On December 10, 2019, the FTC announced the settlement with the University of Phoenix. They stated that parties agreed on a 191-million dollar benefit for former students of the university. As part of that agreement, students owing directly to the university would get 141 million in loan forgiveness. To qualify for the University of Phoenix loan discharge, students should have attended the school between October 2012 and December 2016. On a variety of occasions, Apollo Education Group mentioned that students can relax because, within 45 working days, all the debt amounts of eligible students will be cleared.
Why Was There a Need for the University of Phoenix Loan Forgiveness?
The Background of the UOP
The University of Phoenix is a for-profit school that uses tactics to attract middle-class students by ensuring that they will get a high degree and find quality jobs. While attempting to get a degree, not only the students but also veterans have been influenced by this university.
UOP Class Action Lawsuit
The UOP faced many lawsuits regarding the case in multiple states, such as Arizona, Arkansas, and California. Since 2014, the university has tried to fight back against claims it violated rules in many phases. The court sued UOP for:
- Interference with Contractual Relations of Students
- Unjust enrichment
- Breach of:
- Implied Covenant of Good Faith
- And Fair Dealing
Allegations against the UoP
There are specific claims against the university which are completely unethical and unacceptable. For instance, students argue that the University of Phoenix hired trained enrollment counselors. Another scandalous allegation about the university came from former employees who were whistleblowers of federal funds’ waste.
Possibilities of Your Student Loan Getting Discharged
The Department of Education states on its website that, under particular circumstances, DOE is ready to forgive or cancel student loans. Those circumstances may include the closure of the university or fraudulent actions that might be used by the university, etc. Respectively, in the first case, you would apply for student loan forgiveness programs. On the other hand, to acquire the University of Phoenix loan discharge, students need to prove that the school committed those fraudulent acts against them.
In cases when the school is falsely certified, there is a chance for loan discharge. However, the concern by students shows that DOE is not so active about loan discharge. In fact, some of those students think that the eligibility criteria and the harshness of the whole process are a plan that can push back a student from getting his/her loan discharged. Let’s first analyze the closed school discharge option. Then, we can go through BDAR claims that can help you get debt relief through the University of Phoenix Loan Discharge Program.
Closed School Loan Discharge
For those of you who attended a school while it was closed, there is a chance to discharge the loan that you took for studying at that university. This program can help students with federal family education loans, direct loans, perkins loans, and so on. You may be eligible to apply for this program if
- You were studying at that time when the school closed.
- The student transferred his/her credits to another school but a similar program. For instance, if you were studying criminal justice in UOP and moved to the same or slightly different program such as Criminal Law etc.
- You were attending UOP for 120 days until or after June 20, 2014. There is a chance to get approval from those of you who withdrew from classes during this time.
How to Get Your Loan Discharged?
Under the settlement provisions, the University of Phoenix agreed to pay 191 million dollars for student loan forgiveness. This settlement mainly focuses on loans that students owe to the UOP directly. For federal student loans, there is a chance for students through BDAR, which we will discuss next.
How About Personal Loans?
Borrowers of federal loans were not eligible for the settlement’s benefits. They still have options, though, like the Borrowers’ Defense to Repayment, other forgiving policies, and discharge plans. Even if the debtor is unable to completely pay off the debt, they can use consolidation or repayment plans to do so.
Private loans, on the other hand, are not eligible for these choices. Generally speaking, private loan forgiveness at the government level does not exist. However, there may be ways for these borrowers to obtain favorable loan terms.
Private Borrowers’ Options
A settlement with the lenders is one of the debt issue’s potential solutions. This solution entails negotiating with the lenders to persuade them to offer advantageous loan terms, even temporarily. For instance, borrowers can ask the lender to lower their monthly payments if they are unable to make the current ones. Keep in mind, though, that the lender is not required to grant your request. They can still uphold all of the original loan conditions and turn down any requests from the borrower. However, the lender will also profit if the request is granted. Yes, if they lower the payments, they will temporarily lose some income.
They could, however, default and not pay back the debt at all if they do not assist the borrower. One could contend that the lender still has the right to sue the debtor and get paid. It is feasible, but bringing a lawsuit and paying an attorney are expensive. Furthermore, this process takes a lot of time. Thus, granting the borrower’s request may be advantageous to the lender.
The process of negotiating with the lender is difficult. The borrower should remember throughout the entire process that the lender is not required to grant the favor they are requesting. Therefore, the debtors must treat the lender with the utmost respect and communicate with them patiently without arguing or raising issues.
Additionally, private lenders have the option of consolidation. Private lenders can still find private organizations that offer consolidation services even though they are not eligible for federal consolidation. As an alternative, private lenders may decide to obtain a new credit line with a higher credit limit to pay off existing loans.
Using BDAR for Discharging UOP Loans
Under the Borrower’s Defense law, it is mentioned that in cases where the opposing side (university) did fraudulent things against the student, students have the right to use loan discharge. Violation of the rules, misinterpretation, or misconduct are all part of those fraudulent acts. In our case, which is based on the University of Phoenix, students have the right to file the BDAR claim and earn a loan discharge. As the university provided private student loans to those students while assuring them that the higher education programs they chose were the best, it is perfectly fine to note all those aspects in your BDAR application.
You generally need to accuse the UOP of false advertising and misleading claims that led you to take the loan in the first place, or prove that they lied about:
- job placement rates
- graduation rates
- and many more statistical measures.
If you face such an incident and want to get rid of the massive loan debt, all you need to do is write a BDAR application and submit it to related institutions. The good news for former students of UOP is that if DOE approves their request, they will get a complete loan discharge.
How to Effectively Support Your Claims in the BDAR Application?
There are specific issues that you must address as you write your BDAR application. You need to clearly state that you only took the loan to attend the University of Phoenix. By doing so, the primary reason for your decision was mainly because the university misled you with their fraudulent marketing activities. In other words, conclude that you would never choose that university unless they made those falsified claims. You can show the instances where they
- tricked you
- lied about their curriculum
- mislead you with their false facts about success rates, etc.
Keep an eye on this part because if you cannot manage to fully cover the issue in detail, your BDAR application will not be approved by the Department of Education.
They are selective about the cases. As previously stated, the DOE’s strict evaluation rules make it more difficult for students to obtain approval.You need to deliver the right message throughout your case and support those arguments with evidence. You can attach a screenshot of the messages or call recordings, if possible. In a class-action lawsuit, officials accused UOP of various illegal acts, and you can analyze them to see whether or not any of them happened to you. In the next paragraph, we will explore those claims so that you can better understand and write a practical application that can help you get the University of Phoenix loan discharge.
How Was The University Of Phoenix Involved In Those Actions?
As you already know, UOP was accused of doing illegal stuff that caused students to raise their voices and ask for justice. Besides, students who want to get a higher degree should start searching for available universities for their budget. They look at the current standing, prospects, graduation, and job placement rates whenever they analyze the options. It is impossible to choose the best option without comparing the results of these matters. So, the former students of Phoenix University found out that the university is a very prestigious place that can ultimately open up a successful career path.
After all these years, the FTC raised claims that the university was lying about all its statistics and inflating rates to attract more students. Would you spend thousands of dollars or take out a large loan to attend a school where only one in every five graduates? The answer is no. In your BDAR claim, try to explain this matter clearly so that your chances of acquiring a student loan discharge from the Phoenix university increase.
Where Do You Need To Submit The BDAR Claim?
The United States government has a special website for these types of procedures. By logging into your account, you can easily submit the BDAR application. Keep in mind that it is a sensitive issue. You should never trust any third-party individuals or companies when it comes to providing the BDAR application. You can still consult related agencies and people who have had enough experience to file an effective claim. Student loan scams can take advantage of you and sell your documents and private information to other companies. That is why you should be careful about whom you are consulting while filing your application form.
How Long Will It Take For The Department Of Education To Post The Status Of The BDAR Application?
This question does not have a specific answer because it can take several weeks or even months to get a piece of information about the status of your BDAR claim. If you want to get the University of Phoenix loan discharged, do not lose much time. Start writing and submitting your applications to the official website as soon as possible.
Taxes and the Annual Student Loan Payment
Some students think that after applying, they can stop paying for loan debt. However, this is not the case. You need to follow the contractual guidelines and pay for the loans annually. After you get a message about approval, you can stop paying. The approval message means that Phoenix University discharges all the debt amount. Until then, do not risk your chances because you might pay additional fees and the student loan interest rate for the period that you missed your payment.
How to Apply?
This University of Phoenix student loan forgiveness program can be applied for via an online portal, regular mail, or email. Utilizing the online application form is one of the simplest and quickest methods. You will be asked about important details in this application, such as contact information, the start date of enrollment, the tuition cost, etc. Additionally, you must upload any documents that support the university’s wrongdoing.
Will There Be Taxes On Your Discharged Student Loan Debt?
While the student utilizes Borrower’s Defense Discharges to apply for the University of Phoenix loan discharge program, there will be taxes on your deleted balance. It is one of the significant downsides of this program, but unfortunately, students have to pay taxes for it. The forgiven or discharged amount is considered as income in the student’s balance. The IRS (Internal Revenue Service) will take money from you in the form of taxes according to the amount that has been discharged.
You may see this issue as unfair, but it is nonetheless obligatory. The IRS treats the discharged loan as an income, but a few exceptions can relieve students from tax amounts. So, let’s understand the process and then show you why the University of Phoenix Loan Discharge program can be useful in terms of taxes.
Loan Discharge And Taxes: Are There Any Exceptions?
The IRC will send you Form 1099-C as soon as your BDAR application is approved. This form is for specification purposes only. You need to fill it unless the amount of forgiven debt is less than 600 dollars. While filling out this form, you need to report the forgiven amount in Box number 2 under the headline of other income. For a forgiven debt amount that is less than 600 dollars, students still need to report it on the document as a federal income tax return.
The good news for students is that the tax debt will be much less than the actual discharged amount. For instance, let’s imagine that you have 10,000 dollars of loan debt and you discharged it through BDAR. You must pay the IRS $2,200 in income tax because you are in the 22 percent tax bracket. Even better news for students is that some of the discharged loans might not be taxable income.
Who Will Be Able To Take Advantage Of That Case?
Specific occupations can help students eliminate the tax amount on their discharged student loans. What are those occupations?
- Public Defender
- and Prosecutor
The programs that allow students to discharge loans without paying taxes are
- Teacher Loan Forgiveness
- And National Health Service Corp Student Loans
In addition to that, public loans that are funded by the PHS Act are also considered tax-free income when students successfully utilize loan discharge.
Death, disability, or similar accidents can also assist the student in avoiding paying taxes on their forgiven debt.
The primary exceptions that we are concerned about are closed schools and false certification discharges. For the University of Phoenix Loan Discharges, it can be applied. Former students of UOP can claim that the university used false certification for the aid program, which can help them avoid the IRS tax.