If a school lied to you or pressured you into enrolling, you can apply for Borrower Defense to Repayment and ask the Department of Education to cancel your federal student loans. The program covers five categories of school misconduct, from false job placement numbers to high-pressure recruiting. An approved claim discharges the full remaining balance on your qualifying federal loans and can return payments you already made.1Federal Student Aid. Borrower Defense
What Counts as School Misconduct
Every claim is judged against a single federal standard. The Department must find, by a preponderance of the evidence, that your school committed an actionable wrong, that the wrong influenced your decision to enroll or borrow, and that you were harmed. Five categories of conduct qualify:2eCFR. 34 CFR 685.401 – Borrower Defense to Repayment
- Substantial misrepresentation. False or misleading statements about the program, its cost, or graduate outcomes.
- Substantial omission. Leaving out facts you needed to make an informed decision.
- Breach of contract. Failing to deliver something the school promised in writing, such as specific courses, clinical placements, or career services.
- Aggressive or deceptive recruitment. High-pressure or manipulative tactics used to push you into enrolling or borrowing.
- Adverse judgment or sanction. A court, government agency, or the Department itself has already ruled against the school for conduct that harmed borrowers.
Lies About the Program Itself
Federal regulations single out several kinds of program misrepresentation: false claims about accreditation, credit transferability, faculty qualifications, facilities, and whether a program actually leads to a professional license.3eCFR. 34 CFR 668.72 – Nature of Educational Program or Institution
Licensure claims cause some of the worst harm. A nursing program that told you it held a specialized accreditation required to sit for the state exam, when it did not, leaves you with a completed degree that cannot lead to the job it was sold as preparing you for. The same regulation covers schools that falsely promise credits will transfer, or that a program qualifies graduates for a license or exam when it does not.
Lies About What You Would Pay
Schools also violate federal rules when they mislead students about money. That includes false statements about total program cost, the availability of scholarships or aid, whether loans must be repaid regardless of completion or employment, and the school’s refund policy.4eCFR. 34 CFR 668.73 – Nature of Financial Charges or Financial Assistance Telling a student that grants and scholarships will cover everything, while quietly enrolling them in significant loan debt, is a common example. So is steering students into school-affiliated financing without disclosing their right to reject it.
Inflated Job and Salary Claims
False employment outcomes are one of the most frequently cited grounds. Federal regulations prohibit schools from misstating their relationships with employers, the job market in a given field, or their graduates’ actual employment and licensure pass rates.5eCFR. 34 CFR 668.74 – Employability of Graduates The regulations specifically target the tricks used to pad the numbers: counting one-day job-fair attendees as placed, including students who were already employed before graduating, and excluding students labeled “hard to place.” A published 85% placement rate assembled through those methods is a misrepresentation.
Predatory Recruiting
The recruitment category covers six specific tactics: pressuring same-day enrollment or loan decisions, exploiting an applicant’s inexperience with college or financial aid, discouraging them from consulting family or advisors, deceptive lead generation through fake job postings or phony rankings sites, threatening or abusive behavior, and continued contact after the person asked the school to stop.6eCFR. 34 CFR 668.501 – Aggressive and Deceptive Recruitment Tactics or Conduct These tactics tend to cluster, and documenting a pattern strengthens a claim.
Which Loans Qualify
Borrower defense applies only to federal Direct Loans. If you already have Direct Loans, you can file without any additional steps. If you have older Federal Family Education Loan (FFEL) Program loans or Perkins Loans, you must first consolidate them into a Direct Consolidation Loan to become eligible.1Federal Student Aid. Borrower Defense The Department has confirmed that consolidating FFEL loans this way qualifies them for relief.7Federal Student Aid Partners. GEN-17-01 Treatment of FFEL Program Loans for Borrower Defense
Private student loans are not eligible under any circumstances. If you borrowed from a private lender, your options are state consumer-protection claims or private litigation, not this program.
How to File a Claim
You file through the StudentAid.gov portal or by mailing a paper form to the Department. To be considered materially complete, the application must include five things:8eCFR. 34 CFR 685.403 – Individual Process for Borrower Defense
- A description of the specific acts or statements that constitute the misconduct.
- The name of the school, or the specific representative, responsible.
- The approximate timeframe.
- How the misconduct influenced your decision to attend, continue attending, or borrow.
- The financial or professional harm you suffered as a result.
Supporting evidence matters. Pull together enrollment agreements, catalogs, promotional brochures, emails from admissions staff, and screenshots or archived copies of the school’s website from the time you enrolled. Findings from a state attorney general, the Consumer Financial Protection Bureau, or a court can corroborate your individual account.
Deadlines
There is no time limit for discharging a balance you still owe. If you graduated a decade ago and still carry the debt, you can file. If your loans are already paid off and you want a refund of past payments, a six-year statute of limitations applies to claims based on misrepresentation or breach of contract for loans first disbursed on or after July 1, 2017.9U.S. Department of Education. Borrower Defense Final Regulations Summary of Major Provisions
You May Be Covered by a Group Discharge
Before you file, check whether you already qualify for automatic relief. When the Department determines that a school engaged in widespread misconduct, it can issue a group discharge that cancels loans for every affected borrower without an application. Covered borrowers receive full discharges of their eligible loans, refunds of payments already made, and deletion of the related credit-report trade lines.10Federal Student Aid. Borrower Defense Updates
Schools that have received group discharges include ITT Technical Institute, Corinthian Colleges, Westwood College, The Art Institutes, Ashford University, CollegeAmerica, and DeVry University, among others. The Department posts current information on its borrower defense update page. If you attended a covered school but fell outside the specified enrollment period, you can still file an individual claim.
What Happens After You File
Once your application is received, the Department sends an acknowledgment and begins review. Your school gets a chance to respond, and a Department official weighs everything: your materials, the school’s response, and other records the Department holds.11eCFR. 34 CFR 685.406 – Adjudication of Borrower Defense Applications
While review is pending, your loans go into forbearance or stopped-collections status. You do not have to make payments, and no interest accrues during that time. Many borrowers assume interest keeps running. It does not.
An approved claim discharges the full remaining balance on your qualifying loans. Partial discharges are no longer issued under current rules. You also receive a refund of payments you previously made, including payments on underlying loans that were later consolidated. Processing the discharge, refund, and credit-report corrections takes time, but your balance drops to zero and the related trade lines come off your credit report.
A denial comes with a written explanation identifying the reasons and evidence. Your loans return to their previous status, but collection activity does not resume for at least 90 days, giving you time to plan your next step.
If Your Claim Is Denied
A denial is not always final. You can request reconsideration within 90 days on three specific grounds:12eCFR. 34 CFR 685.407 – Borrower Defense to Repayment
- An administrative or technical error in how your application was processed or evaluated.
- New evidence that was not previously provided or considered.
- For loans first disbursed before July 1, 2017, application of your state’s legal standard rather than the federal one.
A different Department official handles the reconsideration, providing a genuine second look. You submit the request on a Department-approved form, under penalty of perjury, with any new supporting evidence.
Taxes on a Discharge
The tax treatment of a borrower defense discharge is worth checking before you file a return. From 2021 through 2025, the American Rescue Plan Act made all federal student loan forgiveness tax-free at the federal level. That blanket exclusion expired on December 31, 2025.13Taxpayer Advocate Service. What to Know about Student Loan Forgiveness and Your Taxes
Borrower defense discharges have historically been treated as non-taxable even outside that window, because they rest on school misconduct rather than an earned benefit. With ARPA expired, however, the federal tax treatment for discharges processed in 2026 and beyond turns on IRS interpretation and any further legislation. The insolvency exclusion may also help: if your total debts exceeded the fair market value of your assets immediately before the discharge, you can exclude some or all of the forgiven amount from taxable income by filing IRS Form 982.14Office of the Law Revision Counsel. 26 USC 108 – Income From Discharge of Indebtedness State tax rules vary, and a discharge that is federally tax-free can still generate a state bill depending on where you live. A tax professional is worth the fee if the discharge is large.