Final Borrower Defenses to Repayment Regulations Published

The Trump Administration has published final regulations governing the forgiveness of federal student loans to defrauded borrowers, known as the Borrower Defenses to Repayment regulations. The final regulations are scheduled to be implemented on July 1, 2020, and are unlikely to have a significant impact on private, nonprofit colleges and universities. The Department of Education has also prepared a summary of the final regulations.
 
Due to the long legal, political, and policy history of the Borrower Defenses to Repayment regulations, there will now be three different standards in place for aggrieved borrowers based on when their loans were disbursed.  The three thresholds are for loans disbursed:

• Prior to July 1, 2017 (Clinton Administration regulations);
• Between July 1, 2017 and before July 1, 2020 (Obama Administration regulations); and
• After July 1, 2020 (Trump Administration regulations).

The Borrower Defenses to Repayment regulations originated during the Clinton Administration in the mid-1990s. Following the rash of precipitous closures of several for-profit colleges in the mid-2010s, the Obama Administration responded by publishing updated regulations in 2016. One of the first actions of the Trump Administration was to delay the implementation of the Obama Administration’s regulations, a move that was later ruled by a federal court to violate federal administrative procedure rules. The recently published final regulations by the Trump Administration update the rules published by the Obama Administration in 2016.