April 29, 2016

Reed, Whitehouse Urge Department of Education to Give Protection and Relief to Student Borrowers Who Fall Victim to Unlawful and Unfair Practices in Higher Education

In letter, Senators call for “borrower defense” rule to ban mandatory arbitration clauses in enrollment agreements

Washington, D.C.Today, Senators Jack Reed and Sheldon Whitehouse joined with 28 Senate Democrats to write to Secretary of Education Dr. John King urging him to create strong protections and a streamlined path to debt relief for student loan borrowers in the Department’s forthcoming “borrower defense” rule.  The letter reinforces the need to ban mandatory arbitration—which limits students’ legal rights—in school enrollment agreements, and to provide debt relief for students who are victims of unlawful, unfair, deceptive, or abusive practices in higher education.  The letter also calls for giving students the right to use state consumer protection laws to receive relief and hold institutions accountable.

“We believe strongly that it is time to improve the accountability system for our colleges and universities that collectively receive $150 billion in federal student aid revenue each year,” the Senators wrote in the second letter in their series of college accountability efforts.  “This rule is a significant opportunity for the Department to improve upon proposals that were presented to negotiators and to further strengthen the outcome for students…We strongly encourage you to hold colleges accountable by banning mandatory arbitration requirements as a condition of the receipt of federal taxpayer dollars.”

During a negotiated rulemaking process this spring, negotiators discussed various proposals for how to provide defrauded borrowers with debt relief but were unable to reach agreement.  The Department is now charged with producing a draft rule by July 1 and a final regulation by November 1 that goes into effect next year.

On the letter, the list of co-signers include: Senators Patty Murray (D-WA), Tammy Baldwin (D-WI), Richard Blumenthal (D-CT), Barbara Boxer (D-CA), Sherrod Brown (D-OH), Ben Cardin (D-MD), Tom Carper (D-DE), Bob Casey (D-PA), Chris Coons (D-DE), Richard J. Durbin (D-IL), Dianne Feinstein (D-CA), Al Franken (D-MN), Kirsten Gillibrand (D-NY), Mazie K. Hirono (D-HI), Amy Klobuchar (D-MN), Patrick Leahy (D-VT), Jeff Merkley (D-OR), Barbara A. Mikulski (D-MD), Chris Murphy (D-CT), Bill Nelson (D-FL), Gary Peters (D-MI), Jack Reed (D-RI), Bernard Sanders (I-VT), Brian Schatz (D-HI), Charles Schumer (D-NY), Jeanne Shaheen (D-NH), Debbie Stabenow (D-MI), Elizabeth Warren (D-MA), Sheldon Whitehouse (D-RI), and Ron Wyden (D-OR).


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