Colleges Confounded by Flood of Borrower-Defense Claims

Inside Higher Ed

Katherine Knott

October 24, 2023

Colleges and universities beyond the for-profit sector are seeing a rise in the number of borrowers alleging that they were misled or defrauded by their institution, as the Education Department works to clear a backlog in claims.

Under federal borrower defense to repayment rules, those who believe they were defrauded or misled by a college can file a claim seeking relief and potentially have their loans discharged. The department doesn’t publicly release information about the claims—and colleges aren’t eager to talk about them, either. The program was rarely used until 2015 and has mostly discharged the loans of students who attended for-profit colleges.

Now, community colleges, public research universities, religious colleges and other types of institutions are hearing from the Education Department that their students have filed borrower-defense applications. A lot of them, in some cases. According to higher education groups that are hearing from colleges about the claims, one flagship public university received 80 such notices in a day, while one midsize private college has gotten 30 in a day.

“Most of the schools we’re talking about now have never seen a borrower-defense claim before,” said Jon Fansmith, senior vice president of government relations and national engagement at the American Council on Education. “It’s not like they get them once every few months, and now there’s a lot of them. Schools that have never gotten them before are now getting double-, sometimes triple-digit [numbers of] borrower-defense claims.”

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