How to Qualify for a Capella University Student Loan Refund or Discharge
NEWS ALERT: On Thursday, December 13th 2018 the Department of Education announced that they’re approving $150,000,000 in Borrower’s Defense to Repayment Discharges, including discharges for people who attended Capella University.
If you’ve already submitted your Capella BDAR application, then there’s a great chance you’ll receive forgiveness during this wave of approvals, so be sure to monitor your email closely, as DOE started issuing alerts notifying borrowers of approvals on Friday December 14th.
And if you haven’t already submitted your Capella Borrowers Defense application, then I’d suggest getting it in TODAY so that you stand a chance of being included in this round of approvals!
If you are a former Capella University student, then I’ve got some good news.
In 2019, it’s not only very possible, but altogether easy to qualify for the Borrower’s Defense To Repayment program, which would allow you to eliminate up to 100% of your student loan debt without paying a penny!
In the rest of this post, I’m going to provide you with details about the BDAR Discharge Program, including the specifics about who qualifies for it, how and where to apply for the benefit, and how to properly write your Borrower’s Defense application to improve your chances of having the discharge request approved.
If you’re a former Capella student seeking student loan forgiveness then you’ve definitely come to the right place.
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The Capella University Lawsuits
Capella University has been hit by numerous lawsuits in recent years, which opens the school up to claims from people attempting to discharge their loans via the Borrower’s Defense to Repayment Program.
The lawsuits make Capella uniquely eligible for BDAR Discharges because they include accusations that the school violated Federal laws and committed fraud against potential students, which is exactly what the Federal Government is required to receive a Borrower’s Defense Discharge.
None of the lawsuits are good news for Capella, but the worst is probably the one brought against them by a police pension fund that claimed Capella used “abusive and fraudulent recruiting and financial aid lending practices” in order to increase both their revenue and the price of their stock.
However, the police union isn’t the only group going after the school in court, as other former students have claimed that Capella strung them along regarding the quality of their PhD work not because it was bad work, but in order to keep their tuition money flowing for as long as possible.
And keep in mind that this is just a very small sample of the legal troubles Capella University has found itself embroiled in. If you do a quick Google search, you might find that Capella University and the word “lawsuit” go hand in hand.
Discharging Capella Loans via the Borrower’s Defense Against Repayment Program
The Borrower’s Defense To Repayment Program is an official US government program designed to help people who studied at schools that broke the law in some way by allowing them to discharge student loans that were only taken out in the first place due to some kind of illegal behavior or fraudulent activity committed by the school.
Because Capella University is no stranger to lawsuits, former students of the school have a really good chance at finding themselves eligible for the program, especially if they experienced any of the illegal behaviors Capella’s been accused of within those lawsuits, and should think seriously about applying for a BDAR Discharge of their own..
If you think this is a longshot, you shouldn’t, because many other former students of Capella have already used the Borrower’s Defense Program to get their loans discharged, and you can too!
In fact, if you did experience some significant illegal activity by Capella, and it’s because of that activity that you took out loans to attend the school then there’s a very good chance that you can use it to receive loan forgiveness for yourself.
To receive a discharge, you’ll have to fill out the BDAR application, and you’re going to need to learn how to do that in a way that links the specific illegal behavior you experienced to the illegal activities Capella has been accused of in court, and especially those they’ve admitted to, or at least been found guilty to have committed. Throughout the rest of this post, I’ll detail what you need to do in order to achieve this.
But basically, if your Borrower’s Defense application is properly filled out and processed, you’ll have a very good chance of receiving not only receive loan forgiveness but also a refund for any money you’ve already paid toward the loan as well.
How to Write Your Borrower’s Defense Claim
The first thing that you’re going to need to do is figure out what specific illegal activities you were exposed to, and the easiest way to do that is to review the lawsuits against Capella and to think back about your experience with the school.
If you find they’ve been accused of any illegal behaviors that you also experienced first-hand, then you’ll be able to use those behaviors as the argument for why your Capella loan should be discharged.
Here’s the thing though – you can’t just say “Capella has been sued for these behaviors, which I too experienced, therefore I deserve to have my loans forgiven.”. What you do need to do is to say something like “I never would have taken out student loans to attend Capella had I not been exposed to this illegal/fraudulent behavior, thus my loans should never have been created in the first place, and deserve to be discharged via the Borrower’s Defense to Repayment Program.”
To restate the core point here, you’re going to need to explain that you never would have taken out the student loan to attend Capella if the school hadn’t engaged in fraudulent business practices that convinced you it was a good idea.
However, it’s not enough to just say that they committed fraud. You’ll need to be very specific and show how they misled you via false advertising or some other illegal behavior. You’ll need to explain exactly what Capella said to you that convinced you to take out the student loan.
Next, let’s look at a few of the illegal behaviors that Capella has been accused of in court, as you read through these, remember, you should be thinking back about your experience with the school to see if any of this sounds familiar. If you personally experienced any of these illegal activities, then you should definitely apply for a BDAR Discharge of your own.
What Fraudulent Activity has Capella Been Accused Of?
Capella has been accused of using aggressive recruiting tactics on prospective students and promising all sorts of things in an attempt to get their hands on the student loan money, including things that were simply not true, and other things that they didn’t intend on actually doing or delivering.
I’m going to provide you with some examples of those aggressive recruiting tactics in a bit. However, let me emphasize again that it’s not enough to simply point out that Capella did these things and got in trouble with the law for it because of other lawsuits.
What you’re going to need to do is stress the fact that the school did these things to you, personally, and that these illegal behaviors were solely responsible for your decision to believe that it was a good idea to take out student loans to attend their higher education programs.
Capella’s Illegal Marketing Activities
Did Capella assure you that after you graduated from their program you would be able to find a job right away? In your field? Within a specific period of time? Were you able to do just that?
Did the Capella recruiter tell you that the program had a high graduation and job placement rate? Did they cite specific numbers or percentages to make it sound like their programs were extremely easy to graduate from, and use to find a job?
Did Capella seem to care more about the tuition money you were paying them rather than your academic progress? Do you have any examples of their behavior where you can prove that fact?
If any of this sounds familiar, then the good news is that you should be able to use these as the arguments for your Borrower’s Defense Claim, because these are the specific claims levied against Capella in some of the lawsuits filed against them in recent years, and each of these is a violation of Federal law, which opens the school up to Borrower’s Defense to Repayment Discharges..
Where Can I File My Borrower’s Defense Claim?
Here’s a link to the official Borrower’s Defense application.
If you want to read it before you start filling it out via the wizard, just click “View Form” at the bottom of the page and you can browse through the document itself.
This is the only place you should file your Borrower’s Defense claim. Don’t file it with anyone else, because anybody else who’s claiming to be capable of helping you through the process is either trying to scam you, or simply trying to extract money from you for a service that you do not need.
If you get stuck while filling out the application, please ask your questions in the comments section below and I will personally help you with the details. There’s no reason to pay anyone for assistance with this, unless they’re an attorney, because it’s really not that complicated a process.
Checking The Status of My Application
Unfortunately, you might not hear anything about the status of your application for quite some time ,but don’t be dismayed because it’s entirely normal.
Silence from the Department of Education doesn’t mean that anything’s wrong, it just means that they’re significantly understaffed to deal with the volume of applications they’ve been receiving as more and more people become aware of the Borrower’s Defense process.
I personally know people who’ve waited well over a year to even hear back from the Department of Education, so don’t think that just because you’ve waited a week or two you should be on the verge of getting a response from them, and make sure to keep paying your monthly student loan payments until they tell you, in writing, to stop doing so!
Don’t let this stop you from applying for a Borrower’s Defense Discharge though, because this is simply the best program on the planet for eliminating student loan debt without paying for it.
Also, you should be aware that it’s a good idea to get your application in as soon as possible, because Betsy DeVos, the Secretary of Education, is no fan of the Borrower’s Defense program and is actively lobbying to try to shut the whole thing down.
If she’s successful in ending the benefit, then those of you who waited to submit your applications may no longer have access to the system, but anyone who has already applied will probably be grandfathered through and remain eligible for the discharge. Don’t get left hung out to dry, get your application in ASAP!
Will I Owe Taxes on Forgiven Debt?
Yes, you will. Unfortunately, the IRS considers forgiven student loan debt to be taxable income. Here’s an example of how it works:
Let’s say that you use the Borrower’s Defense program to discharge $100,000 worth of student loan debt. Let’s also say that your taxable income rate is 30%. That means that you will now owe the IRS $30,000. Ouch.
Here’s where it gets even more painful. The IRS will want all of that $30,000 right away, in one lump sum payment, rather than spread out over years like your student loans allowed you to do.
Do you have that kind of cash laying around? If you’re like most Americans, you don’t, and that’s precisely why I’ve created a new website to help people get rid of their IRS Tax Debt, called Forget Tax Debt.
If you’re struggling with IRS tax debt, you should visit my site, or at least consider starting by reading these articles, which offer advice on different types of back tax problems: Filing & Paying IRS Back Taxes, IRS Tax Debt Settlements, The IRS Fresh Start Program, and IRS Tax Debt Forgiveness.
Where Else Can I Ask Questions?
If you need help with anything related to student loan debt, the first thing you should do is search my site for whatever questions you might have. You’ll find I’ve created all sorts of guides to help people get through different parts of the student loan debt process, and there’s sure to be something that is useful to you here.
If you need Help with Federal Student Loans, you may want to start by visiting my pages on Federal Loan Forgiveness Programs, Federal Student Loan Bankruptcy Discharges, Federal Loan Consolidation Programs and Federal Student Loan Repayment Plans.
And if you need Help with Private Student Loans, you’ll probably want to start with my pages on Private Loan Forgiveness Programs, Private Student Loan Consolidation Options, Private Student Loan Bankruptcy Discharges and Private Student Loan Default Help.
Remember, it’s not necessarily a good idea to take advice about student loan debt from anyone other than an official representative of the US Government or the Department of Education, which I am most certainly not, but you’ll want to watch out for all the people out there running Student Loan Forgiveness Scams, and only working with official Government Agencies and Representatives is the easiest way to do that.
Finally, if you have any questions after reading through my site, please feel free to ask them in the Comments section below and I’ll do my best to get you a response within 24 hours.
Disclaimer:Information obtained from Forget Student Loan Debt is for educational purposes only. You should consult a licensed financial professional before making any financial decisions. This site receives some compensation through affiliate relationships. This site is not endorsed or affiliated with the U.S. Department of Education.
The email that the FAFSA/BDAR had on file that I couldn’t change was my old capella address that I don’t know if it works anymore. If that is the way they contact me that way how will I know. I will try and go on the website and see if it will let me change my email address. Your website was extremely helpful and I would be blessed if I could receive forgiveness. I don’t know if it will be approved but I did have contact information, clear dates and hopefully enough information. The program I was in is no longer in existence, so I hope that helps my case.
What information is there about keeping you in a PhD program just to keep tuition coming in? I think I was kept in the program for a number of years until tuition ran out and only then was my mentor willing to work with me on the dissertation. Would this be grounds for a discharge?
Yeah, so… no. How would you prove that? You need to prove that the school committed fraud against you. Did you read my full post? I’ve outlined the types of arguments that make people eligible for BDAR. You should be trying to qualify using one of them.
Is it too late to file this?
If I were to have my loan forgiven would the monies that I would be responsible paying to the IRS include the total loan with incurred interest or the original total of the loan? Meaning if the original total of the loan was $48,000 (approximately) and the total loan with accumulated interest exceeded $70,000 would I owe $8,400 or under $6,000 if I am within the 12% tax bracket? Additionally, I was not allowed to complete the degree that I was initially enrolled in and required to change degree plan as a result of disciplinary action that I do not believe to have been appropriate…do you think that this would make it more or less likely that I would be eligible for loan forgiveness?
Good question. I am not entirely sure how this works out because it depends on which kind of forgiveness you qualify for. I would contact your CPA, the IRS, or your loan servicing company for details.
I enrolled in Capella in 2010. Do you know where I may be able to obtain marketing material for the School of Public Leadership/PhD in Human Services that may specify length of the program and other specifics.
Length of the program probably isn’t going to help – what you need are graduation rates, job placement rates, earnings statements, etc. More direct evidence of false advertising. Visit the Internet Archive’s Wayback Machine and plugin the school’s domain, then look at old dates from around the time you started considering attending, and start navigating through old versions of the site to look for the pages you think will contain the fraudulent claims. This is going to require some work.
Omg I have tons and tons of years of emails of fraudulent promises from the DSW program in 2010. I can log into my old Capella alumni site and access my email from back them. They screwed me for $120k and I earned all my credits and they screwed me. 74/74 and a 4.0 and they screwed me. Want a story? Email me. It’s a mess. Now I have 250k in loans because I had to start over and blah blah so I’ve met my aggregate limits because of Capella. I was in their 2nd cohort and they kept taking forever to grade dissertation and I sat around for weeks charging up my student loan bill semester after semester waiting for my chair to edit my work. It was a strategy for becoming one of the wealthiest and most strategic online universities. I’m screwed for life. I’m doomed and have developed deep psychological pain over the situation. I’ll never be able to even pay a money by interest payment. Help!!!!!
If you’ve got email evidence of false promises and fraud, then you’re in a great spot for the BDAR Discharge.