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How Borrower Defense To Repayment Works: A Complete Guide
Updated On October 8, 2022
Editorial Note: This content is based solely on the author's opinions and is not provided, approved, endorsed or reviewed by any financial institution or partner.
Borrower defense to repayment gives student loan forgiveness to student loan borrowers who were defrauded by their schools or whose school closed before they earned a degree. However, it’s important to understand the details about borrower defense to repayment to learn if you can qualify for student loan relief.
In this complete guide to borrower defense to repayment, we will discuss:
- What is borrower defense to repayment?
- How to qualify for borrower defense and get student loan forgiveness
- How do you apply for borrower defense to repayment?
- Student loan relief: examples of borrower defense claims
What is borrower defense to repayment?
Borrower defense to student loan repayment is a federal rule created in 2016 during the Obama administration that helps student loan borrowers get student loan forgiveness for their federal student loans.
Both student loan borrowers and Parent PLUS Loan borrowers can get their federal student loan debt cancelled if they were defrauded by their school or their schools closed before a degree could be earned.
The fraud must relate directly to the student loans borrowed or the education that required financial aid. Specifically, the school must have engaged in deceptive or misleading conduct in violation of state law.
Examples of borrower defense to repayment claims include misrepresentations made by your school regarding:
- Cost of the program
- Accreditation of the school
- Employment prospects
- Ability to transfer credits
- Career services offered
How to qualify for borrower defense and get student loan forgiveness
To qualify for get student loan forgiveness, make sure that your student loans are eligible.
Borrower defense requires that you have Direct Loans, which include federal student loans such as Stafford Loans and Subsidized or Unsubsidized Student Loans, for example. Importantly, you must have borrowed the student loans to pay education costs at the school against whom you’re making a claim.
If you have a FFEL or Perkins Loan, these federal student loans aren’t eligible. However, you can consolidate FFEL or Perkins Loans into a Direct Consolidation Loan, which is eligible.
If you’re unsure if your student loans qualify, then log in to Federal Student Aid with your FSA ID to check which student loans you have.
How do you apply for borrower defense to repayment?
You may be wondering, “How do you apply for borrower defense to repayment?”
To apply, submit an application online. If you have questions, you can call the U.S. Department of Education hotline at 1-855-279-6207 Monday through Friday from 8 a.m. to 8 p.m. Eastern time.
The application takes 30 minutes to complete, and you will need the following documentation:
- Federal Student Aid (FSA) ID and password
- School name and program of study
- Your enrollment dates
- Documentation to support why you believe you qualify and to demonstrate financial harm to you
According to the U.S. Department of Education, you should apply to get student loan forgiveness if:
- attended a school that you believe misled you or engaged in other misconduct, or
- can demonstrate that the school violated state law related to your student loan or to the educational services provided.
When you apply, your federal student loans will be placed into temporary student loan forbearance. Once the U.S. Department of Education determines your eligibility, you will be notified of the decision by email.
If your claim is successful, then your federal student loans can be canceled partially or completely. Alternatively, if your claim is denied, your federal student loans will be taken out of forbearance and you will be financially responsible to pay off your student loans, plus any interest that accrued during student loan forbearance.
Student loan relief: examples of borrower defense claims
President Joe Biden and the U.S. Department of Education have processed a significant number of borrower defense to repayment claims. Biden has processed billions of dollars of student loan forgiveness for student loan borrowers who attended for-profit colleges.
Recent examples include:
- Nearly $8.0 billion of student loan cancellation for 690,000 borrowers under borrower defense to student loan repayment and school closures.
- $5.8 billion of student loan cancellation for 560,000 student loan borrowers who attended Corinthian College.
- $238 million for 28,000 borrowers who attended Marinello Schools of Beauty.
- $415 million for 16,000 student loan borrowers who attended DeVry, Westwood College, ITT Tech and other schools; and
- $1.1 billion for 115,000 student loan borrowers who attended ITT Tech.
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