Students have already been approved for forgiveness under existing regulations known as “borrower defense to repayment”
The US Department of Education announced final regulations Friday aimed at making it easier to get federal student loan forgiveness if your school misleads you or your college closes.
Most of the new rules are effective July 1, 2017, but some take effect Nov. 1. That should be welcome news for borrowers who formerly attended a for-profit school owned by now-defunct Corinthian Colleges. Corinthian filed for bankruptcy in 2015 after the Education Department fined the company for misrepresenting its job placement rates. Some former Corinthian students have already been approved for forgiveness under existing regulations known as “borrower defense to repayment,” but many more likely qualify under both the old and new regulations.
What is borrower defense?
Under existing borrower defense rules, you can apply to get your federal student loans forgiven if you believe your college defrauded you in some way. Currently, state law determines whether those who make borrower defense claims actually qualify for forgiveness. Effective July 1, 2017, the new rules create a federal standard for those claims.
Although the regulations have existed since 1995, few people applied for borrower defense forgiveness until recently. In the fallout after Corinthian’s collapse, tens of thousands of former students filed borrower defense claims.
So far, about 16,000 former Corinthian students have been approved for borrower defense forgiveness, and almost 8,000 have been approved for forgiveness under another regulation known as “closed school discharge.”…