We are a coalition of student loan borrowers harmed by the predatory for-profit industry.
For-profit borrowers were not only scammed by these predatory corporations, they were also left out to dry by the government that is supposed to protect them.
What is Borrower Defense?
Borrower Defense to Repayment is a federal student loan forgiveness program that allows borrowers to have their federal loans canceled if their school misled them or engaged in misconduct—such as false advertising, inflated job placement rates, or other fraudulent practices.
Currently, the U.S. Department of Education is reviewing over 400,000 pending Borrower Defense applications, alongside ongoing investigations involving thousands of pages of evidence against several predatory institutions.
We want findings made public.
Who are the real victims of for-profit education?
Students – Many current and former students enroll in for-profit colleges hoping to gain valuable skills and credentials, only to end up with massive debt and low-quality degrees that employers may not respect. Graduation rates tend to be lower than students attending traditional state universities, and many students drop out before completing their programs.
Taxpayers – Since many for-profit colleges rely on federal student loans and grants, taxpayers end up funding institutions that may not provide a good return on investment. Republicans often argue that student loan cancellation is a burden on taxpayers, yet they continue to support funding these institutions with tax dollars — the money is spent when it’s given to the schools, not when loans are canceled.
Families – Students’ families often co-sign loans or support their education. Only to see their loved ones struggle with debt and limited job prospects. The consequences of student loan debt affect families for generations.
Implications of this debt are passed down when parent borrowers can’t afford to buy a home or live in good school districts or save for their own child’s education. Elderly borrowers often have not saved for retirement and need the financial support of their children.
Legitimate Higher Education – When for-profit schools prioritize revenue over education quality, they undermine trust in higher education as a whole, making it harder for legitimate institutions to maintain their reputation and funding.
Employers – Some businesses hire graduates from for-profit schools only to find they lack the necessary skills, leading to wasted resources on training and turnover.
What we are up against
THE RECONCILIATION BILL
The Trump administration is currently working on the budget Reconciliation Bill that will likely gut all Borrower Defense protections for for-profit borrowers.
What is Reconciliation?
Budget reconciliation is a legislative process that expedites the passage of certain budget-related bills in the U.S. Congress by allowing them to be approved with a simple majority, thereby bypassing the Senate filibuster. Programs built into law like PSLF and Borrower Defense can be defunded by this process.
Here are the steps in Reconciliation:
ONE
Congress passes a budget resolution:
Both the House and Senate agree on a budget resolution that sets overall spending and revenue levels, including instructions for specific committees to draft legislation achieving these targets.
The Concurrent Resolution recently passed in the House and Senate sets the framework for reconciliation.
The House Committee on Education and Workforce is tasked with finding $330 billion in spending cuts over a 10-year period.
TWO WE ARE HERE
Committees draft reconciliation legislation:
The instructed committees develop and approve legislation that aligns with their assigned budgetary targets. The language is often adopted from bills that have been introduced in the House & Senate.
This step is also where verbiage from documents like Project 2025 works its way in. Right now, the Republicans hold a sliver of a majority in both chambers.
The House and Senate Budget Committees will combine the approved committee bills into a single omnibus reconciliation bill for each chamber.
THREE
Chamber debates and votes on the bill: Each chamber debates its respective reconciliation bill under expedited procedures and votes on its passage.
FOUR
Conference to reconcile differences: If there are differences between the House and Senate versions, a conference committee works to reconcile them into a final bill.
FIVE
Presidential Sign: After it passes it is sent to the President to sign
What cuts are we expecting?
- Eliminate Borrower Defense – This option would repeal the rule for a borrower to discharge loans as a result of a school’s misconduct. Would make the 2019 Rule the golden standard.
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- DeVos 2019 Rule makes it almost impossible to prove you were defrauded
- Three year statute of limitation on when you can apply.
- Even if you can prove you were defrauded, cancelation would be means tested.
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- Eliminate Gainful Employment – Schools will no longer be held accountable for the quality of their education.
- Eliminate closed school discharge regulations – Borrowers will no longer have their loans discharged if their school closes during their enrollment.
- Repeal 90/10 rule – Would remove the requirement that for-profit colleges receive at least 10% of their revenue from non-federal sources, including veterans’ education benefits. Currently, this rule serves as a check on for-profit institutions’ dependence on federal aid. This It would especially harm veterans.
- Eliminate SAVE & IBR – ALL income based repayment plans will be eliminated.
- Eliminate the American Opportunity Credit – Taxpayers will no longer be able to deduct up to $2,500 of their student loan interest, raising taxes for anyone with student loans.
- Eliminate subsidized Loans – meaning loans will collect interest while in school.
- Limit or Elimenate: Pell Grants, Graducate and Parent Plus loans.
- Limit the DOEd’s Regulatory Authority – Future administrations will not be able to cancel loans or create programs that do so. Group discharges would be a thing of the past.
Republicans only hold a majority by a very small margin.
Many Republicans support Veterans.
For-profits notoriously prey on Veterans. We need to remind them of that.
THE DEPARTMENT OF EDUCATION
SINCE TAKING OFFICE IN JANUARY 2025 THE REPUBLICAN ADMINISTRATION HAS:
CUT IN HALF – The Borrower Defense team including lawyers working on the 400k+ backlog of Borrower Defense applications and the investigations team.
GONE – FOIA (Freedom of Information Act) office.
GONE – Servicer oversight – Making sure servicers are doing their job and fixing their many mistakes.
GUTTED – The Ombudsman Office – The liaison between borrowers, servicers and the DOEd.
THE Consumer Financial Protection Bureau
GUTTING Our biggest watchdog
Since this administration took office, CFPB dropped several lawsuits it had filed against financial institutions, alleging they had ripped off student loan borrowers.
The National Consumer Law Center (NCLC) has filed a lawsuit challenging the Trump administration’s attempt to dismantle the Consumer Financial Protection Bureau (CFPB), which was recently joined by other consumer, civil rights, and labor groups.
February 14, 2025 Judge Amy Berman Jackson ordered that Acting Director Russell Vought cannot delete any CFPB records or data, cannot terminate CFPB employees, and cannot return CFPB funds pending a preliminary injunction.
March 28, 2025 Preliminary Injunction Granted!!! – Huge win, the data and jobs are safe for now, but likely there will be an appeal.
Private loans
The peak of for-profit school enrollment was in the 2000s along with it a surge of private student lending as lenders rolled out predatory loan products designed to serve the interests of investors and for-profit colleges—not students. These lenders faced little risk when borrowers couldn’t repay, since the loans were quickly sold off to investors through asset-backed securitization. In fact, the market for securitized student loans soared by 76% in 2006 alone, rising from $9.4 billion in 2005 to $16.6 billion.
For-profit colleges and private lenders profited by working in tandem, while students bore the consequences and continue to suffer today.
A major driver of this collaboration was the “90-10 rule,” a federal regulation requiring for-profit colleges to obtain at least 10% of their revenue from non-federal sources. Such as self-pay, private loans, veterans benefits, or military tuition assistance. To meet this requirement, many schools partnered with private lenders to issue high-risk private loans to students—despite knowing these students were likely to default.
To sweeten the deal for lenders and reduce their exposure, schools and lenders often entered into recourse agreements, also known as Risk Share Agreements (RSAs). Under these arrangements, schools agreed to absorb all or part of the losses from defaulted subprime private loans. This setup gave schools continued access to federal aid and allowed lenders to profit with minimal risk.
The outcome of this private subprime lending was devastating for students. They were left with unaffordable and often fraudulent debt—even in cases where lenders were fully repaid. Many of these borrowers has cosigners leaving fractured families in its wake of fraudulent lending.
In 2023 & 2024 several for-profit borrowers were able to get their private loans canceled due to the Navient Misconduct application and the Federal Trade Commission’s Holder Rule Since they have gutted consumer protections they have less incentive to do the right thing. You should absolutely continue to file en masse.
Check out our tool kit for help with your private loans.
With these new cuts and regulations private lending will be on the rise.
Under Secretary – Nicholas Kent
Nicholas Kent is the nominee for Under Secretary of Education in the U.S. Department of Education, pending Senate confirmation.
Prior to this nomination, he served as Virginia’s Deputy Secretary of Education since 2023. Pushing charter schools and private school vouchers.
Before this he was chief policy officer at Career Education Colleges and Universities (CECU), one of the largest lobbyist groups for for-profit colleges.
This group is responsible for the lawsuit that ended Biden’s new Borrower Defense rules from taking effect that would have allowed group applications and evidence based collectively, rather on each application on it’s own merit.
However, if there is no DOE will there be an undersecretary? I guess we wait and see
Restoring the GI Bill
The GI Bill was created in 1944 as a way to ensure that veterans returning from WWII had every opportunity to obtain employment upon arriving home. Since that time, the government has investigated schools intent on scamming veterans out of their benefits. However, it was not until 2023 that the government finally closed the 90/10 loophole that made veterans a target for these schools. Unfortunately, a bill was introduced in February 2025 to reopen that loophole.
Further, many of the schools that specifically targeted veterans charged more than the GI Bill would cover, leaving veterans with large sums of student loan debt. Veterans who are scammed by their schools have consumer protections to cancel their federal student loans through Borrower Defense to Repayment. However, many veterans do not simply lose their hard earned money to these schools; they lose their even-harder-earned GI Bills. To date, there is no way for veterans who were scammed to have their GI Bills retroactively reinstated. Several bills have been introduced that would allow the Department of Veterans Affairs to reinstate GI Bill benefits but none of these bills are retroactive and would only help veterans who are scammed in the future.
Sweet v. McMahon
Formerly known as the Sweet v. Cardona lawsuit is a class-action case in which student borrowers sued the U.S. Department of Education over delays and denials of Borrower Defense to Repayment (BDTR) claims. The case, originally Sweet v. DeVos, alleged that the government unlawfully stalled loan forgiveness applications from students defrauded by for-profit colleges.
A settlement was approved in 2022, leading to the cancellation of billions in student loan debt for approximately 200,000 borrowers who went to bad actor schools. Along with a laddered deadline of application review for those not on the list of schools with automatic releif for those who filed for BDTR before June 22, 2022. This is defined as the FULL CLASS.
There is a subclass that does provide some protections for those who filed for BDTR between the announcement of the settlement on June, 22, 2022 and Nov. 16, 2022 called POST CLASS
POST-CLASS PROTECTIONS:
The only two protections the Post Class has are the DOEd is required to review, approve or deny the application by January 28, 2026 or the applicant will receive full cancelation. Luckily, post class applications fall under the 2016 BDTR rules.
We also know, the legal team PPSL will do everything in their power to protect these borrowers. However, they should be aware of scope and limitations.
POST-CLASS POTENTIAL ISSUES & Limitations
YOU’RE ON YOUR OWN, KID
Each Borrower Defense to Repayment (BDTR) application is evaluated individually on its own merits. This means ‘the list’ of known predatory schools in the full -class and evidence from other applications does not apply. The DOEd can approve or deny any application.
This doesn’t not mean you are in this alone. If a post-class member receives a denial, it’s important to email info@PPSL.org with the subject line ‘POST CLASS DENIAL’. Post-class borrowers will need to read and follow the instructions on their denial letter for any important deadlines or appeal options.
THE TAX CLIFF
This is a huge one. The “federal tax cliff” of 2026 refers to the scheduled expiration of a provision that currently exempts forgiven student loan debt from being considered taxable income at the federal level.
American Rescue Plan Act of 2021: This legislation made student loan forgiveness federally tax-free from 2021 through 2025. During this period, any student loan debt that is forgiven will not be included as taxable income on federal tax returns.
Unless new legislation is enacted to extend this provision, starting January 1, 2026, forgiven student loan amounts may once again be treated as taxable income at the federal level. This means borrowers could face a significant tax liability in the year their loans are forgiven.
THE APPEALS
There are three for-profit institutions—Lincoln Educational Services Corp., American National University, and Everglades College— that have appealed the settlement, seeking to block its implementation. in November 2024 The Ninth U.S. Circuit Court of Appeals denied the appeal from these institutions, allowing the settlement to proceed.
However, On December 20, 2024 they have requested a petition for rehearing en banc. What this means is they ask for the full court (rather than just a three-judge panel) to rehear the case because they believe the panel’s decision was wrong or highly significant.
So basically, someone lost and now wants all active Ninth Circuit judges to review the case again.
On December 30, 2024, 21 state Attorneys General filed an “Amici Curiae” brief in support of the petition for rehearing en banc.
January 10th the courts asked the appellees to file a response to the petition for rehearing en banc. They had 21 days. They did not. PPSL filed a response on January 31,.
The DOEd filed on May 2, Stating “For the foregoing reasons, the petition for rehearing en banc should be denied.” This is good news!
GET HELP
For the most up to date information on Sweet v. McMahon please visit Project on Predatory Lending.
If you are FULL class and have not received full settlement or either class and put back into repayment. Please send emails to: sweet@ed.gov right away, with a copy to info@ppsl.org.
If you are Post Class and receive a denial please email info@ppsl.org with the subject line POST CLASS DENIAL’
IF YOU FILED BDTR AFTER THE 11/16/22 DEADLINE YOU ARE NOT PART OF THE SWEET CLASS.
how can we fight this?
It’s so important that we come together to tell our legislators, ‘They work for us’!
protect our protections!!
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