Trump veto backs DeVos in battle for relief from scammed student loan borrowers
US President Donald Trump backed his Education Secretary Betsy DeVos on Friday night in a battle over how to help student loan borrowers who say they were scammed by their colleges.
Asset vetoed a bipartisan bill this would have required the Department of Education to implement an Obama-era version of the Borrower Defense Rule, a legal process borrowers can use to have their student loans canceled if they believe they have been defrauded by their colleges.
The veto is the latest in a multi-year controversy over the rule. Although on the books since the 1990s, the provision was rarely used until 2015, when amid the collapse of the leading for-profit university chain, Corinthian Colleges, borrowers began to claim relief under the law. In response to these debtors and pressure from the lawyers who organized them, the Obama administration created a process that borrowers could use to file claims under the law.
Tens of thousands of borrowers from other for-profit colleges, including the now defunct ITT Technical Institute, have applied for relief under the law, claiming their colleges are using deceptive placement and graduation rates to inducing them to take out student loans, among other allegations.
Under DeVos, the Ministry of Education has increased the burden of proof for borrowers seeking redress, requiring them, among other provisions, to provide proof that they have suffered financial harm as a result of actions of their schools. Borrower advocates have argued that the DeVos version of the rule will make it difficult to obtain relief for scammed borrowers.
The DeVos-era Department of Education and its supporters argued that their version of the rule would correct the Obama administration’s “overbreadth” and save taxpayers $ 11 billion over the next 10 years.
The bill, adopted by the House in January and the Senate in March with the support of several Republican senators would have forced the Department of Education to implement the Obama-era version of the rule.
If lawmakers are unable to override Trump’s veto, the DeVos version of the rule will take effect on July 1.
(Andy Keshner contributed reporting for this article.)