If a student takes a federal loan (through their school) based on incorrect information from an officer of their school's financial aid office, which causes them to have to pay more money than the financial aid office told them, does the student have any recourse?

Assume this communication was all written and is still accessible by all parties

  • 1
    What would be the cause of paying more money? A higher interest rate? A smaller financial aid package from the college?
    – ohwilleke
    Sep 14 at 18:58
  • @ohwilleke - a cancellation clause? If the officer said (multiple times) 90 days but the actual clause was 14 days, where the officer knew the loan was taken with the intention of cancelling within 90 days but after 14 days
    – olivarb
    Sep 14 at 19:14
  • 2
    Sounds like you were engaged in student loan fraud anyway, so you'd have unclean hands.
    – ohwilleke
    Sep 14 at 19:16
  • 2
    @ohwilleke - I'm unclear why this is student loan fraud. The loan has a clause of cancellation where one is allowed to cancel the entire loan and pay back the full amount without interest within a certain period of days
    – olivarb
    Sep 14 at 19:22
  • 1
    I guarantee you signed something that said 14 days, and also said something like "no other terms apply."
    – Tiger Guy
    Sep 15 at 5:49

2 Answers 2


You can always complain to the person's supervisor. However, the rules regarding cancellation of a loan and the 14 day limit are baked into the law. An error by the school's loan agent does not override the underlying requirements and the 14 day time period for cancellation. There is a borrower defense to repayment potentially available if the student was defrauded by the institution (and there is a 90 day "mitigating factor" aspect to that regulation). This is not applicable to your situation, because it doesn't apply to misinformation (even if it is written down and is plainly incompetent). That escape from repayment is limited to a set of institutes already deemed by the government to be fraudulent.

  • I'm sorry, I don't think I understand the answer. Would you be able to break the last sentence down in simpler language please?
    – olivarb
    Sep 15 at 0:30
  • Obviously the bad advice doesn't change the actual loan terms. But isn't the person who provided the bad advice liable to pay the damages that were suffered by people relying on it? So the student pays the extra money and then sues the advisor to recover, right?
    – interfect
    Sep 17 at 18:01
  • The last sentence means that the Government has declared some schools to be outright frauds (e.g. they took the money and ran), and if you took a loan and gave the money to one of those declared fraudulent schools then you don't have to pay it back. But it doesn't sound like your school is one of them. Sep 18 at 14:33

If you relied on the advice of someone when making a financial decision or signing a contract, and suffered damages because the advice was factually incorrect, and the person providing it knew or should have known that, you might have a civil case against them for damages.

If this person was employed to sell loans, and lied about the loan terms, and you can prove it, that's not allowed. If the person was a fiduciary financial advisor bound to act in your best interest and chose not to, that's not allowed either. If this person is providing some kind of regulated advice and doesn't have or follow the restrictions of a required license, that also isn't allowed; maybe they are practicing law without actually being a lawyer.

If they're a non-fiduciary third party who just gives advice of a kind that is not regulated, and the advice was wrong, you might need to talk to a lawyer to try and figure out whether any generic responsibility they might have had to be right was violated.

Also, you can always total up your damages and ask if they will pay them, given that you relied on their advice, and it was wrong, and that's why the damages were incurred.

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