Experiences of defrauded borrowers with student loan relief

When Kyle Sudhoff was trying to choose between DeVry University and the University of Missouri, DeVry’s promises of placement and a high starting salary after graduation sealed the deal.

But when he graduated in 2011 with a degree in technical management, those promises did not materialize. Months passed and Sudhoff still couldn’t find a job, even with the help of the school’s employment office. Eventually, with his $35,000 student loan debt payments coming due, Sudhoff took a job as an operations coordinator at a manufacturing company that paid $15 an hour, far less than the starting salaries of more than $50,000 that DeVry had advertised.

“It was significantly less than what I expected to earn after graduating,” Sudhoff says. “I made the decision to go based on the expected placement in my field, and ultimately it didn’t happen.”

But that’s life, the 34-year-old thought. And over the next few years, he forgot about DeVry and his broken promises and dutifully paid off his $380 student loan every month while seeking better-paying work and struggling to pay his bills. Then, while browsing Reddit one day in 2017, he came across information about a federal program called the Defense of the borrower until reimbursement (BDTR)which cancels the student loan debt of borrowers who have been defrauded by their schools.

The U.S. Department of Education found that DeVry “repeatedly misled potential students across the country,” so Sudhoff filed for debt cancellation, not thinking he would come out of it much. -thing. And nothing did – until February 2022, when he received an email telling him that his loans would be cancelled. Yet the balance remained, until this month. Not only is all of his debt gone — a balance of about $22,000 — but Sudhoff will get a refund for the $13,000 he’s paid on his loans since graduating.

“It’s kind of surreal,” Sudhoff says of having his loans canceled after five years of waiting. “I was hoping for the best, but it was not at all what I expected.”

Fraudulent borrowers finally receive relief

The Borrower Defense Program is separate from other loan forgiveness programs, including Biden’s recently announced widespread cancellation and public service loan forgiveness.

To qualify for the BDTR, applicants must be able to show that the school they attended misled them or violated state consumer protection laws. Borrowers who have not been defrauded should not apply for BDTR – this will only delay the process for those who are truly eligible and will not get ineligible borrowers any faster for their own loans.

Fraudulent borrowers can complete a application on the Federal Student Aid website to have their federal student loans eliminated. Private loans and other loans from programs administered by federal or state agencies, including loans from the Federal Family Education Loans Program, do not count for forgiveness.

Sudhoff says it took him a while to fill out the form — he had to search online for DeVry ads in 2009 that showed how they tricked prospective students — but it was worth it. He advises anyone who attended a predatory school to apply, even if they have to hire a lawyer to help them with the paperwork. “I would never expect my case to be approved or my loans to be zero,” he says. “Fill out an application as soon as you can.”

BDTR was put on ice under the Trump administration. In fact, then Education Secretary Betsy DeVos sought to make the standard higher for defrauded borrowers seeking forgiveness and was found by a federal judge to be unlawfully refuse to implement program debt cancellation rules.

The Biden administration has worked to reverse this trend. It also investigates predatory schools and forgives borrowers’ debt without requiring an application process. So far, that includes group outings for people who have attended Westwood College, ITT Technical Institute, Corinthian College, and Marinello Schools of Beauty, among others.

By the end of August, the administration had disbursed about $14.5 billion through the BDTR program.

In addition, the U.S. Department of Education recently announced a settlement of borrower defense claims under Sweet v. Cardoon which will provide hundreds of thousands of defrauded student loan borrowers with $7.5 billion in debt relief.

The settlement still needs to be approved, but if and when it is, borrowers who applied for BDTR before June 2022 and attended one of the 153 mostly for-profit colleges will receive student loan forgiveness and refunds for all payments they have made on their loans, and will have all black marks on their credit reports due to the debt removed.

For Sudhoff, the release brings peace of mind, especially since he just got married and has a six-month-old daughter.

“I’m very lucky,” he said. “The money I get back will be useful. It’s a great relief. »

Sign up for the Makeshift Features mailing list so you don’t miss our biggest features, exclusive interviews and surveys.

Comments are closed.