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Are Judgments Against a School or Breach of Contract Grounds for a Student Loan Borrower Defense Loan Discharge?

  • Nov 25 2019

Raging out-of-control and currently hovering at over $1.6 trillion cumulatively, issues continue to abound in the student loan crisis, especially as new rules are instituted by the US Department of Education, stripping away protection put into place by the Obama administration for the borrower defense rule. Student loan borrowers are usually stuck between a hard place and a rock, even when burdened with enormous loan payments that are literally ruining their lives; in fact, the problem is so immense that many households today are found to be under extreme financial duress. Graduates just starting out may have a very difficult time paying back loans whether they find a good job or not—and even individuals who are more established may find the conditions with loan servicers to be untenable.

And no matter how much digging into the problem or finger-pointing occurs currently between analysts and government officials, there is no question that the crisis will continue, and student loan borrowers will continue to feel the effects of further financial stress. If you took out a student loan under the 2016 Rule between July 1, 2017 and June 30, 2020 and have now discovered that the school you attended or are attending has judgments granted against it by creditors—or if they have been found to have breached contracts for student loan borrower defense loan discharges, you could be in luck to see a discharge; however, this is not the case for borrowers who took out or will take out student loans under the 2019 Rule relevant to borrowers after June 30, 2020. Under the old rule, such a judgment against your school or a breach of contract would indeed be strong grounds for you to receive a loan discharge.

Sadly, now though if there are judgments against the school you attend, with loans taken out after June 30, 2020, you will have a little chance of using this as grounds for a discharge. With the 2019 rule, final judgments in breach of contract can be used as evidence if you are hoping for a discharge, but on their own they are not enough to help you. Seeing laws toughen up on borrowers is definitely not the solution most of us have been hoping for—and if you are being affected or are worried about going into default, contact an experienced student loan debt attorney as soon as possible.

Have you experienced problems with your loan service provider or student loan program, or are you in danger of defaulting on your student loan? Contact Fitzgerald & Campbell, APLC now so one of our experienced student loan debt attorneys can review your case and discuss all the available options with you. Our attorneys have decades of experience in serving clients as they navigate through challenging financial situations, to include student loan issues, bankruptcy, and other debt management processes. We are here to help! Click here to schedule a free 30-minute consultation, call us at (855) 709-5788, or email us at info@debtorprotectors.com.

Posted in: Student Loan Debt