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Defrauded student loan borrowers are now eligible to receive full cancellation of their debt, thanks to recent changes to the borrower defense repayment program. According to the U.S. Department of Education, these changes will potentially help cancel $1 billion for 72,000 borrowers.
Changes to the Borrower Defense Program
Borrowers who were misled by a predatory college are eligible for a borrower defense discharge of their federal student loans. For example, you might qualify for loan forgiveness if your school convinced you to borrow student loans by making false claims. This could include lies about the true cost of the loan, educational opportunities at the school or future employment prospects.
Previously, the program required borrowers to go through a complicated process to prove their college harmed them financially. Even if the Department of Education approved their claims, many borrowers only received partial forgiveness.
This process, which was implemented under former Education Secretary Betsy DeVos, denied claims of thousands of borrowers.
On March 18, 2021, the U.S. Department of Education announced that it will be changing how they determine relief under the program and putting an end to the existing partial relief calculation. The revised borrower defense program will provide a clear path to grant defrauded borrowers full debt cancellation.
The new rules apply to all approved borrower defense discharge claims, including those with a pending relief determination. Additionally, borrowers who previously received partial discharge will now have their student loans completely forgiven. The U.S. Department of Education promises to reimburse borrowers who have made payments on partially discharged loans.
How to Apply for Borrower Defense Discharge
Eligible borrowers can apply for borrower defense loan repayment forgiveness on the U.S. Department of Education’s website. You may be eligible for loan forgiveness if you:
- Borrowed federal Direct Loans, including Parent PLUS loans (private student loans, FFELP loans and Federal Perkins Loans are not eligible)
- Believe your college misled your or engaged in illegal misconduct
- Can prove that your school violated a state law related to your student loan or your education
Borrowers have the option to pause student loan payments while their claim is pending. Keep in mind, however that if your borrower defense claim is denied you be responsible for paying off your loans, including any interest that accrued during the forbearance or stopped collections periods.
If you have private student loans that won’t qualify for forgiveness, you may be able to lower your payments by refinancing.
