The rule is a big step forward but has some significant flaws. Here is Public Citizen's press release:
An effort calling on the U.S. Department of Education to halt federal funding for predatory schools that deny students’ access to the courts reached a milestone today, as the department released a proposed rule designed to protect students who have been victimized by predatory colleges and career training programs.
The department’s proposal includes a provision that would condition federal aid on a school’s agreement, under some circumstances, not to force students into private arbitration when they have a legal claim against the school.
Predatory colleges and career training programs have long engaged in fraud when recruiting and enrolling vulnerable students, many of whom rely on federal loans to get an education. These schools have largely gotten away with fleecing their students and U.S. taxpayers by requiring students, as a condition of enrollment, to waive the right to go to court to resolve future disputes with the schools, and instead requiring students to bring cases through binding arbitration.
“The Department of Education’s proposed rule is an important step toward turning the tide on the use of forced arbitration by predatory for-profit schools,” said Julie Murray, attorney for Public Citizen. “The proposal would save U.S. taxpayers money and help to make whole the thousands of students who are being swindled by hucksters masquerading as schools. We do, however, have concerns that the department’s proposal would continue to permit schools to use pre-dispute arbitration agreements against vulnerable students by portraying the agreements as ‘voluntary,’ even when students feel compelled to sign them.”