What Is Borrower Defense to Repayment: Rules and Filing

Borrower defense to repayment is a federal provision that lets you apply to have your federal Direct student loans canceled if your school lied to you, misled you about something important, or broke the law in a way that harmed you as a borrower. It comes from the Higher Education Act and is carried out through Department of Education regulations. The core idea is straightforward: you shouldn’t have to pay for an education that was sold to you through deception. The rules have shifted recently, though. The One Big Beautiful Bill Act, enacted in mid-2025, restored the stricter 2020 regulations and reversed the Biden administration’s 2023 expansion for loans originated before July 1, 2035.¹ You can still file a claim, and the Department says it will keep reviewing them. The legal standard is just tougher for some borrowers than it briefly looked like it would be.

Which Loans Qualify

Only William D. Ford Federal Direct Loans are eligible for borrower defense discharge. Direct Subsidized, Direct Unsubsidized, and Direct PLUS loans can be submitted on a claim without any preliminary steps.²

Federal Family Education Loans (FFEL) and Federal Perkins Loans don’t qualify on their own. To use them in a borrower defense claim, you have to consolidate them into a Federal Direct Consolidation Loan first, which converts the debt into a Direct Loan the Department can discharge.²

Consolidation comes with trade-offs. 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 denied afterward, you’re stuck with that new consolidated loan rather than your original terms.

Perkins borrowers should be especially careful. Perkins Loans carry their own cancellation benefits for people who work in teaching, nursing, and certain other public service fields. Consolidating a Perkins Loan into a Direct Consolidation Loan permanently kills those Perkins-specific cancellation options. If the borrower defense claim then fails, that safety net is gone. Weigh the strength of your claim before you consolidate.

What Counts as School Misconduct

Borrower defense claims turn on what the school did. The specific grounds differ slightly by regulatory period, but four categories cover most claims.

Misrepresentation

This is the most common basis. It covers false or misleading statements the school made that influenced your enrollment or borrowing decisions. Inflated job placement rates, fabricated graduate salary numbers, false claims about program accreditation, and misleading promises about credits transferring to other schools all fit here.³ A school telling students its nursing program leads to licensure when it lacks the required approval is a textbook example.

The misrepresentation has to be substantial, not trivial. An outdated campus photo probably doesn’t qualify. Advertising a 90% job placement rate when the real figure is 30% does. The question is whether a reasonable person would rely on the false information when deciding to enroll and take on tens of thousands of dollars in debt.

Breach of Contract

If your enrollment agreement promised specific programs, resources, or services and the school didn’t deliver, that broken promise can support a claim. This comes up when schools shut programs down mid-semester, drop promised clinical rotations, or fail to provide the laboratory equipment the enrollment contract described.

Favorable Court Judgments

If a court or administrative body has already ruled against the school for conduct related to your education or loans, that judgment can support your discharge. These findings often come out of state attorney general investigations or class-action lawsuits over deceptive practices.⁴ Much of the evidentiary work is already done when a court has established that the school acted improperly.

Aggressive Recruitment

Under the regulations in effect before the 2025 rollback, aggressive recruitment was a standalone basis for a claim. Defined tactics included pressuring students to enroll immediately using false urgency, discouraging them from consulting family or advisors, using threatening language, and obtaining contact information through websites that falsely advertised jobs or government benefits.⁵ Whether it remains a distinct ground under the restored 2020 rules is unsettled as the Department finalizes the rollback. Recruitment tactics that cross into misrepresentation still support a claim under that broader category.

Which Rules Apply to Your Loans

The legal standard used to evaluate your claim depends on when the loan money was first sent to your school. The differences are real, and they matter.

Loans Disbursed Before July 1, 2017

The Department applies a state law standard. 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. This is one of the more flexible standards because state consumer protection laws vary widely and some are quite borrower-friendly.⁶

Loans Disbursed July 1, 2017 Through June 30, 2020

These loans fall under a federal misrepresentation standard. You have 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 court judgments.³ To recover money already collected, there’s a six-year limit that runs from when you discovered or should have discovered the misrepresentation.

Loans Disbursed On or After July 1, 2020

This is where the 2025 legislation hit hardest. The 2023 regulations had broadened the grounds to include aggressive recruitment, substantial omissions, and a wider definition of institutional misconduct. Those expanded protections were rolled back for loans originated before July 1, 2035, restoring the 2020 framework.¹ 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 rules would have imposed.

Group Discharges to Check Before You File

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

Corinthian Colleges, for borrowers enrolled from 1995 through its April 2015 closure.
ITT Technical Institute, for borrowers enrolled from January 2005 through its September 2016 closure.
The Art Institutes, for borrowers enrolled between January 2004 and October 2017.
Ashford University, for borrowers enrolled between March 2009 and April 2020, at 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 its February 2016 closure.

Several other institutions are also covered, including Drake College of Business, Lincoln Technical Institute (specific programs and campuses), and Kaplan Career Institute (specific campus and programs). The full list, along with additional schools covered under the Sweet v. Cardona class action settlement, is on the Federal Student Aid website.⁷ Check whether your school appears before you spend hours on an individual application.

Filing an Individual Claim

If no group discharge covers you, file an individual borrower defense application through the StudentAid.gov portal. You’ll need a verified FSA ID to log in.⁸ The Department estimates the form takes about three hours including preparation, but gathering strong evidence realistically takes far longer.

What You’ll Need

The application asks for your personal information, including your name, Social Security number, date of birth, and enrollment dates.⁹ Your enrollment dates matter a lot because they determine which loans are covered and which legal standard applies.

The strength of your claim depends on the evidence you attach. Useful documentation includes promotional materials from the school, emails or messages from admissions staff, screenshots of website pages making specific claims, course catalogs that list 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 is powerful. Transcripts and degree audits help show the gap between what was advertised and what you actually got.

Writing Your Narrative

The application asks you to describe, in your own words, what the school told you and how it affected your decision to enroll and borrow. This is where many claims succeed or fail. Vague complaints won’t work. Describe specific statements the school made, when and how they were made, what the truth actually was, and how you relied on the false information when you took out loans. Connect the lie to the money. “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 detail is what reviewers need.

You can also mail a paper application to the Department of Education’s Federal Student Aid Information Center in Monticello, Kentucky, but the online submission is faster and easier to track.⁹

While Your Claim Is Under Review

Once the Department receives your application, your loans are generally placed in forbearance, so you don’t have to make payments while the review is pending. Borrowers whose loans are 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 while the review runs.

One thing borrowers often miss: interest continues to accrue during forbearance and gets capitalized, meaning it’s added to your principal balance.¹⁰ If your claim is approved, the whole balance is discharged and it doesn’t matter. If your claim is denied, you’ll owe more than when you started. Borrowers who aren’t confident in the strength of their claim may want to keep paying or use an income-driven plan rather than let interest pile up during what can be a very long wait.

Processing times have been a serious problem. The Department has carried a backlog of hundreds of thousands of claims, and individual reviews have taken years rather than months. No regulation guarantees a decision within a specific timeframe. You’ll get an acknowledgment of receipt and can track status through your StudentAid.gov account or the borrower defense hotline.

If Your Claim Is Approved

Approval produces either a full or partial discharge. A full discharge eliminates the entire remaining balance, and you also get a refund of payments you previously made to the Department on the discharged loans.⁷

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

Discharged loans get updated with the credit bureaus, but negative payment history from before the discharge can remain on your report for up to seven years. If you believe something was reported inaccurately during a period when you should have been in deferment or forbearance, dispute it directly 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 A reconsideration request has to be based on at least one of the following:

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

Reconsideration doesn’t let you raise entirely new allegations of misconduct. If you discover a different type of wrongdoing after your initial claim is denied, you’d need to file a new application for it. New evidence supporting your original allegations, however, is exactly what reconsideration is for. Emails from admissions staff, enrollment agreements, course catalogs, and copies of court judgments 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 can’t file reconsideration on their own under that process, though they can submit a new individual application.¹¹

Taxes on a Discharge

This part catches many borrowers off guard. 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 a borrower defense discharge specifically is less clear-cut than for other kinds of forgiveness. Some guidance has indicated that discharges through specific Department of Education processes like borrower defense may remain excluded from taxable income even after the ARPA provision expired. The reasoning is that a borrower defense discharge isn’t really forgiveness of a legitimate debt; it’s a determination that the debt was based on fraud and shouldn’t have existed. Don’t assume this applies to your situation without professional guidance.

If your discharge is treated as taxable income, the forgiven amount gets added to your gross income for that tax year. On a $40,000 discharge, that could mean thousands of dollars in unexpected tax liability. Two potential safety valves exist. 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 borrowers eligible for borrower defense are insolvent, though proving it means documenting every asset and liability. Some states also 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 before filing season.

Getting Help Without Getting Scammed

You don’t need a lawyer to file a borrower defense application, and there’s no filing fee. Legal aid organizations in many states offer free help with student loan disputes, and some focus on borrower defense claims specifically. If you’re considering hiring a private attorney, hourly rates for this type of work run roughly $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 for you. 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
Federal Student Aid Partners. Federal Student Loan Program Provisions Effective Upon Enactment Under One Big Beautiful Bill Act
2
eCFR. 34 CFR Part 685 – William D. Ford Federal Direct Loan Program
3
eCFR. 34 CFR 685.222 – Borrower Defenses and Procedures for Loans First Disbursed On or After July 1, 2017, and Before July 1, 2020
4
United States Government Accountability Office. Department of Education – Student Loan Relief in Cases of College Misconduct
5
eCFR. 34 CFR 668.501 – Aggressive and Deceptive Recruitment Tactics or Conduct
6
eCFR. 34 CFR 685.206 – Borrower Responsibilities and Defenses
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