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Education Department Releases New Borrower Defense Rule

This past Friday ahead of Labor Day weekend, the U.S. Department of Education (ED) released its anticipated rewrite of the Borrower Defense rule. This regulation substantially changes the earlier version of the rule, that had been issued during the Obama administration in 2016.


Here is ED's unofficial version of the final rule (the official version will be published in the Federal Register soon). Read Inside Higher Education's coverage of the rule here, and the Chronicle of Higher Education's coverage here.


Among other things, the new rule will add a time limit of 3 years for students to file claims alleging fraud on the part of their institutions and permit institutions to require students to agree to binding arbitration to resolve disputes.


From Inside Higher Education: "The DeVos regulations will save the federal government about $11 billion over 10 years, the department estimates (the federal government shoulders the cost of loan discharge if it cannot recoup funds from the institutions themselves). Consumer advocates argue those savings are created by rigging the system against borrowers."

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