Sec. 4632. Amendments to terms and conditions of borrower defenses
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/bill/116/hr/4674/ih/section-4632·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
Part G of title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1088 et seq.), as amended by the preceding sections, is further amended by adding at the end the following: Notwithstanding any other provision of State or Federal law, a defense to repayment of a loan under this title includes— a substantial misrepresentation; an act or omission that would give rise to a cause of action against an institution of higher education under applicable State law, to the extent that such act or omission relates to— a loan received by a borrower under this title; or educational services for which such a loan was received; or such further acts or omissions that the Secretary determines to be appropriate in accordance with subsection (b).
The Secretary shall specify in regulations which further acts or omissions of an institution of higher education a borrower may assert as a defense to repayment of a loan made under this title. The Secretary shall determine whether a borrower is entitled to relief under this section based on all evidence available to the Secretary. A borrower shall be entitled to relief under this section if a preponderance of the evidence available to the Secretary demonstrates that the borrower is entitled to such relief.
A determination under paragraph
(1)shall be independent of any action that the Secretary may take to recoup funds from the institution of higher education implicated by the borrower defense claim. The Secretary shall establish procedures for the fair and expeditious review and resolution of borrower defense claims brought under this section. In establishing such procedures, the Secretary shall— provide a fair process for the review and resolution of borrower defense claims, which shall include procedures for the consideration of borrower defense claims on behalf of groups of similarly situated borrowers without requiring each borrower in the group to submit a separate claim; review a borrower defense claim at any time without regard to the repayment status of any loan subject to such claim; allow a legal representative to bring a borrower defense claim— on behalf of an individual borrower; or on behalf of a group of similarly situated borrowers; and specify a fixed timeframe for the resolution of borrower defense claims. Subject to subparagraph (B), a loan made under this title that is subject to a pending borrower defense claim shall be placed in deferment status, during which periodic installments of principal need not be paid and interest shall not accrue (or shall be paid by the Secretary), without regard to whether such loan is in default. The borrower of a loan subject to deferment under subparagraph
(A)may opt out of such deferment at any time during the pendency of the borrower defense claim. The Secretary shall suspend all adverse credit reporting and collection activity, including offsets and garnishments, with respect to any loan in default that is subject to a deferment under subparagraph (A). If the Secretary determines under subsection
(c)that a borrower is entitled to relief, the Secretary shall, subject to paragraph (2)— cancel or repay all or a portion of the balance of interest and principal due on any loan subject to the claim for relief; and return to the borrower an amount not in excess of the total amount of payments made on the loan by the borrower. If the Secretary determines that a borrower is entitled to relief based on a claim of substantial misrepresentation, the Secretary shall— cancel or repay the full balance of interest and principal due on any loan subject to the claim; and return to the borrower an amount equal to the total amount of payments made on the loan by the borrower. If the Secretary determines that a borrower is entitled to relief based on a claim other than substantial misrepresentation, there shall be a presumption that the Secretary will cancel or repay the full balance of principal and interest due on the loan and return the full amount of payments made by the borrower as described in subparagraph (A). If the Secretary determines that full cancellation or repayment of the debt and return of all funds paid on the loan is not appropriate in a particular case, the Secretary shall provide the borrower with a written explanation as to why partial cancellation or repayment, or the partial return of funds is appropriate. Upon a determination by the Secretary to deny a borrower defense claim under this section, the borrower may file an appeal with the Department. The Secretary shall develop and implement a standardized process for the treatment of appeals under this subsection. A borrower whose claim was denied under this section may refile the claim for good cause, which may include— the availability of substantial evidence that was not available to the Secretary at the time the initial claim was denied; the emergence of facts or circumstances that may have substantially altered the Secretary’s original treatment of the initial claim; and such other factors as may be determined by the Secretary. The Secretary shall designate qualified personnel within the Department whose principal responsibility shall be the processing of borrower defense claims submitted under his section. At the request of a borrower, the Secretary shall identify and provide to the borrower or the legal representative of the borrower any records the Secretary is considering as part of the borrower’s claim. The Secretary shall establish a process under which each borrower with a claim pending under this section shall be notified of the status of the pending claim not fewer than once every 90 days. The Secretary may request documents and other information relating to a borrower defense claim from an institution of higher education. An institution that receives a request for information from the Secretary under this subsection shall provide the information to the Secretary at such time, in such form, and in such manner as the Secretary may direct. Not less than once every fiscal quarter, the Secretary shall submit to the authorizing committees a report that includes the following: The total number of claims submitted to the Secretary pursuant to this subsection in the fiscal quarter covered by the report and in all previous fiscal quarters. Of the claims described in subparagraph (A)— the number of claims that remain pending; the number of claims that were denied by the Secretary, and the total dollar amount of such claims; and the number of claims that were approved by the Secretary, and the total dollar amount of such claims. The information described in subparagraphs
(A)and
(B)of paragraph
(1)shall be disaggregated by State and institution of higher education (except that such disaggregation shall not be required in a case in which the results would reveal personally identifiable information about an individual borrower). The information included in each report submitted under paragraph
(A)shall be made available on a publicly accessible website of the Department. In this section: The term legal representative means a licensed attorney working on behalf of a borrower or a group of borrowers, including— a State attorney general; and an attorney employed by a State agency, a Federal agency, or a nonprofit organization that is qualified to provide legal representation to borrowers. The term substantial misrepresentation has the meaning given that term in section 487(c)(3)(C). . Subsection
(h)of section 455 of the Higher Education Act of 1965 ( 20 U.S.C. 1087e ) is repealed.
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