Skip to main content
Menu Icon
Close

InfoBytes Blog

Financial Services Law Insights and Observations

California AG Harris: Department of Education Should Revise Regulations to Protect Students Defrauded by For-Profit Colleges

State Attorney General Student Lending Department of Education Agency Rule-Making & Guidance

Consumer Finance

Last week, California AG Kamala Harris requested that the Department of Education revise its proposed regulations regarding debt relief for students allegedly misled by “predatory” and for-profit colleges that advertise inflated job placement rates and asked that the Department “do more” to protect the students affected. Defrauded students have a right under Federal law to have loans discharged when their schools engage in misrepresentations and other unlawful conduct. According to AG Harris, the process for asserting this right is unclear. While the Department has emphasized that it intends to enforce an effective and streamlined loan discharge process to provide students’ relief, in the second of three negotiated rulemaking sessions, the Department “unveiled proposed language that contradicts the intent of previous discussions by narrowing, limiting, and delaying student relief.” In response to the Department’s proposal, Harris called on the Department to revise its regulations in a manner that ensures “fair and effective defense-to-repayment procedures.” Specifically, AG Harris commented that the procedures must (i) refer to state law for a basis to assert a defense; (ii) not include a statute of limitations for borrowers to assert a defense to repayment; (iii) provide procedures for broad and instantaneous relief to student borrowers affected by schools’ deceptive practices; and (iv) ban schools from making the discharge process burdensome and expensive.