How to Qualify for Borrower Defense to Repayment

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Stanley Tate

#1 Student Loan Lawyer

Updated on October 2, 2022

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:

  1. Submit an online borrower defense to repayment claim application at studentaid.gov/borrower-defense.

  2. Fill out this PDF, then email it to BorrowerDefense@ed.gov.

  3. Fill out this PDF, print it off, and send it through regular mail to: U.S. Department of Education, 4255 W Hwy 90, Monticello, KY 42633.

For you to be eligible for borrower defense loan forgiveness, either of the following must be true:

  • Your school defrauded you by intentionally misleading you concerning its program(s).

  • Your school defrauded you by breaking state laws, like consumer protection statutes.

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.

What is borrower defense to repayment?

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.

Borrower Defense Schools List [2022 Update]

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.

Can I apply for borrower defense for a loan from a school not on the list?

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.

Borrower Defense Eligibility Requirements

What are the requirements for borrowers’ defense to repayment?

  • You borrowed federal student loans. Borrower defense does not work for private loans.

  • Your school intentionally misled you concerning its educational programs or job placement rates, OR your school broke state laws, such as consumer protection statutes. You don’t qualify for borrower defense if you aren’t happy with your school experience. You must prove that your institution engaged in fraud or broke a state law.

  • You file your claim within three years of leaving the institution. This timeframe can vary depending on when your loans were disbursed and/or the state in which you live.

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.

For example:

  • Ashford University, a for-profit institution that has since been acquired by The University of Arizona, was investigated or sued by the attorneys general in 5 states. Each of these instances were related to potential consumer protection law violations and/or misleading and coercive recruitment practices. Ashford was also targeted by actions by the US Department of Education for these issues between 2015-2017.

  • Salter College provided debt relief of $1.6 million to former students for deceptive/misleading lending practices in 2019 after an investigation by the MA Attorney General. The same state’s AG alleged similar claims and settled for $3.75M in 2014.

  • DeVry University, which is still in operation, was investigated by attorneys general in NY, IL, and MA between 2013-2014. They were investigated by the US Department of Education in 2015 and were required  to settle claims with a number of fines and ongoing requirements. A private 2020 lawsuit regarding fraudulent advertising was settled with a fund of almost $45 million.

  • Career Education Corporation — which owns Colorado Technical University and American Intercontinental University — has been audited, investigated, and forced to provide settlements many times between 2010-2019. In the most recent settlement, CEC provided debt forgiveness of nearly $494 million after 49 attorneys general (including D.C.’s) found rampant evidence of predatory lending and enrollment practices.

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.

Does borrower defense forgive all of my student loans?

No, borrower defense does not always forgive all of your federal student loan debt. Which loans are forgiven and how much of the debt is canceled depends on the type of loans you have and existing legal settlements.

Loan types. Borrower defense only cancels Direct Loans issued by the federal government, including Direct PLUS Loans and Direct Consolidation Loans.

Federal Family Education Loans (FFEL) and Federal Perkins loans are not eligible for borrower defense unless you consolidate them into a Direct Consolidation Loan. You can consolidate for free at studentaid.gov.

Borrower defense never forgives private student loans.

Some legal settlements dictate that schools are to pay a small amount to defrauded students — approximately $300 each in the case of DeVry University — instead of the total amount.

Does my school have to be closed for me to qualify for borrower defense?

If the Department of Education determines your school defrauded you, you are eligible for borrower defense whether or not your school closed.

In that case, you may be eligible to apply for borrower defense loan cancellation and closed school loan discharge. I recommend filing for these at the same time. Closed school discharge is a faster and easier path to loan discharge if you’re eligible.

How to apply for borrower defense to repayment

1. Collect your documentation.

Gather these documents before filling out your borrower defense application:

  • All your transcripts from the school

  • Student manual and course catalog

  • Enrollment agreements

  • Documentation of any fraudulent statements made by your school, including:

  • Promotional materials that contain dishonest information

  • Communication between you and faculty or admissions staff

  • Relevant legal documentation, including past judgments against the school

When documenting fraudulent or dishonest statements, pay close attention to anything referring to:

  • Credit transferability

  • Resources provided by the school

  • Actual employment rates versus what the school advertised

2. Start the application.

Go to studentaid.gov’s Borrower Defense page.

You can log in to start your application online or download a PDF of the application without logging in. You can automatically fill out this PDF], or print it out and fill it out by hand.

3. Fill out the application.

You will fill out the application in 7 sections:

  1. Your personal information

  2. The school’s information

  3. Other loan forgiveness options you’ve pursued

  4. The school’s fraudulent activity (which is the longest section you’ll need to complete)

  5. A description of your financial harm

  6. A request for forbearance

  7. Your signature for certification

4. Submit your application.

The Department of Education prefers that you submit your application online by logging in and completing the online application.

However, if you filled out the PDF version of the application digitally or by hand, you may either email the PDF to BorrowerDefense@ed.gov or mail the printed PDF to:

U.S. Department of Education
4255 W Hwy 90
Monticello, KY 42633

Most experts estimate it should take you about 30 minutes to fill out the borrower defense to repayment application, but I recommend setting aside at least 45 minutes.

I encourage you to save a PDF or print copy of your completed application for your records.

5. Follow-up on your application.

If you have any questions, visit the online Help Center or call the Borrower Defense Customer Contact Center at 1-855-279-6207.

I wrote an extensive, step-by-step guide on how to effectively apply for borrower defense loan forgiveness. I wanted to take the daunting application process and make it less scary. Check out my Borrower Defense Application Guide if you’re considering applying.

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Should you apply for forbearance while waiting on your application?

Yes, you should apply for forbearance while waiting for your application to be processed. This is part of the borrower defense application process.

Forbearance temporarily stops student loan payment collection and keeps your loan from going into default.

However, interest will accrue during forbearance. Consider making interest payments during your forbearance avoid adding to the total balance on your loan(s).

If I already submitted my borrower defense application, do I need to start paying my loans again after the COVID-19 deferment? The pandemic-related payment freeze for federal loans ends on Sept. 1, 2022. If you have applied for borrower defense and requested forbearance, you may remain in a period of forbearance after that payment freeze ends.

Contact the studentaid.gov Help Center for assistance specific to your situation.

How long should my borrower defense application take?

Filling out the borrower defense application should take you 30-45 minutes. It might take longer depending on how detailed you get in your description of how the school defrauded you.

How can I check the status of my borrower defense application?

To check the status of your application, you can contact the studentaid.gov Help Center or call the Borrower Defense Hotline at 1-855-279-6207.

The Education Department has been known to go months without making any borrower defense decisions. The application approval process may take months or even years.

What to expect if your application is approved

Your loan servicer or lender will notify you when your application is approved or denied.

If your borrower defense application is accepted, you can expect a partial or full discharge of your federal student loans.

With new rule changes at the Education Department, approved borrower defense applications may lead to:

  • Complete cancellation of federal student loans

  • Reimbursement of past monthly payments

  • Federal student aid eligibility

  • Adjusting credit reporting to improve your credit score

If your application was pending as of April 7, 2020, the Department of Education is required to approve or deny your application within 18 months, then grant any relief within 2 years of your application’s approval.

However, every case is different. You may get everything you wanted or nothing. It’s important to fill out your borrower defense application as effectively as possible.

Will my previous payments be refunded if my application is approved?

In some cases, previous payments can be refunded after your borrower defense application is approved. A refund largely depends on why your loan is eligible, what kind of financial harm you claim, and when you submitted your borrower defense application.

For federal loans disbursed before July 1, 2017, applicable state laws generally allow borrowers to seek reimbursement for previous payments. However, the Education Department’s borrower defense rules sometimes allow for state law limitations on reimbursement.

For federal loans disbursed after July 1, 2017, but before July 1, 2020, you must ask for a reimbursement of previous payments within six years of disbursement if the borrower defense is based on “breach of contract” or “substantial misrepresentation.”

But there’s no time limit for a refund If your claim is based on a “judgment against school,” — that is to say, your claim is based on a judgment you got against the school for misleading you.

For federal loans disbursed after July 1, 2020, the Secretary of Education will determine if the loan forgiveness amount is more than the remaining debt. If your forgiveness amount exceeds your remaining loan balance, you may be eligible to receive a refund of what you’ve already paid.

Despite the fact that this program has existed for 50 years, it’s only been recently begun to be used. Unfortunately, how it works is based on policy decisions, not just on a simple set of rules — and policy can change (and has changed) from one presidential administration to the next.

How does borrower defense loan forgiveness affect my taxes?

Federal student loans discharged under the Borrower Defense to Repayment program will not be considered taxable income, according to the IRS.

In other words, you don’t have to claim borrower defense loan forgiveness on your taxes.

What should I do if the wrong school name is listed on my borrower defense approval notification?

Occasional clerical errors can lead to the wrong school name being listed on your borrower defense approval notice. Don’t be alarmed, you can still expect loan cancellation.

Expect a corrected notice within a few weeks. If you don’t get a notice or are still concerned about the error, call the Borrower Defense Customer Contact Center at 1-855-279-6207.

What to expect if your application is denied

In the case of a denied application, all interest accrued and the remaining loan balance is still your responsibility. If you made no interest payments during the forbearance period, that interest will be added to the total balance due.

What should I do if I disagree with their decision?

You may be able to ask the Department of Education to reconsider your borrower defense application if you disagree with their findings.

When you make this request, you’ll need to explain:

  • Which decision(s) you disagree with

  • Why you believe the decision(s) were made incorrectly

  • Any additional evidence you have to support your claim (related specifically to the offense(s) you outlined in your original request)

Not all borrower defense denials are eligible to request reconsideration.

To find out if your case qualifies for reconsideration, log into the Status Center and navigate to Case Details. Eligible cases will have a “Request Recommendation” button available.

You can also mail your reconsideration request to:

U.S. Department of Education
P.O. Box 1854
Monticello, KY 42633

This reconsideration only applies if you disagree with the Department of Education’s decision regarding the exact allegations made in your initial application. If you add new allegations of misconduct to your reconsideration request, you will be denied.

During this reconsideration period, your loans will not be placed in a forbearance automatically. You should continue to make regular payments unless you are notified of your claim being approved.

What should I do if I have new allegations of misconduct against my school?

If you have new evidence of misconduct or other related actions made by your school that were not included in your first borrower defense claim, you may file a new claim.

The process will work the same as with your first claim. You will describe the new allegations of misconduct and provide evidence they occurred. During the claim review period, your loans will again go into forbearance.

You have options

Even if your borrower defense claim isn’t approved, there are many options to consider for having all or part of your loans discharged.

Alternatives to borrower defense loan forgiveness include:

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