On Aug. 30, the U.S. Department of Education established new regulations to protect student borrowers.
These updated regulations will protect student borrowers from misinformation and hold higher education institutions responsible if borrowers have been misled. The Department of Education also plans to provide taxpayers with financial protections, which it estimates will save them $11.1 billion over the next decade.
69% of college students in the class of 2018 took out student loans, and the class graduated with an average debt of $29,800, according to Student Loan Hero. The total student loan debt in the U.S. adds up to more than $1.56 trillion.
The new regulations will enable borrowers who apply to all federal student loans on or after July 1, 2020 to assert borrower defense to repayment, which would allow borrowers to apply for loan forgiveness. It will set a stricter standard for borrowers to prove they were misled by their institution. This event means, with the new regulations taking happening, the Obama administration “Borrower Defense” policy will be rescinded. The Obama administration “Borrower Defense” policy determined whether a borrower has a defense to repayment on a loan from an institution that misled them.
The final institutional accountability regulations that begin on July 1, 2020 will allow borrowers to submit “borrower defense to repayment” claims against institutions despite having a loan in default or collections. The new regulations taking place will give borrowers sufficient time to file claims. Borrowers have up to three years of graduation date or withdrawal date to submit claims.
The regulations will also help taxpayers with a net federal budget savings of $11.1 billion, including up tor almost $10 billion to make changes to the regulations and $1.3 billion for closed institutions according to the Department of Education. This means with the new regulations in place, the Department of Education will be able to approve fewer “Borrower Defense” claims. It will allow the student loan forgiveness amount to be reduced by $512 million a year, according to Politico.
Stephanie Rovello, a representative from the Financial Aid Office at Stony Brook University, said Stony Brook tries to educate students about loans.
“Students who are first-time federal loan borrowers are required to complete loan entrance counseling prior to our disbursement of loan funds,” she said. “This counseling is provided in the form of an online tutorial that teaches students about their rights and responsibilities as borrowers.”
Rovello also mentioned that, “when students either graduate or stop attendance at the university, they are provided with a loan exit counseling packet which provides useful information and directs them to the federal direct loan website for additional exit counseling. We have every confidence that we are providing accurate responsible guidance to our students.”
About 60% of Stony Brook University undergraduate students are receiving federal state local aid, according to the 2018-2019 Stony Brook Financial Aid Fact Book.
Catherine Haggerty, a junior linguistics major, hopes the university is leading her in the right direction.
“I would think, and hope to think that SBU hasn’t violated any laws or misled me, in which case it would be irrelevant because I’m still gonna have to pay the loans back anyway,” Haggerty said. “I just look at it as that the majority of people with an education are in student debt or have been at one time, and it’s the price to pay if you want to be educated.”
Michael Crespo, a senior business management major, said he plans to be more careful when applying for loans.
“I’ve been one to fill out FAFSA and kinda take what’s given to me without question,” Crespo said. “This will make me want to do more research.”