The Department of Education is preparing to finalize a law that will allow for college students to sue their schools if they feel they were defrauded. However, the law does not require that the colleges themselves pay. Instead, the bill could fall on taxpayers, leaving them responsible to pay back millions of dollars in student loans.
Today, fraud allegations against colleges are not uncommon. Millennials graduate with mountains of debt only to find limited job prospects and no way to pay off thousands of dollars in student loans. Disgruntled with their alma maters and feeling as though their degrees were useless, many students file suit against their colleges.
The DOE’s new law would be disastrous for colleges and universities if passed. According to administration estimates, it would lead to petty lawsuits and could cost taxpayers over $42 billion over the next 10 years.
Sen. Lamar Alexander (R-Texas) is concerned about the passing of the law.
“If your car is a lemon, you don’t sue the bank that made the auto loan — you sue the car company — and if students feel they were defrauded by their college, the legal system exists for them to seek justice,” Alexander said.
The law would forgive student debt if it is ruled the college made a “substantial misrepresentation” to the accusing student. Time points out that the normal and legal definition of fraud – “with an intent to deceive” – will not play a role in the court proceedings.
Just as colleges cannot be held accountable for poor job markets, the new law could open them up to be sued for ex-students’ laziness or lack of initiative. Under the new rulings, no judge would hear the claims. Instead, these suits would be handled by a DOE hearing examiner.
Rep. John Kline (R-Minn.) is unimpressed with the new law. “Taxpayers will be on the hook for billions of dollars in discharged loans, and ultimately, students will have a harder time accessing the education they need to succeed in life,” he said.
While colleges do have the responsibility to be honest with students who are paying thousands of dollars to attend, this potential law has received much criticism for being too vague and too costly – especially for taxpayers.
