Relief for Defrauded Students Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 3662 To amend the Higher Education Act of 1965 to ensure that student borrowers are provided relief from their student loans in the instance of substantial misrepresentation or omission by an institution of higher education. IN THE HOUSE OF REPRESENTATIVES JULY 10, 2019 Mrs. MCBATH (for herself, Ms. FINKENAUER, Ms. PORTER, Mrs. AXNE, Ms. DAVIDS of Kansas, and Ms. SCANLON) introduced the following bill; which was referred to the Committee on Education and Labor A BILL To amend the Higher Education Act of 1965 to ensure that student borrowers are provided relief from their student loans in the instance of substantial misrepresen- tation or omission by an institution of higher education. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Relief for Defrauded 4 Students Act of 2019’’. 5 VerDate Sep 11 2014 21:27 Jul 17, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3662.IH H3662 pamtmann on DSKBFK8HB2PROD with BILLS 2 •HR 3662 IH SEC. 2. AMENDMENTS TO TERMS AND CONDITIONS OF BOR- 1 ROWER DEFENSES. 2 Section 455(h) of the Higher Education Act of 1965 3 (20 U.S.C. 1087e(h)) is amended to read as follows: 4 ‘‘(h) BORROWER DEFENSES.— 5 ‘‘(1) IN GENERAL.—Notwithstanding any other 6 provision of State or Federal law, a defense to re- 7 payment of a loan under this part shall include— 8 ‘‘(A) a substantial misrepresentation under 9 by an institution of higher education described 10 in section 487(c)(3); 11 ‘‘(B) an act or omission of an institution 12 of higher education that would give rise to a 13 cause of action against such institution of high- 14 er education under applicable State law; or 15 ‘‘(C) any other act or omission by an insti- 16 tution of higher education that the Secretary 17 specifies in the regulations under paragraph 18 (3). 19 ‘‘(2) PROCEDURES.— 20 ‘‘(A) IN GENERAL.—The Secretary shall, 21 for each borrower who submits to the Secretary 22 an application asserting a defense to repayment 23 of a loan made under this part— 24 ‘‘(i) provide an expeditious and fair 25 process to consider such application (with- 26 VerDate Sep 11 2014 21:27 Jul 17, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3662.IH H3662 pamtmann on DSKBFK8HB2PROD with BILLS 3 •HR 3662 IH out regard to whether the application is 1 submitted by an individual borrower, a 2 group of borrowers, or a representative of 3 such individual or group); and 4 ‘‘(ii) determine the entitlement of the 5 borrower to relief based on all evidence 6 available to the Department. 7 ‘‘(B) INDEPENDENT DETERMINATION.—A 8 determination under subparagraph (A)(ii) with 9 respect to a borrower shall be independent of 10 any action that the Department may take under 11 this Act to recover funds from an institution of 12 higher education for an act or omission related 13 to such determination. 14 ‘‘(C) CANCELLATION OF DEBT.—In a case 15 in which the Secretary determines under sub- 16 paragraph (A)(ii) that the borrower is entitled 17 to relief, the Secretary shall— 18 ‘‘(i) cancel any outstanding balance of 19 principal and interest due on each loan 20 made under this part that the borrower re- 21 ceived for enrollment at the institution of 22 higher education against which the bor- 23 rower is asserting the defense to repay- 24 ment; and 25 VerDate Sep 11 2014 21:27 Jul 17, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3662.IH H3662 pamtmann on DSKBFK8HB2PROD with BILLS 4 •HR 3662 IH ‘‘(ii) return to the borrower the 1 amount of any payments made on such 2 loans. 3 ‘‘(3) REGULATIONS.—The Secretary shall speci- 4 fy in regulations which acts or omissions of an insti- 5 tution of higher education a borrower may assert as 6 a defense to repayment of a loan made under this 7 part, except that in no event may a borrower recover 8 from the Secretary, in any action arising from or re- 9 lating to a loan made under this part, an amount in 10 excess of the amount such borrower has repaid on 11 such loan.’’. 12 Æ VerDate Sep 11 2014 21:27 Jul 17, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6301 E:\BILLS\H3662.IH H3662 pamtmann on DSKBFK8HB2PROD with BILLS