Borrowers defrauded by their schools may seek loan forgiveness through borrower defense to repayment.
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Borrower defense to repayment forgives borrowers' student loans if they were defrauded by their schools. Borrowers can also get relief if their schools closed before they could complete a degree.
The Biden-Harris administration has approved the discharge of more than $28.7 billion of debt among 1.6 million borrowers through borrower defense claims and closed school discharge , as of May 2024. And that tally includes an additional $6 billion in relief due to 264,000 borrowers as a result of the Sweet v. Cardona class action lawsuit.
Borrowers whose claims were approved can expect:
• Full discharge (100%) of federal student loans, which could be automatic.
• 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.
Details of recent borrower defense relief• March 18, 2021: 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.
• 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 will have their student loan debt discharged. The relief totals $1.1 billion.
• Feb. 16, 2022: 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, 2022: 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, 2022: 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, 2022: 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, 2022: 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.
• July 25, 2023: $130 million in automatic relief for 7,400 borrowers who attended Colorado Locations of CollegeAmerica between Jan. 2006 and July 2020. The schools misled students about employment rates, salary prospects and their private loan product.
• May 1, 2024: $6.1 billion in automatic relief for 317,000 borrowers who enrolled at any Art Institute campus on or after Jan. 1, 2004 through Oct. 16, 2017. The Department of Education found that The Art Institutes and its parent company, Education Management Corporation, misrepresented employment rates, salaries and career services during that time to students.
