How Borrower Defense to Repayment Works – NerdWallet


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Borrower defense to repayment gives loan forgiveness to student loan borrowers if they were defrauded by their schools. Borrowers can also get relief if their schools closed before they could complete a degree.
The education department has discharged more than $14 billion in debt among 1 million borrowers through approved borrower defense claims and closed school discharge, as of October 2022. A settlement that clinched final court approval on Nov. 16 will add an additional $7.5 billion and up to 264,000 additional borrowers to those totals — if it survives expected legal appeals.
» MORE: 10+ student loan forgiveness, cancellation and discharge programs
Borrowers whose claims were approved can expect:
• Full discharge (100%) of federal student loans.
• Reimbursement of any amount paid toward the loan according to regulations.
• Requests to remove negative credit reporting with the credit bureaus.
• Reinstatement of federal student aid eligibility for those who lost it.
Those approved for borrower defense debt cancellation received good news on March 18, 2021, when the Department of Education announced it would rescind the previous administration’s calculations for partial relief for federal student loan borrowers approved for borrower defense debt cancellation and instead grant full relief to those borrowers. The education department says this will cancel $1 billion in loan debt for 72,000 borrowers. Here's the relief that's happened since then:
• June 16, 2021: $500 million in relief for 18,000 borrowers who previously attended ITT Technical Institute, a for-profit chain of schools shut down in 2016 following federal sanctions.
•July 9, 2021: 1,800 new borrower defense claims were approved for borrowers who attended three schools: Westwood College, Marinello Schools of Beauty and the Court Reporting Institute. All borrowers approved received full loan discharge for a total of $55.6 million in cancellation. The education department said this was the first time since 2017 that borrower defense claims were approved for students attending schools besides Corinthian Colleges, ITT Technical Institute and American Career Institute.
• Aug. 26, 2021: Another 115,000 students who attended ITT Tech would have their student loan debt discharged. The relief totals $1.1 billion.
• Feb. 16: Approximately 16,000 borrowers receive $415 million in borrower defense discharges. It includes borrowers who attended: DeVry University ($71.7 million in discharges for 1,800 students); Westwood College, the nursing program at ITT Technical Institute and criminal justice programs at Minnesota School of Business/Globe University ($343.7 million in discharges to 14,000 students); and more claims for borrowers who attended Corinthian Colleges and Marinello Schools of Beauty ($284.5 million discharges to over 11,900 students).
• April 28: A group discharge of $238 million for 28,000 borrowers who attended Marinello Schools of Beauty. This marks the first time the education department executed a group discharge without requiring all borrowers to submit applications.
• June 1: A group discharge for all remaining federal student loans borrowed to attend any Corinthian College from its founding in 1995 through its closure in April 2015. The $5.8 billion discharge impacts 560,000 borrowers.
• Aug 16: A group discharge for all federal student loans that borrowers used to attend ITT Technical Institute from Jan. 1, 2005, through September 2016 brings $3.9 billion in relief for 208,000 borrowers, on top of previous ITT settlements. All borrowers who meet this criteria will see their debt discharged even if they didn't yet submit a borrower defense application. In addition to this announcement, roughly 100 borrowers who attended Kaplan Career Institute will also see their debt discharged. The department also announced it was, for the first time ever, seeking to recoup the cost of approved claims from a school. DeVry University will be required to pay nearly $24 million to the education department.
Aug. 30: A group discharge for all federal student loans for borrowers who enrolled at Westwood College from 2001 through 2015, when it closed. The Department of Education says Westwood grossly misrepresented job prospects and career potential to its students. About 79,000 borrowers will receive $1.5 billion in relief, whether they have made a borrower defense claim or not.
On Nov. 16, a federal judge in California gave final approval on Sweet v. Cardona (formerly Sweet v. DeVos), a settlement of borrower defense claims that will provide up to 264,000 student loan borrowers with $7.5 billion in debt relief. The final settlement, which must still withstand expected appeals by the defense, will provide full relief including student loan forgiveness, payment refunds and credit repair worth $6 billion to 200,000 borrowers who filed before June 2022 and attended one of about 150 mostly for-profit schools involved in the case. The remaining 64,000 have pending claims against schools not on that list; decisions on their cases will be streamlined.
» MORE: Sweet v. Cardona settlement wins final court approval
Borrowers who attended one of the schools below and submitted a borrower defense application on or before June 22, 2022, are eligible for discharge under the Sweet v. Cardona settlement if they haven't received a decision or received a denial. Those who submitted a borrower defense application after June 22 and before Nov. 16, 2022 will qualify as a "post-class applicant."
Seventy-five percent of all class members will receive loan discharges or refunds by November 2023. The remaining 25% of class members will receive an individual borrower defense decision on a rolling basis, which could result in loan discharges or refunds.
Al Collins Graphic Design School
All-State Career School
Allentown Business School
American Career College
American Career Institute
American College for Medical Careers
American Commercial College
American InterContinental University
American National University
American University of the Caribbean
Anamarc College
Anthem College
Anthem Institute
Argosy University
Arizona Summit Law School
Ashford University
ATI Career Training Center
ATI College
ATI College of Health
ATI Technical Training Center
Bauder College
Beckfield College
Berkeley College
Blue Cliff College
Branford Hall Career Institute
Briarcliffe College
Brightwood Career Institute
Brightwood College
Brooks College
Brooks Institute
Brown College
Brown Institute
Brown Mackie College
California College San Diego
California Culinary Academy
California School of Culinary Arts
Capella University
Career Point College
Carrington College
Center for Employment Training
Chamberlain University
Charlotte School of Law
Chicago School of Professional Psychology
Collins College
Colorado Technical University
Concorde Career College
Concorde Career Institute
Cooking and Hospitality Institute of Chicago
Court Reporting Institute
Court Reporting Institute of St Louis
Daymar College
DeVry College of Technology
Devry Institute of Technology
DeVry University
Dorsey College
Empire Beauty School
Everglades University
Florida Career College
Florida Coastal School of Law
Florida Technical College
Fortis College
Fortis Institute
Gibbs College
Globe University
Grand Canyon University
Gwinnett College
Hallmark Institute of Photography
Hallmark University
Harrington College of Design
Harris School of Business
The Illinois Institute of Art
Independence University
The Institute for Health Education
International Academy of Design and Technology
International Technical Institute
ITT Technical Institute
Kaplan Career Institute
Kaplan College
Katharine Gibbs School
Keiser University
Keller Graduate School of Management
Kitchen Academy
La' James College of Hairstyling
La' James International College
Le Cordon Bleu
Le Cordon Bleu College of Culinary Arts
Le Cordon Bleu Institute of Culinary Arts
Lehigh Valley College
Lincoln College of Technology
Lincoln Technical Institute
Marinello School of Beauty
McCann School of Business & Technology
McIntosh College
Medtech College
Miami International University of Art & Design
Miami-Jacobs Career College
Micropower Career Institute
Miller Motte Business College
Miller-Motte College
Miller-Motte Technical College
Minnesota School of Business
Missouri College of Cosmetology North
Mount Washington College
National University College
New England College of Business and Finance
The New England Institute of Art
NUC University
Orlando Culinary Academy
Pennsylvania Culinary Institute
Pittsburgh Career Institute
Purdue University Global
Radians College
Remington College
Robert Fiance Beauty Schools
Robert Fiance Hair Design Institute
Robert Fiance Institute of Florida
Ross University School of Medicine
Ross University School of Veterinary Medicine
Salter College
Sanford-Brown College
Sanford-Brown Institute
School of Computer Technology
Scottsdale Culinary Institute
South University
Southern California School of Culinary Arts
Southern Technical College
Star Career Academy
Suburban Technical School
Sullivan and Cogliano Training Centers
Texas Culinary Academy
The Art Institute
Tucson College
Ultrasound Diagnostic Schools
United Education Institute
University of Phoenix
University of the Rockies
Vatterott College
Virginia College
Walden University
Washington Business School
Western Culinary Institute
Western International University
Western School of Health and Business Careers
Western State University College of Law
Westwood College
Wilfred Academy
Wilfred Academy of Beauty Culture
Wilfred Academy of Hair and Beauty Culture
Wright Business School
Wright Career College
The education department, under Secretary Miguel Cardona, says it plans to pursue additional actions, including re-regulation of changes made under former Secretary Betsy DeVos that tightened eligibility requirements and placed a larger burden on the borrower to prove the school committed fraud.
» MORE: What are the odds I’ll get student loan forgiveness?
These changes remain in place until the Department of Education acts:
If your school closes after July 1, 2020, while you are still enrolled, it's on you to apply for student loan relief through the borrower defense program. Previously, those loans were automatically canceled.
You will still need to apply even if the Education Department has evidence of wrongdoing by your school that qualifies for student loan forgiveness. No forgiveness is automatic.
Under the new rule, you must prove that your school intentionally misled you and that you suffered specific financial harm as a result. The loan itself doesn’t count as financial harm, but being unemployable as a result of your program might.
Under the new rule, you can file a claim if you leave your school up to 180 days before it closes. That expands the previous window of 120 days.
The old rule allowed six years to apply for relief. The new rule shortens that window to three years.
If your claim is initially denied and new information becomes available, you cannot resubmit your claim for further consideration.
» MORE: Will your college choice leave you high and dry?
You might qualify for federal loan forgiveness under this program if you believe your school defrauded you in one or both of the following ways:
Intentionally misled you about your education program.
Violated certain state laws, such as consumer protection statutes or laws related to your loan or educational services.
You can submit a claim whether or not your school closed and even if you’re eligible for other loan forgiveness programs. You can’t submit a claim for private loans or costs you paid out of pocket.
Not sure if you should apply? Find out if your school has been the subject of legal action by the federal government, state attorneys general or the Consumer Financial Protection Bureau. “The biggest indicator is if the college has been sued or are they currently facing legal action for their practices,” says Robert Kelchen, assistant professor of higher education at Seton Hall University in South Orange, New Jersey.
If your loans disbursed before July 1, 2020, a judgment against your school can be grounds for a successful borrower defense. Under the new rule a judgment against your school can be used as evidence for your claim, but – without additional support – probably won’t be sufficient for loan forgiveness.
You can submit a borrower defense to repayment claim application electronically at or by filling out a PDF and returning it to the Education Department via email or regular mail. Submission details are available on the federal student aid website.
To strengthen your claim, submit a detailed explanation of why your loans might qualify, along with any supporting evidence. This could include:
Actual licensure passage rates that are different from what the school advertised.
Actual employment rates that are different from what the school advertised.
Actual selectivity and admissions profiles that are different from what the school advertised.
Dishonest representation of school held certifications or approval for programs.
Dishonest representation of the education resources the school provided.
Dishonest representation of the transferability of credits.
Dishonest representations of graduate placement rates and salaries.
Dishonest representations regarding financial assistance.
For loans disbursed before July 1, 2020, you can also submit written accounts of verbal conversations with school officials. “Just because it was verbal doesn’t mean [the borrower] shouldn’t provide a narration of that,” says Betsy Mayotte, president and founder of the Institute of Student Loan Advisors. “If they felt … pressured to sign something quickly, for example, they should include that information because it’s taken into consideration.”
For help with your claim, find clinics in your area, such as local nonprofits, law schools or legal aid, suggests Suzanne Martindale, a senior attorney for Consumers Union. You may also contact the National Consumer Law Center, suggests Ben Miller, senior director for postsecondary education at Center for American Progress, a nonpartisan policy institute.
Be wary of debt settlement groups that ask for money to submit your application. You can complete this process yourself for free.
You can choose to put your loans in forbearance – which will halt payments and collections – as part of your claim. After you submit your application, the Education Department will send you a confirmation with more information about your forbearance via email. Although the process should be automatic, you should contact your student loan servicer to make sure they received your forbearance notification and are processing it appropriately.
A borrower defense claim can result in full loan forgiveness, partial loan forgiveness, or no loan forgiveness. The new rule sets a high bar for full loan forgiveness and leans more toward partial relief based on financial damages. Interest will accrue while the Education Department evaluates your application and you will be responsible for interest on any part of your loans that is not cancelled.
About the authors: Anna Helhoski is a writer and NerdWallet's authority on student loans. Her work has appeared in The Associated Press, The New York Times, The Washington Post and USA Today. Read more
Cecilia Clark is a student loans writer with NerdWallet, where she helps readers navigate the landscape around college finances. Read more
Eliza Haverstock is a lead writer on NerdWallet's student loan team covering loan repayment and alternatives to traditional four-year degrees. Read more
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