2019 Institutional Accountability (Borrower Defense) Regulations
Note: On March 18, 2021, the Department rescinded the borrower defense relief methodology that had been announced in December 2019 by the Trump Administration. This December 2019 methodology was published outside of the notice-and-comment rulemaking process, which enabled the Biden-Harris Administration to rescind it without conducting rulemaking. CECU expects the Department to also propose changes to the underlying regulations established by the Trump Administration in 2019. The Department announced that they will hold public hearings on a variety of topics in June 2021, including borrower defense.
On August 30, 2019, the U.S. Department of Education published the final institutional accountability (borrower defense) rule (2019 Rule), which became effective on July 1, 2020.
A summary accompanying the 2019 Rule indicates the regulations will:
On August 30, 2019, the U.S. Department of Education published the final institutional accountability (borrower defense) rule (2019 Rule), which became effective on July 1, 2020.
A summary accompanying the 2019 Rule indicates the regulations will:
- Provide borrowers the right to assert defense to repayment claims against institutions for loans first disbursed on or after July 1, 2020, without regard to whether the loan is in default or in collection proceedings.
- Maintain the current rule’s preponderance of the evidence standard for all borrower defense to-repayment claims.
- Allow borrowers ample opportunity to file defense to repayment claims.
- Create streamlined and fair procedures that ensure basic due process for both borrower and institutions.
- Give students the ability to allege a specific amount of financial harm.
- Enable the Education Secretary to determine at the time she provides borrower defense to repayment relief that there is sufficient evidence to require reimbursement from the school.
- Extend the closed school discharge window from 120 days to 180 days.
- Encourage institutions to close only after the completion of well-planned teach-outs that provide students with the reasonable opportunity to finish their programs.
- Allow students to choose between accepting an institution’s offer of a teach-out opportunity or submitting a closed school discharge application to the Department.
- Provide a financial responsibility framework with fair, clear, and verifiable requirements for recalculating an institution’s financial responsibility composite score and triggering additional security to protect taxpayers.
- Update composite score calculations to reflect recent changes to accounting standards.
CECU hosted a webinar on September 10, 2019 that provided an initial overview of the Department's final 2019 Rule, the slides and recording of which are available on demand in the Member Resource Center here.
Please direct any questions regarding the institutional accountability/borrower defense to repayment regulations to Nicholas Kent, Senior Vice President of Policy and Research, at (571) 800-6524 or Nicholas.Kent@career.org.