The four main categories of false certification discharges are:
The first three categories apply only to FFEL and Direct loans received at least in part on or after January 1, 1986. FFEL and Direct Loans are eligible. Even though the discharge does not cover Perkins loans, Perkins borrowers should be able to raise these issues as defenses to a collection action.
Consolidation loans are trickier. A consolidation loan usually consists of a number of underlying loans. If any of these underlying loans could be canceled, you can apply for a false certification discharge for these loans only. If granted, you will receive a credit for the amount of the underlying loans related to the false certification. To find out what the underlying loans are, visit NSLDS.
If the discharge is granted, you are no longer obligated to repay the loan or any charges or costs associated with the loan. In addition, you have the right to be reimbursed for all amounts paid on the loan, whether those payments were voluntary or involuntary. You are no longer in default on these loans and the loan holder must help clean up your credit history. If the discharge is denied, you may first seek review from the Department of Education and then if necessary, appeal to federal court.
If you did not have a high school diploma or G.E.D. when you went to the school, the school had the responsibility to make sure you could benefit from the educational program, usually by giving an exam. This is called an “ability to benefit” exam. You can get the loan discharged if there were serious problems with the exam, including problems with the way it was administered or if the school did not use an approved exam.
The Department of Education considers the following examples to be proof of “Ability to Benefit” falsification. These are examples only, not a complete list of criteria:
- A test requiring an independent test administrator was not properly administered;
- The school allowed a student to retake the test earlier than the minimum prescribed waiting period or more frequently than allowed;
- The school allowed more time than permitted to take the test, did not use all required portions of the test, supplied answers to students, allowed students to discuss the answers among themselves, or passed a student whose score did not meet minimum standards, or
- The test was not approved by the Department of Education.
Even if an approved ATB test is used, a false certification discharge may still be granted if the student was not given the appropriate portion of the approved test.
How to Apply for an Ability to Benefit Discharge
In most cases, you will have to fill out a false certification ability to benefit form to apply. (There are limited cases in which the government will accept an oral application). The form is available on the Department of Education’s web site. You should send by certified mail and get a receipt. If the address to which you are requested to send payment is the National Payment Center in Greenville, TX, you should submit your completed form to:
United States Department of Education
Federal Student Aid
Processing Group Regional Office, Room 8633
50 Beale St.
San Francisco, CA 94105-1813.
It is important to submit as much information as possible to support the application. In some cases, a state or federal agency may have issued a report about problems with the school’s ATB exams. You can ask for The Department of Education’s files on a school through a Freedom of Information Act (FOIA) request. For answers to frequently asked questions about Department of Education FOIA requests, click here.
Both the Department of Education’s Office of Hearings and Appeals and Office of Inspector General have reports on-line. Some of these reports include helpful information about problems at particular schools. The Student Loan Borrower Assistance Project has also gathered information on some schools. Borrowers or advocates should contact us for more information.
There is no deadline to apply for these discharges. Direct Loan borrowers must apply to the Department of Education and FFEL borrowers should apply to the lender or agency holding the loan. If this is a guaranty agency, the agency is supposed to respond within 90 days.
You are eligible for this discharge if, at the time of enrollment, you would not have been able to meet the state requirements for employment in the occupation for which you were being trained. The reasons for failure to meet the minimum requirements could be a physical or mental condition, age, criminal record or any other reason accepted by the Department of Education.
Examples of Disqualifying Status
Juan enrolled in a truck driving program, but had a disability that prevented him from obtaining a truck-driving license in the state where he lived. He should be eligible for a false certification discharge.
Fred dropped out of school in ninth grade. He went to a cosmetology school in a state that requires cosmetologists to have at least a tenth grade education. Fred should be eligible for a false certification discharge.
Helen has a felony record and served time in prison. She went to a security guard school, not knowing that she could not work as a guard in her state because of her criminal record. She should be eligible for a false certification discharge.
How to Apply for a Disqualifying Status Discharge
In most cases, you will have to fill out a false certification disqualifying status form to apply. (There are limited cases in which the government will accept an oral application). The form is available on the Department of Education’s web site. You should send by certified mail and get a receipt.
There is no deadline to apply for these discharges. Direct Loan borrowers must apply to the Department of Education and FFEL borrowers should apply to the lender or agency holding the loan. If this is a guaranty agency, the agency is supposed to respond within 90 days.
If the discharge is granted, you are no longer obligated to repay the loan or any charges or costs associated with the loan. In addition, you have the right to be reimbursed for all amounts paid on the loan, whether those payments were voluntary or involuntary. You are no longer in default on these loans and the loan holder must help clean up your credit history. If the discharge is denied, you may first seek review from the Department of Education and then if necessary, appeal to federal court.
Unauthorized Signature or Unauthorized Payment
You are eligible for this discharge if the school forged your name on the loan papers or check endorsements. In order to qualify, you must not have received the proceeds of the loan.
This is a limited program. It does not apply in all cases where a signature was forged, only if someone affiliated with the school signed your name without authorization. If someone else forged the signature, you are not eligible for this discharge, but you may still raise forgery as a defense to collection of the loan.
How to Apply for an Unauthorized Signature Discharge
In most cases, you will have to fill out a false certification unauthorized signature/unauthorized payment form to apply.(There are limited cases in which the government will accept an oral application).The form is available on the Department of Education’s web site. You should send by certified mail and get a receipt.
You must submit four samples of your signature in addition to the signature on the application. One of the most difficult requirements is that at least two of these sample signatures must have been written within one year before or after the date that the forgery occurred. Examples of documents that would include both a signature and the date the signature was made include canceled checks, tax returns, and driver’s licenses.
There is no deadline to apply for these discharges. Direct Loan borrowers must apply to the Department of Education and FFEL borrowers should apply to the lender or agency holding the loan. If this is a guaranty agency, the agency is supposed to respond within 90 days.
If the discharge is granted, you are no longer obligated to repay the loan or any charges or costs associated with the loan. In addition, you have the right to be reimbursed for all amounts paid on the loan, whether those payments were voluntary or involuntary. You are no longer in default on these loans and the loan holder must help clean up your credit history. If the discharge is denied, you may first seek review from the Department of Education and then if necessary, appeal to federal court.
There is another type of false certification discharge for borrowers who are victims of identity theft. This is a hard discharge to get. In order to qualify, you must provide a copy of a court verdict or judgment that conclusively determines that you were the victim of a crime of identity theft. This is a problem because most cases of identity theft do not result in criminal convictions. In addition to proof of a crime, the following information must be submitted to apply for this discharge.
If you are an identity theft victim, you should also submit an identity theft report under the Fair Credit Reporting Act to your lender. This report must include a copy of an official report of identity theft filed with a law enforcement agency. Once you submit this identity theft report, your lender must suspend credit bureau reporting for a period of up to 120 days. During this time, the lender must investigate the claims and figure out whether the loan is enforceable. It is possible that the lender will find that the loan is unenforceable, even though the borrower does not qualify for a false certification/identity theft discharge. In these circumstances, the lender must report its findings to credit bureaus. The borrower should not be liable for the loan and the lender should stop trying to force payment.
False Certification Tips and FAQs
Q: Is there anything I can do to stop collection while I am waiting for a response to a false certification discharge application?
A: Yes. One strategy is to request forbearance. Interest will continue to accrue, but collection will stop. If you want to go back to school before a decision on the discharge is made, you should consider reviewing repayment, loan rehabilitation, and consolidation options. Be careful as some options, such as consolidation, may affect your ability to get a discharge.
Q: Can you borrow to return to school if the decision on your discharge is pending?
A: If you are in default, but you want to go back to school before a decision on the discharge is made, you should consider reviewing repayment, loan rehabilitation, and consolidation options. Be careful as some options, such as consolidation, may affect your ability to get a discharge.
Q: In applying for a false certification ATB discharge, do I have to show that I did not find a job after attending school?
A: No.The government used to require you to do this, but not any more.
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