Borrower defense to loan repayment can help you get loans discharged if you were defrauded by a college or university.
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“Borrower defense to loan repayment” is a federal protection for defrauded borrowers.
You may qualify to get all or some of your student loan debt discharged through borrower defense.
Only Direct Loans qualify for borrower defense; private student loans aren’t eligible.
of Insider’s student loan coverage here.
Options for student loan cancellation are often limited to programs like Public Service Loan Forgiveness. However, you may be able to have your student loan debt forgiven through something called “borrower defense to loan repayment” if your school defrauded you or violated specific state laws, like consumer protection statutes.
What is borrower defense?
Borrower defense to loan repayment, often referred to as borrower defense for short, is a program from the federal government that allows you to discharge some or all of your student debt. You must prove you suffered specific financial harm as a result, such as not being employable as a result of your program.
You can opt to put your loans in forbearance as a part of your claim while you wait for the result of your request.
If your request for borrower defense is declined, you will not receive a discharge of any of your federal student loans. The forbearance or stopped collections period will also end for all of your loans. You will need to repay these loans, including accrued interest during the period of nonpayment.
What are the recent changes regarding borrower defense?
In March 2021, the Department of Education updated some rules for borrower defense. Currently, borrowers approved for borrower defense can get their loans fully discharged (previously the amount of loan discharged was based on a formula used by the Trump administration). Any amount paid toward the loan can be reimbursed, you can request negative credit reporting to be reversed, and you can be reinstated for federal aid eligibility if you lost it.
So far, the Department of Education has cancelled over $2.6 billion in student debt for borrowers defrauded by for-profit schools such as ITT Technical Institutes, Westwood College, Marinello Schools of Beauty, and the Court Reporting Institute.
Who is eligible for borrower defense?
You may be eligible for borrower defense if you can prove your school defrauded you or if it closed before you could receive a degree. Even if the Department of Education has ruled that your school is responsible for defrauding students, you still need to apply for borrower defense – you won’t get automatic forgiveness.
Only Direct Loans are eligible for borrower defense. You can’t discharge private loans, Federal Perkins Loans, or Federal Family Education Loans through borrower defense.
You can send in a claim regardless of whether your school has shuttered and even if you qualify for other loan forgiveness programs. You can’t make …read more
Source:: Business Insider
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