November 15, 2023
Without too much fanfare, on November 8, 2023, the U.S. Department of Education published an electronic announcement entitled “Borrower Defense School Notification Process Under the 2016 Regulation.” The announcement follows months of the Department providing borrower defense to repayment (BDR) applications to institutions with little to no direction. While most of the information provided is already common knowledge in the sector, the Department did make an effort to address institutional concerns but, unfortunately, left a number of questions unanswered.
As the Department continues to provide relief applications to institutions, we provide a summary of the announcement as well as our analysis of the guidance below. We also offer a step-by-step guide on how to locate the BDR claims, if any, shared with your institution by the Department. We advise that you check the Common Origination and Disbursement (COD) System regularly to be certain that you do not miss the opportunity to respond to claims within the 60-day response window.
The Post-Class Applicant Process, in General
The announcement confirms that the BDR productions are part of the Sweet v. Cardona settlement agreement that requires the Department to adjudicate the applications under the 2016 regulation. It identifies that the Department is providing notice of BDR applications received from June 23, 2022, to November 15, 2022―what are referred to as “post-class applicants.” While the Department has previously confirmed that the “2016 regulation” means the federal standard in the 2016 BDR rule, the announcement does not make that distinction. Despite this omission, we have no reason to believe that the Department is applying the state-law standard required in the pre-2016 regulations.
The announcement explains that the Department is “attempting” to batch applications so that schools receive all of their claims in a single notification. This is the process for the schools―over 90 percent of the recipients according to the announcement―that have fewer than 100 applications. For the small number of schools that have over 500 applications, the Department is reaching out to explain how it will pace the number of notifications sent each week.
Regarding response timelines, the Department rightfully states that its policy is to provide schools 60 days to respond. Our analysis notes that no statute or regulation requires that an institution’s response be provided within 60 days. Practically speaking, however, the Department has turned off functionality in COD at the expiration of the 60 days. The announcement also explains that the Department “strongly” disfavors extension requests and, consistent with what we have been told by the Department previously, will only grant extensions in “exceptional circumstances.” The announcement does not identify what constitutes such circumstances.