Sec. 150122. Emergency relief for defrauded borrowers
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/bill/116/hr/6800/ih/section-150122A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
An eligible borrower shall be entitled to relief on an eligible loan pursuant to this section. In this section: The term eligible borrower means an individual— who— borrowed an eligible loan to finance the cost of enrollment at an institution of higher education that, according to findings by the Department of Education made on or before the date of enactment of this Act, made a false or misleading representation with the respect to the job placement rates of such institution of higher education; and has not received the relief described in subsection (c)(1) on such eligible loan; or who— borrowed an eligible loan to finance the cost of enrollment at an institution of higher education that, according to findings by the Department of Education made on or before the date of enactment of this Act, made a false or misleading representation with respect to guaranteed employment or transferability of credits of such institution of higher education; in an application to the Secretary for a defense to repayment of such eligible loan, has asserted that the borrower (or the dependent student on whose behalf the eligible borrowed such eligible loan) relied on such false or misleading representation in deciding to enroll in such institution of higher education; and has not received the relief described in subsection (c)(1) on such eligible loan.
The term eligible loan means a loan made, insured, or guaranteed under part B or D of title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1071 et seq.; 1087a et seq.). With respect to each eligible borrower, the Secretary shall— not later than 45 days after the date of enactment of this Act, with respect to each eligible loan of the borrower described in subsection (b)(1)— cancel or repay the full balance of interest and principal (including fees and charges) due on such loan; and return to the borrower an amount equal to the total amount of payments (including voluntary and involuntary payments) made on the loan by the borrower; not later than 60 days after the date of enactment of this section, report the cancellation or repayment under paragraph (1)(A) of each eligible loan to each consumer reporting agency to which the Secretary previously reported the status of the loan, so as to delete all adverse credit history assigned to the loan; and not later than 60 days after the date of enactment of this Act, no longer consider a borrower who has defaulted on a loan cancelled or repaid under this subsection to be in default on such loan.
Not later than 30 days after the date of enactment of this section, the Secretary shall notify (in writing) each eligible borrower of— the relief to which the borrower is entitled pursuant to subsection (c), and when the borrower will receive such relief; the borrower’s eligibility to receive assistance under title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1070 et seq.) after receiving relief pursuant to subsection (c); and any further relief to such borrower as the Secretary determines is appropriate.
The Secretary shall carry out the requirements of paragraph
(2)with respect to each claim submitted to the Secretary on or before the date of enactment of this Act by a State attorney general on behalf of one or more individuals who— allege that the individual borrowed an eligible loan to finance the cost of enrollment at an institution of higher education whose act or omission the individual may assert as a defense to repayment on such loan under the Higher Education Act of 1965 ( 20 U.S.C. 1001 et seq.) or under applicable State law; and has not received the relief described in paragraph (2)(B) on such eligible loan. The Secretary shall carry out the following with respect to each claim described in paragraph (1): Not later than 180 days after the date of enactment of this Act, adjudicate each such claim. For each claim for which the State attorney general proves the facts described in paragraph
(1)by a preponderance of the evidence, with respect to each individual on whose behalf the claim was submitted, provide the following: Not later than 45 days after the date on which such claim is adjudicated, with respect to each eligible loan described in paragraph
(1)of the individual— cancel or repay the full balance of interest and principal (including fees and charges) due on such loan; and return to the borrower an amount equal to the total amount of payments (including voluntary and involuntary payments) made on the loan by the borrower. Not later than 60 days after the date on which such claim is adjudicated, report the cancellation or repayment under clause
(i)of each eligible loan to each consumer reporting agency to which the Secretary previously reported the status of the loan, so as to delete all adverse credit history assigned to the loan. Not later than 60 days after the date on which such claim is adjudicated, no longer consider a borrower who has defaulted on a loan cancelled or repaid under this subparagraph to be in default on such loan. Not later than 10 days after the date of adjudication under subparagraph (A), with respect to each claim submitted on behalf of not less than 20 individuals, provide detailed reports to the authorizing committees, which shall include— any evidence submitted by the State attorney general, which the Secretary relied upon in adjudicating the claim; any evidence submitted by the State attorney general, which the Secretary did not rely upon in adjudicating the claim; any other evidence the Secretary relied upon in adjudicating the claim; a summary of all efforts to coordinate with the State attorney general to ensure a fair adjudication; and a detailed legal rationale for the Secretary’s adjudication. For the duration of the adjudication of each claim— suspend any payments owed on any eligible loan that is the subject of such claim, including a suspension of any capitalization of interest; suspend any involuntary collections on such loan, including collections under— a wage garnishment authorized under section 488A of the Higher Education Act of 1965 ( 20 U.S.C. 1095a ) or section 3720D of title 31, United States Code; a reduction of tax refund by amount of debt authorized under section 3720A of title 31, United States Code, or section 6402(d) of the Internal Revenue Code of 1986; a reduction of any other Federal benefit payment by administrative offset authorized under section 3716 of title 31, United States Code (including a benefit payment due to an individual under the Social Security Act ( 42 U.S.C. 301 et seq.) or any other provision described in subsection (c)(3)(A)(i) of such section); or any other involuntary collection activity by the Secretary; and suspend any interest accrual on such loan. Not later than 10 days after the date of adjudication for which relief is provided under subparagraph (B), notify (in writing) each individual with respect to whom relief is provided of— the relief to which the individual is entitled pursuant to subparagraph (B), and when the individual will receive such relief; the individual’s eligibility to receive assistance under title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1070 et seq.) after receiving relief pursuant to subparagraph (B); and any further relief to such borrower as the Secretary determines is appropriate. With respect to each loan cancelled or repaid under this section, the Secretary shall initiate an appropriate proceeding to require the institution of higher education whose act or omission resulted in such cancellation or repayment to repay to the Secretary the amount so cancelled or repaid. For purposes of the Internal Revenue Code of 1986, in the case of any relief provided under subsection (c)(1) or (e)(2)(B) with respect to a borrower: No amount shall be included in the gross income of such borrower by reason of such relief and section 111(b) such Code shall not apply with respect to such relief. Amounts excluded from gross income under paragraph
(1)shall not be required to be reported (and shall not be taken into account in determining whether any reporting requirement applies) under chapter 61 of such Code.
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Sec. 150122
Emergency relief for defrauded borrowers
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