Trump administration to revise student loan rules aimed at helping borrowers

Kevin McCoy | USA TODAY

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The Trump administration Wednesday said it plans to revise two Department of Education regulations aimed at helping borrowers who say they were misled by for-profit colleges.

The decision announced by Secretary of Education Betsy DeVos could undo a pair of Obama administration regulations designed to protect students who attended career-preparation programs at for-profit colleges and either failed to earn projected incomes or claimed they were misled or defrauded by the schools.

One of the rules, known as the Borrower to Defense Repayment regulation, was scheduled to take effect next month. The other, called the Gainful Employment regulation, is already on the books.

The Obama administration billed the borrower defense rule as a simpler process for handling claims by consumers who say they were defrauded by for-profit schools and seek to have the federal government forgive their student loans. The gainful employment rule would put college programs at risk of losing federal student aid if graduates don't earn enough to support themselves and repay their education loans.

"My first priority is to protect students," DeVos said in an official statement that faulted an Obama administration rulemaking process last year with producing results that were unfair to students and schools while putting taxpayers "on the hook for significant costs."

"It's time for a regulatory reset," added DeVos. "It is the Department's aim, and the Administration's commitment, to protect students from predatory practices while also providing clear, fair and balanced rules for colleges and universities to follow."

The reset plan drew criticism and predictions of legal challenges. John King, the immediate Obama administration predecessor of DeVos, called the decision "deeply worrisome and wrong." The rules were designed to protect taxpayers and students, "particularly low-income students and students of color — who are most likely to get taken advantage of by unscrupulous institutions," said King.

The Institute for College Access and Success, a nonprofit organization focused on making higher education more available and affordable, said the changes would make it easier for disreputable schools "to defraud students and evade accountability" and simultaneously "make it harder for defrauded students to get their loans discharged."

DeVos said nearly 16,000 borrower defense claims are currently being processed. The Department of Education will continue to process applications under the current rule until a new one is enacted, she said.

Education officials plan to hold hearings on the new rule-making on July 10 in Washington, D.C. and July 12 in Dallas, Texas.

Follow USA TODAY reporter Kevin McCoy on Twitter: @kmccoynyc