Recently, the Department of Education, under the Obama administration, proposed a new federal rule that would allow student borrowers to have their federal student loans forgiven in cases of fraud. See, e.g., Patrick Torphy, Obama Plan Eyes Debt Relief for Defrauded Students, PBS (June 15, 2016). In essence, the proposal was designed “to protect student loan borrowers from misleading, deceitful, and predatory practices of, and failures to fulfill contractual promises by, institutions participating in the Department’s student aid programs.” 34 C.F.R. § 30, 668, 674, 682, 685 & 686 at 4-5, available at (last visited June 16, 2016). Several key provisions of the proposal include, but are not limited to:
- Barring universities that accept federal funding from forcing students into mandatory arbitration agreements
- Requiring universities experiencing financial distress or facing major consumer lawsuits to prove their solvency to the Department of Education
- Obligating “financially risky” universities to warn their students if alumni are struggling to repay their loans
- Prohibiting the use of class action lawsuit waivers for students
- Requiring universities to disclose and notify of arbitration filings and awards and
- Mandating that universities with student loan repayment rates that are less than or equal to 0% provide warnings to prospective and enrolled students and place such warnings on their websites, all promotional materials, and advertisements.
See Obama Plan Eyes Debt Relief for Defrauded Students; see generally 34 C.F.R. §§ 30, 668, 674, 682, 685 & 686.
This latest proposal comes about a year after the for-profit Corinthian Colleges empire collapsed, leaving about 16,000 students empty handed without any job prospects or marketable degrees, aside from insurmountable student loan debts. See Obama Plan Eyes Debt Relief for Defrauded Students. Since the downfall of Corinthian Colleges, more than 23,000 student loan borrowers from for-profit colleges filed “borrower-defense claims” with the Education Department. Id. That being said, however, as of late March, only a mere 10% of such borrowers have been granted loan forgiveness! Id. How can this happen? This appalling and tragic statistic further supports the need for this recent proposal to pass. If it does – which it most certainly should – the Obama administration intends for the rule to take effect in July of 2017. Id.
Yet, as discussed in the aforementioned paragraphs, this proposed rule only applies to federal student loans. What about your private student loans? What can you do? Where can you turn? Who can you trust?
You must call McCarthy Law immediately! We work directly with your private student loan lenders for significant reductions in your overall debt. We are the go-to law firm for all of your debt concerns. We know your private student loan lenders and we will fight for you every step of the way. We work for YOU – the private student loan lendee taken advantage by these predatory lenders. Call today and don’t delay!