A false certification cancellation (also known as discharge) is available when a school falsely certifies a borrower’s eligibility for federal aid. There are four categories of this discharge described here plus a common law forgery discharge. FFEL and Direct Loans are eligible for false certification discharges. Parent PLUS loan borrowers are eligible if the child on whose behalf the loan was taken out qualifies. Only loans received at least in part on or after January 1, 1986, may be discharged.
If you have a consolidation loan and any of the underlying loans can 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. In most cases, there is a 30-day time period to send in an appeal.
Ability to Benefit
If you did not have a high school diploma or GED 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 or failed to give an exam.
As of July 1, 2012, most borrowers without high school diplomas or GEDs are no longer eligible for federal student aid. There are some important exceptions, including for students who have completed a secondary school education in a home school setting. A more recent exception allows students without high school diplomas or equivalencies to qualify for federal student aid if they are enrolled in “eligible career pathway programs.” The Department has provided some guidance on how to define career pathway programs, but it still remains to be seen how this will work in practice.
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,
- The test was not approved by the Department of Education, or
- The school failed to give a test as required.
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 or if there were other problems with the test or the way the school administered the test.
Borrowers who took out loans after July 1, 2020, are subject to new regulations that the Department published in September 2019. Under the new rules, borrowers are ineligible for a false certification discharge if they were unable to provide an official high school transcript or diploma and, instead, gave their school a sworn statement that they graduated from high school. These new regulations only apply to borrowers who borrowed loans after July 1, 2020.
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).
There is no deadline to apply for these discharges. If you are still current on your loan, in most cases you should send your application for relief to your loan servicer. You should send it by certified mail and get a receipt. It is a good idea to contact your servicer to make sure you are sending the application to the correct address.
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.
Both the Department of Education’s Office of Hearings and Appeals and the Office of Inspector General have reports on-line. Some of these reports include helpful information about problems at particular schools.
You may also be able to find information about testing related problems at your school on this pro bono web site.
For loan issued before July 1, 2020, you are eligible for a loan 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.
- 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.
- 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.
- 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.
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.) You should send the application by certified mail, return receipt requested.
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.
Loans issued after July 1, 2020, are not eligible for this type of discharge.
Forgery by the School
This is also called the “unauthorized signature” discharge. 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. Use this form 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 can still raise forgery as a defense to collection of the loan. In the alternative, you may seek a discharge through the Department’s common law forgery discharge process (discussed below).
There is no deadline to apply for these discharges. To apply, Direct Loan borrowers must complete a false certification: unauthorized signature/payment form and submit it to the Department of Education. FFEL borrowers should submit their application to the lender or agency holding their loan. If this is a guaranty agency, the agency is supposed to respond within 90 days.
A borrower seeking this discharge must:
● Certify that the borrower did not sign the promissory note or that any other means of identification used to obtain the loan was used without the borrower’s authorization;
● Certify that the borrower did not receive or benefit from the proceeds of the loan with the knowledge that the loan had been made without the borrower’s authorization; and
● Provide a copy of a local, state, or federal court verdict or judgment that conclusively determines that the borrower was a victim of the crime of identity theft by a perpetrator named in the verdict or judgment.
There is more information regarding who is eligible for relief and what evidence you should provide when applying on the Department’s web site, including a link to the forms you will need to fill out.
Common Law Forgery Discharge
In February 2020, the Department announced a new form for a common law forgery loan discharge for borrowers whose signature was forged by someone other than a school employee. This is only for Department-held loans, but the Department is encouraging other loan holders to create a process like this one as well. Until it launched this form, the Department evaluated all forgery claims using the discharge forms that only apply where the school falsified a signature or if there was a judicially-proven crime of identity theft.
This new option is not a false certification discharge. However, many borrowers who do not fit into the narrow false certification categories still need relief. This new form and process apply to this broader group of people who claim that they did not sign up for or request a loan. You should use this form if you did not sign the promissory note or did not request the loan the Department is trying to collect and you do not think that a school official was responsible for taking out the loan in your name. You should include any evidence showing that you tried to contest the debt. Evidence could include (but is not limited to) police reports, court records, or an FTC identity theft affidavit (available here). You can use this form even if you do not know the identity of the forger.