Dept. of Education to put halt to 'borrower defense' rule

June 16, 2017

The U.S. Department of Education announced it will halt the so-called "borrower defense" rule instituted under the Obama Administration. As ILR posted last year, the rule could have made for-profit universities a target of the litigation industry.

Among other provisions, the rule would have defined an college or university as “financially irresponsible” if it was sued by a state, federal or other government entity for $750,000 or 10 percent of the university’s assets. That could open up the colleges and universities to lawsuits.

Forbes columnist Preston Cooper last year wrote that, "Under this standard, an attorney general could hold a college hostage, possibly for years, without having to prove anything."

The rule was set to take effect on July 1, but the department said it will create committees to review the rules.