Education

New Loan Forgiveness Rule Aims To Help Students Defrauded By Colleges

REUTERS/Joshua Roberts

Paulina Likos Contributor

Education Secretary Betsy DeVos announced Friday a new rule on loan forgiveness that aims to help relieve students of debt who have been defrauded by colleges, according to the Associated Press.

DeVos said the Obama-era regulations were not working and that the new rule will “treat students and taxpayers fairly.”

The re-write is the most recent attempt of the Trump administration to focus its efforts on improving student loan repayment but also to reduce rules supported under the Obama administration, according to AP.

The new rule requires borrowers to provide documentation as evidence students faced financial hardship and requires students file a claim within three year of graduating. (RELATED: Betsy DeVos Hits Back At Critics Over Proposed $18M Special Olympics Funding Cut)

The policy goes into effect July 2020.

Critics say the new standards are too strict. Democratic Sen. Dick Durbin said, “This rule is another Trump-DeVos giveaway to their for-profit college cronies at the expense of defrauded student borrowers.” (RELATED: Betsy DeVos Hits Back At Critics Over Proposed $18M Special Olympics Funding Cut)

Michael Dakduk, executive vice president of Career Education Colleges and Universities, weighed in on the new rule saying, “We think it provides fairness and due process to all parties involved.”

Ahead of the announcement DeVos discussed education priorities for 2020 during an April hearing before the Committee on Education and Labor.

The secretary explained in her statement, “We propose to improve student loan repayment by consolidating multiple Income Driven Repayment plans into a single plan. This is urgently necessary because at almost $1.5 trillion, Federal Student Aid’s loan portfolio is the largest consumer loan portfolio in America.”