WASHINGTON, D.C. — U.S. Sen. Sherrod Brown (D-OH) today applauded the U.S. Department of Education’s (ED) new rule creating strong protections for student loan borrowers who are the victims of unlawful and abusive practices in higher education – including students who have been defrauded by for-profit institutions, like Corinthian Colleges. After several requests from Brown, the rule, known as “borrower defense,‎” improves the process for these students to have their federal loans discharged and would provide a path to more automatic relief for groups of students that have been harmed.

The rule also crucially bans mandatory arbitration clauses—which force students to waive their legal rights to file lawsuits as individuals or as part of class actions—that are sometimes buried in the fine print in school enrollment agreements.  

“Today’s strong rule is a victory for students,” said Brown. “These protections will stop for-profit colleges from using fine print to deny students their right to a day in court, and take important steps to create a process for providing students with debt relief when they’ve been defrauded or deceived by a predatory for-profit college.”

Brown has been a leading voice in Congress on calling for students’ right to use protection laws to receive relief and hold institutions accountable. In 2015, ‎and most recently in March, Brown urged President Obama to provide a fair process to all students harmed by the closure of Corinthian Colleges or any other school that has engaged in similar practices.

In April, Brown urged ED to ensure today’s announced rule provided victims with fair and equitable debt relief, and made significant progress to protect future student loan borrowers. In the letter, he and his Congressional colleagues strongly encouraged holding colleges accountable by banning mandatory arbitration requirements as a condition of the receipt of federal taxpayer dollars, which was confirmed in today's rule.

 

Full list of actions announced today:

  • Give student loan borrowers access to a process to seek debt relief when they have been the victims of unfair, deceptive, or abusive practices;
  • Provide debt relief to borrowers without requiring individual applications in instances of widespread misrepresentations;
  • Protect taxpayers by ensuring that financially risky institutions are better prepared to take financial responsibility for the discharge of federal student loans they benefitted from;
  • Ensure that for-profit schools where students have poor repayment outcomes provide students with warnings so that students can make more informed enrollment and financing decisions;
  • Ensure affected borrowers have information about and access to closed school discharge when schools close;
  • End the practice of schools forcing arbitration, preventing class actions, and denying students their day in court; and
  • End the use of “gag rules” that silence students from voicing their concerns to authorities

 

  

 

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