False Certification

The Higher Education Act provides relief for borrowers who meet false certification requirements as outlined in this subsection. A borrower qualifies for discharge of the entire loan due to false certification if the borrower—or student for whom a parent obtained a PLUS loan—received any part of the proceeds of a FFELP loan on or after January 1, 1986, to attend a school that:

• Admitted the student on the basis of his or her ability to benefit from its training, even though the student did not meet the applicable requirements for admission on the basis of ability to benefit.
• Signed the borrower’s name on the application and/or promissory note without his or her authorization.
• Endorsed the borrower’s name on the loan check or signed the authorization for electronic funds transfer or master check without the borrower’s authorization— unless the student for whom the loan was made received the proceeds of the loan either by actual delivery of the loan funds or by a credit in the amount of the contested disbursement to charges owed to the school for the portion of the educational program completed by the student.

The guarantor or U.S. Department of Education (ED) may initiate the discharge process if either determines that the borrower is eligible for discharge based on information in its possession. If, however, the borrower initiates the process by requesting a discharge based on false certification, the borrower must complete, certify, and submit to the lender or guarantor the applicable loan discharge form. Through submission of this form, hereafter referred to as the “request,” the borrower:

• Agrees to provide, as requested, other reasonably available true and correct documentation that
  demonstrates the borrower’s eligibility for discharge.
• Agrees to cooperate with the Department (or its designee) in any enforcement action or attempt to recover discharged loan amounts, and to transfer and relinquish to the Department any right to a refund on a discharged loan.
• States whether the student has made a claim with respect to the school’s false certification with any third party, such as the holder of a performance bond or a tuition recovery program—and, if so, provides the amount of any payment received by the borrower (or student) or credited to the loan obligation.

If the guarantor determines that a borrower is eligible for a loan discharge or a discharge of one or more disbursements on a loan, the discharge cancels the obligation of the borrower to repay the applicable outstanding principal, accrued interest, collection costs, and late fees. It also qualifies the borrower for reimbursement of any amounts paid voluntarily or through forced collection on the amount discharged. The lender or guarantor must ensure that a discharge is reported to credit bureaus such that the adverse credit history associated with the amount discharged is removed.

The guarantor or ED may initiate the discharge process if either determines that the borrower is eligible for discharge based on information in its possession. If, however, the borrower initiates the process by requesting a discharge based on the school’s improper determination of the student’s ability to benefit, the borrower must complete, certify, and submit to the lender or guarantor the Loan Discharge Application: False Certification of Ability to Benefit form. Through submission of this request, the borrower will make all of the following certifications with respect to the borrower or student for whom a parent received a PLUS loan:

• The student received proceeds of a loan, in whole or in part, after January 1, 1986, to attend a school.
• The student was admitted to the school on the basis of ability to benefit from its training, but did not meet the applicable requirements for admission on the basis of ability to benefit.

In the case of a borrower requesting a discharge due to a disqualifying status, the borrower must complete, certify, and submit to the lender or guarantor the Loan Discharge Application: False Certification (Disqualifying Status) form. Through submission of this request, the borrower will:

• State that he or she (or the student in the case of a PLUS borrower) was unable to meet the legal
  requirements for employment in the student’s state of residence in the occupation for which the program of  study was intended, due to age (upon completion of training), physical or mental condition, criminal record, or other reason.
• Provide information about the state legal requirement for employment that the student could not meet,
  including a reference to or a copy of the specific state law or regulation.
• Provide supporting documentation proving that the borrower had the disqualifying status at the time the loan was certified or originated.

In the case of a borrower requesting a discharge because the school signed the borrower’s name on the loan application or promissory note without the borrower’s authorization, the borrower must complete, certify, and submit to the lender or guarantor the Loan Discharge Application: Unauthorized Signature/Unauthorized Payment form. Through submission of this request, the borrower will:

• State that the signature on either of those documents was not his or her signature.
• Provide five different specimens of his or her signature, two of which must be no earlier nor later than one year before or after the date of the contested signature.

In the case of a borrower requesting a discharge because the school, without the borrower’s authorization, endorsed the borrower’s name on the loan check or signed the authorization for electronic funds transfer or master check, the borrower must complete, certify, and submit to the lender or guarantor the Loan Discharge Application: Unauthorized Signature/Unauthorized Payment form. Through submission of this request, the borrower will:

• Certify that he or she did not endorse the loan check or sign the authorization for electronic funds transfer or master check, or authorize the school to do so.
• Provide five different specimens of his or her signature, two of which must be no earlier nor later than one year before or after the date of the contested signature.
• State that the proceeds of the contested disbursement were not received either through actual delivery of the loan funds or by a credit in the amount of the contested disbursement applied to charges owed to the school for the portion of the educational program completed by the student.