What is the Borrower’s Defense against Reimbursement?
If your school has defrauded or misled you, you may be able to apply for a loan release through the “Borrower Defense Until Repaid” or “Borrower Defense” program. Read on to learn how Borrower Defense works, who qualifies, why the program exists, how regulations have changed during the pandemic, and why you want to act fast to file a claim if you’ve been the victim of fraud or educational deception.
What is the borrower’s defense to repayment?
Borrower Defense Until Repayment is a federal program that will pay off some or all of student loan balances for students who have been misled or defrauded by their school. The program has been around for several decades, but gained traction in 2015 when the for-profit Corinthian Colleges closed after being accused of fraud and using illegal tactics to collect student loans. Students who had taken out college loans argued for loan release, which the Department of Education eventually granted.
If you believe your school misrepresented the facts when it recruited you to enroll (or to continue enrolling), you may be eligible for tuition recovery.
Who is eligible for borrower defense?
Anyone who feels they have been misled by their school can request the defense of the borrower until reimbursement. This misrepresentation could imply something that school officials did or did not do. However, this form of debt relief is reserved for holders of an eligible federal direct student loan, which includes:
- Subsidized direct loans.
- Direct unsubsidized loans.
- Direct Loans PLUS.
- Direct Consolidation Loans.
You might also be dissatisfied with other things related to your school or education, such as your classes, housing, or grades. But these types of issues will not qualify for debt cancellation under the borrower’s repayment defense provision.
If a school has misrepresented you in any of the following areas, you may be eligible to have your student loans canceled or forgiven:
- Admissions practices or selectivity issuesincluding percentage of accepted applicants, open enrollment details, or school ranking.
- Details of educational servicessuch as internships or externships, the qualification of its faculty members, your program of study or the number of credits needed to obtain a degree.
- Job prospects for school graduates, such as promises of future employment, school placement rate, true demand for people in your field of study, and whether your school or degree program was accredited .
- Actual program costs, including tuition, fees or expenses associated with campus life.
- Loan detailssuch as repayment terms, the total cost of the loan, or promises of grants and scholarships in lieu of a loan.
- Credit Transfer Problems, including being led to believe that your credits would be transferred to other schools when they would not.
- Availability of career servicesincluding help with writing a resume, conducting mock interviews with you, or finding a job on your behalf.
- Representations to third partiesincluding information provided to accrediting agencies, the Veterans Administration, the Department of Education, or an organization that ranks schools, such as U.S. News and World Report or Barron’s Profiles of American Colleges.
Some schools may make you feel the urge to enroll. If you felt compelled to commit in writing to attend school soon, this detail could strengthen your case. However, communicating an urgency to register does not in itself qualify you for a borrower’s defense claim.
How to File a Borrower Defense Claim
You can apply for a borrower’s defense loan release online with the U.S. Department of Education. If you prefer, you can download a PDF version of the application and mail it to the US Department of Education, 4255 W HYW 90, Monticello, KY, 42633.
Be prepared to share the name of the school you attended, campus location, your enrollment dates, your program or major, and the type of certification or degree you are pursuing.
You may also need to provide documents to verify your identity and support your claim. These documents may include:
- Listing Agreements.
- Promotional materials from your school.
- Communication with school officials or staff.
- Student’s manual.
- Course catalog.
- Legal documents.
- Findings or determinations made by government entities.
- Copies of documents or information provided to third parties.
- Any other document you deem relevant.
Finally, be sure to list any refunds, remedies, loan reductions, or tuition recoveries you have received.
Defense of the borrower to requests for reimbursement in 2022
Throughout 2021, the Biden administration has made several updates to the repayment defense program for borrowers.
- March 2021: The Department of Education has changed the way it calculates student aid for academic misconduct or misrepresentation in violation of certain laws. Eligible borrowers now receive full loan relief instead of partial relief. The change is retroactive for those who qualified for a partial Borrower Defense Loan release in the past – helping about 72,000 borrowers with $1 billion in loan forgiveness.
- June 2021: The Ministry of Education has announced that it will grant full loan discharge to 18,000 student borrowers approved by ITT Technical Institute. The department approved applications regarding job prospects and the ability to transfer ITT Technical Institute credits to another school, which were new categories added by the department. The amount of canceled debt is $500 million.
- July 2021: The department approved debt relief for more than 1,800 additional students as part of borrower’s defense to repayment guidelines. Newly approved students have attended the Court Reporting Institute (applications for program completion), Marinello Schools of Beauty (applications for educational services), or Westwood College (applications regarding job prospects and ability to transfer credit). Debt forgiveness totaled $55.6 million.
Pandemic relief measures have also affected borrowers pursuing their defense. Federal student loan payments are currently on hold until May 1, 2022. However, your payments may be eligible to remain on hold after this date if you:
- Submitted a Borrower Defense Request and still waiting to hear from the Department.
- I received a notification that your application has been approved, but the loans have not yet been repaid.
- Received a rejection letter in or after December 2019.
- Sent a reconsideration request which is under review.
With new categories added by the Department of Education, more students are eligible to receive debt forgiveness through Borrower Defense. If you think you have a complaint, spend a few minutes reviewing the request. You can fill out the form directly on the Department of Education website, which could save you thousands of dollars in debt.