Here’s something most people with student loans don’t know: if your school defrauded you — like, lied about job placement rates, made false promises about accreditation, or misled you into enrolling — the federal government has a way to cancel your loans because of it. Same goes if your school just closed while you were still enrolled. Either way, you don’t have to keep paying for an education that was taken from you.
There are two main programs to know about.
The first is called Borrower Defense to Repayment. This one’s for when a school broke the law or misled you in a way that caused you to take out federal Direct Loans. Think: they told you their program would lead to a specific career and it turned out to be completely false. Or they hid information about their accreditation status. If the school’s misconduct played a role in your decision to borrow, you can apply to have those loans discharged — meaning eliminated — based on that.
The second is called Closed School Discharge. If your school closed down while you were attending, or within a certain window after you left, you may qualify to have your loans canceled through that route instead. This one’s specifically tied to the school’s closure, not fraud, so the situation it covers is different.
Both of these apply only to federal student loans — not private ones. And they’re not automatic. You have to actually submit an application to the Department of Education. The government isn’t going to look up your name and send you a check. You have to go claim it.
This matters more than people realize. For-profit colleges in particular have faced serious fraud accusations over the years — schools that sold students on programs that didn’t deliver, degrees that employers didn’t respect, and promises that were never kept. The DeVry University case is one real example where the government announced loan relief to students who were misled, even while the school stayed open. That’s notable — you don’t have to wait for a school to collapse to potentially qualify for borrower defense.
If you think this applies to you or someone you know, the place to start is Federal Student Aid’s page on options for fraud victims. That’s the official government resource, and it walks through what qualifies and how to apply.
One honest caveat: these programs have gone through significant policy changes depending on the administration in charge, and right now processing times and approval rates can vary widely. Approvals aren’t guaranteed, and applications can face long delays. But the legal right to apply exists. And if you were genuinely defrauded, it’s absolutely worth pursuing.