What is borrower defense to repayment?

Who can apply for borrower defense?

A borrower with an outstanding federal student loan tied to the school in question. Parent PLUS borrowers can apply as well when the misconduct happened to their child, and they file their own application.1

The claim is about the school's conduct. That makes it different from an undue hardship case in bankruptcy, which turns on whether the borrower can repay.1 2

The application is signed under penalty of perjury, so everything in it has to be accurate and true to the best of your knowledge.1

What kind of school conduct counts?

Federal Student Aid gives examples from past approvals: false or misleading promises that students would get a job after graduation, earn a certain salary, or be able to transfer their credits to another school. Its page lists six grounds under its 2023 regulation.1

• Substantial misrepresentation.1
• Substantial omission of fact.1
• Breach of contract.1
• Aggressive and deceptive recruitment.1
• A judgment against the school.1
• Prior action against the school by the Secretary of Education.1

The common thread in the examples is a statement by the school that was false or misleading and that mattered to the decision to enroll or to borrow.1

A school closing does not by itself qualify a borrower for borrower defense, though a closed school discharge may be available.1

Which rules apply right now?

This is the unsettled part. Federal Student Aid's page describes the standards of its 2023 regulation, and the same page carries a notice that a federal court injunction, issued on Aug. 7, 2023 and extended on April 4, 2024, has delayed that regulation. The Department says it will not decide applications under the delayed rule while the injunction lasts.1

Borrowers may still apply, and the Department says it continues to decide borrower defense applications. Because the governing standard depends on the court case, check the borrower defense page on StudentAid.gov for the current status before you rely on any summary, including this one.1

How do you apply, and what does the application need?

You can apply online through a StudentAid.gov account or mail the PDF form. Federal Student Aid says an application that is not materially complete will be denied, so the description of what happened carries the weight.1

1. Gather what the school told you and what you signed: emails and other communications, course catalogs, advertisements, the enrollment agreement, transcripts and diplomas.1
2. Describe what the school did or failed to do, and name the school or the representative responsible.1
3. Say approximately when it happened.1
4. Explain how it affected your decision to attend, to keep attending or to take out the loan.1
5. Describe the harm that resulted.1

If the school is still open, it gets a chance to respond. A claim is approved only if it is more likely than not to be true.1

There is no need to pay a company to file this for you. The FTC says applying for federal repayment and forgiveness programs is free.3 4

What if your situation does not fit?

Other federal discharges cover nearby situations. A closed school discharge may apply if the school closed while you were enrolled, on an approved leave of absence, or within 180 days after you withdrew. A false certification discharge covers cases where the school signed you up for loans without your authorization or enrolled you when you did not meet eligibility requirements.5 1

How does borrower defense relate to bankruptcy?

They are separate routes with separate decision makers. Borrower defense is decided by the Department of Education. A bankruptcy discharge of a student loan is decided by a bankruptcy judge, after a separate lawsuit in which the borrower must prove undue hardship.1 2

The Justice Department's guidance for bankruptcy cases says the availability of administrative relief such as a closed school discharge should have limited influence on the bankruptcy analysis. It does not mention borrower defense by name, so how a pending borrower defense claim is weighed in your case is a question for a lawyer.6

One overlap is worth knowing. Under that guidance, a borrower who did not obtain the degree the loan paid for is presumed to have an inability to repay that will continue. School misconduct is often part of why a degree was never finished.6