Borrower Defense Discharge (BDTR)

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Borrower Defense To Repayment

Borrowers Defense Discharge Program (BDTR) is a federal student loan forgiveness program provided for borrowers who have been defrauded by their school. The program was established to protect students from unscrupulous schools that engage in deceptive practices, such as false advertising, misrepresenting job placement rates, and other fraudulent activities.

If you believe that your school has engaged in such practices and as a result, you have incurred student loan debt, you may be eligible for BDTR discharge.

On August 4th, 2022 a federal judge granted preliminary approval of a $6 billion settlement between the Biden administration and student loan borrowers who claim they were misled from the institutions they attended.

Several schools, including Lincoln Tech and Keiser University, filed motions last month to intervene and object to the proposal, arguing that they did not assess the borrowers’ claims and in doing so, would damage their reputation.

The schools are among 153 institutions — many of which are for-profit colleges — that the Department of Education identified as having evidence of misleading job prospects, employment opportunities, and even how much students would earn after graduating. Former students of those schools who applied for debt relief are entitled to full loan forgiveness under the settlement, including reimbursement of payments they have already made to their lender.

Eligibility for Borrower Defense Discharge

To be eligible for the BD discharge, the borrower must be able to prove that their school violated state consumer protection laws in the applicable state. While these laws vary by state, they generally focus on false advertising and the misrepresentation of program outcomes. Most state consumer protection laws have a statute of limitations, which is a timeframe where such allegations may be made. They vary by state but the average timeframe is about six years. In many cases, this statute of limitations will also apply to your BD claim. Some examples that could qualify a borrower for full or partial discharge under the current BD rules include but are not limited to:

• The school misrepresented the cost of the program in a significant way.
• The school advertised 100% job placement for program completers, however evidence shows the actual job placement rate was much less than that.
• The school advertised that the program made completers eligible for certification in a certain field or in a certain state when in fact it did not.
• The school stated that all of its staff were fully certified in a certain area when in fact they were not.
• The school has shut down.
• The school lost it’s Accreditation.

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