We wrote in a previous post about our coalition letter to the Department of Education’s “Special Master”, urging him to create a fair and accessible “defense to repayment” process for borrowers. While the special master Joseph Smith works on this project, the Department also announced that it will be holding hearings and creating a negotiated rulemaking committee to develop proposed regulations for determining which acts or omissions of an institution of higher education (“institution”) a borrower may assert as a defense to repayment of a Direct loan and the consequences for borrowers, institutions, and the government.
The “defense to repayment” process will be most relevant if you have a legitimate complaint about your school, but are not eligible for one of the other discharge programs. In this case, you may still be able to raise a school-related claim as a defense to collection. These defenses may be raised even if you are current on the loan and there are no collection actions. If you are in default and facing collection, the defenses may be raised in response to all types of collection actions, not just lawsuits. If your school violated state or federal law, you may claim that you are not obligated to pay it back. You may also seek a refund for amounts you already paid. But it is not clear how this process will work. This is why the public hearings and new rulemaking process are so important. The Department will be deciding who is eligible for this relief and how the process will work.
The Department will first hold two public hearings to gather information. The public hearings will be held:
- September 10, 2015, at the U.S. Department of Education, 1990 K Street NW., Eighth Floor Conference Center, Washington, DC 20006.
- September 16, 2015, at the Courtyard San Francisco Downtown, 299 2nd Street, Rincon Hill Room, San Francisco, CA 94105.
The public hearings will be held from 9:00 a.m. to 4:00 p.m., local time. The Department will also accept written comments through September 16.
This is a critical time for borrowers and their advocates to get involved and make sure that the Department puts borrower needs first. As we have written previously, we are concerned that the Department’s primary focus is protecting the federal government’s investment, rather than protecting the people who are least responsible for this situation – the students. The Department has started to provide some clarification about relief for Corinthian school students, but much more needs to be done to make sure that Corinthian students and students from other predatory schools can get the relief they are entitled to by law.