Draft Borrower Defense to Repayment Language

2021 Negotiated Rulemaking

The first two suggested items below came for the negotiators representing State Attorneys 

General. The third set of language comes from the 2016 borrower defense regulation and the 

fourth comes from the Consumer Financial Protection Bureau.

Violation of state law. A borrower has a borrower defense under this section if the Department 

identifies an act or omission of the school attended by the student that relates to the making of 

the loan for enrollment at the school or the provision of educational services for which the loan 

was provided that would give rise to a cause of action against the school under applicable State 

law.*

(a) The Department shall consider whether a borrower or group of borrowers has a 

borrower defense under this paragraph if a violation of state law is specifically alleged in 

an individual or group borrower defense application and the Department has 

determined that the borrower or group of borrowers is not approved for full relief 

under the federal standard for relief specified in [insert x-ref]. The Department may

consider the specifically alleged state violation before it considers whether there is a 

violation under the federal standard for relief specified in [insert X-ref].

(b) The Department may consider whether a borrower or group of borrowers has a 

borrower defense under this paragraph if the borrower defense application does not 

specifically allege a violation of state law. 

*The red language is from 685.206(c)(1).

“Aggressive Recruitment” means exerting unreasonable pressure upon a consumer to enroll in 

an institution. Without limiting the general application of the foregoing, the following conduct 

is a violation of this section: 

(a) Exploiting a consumer’s fears, anxieties, insecurities, or any specific misfortune or 

circumstance of such gravity as to impair the consumer’s judgment, to influence the 

consumer’s decision with regard to the institution; 

(b) Interfering with the ability of a consumer to understand a term or condition of 

enrollment or a financial product or service related to enrollment; 

(c) Taking unreasonable advantage of someone’s lack of understanding of higher 

education and financial aid, by reason of socio-economic background, lack of familial 

experience in higher education, or other reason;

(d) Taking unreasonable advantage of someone who reasonably relies on the recruiting 

individual or entity to act in their interests; 

Commented [A1]: See The Consumer Protection from 

Unfair Trading Regulations 2008, United Kingdom, Section 

7(2)(c), available at 

https://www.legislation.gov.uk/uksi/2008/1277/pdfs/uksi_2

0081277_en.pdf.

Commented [A2]: See 12 U.S.C. § 5531(d)(1). 

Commented [A3]: See 12 U.S.C. § 5531(d)(2)(A).

Commented [A4]: See 12 U.S.C. § 5531(d)(2)(C).
 

 UNITED STATES DEPARTMENT OF EDUCATION

 OFFICE OF POSTSECONDARY EDUCATION

a. Reasonable reliance shall be presumed if the recruiting individual uses a title that 

implies they are acting in the best interest of the student including but not 

limited to “admissions representative,” “guidance counselor,” or “academic 

advisor”;

(e) Unsolicited contact with a borrower that has previously requested not to be 

contacted; 

(f) The use of threatening or abusive language or behavior; and

(g) Exerting unreasonable or unsubstantiated time pressures upon a consumer.

3. [option for consideration] Aggressive and deceptive recruitment tactics: 2016 Borrower 

Defense Regulations (with modifications)

Aggressive and deceptive recruitment tactics or conduct include but are not limited to:

(1) Demanding that the borrower make enrollment or loan-related decisions 

immediately;

(2) Placing an unreasonable emphasis on the consequences of delay;

(3) Discouraging the borrower from consulting an adviser, a family member, or other 

resource;

(4) Failing to respond to the borrower's requests for more information, including about 

the cost of the program and the nature of any financial aid; 

(5) Falsely presenting the number of spots available; or

(6) Otherwise unreasonably pressuring the borrower or taking advantage of the 

borrower's distress or lack of knowledge or sophistication.

4. [option for consideration] Aggressive and deceptive recruitment tactics: CFPB) definition of 

abusive:

• Materially interfering with someone’s ability to understand a product or service

• Taking unreasonable advantage of someone’s lack of understanding

• Taking unreasonable advantage of someone who cannot protect themself, and

• Taking unreasonable advantage of someone who reasonably relies on a company to act 

in their interests.

Last updated 10/25/2021

Commented [A5]: See generally Fair Debt Collection 

Practices Act, 15 USC § 1692(c)(c).

Commented [A6]: See The Consumer Protection from 

Unfair Trading Regulations 2008, United Kingdom, Section 

7(2)(b), available at 

https://www.legislation.gov.uk/uksi/2008/1277/pdfs/uksi_2

0081277_en.pdf; see also Fair Debt Collection Practices Act, 

15 USC § 1692(d)(2).

Commented [A7]: This language had been in the 2016 

regulation as a way to show reliance but could be used 

instead as aggressive recruitment.