Pat Greenhouse | Boston Globe | Getty Images
Kennya Cabrera Garcia studies Algebra I at the East Boston branch of the Boston Public Library on Sep. 14, 2017. She just started classes for a bachelor’s degree. She is a victim of fraudulent practices by Everest Institute, where she took out large loans for a ‘worthless degree.’ She is waiting to see if the Trump administration will forgive the loans.
It could soon become a lot harder for people who say they’ve been defrauded by their schools to have their student loans cancelled.
A new proposal released by the Trump administration on Wednesday re-writes an Obama-era regulation from 2016, known as “borrower defense,” which aimed to establish a way for students to have their federal student loans forgiven if their school misled them or engaged in other misconduct.
More than 160,000 people have made this claim against their school to the Education Department, and new applications continue to pour in. Almost all of these complaints come out of for-profit schools, of which there are some 7,000 around the country, that take in around 15 percent of the government’s financial aid.
The Trump administration’s new proposal was met with harsh criticism from consumer advocates.
“This is a day where the Department of Education is saying to students, we’re not on your side,” said Yan Cao, a fellow at The Century Foundation, a liberal think tank.
The Department of Education did not immediately respond to a request for comment.
The new rule would bring relief to fewer borrowers, advocates say. While the Obama-era rule would have cost the government around $15 billion in loan forgiveness, this proposed rule would cost it just around $2 billion.
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