ED’s latest BDR guidance, and why institutions should always respond to claims

Thompson Coburn LLP

Jeff Fink, Scott Goldschmidt, Aaron Lacey, Stephanie Cohan

November 16, 2023

The U.S. Department of Education published an electronic announcement on November 8, 2023, offering guidance on the notification process for Borrower Defense to Repayment (“BDR”) claims received by the agency between June 23, 2022, and November 15, 2022. As discussed in our September 21 webinar Responding to Student Borrower Defense to Repayment (BDR) Claims: 2023 Edition, the Sweet v. Cardona litigation requires the Department to process the backlog of student BDR claims in accordance with specific timelines and standards.

For claims filed between June 23, 2022, and November 15, 2022, the Department must notify schools, adjudicate the claims, and issue a decision no later than January 28, 2026. The Sweet litigation requires the Department to adjudicate this cohort of claims under the 2016 version of the BDR regulation (34 C.F.R. 685.222). Notably, if the Department does not issue a decision by January 28, 2026, borrowers will receive a full discharge of their federal student loans.

The November 8 guidance offers helpful confirmations and clarifications. For example, the Department confirms it is focused on claims filed June 23, 2022, to November 15, 2022, and hopes to complete all notifications relating to this cohort of claims by April 2024. It also observes that the vast majority of schools now receiving notices “have fewer than 100 applications” and indicates that for the minority of schools that have “over 500 applications” filed during this period, it will reach out later in the year with further guidance. Confirming a point widely believed by institutions, the Department also acknowledges that it is not conducting any substantive review of the applications (e.g., determining whether an application even asserts a valid basis for a BDR claim) before sending them to the institutions.

This having been said, we fear some elements of the Department’s guidance might cause confusion among institutions and even lead to inaccurate conclusions. Specifically, we are concerned that some institutions might conclude there is no adverse consequence if they decide not to respond to a BDR claim – a conclusion that would be inaccurate.

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