Should You Apply for Borrower Defense to Repayment?

The Borrower Defense to Repayment program has been making headlines this month. Major moves by the Biden administration may allow for sweeping student loan forgiveness through the program, potentially impacting hundreds of thousands of student loan borrowers. Many more may still qualify in the coming months.

Here’s what you need to know, and whether you may want to consider applying.

What is Borrower Defense to Repayment?

The Borrower Defense to Repayment program is a federal student loan forgiveness program designed to provide a remedy for borrowers who were defrauded by their school. According to the Department of Education:

“Under the Borrower Defense to Repayment provision of law, certain conduct by a school you attended might make you eligible to receive a discharge of some or all of your federal student loans.”

Only certain kinds of school misconduct may qualify for Borrower Defense relief, however. “The most common types of conduct that might make a borrower eligible for loan relief through borrower defense to repayment discharge are misrepresentations of the truth made by the school or its representatives during their efforts to recruit you to enroll at the school or to continue your enrollment at the school,” according to the Department.

“These misrepresentations typically take the form of untruthful representations of the school's selectivity in admitting students, its rankings as compared to other schools, the job placement and earnings outcomes of its prior graduates or the likelihood that its credits will be accepted by another school or that it will accept credits from other schools.”

Other kinds of misconduct and problematic student experiences do not qualify for relief under Borrower Defense to Repayment. This includes disputes about the quality of a school’s program or physical facilities, sexual harassment or violations of civil rights, academic performance and disciplinary matters.

The Borrower Defense program has been the subject of intense political, legal and bureaucratic disputes for years. The program regulations have been rewritten several times, leading to a confusing patchwork of relief availability and inconsistent outcomes. According to the Department of Education,

“The type of conduct that might make you eligible for student loan relief and the process by which the Department of Education will review your claim may differ based upon when you took out your loan. In general, loans taken out or consolidated prior to June 30, 2017 will be evaluated under one set of regulations, while those taken or consolidated between July 1, 2017 and June 30, 2020 will be evaluated under a second set of regulations, and those taken or consolidated after July 1, 2020 will be evaluated under a third set of regulations.”

The latest Borrower Defense to Repayment developments

There were two significant Borrower Defense developments this month for federal student loan borrowers.

First, the Biden administration, in early June, announced that it would be automatically canceling billions of dollars in federal student loan debt for over 500,000 borrowers who attended Corinthian Colleges. Corinthian was a national chain of for-profit schools that shut down in 2015 following allegations of widespread false advertising and other misconduct.

“For far too long, Corinthian engaged in the wholesale financial exploitation of students, misleading them into taking on more and more debt to pay for promises they would never keep,” said Education Secretary Miguel Cardona in a statement on June 1.

Then last week, attorneys representing the Education Department and a class of student loan borrowers announced they had reached a settlement agreement to resolve Sweet v. DeVos, a years-long lawsuit over stalled Borrower Defense applications.

The settlement agreement still needs to be approved by the court. But upon approval, the agreement would allow hundreds of thousands of borrowers who attended over 150 covered institutions to get their federal student loans forgiven under Borrower Defense to Repayment, if they already had submitted Borrower Defense applications. And borrowers who still haven’t submitted applications may still have a window of time to do so, even if it would not guarantee student loan forgiveness.

Related: Democrats Press Biden Administration to Enact Wide-Scale Student Loan Forgiveness

Should you apply for student loan forgiveness under Borrower Defense to Repayment?

These latest developments have led to some confusion for borrowers about whether or not they should apply for student loan cancellation through Borrower Defense to Repayment. Here is a breakdown, depending on your situation.

You attended Corinthian Colleges

If you attended Corinthian Colleges, no action is necessary. The Education Department has indicated that it will automatically discharge the federal student loan debt associated with attendance at Corinthian schools, whether or not the borrower has submitted a formal Borrower Defense application.

You attended a covered school and submitted a Borrower Defense application

For the Sweet settlement, borrowers who attended one of the covered institutions and submitted a Borrower Defense application by June 22, 2022, would have their federal student loans forgiven, provided the court approves the settlement agreement. The agreement potentially covers over 150 schools – you can access the full list of schools here.

You attended a covered school but haven't submitted a Borrower Defense application

For the Sweet settlement, borrowers who attended one of the covered institutions but have not yet submitted a Borrower Defense application can still do so. Under the proposed agreement, borrowers who submit an application after June 22, 2022, but before the date of the final settlement approval (which could be months away, according to the attorneys representing the class of student loan borrowers) wouldn't be entitled to automatic student loan forgiveness.

However, attendance at a covered institution would “justify presumptive relief,” according to the language in the proposed settlement agreement. And under the agreement, the Education Department would have to render a decision on those Borrower Defense applications within 36 months, or the borrower’s loans would have to be discharged.

You're not covered by the Sweet settlement

Borrowers who aren't covered at all by the Sweet settlement (i.e., because they didn't attend a covered institution, or submit a Borrower Defense application after final settlement approval by the court) can still submit a Borrower Defense application.

You must show that you're entitled to relief based on school misconduct. The Department of Education would then evaluate these applications on a case by case basis.

Borrowers can access the Borrower Defense to Repayment application here.