Reboot Your Life: Tampa Student Loan and Bankruptcy Attorney Blog
The Borrower Defense to Repayment (BDTR) program has undergone so many changes over the past decade it’s hard to keep track.
Notably, I wanted to set the record straight for those who may be receiving weird messages about their pending BDTR apps.
Only the 2019 Borrower Defense Rule imposed a statute of limitations on borrowers, and that rule only applied to loans that were issued after July 1, 2020– it does not apply to most of the BDTR applications. Unfortunately, when ED created its borrower defense application, it used a single application for all three standards without adequately differentiating what warnings would be shown to borrowers applying under different standards. As a result, borrowers get misleading warnings that don’t actually apply to them at all. There are no limitations periods for the 2016 or 1994 Rules (although there are some restrictions on when borrowers can receive a refund of amounts paid towards the loans implicated by the borrower defense application).
If you are receiving a message that the lender has filed a response and that you need to provide supporting documents, this is not applicable for anyone who is a member of the Sweet v. Cardona class action. Those members who attended a listed school are in line to receive a full discharge.
If you applied for before June 22, 2022, you are a Sweet v. Cardona class member. If you applied between June 22, 2022 and November 16, 2022, you are a post-class applicant. If you applied afterwards, you are not implicated by the settlement. The folks over at the Project on Predatory Student Lending have published an excellent FAQ for class members here: https://www.ppsl.org/sweet-v-cardona-class-members/#sweet-settlement.
The Department finalized a new borrower defense rule on November 1, 2022, which will go into effect on July 1, 2023. This rule will replace the prior rules for relief eligibility, regardless of when the loan was distributed, and will apply to all applications that are pending on that date or are submitted afterwards. It has some significant advantages over the existing rules, including expanded eligibility criteria, full relief (including refunds on amounts paid) for all claims that are granted, an adjudication deadline, and a new group discharge process (a brief summary of the new rules is here). If you haven’t applied yet, you should review the new rules to make sure that your application also includes information pertaining to the new eligibility grounds, as I would expect that it may be pending until the new rules take effect.
There is a hearing scheduled for February 15, 2023 on a pending motion to stay the processing of these BDTR applications. This is due to an appeal filed by no more than four schools (out of over 100 on this list). If the lenders win that hearing, the processing of all applications will remain on hold. However, if they lose, you can expect discharges to come fast as ED instructs its servicers to finalize the BDTR applications for their borrowers.
