On the surface, Borrower Defense to Repayment is quite simple. If your school misrepresented important facts to you, and thereby induced you to enroll in that school, you can petition to have your federal student loans discharged. Borrower Defense can be very helpful, because in the past many for-profit schools routinely exaggerated or lied about the classes they offered or your employability after graduating from their schools.
It’s simple to apply for Borrower Defense. Go to the federal government website here to read more about Borrower Defense, and fill in the on-line application form you find there.
For graduates of some schools, Borrower Defense is even easier. Certain students of Corinthian Colleges (including Everest College, Heald College, and WyoTech) and also certain students of the American Career Institute have an expedited process to get their Direct federal student loans discharged. More information here.
For students from other schools, however, the Borrower Defense process can have difficulties. Here’s why.
–You must show the specific acts (or failure to act) by your school that constituted misconduct toward you, or breached the school’s contract with you. This is different than just showing that the school engaged in general misconduct during the time you attended that school. You must show how the school’s actions impacted you directly. Then, there’s the question of evidence. Written documentation is helpful to your case, however it is unclear the type or amount of evidence that is required about your school’s misconduct that will convince the Department of Education to forgive your federal student loans
–You must describe in convincing detail how the school’s misconduct affected your decision to attend the school and to take out federal student loans to pay to attend the school. “Convincing” is the important word here. Again, written documentation helps with this.
–You need to know that federal regulations require that the school’s misconduct must violate an applicable state law or cause of action. However, the Borrower Defense application does not currently require you to list the state law being violated. That’s good, because the question of which particular state’s laws apply, and exactly which laws were violated, can become complex very quickly. However, including references to state law violations in your Borrower Defense application may increase the likelihood that your loans will be forgiven.
–Your federal student loans must be Direct loans to be discharged. While Federal Family Education Loans (FFEL loans) can also apply for Borrowers Defense, the process for FFEL loans is much more complicated and unlikely to be successful. FFEL loans may need to be consolidated into Direct loans in order for Borrower Defense to be successful.
–You must be patient. The Department of Education is moving relatively quickly on Corinthian College applications, but Borrower Defense applications for other schools are taking a long time to process—sometimes in excess of a year.
New Borrower Defense regulations have been proposed by the Department of Education. These would streamline the Borrower Defense application and decision-making processes. However, these updated regulations are currently on hold. Further, as written they will only apply to federal student loans taken out after July 1, 2017.
Borrower Defense to Repayment–a simple and useful concept, but with a number of potential pitfalls.