Borrower Defense Neg Reg Day 4: Closed School and False Certification Discharge, Revisiting Standard of Evidence, Intent – NASFAA
On the final day of the second rulemaking session convened to rewrite a federal borrower defense to repayment, higher education stakeholders tackled the remaining issue papers, which addressed closed school discharge, false certification discharge, guaranty agency collection fees, and subsidized usage period recalculation. Members also revisited the first few issue papers in an attempt to resolve disagreements over new language around instituting a higher standard of evidence for students to prove they were misled by their institutions, as well as to settle a debate over whether students should have to prove a school’s malicious intent to qualify for loan discharge.
Building on the momentum of Wednesday’s session, committee members Thursday began the morning in a discussion about closed school discharges. While members offered a handful of proposals related to amending language around location closings and a time period for students to automatically qualify for a loan discharge, nothing was overwhelmingly supported by the committee.
Some negotiators expressed concern that schools with programs that are established to last a limited amount of years may be unintentionally targeted because students who do not complete the program in the allotted time will be eligible to have their loans discharged, despite the public acknowledgement of the program’s short term. A few members suggested that there be a distinction made between schools that close unexpectedly and those that close with proper warnings, to which federal negotiator Annmarie Weisman replied, “It doesn’t matter… there need to be some protections for students, and closed school discharge is one of those protections.”