False Certification Discharge

A borrower of a federal student loan may be eligible for a false certification discharge if:

  • Ability to Benefit. The school falsely certified the student’s eligibility for the loan based on the student’s ability to benefit from the training.
  • Unauthorized Signature. The school signed the borrower’s name on a loan application or promissory note without the borrower’s permission.
  • Disqualifying Status. The school certified the eligibility of a student who would not satisfy the requirements for employment in the occupation for which the student was being trained in the student’s state of residence when the loan was originated. This includes students who would not have met the requirements for employment because of the student’s physical or mental condition, age or criminal record.
  • Identity Theft. The loan was not authorized by the borrower because the borrower was the victim of identity theft and the borrower did not receive or benefit from the loan proceeds. Victims of identity theft must provide a copy of a court verdict or judgment that conclusively determines that the borrower was the victim of a crime of identity theft or other evidence that the borrower was the victim of the crime of identity theft.
  • Unauthorized Payment. If the school endorsed the borrower’s loan check or signed the borrower’s authorization for electronic funds transfer without the borrower’s authorization and the student did not receive or benefit from the loan proceeds (e.g., the loan proceeds were not applied to charges owed by the student to the school nor delivered to the student).

The federal student loans must have been made on or after January 1, 1986. The borrowers may be eligible for a refund of amounts previously paid on the discharged loans in addition to a discharge of the remaining debt.

To apply for a false certification discharge, the borrower should file the appropriate loan discharge application:

There is currently no form to apply for a discharge due to identity theft. The borrower should contact the loan servicer for more information and the requirements for a discharge. The borrower may be required to sign a letter that certifies that the borrower agrees to cooperate with the U.S. Department of Education and the U.S. Department of Justice in the investigation of the borrower’s allegation of identity theft.

Borrowers who receive a false certification discharge must cooperate with the U.S. Department of Education in enforcement actions brought by the U.S. Department of Education to recover the amounts discharged. Borrowers must also transfer to the U.S. Department of Education the borrower’s right of recovery against third parties.

Borrowers who are denied a false certification discharge may be able to appeal the denial to the U.S. Department of Education.

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In order to qualify for private student loan refinancing, lenders require a strong credit score with proof of income and employment history. In some cases a cosigner may be required. Also, if you have adverse credit history, including a prior student loan default*, you may not be eligible. * Default = 270 days late/missed payment on a federal loan and typically 90 days late/missed payment on a private loan(contact your lender for exact definition of default).

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