Dive Brief:

• As the U.S. Department of Education deals with an influx of borrower appeals for low forgiveness from students attending for-profit schools, a panel of negotiators is considering adepartment proposal for a new federal standard in assessing such claims.
• The Chronicle of Higher Education reports the new standard, while creating a policy that is more uniform across state lines, is narrower than the existing rule, which simply requires borrowers to show their institution broke state law.
• The proposal also creates a two-year statute of limitations on borrower claims and expands the conditions that would prompt the department to demand a letter of credit from colleges and require the institution to notify enrolled and prospective students of the action.

Dive Insight:

The Education Department has been facing significant criticism from legislators and student activists arguing the government is worried about profits from the federal financial aid program more than the students it is tasked with protecting. While students have been able to win broad loan forgiveness agreements from some private lenders, the U.S. government has been harder to crack.

All students whose educational programs were disrupted by closing schools, like Corinthian and other for-profits, have a claim to loan forgiveness, and any students who attended those schools investigated for fraudulent activity could get the same. The Education Department has been wary of taking hefty losses on student debt. In the case of Corinthian, when the department awards debt forgiveness, it can’t recover any of that money by suing the institution, as Corinthian went bankrupt.