Lawsuits filed in delay of student loan forgiveness regulations

Florida students who may have been defrauded by their colleges may have to wait longer than anticipated for regulations involving student loan forgiveness that would have come into effect on July 1. The “borrower defense to repayment” rules would also prevent colleges from requiring students with complaints to go through arbitration instead of the court system. While regulations already exist that prevent enforcement of student loans if a college has been guilty of misconduct, the Obama-era regulations were intended to make the process clearer and more consistent.

In June, the regulations were delayed after for-profit colleges mounted a legal challenge against them. On July 6, the District of Columbia and 18 states filed a lawsuit against Education Secretary Betsy DeVos for the delay. The same day, consumer groups filed a lawsuit as well. The lawsuits are asking that the administration be forced by the federal court to enforce the regulations.

The legal issues will look at whether the Trump administration can legally delay regulations once they are finalized. According to DeVos, one section of the Administrative Procedure Act allows this delay under certain circumstances.

Student loans usually cannot be discharged through bankruptcy, although there are exceptions for extreme hardship. However, a person who has no other recourse for student loan forgiveness might be able to pay off those loans if other obligations could be managed. People who are overwhelmed by credit card debt, for example, may want to consider filing for bankruptcy. In a Chapter 13 bankruptcy, people may be able to keep many of their assets by working out a plan to pay creditors back over three or five years. a lawyer can outline the eligibility and other requirements of that chapter.