The House of Representatives voted to overturn a recent change to Defense to Repayment, a method for student loan borrowers to seek a reduction or reprieve from federal student loans they took out to attend college. The regulation overturned by Congress was recently put in place by Betsy DeVos, U.S. Secretary of Education.
What Does It Mean?
The regulation has been criticized as a method of limiting the amount of federal student loan forgiveness a borrower can receive if the borrower attended a college closed due to fraud. Before this rule was put in place, the amount a borrower could have forgiven was subjective. Most people assumed that the entire loan amount would qualify. Betsy DeVos rule put a hard limit on the forgiveness amount. With the regulation overturned, the hard limit has been removed. However, the subjectivity is now back in play, meaning all of this could be for nothing since the Department of Education still takes its direction and intent from DeVos.
What is Borrower Defense to Repayment?
Borrower defense to repayment (DTR) enables students who used federal student loans to attend schools that used illegal or deceptive recruitment practices to receive forgiveness. Without this forgiveness option, students are responsible for repaying the loans even if they didn’t find gainful employment or finish their degree before their school closed. However, neither the new rule nor the overturned rule guaranteed forgiveness. Borrowers must apply for DTR and there are many considerations and requirements just to qualify.
The exact debate of the Borrower Defense to Repayment program is centered around the interpretation of whether this forgiveness program is something you apply for or automatically receive based on specific criteria. Either way, submitting for this program can be tedious and complicated. At my law firm, I can assist you in preparing the necessary submissions and put a strategy in place to help you reduce risks in the event you receive or do not receive this forgiveness. Contact me today to schedule a consultation via phone or at my office at Palm Springs Drive and E Citrus St.