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July 25 (UPI) -- Education Secretary Betsy DeVos proposed new rules tightening the criteria for students to receive loan forgiveness from claims of institutional fraud. The proposed rules, published on the Education Department website Wednesday, would require students to prove their school knowingly misled them in order to receive forgiveness for their loans.
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The rules rewrite an Obama-era regulation to more clearly lay out rules for students to seek debt relief and hold institutions accountable for misrepresentation and fraud, DeVos said in a statement.
"Our commitment and our focus has been and remains on protecting students from fraud," she said. "The regulations proposed today accomplish that by laying out clear rules of the road for higher education institutions to follow and holding institutions, rather than hardworking taxpayers, accountable for making whole those students who were harmed by an institution's deceptive practices."
The proposal states, however, its focus is to "enable students to make informed decisions" before enrolling and notes students have a responsibility to research their institution, rather than relying on federal loan relief.
"Postsecondary students are adults who can be reasonably expected to make informed decisions if they have access to relevant and reliable data about program outcomes," the proposal states.
The Education Department also is seeking public comment on whether students must be in default in order to seek loan forgiveness before it publishes its final rules Nov. 1.
One option would require students to be in default, while the alternative would allow students to continue to submit affirmative claims, which would be held to a higher standard of approval.
Students with existing loans will be permitted to apply for loan forgiveness under standards established in 1995, which were rarely used until 2015 when for-profit university chains Corinthian Colleges and ITT Technical Institutes collapsed.
Since that point the Education Department said it has received more than 100,000 claims.
The proposal also would grant schools the opportunity to respond to claims of fraud and would reverse Obama-era rules in order to allow schools to require students to sign arbitration agreements barring them from filing lawsuits against the institution.
National Student Legal Defense Network President Aaron Ament said the proposal allows for-profit institutions to take advantage of students
"Today's proposal is a giveaway to predatory for-profit colleges and a stunning show of indifference toward students working to better their lives," Ament said, according to The Washington Post.
Abby Shafroth, an attorney at the National Consumer Law Center added there are too many barriers in place for students to convincingly prove an institution intended to deceive them.
"How are borrowers supposed to prove intent? They don't have any discovery rights. They don't have the ability to get testimony from the person who lied to them about what they knew or didn't know," Shafroth said.
