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Borrower’s Defense in 2021: Can Joe Biden Revive the Program?

borrower's defense

Borrower’s Defense to Repayment is an excellent program allowing student loan borrowers to get rid of their debts. This program grants forgiveness if debtors can prove that the school misled them or engaged in any kind of education-related fraud. 

The reason behind the forgiveness opportunity is that if you do not get what you are promised, you should not be responsible for the debt. This forgiveness plan prospered during Obama’s administration period. However, unfortunately, it is getting more challenging than ever to get debt relief through Borrower’s Defense rule.

There are debates about whether this program really benefits students in need or is just a waste of funds. Particularly, the Education Department and Secretary Betsy DeVos expressed their hesitation for such a program, which is why the forgiveness plan lost its power to help students. This guide will discuss what happened previously with the program and what is expected from Borrower’s Defense rule in 2021. 

Borrower’s Defense to Repayment during Trump Administration

Borrower's defense

As mentioned before, the Obama administration developed the program intending to ease the forgiveness opportunity for misled students. However, during the Trump administration, there emerged barriers for the students to get relief. More than 200,000 applications were received but not reviewed. For about fifteen months, applications continued to pile up and made borrowers wait for a long time. During this time, 0 applications were reviewed. 

The Lawsuits

Due to borrowers’ complaints, several attorney generals sued Betsy DeVos for her role in blocking Borrower’s Defense rule. During this time, the Education Secretary was criticized for sidelining for-profit colleges. Finally, a year later, the federal judge ordered an immediate raise of delay on the Borrower’s Defense rule after a year. The Public Citizen Attorney mentioned that this decision was a victory, and they will continue challenging the administration to implement it. 

On the other hand, a spokesperson for the Education Secretary mentioned that she respects the decision but still thinks that some of Obama’s rules were not effective policies. Instead, DeVos wanted to come up with more effective laws that will protect both taxpayers and debtors. She developed a new forgiveness calculation approach that could grant not full but a partial relief to borrowers and save billions during a decade. 

What Happened after the Lawsuits?

After a long battle over the Borrower’s Defense rule, in April 2020, the department started processing the applications. Some borrowers who waited for a long time for the review finally received the decisions. During the summer, approximately 74,000 applications were reviewed. Unfortunately, only 6% of them got approval for partial relief. The rest- the whole 94%- was rejected. 

According to the laws, the reason for rejection should be stated clearly in the notice. However, this was not the case for people who received rejection during summer. 

U.S. District Judge William Alsup claimed that the Education Department sent template letters for rejection, which were” alarmingly curt.” He explained that the secretary sends letters without proper explanation only due to her duty. Meanwhile, the Education Department spokesperson said that not all borrowers are eligible for Borrower’s Defense rule. The department works as fast as possible to resolve the cases so that eligible borrowers get relief. In response, William Alsup noted that not all borrowers could qualify, but all of them deserve a meaningful response.

It should also be mentioned that rejected borrowers can still apply for reconsideration. Therefore, Alsup was worried that debtors with no sense of exact denial cause would not be able to benefit from reconsideration. He wrote that arguing with unreasonable decisions is impossible.

What can be expected in 2021?

Even if the Department of Education and borrowers’ tensions continue, the problem can be solved once and for all by Biden’s administration. In Joe Biden’s student loan plan, it is mentioned that the administration will return to Obama-Biden Borrower’s Defense rule to cancel the debt of students facing misleading activities of for-profit colleges. Sure, designing this rule again can take the same time. However, it is also expected that Biden will bring more swift benefits until the student loan problem is solved in the long run. One of such short term benefits is immediate $10,000 student loan forgiveness for all federal borrowers. Joe Biden mentioned it in his tweet back in March 2020. Currently, the Progressive Democrats urge the president-elect to go even further and grant $50,000 forgiveness. 

Are the changes made to the Borrower’s Defense rule likely to be enforced?

Whether Biden’s administration will be able to return Borrower’s Defense or grant $10,000 forgiveness to debtors is still unclear. Even if the return to rule is mentioned in Biden’s plan, it will not be enforced unless Congress approves it. When it comes to immediate forgiveness, the matter seems more complex. First, there exist around 43 million federal borrowers. Granting a minimum of $10,000 for each borrower requires huge financial resources. Some experts claim that such action will not help poor people because they mostly do not attend high school. According to them, the student loan problem is more visible in the middle class. Hence, eliminating the student debt of these people does not affect improving poor people’s living standards. Meanwhile, some experts also think it is unfair to use taxpayers’ funds on others’ debts. 

A Note for Borrowers

note for borrowers

Understandably, the Education Department’s current approach and ongoing debates about Borrower’s Defense rule make it hard to access. Though some hope that Joe Biden will be able to end these discussions in favor of the borrowers, there is still no exact action in this way. Unfortunately, once again, it all depends on the borrowers to find a solution to their debt problems. 

Currently, the federal debt collection process stopped due to the pandemic and its negative effects on people’s incomes. The debt collector will not be resumed at least till the end of January. Hence, borrowers have more than a month of non-payment period to think about their challenges and develop a solid plan. Keep in mind that in no case should you let the fate of your debt depending on external decisions. It would help if you took control of the debt and be prepared for the worst scenarios. 

Get Expert Help

Unfortunately, most borrowers lack financial skills or do not even have time to follow news, updates and understand the consequences of proposed changes on their student loans. While it is understandable, it does not make the debt problem less significant. One cannot ignore this issue; loans will continue haunting the borrowers unless they have a solution. 

Hence, it is advisable to get expert help, like those in Student Loans Resolved. Our debt specialists have years of experience in the field and have helped thousands of borrowers like you. We help people by analyzing their financial standing and choosing the most suitable plan to reduce or relieve debt in a short period. Whether you want to apply to Borrower’s Defense rule or other forgiveness programs, our experts will guide you through the whole process. From the decision-making stage to the final application, we will be by your side.