Sec. 103. Closed school discharge
590 words·~3 min read·
/bill/119/hr/2899/ih/section-103·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
Section 437(c)(1) ( 20 U.S.C. 1087(c)(1) ) is amended to read as follows: If a borrower who received, on or after January 1, 1986, a loan made, insured, or guaranteed under this part and the student borrower, or the student on whose behalf a parent borrowed, is unable to complete the program in which such student is enrolled due to the closure of the institution or if such student’s eligibility to borrow under this part was falsely certified by the eligible institution or was falsely certified as a result of a crime of identity theft, or if the institution failed to make a refund of loan proceeds which the institution owed to such student’s lender, then the Secretary shall discharge the borrower’s liability on the loan (including interest and collection fees) by repaying the amount owed on the loan.
In addition to the authorization of discharge under subparagraph (A), the Secretary shall discharge a borrower's (including an endorser's) liability on a Federal Direct Loan made under part D if— the institution at which the borrower who took the loan (or on whose behalf it was taken or endorsed) was enrolled, ceased to provide educational instruction as a whole, or ceased to provide instruction in the programs in which more than 50 percent of the students were enrolled; or the borrower who took the loan (or on whose behalf it was taken or endorsed) was enrolled in an institution at any time within the period not earlier than 180 days before the date of the closure of the institution.
The Secretary may extend the 180 day period described in clause (i)(II) in cases where exceptional circumstances are demonstrated, including if— the institution was placed on probation or order to show cause or approval was withdrawn or terminated by an accrediting agency or association or an institution's institutional accreditor, or a State authorizing or licensing authority; the institution was placed on Heightened Cash Monitoring status by the Department or was placed on Provisional Program Participation Approval status, or the institution's participation in a program under this title was terminated by the Department; the institution was found to have violated Federal or State law related to enrolling or providing education services to students by a Federal or State Government agency, or is the subject of a Federal or State court judgment that the institution violated laws related to enrolling or providing education services to students; the teach-out plan (as required under section 487(f)) of the borrower's educational program exceeds the 180 day period described in clause (i)(II); the institution responsible for the teach-out of the borrower's educational program fails to perform the material terms of the teach-out plan (as required under section 487(f)), such that the borrower does not have a reasonable opportunity to complete the borrower's program of study; and the institution permanently closed all or most of its in-person locations while maintaining online programs or permanently closed many programs.
A borrower who took a loan (or on whose behalf it was taken or endorsed) that is eligible for discharge under this paragraph due to institutional closure is entitled to discharge without an application or statement from the borrower 1 year after the institution's closure date if the student did not complete the program at the institution. After discharging liability on a loan under this paragraph, the Secretary shall pursue any claim available to a borrower against the institution and its affiliates and principals or settle the loan obligation pursuant to the financial responsibility authority under subpart 3 of part H. .
Connectionstraces to 1
Citation graph
cites case law
Sec. 103
Closed school discharge
Cites 1Cited by 0 across 0 sources