How to Get 100% of Your Student Loans Forgiven Through the Borrower Defense Program
Last week, President Biden announced that millions of Americans may be eligible for up to $10,000 in federal student loan forgiveness—up to $20,000 for those who received Pell Grants—with additional support in the form of lower monthly payments and unpaid interest coverage for future borrowers and those who owe more on their loans.
But there’s a substantial group of borrowers who may actually be eligible to have their federal student loans discharged completely in the next year or so through the U.S. Department of Education’s Borrower Defense program, which provides loan relief in the event that a school misleads students to begin or maintain their enrollment, or engages in other misconduct.
One recent example: schools owned by for-profit Corinthian Colleges were found to have lied about student job placement rates and to have offered employment guarantees. The 560,000 borrowers who attended these schools had their loans discharged in June 2022.
While borrower defense has been in place for a while, the Education Department is now making it easier for students who were swindled by such misconduct to get loan relief thanks to a class-action settlement known as Sweet v. Cardona. Here’s how to find out if you’re eligible and how to apply to have your debt discharged.
What is Sweet v. Cardona?
The class-action suit challenged the Education Department’s handling of borrower defense applications, including delays in processing and denial of certain applications. A proposed settlement was reached on June 22, 2022, and preliminarily approved on August 4. A hearing is scheduled for final approval on November 3.
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The proposed settlement would resolve pending borrower defense applications and provide full relief for eligible borrowers who attended schools named in the suit. It also offers a clear timeline for application decisions for those whose schools aren’t named or who apply later.
Who is eligible for settlement relief?
There is a long list of schools named in the class-action suit, including the University of Phoenix, Le Cordon Bleu (and a handful of other culinary institutes), ITT Technical Institute, the Art Institute, Walden University, and DeVry University.
Borrowers who paid to attend any of these institutions may be eligible for “full settlement relief,” which means all federal student loans will be discharged, any amount paid to the Education Department will be refunded, and the credit line cleared from the borrower’s credit report.
In order to be eligible, you must apply for borrower defense, and the discharge process depends on when you submit your application.
If you applied for borrower defense prior to June 22, 2022, you’re eligible for full settlement relief to be provided within one year of the settlement’s final effective date. The Education Department won’t attempt to collect anything owed on these loans in the meantime.
If you haven’t applied for borrower defense yet, you have until November 3, 2022 to do so. Anyone who applies between June 22 and November 3 will receive a decision on their application within 36 months of the settlement being finalized. If a decision isn’t provided within that timeframe, you’ll be granted full settlement relief.
If you attended a school not named in the settlement but applied for borrower defense before June 22, the Education Department will review your documents according to the timeline listed here. If a decision isn’t made, you’ll be granted full settlement relief.
If you’ve received a denial of your application since December 2019, your application will be reconsidered.
This is a little bit confusing, but the Project for Predatory Student Lending has a handy flowchart guide to the process.
How to apply for borrower defense
To apply for relief, you must fill out an application from the Department of Education, which you can do by creating an online account (or downloading and filling out a PDF by hand). The process will take about 30 minutes. Part of the settlement agreement streamlined the application and review process, so you do not need to provide any evidence of misconduct outside of your written application (though you can, and it wouldn’t hurt). If your application is denied, you will have six months with guidance from the Education Department to resubmit your claim for additional review.