A New Forgiveness Rule Recently Went into Effect
Borrowers who attended certain for-profit schools and felt they were misled through fraudulent lending practices can apply for federal student loan forgiveness based on “borrower defense (to repayment),” which went into effect October 16th. Borrowers can complete an online application or submit an application by mail. Forms can be found on the studentaid.ed.gov site.
Do I qualify for Borrower Defense Loan Forgiveness?
Certain for-profit schools violated state laws by defrauding students into taking on unnecessary loans to attend their schools by making misleading claims about gainful employment. For example, borrowers who attended Corinthian Colleges between 2010 and 2014 are eligible to apply. If you attended a different school and feel you qualify for relief, you can also apply. In addition to transcripts and proof of attendance, you may need to provide promotional materials from the school demonstrating their deceptive advertising. Forgiveness is limited to federal loans only, which includes Direct Loans, Direct Consolidation Loans, FFEL program loans, and Perkins Loans.
What Should I Do About My Payments?
Only the remaining balance on your loans will be forgiven. Any previous payments you have already made will not be refunded. If you apply for forgiveness, your loans will be placed into forbearance which will put a stop on your payments. However, interest will still accrue on your student loans. If your application is denied, your payments will become due plus all of the interest you accrued during the forbearance period. You can still make payments while in forbearance, and if you’re unsure your application will be accepted, it’s a good idea to make interest-only payments. More information about Student Loan Forgiveness
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