Coalition Opposes Dept of Ed Backdoor Student Loan Bailout

Image: 

American Commitment is leading a coalition of 18 national taxpayer organizations, representing millions of members and supporters, in requesting that a new Department of Education rule be immediately withdrawn.  The coalition contends that Congress should take up the issue.  The proposed “Defense to Repayment Regulations” rule, which was published in the Federal Register on June 16 and is allegedly meant to protect students, will actually harm taxpayers and students immensely.

In a letter sent to Education Secretary John King, Jr., the coalition states: “The cost to taxpayers will run well into the billions of dollars.  The ED’s own analysis in the proposed rule found ‘a net budget impact in costs over the 2017-2026 loan cohorts ranging between $1.997 billion in the lowest impact scenario to $42.698 billion in the highest impact scenario.’”

“We do not need another federal bailout.  The existing rules were designed to permit students to sue for loan forgiveness when they were victims of intentional fraud or another violation of state law,” said Phil Kerpen, president of American Commitment.  “But these newly proposed rules are so broad and vague that complaints will proliferate based on innocent errors and alleged misunderstandings—with the costs shifted to federal taxpayers.”

“When a regulation claims to cost taxpayers $2 billion to $43 billion you can assume the agency actually has no idea what the final price tag will be – but it won’t be cheap,” said Kerpen.  “Forcing taxpayers to pay for bad student loans is wrong.”

The letter continues: “Schools will have little recourse to defend against the allegations. Determination of whether an institution has made a ‘substantial misrepresentation’ to a student or group of students is made unilaterally by an ED hearing examiner….Such an enormous commitment of federal taxpayer dollars should not be made through agency rulemaking, but by Congress which is elected by the American people and is responsible under the Constitution for exercising the power of the purse.”

American Commitment is also organizing a public comment campaign to the Department of Education. Citizens can take action here.

Taxpayer Groups Oppose "Defense to Repayment" Student Loan Bailout