Biden Administration Proposes Significant and Concerning Overhaul to Borrower Defense Regulations7/6/2022
Arlington, VA – Today, the U.S. Department of Education published the unofficial version of its Notice of Proposed Rulemaking (NPRM) on borrower defense to repayment (BDR), along with six other issues negotiated last year. The public will have 30 days to submit written comments once the Department publishes the official NPRM in the Federal Register. “We are disappointed that the Biden administration continues to pursue a borrower defense agenda that is not grounded in any existing statute, and that suffers from inadequate due process protections. For students who allege that they have been defrauded, there should be a careful and deliberative process for considering and resolving their claims. Any process the Department implements must be fair to students, institutions, and taxpayers alike,” said CECU’s President and CEO, Dr. Jason Altmire. “However, today’s proposed rule sends a clear and troubling message that the Department intends to use the rulemaking process to discharge federal student loans en masse while hurting unfavored institutions and their students in the process. This is an unprecedented expansion of the Department’s authority that was never contemplated by Congress and that will have substantial negative economic consequences on institutions and taxpayers.” ### About Career Education Colleges and Universities
Career Education Colleges and Universities (CECU) is the national association serving the proprietary higher education sector. Please direct media inquiries to Jenny Faubert, VP of Communications, at Jenny.Faubert@career.org. Arlington, VA – Today in a federal court filing, the U.S. Department of Education agreed to settle a class-action case regarding the Department’s ongoing delay in processing borrower defense to repayment claims. The court will need to approve the proposed settlement agreement before it becomes final. The agreement provides automatic relief, including federal loan discharges, refunds of amounts paid to the Department, and credit repair, for approximately 200,000 students who borrowed to attend one (or more) of a specified list of schools, many of which have closed in recent years. The Department alleges that “attendance at one of these schools justifies presumptive relief, for purposes of this settlement, based on strong indicia regarding substantial misconduct by listed schools, whether credibly alleged or in some instances proven, and the high rate of class members with applications related to the listed schools...” (Emphais added). “We are deeply concerned that in its haste to respond to outside political pressure, the U.S. Department of Education is attempting to approve wide swaths of claims without regard to individual merit,” said CECU’s President and CEO, Dr. Jason Altmire. “The Department has an obligation to take a more measured approach to determine if each student has been financially harmed based on an unlawful act. The Court should look carefully at the settlement agreement to ensure it is fair for all parties involved.” ### About Career Education Colleges and Universities
Career Education Colleges and Universities (CECU) is the national association serving the proprietary higher education sector. Please direct media inquiries to Jenny Faubert, VP of Communications at Jenny.Faubert@career.org. Arlington, VA – According to the Biden administration's Unified Agenda of Regulatory and Deregulatory Actions report released today, the gainful employment Notice of Proposed Rulemaking (NPRM) will be delayed until April of 2023, missing the November 1, 2022, master calendar deadline for publication of the final rule. The earliest the rule could go into effect would be July 1, 2024. “CECU is pleased that the Department of Education is taking the time necessary to reconsider their ill-conceived plans to propose an accountability measure that exempts the vast majority of institutions of higher education,” said CECU’s President and CEO, Dr. Jason Altmire. “We look forward to working with the Department in the months ahead to craft a meaningful and fair rule that applies to all institutions in all sectors, as the Department is authorized to do under Section 454 of the Higher Education Act.” ### About Career Education Colleges and Universities
Career Education Colleges and Universities (CECU) is the national association serving the proprietary higher education sector. Please direct media inquiries to Jenny Faubert, VP of Communications at Jenny.Faubert@career.org. Arlington, VA – Earlier today, the U.S. Department of Education announced the largest single federal student loan discharge in the Department’s history for students who borrowed to attend campuses owned or operated by Corinthian Colleges since its founding in 1995. Full loan discharges will be received by 560,000 borrowers, including students who have not applied for a borrower defense discharge. “Students intentionally deceived by their college and who were financially harmed are entitled to appropriate relief regardless of whether the related actions are perpetrated by a public, nonprofit, or for-profit institution. The actions by Corinthian, which shuttered more than seven years ago, do not represent all private career schools and the students whose credentials have been a springboard to social and economic mobility,” said CECU’s President and CEO, Dr. Jason Altmire. “The Department and others should not conflate the actions of one organization with an entire sector that has provided opportunities for millions of students and contributed to our nation’s workforce.” ### About Career Education Colleges and Universities
Career Education Colleges and Universities (CECU) is the national association serving the proprietary higher education sector. Please direct media inquiries to Jenny Faubert, VP of Communications at Jenny.Faubert@career.org. Arlington, VA – Today, 12 members of Congress sent a letter to Attorney General Merrick Garland urging the U.S. Department of Justice (DOJ) to actively examine the Biden administration’s contemplated borrower defense to repayment rule. Led by House Education and Labor Committee Ranking Member Virginia Foxx (R-NC), the letter highlights several legal and policy concerns with the U.S. Department of Education’s most recent borrower defense proposal. The signatories call on DOJ to exercise its independence and address, among other issues, the lack of due process protections through the interagency review process. “We support a reasonable process that provides relief to borrowers who are misled by their institutions and financially harmed; however, the Department’s most recent borrower defense proposal lacks adequate due process protections for institutions," said CECU’s President and CEO, Dr. Jason Altmire. "We applaud the Congress members for calling attention to this policy imbalance and hope that the Department of Justice will intervene to ensure equal justice for borrowers, institutions, and taxpayers alike.” A copy of the letter is available here. ### About Career Education Colleges and Universities
Career Education Colleges and Universities (CECU) is the national association serving the proprietary higher education sector. Please direct media inquiries to Jenny Faubert, VP of Communications, at Jenny.Faubert@career.org. Arlington, VA – Earlier today, Chairman Bobby Scott (D-VA) and Rep. Frederica Wilson (D-FL) introduced a bill that would reauthorize the Workforce Innovation and Opportunity Act (WIOA). WIOA was designed to help job seekers access employment, education, training, and support services to succeed in the labor market and to match employers with the skilled workers they need. The bill appears to remove proprietary institutions from eligibility for WIOA programs by amending the definition of “institution of higher education” to remove references to proprietary institutions. “We are deeply concerned that this bill’s proactive exclusion of proprietary career schools from the definition of Institution of Higher Education would disqualify those schools from participating,” said CECU’s President and CEO, Dr. Jason Altmire. “Excluding proprietary institutions from participating in WIOA programs would negatively impact thousands of students and further limit the supply of workers in an already limited labor market. We urge Congress not to exclude students attending proprietary institutions from funds that are designed to help job seekers access education and training that strengthens our nation’s workforce.” For the fact sheet of the WIOA Act of 2022, click here. For the section-by-section of the WIOA Act of 2022, click here. For the full text of the WIOA Act of 2022, click here. ### About Career Education Colleges and Universities
Career Education Colleges and Universities (CECU) is the national association serving the proprietary higher education sector. Please direct media inquiries to Devin Miller, Director of Communications at Devin.Miller@career.org. Arlington, VA – Earlier today, the U.S. Department of Education issued a press release and an Electronic Announcement creating a new policy regarding who must sign a program participation agreement (PPA) at non-public institutions. The PPA is an agreement between a higher education institution and the Department that lists the terms and conditions an institution must meet to participate in the federal Title IV programs like Pell Grants and Direct Loans. The Department’s new policy will affect corporations or other legal entities that exercise substantial control over non-public institutions or could have a direct or indirect effect on the institution’s financial responsibility. The Department has made clear that the purpose of these additional PPA signature requirements is so that it can pursue the assets of corporate parents in the event the institution does not pay all outstanding liabilities. “Determining whether to pierce the corporate veil should be a fact-specific inquiry,” said CECU’s President and CEO, Dr. Jason Altmire. “When corporate parents intentionally withdraw equity or become the alter ego of the institutional subsidiary, piercing the veil may be appropriate. However, courts have long recognized that piercing the veil is not appropriate in the case of ordinary business decisions. The U.S. Department of Education should take into account all circumstances surrounding an institutional closure before taking the extraordinary step of piercing the corporate veil to reach the assets of the corporate parent.” ### About Career Education Colleges and Universities
Career Education Colleges and Universities (CECU) is the national association serving the proprietary higher education sector. Please direct media inquiries to Devin Miller, Director of Communications at Devin.Miller@career.org. |
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