UNCF Statement on U.S. Department of Education’s Borrower Defense Rule

UNCF (United Negro College Fund) President and CEO Dr. Michael L. Lomax issued the following statement on the final Borrower Defense to Repayment regulation released on Oct. 28, 2016, by the U.S. Department of Education:

“The U.S. Department of Education has issued an extensive, 928-page final regulation aimed at providing debt relief to thousands of students impacted by the closure of Corinthian Colleges and other institutions that defrauded them; protecting students from additional abuses; and securing financial protections from colleges for loan forgiveness liabilities.

“UNCF and our member institutions have engaged in a year-long effort to provide data and analysis; input and feedback on the earlier borrower defense regulatory proposals through formal comments and meetings with White House and departmental officials, including Department of Education Secretary John King, Jr., in order to mitigate unintended consequences of the broad sweep of these regulations on the nation’s historically black colleges and universities (HBCUs). Students seeking forgiveness of federal student loans are largely not those attending and graduating from HBCUs, which for 150 years have provided quality and caring educational environments for their students. We appreciate the consideration given to our views by the Obama Administration and its outreach to UNCF.

“In particular, we are pleased that the department significantly revised the financial responsibility sections of the final regulation to eliminate some damaging automatic penalties, based on past accreditation status, on HBCUs and other institutions that are serving students well. In addition, the integration of new letter of credit requirements with existing financial responsibility standards—eliminating overlapping requirements that measure a college’s financial viability—is an improvement over the draft regulation. We are disappointed, however, that the administration leaves the door open to new financial disclosure requirements, which could have negative consequences for under-resourced private, non-profit institutions.

“UNCF supports the department’s efforts to provide a clear and consistent process for debt relief for students who have been defrauded by their colleges, and we applaud a related announcement to restore semesters of Pell Grant eligibility to students unable to complete their educational programs due to school closure. The final regulation incorporates additional guidance regarding how the department will determine amounts of debt relief afforded to students, including the value of any educational services provided; however, the department’s failure to establish clear standards for determining levels of debt relief could lead to significant inequities for students and institutions if borrowers with similar circumstances are treated differently.

“Further, while the final regulation incorporates desirable institutional appeal and due process rights for both debt relief and financial responsibility, it does not go far enough to provide opportunities for engagement for institutions or detail explicit timeframes by which the department will make loan forgiveness determinations.

“The bottom line is that the final borrower defense regulation–nearly doubling in size since the June 2016 proposal—remains an enormously complex set of intersecting rules and requirements for both students and institutions. It will take some time to fully unpack and understand the ramifications and risks of this regulation for HBCUs and other vulnerable institutions that face financial challenges. Whether the department has found the appropriate balance among protecting the interests of students, colleges and universities and taxpayers remains to be seen.”


About UNCF
UNCF (United Negro College Fund) is the nation’s largest and most effective minority education organization. To serve youth, the community and the nation, UNCF supports students’ education and development through scholarships and other programs, strengthens its 37 member colleges and universities, and advocates for the importance of minority education and college readiness. UNCF institutions and other historically black colleges and universities are highly effective, awarding nearly 20 percent of African American baccalaureate degrees. UNCF awards more than $100 million in scholarships annually and administers more than 400 programs, including scholarship, internship and fellowship, mentoring, summer enrichment, and curriculum and faculty development programs. Today, UNCF supports more than 60,000 students at over 1,100 colleges and universities. Its logo features the UNCF torch of leadership in education and its widely recognized trademark, “A mind is a terrible thing to waste.”® Learn more at UNCF.org, or for continuous news and updates, follow UNCF on Twitter, @UNCF.