Borrower Defense to Repayment

What happens if your school lies to you? Let’s say its commercials guarantee that 90% of their graduates get jobs, but it turns out that only 20% of graduates actually do. You may qualify for borrower defense to repayment, which means you can apply for a loan cancellation and seek a refund for the amount you already paid.  Here’s how to find out if you’re eligible and how to apply.

Who Qualifies for Borrower Defense to Repayment Loan Forgiveness?

You may be eligible for borrower defense to repayment of the federal loans you took out to attend a school such as the now-closed Corinthian College, ITT Tech, American Career Institute “ACI,” DeVry University, The Art Institutes, and more. More than 98.6% of the complaints filed for borrower defense were against for-profit colleges such as these. If the school misled you or engaged in other misconduct in violation of certain laws, then you can be eligible for borrower defense to repayment.

You can assert that the school violated state law related to the education services for which your loan was provided or to the federal student loan itself. Your school doesn’t need to have closed for you to be eligible for borrower defense.

Top 11 Schools That Have Generated Borrower Defense Claims

1. Corinthian Colleges (Everest College, Heald College, WyoTech)
2. ITT Educational Services, Inc. (ITT Tech, Daniel Webster College)
3. American Career Institute “ACI”
4. Education Management Corporation “EDMC” (The Art Institutes, Argosy University, South University, Brown Mackie College)
5. Adtalem Global Education, Inc., f/k/a DeVry Education Group Inc. (DeVry University, DeVry College of New York, Carrington College, Chamberlain University – College of Nursing, Keller Graduate School of Management, Ross University)
6. Apollo Education Group (University of Phoenix, Western International University)
7. Career Education Corporation “CEC” (American InterContinental University, Briarcliffe College, Brooks Institute, Colorado Technical University, Harrington College of Design, Le Cordon Bleu College of Culinary Arts, Missouri College, Sanford-Brown College)
8. InfiLaw Corporation (Charlotte School of Law, Arizona Summit Law School, Florida Coastal School of Law)
9. Alta Colleges, Inc. (Westwood College, Redstone College)
10. Graham Holdings, Inc. (Kaplan University, Kaplan College, Kaplan Career Institute, TESST College of Technology)
11. Globe Education Network (Globe University, Minnesota School of Business, Duluth Business University, Broadview University, Institute of Production and Recording)

Frequently Asked Questions About Borrower Defense to Repayment

How Can I Apply for Borrower Defense If I Attended ITT Tech or DeVry?

The borrower defense application is available online. This is for borrowers who did not attend any of the Corinthian Colleges such as Everest, Heald, and WyoTech — the application for those schools is different and outlined below. In order to apply for student loan forgiveness based on borrower defense at non-Corinthian schools, you can submit an application by:

1. Completing an online application form. Within the form, you’ll sign it digitally. It’s useful to submit additional documentation as part of your application by uploading scanned PDFs. Prepare these documents before starting the application process so you’re as ready as possible when you have the form open.
2. Completing a fillable PDF application form, printing it, and signing it. Then, you need to send your completed form to the U.S. Department of Education by email to BorrowerDefense@ed.gov or by regular mail to U.S. Dept. of Education – Borrower Defense to Repayment, P.O. Box 1854, Monticello, KY 42633. If you submit your PDF application by email, you need to upload an electronic version of your signature via a picture file. Include any additional documents with your application as well.

How Do I Apply for Borrower Defense to Repayment If I Attended a Corinthian College?

Borrowers need to complete a Corinthian-specific application, which can be found at the Information about Debt Relief for Corinthian Colleges Students page. Corinthian Colleges, Inc. sold most of its schools and closed the remaining ones and this means that some students may receive forgiveness of their federal student debt.

If you are in one of these two situations, you might be eligible for loan forgiveness:

• You attended a Corinthian school that closed on April 27, 2015.
• You believe you were defrauded by the Corinthian school you attended or that the school otherwise engaged in actions that violated applicable state law—regardless of whether that school closed.

To find out if you are eligible, follow the links below:

• You may be eligible for closed school debt relief if you attended a Corinthian school that closed on April 27, 2015.
• You may be eligible for debt relief based on borrower defense to repayment if you believe that you were a victim of fraud or another violation of state law at Corinthian no matter if the school is open or closed.

 What Additional Documents Can Support My Borrower Defense Application?

 Additional documents to submit as part of your borrower defense application include the following:

• Documents that show your program of study and your dates of enrollment at the school for which you are applying for borrower defense; this can include enrollment agreements, transcripts, and registration proof.
• Materials promoting the school
• E-mails with school officials
• The school’s course catalog or their manual

How Do I Know If My Borrower Defense for Repayment Application Was Accepted or Denied?

The U.S. Department of Education or your lender will contact you once they’ve reviewed your application to tell you whether it was successful or denied.  You can almost monitor your student loan balance in case you never receive a communication from the DoE.

 What Happens if I’m Eligible to Receive Borrower Defense Forgiveness?

If you’re eligible to receive forgiveness for your federal student loans, then you may have all or part of the debt forgiven and you may be reimbursed for amounts you already paid on these loans. Remember that you are only eligible for forgiveness if your school’s activities or misconduct directly relate to the loan or the educational services for which the loan was provided. Any claims such as harassment or personal injury that don’t relate to the loan are not bases for your borrower defense application.

Eligibility for federal student loan forgiveness only applies to the federal student loans you took out to pay the school related to your borrower defense application. If you need to submit borrower defense against multiple schools, then you’ll need to submit separate applications for each school.

Your federal student loans may be discharged partially or completely. Partial forgiveness means that you need to repay any amounts that are not discharged including any interest that accumulated on the loans.

What Happens If My Borrower Defense Application is Denied?

Your loans will not be discharged and the forbearance or stopped collections status will end. You will need to repay those loans and all of the interest that accrued during the forbearance or stopped collections period.

 What If I’m Not Eligible for Borrower Defense But I Can’t Pay Back My Loans?

If you’re one of the millions of Americans who can’t pay back their student loans and you’re not eligible for borrower defense for repayment, then there are other options you can pursue. Check out our Complete Guide to Student Loan Forgiveness to investigate options such as:

• Public Service Loan Forgiveness. The public service student loan forgiveness (PSLF) program offers loan forgiveness to those who work in the public sector. This includes non-profit employees, volunteers in the Peace Corps, public school staff and teachers, and government employees, among others.
• Teacher Loan Forgiveness. The Teacher Loan Forgiveness program is a form of student loan forgiveness that is separate from the Direct Loan or Obama Student Loan Forgiveness program. This program awards educators with a principal reduction of their federal loans. It was made to encourage students to enter into educational occupations and incentivize teachers to continue teaching.
• Disability Discharge Student Loan Forgiveness. Disability discharge helps borrowers suffering from a total and permanent disability (TPD) by offering a complete discharge on your federal loans. Unfortunately, most private lenders do not offer disability discharge for private student loans except for Sallie Mae, Wells Fargo, Discover, and New York Higher Education Services Corp.
• Bankruptcy and Undue Hardship Student Loan Discharge. It might be rare, but it’s possible to have your student loans discharged through bankruptcy. This process requires proving “undue hardship” and may require hiring a student loan lawyer.

Take a look at the other options available to you in terms of student loan forgiveness to see if you’re eligible for existing programs that apply when borrower defense doesn’t.  You can consider taking a job which offers student loan forgiveness as well.

What Is the Status of My Loans While I’m in Borrower Defense?

In the application, you can choose to have your federal student loans placed in forbearance or stopped collections status while the U.S. Department of Education reviews your application. If you choose one of these options, then collections will be ceased on any of your loans that are in default during the review process.

If you don’t select forbearance or stopped collection options within the application, then your loans will be placed into either forbearance or stopped collection and the U.S. Department of Education will request a forbearance or stopped collection for any commercially held Federal Family Education Loan (FFEL) Program loans that you currently have. Loans that are in forbearance will continue to accrue interest.

Frequently Asked Questions About Forbearance/Stopped Collections Status While Applying for Borrower Defense of Repayment

When you submit a borrower defense application, then you may have your federal student loans placed into forbearance and have any debt collections on your defaulted federal student loans stopped.

What Do Forbearance and Stopped Collections Status Mean?

• Forbearance: during forbearance, you do not have to make payments on your loans and they will not default. Your loan servicer will inform you when your loans have been placed in forbearance. Make payments until you receive that notice.
• Stopped Collections Status: the collections on your loans stop. The federal government will stop trying to collect on the loan, including withholding money from your wages or income tax refunds. This will continue until your application process is complete. If you’ve defaulted on your loans and are in a rehabilitation plan, then you should contact your collection agency to see if entering into a stopped collections status will have negative consequences for your plan.

Interest will continue to accumulate on your federal student loans, including on subsidized loans. If your application for borrower defense if denied or only partially approved, then your interest during the application period will be added to the amount owed when you entered forbearance and the total you owe might be higher.

It’s important to note that you do not have to place your loans in forbearance or stopped collections to apply for borrower defense forgiveness because your U.S. Department of Education-held federal loans will automatically be placed into one of these options.

Can I Stop the Forbearance or Stopped Collections Status?

Yes. You can contact your loan servicer to do so.

Can I Make Payments on My Federal Loans That Are in Forbearance or Stopped Collections Status?

Yes. You can make payments on any of those loans including on accrued interest.

Who Can I Call For Help About Borrower Defense?

 If you have questions about borrower defense, you may call the borrower defense hotline: 1-855-279-6207. Representatives are available Monday through Friday from 8 a.m. to 8 p.m. Eastern time.

Closing Thoughts

If you think you’ve been defrauded by your school and are buried in student loan debt, then the borrower defense to repayment could be the right option for you. If you aren’t eligible, there are other options available to you that can help.

Dealing with fraud is a very difficult situation and one that will take time and resources to resolve. Maintain records of everything your school has done or communicated with you so you can build a strong case against them. The sooner you can resolve the damage that being defrauded has done, the sooner you can move on with your life.