Washington, DC, USA: The Trump administration is set to end the ‘Borrower’s Defense Against Repayment Program’ rule, a component of the ‘Obama Student Loan Forgiveness Program. The Obama-era policy fully forgives federal loans for students defrauded by for-profit colleges. Education Secretary Betsy DeVosv is working on a plan that would only give defrauded students partial relief from the debt. The Barak Obama administration had allowed the debt to be fully forgiven.
The Borrower’s Defense Against Repayment Program is the fastest, easiest, and best way to get rid of outstanding student loan debt, because it allows the debtor to challenge the legal validity of your loans.
This program let’s the debtor qualify for a complete loan discharge if debtor can prove that the loans shouldn’t exist in the first place, by arguing that they were created based on lies, deceptions, or some kind of outright illegal activity (like false advertising, or fraud).
President Obama added the Borrowers Defense Against Repayment Program to the Obama Student Loan Forgiveness package citing the same provision in the Higher Education Act of 1965, which prior Presidents may not have been aware of or overlooked.
On June 8th, 2015, Obama’s DOE announced that they would support the tens of thousands of students caught up in the collapse of Corinthian Colleges. Tthe Department of Education was serious about their promise to help those now saddled with excessive student loan debt, as they publicly affirmed that those students would be able to qualify for a comprehensive student loan forgiveness program, governed by the old 1965 defense against repayment provision.
Tens of thousands of students who were deceived by now-defunct for-profit programs had more than $550 million in loans erased under the President Barak Obama administration.
Since Trump took office, student loan forgiveness in cases of possible fraud has come to a screeching halt, according to Department of Education records released to Sen. Dick Durbin. The records show that nearly 15,000 people applied for loan forgiveness from January 20 to July 5, claiming their colleges and universities defrauded them. None of those applications have been approved. Zero
Student loan advocates have criticized the reported moves to only partially forgive the debt
Recall that President Trump paid $25 million to settle a lawsuit earlier this year after students claimed they were misled by his own former for-profit program, Trump University.
U.S. District Judge Gonzalo Curiel approved a lawsuit settlement requiring President Trump to pay $25 million to former students of his now-defunct Trump University, bringing to a close a year long legal saga that marred his run for president.
“The court finds that the amount offered in settlement is fair, adequate, and reasonable, and accordingly concludes that this factor weighs in favor of final approval,” U.S. District Judge Gonzalo Curiel wrote in his ruling.
The decision settled two class-action lawsuits brought by customers who claimed the Trump-branded education venture misled them into enrolling in expensive classes that promised real estate success.
It also settled a civil suit brought by New York Attorney General Eric Schneiderman, who said the company’s actions carried “the hallmark of a snake-oil salesman.”
The Education Department has sought to repeal rules as part of the Trump administration’s push to undo Obama-era regulations it deems ‘unnecessary’.
Trump Rescinds Obama-era documents on rights of students with disabilities
A report revealed earlier this month (October 2) that Education Department has rescinded 72 documents that laid out the rights of students with disabilities. The Office of Special Education and Rehabilitative Services revealed in a newsletter that the documents had been rescinded “due to being outdated, unnecessary, or ineffective,”.
The rescinded documents include information on how schools can spend federal funds allocated for special education, as well as guidance for parents on advocating for their children.
Trumps rescindes Obama-era school saxual assault policy
The Education department, last month, came under fire for rescinding Obama-era campus saxual assault rules, claiming the regulations did not do enough to protect the rights of the accused.
In addition to the evidence standard, the agency said the 2011 letter being withdrawn insisted schools with an appeals process allow complainants to appeal not-guilty findings when appeals were typically reserved for accused students.
The agency claims the letter also discouraged cross-examination by the parties, forbade schools from relying on police investigations of criminal conduct to resolve complaints and forced schools to establish policing and judicial systems while directing schools to resolve complaints on an expedited basis.
Under the interim guidance, the agency said schools now have the discretion to apply either the preponderance-of-the-evidence standard or the clear-and-convincing-evidence standard, meaning is it “more likely than not” that saxual harassment or violence occurred, or the convincing evidence standard, meaning “is it highly probable or reasonably certain,” which is the higher standard of proof.
Though no longer required to allow appeals, the department said schools can choose to limit appeals to only those from the accused student or allow appeals from both parties.
“As I said earlier this month, the era of rule by letter is over,” DeVos said in a statement. “The Department of Education will follow the proper legal procedures to craft a new Title IX regulation that better serves students and schools.”
The department expects to release a notice of proposed rulemaking in the next few months.
Obama Loan Forgiveness Program
Anyone who first took out Federal student loans after October 1st, 2007 is eligible for the benefits enacted in what’s been called the Obama Student Loan Forgiveness Program.
Originally announced in October of 2001, President Barak Obama promised to initiate major reforms to Federal student loan debt laws, including a massive overhaul of the existing Federal forgiveness programs, and the introduction of a brand new, much more lucrative Federal student loan repayment plan, called Pay As You earn.
Obama Loan Forgiveness, is a suite of reforms that were put into law during the Obama presidency, including:
The Know Before You Owe Initiative – To ensure that graduates aren’t saddled with excessive monthly payments that would surely put them in the bread line, President Obama committed to offering them the ability to cap monthly student loan payments at just 10% of discretionary income, a move that would save some borrowers hundreds to thousands of dollars per month
Introduction of the Pay As You Earn (PAYE) Student Loan Repayment Plan – This new Income-Based Federal Student Loan Repayment Plan limits monthly payments to just 10% of discretionary income, and offers complete loan forgiveness once borrowers have made 20 years worth of monthly payments, regardless of how much they still owe
Updates to the Public Service Loan Forgiveness Program (PSLF) – While previous law stipulated that PSLF loan forgiveness could be earned by making 20 years worth of payments, President Obama’s update now offers eligible participants to discharge their entire remaining student loan debt after making payments on it for just 10 years
There is a major caveat to President Obama’s updates, however, in that the extremely popular Pay As You Earn Repayment Plan is still currently only available to those borrowers who first received Federally-funded student loans on or after October 1st, 2007.
President Obama later expanded availability of the Obama Student Loan Debt Reforms to all borrowers, and now anyone with Federal Student Loan Debt can enroll in the REPAYE Student Loan Repayment Plan, which offers similar benefits to Pay As You Earn.
President Obama later extended the loan forgiveness benefits offered under PAYE were expanded and made available to everyone via the introduction of the REPAYE Program, which allows everybody with Federal student loans to start working toward earning forgiveness benefits.
The way that REPAYE works is that you have to agree to make monthly student loan payments in an amount based on your annual income (the more you make, the more you pay), and after you’ve made 240 payments on time, and in full, you’ll be offered complete forgiveness on whatever amount of money you still owe.
This plan is an excellent option (and the only option) for people who don’t qualify for any of the other forgiveness benefits offered below, but the biggest downside to it is that you WILL OWE TAXES to the IRS on whatever amount of debt you get forgiven.
The Obama administration made significant increases to loan forgiveness benefits creating paths to 100% forgiveness (where applicable), to qualified persons who:
First borrowed on or after October 1st, 2007 (via the Obama Loan Forgiveness Program and the Pay As You Earn Student Loan Repayment Plan)
Is willing to enroll in one of the Income-Based Based Federal Student Loan Repayment Plans, like the Income-Based Repayment Plan, Income-Contingent Repayment Plan or REPAYE Student Loan Repayment Plan)
Works in Public Service (via the Public Service Loan Forgiveness Program)
Works as a Nurse (via PSLF, the Nurse Corps Loan Forgiveness Program, or the Perkins Loan Forgiveness for Licensed Medical Technicians Program)
Works as a Doctor or Dentist (via the NHSC Students to Service Loan Repayment Program)
Works as a Teacher (via PSLF, Federal TEACH Grants, Perkins Loan Forgiveness & Stafford Loan Forgiveness Programs)
Works for the Government (via the Government Employee Loan Forgiveness Program)
Works at a Non-Profit (via Non-Profit Student Loan Forgiveness Program)
Serves in the Military (via a suite of Military Student Loan Forgiveness Programs)
Serves in the Peace Corps or AmeriCorps (via the Public Service Loan Forgiveness Program)
Is permanently disabled (via the Total and Permanent Disability Discharge Program)
Holds debt from a school that closed before they could finish (via the Closed School Discharge Program)
Can prove that they were lied to, promised something they did not receive, deceived or legally taken advantage of in some way (via the Borrower’s Defense Against Repayment Program)
As you can see, President Barak Obama created all sorts of options for pursuing Federal student loan forgiveness (100% where applicabe), and the hard part isn’t qualifying for one of these programs, but deciding which one of the programs will work best for you.
No Student Loans Have Been Forgiven Under The Trump Administration
Since Trump took office, student loan forgiveness in cases of possible fraud has come to a screeching halt, according to Department of Education records. The records show that nearly 65,000 people applied for loan forgiveness- under the Obama-era Borrower’s Defense Against Repayment Program- since Trump took office. None of those applications have been approved.
This inaction isn’t the only time Trump’s Department of Education has halted student loan forgiveness. In June, the department also announced its decision to delay and rewrite the borrower defense to repayment rule, an Obama-era rule that would have made it easier for students to have their loans forgiven if they were deceived by their schools. That rule was set to go into effect July 1, but it was indefinitely postponed.
Now President Trump is reportedly set to rescind the Obama Borrower’s Defense Against Repayment rule altogether.