Under a proposed rule from the Department of Education, your student loans could disappear into thin air.
This could be a real relief for many Americans, according to Pew, the average student debt is more than 26 thousand dollars. Under the proposed rule if the school loses in a legal case, or fails to meet the obligations of a contract that has misrepresented itself, a student could bring a case to an education department official who would rule on whether or not the school must forgive the loans.
Holding schools' accountable, sounds good right?
Well, on the face of it, it does, but the devil is in the details.
Despite being more than 300 pages the language of the proposed rule is extremely vague. It never defines what exactly it means to misrepresent. So universities are left to wonder if they would have to forgive loans if they cut a class that was listed in the course guide or if graduate salaries decrease from what they told students when they enrolled.
These questions about what would force a school to forgive loans are decided by the Education Department official, not a judge, not a jury.
This vagueness could be a field day for companies looking to make a fast buck, some have already started placing ads telling students they could have their debt forgiven. And they aren't just targeting for-profit schools, your local state college could be on the hook as well.
A former college president from a school with a small endowment says this rule could financially ruin them and disproportionately hurt minorities.
The rule isn't all bad but if exploited your student debt might not be the only thing disappearing, your school may vanish too.