President Joe Biden campaigned on canceling up to $10,000 in student loan debt per borrower, but federal student loan forgiveness legislation has proven difficult to enact. While widespread student loan cancellation may still be out of reach, the Department of Education has been able to approve $1.5 billion worth of student loan discharges through borrower defense to repayment.
Borrower defense is a program offered by the Federal Student Aid (FSA) office to forgive the federal student loan debt of borrowers who were misled by their higher education institution. This includes schools that engaged in misconduct in violation of applicable state laws.
The Biden administration has approved borrower defense claims for approximately 92,000 students who attended for-profit colleges like ITT Technical Institute, Westwood College, Marinello Schools of Beauty and the Court Reporting Institute. Under the Obama administration in 2013, students filed similar claims after the closure of Corinthian Colleges.
Keep reading to learn more about the borrower defense rules and what you can do if you don't qualify. Alternatives to borrower defense include enrolling in an income-driven repayment plan, researching other student loan forgiveness and refinancing your student loan debt.
If you decide to refinance your student debt, visit Credible to compare offers from multiple private student loan lenders at once without impacting your credit score.
How to apply for borrower defense
You may qualify for the borrower defense to repayment program if you attended a school that has a history of misleading students about the quality of their program or earnings potential. For example, the Education Department discharged the loans of 18,000 ITT Tech students who claimed the school misled them about their employment prospects, job placement rates and the ability to transfer credits.
To apply for borrower defense, you must fill out an application form. You'll need to provide transcripts and other information regarding your school, as well as the collections status of your loans. You'll also have to prove a basis for borrower defense by including:
- Promotional materials from the school, including brochures, enrollment agreements, websites and emails
- The name and title of the school officials who misled you, if known
- What information the school did, or didn't, provide
- Why you believe you were misled
It takes about 30 minutes to complete the application process. You can find more frequently asked questions on the FSA website.
What to do if you don't qualify for student loan forgiveness
Just a fraction of America's 45 million student loan borrowers have qualified for student loan forgiveness under the Biden administration. While it's possible to ask the Education Department to reconsider your borrower defense application by mail, you have other options if you don't qualify for a loan discharge:
- Enroll in an income-driven repayment plan. Depending on the type of federal loans you have, you may be able to limit your student loan payment to 10-20% of your disposable income.
- Apply for additional forbearance. The FSA offers up to 36 months of federal student loan forbearance through unemployment deferment and economic hardship deferment. If you have private student loans, get in touch with the lender to see what kind of forbearance programs they offer.
- Research alternative student loan forgiveness programs. Some of these include the Public Service Loan Forgiveness (PSLF) program, the Teacher Loan Forgiveness Program, total and permanent disability discharges (TPD) and closed school discharges.
- Refinance your private student loans. Borrower defense only covers federal student loans like Direct loans and federal Perkins loans, so you may still be left with private loans even after being approved. Private student loan refinancing can help you lower your monthly payment, pay off your debt faster and save money in interest charges over the life of the loan.
You can browse student loan rates from real lenders in the table below. To see student loan refinance offers tailored to you, get prequalified in just minutes on Credible.
Is student loan refinancing right for you?
Private student loan refinancing can be an effective way to find student loan relief, stay out of default and save money over time.
According to data from Credible, Creditworthy borrowers who refinanced to a shorter-term student loan on Credible were able to save nearly $17,000 and pay off their college debt 41 months faster. Borrowers who refinanced to a longer-term loan reduced their payments by more than $250, without adding to the overall cost of the loan.
You can use Credible's student loan refinance calculator to see how much you can save by refinancing to a lower rate.
However, student loan refinancing isn't necessarily right for everyone. Borrowers with federal student loans stand to lose federal protections like income-driven repayment plans and administrative forbearance by refinancing to a private loan.
Still not sure if you should refinance your college debt? Reach out to an experienced loan officer at Credible to learn more about student loan refinancing.
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