Borrower Defense Consolidation Loan Options and Eligibility

If you're struggling with overwhelming debt from a borrower defense claim, consolidating your loans might be a good option. You may be eligible for a borrower defense consolidation loan if you're a federal student loan borrower with a pending or approved borrower defense claim.

There are two types of borrower defense consolidation loans: Direct Consolidation Loans and Federal Student Aid's (FSA) borrower defense loan discharge program. The Direct Consolidation Loan can combine multiple loans into one loan with a single interest rate and monthly payment.

To be eligible for a borrower defense consolidation loan, you must have a pending or approved borrower defense claim. This means you've already submitted a claim to the Department of Education and are waiting for a decision or have had your claim approved.

You can apply for a borrower defense consolidation loan online through the Federal Student Aid website or by calling their customer service number.

The Borrower Defense to Repayment process is failing. This is a serious issue for those who need to take advantage of this option to have their loans forgiven.

The Borrower Defense to Repayment process is designed to help borrowers who were misled by their college or university. Borrowers who were deceived into taking out loans may be eligible for loan forgiveness.

The process is failing, which means that many borrowers are not getting the help they need. This can lead to financial difficulties and stress.

A new resource for spousal consolidation loans is available, but this is not directly related to the Borrower Defense to Repayment process.

You qualify for borrower defense if you borrowed federal student loans and your school intentionally misled you about its educational programs or job placement rates, or if your school broke state laws. You must prove that your institution engaged in fraud or broke a state law.

To be eligible, you must file your claim within three years of leaving the institution, although this timeframe can vary depending on when your loans were disbursed and/or the state in which you live. This is a crucial deadline, so make sure to keep track of it.

A great indication that your school's actions may have been questionable is if it's being or has been sued by the Education Department or state attorneys general. For example, Ashford University was investigated or sued by attorneys general in five states for potential consumer protection law violations and/or misleading recruitment practices.

If your school has been involved in similar lawsuits or settlements, it may be a good idea to explore your borrower defense options. Here are some examples of schools that have been involved in lawsuits or settlements:

Keep in mind that borrower defense is not granted for personal expenses incurred while in school or for personal injury. It's also not granted because you were harassed by employees of the school.

Filing a claim application for borrower defense loan discharge is a relatively straightforward process. You can apply online at StudentAid.gov or download a PDF version of the application to mail to the U.S. Department of Education.

To apply, you'll need to provide basic information about your school, including the name, campus location, enrollment dates, program or major, and type of certification or degree you were pursuing. This information will help the Department of Education verify your claim.

You may also need to provide documentation to support your claim, such as transcripts, enrollment agreements, and promotional materials from your school. This can be a bit time-consuming, but it's essential to include as much detail as possible.

Some examples of documentation you may need to provide include:

If you're not sure where to start or need help filling out the application, consider reaching out to a non-profit or legal aid organization for assistance.

Borrower defense only cancels Direct Loans issued by the federal government, including Direct PLUS Loans and Direct Consolidation Loans.

You can consolidate your Federal Family Education Loans (FFEL) and Federal Perkins loans into a Direct Consolidation Loan, making them eligible for borrower defense.

Consolidation is a free process, and you can do it at studentaid.gov.

Borrower defense never forgives private student loans.

Schools may be required to pay a small amount to defrauded students, approximately $300 each, instead of the total amount, as seen in the case of DeVry University.

The tax implications of borrower defense consolidation loans are a relief for many borrowers.

Federal student loans forgiven under the Borrower Defense to Repayment program aren't taxable.

Loans forgiven between December 31, 2021, and January 1, 2026, will be tax-free due to new provisions in the $1.9 trillion stimulus bill.