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.
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