The Education Department published new guidance last Friday on applying for Borrower Defense to Repayment, a student loan forgiveness program that can provide relief to borrowers who were misled by their school. The updated guidance includes strategies and tips for increasing the chances that a borrower’s application will ultimately be approved.
Here’s what borrowers should know.
Borrower Defense to Repayment Can Lead to Student Loan Forgiveness and Other Debt Relief
Borrower Defense to Repayment is a federal student loan debt relief program designed for borrowers who have been defrauded by their school. Under the program, “certain conduct by a school you attended might make you eligible to receive a discharge of some or all of your federal student loans,” as well as refunds of past payments in certain cases, according to the Education Department.
Examples of school misconduct that can give rise to a Borrower Defense claim include misrepresentations or false promises about key elements of an educational or vocational program such as admissions statistics, career prospects, or the transferability of credits to other institutions. Breach of a contract can also give rise to a Borrower Defense claim.
Not all types of school-related misconduct can result in a viable Borrower Defense claim, however. General dissatisfaction with a program or facilities, conflicts with teachers or other students, and civil rights violations can all be serious, but do not necessarily fall under the umbrella of an actionable Borrower Defense claim.
To request relief under the program, borrowers must submit a detailed application describing their experiences.
Education Department Releases New Guidance on Applying for Borrower Defense Debt Relief
According to the Education Department’s newly published guidance, there are a number of things a borrower can do to strengthen their application and increase the chances of getting approved for student loan forgiveness under the Borrower Defense program:
- Borrowers should make a clear connection between the school’s misconduct and their decision to enroll in the school or remain enrolled. In other words, the school’s misconduct cannot be incidental or unrelated to enrollment decisions. “The misrepresentation, breach of contract, or judgment must have affected your decision to enroll and take out federal loans, or it must be related to the school’s educational services,” says the guidance.
- Include supporting documentation with your application that substantiates your allegations. This can include “emails or other communications between you and your school, course catalogs, student handbooks, and advertisements from your school (such as web ads, social media ads, email ads, print ads, or YouTube links to television ads),” as well as copies of the applicable contract if you are asserting a breach of contract claim.
- Be as specific as possible in your application. In other words, don’t just broadly assert that the school made a misrepresentation or false promise. Specify who made the misrepresentation, what the misrepresentation was, how and when it was communicated to you, why the information was important to you, how and why you relied on it, and ultimately how that reliance negatively impacted you.
- Be as through and complete as possible in documenting your allegations, but also be sure to be truthful. “At the end of your application, you’ll certify under the penalty of perjury that your application is accurate and true to the best of your knowledge,” warns the Education Department. “This means that you could face criminal prosecution if you knowingly submit a false statement on your application.”
Other Borrower Defense and Related Student Loan Forgiveness Updates To Know About
Hundreds of thousands of borrowers may be eligible for $6 billion in automatic debt relief under an approved settlement in the Sweet vs. Cardona case to resolve stalled Borrower Defense applications. However, that relief has been temporarily halted while a court considers whether to stay the relief pending an appeal by several impacted schools. A decision on the stay is expected before the end of the month. Borrowers who aren’t covered by the Sweet settlement can still apply for Borrower Defense relief; they just would not be entitled to automatic relief under the settlement.
Meanwhile, later this summer the Biden administration is set to enact new Borrower Defense regulations. Under these new rules, additional types of school misconduct can give rise to a Borrower Defense claim (i.e., “aggressive and deceptive recruitment” practices and “substantial omissions of fact”), and the Department will be able to more easily issue group discharges to similarly-impacted borrowers. The new regulations will also allow for complete relief (rather than partial relief, which was permitted under the Trump administration) and a reconsideration process for borrowers who are denied. The updated regulations should go into effect by July 1.
Borrowers interested in exploring Borrower Defense can review the application and read up on the Education Department’s new guidance.
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