The House of Representatives voted 231-180 yesterday to pass a resolution to block Education Secretary Betsy DeVos' new borrower defense rule from going into effect. The Senate is unlikely to follow suit, and even if it does, the Trump administration has issued a Statement of Administration Policy that guarantees a veto.
The Department of Education's management of the borrower defense regulation—which cancels federal student loans for borrowers whose institutions misrepresented their educational offerings, job placement outcomes, or otherwise misled their students—has been the focus of widespread public attention over the past three years, as well as the subject of litigation. At a House Education and Labor Committee hearing last month, Democrats were aggressive in their questioning about the secretary's role in overseeing this process, as well as their concerns with the department's implementation of the regulation, which rolls back the Obama administration's borrower defense rule.
In comments submitted last year on the proposed rule, ACE told the department that it would make asserting a successful borrower defense claim functionally impossible and incentivize practices we know to be harmful to students. Despite these and other concerns, the rule likely will still go into effect on July 1 as planned.
In a related development, the Treasury Department and IRS issued new guidance on Wednesday that exempts student loan borrowers from being taxed on loans that were forgiven as a result of either a successful borrower defense claim or a “closed school" discharge. Click here to read the guidance, and here to read a short Forbes piece on it.