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: http://bit.ly/1YwSbAT
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