DeVos suspends rules on student borrower protection

“The department intends to develop fair, effective and improved regulations to protect individual borrowers from fraud, ensure accountability across institutions of higher education and protect taxpayers,” the Department of Education said in a statement on Wednesday.

One rule, the Gainful Employment regulation, required for-profit colleges and certificate programs at non-profit colleges — under the threat of withholding federal aid — to show that a student’s education in those institutions would help those students receive “gainful employment.”

The second rule, the Borrower Defense to Repayment regulation, clarified how student borrowers who were defrauded or misled by their college could apply for loan forgiveness and also created a fast-track for students who apply for forgiveness in case their college closed.

The rules were to take effect July 1 but the Department of Education under Betsy DeVos said it would delay implementation upon further review. The Obama-era rules were first proposed amid the collapse of the Corinthian Colleges Inc. for-profit institution.

“My first priority is to protect students,” DeVos said. “Fraud, especially fraud committed by a school, is simply unacceptable. Unfortunately, last year’s rulemaking effort missed an opportunity to get it right.”

DeVos said her department would uphold processing claims already filed by 16,000 student borrowers.

Some Democratic members of Congress criticized the move by the department.

“Delaying this important pathway to debt relief would harm thousands of students, many with crushing levels of student loan debt and few meaningful job prospects,” Sens. Elizabeth Warren, Patty Murray, Sherrod Brown and Dick Durbin wrote in a statement.