Illinois, Maryland & Pennsylvania State AGs Join Student Defense to Call for Student Relief When Colleges Close
WASHINGTON, DC – The Attorneys General of Illinois, Maryland and Pennsylvania joined Student Defense today to call on the Department of Education to restore and improve a rule providing automatic debt relief to students whose educations are disrupted by their school’s closure. Student Defense also released a new paper today describing how the Department could restore those protections.
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. But 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 our lawsuit, the Department discharged over $354 million to over 31,000 student borrowers. Secretary DeVos then proceeded to issue her own regulation, repealing this automatic relief.
The Student Defense report suggests significant improvements to the automatic closed school discharge rule and outlines the regulatory and procedural steps necessary for the Department of Education to restore the rule. The paper is the latest in Student Defense’s 100 Day Docket initiative, designed to help a future Department of Education take immediate, decisive action to protect students.
Illinois Attorney General Kwame Raoul:
“The Department of Education is unfairly limiting relief that should be automatically available to students who took out loans to pay for a school that is now closed. Through no fault of their own, students have been unfairly burdened with overwhelming debt loads and left without a degree. Student Defense’s commonsense proposal would protect students from predatory institutions, provide faster relief for student borrowers, and provide automatic relief to students already facing unprecedented financial hardships and economic uncertainty because of the COVID-19 pandemic.”
Maryland Attorney General Brian Frosh:
“It is unfair and terribly harmful to students when their school abruptly closes without setting up high-quality transfer options for them to continue their education. It’s ludicrous that many of these students also carry substantial student loan debt after a school fails to deliver on its promises. The Education Department’s repeal of the Automatic Closed School Discharge Rule affects students impacted by recent school closures, many of whom are also facing challenges dealt by the COVID pandemic. The Department has a duty to help students affected by these disorderly closures, and the least it can do is automatically cancel their federal student loans. The recommendations made by Student Defense should be carefully considered by the next administration’s Education Department.”
Pennsylvania Attorney General Josh Shapiro:
“We’re holding Betsy DeVos and the U.S. Department of Education accountable for unlawfully attempting to repeal its 'borrower defense' rule. This paper’s call for the Department to restore the Automatic Closed School Discharge Rule is critical. The rule is a major protection for borrowers - especially when so many families are suffering losses of income and serious illness due to the Covid-19 pandemic and jobs crisis.”
Student Defense Senior Counsel and Cofounder Alex Elson:
“Every year, thousands of borrowers whose schools shut down struggle to make payments on loans they don’t need to repay, because they simply don’t know they’re entitled to relief. Making this vital closed school relief automatic again is the only way to ensure students receive the benefits they are entitled to under the law.”
“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. However, as the Department of Education has explained, nearly half of all eligible borrowers never apply for the closed school discharges to which they are legally entitled. The Obama Administration adopted a regulation making the loan discharges automatic for eligible borrowers, but Secretary DeVos repealed that provision and once again required borrowers to complete an application process that many borrowers do not know exists.
As part of the 100 Day Docket initiative, Student Defense is publishing a series of papers identifying opportunities for the Department of Education to exercise underused authorities in the Higher Education Act to promote equity and foster stronger protections and outcomes for students. Papers so far include how the Department can hold individual executives personally liable for their schools’ misconduct, how to fix the Public Service Loan Forgiveness program, and how to deliver overdue loan relief to over 350,000 borrowers with disabilities.
More information about the project is available at www.100DayDocket.org