Federal judge rejects challenge to 2016 borrower-defense rule, clearing the way for new benefits for borrowers, including tens of thousands who attended defunct for-profit colleges.
A federal judge on Tuesday rejected a challenge from a for-profit college group to an Obama administration rule governing loan forgiveness for defrauded borrowers, clearing the way for the rule to take effect.
The ruling on the regulation, known as borrower defense, is seen as a major win for students by consumer groups. The rule would ban colleges from enforcing arbitration provisions of enrollment agreements. And it could make it easier for many student borrowers to receive loan forgiveness. But those benefits will also depend on how the Education Department, which has sought for the past two years to roll back the regulations, carries out provisions of the rule.
Tens of thousands of borrowers — most of them former for-profit college students — are waiting for rulings from the department on loan-forgiveness claims under the rule, which also encompasses actions of institutions far beyond student loan forgiveness.
“Countless borrowers around the country have been counting on this rule to go into effect,” said Julie Murray, a lawyer at Public Citizen who helped argue a lawsuit brought against the department by several consumer groups and state attorneys general. “Today is a huge victory for them.”