More than a year after the entry into force of the Obama student loan rule

A federal judge on Tuesday dismissed the protest of a group of for-profit universities against an Obama administration rule governing the write-off of loans for defrauded borrowers, paving the way for the first time. entry into force of the rule.

The regulatory decision, known as the Borrower Defense, is viewed by consumer groups as a major victory for students. The rule would prohibit colleges from applying the arbitration provisions of the registration agreements. And that could help a lot of student borrowers get a loan waiver. But these benefits will also depend on how the education department, which has been trying to backtrack for two years, applies the provisions of the rule.

Tens of thousands of borrowers – most of them being former for-profit students – are waiting for ministry decisions on loan repayment claims under the rule, which also encompasses Institutional actions going beyond the student loan cancellation.

"Countless borrowers across the country are counting on the coming into force of this rule," said Julie Murray, attorney at Public Citizen, who helped plead the lawsuit filed against the department by several tax groups. Consumers and Attorneys General. "Today is a huge victory for them."

Education Secretary, Betsy DeVos, announced that she would block the rule last year and proceed with an accounting rewrite of the concerns of the institutions. However, a federal district court judge, Randolph Moss, found last month that the delay in the 2017 settlement was illegal. And the Department of Education later said it would not try to justify this delay further. The decision on the challenge of the for-profit association opens the way to the application of the provisions of the rule although the judge did not give further instructions to the ministry.

A spokesperson for the Department of Education said DeVos had complied with the court's ruling but had not given details on the implementation plans for the 2016 regulation.

"The secretary continues to believe that the rule enacted by the previous government is bad policy and that the ministry will continue work to finalize a rule that protects both borrowers and taxpayers," said Liz Hill, spokesperson from the Department of Education. "The ministry will soon provide more information on the next steps in the implementation of the 2016 Borrower Defense Regulation."

In addition to the arbitration bans and the financial accountability provisions, the regulations provide for the automatic release of the student loan for borrowers whose colleges closed three years ago and who have never re-enrolled elsewhere. And it provides for the discharge of the group when widespread fraud is found in an institution. However, to get that relief, the department will have to take action.

Data released by Democratic senators last month showed that more than 100,000 claims for the defense of borrowers were pending at the ministry on June 30, prompting lawmakers to say the ministry was ignoring troubled borrowers.

The removal of the borrower's defense rule, as well as the regulation of paid employment, was a top priority for the Trump administration as well as for the purpose-based college sector. lucrative. The Department of Education issued in July a draft regulation on the defense of borrowers, which would be more restrictive than the Obama rule. But administration officials announced earlier this month that they would miss the deadline of November 1 for the publication of a final rule for 2019.

This missed deadline means that the DeVos borrowers defense rule could come into force at the earliest is that of July 2020 – more than a year and a half after the Obama rule came into force.

But what happens with these provisions of the rule now depends on the actions of an avowed department hostile to regulation.

"I'm very concerned that they are intentionally slowing down or simply refusing to do certain things," said Ben Miller, senior director of post-secondary education at the Center for American Progress.

Miller noted that before proposing the repeal of the regulation on paid employment in August, the Trump administration had spent more than a year deferring the provisions repeatedly. of this rule. He stated that it was the responsibility of the Department of Education to provide colleges with the necessary guidance on the borrower defense provisions such as the prohibition of arbitration as soon as possible.

"The department is obliged to respect the rules in force," he said.

Although Moss ruled against the California Association of Postsecondary Schools, the for-profit group that sought to block regulation, he did not analyze the substance of the group's objections and said: is not the first (and probably not the last) in a dispute over the fate of regulation ".

Steve Gunderson, president of Career Education Colleges and Universities, said in a statement that the decision was disappointing and would create additional confusion for students and institutions.

He asserted that there was a precedent in which the Obama and Bush administrations had chosen not to apply rules with which they disagreed and said DeVos should use the same power discretionary.

"But for now, I hope Trump 's education department will provide as much advice as possible to schools on how to operate despite the current regulatory confusion caused by the decision to go to school. apply the rules of the Obama era as they are about to create a new, much more balanced regulation, providing for due process for students and schools, "he said.