The Department of Education recently resumed reviewing borrower defense to repayment claims, which explains why many institutions have seen a jump in the number claims in recent weeks.
In a recent Electronic Announcement, the Department of Education (Department) said they have resumed adjudicating borrower defense to repayment applications that are not impacted by the Sweet v. McMahon settlement and reminded institutions of the borrower defense to repayment and recoupment processes.
While the applications may fall under three different sets of borrower defense regulations (1994, 2016, and 2019), the 1994 and 2016 regulations require that the Department notify institutions about all applications before they are reviewed through the fact-finding process. Although institutions have the option to respond to the notices, a non-response does not have a negative impact on the institution.
The Department outlined several key takeaways from the announcement related to the 1994 and 2016 regulations:
- The Department is notifying most institutions of all applications for borrower defense to repayment claims received and will periodically send newly submitted applications with approximately 70% of the notifications already issued.
- Prior to any substantive review by the Department, institutions are being notified as the notification process is part of the fact-finding step.
- An institution has the option of whether or not to respond to the applications and a nonresponse does not have a negative inference against the school.
- For cases adjudicated under the 1994 regulations, the Department will approve applications that allege a misrepresentation only if it has evidence that demonstrates that all elements of the applicable state law are met.
- For cases adjudicated under the 2016 regulations, the Department will approve applications that allege substantial misrepresentations only if it has evidence that demonstrates that a borrower’s school made a substantial misrepresentation that the borrower reasonably relied on to his or her detriment. The Department will then decide whether to recoup funds from the institution for any approved claim.
There are several resources available to schools:
- Questions on using COD to upload responses can be directed to COD School Relations at CODSupport@ed.gov or 1-800-848-0978.
- Questions about a specific application can be directed to the Borrower Defense Customer Support line at 1-855-279-6207.
- Up-to-date borrower information is available at StudentAid.gov/borrower-defense.
