Student-loan borrowers who are defrauded by their colleges could soon find it easier to get their debt forgiven and to sue their colleges for wrongdoing, under a proposed rule that the Education Department is set to issue on Thursday.
The draft rule, which was prompted by the abrupt collapse of Corinthian Colleges, in 2014, and closure a year later, would allow groups of students — not just individuals — to have their federal loans discharged in cases of fraud, and would ban the use of mandatory-arbitration clauses that can force borrowers to settle claims against their colleges out of court.
The rule would also require colleges that engage in misconduct or show signs of financial distress to post letters of credit to the Department of Education, and to disclose their problems to current and prospective students. For-profit colleges with low loan-repayment rates would have to issue warnings to students, too.
Read more at The Chronicle of Higher Education: http://chronicle.com/article/US-Proposes-Easier-Path-to/236787