How To Get Help With Your Loans If Your College Has Scammed You


    Get Help That Has Been Cheated By Your College

    Borrowers who have been scammed by their colleges may be able to cancel their state student loans and have previous payments reimbursed by filing a borrower waiver defense.

    If the discharge is approved, negative credit information about the loans will also be removed from the borrower’s credit history. Entitlement to state study grants will also be restored.

    As of April 30, 2021, more than 350,000 borrowers have filed objections to repayment claims. And about 40% of the applications processed were approved. Could you also qualify for your student loan disbursement? How to find out.

    What is the borrower’s defense against repayment?

    The borrower’s objection to repayment is a set of regulations that determine when federal student loans may be dismissed due to harmful acts and omissions by the student’s college.

    These regulations are authorized by the Higher Education Act of 1965 at 20 USC 1087e (h) which states:

    • Regardless of other provisions of state or federal law, TThe secretary lays down in regulations which acts or omissions of a university a borrower can assert in defense of repayment of a loan granted under this partExcept that in no event may a Borrower reclaim from the Secretary in any action arising out of or relating to any loan made under this Part in excess of the amount that the Borrower has received for such Loan has repaid.

    The special rules that apply to your loans depend on whether they were paid out for the first time:

    • Before July 1, 2017
    • On or after July 1, 2017 and before July 1, 2020
    • On or after July 1, 2020

    Recent changes to borrower defense regulations

    The current regulations enacted during the Trump administration limited the borrower’s eligibility for repayment. In order to qualify for the relief of the borrower:

    • Incorrect information must have been provided with “Knowing its false, misleading, or deceptive nature, or with a ruthless disregard for the truth.”
    • The borrower must have suffered financial damage due to the false information.
    • The borrower’s repayment claim must be filed within three years of the student’s separation from college.

    The Trump administration also adopted a partial relief formula that limited the amount of debt settled under the borrower’s plea to repayment.

    The U.S. Department of Education announced on March 18, 2021 that it was lifting the partial relief formula and providing full relief to all borrowers with approved borrower defense claims. The US Department of Education also announced that it intends to enact new regulations for borrower protection when repaying. Further developments will be announced on the US Department of Education’s Borrower Defense Updates page.

    The IRS has determined that the borrower’s defense against repayment relief is excluded from income. Borrowers are also not required to repay education tax breaks claimed on previous federal income tax returns. [Revenue Procedure RP-20-11]

    Which borrowers are eligible to apply for borrower defense to repay the amortization?

    How does the federal government determine who has been scammed by a college? Misconduct that could be covered by the borrower’s repayment regime includes fraudulent or unlawful acts by the college under federal or state law and misrepresentation. A couple of brief examples are:

    • Wrong recommendations
    • False certificates (such as the college’s signature of grant documents on behalf of the student)
    • Providing false information to college ranking organizations

    Incorrect information includes not only false, erroneous and misleading information, but also Omissions that make the statement false, false, or misleading. Examples of misconduct are false statements regarding:

    • Admission rates (selectivity), university rankings and student admission profiles
    • The qualifications of the teachers and the quality of the training equipment
    • Graduation rates, employment rates and post-graduation earnings
    • The possibility of transferring credits to other universities
    • Admission through rates or admission requirements
    • University and course-specific accreditation, approval and certification
    • Tuition and fees as well as financial support
    • The terms or the amount of a loan
    • Type of loan (e.g. characterizing a loan as a grant)

    If any of these false statements led you to take out student loans, you could be considered someone who was defrauded by your college. If so, you can claim repayment even if you are eligible for other types of student loan issuance. The college doesn’t have to be closed.

    Objections of the borrower to repayment claims are listed under a. rated “The evidence outweighs standard.” In other words, in order to have your claim approved, there must be more evidence to conclude than against.

    What loans are eligible for a borrower defense to repay the amortization?

    Only federal educational loans in the Direct Loan program are immediately eligible. However, loans granted under the Federal Family Education Loan Program (FFELP) and the Federal Perkins Loan may be made eligible by being included in a Federal Direct Consolidation Loan.

    Private student loans are ineligible and cannot be made eligible.

    Entitlement to defense of the borrower for repayment relief

    Federal loans for family education

    How to file a borrower’s defense claim

    Borrowers can file a borrower’s defense of repayment claim online, by calling 1-855-279-6207 (Monday through Friday 8:00 a.m. to 8:00 p.m. ET), or by completing a 9-page Defense Against Repayment Application Form. The completed application form can be emailed to or by post to:

    US Department of Education – Borrower Defense until Repayment
    P.O. Box 1854
    Monticello, KY 42633

    Borrowers should include evidence to support their claim, such as:

    • Copies of the university’s advertising and promotional materials or the university’s website
    • E-mail or other correspondence with the university
    • The university’s course catalog
    • Enrollment agreements, enrollment documents, certificates and other evidence of enrollment data

    Evidence of wrongdoing can also include legal action taken by the federal government (including the Consumer Financial Protection Bureau) and attorneys general against the college.

    • Beware of organizations that say they are bringing legal defense against a borrower on your behalf for a fee. Collecting an upfront fee for credit repair services (borrower defense counts) is a violation of federal and state laws.

    Should loans continue to be paid while the borrower’s defense claims are being reviewed?

    While the borrower’s defense against the repayment claim is being examined, the borrower can choose to defer his loans. However, if the claim is not approved, any accruing interest will be capitalized at the end of the deferral period.

    With this in mind, you should continue to pay the interest during the deferral to prevent the loan balance from increasing. If your borrower’s plea for repayment is approved, the amounts previously paid on the loan can be refunded.

    Other financial relief options if you have been scammed by your college

    If your college closes during your enrollment or within 180 days of leaving, you may be eligible for a leave of absence on your student loans. In order to qualify, you would need to be able to prove that you have not been able to transfer credits or complete your education at another university.

    Has your college applied for financial assistance on your behalf or signed your name on a Master Promissory Note (MPN) without authorization? If so, you may be eligible for a false certificate of your student loan.

    Finally, students can qualify for compensation from state tuition fees and guarantees / performance bonds. This can provide compensation for expenses not paid with student loans. Information on these options can be found on the websites of the State University Council and the Public Prosecutor’s Office.


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