U.S. Department of Education finalizes "borrower defense to repayment" rules effective 1 July 2020

On 23 September 2019 the U.S. Department of Education (ED) published final regulations concerning, among other things, "borrower defense to repayment" claims for federal student loans first disbursed on or after 1 July 2020, certain "triggering events" under ED's financial responsibility rules, disclosures related to predispute arbitration agreements and class action waivers, and closed-school discharges (the 2019 Final Rules).

With very limited exceptions (related to optional early implementation of modifications to ED's composite score methodology), the 2019 Final Rules become effective on 1 July 2020 – meaning institutions must continue to comply with ED's 2016 Final Rules, which are now in effect, until that date. (For more information about the 2016 Final Rules currently in effect, including related reporting requirements under the financial responsibility rules, please see our previous alerts.) Like the 2016 Final Rules, the 2019 Final Rules apply to all institutions that participate in the Title IV federal student financial aid programs.

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