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    What To Know About Borrower Defense To Repayment (DTR) Loan Discharge

    Think your school made false claims, misrepresented itself, or possibly broke the law? You may be eligible to have part or all of the federal student loans you borrowed to attend there discharged.
    Updated: June 28, 2017
    People sitting at a table looking at paperwork.

    Getting a college education is a big investment. It’s definitely one worth making—provided your time and money are well spent. Before you enroll or borrow student loans, you should research the school you plan to attend to ensure a quality education.

    Unfortunately, some schools may make false claims about their students’ success, staff, or the benefits of their programs. And while this is certainly unethical, it may also be unlawful. The Borrower Defense to Repayment (DTR) loan discharge was created to help protect student loan borrowers in this situation.

    What DTR Is

    DTR eliminates some or all of borrowers’ federal student loans if either of the following can be shown:

    • They were defrauded by their school.
    • Their school violated state law that affected their educational programs or employment opportunities.

    Like many ED rules, eligibility depends on what type of loans you have and when you borrowed them—with the standards changing for federal loans made on or after July 1, 2017.

    Direct Loan Borrowers

    Direct Loan borrowers must show that their school defrauded them by violating state consumer protection law. Some potential examples of this may include:

    • Advertising false job placement rates.
    • Claiming credits were transferable when they weren’t.
    • Saying faculty held certifications when they did not.

    Note that these violations will vary based on the applicable state law.

    Federal Family Education Loan Borrowers

    Federal Family Education Loan Program (FFELP) borrowers need to prove that their school not only violated applicable state consumer protection law but also had an improper relationship with the lender who made their FFELP loans. Unfortunately, given the statute of limitations, this could be difficult to prove considering no FFELP loans have been made in more than 6 years.

    What Does And Doesn’t Qualify

    For all borrowers, the fraud must have taken place while you were attending or considering enrolling in the school and directly relate to your loans or educational services. Personal injury or harassment claims, for example, are not eligible.

    Some examples that may be DTR-eligible situations include:

    • The school advertised that its faculty was certified in their field, but many were not.
    • The school claimed that the average starting salary after graduation was $100,000, when the average was closer to $25,000.
    • The advertisements for your program or school guaranteed 100% employment after graduation when, in fact, a high percentage of graduates could not find employment in their field.
    • The program you enrolled in claimed to provide the certification necessary for a specific field of work, but it did not meet the necessary standards to get a job in that field.

    Some examples of situations that would NOT likely be eligible for DTR include:

    • The school advertised an average starting salary of $100,000, the rate was proven accurate, but your starting salary was much less.
    • The school claimed that over 90% of graduates in your program get jobs in their field, the rate was proven accurate, but you were not able to find employment within your first year of graduation.
    • You decided to change employment fields or chose to withdraw from your school or program.

    How Much Will Be Discharged

    If you have existing consolidated loans, you cannot receive a refund for payments you made before the consolidation. In other situations, the refund amount will be based, in part, on the applicable statute of limitations. 

    If you have already received relief via a lawsuit, tuition recovery fund, or other venues, those amounts will be taken into consideration when determining how much relief you might be eligible for. Private student loan debt and out-of-pocket expenses are never considered in determining the amount of relief you may receive.

    In addition, the discharge amount can depend on the nature of the fraud. For example, let’s say the school quoted you one cost but charged you more. In this instance, any loan discharge you receive would likely not be higher than the difference between those two amounts.

    How To Apply

    You can apply by email (FSAOperations@ed.gov) or mail (U.S. Department of Education, PO Box 429060, San Francisco, CA 94142). You can find a complete list of materials to include in your submission here.

    Other Options

    If you aren’t eligible for DTR discharge, you may qualify for a different type of loan relief. For instance, if your school closed while you were attending it, you may be eligible for the closed school loan discharge. Talk to your loan holder to discuss your options.

    If you feel that you were defrauded by your school but don’t qualify for discharge under the current rules, you should consider filing a complaint with your local Attorney General’s office or explore the feasibility of suing the school directly. Unfortunately, you will still be required to make your student loan payments as you consider these options, unless you request forbearance on your account. Your loan is due and you are considered responsible for it unless and until the loan is discharged or a court declares otherwise.

    Upcoming Changes

    The DTR rules were scheduled to expand eligibility as of July 1, 2017, but have since been indefinitely delayed. Updates will now likely go into effect as of July 1, 2019, after new rules can be agreed to.

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