Friday, June 17, 2016

Department of Education Proposes Banning Arbitration Agreements Between Schools, Student Loan Borrowers

The proposal is part of a larger rulemaking to protect student borrowers and taxpayers from “predatory” practices by postsecondary institutions.The U.S. Department of Education has proposed new regulations to strengthen its existing rule on student loan forgiveness, including a ban on the use of mandatory pre-dispute arbitration clauses and class action waivers.Under the proposed regulations, schools participating in the Direct Loan Program would be prohibited from requiring, through the use of contractual provisions or other agreements, arbitration to resolve claims brought by a borrower against the school, as well as from obtaining agreement that a borrower waive his or her right to initiate or participate in a class action lawsuit regarding such claims. In addition, Ed is also proposing to impose certain notification and disclosure requirements on a school regarding claims that are voluntarily submitted to arbitration after a dispute has arisen. More info here:

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