Student Loan Forgiveness via Borrower’s Defense to Repayment Discharges
(Updated October, 2018)
NEWS ALERT: On Tuesday, October 16th, a Federal Judge ruled that Betsy DeVos must immediately terminate all delays for the Borrower’s Defense Program, and order her Department to immediately begin evaluating applications again. Borrower’s Defense is now FULLY LIVE again, and DeVos has stated that she will seek no further delay in the program!
What is the Borrower’s Defense Against Repayment Program?
In 2018, it’s the fastest, easiest, and best way to get rid of your outstanding student loan debt, because it allows you to challenge the legal validity of your loans.
Through Borrower’s Defense, you can qualify for a complete loan discharge if you can prove that your loans shouldn’t exist in the first place because they were created based on lies, deceptions, or some kind of outright illegal activity (like false advertising, or fraud).
This post will teach you how to use the Borrower’s Defense to Repayment Program to wipe out your Private or Federal student loans without paying for them, but first, let me make a suggestion: if you’re having trouble understanding Borrower’s Defense, or if you’re worried about making a mistake on your application form, then I recommend that you call the Federal Government’s Official Borrower’s Defense Hotline at 1-855-279-6207.
The Hotline is open Monday through Friday from 8 a.m. to 8 p.m. EST, and can answer any questions you have about the BDAR Program, including checking on the status of your application. There is no cost to call and this is the official hotline from the Federal Government, so you can trust that it’s not some kind of scam or any sort of paid service that’ll seek to charge you for their assistance.
Get Your Borrower’s Defense Applications in Now!
Not only are my readers reporting that it can take over a year to hear back from the Federal Government on submitted Borrower’s Defense Claims, but we’re now also facing an imminent threat of getting the program shut down completely.
I recommend getting your Borrower’s Defense to Repayment application form submitted as soon as possible, because President Trump’s Secretary of Education Betsy DeVos is actively trying to destroy the Borrower’s Defense Against Repayment Program, just like she tried to kill off the Public Service Loan Forgiveness Program.
In July of 2017, Secretary DeVos attempted to “freeze” the Borrower’s Defense Against Repayment Discharge Program, claiming that the rules created “a muddled process that’s unfair to students and schools”, but we all know that this is a complete lie, as the process is extremely straightforward.
What Betsy DeVos is really trying to do here is to protect her friends and family members who work for corrupt For-Profit Schools and literally evil Student Loan Servicing Companies who stand to lose billions of dollars when all of these immoral student loans end up getting discharged.
Summer, 2018: Betsy DeVos’s Latest Attacks Against BDAR
On July 25th, 2018, Betsy DeVos’s Department renewed her attack on the Borrower’s Defense Program, releasing new proposed regulations that seek to make things even harder for borrowers.
Under the new standards, qualifying for an approved BDAR discharge will require that borrower’s prove the school or lender did something illegal with “known falsity, intent to deceive, or reckless disregard for the truth” (current rules don’t require a “known falsity”, a purposeful deception, or reckless disregard of the truth; all we need is illegal or fraudulent activity).
Furthermore, the new proposed standards want to make any group claims (like class action lawsuits) illegal, and to change “institutional financial responsibility standards”, basically making it even more difficult to find the schools, lenders and servicing companies guilty of any wrongdoing.
Finally, per Forbes, the new rules clearly state that borrowers will no longer be allowed to pursue a borrower’s defense claim unless they have already defaulted on their loans, which is a massive change to the current system that allows a claim to be made at any time.
Please Sign My Petition to Protect BDAR from Betsy DeVos!
Honestly, there’s never been a bigger threat to Borrower’s Defense, and it’s imperative that you write your congressional representative, senator, and anyone else you can contact to lodge your complaint about Secretary DeVos’s plan.
If Betsy DeVos gets her way, she will effectively kill off every facet of the Borrower’s Defense Program that’s actually helping people, preventing anyone from ever receiving another BDAR discharge, and ensuring that the for-profit schools and hedge fund bankers she represents get to keep collecting money from impoverished Americans.
Please help to protect this vital loan forgiveness program by signing my petition to protect Borrower’s Defense to Repayment here:
How to Get Your Loans Discharged via Borrower’s Defense
The best way to get out of paying back your Federal or Private student loans is to take advantage of the Borrowers Defense Against Repayment provision of the Higher Education Act of 1965.
Many Americans have never heard of this excellent opportunity to receive complete forgiveness from excessive student loan debt, but people are waking up to these opportunities thanks to the now popular ITT Tech Student Loan Forgiveness Program, the DeVry Student Loan Forgiveness Program, and the Corinthian Colleges Student Loan Forgiveness Program, which are all helping people to realize that they can fight back against their lenders.
The “Defense Against Repayment” provision is an often-overlooked statute buried within the U.S. Higher Education Act of 1965, but one that is growing rapidly on popularity, as it states that the Department of Education is authorized to allow students to get out of paying back their student loans if they can prove that they faced “acts or omissions of an institute of higher education”.
How Does Borrower’s Defense Actually Work?
If your school ever lied to you about anything, like overstating your job prospects, promising you salary expectations, or guaranteeing you management positions, then you can petition the Federal Government to invalidate your student loans, and discharge them entirely.
This works for any sort of violation of State or Federal laws that the school may have committed, but it also applies to student loan servicing companies (in some cases), where you’re able to get Federal Student Loan Forgiveness because the servicer lied to you, didn’t give you the right information, made some false promise, or cheated you in some way.
The Navient Student Loan Forgiveness Program is a great example of this sort of thing, where Navient failed to properly support their borrowers, and is now being sued by the Consumer Financial Protection Bureau.
Bottom line: while we wait for President Trump’s Student Loan Reforms to be announced, your best bet at getting your Federal loans discharged, reduced, or in some other way dealt with is to pursue a Borrowers Defense Against Repayment discharge.
What is the Process for Using Borrower’s Defense to Repayment?
It’s important that you fully understand how the defense to repayment provision works, because getting approval for a defense to repayment discharge requires making a sophisticated legal argument that your school violated the law in some way, essentially tricking you into taking on student loan debt due to their false promises that it would be worth the cost.
Receiving approval for a defense against repayment argument involves collecting evidence and presenting the Department of Education with proof “that the school did something wrong or failed to do something that it should have done”, which is provided in the form of the Borrowers Defense Against Repayment letter.
Importantly, this law also stipulates that you may only rely on the defense against repayment argument if the school’s act or omission was directly related to your loans, or to the educational services that the loan was intended to pay for, and if what the school did (or didn’t do) would be considered a violation of state law.
That means you can’t accuse the school of doing something illegal, and get your loans discharged, if their illegal behavior had no impact on your decision to take out student loans to pay for their services.
How Do You File for a Defense Against Repayment Discharge?
(Updated Summer, 2018)
When this program was first initiated, the application process was terrible, because it requires you to submit information to your student loan servicer, giving them the call on whether or not your loans would be forgiven (and costing them money!).
Fortunately, the rules have been updated to remove the servicer from as much of the approvals process as possible, and you now have two options for submitting a Borrower’s Defense Application Form: either doing it online, via the official Federal Government website, or by printing out all the forms, filling them out, and mailing them in.
If you want to submit your application online, go here.
If you want to print the paperwork and submit it via snail mail, go here.
Borrower’s Defense Forgiveness & Taxable Income Laws
One thing you need to keep in mind about getting a Borrower’s Defense Discharge is that the eventual student loan forgiveness benefit you receive WILL have to be counted as taxable income on your IRS filings the year that you receive it.
And that’s a big deal, because it could mean you’ll end up with a much higher tax bill than you were expecting to face.
For specific details on how forgiveness and taxes work, please visit my page about Student Loan Forgiveness Benefits and Taxable Income Laws, but for now, here’s a quick example to give you an idea of what will happen:
Let’s say your Borrower’s Defense Application is approved, and you get $10,000 in student loans forgiven. The year you have that debt forgiven, you’ll now have to list that $10,000 as taxable income on your IRS tax return, meaning you’ll have to claim that $10,000 as income, and you’ll owe income taxes on it.
If you’re paying 25% income taxes, you’d now owe an additional $2,500 to the IRS (on top of whatever else you have to pay for the year).
And this is a big deal, because most student loan borrowers who need a Borrowers Defense Discharge aren’t swimming in money; they’re typically buried in debt!
The Coming Student Loan Forgiveness Taxpocalypse
Most people who talk about student loan forgiveness benefits and even the Borrower’s Defense to Repayment Program fail to mention this important part of the process, perhaps because it’s uncomfortable, but the reality is that a lot of people are going to end up with fewer student loan debt, but way more IRS tax debt.
And that’s precisely why I’ve created a new website called Forget Tax Debt, which offers the same kind of advice I provide readers here about student loans, except that it’s entirely focused on getting rid of IRS tax debt that you’ve racked up.
If you have any tax-related problems, you’ll definitely want to check out Forget Tax Debt, where I go through all sorts of complicated tax programs in extreme detail, offering advice on things like How to Apply to the IRS Fresh Start Program, How to File and Pay IRS Back Taxes, and How to Qualify for Tax Debt Forgiveness or an IRS Tax Debt Settlement.
Why Did Borrowers Defense Become Popular all of the Sudden?
It’s kind of funny that this little legal provision from way back in 1965 is only now starting to receive so much attention, but that’s happening for one very good reason.
The now defunct Corinthian Colleges, notorious day-time advertiser and parent company of the largest for-profit schools chain in the United States, home to Everest, Heald and WyoTech, is the reason for this provision’s newfound popularity.
When Corinthian collapsed under the weight of its own corruption (and the added pressure placed on it by a series of Federal investigations for fraud and deceptive business practices), a huge portion of it’s thousands of students found themselves between a rock and a hard place.
These were students who had racked up tens of thousands of dollars in debt, but who now had zero chance of receiving a diploma that would help them to land jobs capable of providing income streams to pay that debt back.
These were students who had sunk thousands of hours, and tens of thousands of dollars, into education programs that would never lead to degrees of any sort.
But these students decided to do something about their unique situation, and they accomplished something that no previous generation of debt-saddled college kids had managed to accomplish: they went on strike, publicly swearing to refuse to pay back their debt, and the media covered their efforts!
Birth of the Student Loan Debt Strikers
Initially called The Corinthian 15, this group of student loan strikers received a tremendous amount of media attention, raising enough awareness for their problem that the entire country began to take notice of what was going on, and earning enough sympathy to get a federal hearing scheduled with the Department of Education.
Fortunately, DOE sided with the debt strikers, and on June 8th, 2015, announced that they would support the tens of thousands of students caught up in the collapse of Corinthian Colleges.
But the best part of the whole deal was that the Department of Education was serious about their promise to help those now saddled with excessive student loan debt, as they publicly affirmed that those students would be able to qualify for a comprehensive student loan forgiveness program, governed by the old 1965 defense against repayment provision.
Forgiveness Expands Outside the Corinthian System
The great news for those of you who did not attend a Corinthian-affiliated school is that it’s not the only case under which defense against repayment may be invoked.
In fact, the Department of Education itself made clear that other schools (especially those operating in the for-profit sector), would also be covered under the conditions of the provision.
Along those lines, the Consumer Financial Protection Bureau went to the mat on behalf of begrudged students by filing a lawsuit against the for-profit ITT schools, stating that ITT has “exploited its students and pushed them into high-cost private student loans that were very likely to end in default.”
And that’s serious business, because while you may not know anyone who attended an ITT school, this massive for-profit educator enrolls about 70,000 students per year (far more than most of the big schools you ARE familiar with).
That single suit seems to have opened the floodgates for others seeking to qualify under the defense to repayment provision, encouraging millions of other students who now feel like it may be possible to get out of paying back their student loans.
How Can I Apply for Defense Against Repayment Forgiveness?
While the good news is that it is possible to qualify for a discharge under the defense against repayment provision, the bad news is that it’s not an easy process.
However, at least the Department of Education has caught up with the times, and now you can find a Borrowers Defense Against Repayment form available directly from their website, here.
This has made the process much easier than it was before when only a loose set of guidelines were provided, and people had to figure out what to include, how to structure their letters, and everything else about them entirely on their own, so if you haven’t yet filled out one of these letters, now is definitely the time to get started.
Also, as I mentioned earlier in this post, what you’ll need to do is prove that your school committed some sort of fraudulent activity by either doing something, or failing to do something, which influenced your decision to enroll in their education program, but which also violated applicable state law.
If your school convinced you to sign up for their expensive program because they made promises about your ability to pay back the loan (either by inflating job placement rates, salary statistics, or some other similar data), then you’ll have a pretty good shot at qualifying for a defense against repayment discharge.
Make sure you include as much detail as possible (relevant detail), in your application letter and provide specific details about how you were lied to, what you were promised, told, or not told about, to clearly explain why you believe the school violated some law.
In your defense against repayment letter, I would encourage you to include detailed explanations of each of the following things:
How to Write a Defense To Repayment Letter
(This is historical info, from when the program didn’t have an official application form yet.)
- A written statement saying that you “Wish to assert a borrower defense to repayment based on state law”
- Your first, middle and last name (use your official legal name)
- Your date of birth
- Your home address
- Your email address
- Your telephone number
- The last four digits of your Social Security number
- The name and address of the school you attended
- The name of the certificate or degree program you earned, or were seeking to complete (both people who completed their programs, and people who didn’t, are eligible for a defense to repayment discharge)
- The dates you were enrolled at the school
- Documentation to prove that you were enrolled in the school, for the program you specified (use your transcripts or registration docs for this)
- A detailed explanation of how your school defrauded you, including a description of which state law or cause of action your school violated, an explanation of how their alleged misconduct affected your decision to attend the school (and take out loans to pay for the program), and the damage you’ve suffered (likely an explanation of your ruined finances) as a result of the school’s alleged behavior
Sounds Simple, Right?
If you think that the above list of requirements seems simple, please read through them again to be sure that you fully understand what you’re being asked to provide.
This is not a simple yes/no type application, or even a basic multiple-choice type form. You’ve literally got to prove the fact that you were defrauded (lied to in some way), and screwed over by your school.
For most people, that’s not an easy argument to make, so if you aren’t a great writer, then I’d advise you consult with an attorney for assistance to ensure that your application is rock-solid.
I haven’t run into anything explaining how the appeals process will work for defense to repayment applications, and I’m not yet sure if you’ll even be offered a second round chance at getting an approval once your initial application is submitted and denied.
What’s that mean? It means you’ve got a lot to lose by screwing this up, and that you should probably pay a lawyer to review whatever you put together to ensure that you haven’t made any mistakes.
What Kinds of Things Constitute Being Defrauded?
What sorts of things can you use as examples of having been defrauded by your school? I’m glad you asked!
Let’s say your school told you that you’d be able to earn an income of $XX.XX per hour, or $XX,XXX per year after graduating from their program – there’s your argument that they defrauded you!
Or what if your school promised that completing their graduate program would let you land that coveted management position you’ve had your eyes on for so many years? There’s your argument!
In a nutshell, any promise of earning potential, job placement rates, or work title could land your school in hot water, allowing you to qualify for a defense to repayment discharge.
Make Sure You Keep Sending Monthly Payments
One thing to keep in mind is that you can’t simply give up on paying back your student loans at the time you submit your defense against repayment application.
While the Department of Education WILL place your student loans into forbearance from the very moment that they receive your application, those loans will continue to generate interest even as they’re paused and DOE works on investigating your claim.
What’s that mean? You need to keep making your monthly payments until you’ve received an official, written notice from the Department of Education that your loans are being discharged. Up until that point, don’t neglect to send in that monthly check, or you might end up in even worse financial shape than when you started down the discharge path!
What Should I Do?
Here’s what I’m telling all my friends and family members facing a similar situation to your own: “Please hire a lawyer or a debt resolution company, consult with them on how best to proceed, and don’t do anything without first spending some serious time investigating this important opportunity.”
Jumping into the defense against repayment pool without first testing the waters by researching the opportunity in detail is likely to lead to disappointment, and potential financial ruin.
Be careful about how you proceed with your application, as no one really knows how all of this is going to shake out. Will it be easy to get approval for your application, or will DOE place ridiculous restrictions on handing out these forgiveness benefits?
Honestly, only very few of the Borrowers Defense to Repayment applications are being approved so far, so I’m still not entirely sure if this is a great debt forgiveness program, or a niche opportunity that only a few people will get to take advantage of.
Questions About Defense to Repayment Application Letters
If this all seems confusing to you, then I’ve got one final piece of good news – the Federal Government created a helpline dedicated to questions about the defense to repayment provision, and you can call it right now to get some free advice on your unique situation.
For any questions that you might have which you don’t want to ask in the comments section below, please feel free to call the Government’s official Borrower Defense Hotline at (855) 279-6207.
This hotline has representatives available to walk you through the defense to repayment process on weekdays from 8:00am to 8:00pm EST.
Don’t want to call the Government helpline?
Feel free to ask anything you’d like in the comments section below.
I’ll do my best to get you a response within a day or two, though I can’t promise that I’ll have a great answer since this program still involves a great deal of mystery.
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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.