The Department of Education has issued newly revised draft regulations proposing to amend regulations governing the William D. Ford Federal Direct Loan Program in part to “prohibit[] participating schools from using certain contractual provisions regarding dispute resolution processes, such as mandatory pre-dispute arbitration agreements or class action waivers, and to require certain notifications and disclosures by schools regarding their use of arbitration.” The proposed rule, which was issued in advance of a third (and possibly final) round of negotiated rulemaking, is here. Comments are due 45 days from June 16, and may be submitted electronically at www.regulations.gov.

This is an important development that would deal directly with the all-too-frequent situation where a predatory, for-profit school engages in fraudulent recruitment practices, provides substandard education which does not yield career advancement, and bars students from seeking redress in court through pre-dispute arbitration agreements which students are required to sign at the time of enrollment.

This particular rulemaking was first requested by Public Citizen, Inc., and is consistent with efforts of certain members of Congress to condition Title IV funding–about $128 billion annually–on a school’s agreement not to force students to agree to waive their right to sue in court, including as part of a class action.