PPSL Launches Awareness Campaign Around New Borrower Defense Application Process for Private Student Loans
Navient borrowers who experienced school misconduct are encouraged to submit applications for cancellation of their private student loans
BOSTON – The Project on Predatory Student Lending, the leading nonprofit legal organization representing borrowers defrauded by predatory colleges, today launched an awareness campaign to broadly publicize a new “School Misconduct Discharge Application” created by Navient. Recently, Navient began quietly sending its new application to a select few borrowers, including some PPSL clients. The application allows borrowers who experienced misconduct at their school to apply directly for discharge of private loans, marking a long overdue recognition of borrower rights.
The campaign aims to draw attention to the new Navient application, which has not previously been made available to the public, and encourages borrowers to apply. Borrowers can access more information at ppsl.org/privateloans.
Although private student loan borrowers do have protections in their contracts against the repayment of loans based on school or lender misconduct, lenders have failed to honor borrower defense rights on private student loans by failing to offer a clear path or process. PPSL has worked alongside borrowers for years to create a pathway for private student loan borrowers to receive relief, including by filing several lawsuits against Navient on behalf of individual borrowers and highlighting the issue to regulators.
“Today we are making a concerted effort to illuminate the pathways to cancellation available to student borrowers with private loans who were cheated by their schools. Private student loans have always carried basic consumer protections like borrower defense, yet lenders and servicers have obstructed borrower efforts to realize them, individually or at scale,” said Eileen Connor, President and Executive Director of PPSL. “This Navient application is an opportunity for borrowers who experienced misconduct to finally seek relief for their private loans and is a direct result of our clients’ persistence. We’re spreading the word to ensure that impacted borrowers—not just those that Navient hand picks—know that there is a path to relief. We’re also calling on Navient and all lenders to do the right thing and cancel all student loans outright where there is evidence of fraud.”
The Federal Trade Commission’s 1976 rule concerning the Preservation of Consumers’ Claims and Defenses (or “Holder Rule”) ensures that consumers are not held to a loan or credit obligation related to the purchase of goods or services that they did not actually receive as promised. Under the Rule, schools and colleges under the FTC’s jurisdiction cannot accept the proceeds of a student loan unless the loan contract contains a specific term that allows the student to raise school misconduct as a defense to repayment of the loan. For years, student borrowers who raised such defenses were told they had no such rights. If they sought redress in court, lenders forced them into individual arbitration proceedings.
PPSL client Mario Fuentes attended Brooks Institute of Photography. At the time he enrolled, he was unaware that Brooks was the target of state and federal investigations into its high-pressure sales tactics, low quality programs and poor student outcomes. Nor was he aware of Brooks’ arrangements with Navient to finance his education through debt that he would be unable to repay. The Department of Education cancelled Mario’s federal student loans in 2023 after determining that Brooks had lied to him and thousands of other Brooks students. Earlier this year, Mario was surprised to receive the discharge application from Navient, and in May, his $197k in private loans were discharged.
"Finally getting these Navient loans cancelled has been life changing, but it shouldn't have required a team of attorneys and a secretive process to make it happen,” said Mario Fuentes. “It’s just common sense that those of us who were scammed by our schools and pushed into predatory loans should have access to a fair cancellation process. I hope that bringing attention to this new application helps clear a path for others to get relief and forces Navient to recognize that these loans never should have been made in the first place."
“Navient has admitted responsibility for canceling their predatory loans but set up a process for cancellation that’s impossibly confusing for borrowers,” said U.S. Senator Elizabeth Warren of Massachusetts. “I won’t let Navient get away with cheating defrauded student loan borrowers out of the relief they deserve.”
PPSL is not aware of any similar private student loan cancellation process for private student loan holders besides Navient. Nevertheless, borrowers can still contact their servicer to contest their private student loans on account of their school’s misconduct. For more information on that process, visit our website. PPSL will continue to work with policymakers and regulators to hold companies accountable, and will continue to fight alongside borrowers until all predatory student debt is cancelled.
About the Project on Predatory Student Lending
Established in 2012, the Project on Predatory Student Lending represents over a million former students of predatory for-profit colleges. Its mission is to use litigation to eliminate predatory practices in higher education, and to relieve current and future borrowers from fraudulent student loan debt. PPSL has won landmark cases to protect borrower rights, recover money owed, and cancel more than $16 billion in fraudulent debt. Its ongoing cases hold predatory colleges accountable and force the U.S. Department of Education to act on behalf of students and stop protecting this insidious industry.
