On November 1, 2016, the Department published final regulations (the 2016 final regulations) governing the standard and process for evaluating borrower defense to repayment discharge claims. 81 FR 75926. Those regulations, among other things, established processes for the consideration of borrower defense discharge applications. In particular, 34 CFR 685.222(e)(3)(i) and (f)(2)(iv), provide that we will notify the school associated with the borrower defense application of the claim filing, and give the school the opportunity to submit records or a response to the allegations contained within the application. These regulations govern borrower defense applications associated with loans that are first disbursed before July 1, 2020.
The purpose of this announcement is to alert schools that we will soon begin to send notices required under the 2016 final regulations. In particular, after we receive a borrower defense discharge application, we will send the school associated with the borrower’s allegations a letter and a copy of the borrower’s application and invite the school to respond and provide information relevant to the borrower’s allegations within 30 days. Our letters will be sent to the school’s active Postsecondary Education Participation System (PEPS) contacts (which typically include the Chief Executive Officer, Chief Financial Officer, and Financial Aid Administrator), and will provide instructions about how to respond.
Future Changes to the School Notice Requirements Under the 2019 Borrower Defense Regulations
On September 23, 2019, the Department published new final regulations to revise the standard and process for borrower defense applications. 84 FR 49788. Those regulations, which apply to loans first disbursed on or after July 1, 2020, in part modify the 2016 final regulations concerning school notice and submission of evidence processes. We will provide information on the implementation of these regulations before they become effective.
We thank schools for their continued support of the federal student aid programs.