Education Dept. to Rewrite the 2016 Loan Rule Overhaul

Education Dept. to Rewrite the 2016 Loan Rule Overhaul
Susan Dutca-Lovell

The Education Department will rewrite its overhaul of a 2016 Obama Loan Rule - most likely by dropping the "most restrictive provisions" of an earlier attempt to replace the borrower-defense rule. The loan rule outlines how borrowers who were defrauded or misled by their college can seek loan forgiveness.

For two years, Education Secretary Betsy DeVos has sought to revamp the Obama-era loan rule, which was issued after a "flood of debt-relief claims from students who attended defunct for-profit colleges." Last summer, the Department of Education crafted a new proposal, suggesting that borrowers only seek student debt relief if they had defaulted on their loans and restricting loan forgiveness for borrowers whose institution abruptly closed, according to Inside Higher Ed. Late last year, U.S. District Judge Randolph Moss ruled against the bid to delay the Obama-era loan rule, which allowed the consumer protections passed under President Barack Obama to go into effect. Now, the Department of Education has another chance at rewriting its overhaul of the student loan forgiveness program.

Last week, a department official stated that it is "no longer seeking to restrict relief for students at institutions that shut down, known as closed-school discharge if a college offers students options to complete their degree elsewhere." If student loan forgiveness, student loan cancellation or student loan discharge is not an option for you, there are other proactive steps you may qualify for student loan repayment or student loan consolidation.

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