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ARTICLE · 13 DECEMBER 2022

Borrower Defense To Repayment 4.0

Cooley LLP
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In late October 2022, the US Department of Education (ED) published final regulations regarding the borrower defense to repayment rule (BDTR). The new version attempts to make the discharge...

United StatesConsumer Protection
Katherine Lee Carey
Katherine Lee Carey
Jasmine T. Lee
Jasmine T. Lee
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In late October 2022, the US Department of Education (ED) published final regulations regarding the borrower defense to repayment rule (BDTR). The new version attempts to make the discharge process streamlined for borrowers, but has created concern for institutions, as it also removes many of the due process protections included in prior iterations of the rule.

Applicable to all Title IV-participating institutions, the BDTR first became effective in 1995. The original BDTR allowed student borrowers to assert a defense against repayment of a Federal Direct Loan based on an act or omission of the school giving rise to a state law claim that would support a challenge to repayment. The focus at that time was not loan discharge, but rather, providing a borrower a defense in a wage garnishment or other collection activity. That view changed in 2015.

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