Types of false certification cancellations:
A federal student loan false certification cancellation (also known as discharge) is available when a school falsely certifies a borrower’s eligibility for federal aid. Borrowers are not eligible for this discharge in all cases in which a school falsely certifies eligibility. There are four specific categories that can lead to a discharge. The first three false certification categories: Ability to Benefit, Disqualifying Status and Forgery apply only to FFEL and Direct loans received at least in part on or after January 1, 1986. The fourth category, identity theft, is available if the false certification occurred as a result of a crime of identity theft.
FFEL and Direct Loans are eligible. Even though the false certification discharge does not apply to 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 false certification 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.