Blumenthal Welcomes Final Rule to Expand Debt Relief for Students Defrauded & Deceived by Predatory For-Profit Schools

[WASHINGTON, D.C.] – U.S. Senator Richard Blumenthal (D-CT) applauded the Department of Education for issuing a final rule creating strong protections for student loan borrowers who are the victims of unlawful and abusive practices in higher education. The rule, also known as “borrower defense,‎” significantly improves the process for these students to have their federal loans discharged. The rule crucially bans any pre-dispute arbitration clauses, whether voluntary or mandatory—which force students to waive their legal rights to file lawsuits as individuals or as part of class actions—that are sometimes buried in the fine print in school enrollment agreements. 

“The rulemaking finalized today will help empower students who have been deceived and defrauded with a clear, fair process to hold accountable institutions that took advantage of them, preying upon their dreams of a higher education,” Blumenthal said. “And after years of being unfairly blocked from seeking recourse through our justice system by abusive pre-dispute arbitration agreements, students will finally be allowed to have their day in court. I applaud Secretary King for taking the first step to help students move forward with a clean slate, but real relief requires that these rules be efficiently and fairly implemented. I look forward to working with the Department of Education on further action to make sure every student that deserves justice receives a full and fair hearing – and that the Secretary proactively pursues relief on behalf of groups of borrowers who were defrauded.”

After several requests by the Blumenthal and U.S. Senators Patty Murray (D-WA), Dick Durbin (D-IL), and Sherrod Brown (D-OH) the borrower defense rule also avoids a previously-proposed statute of limitations to receive relief from outstanding loan debt, and would provide a path to more automatic relief for groups of students that have been harmed.

Blumenthal has been a leading voice in Congress calling for giving students the right to use protection laws to receive relief and hold institutions accountable. In 2015 and again in March, Blumenthal and Senate Democrats urged President Obama to provide a fair process to all students harmed by the closure of Corinthian Colleges or any other school that has engaged in similar practices.

In April, Blumenthal joined a bicameral letter to the Department to ensure today’s final rule provided victims with fair and equitable debt relief, and made significant progress to protect future student loan borrowers. In the letter, the Members strongly encouraged holding colleges accountable by banning mandatory arbitration requirements as a condition of the receipt of federal taxpayer dollars, which was confirmed in today's rule.

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