Student Loan Discharging Drama

Is it inherently wrong to discharge student loans or is the problem who pays for the discharge?

So I had over $27,000 in student loans and I finally got them discharged via the Borrowers Defense to Repayment (BDR) method (which took almost a decade by the way). But most people don’t understand BDR at all. I posted about it. I tried to explain it is not what people originally think of when they hear student loan discharge. But I still got a snarky response. I’m also well aware that by posting this in a Substack article, many people will get upset because they don’t understand either. But I want to explain the difference as I see it. Feel free to comment on the topic below, but please actually read about the Buyer’s Defense to Repayment process before you do. First, I will discuss what it’s not.

Biden’s Discharge

Biden tried to bribe the younger generation with the idea of discharging all (or most) student loans for low-income borrowers. He did it stupidly and the courts correctly ruled on it and stopped him. I understand that simply using tax-payer money to “forgive” student loans hurts tax-payers (like myself). It doesn’t make sense to just forgive everyone’s loans without cause either. And it doesn’t actually fix the problem since the educational institutes aren’t hurting from that kind of discharge financially.

I don’t need to write about how stupid and reckless this is. Plenty of people have. It’s likely why some get a triggered reaction whenever they see someone say they got their student loan discharged.

Whose Responsibility Is It?

The Drama Triangle is built around people shifting responsibility around. Biden might view all student-loan receivers as victims and may have called all of the student loan debt “the system’s fault” (persecutor). But his “solution” was to have tax-payers be responsible. How fair is that? It’s not. It’s completely unfair for taxpayers to pay for someone else’s mistake or wrong-doing.

Who gave the graduate the debt? Taxpayers or the educational institutes?

Borrower Defense to Repayment (BDR) Discharges

The Borrower Defense to Repayment method requires a student to prove that the educational institute did something wrong. The applicants have to fill in a long form explaining all of the wrongdoing on the part of the institute and how it negatively affected their life. Then someone in the government reviews that complaint and approves or denies it. This means if the applicant cannot prove any wrongdoing they can’t get any money discharged. This is a much better method than forgiving everyone’s loans for absolutely no reason like Biden was trying to do.

NOTE: I don’t think this process is perfect as of right now. There’s a big backlog and some claims may be approved simply because the government wasn’t prepared to adjudicate such a backlog. But I’m hoping this gets fixed in the future and works out more fairly over time.

Many schools outright lied and misled potential students into deciding to take out loans for their education. I also think many of the educational institutions are inflating costs in ways that aren’t benefitting the students so that students take out larger than necessary loans, but that may be another matter.

I was watching the following video put out by lawyers on the colleges’ sides concerning the Student Borrower Defense to Repayment (BDR) Claims. At 15 and a half minutes into it, the leader of the webinar says that over 75% of Title IV institutions have claims against them. That doesn’t mean that all claims are true, but applicants to BDR have to sign their application under penalty of perjury.

That’s a very large percentage of educational institutes to be accused of misleading their applicants. And, a large portion of people in the United States don’t even know what the BDR claims are. They don’t know they exist. Many students don’t know that they could have applied. So the amount of cases (if everyone knew about this process) likely would have been much larger.

When you apply to have your student loans discharged through the Borrower Defense to Repayment process, you have to prove that the educational institute misled or lied to you. This process is supposed to keep students from simply saying, “I don’t want to pay” and getting away with an education and no debt when they weren’t wronged.

On a side note, as of right now, I’m not opposed to the idea of taking away the college degree or certificates that have been gained when/if you get your student loans discharged. I haven’t received any jobs based on those documents. That wouldn’t affect me personally. Feel free to discuss that in the comments section. Maybe someone can change my mind on it with something I haven’t considered.

The educational institutes misleading or lying to students to get them to take out loans to attend did something wrong. Since they did something wrong, they should have to pay to make things right.

Rather than shift the responsibility to the taxpayers to repay these loans, the educational institutes should be required to pay back the loans. That’s where the Borrower Defense to Repayment comes in.

I think that the schools should have to pay it back if they did something wrong, but the way the system is set up right now it’s a two-part process. First, the government pays the student back since the loan is from the federal government (other private loans are not considered for BDR). Secondly, the government can then financially go after the schools for the money that they shelled out to the students. Finally, then, the schools who are responsible for this will have to pay for it, rather than the taxpayers.

Holding Schools Responsible

When schools are held responsible for their actions, they will change the way they do things. Until then, they will not change their behaviors.

In the video I shared above, at the 41 minute, 15 second mark, the man is suggesting that the colleges should respond to BDR complaints about their institution because the government can try to recoup that money from them. This is a threat to these educational institutions. They now are seeing that the government may come after them for these funds. This means the educational institutes will need to make some changes to how they do things to make sure students don’t try to get their money back through this BDR process.

I’m happy to be a part of that. I want the schools, not the taxpayers, to be held financially responsible for their wrongdoings. I’d like to see that sort of justice come about. What Biden was trying to do wasn’t justice since the innocent taxpayers would have been the ones paying for it all and the educational institutes wouldn’t have learned a lesson.

I think if a BDR claim gets approved, the money should come from the schools without having the middle step. But this is the way it is for now. I hope the government will go after these educational institutes for the money. I’m glad some educational institutes are afraid of having the government coming after them for the money. I hope the schools start taking actions to make sure students don’t feel misled or lied to (such as not lying to them). I want young adults to have a sort of informed consent before they start applying for loans that could weigh them down for the rest of their lives. I would like to see some changes to the way our schools work.

So, is it inherently wrong to discharge student loans or is the problem who pays for the discharge? What are your thoughts on this? Leave a comment below. I’d like to hear them.

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