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How Does Borrower Defense To Repayment Work?

borrower defense to repayment

Through the borrower’s defense to repayment, borrowers who were defrauded by their schools may request loan forgiveness. An individual may be eligible for “borrower defense to loan repayment,” also known as “borrower defense,” if his/her school misled him/her or engaged in other misconduct that violated specific state laws. The federal student loan debt may be discharged in part or in full in this situation. Borrowers may also be eligible for relief if their schools shut down before they could finish their degrees.

Through borrower defense to repayment claims and closed school discharge, the education department has authorised the discharge of more than $14 billion in debt held by 1 million borrowers as of October 2022. A settlement that received final court approval on November 16 and was upheld on February 24 will bring the total up to $6 billion and up to 264,000 more borrowers. Those borrowers whose claims were granted can anticipate the following: 

  • 100% forgiveness of federal student loans
  • The reimbursement of any loan-related payments made in accordance with the rules
  • Requests for the credit bureaus to stop keeping track of bad credit
  • The restoration of former recipients’ eligibility for federal student aid
borrower defense to repayment

What Criteria For Eligibility Must Borrowers Still Satisfy? 

Under Secretary Miguel Cardona, the education department says it intends to take additional steps, such as revoking regulations made under former Secretary Betsy DeVos that tightened eligibility requirements and increased the burden on borrowers to show that the school engaged in fraud. Until the Department of Education takes action, these changes are still in effect:

  • You are responsible for submitting an application for borrower defense to repayment  programme student loan relief if your school closes after July 1, 2020, while you are still enrolled. Before, those loans were immediately cancelled.
  • Even if the Education Department has proof that your school committed a crime that qualifies for student loan forgiveness, you still need to apply. There is no automatic forgiveness.
  • You must demonstrate that your school purposefully misled you and that this led to specific financial harm in order to comply with the new rule. Financial harm from the loan itself is not considered, but it might be considered if your programme makes you unemployed.
  • If you leave your school up to 180 days before it closes, you may submit a claim under the new regulations. The earlier window of 120 days is now extended.
  • Before, you had six years to submit a request for relief. That window is reduced to three years by the new regulation.
  • You cannot resubmit your claim for consideration if it is initially denied and new information becomes available.

How To Apply For Borrower Defense To Repayment? 

Provide an in-depth explanation of why your loans might qualify, along with any supporting evidence, to strengthen your claim. Borrower defense to repayment application  may include:

  • Actual licensure passage rates that differ from those advertised by the school
  • Actual employment rates that differ from those advertised by the school
  • Actual selectivity and admissions profiles that differ from those advertised by the school
  • Dishonest representation of school certifications or programme approval
  • Dishonest representation of the educational resources provided by the school
  • A false representation of credit transferability
  • False claims about the salaries and placement rates for graduates
  • Providing false information about financial assistance

How Applying For Borrower Defense To Repayment Can Affect Your Loans?

You have the option to put your loans in forbearance – which will halt payments and collections – as part of your claim. The Education Department will email you a confirmation once your application has been submitted and includes more details about your forbearance. You should get in touch with your student loan servicer to make sure they received your forbearance notification and are handling it properly, even though the procedure ought to be automatic.

Loans may be completely forgiven, partially forgiven, or not at all if a borrower’s defense claim is successful. The new rule places a high bar for total loan forgiveness and favours partial relief based on financial harm. While the Education Department considers your application, interest will start to accrue, and you will be responsible for paying it on any portion of your loans that isn’t cancelled.

Key Terms In The Story 

Borrower defense to repayment: a federal loan forgiveness programme for students whose universities violated laws, defrauded the public or misled the public. If a borrower’s school closed down before they could finish their degree, they may also be eligible for relief. Successful borrower defenses to repayment claims are now more challenging due to new eligibility and borrower defense to student loan repayment rules, but you should still file a claim if you think you’ve been taken advantage of.

Forbearance: a time frame of up to 12 months of authorised nonpayment. If you can’t pay your loans and don’t qualify for deferment, forbearance is usually not a good option since interest continues to accrue on all loans during that time. If you won’t be able to make your payments for a considerable amount of time, an income-driven repayment plan is a better choice.

Student loan forgiveness: Government initiatives that forgive federal student loan debt for borrowers who satisfy certain criteria. Examples of student loan forgiveness programmes include Teacher Loan Forgiveness (TLF) and Public Service Loan Forgiveness (PSLF). Private student loan borrowers are not eligible for student loan forgiveness programmes, but they do have other debt management options.

Student loan servicer: the private organisation that oversees your monthly payments for federal student loans until they are repaid. It’s important to inquire about and fight for your rights because student loan servicers might not always provide the best options for repayment.


1. I took out loans to pay for my programme, but do all of them qualify for the borrower defense discharge?

No, only your Direct Loans are covered by this borrower defense discharge. Private student loans, and other loans you may have obtained from federal or state-run programmes, including other programmes run by ED, are not covered by this borrower defense discharge.

2. I applied borrower defense to repayment. How will I be informed of the outcome of my application?

Borrower defense applicants are notified via email by the U.S. Department of Education (ED) of the ED’s decision regarding borrower defense discharge eligibility.

3. What will happen if my lawsuit against the school for borrower defense is successful?

Your federal student loans linked to your application might be partially or totally discharged. If you are granted a partial discharge, you are still obligated to pay back any sums not covered by borrower defense, including any accumulated interest. The period of forbearance or stopped collections for any additional federal student loans you have will also end at that time. If applicable, you’ll be accountable for paying back those additional loans along with any interest that accumulated while the forbearance or stopped collections period was in effect.

4. What will happen if the school rejects my borrower defense request?

All of your federal student loans will no longer be in forbearance or be subject to stopped collections, and you won’t be discharged from any of them. You are liable for paying back these loans, along with the interest that accumulated while the collections were on hold or in forbearance.

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How Does Borrower Defense To Repayment Work?

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