Proposed federal rules would make it easier for people who have been cheated or misled by a college to have their student-loan debt forgiven, U.S. Department of Education officials say. Local advocates say it looks like a good start.

Proposed federal rules would make it easier for people who have been cheated or misled by a college to have their student-loan debt forgiven, U.S. Department of Education officials say.

Local advocates say it looks like a good start.

�I think we�ve got to wait and see� how much difference the proposed rules will make, said Scott Torguson, a lawyer with the Legal Aid Society of Columbus. �I don�t think there�s any question that something was needed.�

The proposed rule changes, announced last week by the U.S. Department of Education, are part of an ongoing crackdown on alleged abuses by for-profit colleges and universities.

Last week, the department recommended shutting down an accreditation agency that has given the green light for billions in federal student-loan money to flow to schools.

A so-called gainful-employment rule finalized a year ago could lead to cutting off federal loan money to schools whose graduates don�t earn enough in relation to their student-debt payments.

Major provisions of the proposed debt-relief rule include:

� A simpler way to seek relief from federal student loans when a college has committed wrongdoing. A so-called �defense to repayment� process exists but is complicated and subject to different rules in different states. It went largely unused until the collapse of Corinthian Colleges in 2015. Since then, more than 23,000 claims for forgiveness have been filed, and the government has wiped out more than $42 million in debt for more than 2,000 people so far.

� Allowing group applications for debt relief in cases of schoolwide wrongdoing. Now, every student must file individually.

� Requiring schools at financial risk to set aside funds, via irrevocable letters of credit, to cover the cost in case students eventually are due debt relief because the school fails. The rule sets conditions that would trigger the requirement, such as a government entity filing a major suit against the school or the school relying too heavily on federal student loans. Schools that trip those triggers would be required to warn current and prospective students that they are at financial risk. Now, when schools declare bankruptcy, taxpayers are on the hook for forgiven loans.

� Requiring schools to warn current and prospective students if former students have poor rates of loan repayment.

� Doing more, sooner, to inform students whose schools have closed that they might be eligible to have their loans forgiven.

� Banning school agreements under which students sign away their right to sue schools and agree to participate in an arbitration process instead of notifying regulators about problems.

�These rules should make them think twice,� U.S. Education Secretary John King said of schools that would mislead students or engage in risky enrollments.

U.S. Sen. Sherrod Brown, D-Ohio, praised the proposed rule, which is subject to a 45-day comment period, as �a victory for students.�

�These protections will stop for-profit colleges from using fine print to deny students their right to a day in court.�

An association representing for-profit colleges criticized the proposed rule, saying in a statement that it �will cause millions of students to lose access to higher education and leave American taxpayers on the hook for billions of dollars.�

Steve Gunderson, president of Career Education Colleges and Universities, protested that some of the provisions, such as the letter-of-credit requirement, target only for-profit schools.

Asked about that in a conference call with reporters Tuesday, Department of Education Under Secretary Ted Mitchell said: �It really is the proprietary sector where most of the risk exists."

Hannah Halbert of the left-leaning research group Policy Matters Ohio called the proposed rule � a positive step� but said a better way to help low-income Ohioans with education would be to make community colleges and state universities more accessible and affordable so that people don�t turn to for-profit schools.

�We can do more of these sorts of regulatory actions to close the low road� to high debt and poorly performing institutions, Halbert said, �but the real solution is providing more help on the front end � to pave the high road to education.�

People can read the rules and submit comments via the Federal Register through Aug. 1.

mcedward@dispatch.com

@MaryMoganEdward