The Direct Network

5 Things You Need to Know About Borrower Defense

Posted by Lori Reese on Jun 21, 2017 5:30:00 AM
Topics: Higher Ed, higher education law

One minute, experts advise colleges to put their marketing materials under the microscope and check for language that could — intentionally or not — be viewed as predatory. The next, word is there’s no longer cause for schools to conduct a review. Here’s what’s going on with the Borrower Defense to Repayment Rule.



The Borrower Defense to Repayment Rule, originally set to take effect July 1, 2017 has been indefinitely delayed. The rule, prompted by the closure of Corinthian Colleges, streamlines a process for students seeking relief from federal loans. If students demonstrate a school acted in violation of state laws, the federal government forgives the debt. Right now, 16,000 applicants have been promised debt forgiveness and are waiting for claims processing. Education Secretary Betsy DeVos announced the Department would keep its promise to those students but halt the implementation of the rule.

“Fraud, especially fraud committed by a school, is simply unacceptable. Unfortunately, last year’s rule making effort missed an opportunity to get it right,” said Devos.

The Department of Education plans to hold hearings about the rule in July.


Consumer advocates believe the rule is a necessary defense against predatory practices of some colleges and universities, especially those whose income base relies primarily on student financial aid. They argue these schools entice low-income, first-generation students with promises about future employment they can’t keep. Those students wind up with hundreds of thousands of dollars in debt they cannot repay. Advocates say the rule is the best way to hold schools accountable for their recruiting practices. Randi Weingarten, president of the American Federation of Teachers, expressed outrage at the decision to halt the rule.

“About the only thing worse that ripping off students with worthless degrees from for-profit colleges is denying them help to relieve their substantial debt, and allowing the schools to continue to prey on students,” he said in a statement


For-profits, Historically Black Colleges and Universities (HBCUs) and many small private colleges took issue with the rule. They argued Borrower’s Defense could prevent millions of low-income and first-generation students from pursuing higher education because it would bring excessive regulatory pressure to schools that aim to recruit from these demographics. Also, the rule, as written, said a college or university could be held accountable for exploitative action whether or not the wounded party demonstrated intent. That left colleges and universities nationwide on the hook: The language in their marketing literature could be interpreted as misleading, whether or not they meant harm.

Before the decision to halt implementation, the United Negro College Fund and the National Association for Equal Opportunity in Higher Education, which represents HBCUs, sent Devos a letter expressing opposition. 

"We remain concerned about the sweeping scope of the regulation and vague standards for determining ‘misrepresentation’ that could unfairly leave HBCUs and PBIs liable for frivolous claims, unwarranted fines, and unfounded penalties. Such provisions could result in significant costs that would divert precious resources better spent on serving the needs of students."

Yes, it’s political

Parties on all sides see politics behind the Obama-era rule and the Department of Education’s decision to delay its implementation. Republican lawmakers had long promised to roll back the regulation when a new administration came in. Democratic Senators rallied behind Borrower Defense, attempting to stop the Education Secretary’s action. A change in political winds could bring a change in the status of the rule.


The debate may have long-term ramifications on students’ attitudes toward college, whether or not the rule takes effect. A large group of students successfully demonstrated to the federal government that a college acted in a predatory way. Politicians will debate about what practices are exploitative or misleading, but neither side will change the increased likelihood that students will feel empowered to hold schools accountable for their ability to help them find jobs and pay off substantial debt. Both Gen Z and nontraditional students seek greater return on their investment in school than past students. As students increasingly regard themselves as entitled consumers, educators, for good and ill, will be forced to offer more measurable, marketable products.

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About Lori Reese

Lori Reese is a writer and an educator with 20 years of experience in higher education teaching.

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