Credible takeaways
- You may qualify to have your federal student loans canceled if your school engaged in deceptive practices or violated state law.
- Your claim should include evidence that connects the school’s statements or promises to your decision to attend or take out federal loans.
- For loans disbursed on or after July 1, 2020, you may need to show that the school’s misconduct caused financial harm beyond the loan itself.
- If your claim is approved, your eligible loan balance may be discharged, and you may receive a refund for payments you already made.
Borrower defense to repayment can discharge your federal student loans if your school misled you or engaged in certain misconduct. To qualify, you’ll need to submit an application and provide evidence that supports your claim.
If your application is approved, you won’t have to repay the discharged loan balance. In some cases, you may also get a refund for payments you already made.
This guide explains how borrower defense to repayment works, who qualifies, what evidence to include, and what to do if your application is denied.
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What is borrower defense to repayment for student loans?
Borrower defense to repayment is a federal student loan discharge program for borrowers whose school misled them or engaged in certain misconduct. The Department of Education may discharge some or all of the federal student loans you took out to attend that school if your application is approved.
The program is limited to specific situations. For example, you may qualify if your school misrepresented its job placement rates, accreditation, transferability of credits, program quality, or other information that affected your decision to enroll or borrow.
“While the program is generally associated with for-profit schools, it can apply to any institution regardless of its tax status,” says Phillip Zagotti, certified public accountant (CPA) and attorney at North Star Law Firm.
Who is eligible for borrower defense loan discharge?
Borrower defense is available only in specific cases where school misconduct affected your decision to enroll or borrow.
“Only those who took out federal student loans can qualify, and you must have used the funds to attend a school that was found to have in some way misrepresented itself or pressured you during the application process,” explains Kevin Ladd, chief operating officer and co-creator of Scholarships.com.
Examples of school misconduct may include:
- Leaving out important facts
- Misleading you about program costs, services, job placement rates, earnings, accreditation, or graduate outcomes
- Failing to honor a contractual agreement
- Using aggressive or deceptive recruitment tactics
“Being unhappy with the quality of education is insufficient,” says Mark Kantrowitz, a nationally recognized financial aid expert and author of books on the subject.
“The college must have engaged in fraud or made substantial misrepresentations, and the borrower must have relied upon these representations when deciding to enroll at the college.”
A court judgment or the Department of Education revoking the school's participation in financial aid programs can also be evidence of misconduct.
“Students who borrowed to attend schools that have faced legal actions may have a stronger chance of relief,” says Ladd.
How do you apply for borrower defense?
You can apply for borrower defense online at StudentAid.gov/borrower-defense. According to Federal Student Aid, an application for one school takes about three hours to complete, including preparation time.
Before you start, gather any details and documents that support your claim, including:
- A description of acts or omissions by your school that constitute substantial misrepresentation. You must show what your school did, or didn't do.
- Details about the school or representative who made the substantial misrepresentation.
- Information about when the misconduct occurred.
- How the misconduct affected your decision to enroll or take out the federal loan.
- How you were harmed financially or otherwise.
What evidence should you include?
Your evidence should help show what the school said or did, when it happened, and how it affected your decision to enroll or borrow.
Examples of evidence may include:
- Enrollment agreements
- School advertisements
- Emails, text messages, or other written communications
- Transcripts
- Job placement claims
- Claims about licensure or certification
- Claims about credit transferability
- Legal findings against the school
Editor insight: “I suggest looking through old emails, enrollment documents, school ads, program materials, and any notes you saved from conversations with school representatives. Be as specific as possible with the evidence you provide.”
— Renee Fleck, Student Loans Editor, Credible
Borrower defense has existed for years, but the rules have changed over time. The evidence you need to provide may depend on when your loans were disbursed.
“Loans disbursed on or after July 1, 2020, are generally governed by the 2019 regulations, which were restored by the One Big Beautiful Bill Act,” explains Zagotti.
“Under the current framework, borrowers must generally demonstrate not only that a school made a misrepresentation, but also that the misrepresentation caused financial harm beyond the loan obligation.”
What happens after applying for borrower defense?
After you submit your application, the Department of Education will review your claim and supporting evidence. It will determine whether your school made substantial misrepresentations and whether you suffered financial harm as a result.
If your application is approved, you’ll be notified by mail. Your remaining eligible federal loan balance will no longer be due, and you may receive a refund for payments you already made.
What if your claim is denied?
If your borrower defense claim is denied, you can submit a reconsideration request. You can also submit a new application if you have new allegations of wrongdoing by your school.
The request for reconsideration must be submitted within 90 days of the date of the written decision on your first application.
FAQ
Does borrower defense apply to private student loans?
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Can parent PLUS borrowers apply for borrower defense?
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Will student loan payments pause while a borrower defense application is pending?
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Can you get a student loan refund after borrower defense approval?
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Does borrower defense for student loans affect your credit?
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