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The Secretary proposes to amend regulations that determine what acts or omissions of an institution of higher education a borrower may assert as a defense to repayment of a loan made under the Federal Direct Loan and Federal Family Education Loan Programs and specify the consequences of such borrower defenses for borrowers, institutions, and the Secretary. Further, the Secretary intends to review the use of class-action lawsuits and pre-dispute arbitration agreements for matters pertaining to borrower defense claims by schools receiving Title IV assistance under the Higher Education Act.

Statement of Need:

This rulemaking is necessary to determine what acts or omissions of an institution of higher education a borrower may assert as a defense to repayment of a loan made under the Federal Direct Loan Program and specify the consequences of such borrower defenses for borrowers, institutions, and the Secretary. 

Summary of the Legal Basis:

We are conducting this rulemaking under the following authorities: 20 U.S.C. 1082(a)(5), (a)(6); 20 U.S.C.1087(a); 20 U.S.C. 1087e(h); 20 U.S.C. 1221e-3; 20 U.S.C. 1226a-1; 20 U.S.C. 1234(a); and 31 U.S.C. 3711.

Alternatives:

We have limited information about the alternatives at this time. 

Anticipated Costs and Benefits:

We have limited information about the anticipated costs and benefits at this time. 

Risks:

We have limited information about the risks at this time.