The U.S. Department of Education has  announced that it is postponing  “until further notice” the July 1, 2017 effective date of various provisions of the “borrower defense” regulation issued last November.  One of these provisions is a ban on arbitration agreements and class action waivers.  The Department’s Federal Register notice lists the specific provisions, which are those “pertaining to the standard and process for the Department to adjudicate borrower defense claims, requirements pertaining to financial responsibility standards, provisions requiring proprietary institutions to provide warnings about their students’ loans repayment rates, and prohibitions against institutions including arbitration or class action waivers in their agreements with students.”  The Department is retaining the July 1 effective date for several minor provisions, such as those concerning the documentation that can be used for granting a discharge based on a borrower’s death.
The Department also announced that it plans to establish two negotiated rulemaking committees, one to  revise the “borrower defense” rule and the other to revise develop proposed revisions to the “gainful employment” rule that took effect in July 2015 and requires schools to disclose material information to students, such as graduation rates, earnings of graduates, and  how much debt students incur.
These announcements followed a lawsuit by the California Association of Private Postsecondary Schools seeking to invalidate the “borrower defense” rule.