Did you, or someone you know, attend a private, for profit school that closed down or eliminated programs?
Did your school make fraudulent claims regarding career placement or inflate graduation rates?
Was your decision to enroll in programs at your school based entirely, or partially, on the promise of a certain income level upon graduating?
If you said yes to any of the above questions, then the information in this article will prove to be incredibly valuable. We are going to cover the rights every federal student loan borrower is entitled to as well as one of the programs available for relief.
Borrower’s Defense to Repayment/ Borrowers Discharge
Borrower’s Defense regulations and similar programs have actually been around since the 1990’s. These programs aren’t heavily talked about or advertised, however, because the Department of Education doesn’t want borrowers to know about them. In fact, educating their borrowers on these programs is a major conflict of interest for them. If the federal government proactively educated us on what Borrowers Defense is and how it works, they would ultimately have to discharge more student loans, collect on less debt and potentially even have to reimburse applicants who were approved. Taking all of the above into consideration, it is apparent that it is in the best interest of the Department of Education to NOT educate on these programs.
So, what exactly is the Borrower’s Defense regulation?
The Borrowers Defense program is a federal regulation issued by the Department of Education that allows federal student loan borrowers who were defrauded by a college, university or career school to seek full or partial forgiveness of those loans.
The issue started to gain more traction in 2015, when the for-profit Corinthian Colleges closed in response to the fraud allegations against them. The Obama administration proceeded to issue an update to the existing rule and created a process for borrowers to petition for federal student loan discharge if they feel they were defrauded under state law.
More recently, in 2019, the Trump administration enacted an additional amendment that set stricter standards. Starting in July 2020, borrowers will be required to show proof that their school committed fraud “with knowledge” that the claims were deceptive and provide evidence that they experienced financial harm as a result.
Success with Borrowers Defense
We have actually seen great success in utilizing borrower’s defense. Here’s a success story from one of our clients who we were able to get approved.
I graduated from Heald College and immediately after receiving my degree, the university closed down, rendering my degree worthless. This was absolutely devastating to me, both emotionally and financially. All of the time and effort I put into that degree was for nothing and now I was 30,000 dollars in debt. Key 2 Debt Free educated me on borrower’s defense and guided me through the application process. Because of that, the federal government reimbursed me $27,000.
– Arijanna S.
While not every application will be approved, borrower’s defense does work and clients have experienced great success. Check out our contact us page to set up an appointment with one of our seasoned debt relief specialists.