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Quick Action by Incoming Secretary Cardona Can Deliver Relief for Students Whose Colleges Closed

WASHINGTON, DC – When Dr. Miguel Cardona is sworn in as U.S. Secretary of Education after his Senate confirmation vote, he can move quickly to restore a rule that previously provided over $354 million in relief to students whose colleges closed. A proposal created by Student Defense’s 100 Day Docket project, and endorsed by the state attorneys general of Illinois, Maryland and Pennsylvania, would reinstate the Automatic Closed School Discharge Rule and provide substantial, faster relief for borrowers well into the future.

“We know there are hundreds of thousands of students whose schools shut down, struggling to make payments on loans they don’t need to repay, because they simply don’t know they’re entitled to relief,” said Student Defense President Aaron Ament.  “Dr. Cardona can immediately automate this relief and ensure student borrowers receive the assistance the law provides for them.” 

The proposal, “How to Bring Back and Improve Upon the Automatic Closed School Discharge Rule” is available here.

Students who are enrolled at a school within 120 days of closure (180 days if the school closed after July 1, 2020) are eligible to have their federal student loans discharged. According to federal data, nearly half of all eligible borrowers never apply for the closed school discharges to which they are legally entitled. Under a rule created by the Obama Administration, closed-school debt relief became automatic for eligible students.

Former-Secretary Betsy DeVos was steadfast in her attempts to dismantle this safeguard. First, she refused to automatically provide loan discharges for impacted students until after Student Defense sued on behalf of the non-profit organization Housing and Economic Rights Advocates. Following the lawsuit, the Department discharged over $354 million to over 31,000 student borrowers. DeVos then proceeded to issue her own regulation, repealing this automatic relief and requiring borrowers to complete an application process that many do not know exists.

Student Defense’s proposal was endorsed by Illinois Attorney General Kwame Raoul, Maryland Attorney General Brian Frosh, and Pennsylvania Attorney General Josh Shapiro. The proposal suggests that the Department issue an Interim Final Rule to immediately reinstate the Automatic Closed School Discharge Rule, while beginning a negotiated rulemaking process. The proposal also includes suggestions to: speed up and expand the scope of relief, by reducing the waiting period from three years to one year; revisiting whether it is possible to use new program-level data to provide relief to students who transferred credits into unrelated programs or who transferred but did not complete their studies; and potentially extend the eligibility date back beyond the current date of November 1, 2013.

Student Defense’s 100 Day Docket initiative has identified opportunities for the next Secretary of Education to strengthen enforcement efforts and take administrative actions to protect students. These proposals, which have already garnered public support from senators and state attorneys general, include exercising underused authorities in the Higher Education Act to foster equity, implementing stronger protections for students, identifying new pathways to student loan relief, and bringing accountability to predatory colleges and other actors.

More information about the project is available at www.100DayDocket.org

Tags   100 Day Docket