Cooper and Attorneys General Push Education Department for Greater Student Debt Reforms
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Cooper and Attorneys General Push Education Department for Greater Student Debt Reforms

March 22, 2016

North Carolina Attorney General Roy Cooper and his peers from 18 other states are pushing the U.S. Department of Education to make it easier for students who are trapped by predatory student loans.

The federal government is considering new rules for student loan debt relief and state attorneys general are pushing officials to do more to make relief process less confusing and simpler.

"After years of abuse and deception by predatory for-profit schools, we join in the belief that the borrower defense rule will provide a means to help restore accountability for taxpayers and fairness for students," the attorneys general wrote in a letter to Acting Secretary John King.

Cooper, a Democrat, is challenging Republican Governor Pat McCrory this fall. Cooper and his peers are seeking specific reforms, including:

  • Letting students continue to use violations of state as well as federal law to make their claim for debt relief. State laws cover a number of problematic practices that can impact student loans, such as debt collection, misleading advertising, and other unfair business practices.
  • An automatic and timely review by the US Department of Education whenever it learns of a state or legal aid investigation involving unfair student lending, so that students don't have to wait years for cases to resolve before they can seek relief.
  • Allowing students to use judgments or settlements won by attorneys general or other government agencies to help make their case for debt relief.
  • No time limits for fraud victims to seek student loan debt relief. Student victims are often unfamiliar with their legal rights and may not learn about the violations against them until long after the current statute of limitations has expired. There is no time limit for collecting on federal student loans, and there should not be a time limit for eliminating fraudulent ones.

Several of the reforms sought by state attorneys general have now been added to the proposed rules, including:

  • A streamlined process for granting student loan relief when a school has defrauded many students. Under the new rules, all of a school's students can be considered for debt relief as a group rather than having to apply individually.
  • Changes to ensure that the discharge of student debt is not an adversarial process that pits students against schools.
  • Limits on the use of binding arbitration agreements by schools, which can keep students from exercising their legal rights.

Consumers can get tips on student loans or report student loans scams to the North Carolina Attorney General's Office.