The deadline for receiving comments at www.regulations.gov is one minute before Midnight tonight! Post your own comments. Use the hyperlink below. Here's a comment that I posted there today:
August 30, 2018
Re: RIN: 1840-AD26
Federal Register Number: 2018-15823
ID: ED-2018-OPE-0027-0001
"Student Assistance General Provisions, Federal Perkins Loan Program, Federal Family Education Loan Program, and William D. Ford Federal Direct Loan Program"
To the Department of Education:
This comment letter addresses your proposed new Section 685.206(d)(1) and your stated policy goals in proposing it. These comments on Section 685.206 follow my earlier comments on Sections 668.41 and 668.175.
Your Proposed Rule document describes new Section 685.206(d)(1) and your purpose in proposing it, as follows:
Proposed § 685.206(d) would establish a new uniform standard not based upon applicable State law, also referred to here as the “Federal standard” for a borrower's defense to repayment discharge on a Direct Loan first disbursed on or after July 1, 2019. First, § 685.206(d)(1) would define terms applicable to the Federal standard, including the term “borrower defense to repayment.” Consistent with the Department's current interpretation that it is not appropriate for the taxpayer to face potential loss based on action by schools in matters unrelated to the Department's loan programs, this definition would provide that a borrower defense to repayment discharge must directly and clearly relate to the making of the Direct Loan, or the making of a loan that was repaid by a Direct Consolidation Loan, for enrollment at a school or the provision of educational services for which the loan was obtained.
[Emphasis added.]
In the course of "establishing a new uniform standard not based upon applicable State law," your proposed language would eliminate defenses currently available under applicable State law. Your proposed regulation does not inform of this result nor express publicly this intent.
Further, as a matter of policy there is no good reason why defenses to repayment should not include defenses other than those that "directly and clearly relate to the making of either "the Direct Loan" or to "a Direct Consolidation Loan," which includes potential defenses for example that the school's actions were unfair, fraudulent, or deceptive under applicable State law even though such reprehensible conduct may have induced students to enroll and thus become "borrowers" who should under the circumstances be able to raise the school's reprehensible conduct in that regard, as a defense to repayment of loans.
To the contrary, as a matter of policy there are affirmatively good reasons why defenses to repayment should include defenses of the kind I have mentioned, among so many others which I have not mentioned here due to time and space limitations. It is enough for the present purpose to mention those which have been mentioned above.
Finally, your Proposed Rule document sets out insufficient grounds for your promulgation and proposal of this new Regulation. There is no good basis, at least among any of those which you mention (and you probably mention all the available reasons, such as they are), for expanding the reach of the federal government and supplanting State laws with federal regulatory administration such as you contemplate in your new Section 685.206.
For all these reasons, whether taken separately or together, the proposed new language in Section 685.206 should be withdrawn and not be officially published.
Thank you for your consideration of these comments.
Sincerely Yours,
Dennis J. Wall, Esquire
Dennis J. Wall
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