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Borrower Defense to Repayment: How Defrauded Students Can Seek Loan Forgiveness

Borrowers defrauded by their schools may seek loan forgiveness through borrower defense to repayment.
Jan. 3, 2020
Loans, Student Loans
Student Loan Discharge Eligibility Relaxes for Defrauded Borrowers
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Borrower defense to repayment is a federal student loan forgiveness program for borrowers whose schools violated certain laws, or defrauded or misled students. Borrowers can also get relief if their school closed before they could complete a degree.

» MORE: 10+ student loan forgiveness, cancellation and discharge programs

New rules are in effect to simplify borrower defense guidelines, making it easier to obtain loan forgiveness, and extend eligibility to existing borrowers who consolidated their loans. The rules also add financial responsibility and disclosure requirements for schools.

Rules were delayed for a time as state attorneys general and the Department of Education wrangled over implementation. But the borrower defense rules regarding fraud and misrepresentation went into effect on Oct. 16, 2018, after a federal court judge deemed the delays unlawful.

Borrowers who attended schools that closed before they could complete a degree got relief as of Dec. 14, 2018. The Department said $150 million in qualifying loans will be discharged, affecting 15,000 borrowers who attended schools that closed between Nov. 1, 2013 and Dec. 4, 2018. A majority were students at now-defunct Corinthian Colleges. Borrowers should receive a notification from the Department of Education. The process may take up to 90 days.

» MORE: Will your college choice leave you high and dry?

Do you qualify for borrower defense forgiveness?

You can submit a claim for borrower defense at any time. You might qualify for federal loan discharge under this program if your school:

  • Misled you in any way about your loans or education program
  • Violated certain state laws, such as consumer protection statutes or laws related to your loan or educational services

You can submit a claim whether or not your school closed and even if you’re eligible for other loan forgiveness programs. You can’t submit a claim for private loans or costs you paid out of pocket.

Not sure if you should apply? Find out if your school has been the subject of legal action by the federal government, state attorneys general or the Consumer Financial Protection Bureau.

“The biggest indicator is if the college has been sued or are they currently facing legal action for their practices,” says Robert Kelchen, assistant professor of higher education at Seton Hall University in South Orange, New Jersey. “Otherwise, it gets much more subjective: Is there clear fraud? Is there misrepresentation? That’s when it may take a court to decide.”

Forgiveness of loans, even those from the discontinued Federal Family Education Loan Program, should not be subject to a statute of limitations.

How to apply for borrower defense to repayment

You can submit a borrower defense to repayment claim application electronically at or by filling out a PDF and returning it to the Education Department via email or regular mail. Submission details are available on the federal student aid website.

To strengthen your claim, experts suggest submitting a detailed explanation of why your loans might qualify, along with any supporting evidence. This could include:

  • Confirmation of attendance
  • Emails or correspondence with school officials
  • Related promotional or school-produced materials

If you don’t have communication records, you can still apply. “Just because it was verbal doesn’t mean [the borrower] shouldn’t provide a narration of that,” says Betsy Mayotte, president and founder of the Institute of Student Loan Advisors. “If they felt … pressured to sign something quickly, for example, they should include that information because it’s taken into consideration.”

For help with your claim, find clinics in your area, such as local nonprofits, law schools or legal aid, suggests Suzanne Martindale, a senior attorney for Consumers Union. You may also contact the National Consumer Law Center, suggests Ben Miller, senior director for postsecondary education at Center for American Progress, a nonpartisan policy institute.

Be wary of debt settlement groups that ask for money to submit your application. You can complete this process yourself for free.

How applying can affect your loans

Once you submit a claim, you should request that your loans be placed into forbearance or stopped collections status, which will halt payments and collections. Interest will accrue while the Education Department evaluates your application.

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