Time to develop protocols for responding to borrower defense claims (despite Sweet and Fifth Circuit injunction)
Jeff Fink, Scott Goldschmidt, Aaron Lacey
September 1, 2023
On August 7, 2023, the Fifth Circuit Court of Appeals issued a nationwide injunction in Career Colleges and Schools of Texas v. Cardona, preventing the U.S. Department of Education (ED) from enforcing the latest version of its borrower defense to repayment (BDR) rule, which was published in 2022 (2022 BDR rule). Meanwhile, ED continues processing BDR claims under the June 2022 settlement reached in the Sweet v. Cardona litigation, as well as under the existing BDR rule, which was published by the Trump administration in 2019 (2019 BDR rule). In fact, we have observed a decided rise in the number of BDR claim letters being sent to institutions and expect more will be forthcoming.
In an effort to assist institutions as they prepare for, or manage, BDR claims, we are circulating Suggested Protocols for Responding to Individual Borrower Defense to Repayment Claims, a brief desk guide that offers ideas for developing a BDR response process. Institutions also may wish to review our webinar, Responding to Student Borrower Defense to Repayment (BDR) Claims, which provides an overview of the historic and current BDR rules and an extended discussion regarding how best to respond to such claims. Finally, below we offer a brief overview of the current state of BDR claims activity.
