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House Bill 3662
116th Congress(2019-2020)
Relief for Defrauded Students Act of 2019
Introduced
Introduced
Introduced in House on Jul 10, 2019
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Introduced in House 
Jul 10, 2019
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Introduced in House(Jul 10, 2019)
Jul 10, 2019
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H. R. 3662 (Introduced-in-House)


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 misrepresentation or omission by an institution of higher education.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. Short title.

This Act may be cited as the “Relief for Defrauded Students Act of 2019”.

SEC. 2. Amendments to terms and conditions of borrower defenses.

Section 455(h) of the Higher Education Act of 1965 (20 U.S.C. 1087e(h)) is amended to read as follows:

“(h) Borrower defenses.—

“(1) IN GENERAL.—Notwithstanding any other provision of State or Federal law, a defense to repayment of a loan under this part shall include—

“(A) a substantial misrepresentation under by an institution of higher education described in section 487(c)(3);

“(B) an act or omission of an institution of higher education that would give rise to a cause of action against such institution of higher education under applicable State law; or

“(C) any other act or omission by an institution of higher education that the Secretary specifies in the regulations under paragraph (3).

“(2) PROCEDURES.—

“(A) IN GENERAL.—The Secretary shall, for each borrower who submits to the Secretary an application asserting a defense to repayment of a loan made under this part—

“(i) provide an expeditious and fair process to consider such application (without regard to whether the application is submitted by an individual borrower, a group of borrowers, or a representative of such individual or group); and

“(ii) determine the entitlement of the borrower to relief based on all evidence available to the Department.

“(B) INDEPENDENT DETERMINATION.—A determination under subparagraph (A)(ii) with respect to a borrower shall be independent of any action that the Department may take under this Act to recover funds from an institution of higher education for an act or omission related to such determination.

“(C) CANCELLATION OF DEBT.—In a case in which the Secretary determines under subparagraph (A)(ii) that the borrower is entitled to relief, the Secretary shall—

“(i) cancel any outstanding balance of principal and interest due on each loan made under this part that the borrower received for enrollment at the institution of higher education against which the borrower is asserting the defense to repayment; and

“(ii) return to the borrower the amount of any payments made on such loans.

“(3) REGULATIONS.—The Secretary shall specify in regulations which acts or omissions of an institution of higher education a borrower may assert as a defense to repayment of a loan made under this part, except that in no event may a borrower recover from the Secretary, in any action arising from or relating to a loan made under this part, an amount in excess of the amount such borrower has repaid on such loan.”.