Federal Student Loan Forgiveness for Victims of School Fraud

Today we’re going to talk about Borrower Defense to Repayment, the federal regulation that allows a borrower to get Direct Loan forgiveness if they were defrauded by their school.

Until last year, only a handful of these claims were filed because nobody knew it was available. 

Then came the Corinthian Colleges meltdown, when a huge for-profit college went out of business on the heels of a massive federal investigation into its practices. Thousands of former students were left with nothing more than a mountain of student loan debt to show for their hard work.

Now, intense pressure from borrower groups such as the The Debt Collective has forced the U.S. Department of Education to come to grips with Borrower Defense to Repayment. Not only are Corinthian College students sending in their applications, so are former students of for-profit institutions such as ITT, University of Phoenix, and others.

With no formal procedures or standards yet in place for making a claim or evaluating one, borrowers have no way of evaluating their rights.

Today you’ll learn:

• what the Department of Education is doing to create a framework for Borrower Defense to Repayment;
• how to decide whether you may have a claim for loan forgiveness under this regulation;
• why waiting for the government to establish procedures may defeat your claim; and
• what you should do before you go into forbearance in connection with your claim.

Borrower Defense to Repayment Resources

• The Strange History of the Student Borrower Defenses Provision
• US Department of Education Information About Debt Relief for Corinthian Colleges Students
• How Loan Forgiveness Under Defense to Repayment Is Taxed by the IRS
• Negotiated Rulemaking for Higher Education 2015 – 2016
• First Report of the Special Master for Borrower Defense to the Under Secretary (November)
• Second Report of the Special Master for Borrower Defense to the Under Secretary (December 3, 2015)
• Unofficial Borrower Defense to Repayment Form
• Debt Collective Defense to Repayment App
• Forbearance/Stoppage of Collection Activity Request Form for Corinthian College Borrower Defense to Repayment Claimants