WASHINGTON — Education Secretary Betsy DeVos proposed on Wednesday to curtail Obama administration loan forgiveness rules for students defrauded by for-profit colleges, requiring that student borrowers show they have fallen into hopeless financial straits or prove that their colleges knowingly deceived them.
The DeVos proposal, set to go in force a year from now, would replace Obama-era policies that sought to ease access to loan forgiveness for students who were left saddled with debt after two for-profit college chains, Corinthian Colleges and ITT Technical Institute, imploded in 2015 and 2016. The schools were found to have misled their students with false advertisements and misleading claims for years.
Afterward, the Obama administration forgave hundreds of millions of dollars in student loans and began rewriting regulations to crack down on predatory institutions and bolster borrowers’ ability to seek debt relief from the federal government. But higher education institutions, including historically black colleges and universities and for-profit educators, maintained that the new rules were far too broad and subjected them to frivolous claims that carried significant financial risks.
