Bureaucrats to Dump Billions in Student Loans on Taxpayers
Regulations are flying out the door in in Washington, where an already hyper-aggressive Obama administration is looking at its last chance to move its agenda forward while sidestepping the Republicans in Congress.
Many of the expensive rules in areas like energy, health care, and finance have drawn widespread public and media scrutiny —- which makes it all the more curious that what is likely to be the single most expensive proposed regulation of the year, a Department of Education rule that would discharge billions in student loans, has gone almost completely unnoticed.
The proposed rule, titled the “Borrower Defense to Repayment Regulations,” would create a stampede to file claims for loan forgiveness based on a newly broadened, vague standard requiring only that a plaintiff allege a school made a “substantial misrepresentation.” This phrase is defined broadly as any “statement” or “omission” with a “likelihood or tendency to mislead under the circumstances.”
For decades students have been able to apply for loan forgiveness when they were victims of intentional fraud or another violation of state law. The proposed rule ditches the requirement that there be any actual legal violation, substituting in a new standard so vague that complaints will proliferate based on innocent errors and alleged misunderstandings —- with the costs shifted either onto schools or, ultimately, to federal taxpayers. – READ MORE