NAICU Washington Update

Borrower Defense Proposed Regulations Published

June 13, 2016

The proposed rule on Borrower Defense to Repayment (BDR) will be published for public comment on June 16 in the Federal Register. The unofficial preview was released by the Department of Education on June 13. The regulations are designed to provide for the conditions under which borrowers who believe they have been defrauded by an educational institution may petition the government to have their loan forgiven.

The proposed rule follows a series of negotiated rulemaking sessions this winter that sought to outline the conditions under which a borrower may apply for relief but also set out a process by which institutions may share in the liability for those loans. This latter step was taken in light of the collapse of Corinthian College to protect taxpayer liability by expanding the instances in which an institution may be required to obtain a letter of credit against its student loan portfolio.

NAICU will be analyzing the complex regulations and provide updates as warranted. There will be a 45-day comment period for the proposed rule.

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