School-related cancellations offer very broad relief, but are available only in limited circumstances.
Many of the problems and abuses that lead to potential cancellations have occurred in the predatory for-profit school industry. As summarized by the Project on Predatory Student Lending at the Legal Services Center of Harvard Law School, “for decades, the predatory for-profit college industry has exploited the promise of higher education, perpetrating a massive fraud on students who are trying to build a better life.” The industry specifically targets low-income students, students of color, single parents and veterans. Many are the first in their family to attend college.
The first three cancellation categories listed below require you to meet specific eligibility standards. To get loan relief based on the fourth category, borrower defense to repayment, you will have to show that the school misled you or engaged in other misconduct in violation of certain laws. Depending on where you live, you might also be able to apply for relief from state student tuition recovery funds.
The four main categories of federal school-related cancellations are:
1. Closed School: This cancellation is available if you attended a school that closed while you were a student there or if you withdrew shortly before the school closed.
2. False Certification: There are four categories of false certification cancellations: Ability to Benefit; Disqualifying Status; Forgery; and Identity Theft.
3. Unpaid Refund: You do not always have to pay the full amount if you left school early.
4. Borrower Defenses: You may be able to get a full or partial cancellation based on claims you can raise about specific problems with the school.