The U.S. Education Department has released its long-awaited defense-to-repayment rules, which codify how borrowers who are defrauded by predatory colleges can obtain relief from the federal government. The rules, released on Friday at 12 a.m., were spawned by the collapse of the for-profit Corinthian Colleges and the subsequent masses of students who petitioned the department for loan forgiveness.
Among other things, the rules:
- Allow loan forgiveness to be granted to borrowers en masse, in cases where an institution made “widespread misrepresentations,” as opposed to granting petitions for relief one by one.
- Forbid institutions to bar students from pursuing class-action lawsuits against them.
- Affirm that there is no statute of limitations “for discharge of borrowers’ loan balances still owed or relief based on state or federal court judgments.”
- Establish that “a number of triggering and early-warning events” at an institution would require that institution to post a letter of credit with the department.
- Restore Pell Grant eligibility to students at colleges that have closed.
The department’s news release about the rules also updates figures on how many former Corinthian students have received forgiveness from the federal government. According to the department, it has granted more than 15,000 claims for forgiveness -- which, taken together, amount to more than $247 million in relief.