What Is Borrower Defense to Repayment: Standards and Claims

Borrower defense to repayment is a federal program that lets you apply to cancel your federal Direct student loans if your school lied to you, misled you about something that mattered, or broke the law. It comes from the Higher Education Act and is run through Department of Education regulations. The rules have shifted recently, so what you have to prove depends on when your loans were first paid out and when you file.

Which Loans Qualify

Only William D. Ford Federal Direct Loans are eligible. If you have Direct Subsidized, Direct Unsubsidized, or Direct PLUS loans, you can file right away.¹

Federal Family Education Loans (FFEL) and Federal Perkins Loans don’t qualify on their own. To bring them in, you’d first consolidate them into a Federal Direct Consolidation Loan, which converts the debt into Direct Loan debt under the Department’s oversight.¹

Consolidating has costs. The new interest rate is the weighted average of your existing rates, rounded up to the nearest one-eighth of a percent, so you’ll almost certainly pay slightly more. If your borrower defense claim is then denied, you’re stuck with that consolidated loan rather than your original terms.

Perkins borrowers face a bigger risk. Perkins Loans carry their own cancellation benefits for people working in public service fields like teaching or nursing. Once you consolidate a Perkins Loan, those Perkins-specific cancellations are gone permanently. If the borrower defense claim fails, you’ve lost that safety net too. Weigh the strength of your claim carefully before consolidating.

What Counts as School Misconduct

Claims center on something the school did wrong. The specific grounds vary slightly by period, but the main categories overlap.

Misrepresentation

This is the most common basis. It covers false or misleading statements that influenced your decision to enroll or borrow: inflated job placement rates, fabricated graduate salary figures, false claims about program accreditation, promises that credits would transfer when they wouldn’t.² A school telling prospective students that its nursing program led to licensure when it lacked the necessary approval is a textbook example.

The misrepresentation has to be substantial, not trivial. An outdated campus photo won’t qualify. Telling students that 90% of graduates find jobs in their field when the real figure is 30% will. The question is whether a reasonable person would rely on the false information when deciding to enroll and borrow tens of thousands of dollars.

Breach of Contract

If the school signed an enrollment agreement promising specific programs, resources, or services and then failed to deliver, that broken promise can support a claim. Think of programs shut down mid-semester, eliminated clinical rotations, or missing lab equipment that the enrollment contract described.

Favorable Court Judgments

If a court or administrative body has already ruled against the school over conduct tied to your loans or education, that judgment can support discharge. These often come from state attorney general investigations or class action lawsuits.³ A judgment does a lot of the evidentiary work for you.

Aggressive Recruitment

Under the regulations that were in effect before the recent rollback, aggressive recruitment was its own basis. Defined tactics included pressuring students to enroll immediately with false urgency, discouraging them from consulting family or advisors, using threatening language, and collecting contact information through websites that falsely advertised employment opportunities or government benefits.⁴ Whether it remains a standalone basis under the restored 2020 rules is an open question. Recruitment tactics that cross into misrepresentation still support a claim under that broader category.

The Standard That Applies to Your Loans

Which legal test the Department uses depends on when your loan money was first sent to your school.

Disbursed Before July 1, 2017

For the oldest eligible loans, a state law standard applies. Your claim succeeds if the school did something that would give you a legal case against it under the consumer protection or contract law of the state where you attended. Some state consumer protection laws are quite borrower-friendly, which makes this one of the more flexible standards.⁵

Disbursed July 1, 2017 Through June 30, 2020

A federal misrepresentation standard governs these loans. You need to show, by a preponderance of the evidence, that the school made a substantial misrepresentation you reasonably relied on when deciding to enroll or borrow. The regulation also covers breach of contract and favorable judgments against the school.² For recovery of money you already paid, there’s a six-year limit running from when you discovered or should have discovered the misrepresentation.

Disbursed On or After July 1, 2020

This is where recent legislation hits hardest. The One Big Beautiful Bill Act, enacted in mid-2025, restored the Trump-era 2020 borrower defense regulations and reversed the Biden administration’s 2023 expansion for loans originated before July 1, 2035.⁶ The 2023 rules had added new grounds for claims, created a streamlined group discharge process, and lowered the burden on borrowers. They had already been blocked by a federal court injunction before the legislation formalized their rollback. The Department is publishing a Federal Register notice formally restoring the 2020 rules. If your loans are from this period, expect a higher burden of proof than the 2023 regulations would have required.

You can still file. The Department says it will continue reviewing claims. The core right to seek discharge for serious school misconduct hasn’t gone away.

Automatic Group Discharges

Not every borrower needs to file an individual application. The Department has approved automatic group discharges for students who attended certain schools during specific periods. If you’re covered, your loans are discharged without any action on your part, and payments you made to the Department on those loans are refunded.⁷

Schools with approved group discharges include:

Corinthian Colleges, for borrowers enrolled from 1995 through its closure in April 2015.
ITT Technical Institute, for borrowers who attended from January 2005 through closure in September 2016.
The Art Institutes, for borrowers enrolled between January 2004 and October 2017.
Ashford University, for borrowers enrolled between March 2009 and April 2020, with 100% discharge.
Westwood College, for borrowers enrolled between January 2002 and November 2015.
Center for Excellence in Higher Education schools (Independence University, CollegeAmerica, Stevens-Henager College, California College San Diego), for borrowers enrolled between January 2006 and August 2021.
University of Phoenix, for borrowers enrolled between September 2012 and December 2014.
Marinello Schools of Beauty, for borrowers enrolled between January 2009 and closure in February 2016.

Other institutions are also covered, including Drake College of Business, certain Lincoln Technical Institute programs and campuses, and a specific Kaplan Career Institute campus and programs. The full list, including schools covered under the Sweet v. Cardona class action settlement, is on the Federal Student Aid website.⁷ Check whether your school appears before spending time on an individual application.

Filing an Individual Claim

If your school isn’t covered by a group discharge, you file through the StudentAid.gov portal using a verified FSA ID.⁸ The Department estimates about three hours including preparation, but gathering strong evidence realistically takes far longer than filling out the form itself.

What You’ll Need

The application asks for your personal information, Social Security number, date of birth, and the dates you were enrolled.⁹ Enrollment dates are critical because they determine which loans are covered and which legal standard applies.

The strength of your claim comes from the evidence you attach. Useful documents include promotional materials from the school, emails or messages from admissions staff, screenshots of the school’s website making specific claims, course catalogs listing programs or outcomes that didn’t materialize, and your enrollment agreement. If a recruiter promised a certification the school wasn’t authorized to grant, any written record of that conversation is powerful. Transcripts and degree audits can help show the gap between what was advertised and what you received.

Writing Your Narrative

The application includes a section where you describe, in your own words, what the school told you and how it affected your decision to enroll and borrow. Vague complaints about the school being “bad” won’t carry a claim. Describe specific statements, when and how they were made, what the truth actually was, and how you relied on the false information when deciding to borrow. Connect the lie to the money. For example: “The admissions officer told me in person in September 2015 that 95% of graduates were employed within six months. I enrolled and borrowed $35,000 based on that promise. After graduating, I learned from the school’s own data that the actual placement rate was below 40%.” That level of specificity is what reviewers look for.

You can also mail a physical application to the Federal Student Aid Information Center, but the online submission is faster and easier to track.⁹

What Happens While You Wait

Once the Department receives your application, your loans are generally placed into forbearance, so you don’t have to make payments while the review is pending. Borrowers in default have collections stopped during this period.⁷ You can decline the forbearance and keep paying, or switch to an income-driven repayment plan during the review.

Watch the interest. Interest keeps accruing during forbearance and is capitalized, meaning it’s added to your principal balance.¹⁰ If your claim is approved, the whole balance is discharged, so the extra interest doesn’t matter. If it’s denied, you’ll owe more than when you started. If you aren’t confident in the strength of your claim, keeping up payments or using an income-driven plan may be the safer path.

Processing times have been a serious problem. The Department has had a backlog of hundreds of thousands of claims, and individual reviews have taken years. There’s no regulatory guarantee of a decision within a specific timeframe. You’ll get acknowledgment of receipt and can track status through your StudentAid.gov account or by calling the borrower defense hotline.

If Your Claim Is Approved

An approved claim results in either a full or partial discharge. A full discharge eliminates the remaining balance, and you also receive a refund of payments previously made to the Department on the discharged loans.⁷

Partial discharges are more complicated. The Department has used an earnings-based methodology in some cases, comparing what graduates of your program actually earned against graduates of similar programs at other schools. The larger the gap, the larger the percentage discharged. Relief tiers have included 25%, 50%, and 100% depending on which quartile your program fell into.

Discharged loans are updated with the credit bureaus, but negative payment history from before the discharge may remain on your report for up to seven years. If information was reported inaccurately during a period when you should have been in deferment or forbearance, you can dispute it with the credit reporting agencies or through your loan servicer.

If Your Claim Is Denied

A denial isn’t necessarily the end. You can request reconsideration within 90 days of the written decision.¹¹ Reconsideration must be based on at least one of the following:

Administrative or technical errors in how your claim was handled.
New evidence that you hadn’t previously submitted and that wasn’t mentioned in the denial letter as a basis for the decision.
State law standard review for loans first disbursed before July 1, 2017, if your claim wasn’t already evaluated under state law.

Reconsideration does not let you raise entirely new allegations of school misconduct. If you discover a different type of wrongdoing after your initial denial, you’d file a new application for that. New evidence that supports your original allegations is exactly what reconsideration is for. Emails from admissions staff, enrollment agreements, course catalogs, or a court judgment against the school can all strengthen a reconsidered claim.

One limitation: if your claim was part of a group application that was denied, only the third-party organization that filed the group claim can request reconsideration. Individual borrowers within a denied group claim cannot file reconsideration on their own under that process, though they can submit a new individual application.¹¹

Tax Consequences

Through the end of 2025, the American Rescue Plan Act excluded all discharged student loan debt from federal income tax. That blanket protection expired on January 1, 2026.¹²

The tax treatment of borrower defense discharges specifically is less clear-cut than for other forgiveness programs. Some tax guidance has indicated that discharges through Department of Education processes like borrower defense may remain excluded from taxable income even after the ARPA provision expired, on the logic that borrower defense isn’t really forgiveness of a legitimate debt but a determination that the debt was based on fraud. Don’t assume this applies to your situation without professional guidance.

If a discharge is treated as taxable income, the amount forgiven is added to your gross income for the year. On a $40,000 discharge, that can mean thousands in tax liability. Two safety valves may help. The insolvency exclusion under the Internal Revenue Code lets you exclude discharged debt from income to the extent your total liabilities exceed your total assets at the time of discharge.¹³ Many borrower defense applicants are insolvent, though proving it means documenting every asset and liability. Second, some states don’t tax student loan discharges even when the federal government does. State treatment varies, so check your state’s rules or talk to a tax professional.

Getting Help

You don’t need a lawyer to file, and there’s no filing fee. Legal aid organizations in many states offer free assistance with student loan disputes, and some specialize in borrower defense. If you’re thinking about a private attorney, hourly rates for this work range from $100 to $600 depending on your area and the complexity of the case. Before paying anyone, check whether a free legal aid clinic in your state handles these claims.

Be cautious of companies that charge upfront fees to file borrower defense applications on your behalf. The application is free, the Department reviews every claim regardless of who filed it, and no private company can speed up the review. The strongest factor in your claim’s success is the quality of your evidence, not who submits the form.

1
eCFR. 34 CFR Part 685 – William D. Ford Federal Direct Loan Program
2
eCFR. 34 CFR 685.222 – Borrower Defenses and Procedures for Loans First Disbursed On or After July 1, 2017, and Before July 1, 2020
3
United States Government Accountability Office. Department of Education – Student Loan Relief in Cases of College Misconduct
4
eCFR. 34 CFR 668.501 – Aggressive and Deceptive Recruitment Tactics or Conduct
5
eCFR. 34 CFR 685.206 – Borrower Responsibilities and Defenses
6
Federal Student Aid Partners. Federal Student Loan Program Provisions Effective Upon Enactment Under One Big Beautiful Bill Act
7
Federal Student Aid. Borrower Defense Updates
8
Federal Student Aid. Borrower Defense – Federal Student Aid
9
Federal Student Aid. Borrower Defense to Repayment Application
10
eCFR. 34 CFR Part 685 Subpart B – Borrower Provisions
11
eCFR. 34 CFR 685.407 – Reconsideration
12
Federal Student Aid. How Will a Student Loan Payment Count Adjustment Affect My Taxes
13
Office of the Law Revision Counsel. 26 USC 108 – Income From Discharge of Indebtedness