Relief for Defrauded Students Act of 2019

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. 1. Short title This Act may be cited as the Relief for Defrauded Students Act of 2019 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) (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. .

Summary: Relief for Defrauded Students Act of 2019 This bill provides statutory authority for specific borrower defenses to repayment under the Federal Direct Loan program. Specifically, the bill allows a defense to repayment of a loan under the program if (1) the institution of higher education (IHE) made a substantial misrepresentation of the nature of its educational program, its financial charges, or the employability of its graduates; (2) the IHE made an act or omission in violation of state law; or (3) the IHE made any other act or omission as specified by the Department of Education (ED). Under current law, ED is required to specify in regulation which acts and omissions of an IHE may be asserted by a borrower as a defense to repayment under the program. The bill requires ED, upon determination that a borrower is entitled to student loan relief, to cancel any outstanding balance of principal and interest due on each loan and return to the borrower the amount of any payments made on each loan.