For over a decade, many U.S. Citizens have been struggling with student loan debts. Paying back what they owe each month has become a heavy burden, and many are starting to (if not already) lose hope. Apart from refinancing and IBR options, there are other few options like student loan discharge, such as the Borrowers Defense to Repayment.
However, there is not enough understanding because student loan discharge is still a vague concept for many students. And we understand that because it sounds too good to be true. But you can be eligible only if you qualify for the stipulated requirements. It is also a complicated process that may require the assistance of lawyers or professional experts.
This guide will explain everything you need to know about the Borrowers Defense to Repayment, including the recent updates. We will also show you effective ways to get rid of your student loans, and any other alternatives.
Please note: Unfortunately, the Trump administration has made any applications for Borrowers Defense to Repayment more challenging to get. Congress made efforts to stop the rule from taking effect, but it didn’t work. Many advocates also challenged the new changes in the federal court, but it was to no avail.
Due to that, we recommend that you take appropriate actions to clear your loan debts now. The information in this guide will guide you on what to do next. You can also contact us for a professional, free assessment on 800-820-8128 right now.
Now, let’s get into it.
What Borrowers Defense To Repayment Is About
Maybe you have seen or heard the term “borrowers defense” many times in the news and wondered what it was and whether it applies to you. Here’s the simplest way to understand it. Let’s say you attended a school, whether college, career institution, or university, with federal student loans. Later, you realized or suspected that the school’s promises were false, you may qualify to get all or half of your student loans discharged under the borrower’s defense rule.
You can also acquire relief if your school closed down before you completed your degree. The borrower’s defense got the public’s attention in 2015 when Corinthian Colleges shut down due to fraud allegations.
The Obama administration developed a borrower’s defense rule to solve the problem, where student borrowers could petition their student loans to be discharged. That is, only if the school defrauded them.
However, the Trump administration made some changes in 2019 to the Borrowers Defense to Repayment rule, making it more difficult to acquire forgiveness. Before we go through the recent changes to the regulation, let’s have a good understanding of how the borrower’s defense works. That will help you know your next move and completely get rid of your student loan debts.
How Borrowers Defense To Repayment Works
First of all, you have to prove that the university or college you attended intentionally deceived you into taking out a student loan. If your evidence proves valid, you may be eligible to have your student loans fully or partially discharged.
Some instances of school frauds include:
- Forging figures of job placements
- The overall cost of the institution
- Records of successful credit transfer
- The degree program you offered
The steps listed above are part of what occurred to the Corinthian Colleges students. The Corinthian Colleges lied to its students and were found guilty, and more than 15,000 students were able to get their federal loans discharged through the Borrowers Defense to Repayment.
Students with Direct Loans are those qualified to have their student debts forgiven. That means if you have Parent Plus, Perkins, Consolidation, Stafford, or unsubsidized Stafford, you won’t be eligible.
If your student loan discharge is successful, any overdue balance could be forgiven, including reimbursement of money previously paid. Not only that, but you can have a clean credit report that is linked to the loan. In other words, any unfavorable information could be wiped away.
If you want your loan to be discharged, you need to submit the following required information to the U.S. Department of Education:
- The laws your school breached
- Degree program you enrolled in
- At what time were you a student?
- Contact information
- How the school influenced your decision to go in for student loans
For more in-depth information on how you can file a reasonable claim, check out the Federal Student Aid’s guide. After submitting the request, there will be a deferment on your student loans for a maximum of 12 months, but they will still accumulate interest.
You need to provide substantial evidence to the federal government that your claim meets the state’s standard. Not only that, but also there is no expiration on the statute of limitations for submitting the claim. Another area you need to look at is if you will be taxed on your federal student loans when discharged.
Please note: the Borrowers Defense to Repayment process is a serious legal issue, and you may need professionals to help you.
Borrowers Defense To Repayment Is Not A Repayment Plan
Before we proceed to new changes made to the borrower’s defense, it’s essential to be aware that the borrower’s defense is not part of the repayment plan that provides forgiveness. It’s relevant because there are student loan aid organizations that are ensuring students of loan relief. If you need help from student aid companies, ask them what they will do for you before proceeding. In most cases, these companies will enroll you in an IBR plan that includes loan forgiveness.
Even though that will help you manage your student loan debts for a while, it’s not the Borrowers Defense to Repayment. So you can opt for the IBR plan, but make sure you understand and know what you want before you go ahead. When it comes to your student loan debts, nobody cares more than you. Take charge of your financial freedom!
Everything About The Borrower’s Defense To Repayment New Changes
The new borrower’s defense rule has made the loan forgiveness eligibility requirements more challenging to get. And that has placed a massive burden on the borrower to give strong evidence that the college or university committed fraud. Here are some of the massive changes you need to be aware of.
- It’s now your sole responsibility to apply for the borrower defense if your college shuts down after July 1, 2020. At first, the loans were canceled automatically.
- Even if the U.S. Education Department has considerable proof that your school frauded you, you still need to apply. Now, there is no such thing as automatic loan forgiveness.
- You must provide substantial proof that your school intentionally deceived you, causing you particular financial harm due to the misconduct. Take note that the student loan itself is not considered as a factor for financial harm. But other areas such as being unemployed due to your program.
- The new borrower’s defense rule indicates that you should have left your school within 180 days before it closed down. Only then can you file a claim. Previously, it was 120 days.
- In the old borrower’s defense rule, you had six years to send an application for relief. Now, that has reduced to three years.
- If the authorities initially reject your claim and you resend it for consideration again due to new information, it will not be considered.
Will The New Regulations Affect Borrowers With Pre Existing Loans?
First of all, the new changes do not alter the previous rules applied to students with Direct Loans and send their claims. The latest update that determines whether you are qualified for a Borrowers Defense to Repayment is applicable to loans granted after July 1, 2020. The new update has no effect on any loans granted before the said date.
However, the evidence that the Department of Education will need from you in filing a claim is quite unclear. According to the Department, you must submit more proof than your written testimony to prove without a doubt that your college defrauded you.
We are unclear if the authorities now require you to send additional evidence to prove your case, even for claims governed by a previous standard of the borrower defense. If you have outstanding claims, we recommend getting professional advice from an expert. They will help you determine if you should amend your borrower’s defense claims.
But the new changes have eliminated two vital security for already existing borrowers:
- Limitations on when institutions can prevent students from filing claims against the institution in court
- Provisions made for automatic close school discharges
In all, the new changes to the rule have made borrower’s defense more challenging and even more complicated for borrowers to acquire student loan relief. We strongly advise that you get a professional expert to assist you. That way, you can improve your chances of getting your loans forgiven.
Are You Eligible For The Borrowers Defense Forgiveness?
You can qualify for the student loan forgiveness under the Borrowers Defense to Repayment. However, you have to be 100% certain that your school deceived you in one or all of the ways below:
- The school deliberately deceived you about your degree program.
- The institution infringed some state laws, such as any laws associated with your student loans, education services, or consumer protection statutes.
You can file a claim even if your college or university closed down or not. You can also send your claim if you qualify for other school relief programs. However, you can’t file a claim to get a private loan or the costs you paid.
If you are not sure if you should file a claim for the Borrowers Defense to Repayment, check if your school has any legal actions against it. Find out if the state attorneys general, the federal government, or the Consumer Financial Protection Bureau (CFPB) has any legal injunction against your school.
One of the massive indicators is if your institution is currently going through legal action or have been sued.
If your student loan disbursement happened before July 1, 2020, you could use your institution’s legal actions to get borrower defense discharge successfully. According to the new changes, you can use that as evidence, but you’ll have to provide additional proof. Otherwise, it will probably not be enough to get loan forgiveness.
How You Can Apply For The Borrowers Defense To Repayment
You can send your claim application online at the borrower’s discharge page at the Federal Student Aid official website. You can also get the PDF form, fill it out, and send it to the U.S. Department of Education through regular mail or email. If you want the details of the submission, visit the official Federal Student Aid website.
To have a strong claim that can guarantee success, you have to send an in-depth explanation of why your student loan might be eligible. You also have to include additional supporting evidence. That could include the following:
- The school was not honest in its representation in terms of financial assistance.
- They were deceitful in its representation regarding graduate placement salaries and rates.
- The school was not honest in its representation in terms of its credits transfer.
- The institution intentionally misrepresented the educational resources it offered.
- The school was dishonest in its representation regarding the certifications it held and certifications for other programs.
- Admission profiles and the actual selection were entirely different from what the institution advertised.
- Employment rates were different from what the school advertised.
- The actual rates of the licensure passage were different from what the institution advertised.
If your loans are disbursed before July 1, 2020, you can include the school officials’ verbal conversions (in written form). Other actions that can benefit your claim are looking for law schools, legal aid, or local nonprofits in your vicinity. You can also get in touch with the National Consumer Law Center.
Please note: Be careful of debt settlement companies that require money before you can send your application. It’s entirely free, and you can go through the process and complete it by yourself.
How Applying For The Borrowers Defense To Repayment Can Affect Your Student Loans
You can decide to place your student loans in forbearance as part of your claim. That will suspend any collections and payments. After submitting your application, the Department of Education will reply to you with more details concerning your forbearance through email.
Ideally, the process is supposed to be automatic. But to be on the safer side, contact your loan servicer and verify that the servicers have received your forbearance, and they are actively processing it. You can get your student loan forgiveness in full, partial, or not at all. The new regulation has made it difficult for you to get complete loan forgiveness.
The new rule rather focuses on partial loan forgiveness, and that even relies on financial harm. While the Department of Education reviews your application, the interest will accumulate. You will then be liable to pay any interest that accrues on the loan that does not get canceled.
What Happens If Your Application Is Denied?
When the Department of Education denies your Borrowers Defense to Repayment application, your forbearance will end. That means you’ll be liable again to make your monthly contributions on the loan debt. You will also have to pay an interest that accumulated during the period your loan was in forbearance.
What Should You Do Next?
If you think you have a chance to get your Borrowers Defense to Repayment discharge approved, we recommend that you take it. But remember to take it seriously. Do not lie or make false claims, and be sure to follow all the instructions given. It’s better to get a legal advisor who can help you make a compelling case to get your loan discharged, even if it’s only half of it.
However, before you proceed, you should test the waters to determine if you have a vital opportunity to get the discharge. Otherwise, all your effort may end in disappointment, and possibly financial ruin. So be extra careful about how you move ahead with your application.
It’s advisable to keep making your monthly payments, especially when you submit your application. Even though your student loans will be in forbearance, they will still accrue interest. So you should consider making the monthly payments on those loans to stop the debt from going out of control if your application is denied.
We recommend that you keep paying on your monthly payment until you receive an official letter from the Department of Education. That is, if they have discharged your student loans.
How To Determine If Your School Is Credible
The new Borrowers Defense To Repayment rule has made it more challenging to get a loan discharge. But there will always be fraudulent schools that will try to get the best of you. To prevent that, you need to know how to determine if an institution is legit. If you can do that, you’ll prevent yourself from going through the hectic process of getting federal student loan forgiveness.
Now, the school that has “college” or “university” attached to its name does not mean you will receive quality educational programs. You have to go beyond the advertisements when deciding on which school to choose.
Over the years, numerous for-profit schools and career training institutions have been accused of intentionally deceiving millions of students with fake job placement rates and false credentials by the Consumer Financial Protection Bureau (CFPB) and the state attorneys general. Big schools such as ITT Technical Institute and Corinthian Colleges closed down after a series of legal battles.
But, there are other predatory schools out there who are enrolling innocent students. The simplest way you can prevent such incidents from happening to you is to search the school name with the term, “lawsuit.” If there are legal actions against the school, then you avoid such school at all costs.
That’s not the only way to find out. The following tips will help you find out if your choice of school is legit or not.
Search for the school’s certification
It’s mandatory that every school must have a license and accreditation. But they are not the most reliable way to measure the school’s quality. That is because institutions such as ITT Tech, Corinthian, and many others had licenses and accreditations.
When a school has a license, it means they have qualified for the state standards and are ready to operate. However, not every state requires such a permit. When it comes to accreditation, it shows that the institution meets regional or national private organizations’ standards. And the Education Department recognizes these agencies.
The only way an institution can receive funds from the state and federal student aid programs is if they have accreditations. It also means that you can’t get federal student loans and grants if the school is not accredited.
So before you proceed with your preferred school choice, get in touch with the license and accreditation companies affiliated with the school to know if they are legit.
Find out if particular programs are licensed or accredited.
If you acquire a professional license in a particular field, you must meet all the educational requirements. For that to happen, single programs should be accredited by a recognized accreditation agency.
For example, if you want a professional certificate to be a dental assistant, you should graduate from a dental assisting program. And that program should be accredited by the American Dental Association’s Commission on Dental Accreditation.
Most of the time, the school may be accredited, but its educational programs are not. If you want to find out if the programs are certified, search for your state’s institution at the Education Department’s database. Visit the official website of the Database of Accredited Postsecondary Institutions and Programs (DAPIP) to proceed.
If it will be necessary for you to get a license to work, get in touch with your state’s licensing agency to know if the college’s program meets the standard.
Find out if other institutions permit credits.
If you plan to start school and later transfer to another school, you need to determine if the credits earned will be accepted in that school. So before you enroll in an institution, discuss with your current college’s transfer advisor, find out which schools they have transfer agreements with, and know the credits that will transfer. It will also give you the step ahead to learn about the school before moving them with your credits. Also, make sure to take the courses that will help you get the degree you want.
Look for the school that has a legit track record.
If you want to find out the school’s performance, use the U.S. Department of Education College Scorecard for details. There is also the College Navigator tool, which you can use to get more information. These tools will give you information on the rate at which students return the first year and graduates’ rate.
You can also know the graduates’ salaries through the scorecard, including the number of students who earn income above those with just a high school diploma. This information is highly relevant because you want to earn a degree that can help you earn more, and make the program worth it.
Most of the for-profit colleges, including some online programs, are more expensive. That would make sense if you could earn a better income, but that seems not to be the case. That’s why when an institution makes job placement ads or average graduate’s salaries, you should ask for that information in written form. It’s illegal, but some colleges make exaggerations when advertising job placement rates.
Connect with the students in the school.
If possible, visit the school and examine the facilities to ensure that everything they say in the ads is valid. While there, have a conversation with the students on campus. Ask them what or how they see the school and the programs.
If it’s an online school, contact the students through social media. There are alumni networks which you can try out. Find out about their experience while in school. And also, what they have been able to do with their education after graduation.
Check out for red flags.
There are certain red flags you should pay attention to. Some of them include the following:
- If you find it challenging to find the school’s address, be wary. Every online school has a place they operate from. You can ask for their address. If they show any signs of hesitation, that should be your cue. If they do give you an address, follow up to know if it checks out.
- The school hesitates to provide details on licensing and accreditation.
- It’s hard to find the graduation rates and overall cost.
- The address of the school’s websites ends in “.net” or “.com” rather than “.edu.”
- The costs are way expensive compared to other similar schools.
- When the school pressures you to make a deposit or enroll in the school’s program.
- When the school forces you to borrow high student loans or unreasonably high-interest rates
- The degree seems too simple to earn.
- The salary outcome and job placements look like a dream come true.
If Your School Did Not Shut Down Due To Fraud
Take note that if your claim has nothing to do with your educational services or student loan, you will not qualify for the Borrowers Defense to Repayment. Some of the examples include harassment allegations, claims of personal injury, etc.
If your school closed down due to other reasons, not fraud, and could not transfer your credits, you can do two things:
- You can complete your education via a transfer or tech-out plan.
- Apply for a closed school discharge with the U.S. Department of Education.
If you apply for the closed school discharge, you can not transfer the credits you earned at the closed college. You will have to begin your education from the start. That’s why most students prefer transferring to other schools. That is, if they can find a school that accepts their credits.
Transferring or Teaching Out if Your School Closes
When you transfer to another college, you can continue your education from where you left off from your previous school. However, before you begin your transfer process, find out from the school, the number of the existing credits they will accept. Some may allow you to transfer part of your credits; others allow all of them.
Before your institution shuts down, they should give you a way to access your transcript. That way, it can be easy to transfer them to other schools. If you don’t know how to get the information, visit the closed school site on the Department of Education.
You can also opt for the teach-out plan. It helps you complete your program by schools that have agreed to take students from shut down schools. If you choose the closed school discharge, all your federal loans will be forgiven. You can only qualify when the school shuts down while pursuing your course or leaves the school without a degree, and it closed down 120 days after you left.
If you’re 100% sure that your school has defrauded you and due to that, it has caused you to incur thousands of student debts; this is the best time to get help. Even though the recent changes have made it more complicated, it’s still possible to get your loan discharged through the Borrowers Defense to Repayment.
The difficult part is proving that your institution misled you concerning your education program. Keep writing copies of everything about your school and store them in a secure place. Even though many institutions are honest about their conduct, it is still advisable to take proactive steps. It could save you a lot of trouble later in life.
If you don’t know what to do or where to begin, hire a financial expert to assist you with your student debt. You can also contact us right now for a free assessment. We promise to help you gain your financial freedom again. Call us right now: 800-820-8128.