Borrower defense to repayment is the discharge or cancellation of part or all of your federal student loans due to fraud and/or predatory lending practices by your school. This term is often shortened to “borrower defense.”
You can apply for the borrower defense application process in 3 ways:
For you to be eligible for borrower defense loan forgiveness, either of the following must be true:
Think you may qualify for a borrower defense claim? Ahead learn more about what borrower defense is, what situations qualify for borrower defense loan forgiveness, and how to apply for it.
Often shortened to “borrower defense,” borrower defense to repayment is federal student loan discharge — whether in part or in full — due to school fraud and predatory lending. Student loan borrowers are eligible for this type of loan forgiveness if their school defrauded them in some way.
In 1965, Congress passed the Higher Education Act, which allowed the Secretary of Education to determine when school misconduct justified borrower defense against repayment. In 1994, the Department of Education enacted sparse borrower defense regulations that left a lot of questions unanswered.
Both the 1965 and 1994 regulations are widely considered unclear (at best) by legal scholars. In fact, before 2015, only 5 people ever applied for borrower defense although this process had technically been available for half of a century.
During the Obama administration, a record number of borrower defense claims were approved — most of them right before Trump took office.
However, Secretary DeVos (of the Trump administration) notoriously called the program a “free money” giveaway and implemented processes that led to over 130,000 borrower defense rejections.
The Education Department under President Biden only recently formed significant borrower defense regulations in response to the sudden closure of Corinthian Colleges.
How can a borrower get out of paying back a student loan if they attended a university and the university closed? You might be able to cancel their student loan if you attended a university that closed while you were enrolled or very soon after you left. This cancellation is called Closed School Discharge.
The US Department of Education has determined the following schools defrauded students, entitling students of these programs to either partial or total borrower defense loan forgiveness:
If you attended a school on this list, you’ll have an easier time getting your borrower defense claim approved.
Because borrower defense claims have gained significant traction only over the last few years, this list is likely to grow as claims are reviewed.
So far, every school found guilty of fraud is a for-profit school — as opposed to the more common non-profit colleges. For-profit institutions tend to use aggressive and fraudulent recruitment efforts because their profits come from enrolling as many students as possible. Still, not every for-profit school participates in predatory lending.
Yes, you can apply for borrower defense for a loan from a school that is not on the list of institutions that have already been found guilty of defrauding students. You can also file for forgiveness for “acts or omissions” committed by your school that aren’t listed in the official borrower defense application.
What are the requirements for borrowers’ defense to repayment?
A great indication of whether your borrower defense application meets eligibility requirements is if your school is being or has been sued by the Education Department or state attorneys general.
Basically, you must claim financial harm related to your federal student loan or educational services. Borrower defense is not granted for personal expenses incurred while in school or for personal injury. It also isn’t granted because you were harassed by employees of the school.
If your federal student loans were disbursed before July 1, 2020, a legal judgment against your school may be used as the sole grounds for a borrower defense application. However, such a legal judgment cannot be used as sole evidence when applying to cancel loans disbursed after July 1, 2020.
You won’t know with absolute certainty whether you qualify for borrower defense until your application gets processed. Even a well-written application can be denied if the Department of Education doesn’t believe that you meet the exact criteria for eligibility.
