(Adds education secretary DeVos quotes, details on regulation)
By Lisa Lambert
WASHINGTON, June 14 U.S. Education Secretary
Betsy DeVos on Wednesday called for a "regulatory reset," and
pressed pause on a rule intended to speedily cancel the
student-loan debts of people defrauded by for-profit Corinthian
Colleges Inc and others, so that it can be rewritten.
DeVos said the department is still granting debt relief that
the students are entitled to by law as expeditiously as
possible, and some borrowers should expect to obtain discharges
within the next several weeks. The Education Department is
processing 16,000 claims for relief.
DeVos, a Republican and advocate of public-private
partnerships in education, said she was delaying the effective
date of the rule on accelerating the process, which was enacted
at the end of last year under the administration of former
President Barack Obama, a Democrat.
"Unfortunately, last year’s rulemaking effort missed an
opportunity to get it right," DeVos said in a statement. "The
result is a muddled process that's unfair to students and
schools, and puts taxpayers on the hook for significant costs.
It’s time for a regulatory reset."
Obama overhauled federal student lending, moving it from the
banks to the Education Department and also trying to prevent
students from taking out loans they could not repay after
graduation. He specifically targeted for-profit, career colleges
that promise students they will find jobs post-graduation and
can charge high tuition.
The reforms became a hot-button issue in last year's
presidential campaign, with Democrats seeking to preserve them
and Republicans such as then-candidate President Donald Trump
saying the U.S. government should "get out of the business" of
In recent weeks states and Democratic lawmakers have pressed
DeVos on the "borrower defense" rule, saying thousands of
student have been caught in limbo as the Education Department
slowly grants discharges.
They have especially been concerned about growing backlogs
of relief applications and of loans approved for discharge that
simply need a sign-off. They say the delays force students to
keep up unaffordable monthly payments or face debt
Amid federal and state investigations in 2015 into its
post-graduation rates, Corinthian filed for bankruptcy and
abruptly closed its 28 schools. Many students were caught with
student loans they had taken out to pay for Corinthian tuition.
DeVos said she would also seek to redo a "gainful
employment" rule that was intended to help students avoid
enrolling in and taking out student loans for career colleges
that consistently fail to deliver on promises of job security
and high salaries for graduates.
(Reporting by Lisa Lambert; Editing by Grant McCool)