2016 Borrower Defense Overview

Through the negotiated rulemaking process, stakeholders debated five issues related to borrower defense regulations:

  1. Whether to establish a new standard for the purpose of determining whether a borrower can establish a defense to repayment on a loan based on an act or omission of a school;
  2. The time period of availability for borrower defense to repayment claims;
  3. Developing a regulatory framework for the process of submitting, reviewing, and determining the veracity of borrower defense to repayment claims;
  4. Updating and expanding the existing categories of false certification discharges; and 
  5. Whether to revise the financial responsibility or administrative capability regulations and whether to add disclosure agreements to protect students, taxpayers, and the federal government against potential school liabilities and risks.

On Nov. 1, 2016, the Department of Education(ED) published final regulations concerning borrower defense to repayment and other related matters. In response to a lawsuit filed by the California Association of Private Postsecondary Schools, ED delayed the original effective date (July 1, 2017) of these regulations under section 705 of the Administrative Procedures Act (APA), which states that when an agency finds "that justice so requires, it may postpone the effective date of action taken by it, pending judicial review." A second lawsuit was filed by student borrowers and 19 states and the District of Columbia objecting to ED's implementation delay, and the two cases were ultimately consolidated by the courts. By order of the courts, the 2016 final regulations took effect in October 2018.

NASFAA Summary of Final Rules

NASFAA Public Comments

Department of Education Resources

NASFAA Comprehensive Coverage of the 2016 Borrower Defense Process

Other Resources

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