BORROWER DEFENSE TO REPAYMENT CLAIMS ARE COMING
The regulations under the 2016 Borrower Defense To Repayment established a standard procedure for ED to follow when evaluating borrower defense to repayment discharge claims for loans that were first disbursed prior to July 1, 2020.
When a borrower makes a claim and attempts to have their loans discharged, ED will notify the school and give them a chance to respond to the borrower’s allegations. In a recent electronic announcement, FSA advised that they’ll begin sending claim information to schools to review and respond to within the next few weeks. This information will likely include a letter from ED with instructions for school personnel to follow, and a copy of the borrower’s discharge application and any supporting evidence. Institutions will have 30 days to respond to any allegations and during that time can provide supporting evidence to ED if they choose to dispute the borrower’s allegations.
Earlier this year new Final Rules pertaining to Borrower Defense were published but won’t got into effect until July 2020. Those rules however will only apply to new loans disbursed on or after July 1, 2020