Borrower’s Defense to Repayment is a student loan forgiveness program that aims to help students who enrolled in schools, which violated certain laws, and misled, or defrauded those students. Through the program, students can get complete relief from student loan debt, especially in case their University shut down before graduation. These aspects will be covered in later paragraphs. For now, let’s briefly talk about rule changes and updates on the case. Since 2018, new rule changes are in effect to help more students who are victims of fraudulent practices by the universities.
The Borrowers Defense to Repayment was a more complicated issue decades ago. Today, both state attorneys and the Department of education are trying to make it simpler. New rules seem to work effectively for students because of the recent changes such as:
- Extending eligibility for students who used loan consolidation
- Adding disclosure requirements
- Conforming financial responsibility on schools
In December 2018, the students who could not get a degree because of the closing of the Universities got complete relief from student loan debt.
The Department of Education stated that for now, $150.000.000 in qualifying loans would be discharged as soon as possible. The campaign covered around fifteen thousand students who attended the closed schools between November 1, 2013, and December 4, 2018. The process may take longer for students, which they are stressing out about the possible results. For now, the best advice would be to wait for notifying emails from the DOE and hoping for better results.
Borrowers defense to repayment (BDAR) remains one of the best and available programs for eliminating the debt that students owe to the loan providers, banking institutions. It is important to note that BDAR only applies to federal student loans. That means students who have private loans cannot get the benefits of this program. Keep in mind that completing a successful BDAR application is not an easy task as the Department of Education asks for strong evidence regarding deceitful practices committed by universities.
DOE and CFPB are investigating the case closely, with subsequent lawsuits against many of the schools. For borrowers, it is high time to apply to BDAR because most of those schools have accepted their role in these fraudulent acts. If you enrolled in one of them, your chances of getting an acceptance have increased drastically. Let’s see how the program works and what you need to do moving forward.
Jay Fleischman’s view on the Case
The lawyer who specializes in student loans –Jay Fleischman stated the importance of loan discharge. He argued that “students got not an only fair treatment for their loan debt, but also fair compensation for all the things that the University made them go through.” “The negative information on the credit reports of the students will also be deleted as well,” according to Fleischman. There are other claims by students such as civil rights or personal injury, which held them back from paying the student loan.
Fleischman added that “these types of cases are not going to result in student loan discharge. Not all students can be good candidates for BDAR.” The reason for that is, each case is different, and even if the University treated the students unjustly, there is a chance that you may not get what you needed as a result of BDAR. The personal case needs to be analyzed carefully. If you find a reliable source that clearly shows how the University practiced illegal acts toward you, then you may have a good chance of being accepted.
How BDAR Works?
BDAR involves many stages in which students need to prove that the University deceived them, and they took the student loan as a result of those acts. If the University defrauded you with:
- Falsified information
- Misleading ads
- Other such illegal practices
If any of the above situations apply to you, you are a good candidate for taking this program. What are the examples of fraudulent acts? The universities may lie about:
- Offered degree programs
- Job Placement Figures
- Total Costs of study
- Tuition Fee Assistance
- Successful Credit Transfer scores
- Graduation Rate
- Employment Rat
Well-known college, Corinthian was under investigation and was indicted for committing fraudulent activities for over a decade. Thankfully, in the process, over 15 thousand students who studied at one of those universities got rid of their loan debt. It is a relief to know that only direct loans got a discharge for fraudulent actions by the universities. This means that Parent PLUS, Perkins, Stafford, or Federal Consolidation loans cannot be discharged as of now.
What should you include in the BDAR Application?
Students who argue that the school violated the law in their specific case needs to file an application to the Department of Education, which contains the following information:
- Which Laws your school violated?
- When were you a student?
- In which degree program you studied?
- Your Contact Information
- How University’s fraudulent actions affected your decision about taking a student loan?
After you submit the BDAR application, it will go through further delay and stay there for one year. It is a very strict process that may involve legal assistance as well as professional guidance. So, for borrowers who intend to submit this application, we recommend contacting a professional and getting a lawyer to look at your specific case. Even though you get acceptance from loan discharge, you may face serious problems regarding the tax on forgiven loans. That is the main reason why you always need to consult with a professional to get more information about the case and possible results.
News about New Approvals
As mentioned earlier, on December 13th, 2018, DOE stated that around $150 million federal student loans would get a discharge. This case in particular was designed in keeping with the students of Corinthian Colleges. On October 16th, 2018, news broke out about a Federal Judge’s decision. F.J. that stated, “ the Department of Education needs to immediately take action and terminate all the student debt from pending Borrowers Defense to Repayment applications.” Students should be notified within 30 to 90 days prior to this call by the Federal Judge.
Students from Corinthian colleges, mainly Heald Colleges, WyoTech, and Everest, may get those notifications from December 14, 2018. It is a positive sign for students desperately waiting for approval regarding BDAR. If you have not submitted your BDAR application because you feel like they may not accept it, please do it immediately because it is hard to tell how long these procedures will continue, and whether BDAR will cease to exist.
When BDAR Works on your Favor?
In the past few years, there were many speculations regarding the Borrower’s defense to a repayment program. Students thought that they could sue and directly use BDAR against student loan lenders, servicers, and creditors like Navient Corp. Though, it is not accurate information because BDAR discharges are only related to students who enrolled in fraudulent schools. You can only sue them, neither a lender nor the servicer with BDAR.
On the other side, this is great news because BDAR helped DOE to find out those types of schools that were lying to their students for years and taking advantage of their loan money. Huge lawsuits against these for-profit Universities raised awareness about the case and helped thousands of students to discharge their student loans. If you attended either one of those universities that have ongoing lawsuits against them, it is better to closely monitor the case. The results of those lawsuits could impact your case positively if the University accepted its role in deceiving the students.
Some of the for-profit universities that have lawsuits right now are:
- The DeVry University
- The Le Cordon Bleu University
- The Anthem College
- The University of Phoenix
- The Walden University
- The WyoTech
- The Kaplan University
- The Westwood College
- The ITT Tech
- The Heald College
- The Capella Colleges
- The Everest Colleges
- The Art Institute
- The Corinthian Colleges
- The Full Sail University
- The Brown Mackie College
Who Qualifies for BDAR Discharge?
According to the BDAR rules, the only case where you are eligible for this program and get complete loan discharge is the case where you can prove that you took the student loan for attending the school that spread out misleading information, and it was the main reason why you did so. The school that you attended should have done illegal practices, misconduct, and violation of certain laws. Otherwise, Borrower’s defense to repayment cannot help you to discharge the loan debt. In other words, students should prove that the school tricked them, and as a result, they took the loan for attending that specific University.
The Department of Education is strictly checking those applications. So, it is better to demonstrate every minor detail without any lies or exaggerated information. False advertising is one of those things that many schools used with exaggerated rates regarding employment and graduation. If you saw those and took the loan because of that, this is strong evidence that can help you to get the BDAR discharge application approved by DOE. Every application is based on personal cases. Keep in mind that, even the schools that spread falsified information about their programs and get students enrolled are not guaranteed for you to get approval without strong evidence.
You should have direct messages, emails, and such evidence, which shows that you saw those ads and then decided to choose that particular school. If you enroll in one of those schools without having any information about these illegal acts, just because of your preference, unfortunately, you cannot get BDAR discharge application acceptance. You should clearly show your perspective on the issue and mention that you would never choose these schools unless you saw those falsified advertisements and saw this as an opportunity for your future.
Student Loans That Qualify For Borrowers Defense to Repayment?
As we already mentioned, only federal student loans are qualifying for BDAR discharge. Though, there are more details that you need about these criteria to see whether or not you are eligible to apply. Only the following students are eligible to qualify for Borrowers Defense to Repayment Discharge.
- Direct student loans
- Federal Perkins Loans
- Federal Family Education Loans
Other than these, the direct student loans from private/public schools, whether they are still open or shut down, are qualifying for BDAR Discharge. These details may be complex for you to understand. That is why it is better to classify them all as federal student loans.
How To Apply For Borrowers Defense To Repayment Discharge?
Once a student decides that their federal loans are qualifying for the criteria, it is time to write down the application and send it to the Department of Education. It was a more comprehensive process back then because all the students were writing letters in which they mentioned the details about the case and how the school deceived them. There were not any template or requirement criteria at that time.
Though right now, we have a template for the BDAR Discharge application and the uniform structure which you need to follow while writing your application. You need to write the facts with the correct explanation, dates, and put evidence regarding the process. You need to explain the misbehavior of the school, how it impacted your decision, and why you should be eligible to access the BDAR Discharge from your federal student loans. The uniform structure for the BDAR discharge application is available on the Federal Student loan aid website. You need to find and fill it accordingly before submitting it.
You can find it here:https://studentaid.gov
As you enter the link, you need to find an online application bar or download the PDF version so that you can fill the blank document. As you finish the application, you need to submit it to the official email of the Department of Education- BorrowerDefense@ed.gov or send it via fax to the P.O. Box 1854, Monticello KY 42633 address.
There is no difference between the online application form and the PDF version. Though, many students think that online forms have an advantage because they might get faster responses. You need to do the one that appeals to you more. So, it is a matter of choice.
How Can You Increase Your Chances Of Approval?
The most crucial aspect of these applications is to prove that the school indulged in illegal actions. You need to be aware of the situations where those acts are considered a breach of federal law. If you cannot put all the details together and provide them with evidence, it is unlikely that you will get approval from the Department of Education regarding the BDAR application. There are two different sides to the issue. The first one is that you need to prove the illegal activities that happened against you. The second one is how those actions affected you and lead you to get a federal student loan. Do not write complaints about the school because that information will not help you. You need to mention those two things mentioned above. Create an argument and write down supporting points for that argument.
The simple format should look like this:
- The University did xxx things to me (misconduct, misinformation, fraud, deceitful advertising, etc.)
- XXX person or office impacted my decision and convinced me to get a federal student loan for attending their school.
- If they did not do these things, I would not choose XXX University and get a student loan
It is better to write your application in this format because it is about straight facts and nothing else. This is what you need to present to DOE. Otherwise, the results will not be good because the Department of Education will view your application as another complaint by students and will not take it seriously.
What Classifies as “illegal action” by Federal Law?
It is messed up when it comes to the definition of illegal activity while you write the BDAR application. First of all, poor consumer service by the University does not necessarily make it an illegal action. So, if students wrote emails, called universities, and could not get a reply, they cannot use this as evidence for illegality. Let’s give you some tips on which acts are illegal and write down the most common instances.
Acts that can make you Eligible for Getting BDAR Discharge
- If school promised you a set salary after graduation. For example, XXX School contacts you and promising that you will get $60.000 a year after you graduate from them.
- If the XXX School promised you a specific position that you will get after graduating. For example, you will become a Management Level position after graduating from University.
- If XXX School spread out the falsified and exaggerated rates about job placement
- For example, if they argued that more than 80 percent of our alumni found a job in a few months.
- If the XXX school promised about the misleading graduation rates
- For example, if they put advertisements and argued that the graduation rate for the past ten years for the University is around 90 percent.
- If the school Program accreditation. For example, if they argued that “our project management degree is regionally accredited while it is not true.
- If the University lied about credit transfers
- For instance, if they stated that 100 percent of the credits from our school could be easily transferred to other schools while it is not really a case and they do not have evidence to prove that either.
Keep in mind that these instances are very important to prove that your school is guilty and should be punished. Without proving that, there is no way for you to get the advantage of the Borrowers Defense to Repayment Program.
How to present illegal actions by Schools in your BDAR application?
If you faced any type of illegal action by universities that are listed above, you need to mention those aspects clearly in your BDAR application, and that should be your core argument. If you focus on these issues and give a detailed analysis regarding the process and situation, it will reflect positively on your application. Keep in mind that, you have only one chance to write an application and submit it, so do not screw that opportunity by stating the complaints regarding the quality of education or poor customer service of the University. Instead, you can just state the facts and give more details about what happened to you.
Those details may include:
- What exactly the University told/promised you? Do not generalize or paraphrase what they told you; it is better to write down what happened as it was.
- Who spoke to you? You need to mention the position of the University staff member who talked and promised you about those aspects?
- When did the case happen? You need to remember the exact meeting dates when they lied to you about the success rates of their University.
- Where did they tell you? Where you first saw or told about that falsified information. The place can be the campus of the University, registrar office, recruiting event, and so on.
- How do they contact you? It can be through phone calls, email, or face to face meetings. If you saw the ads on T.V., heard it on the radio or saw them on banners, please mention all of that in your application exactly.
The final point is about the impact that those falsified ads and misleading information had on your decision. Ask yourself a question and write them down accordingly. Would you rather go to the other schools if not for these ads/empty promises? Would you still take the federal student loan? If you can write in this format, there is a high chance that your BDAR application will get the attention of officials at the Department of Education, and they will consider this as an excusable reason for taking the loan and discharge it.
What else can you include in Borrowers Defense to Repayment Application?
Even after mentioning all these details, you could end up with a decline from DOE. What is the reason for that? It is because the Department of Education wants evidence, and if that evidence is not satisfying them, they will not accept your Borrowers Defense to Repayment application. What can be additional evidence?
You can present the documents which prove that you attended that University, the program that you enrolled in (Registration documents, Transcripts from various semesters, Enrollment Agreements, etc.)
You can find promotional materials such as procurers which schools, handed to the students before their enrollment. Try to search them in google or go through enrollment emails to see whether or not they sent those types of communication in the recruitment process. Universities may update their website to seem innocent. However, you can still find old versions of those websites in the Internet Archive’s Way Back Machine to get evidence regarding the misconduct.
You can find the course catalog and see if there is any evidence regarding the false advertising claims.
You should submit your application alongside all these documents and hope to get a student loan discharge. This type of evidence plays a major role in the decision process of the Department of Education. They are a more powerful and visual representation of the evidence, and it can help DOE officials to see the misconduct rather than reading what you have written on the application.
Should you put your loans into Forbearance?
While you decide to file an application for Borrowers defense to repayment discharge, you will have an option like Forbearance. What is that? Forbearance means to temporarily pause the monthly payment while you are waiting for the results of the Borrower Defense to Repayment application from the Department of Education. You can either use Forbearance for active loans or defaulted ones. It is an opportunity for people who are positively thinking that they have a great chance of getting a Borrowers Defense to Repayment approval. The reason for that is, most of the time, the approval for the Borrowers defense program does not pay back the amount that you already paid for student loans.
By stopping the purchase, you can save yourself some money.
Before the official approval by the Department of Education, you can use Forbearance. Though, keep in mind that the interest rate for the loan would be added in that time frame too. So, you need to pay back that amount until DOE completely discharges your student loan. The good news is that even if you do not choose Forbearance as an option or do not have enough information about this matter, the Department of Education will do it for you. In fact, if the student has three federal loans and only applied to Borrower Defense to Repayment for one of them, DOE will put all three of them to Forbearance automatically.
What happens if your BDAR application gets approval from DOE?
There are two different types of student loan discharges. The first one is full, and the second is partial. You need to check to see whether or not you were able to get a full discharge or not. If not, it would be better to check the amount and payment form of the remaining balance. Keep in mind that the interests are also part of the loan, and if you got a partial discharge, you need to pay the interest rate for that remaining amount. The other controversial thing about loan discharge is taxes. Students want to know what will happen in the annual tax return. Let’s discuss that issue.
Borrowers Defense to Repayment and Taxable Income Laws
- On the IRS filings, the discharge amount that you get rid of from student loans shows as taxable income. Before Borrowers defense to repayment discharge, you’re the tax that you were going to pay was considerably smaller than the tax for the discharged amount. Income tax percentage is a very important variable that you need to look at in these types of cases. For instance, if you can get approval from the Department of Education regarding the BDAR Discharge and get rid of the $10.000, your tax amount will be counted according to that amount. So, if income tax is 25 percent, you have to pay $2500 to the IRS. The IRS wants to get paid immediately, and at once, that is why the tax issue concerns many students after they got loan discharge.Taxable income laws are very crucial and often overlooked by both applicants and the officials. For instance, the Department of Education did not mention that on their website. So, the students do not have enough information about this issue. There are available programs to help students to cope with income taxes after they get student loan forgiveness or discharge.Those programs are:
- IRS Fresh Start
- IRS Tax Debt Settlement
- Pay IRS Tax Back
What happens if your BDAR Discharge Application got denied by DOE?
After you submit your Borrower’s defense to repayment application, during 3-6 months, you will get a reply email from the Department of Education. If the answer is no and your application gets denied by DOE, you need to be careful. Before that time, if you used Forbearance for the student loan debt and stopped paying the amount, you need to do so from now on. If your application is denied, you need to pay your monthly dues just like before. While you put the student loan debt on Forbearance, the interest rates and taxes get collected in your balance, so you need to pay them back too.