Federal student loans may be discharged if the borrower’s school falsely certified the student’s eligibility to receive a loan.
False certification based discharges are not automatic, the borrower must apply and be approved for the discharge. To qualify, the borrower must meet certain requirements:
What Loans Qualify?
- William D. Ford Federal Direct Loans;
- Parent PLUS Loans;
- Federal Family Education Loans (FFEL);
What are the eligibility requirements?
There are three categories of false certification through which a borrower might be eligible for a discharge of his or her Direct Loans or FFEL Program loans:
Ability to Benefit: The school falsely certified the student’s eligibility to receive the loan based on his or her ability to benefit from the school’s training, and the student did not meet the ability-to-benefit student eligibility requirements that were in effect at the time the school determined the student’s eligibility.
Disqualifying Status: The school certified the borrower’s eligibility to receive the loan, but at the time of the certification, the borrower had a status (physical or mental condition, age, criminal record, or other circumstance) that disqualified the student from meeting the legal requirements for employment in his or her state of residence in the occupation for which the program of study was preparing the student.
Unauthorized Signature or Unauthorized Payment: The school signed the borrower’s name on the loan application or promissory note without his or her authorization or the school endorsed the borrower’s loan check or signed the borrower’s authorization for electronic funds transfer without his or her knowledge, and the loan money wasn’t given to the borrower or applied to charges the borrower owed to the school.