What is Borrower Defense Loan Discharge for Federal Student Loans?

Borrower defense to repayment is available for borrowers who have been misled by a college or university.

Pencil erasing the words student loans
(Image credit: Getty Images)

Although applications for student loan forgiveness went live in October, due to several legal challenges, plans to forgive the student loans of millions of borrowers, have been blocked. (The U.S. Supreme Court is set to hear arguments on the issue this month, and if litigation is not resolved by June 30, deferred payments will resume 60 days after that.)  Meanwhile, the Biden administration is now providing “borrower defense to repayment” for borrowers who have been misled by a college or university. According to the U.S.Department of Education, if you feel that your school misled you or engaged in other misconduct in violation of certain laws, you may have legal grounds for discharging your federal student loans. 

The borrower defense program has forgiven $14.5 billion for nearly 1.1 million borrowers since President Biden took office, and the new Borrower Defense Loan Discharge webpage makes the application process more straightforward and concise.  

Borrower Defense Loan Discharge  

If your college misrepresented details that led you to enroll there, you have grounds to apply for borrower defense loan discharge. Common examples of misrepresentations for purposes of the loan discharge program include your university lying about your ability to roll over credits, promising to get you a job after graduation or guaranteeing that you’ll receive a certain salary after you graduate. 

Subscribe to Kiplinger’s Personal Finance

Be a smarter, better informed investor.

Save up to 74%

Sign up for Kiplinger’s Free E-Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.

Profit and prosper with the best of expert advice - straight to your e-mail.

Sign up

Less common, but still valid, reasons for borrower defense involve breaches of contract and judgments issued against the school. However, “in any case, the misrepresentation, breach of contract, or judgment must have affected your decision to enroll and to take out federal loans, or it must be related to the school’s educational services.”

If the US Department of Education approves your claim, any federal student loans taken out to attend said school will be discharged, and you could potentially receive a refund of any loan payments that you already made towards your loans. 

Writing a Claim for Borrower Defense

The Department of Education lists two key points you’ll want to include in your borrower defense application to make it as strong as possible.

  • Provide as much detail as possible to help us evaluate your claim(s): This can include any documentation supporting the claim your school lied to you, as well as any material that can confirm your dates of enrollment.
  • Address all required “elements” of a borrower defense claim: You’ll need to choose between one of the three types of borrower defense claims, substantial misrepresentation, judgment or breach of contract and include all required “elements” of that claim, found here.

Completing an application for one school takes about 30 minutes, and once it’s submitted along with supporting documentation, it will be reviewed by the U.S. Department of Education.

Bottom Line 

While the ability to submit a borrower defense claim has long been around, it’s now more clearly established with comprehensive information. If you’ve been misled or wronged by a school, and your borrower defense claim is approved, you could have all associated federal loans cleared. 

There's also the possibility of receving a refund of any previous payments. Your application can be checked online or by calling the Borrower Defense Hotline at 1-855-279-6207.

Related Content

Student Loan Forgiveness Blocked For Now Due to Court Rulings

Some States Could Tax Student Loan Forgiveness

Erin Bendig
Personal Finance Writer

Erin pairs personal experience with research and is passionate about sharing personal finance advice with others. Previously, she was a freelancer focusing on the credit card side of finance, but has branched out since then to cover other aspects of personal finance. Erin is well-versed in traditional media with reporting, interviewing and research, as well as using graphic design and video and audio storytelling to share with her readers.