§ 1087. Repayment by Secretary of loans of bankrupt, deceased, or disabled borrowers; treatment of borrowers attending schools that fail to provide a refund, attending closed schools, or falsely certified as eligible to borrow

Footnotes

1. 1 See References in Text note below.

Legislative history

Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.

1. 1986

   Higher Education Act of 1965

   Pub. L. 89–329 title IV § 437 · 79 Stat. 1219

   Enacted · 20 U.S.C. § 1087

   Pub. L. 89–329, title IV, § 437, as added Pub. L. 99–498, title IV, § 402(a), Oct. 17, 1986, 100 Stat. 1414

   Source evidence

   Code source credit
   Pub. L. 89–329, title IV, § 437, as added Pub. L. 99–498, title IV, § 402(a), Oct. 17, 1986, 100 Stat. 1414

2. 1992

   Higher Education Amendments of 1992

   Pub. L. 102–325 title IV § 428 · 106 Stat. 448

   1. Amended · 20 U.S.C. § 1087

      Pub. L. 102–325 amended section generally

   2. Substituted · 20 U.S.C. § 1087

      Pub. L. 102–325 substituting subsecs. (a) to (d) for former subsecs. (a) and (b) which related to repayment by Secretary of loans of bankrupt, deceased, or disabled borrowers

   Source evidence

   Code amendment note
   Pub. L. 102–325 amended section generally, substituting subsecs. (a) to (d) for former subsecs. (a) and (b) which related to repayment by Secretary of loans of bankrupt, deceased, or disabled borrowers.

   Enacted provision · exact public law section
   SEC. 428. REPAYMENTS BY SECRETARY. Section 437 of the Act (20 U.S.C. 1087) is amended to read as follows: “Sec. 437. “repayment by the secretary of loans of bankrupt, deceased, or disabled borrowers; treatment of borrowers attending closed schools or falsely certified as eligible to borrow (a) Repayment in Full for Death and Disability.— If a student borrower who has received a loan described in subparagraph (A) or (B) of section 428(a)(1) dies or becomes permanently and totally disabled (as determined in accordance with regulations of the Secretary), then the Secretary shall discharge the borrower’s liability on the loan by repaying the amount owed on the loan. “(b) Repayment of Amount Subject to Bankruptcy Action.— If the collection of a loan described in subparagraph (A) or (B) of section 428(a)(1) or sections 428A, 428B, 428C, or 428H is stayed in any action under title 11, United States Code, the Secretary shall repay the unpaid balance of principal and interest owed on the loan. “(c) Discharge.— “(1) In general.— If a student borrower who received, on or after January 1, 1986, a loan made, insured, or guaranteed under this part is unable to complete the program in which the borrower is enrolled due to the closure of the institution or if such student’s eligibility to borrow under this part was falsely certified by the eligible institution, then the Secretary shall discharge the borrower’s liability on the loan (including interest and collection fees) by repaying the amount owed on the loan and shall subsequently pursue any claim available to such borrower against the institution and its affiliates and principals or settle the loan obligation pursuant to the financial responsibility authority under subpart 3 of part H. “(2) Assignment.— A borrower whose loan has been discharged pursuant to this subsection shall be deemed to have assigned to the United States the right to a loan refund up to the amount discharged against the institution and its affiliates and principals. “(3) Eligibility for additional assistance.— The period of a student’s attendance at an institution at which the student was unable to complete a course of study due to the closing of the institution shall not be considered for purposes of calculating the student’s period of eligibility for additional assistance under this title. “(4) Special rule.— A borrower whose loan has been discharged pursuant to this subsection shall not be precluded from receiving additional grants, loans, or work assistance under this title for which the borrower would be otherwise eligible (but for the default on such discharged loan). “(5) Reporting.— The Secretary shall report to credit bureaus with respect to loans which have been discharged pursuant to this subsection. “(d) Repayment of Loans to Parents.— If a student on whose behalf a parent has received a loan described in section 428B dies, then the Secretary shall discharge the borrower’s liability on the loan by repaying the amount owed on the loan.”.

3. 1993

   Higher Education Technical Amendments of 1993

   Pub. L. 103–208 § 2(c)(63) · 107 Stat. 2457

   Amended · 20 U.S.C. § 1087(b)

   Pub. L. 103–208, § 2(c)(63), amended heading and text of subsec. (b) generally. Prior to amendment, text read as follows: “If the collection of a loan described in subparagraph (A) or (B) of section 1078(a)(1) of this title or sections 1078–1, 1078–2, 1078–3, or 1078–8 of this title is stayed in any action under title 11, the Secretary shall repay the unpaid balance of principal and interest owed on the loan.”

   Source evidence

   Code amendment note
   Subsec. (b). Pub. L. 103–208, § 2(c)(63), amended heading and text of subsec. (b) generally. Prior to amendment, text read as follows: “If the collection of a loan described in subparagraph (A) or (B) of section 1078(a)(1) of this title or sections 1078–1, 1078–2, 1078–3, or 1078–8 of this title is stayed in any action under title 11, the Secretary shall repay the unpaid balance of principal and interest owed on the loan.”

   Enacted provision · exact public law section
   (63) in section 437, by amending subsection (b) to read 20 USC 1087. as follows: “(b) Payment of Claims on Loans in Bankruptcy.— The Secretary shall pay to the holder of a loan described in section 428(a)(1) (A) or (B), 428A, 428B, 428C, or 428H, the amount of the unpaid balance of principal and interest owed on such loan— “(1) when the borrower files for relief under chapter 12 or 13 of title 11, United States Code; “(2) when the borrower who has filed for relief under chapter 7 or 11 of such title commences an action for a determination of dischargeability under section 523(a)(8)(B) of such title; or “(3) for loans described in section 523(a)(8)(A) of such title, when the borrower files for relief under chapter 7 or 11 of such title.”;

4. 1993

   Higher Education Technical Amendments of 1993

   Pub. L. 103–208 § 2(c)(64) · 107 Stat. 2457

   1. Substituted · 20 U.S.C. § 1087(c)(1)

      Pub. L. 103–208, § 2(c)(64), substituted “If a borrower” for “If a student borrower”

   2. Substituted · 20 U.S.C. § 1087(c)(1)

      Pub. L. 103–208, § 2(c)(64), substituted “under this part and the student borrower, or the student on whose behalf a parent borrowed, is unable” for “under this part is unable”

   3. Substituted · 20 U.S.C. § 1087(c)(1)

      Pub. L. 103–208, § 2(c)(64), substituted “in which such student is enrolled” for “in which the borrower is enrolled”

   Source evidence

   Code amendment note
   Subsec. (c)(1). Pub. L. 103–208, § 2(c)(64), substituted “If a borrower” for “If a student borrower”, “under this part and the student borrower, or the student on whose behalf a parent borrowed, is unable” for “under this part is unable”, and “in which such student is enrolled” for “in which the borrower is enrolled”.

   Enacted provision · exact public law section
   (64) in section 437(c)(1)— (A) by striking “If a student borrower” and inserting “If a borrower”; (B) by striking “under this part is unable” and inserting “under this part and the student borrower, or the student on whose behalf a parent borrowed, is unable”; and (C) by striking “in which the borrower is enrolled” and inserting “in which such student is enrolled”; and

5. 1993

   Higher Education Technical Amendments of 1993

   Pub. L. 103–208 § 2(c)(65) · 107 Stat. 2457

   Inserted · 20 U.S.C. § 1087(c)(4)

   Pub. L. 103–208, § 2(c)(65), inserted at end “The amount discharged under this subsection shall be treated the same as loans under section 1087ee(a)(5) of this title.”

   Source evidence

   Code amendment note
   Subsec. (c)(4). Pub. L. 103–208, § 2(c)(65), inserted at end “The amount discharged under this subsection shall be treated the same as loans under section 1087ee(a)(5) of this title.”

   Enacted provision · exact public law section
   (65) in section 437(c)(4), by adding at the end the following new sentence: “The amount discharged under this subsection shall be treated the same as loans under section 465(a)(5) of this title.”;

6. 1998

   Higher Education Amendments of 1998

   Pub. L. 105–244 title IV § 431 · 112 Stat. 1581

   1. Inserted · 20 U.S.C. § 1087(c)(1)

      Pub. L. 105–244 inserted “or if the institution failed to make a refund of loan proceeds which the institution owed to such student’s lender,” after “falsely certified by the eligible institution,”

   2. Inserted · 20 U.S.C. § 1087(c)(1)

      Pub. L. 105–244 inserted at end “In the case of a discharge based upon a failure to refund, the amount of the discharge shall not exceed that portion of the loan which should have been refunded. The Secretary shall report to the Committee on Education and the Workforce of the House of Representatives and the Committee on Labor and Human Resources of the Senate annually as to the dollar amount of loan discharges attributable to failures to make refunds.”

   Source evidence

   Code amendment note
   Subsec. (c)(1). Pub. L. 105–244 inserted “or if the institution failed to make a refund of loan proceeds which the institution owed to such student’s lender,” after “falsely certified by the eligible institution,” and inserted at end “In the case of a discharge based upon a failure to refund, the amount of the discharge shall not exceed that portion of the loan which should have been refunded. The Secretary shall report to the Committee on Education and the Workforce of the House of Representatives and the Committee on Labor and Human Resources of the Senate annually as to the dollar amount of loan discharges attributable to failures to make refunds.”

   Enacted provision · exact public law section
   SEC. 431. DISCHARGE. Section 437(c)(1) (20 U.S.C. 1087(c)(1)) is amended— (1) by inserting after “falsely certified by the eligible institution,” the following: “or if the institution failed to make are fund of loan proceeds which the institution owed to such student’s lender,”; and (2) by adding at the end the following new sentences: “In the case of a discharge based upon a failure to refund, the amount of the discharge shall not exceed that portion of the loan which should have been refunded. The Secretary Reports. shall report to the Committee on Education and the Workforce of the House of Representatives and the Committee on Labor and Human Resources of the Senate annually as to the dollar amount of loan discharges attributable to failures to make refunds.”.

7. 2006

   Higher Education Reconciliation Act of 2005

   Pub. L. 109–171 § 8012(1) · 120 Stat. 4

   Substituted · 20 U.S.C. § 1087

   Pub. L. 109–171, § 8012(1), in section catchline, substituted “schools that fail to provide a refund, attending closed schools, or falsely certified as eligible to borrow” for “closed schools or falsely certified as eligible to borrow”

   Source evidence

   Code amendment note
   Pub. L. 109–171, § 8012(1), in section catchline, substituted “schools that fail to provide a refund, attending closed schools, or falsely certified as eligible to borrow” for “closed schools or falsely certified as eligible to borrow”.

   Enacted provision · exact public law section
   (1) in the section heading, by striking “CLOSED SCHOOLS OR FALSELY CERTIFIED AS ELIGIBLE TO BORROW” and inserting “SCHOOLS THAT FAIL TO PROVIDE A REFUND, ATTENDING CLOSED SCHOOLS, OR FALSELY CERTIFIED AS ELIGIBLE TO BORROW”; and

8. 2006

   Higher Education Reconciliation Act of 2005

   Pub. L. 109–171 § 8012(2) · 120 Stat. 4

   Inserted · 20 U.S.C. § 1087(c)(1)

   Pub. L. 109–171, § 8012(2), inserted “or was falsely certified as a result of a crime of identity theft” after “falsely certified by the eligible institution” in first sentence

   Source evidence

   Code amendment note
   Subsec. (c)(1). Pub. L. 109–171, § 8012(2), inserted “or was falsely certified as a result of a crime of identity theft” after “falsely certified by the eligible institution” in first sentence.

   Enacted provision · exact public law section
   (2) in the first sentence of subsection (c)(1), by inserting “or was falsely certified as a result of a crime of identity theft” after “falsely certified by the eligible institution”.

9. 2008

   Higher Education Opportunity Act

   Pub. L. 110–315 § 437(a)(3) · 122 Stat. 3078

   Changed · 20 U.S.C. § 1087(a)

   Pub. L. 110–315, § 437(a)(3), which directed insertion of “The Secretary may develop such safeguards as the Secretary determines necessary to prevent fraud and abuse in the discharge of liability under this subsection. Notwithstanding any other provision of this subsection, the Secretary may promulgate regulations to reinstate the obligation of, and resume collection on, loans discharged under this subsection in any case in which—

   Source evidence

   Code amendment note
   Subsec. (a). Pub. L. 110–315, § 437(a)(3), which directed insertion of “The Secretary may develop such safeguards as the Secretary determines necessary to prevent fraud and abuse in the discharge of liability under this subsection. Notwithstanding any other provision of this subsection, the Secretary may promulgate regulations to reinstate the obligation of, and resume collection on, loans discharged under this subsection in any case in which—

   “(A) a borrower received a discharge of liability under this subsection and after the discharge the borrower— “(i) receives a loan made, insured, or guaranteed under this subchapter; or “(ii) has earned income in excess of the poverty line; or “(B) the Secretary determines necessary.” at the end of subsec. (a), was executed by making the insertion at the end of par. (1) to reflect the probable intent of Congress, notwithstanding the addition of par. (2) prior to the effective date of this amendment.

   Enacted provision · exact public law section
   (3) by adding at the end the following: “The Secretary may develop such safeguards as the Secretary determines necessary to prevent fraud and abuse in the discharge of liability under this subsection. Notwithstanding any other provision of this subsection, the Secretary may promulgate regulations to reinstate the obligation of, and resume collection on, loans discharged under this subsection in any case in which— “(A) a borrower received a discharge of liability under this subsection and after the discharge the borrower— “(i) receives a loan made, insured, or guaranteed under this title; or “(ii) has earned income in excess of the poverty line; or “(B) the Secretary determines necessary.” .

   Effective date note
   Pub. L. 111–39, title IV, § 402(e)(2), July 1, 2009, 123 Stat. 1943, provided that: “The amendments made by paragraph (1) [amending this section] shall be effective as if enacted as part of the amendments in section 437(a) of the Higher Education Opportunity Act (Public Law 110–315) [amending this section], and shall take effect on July 1, 2010.”

10. 2008

    Higher Education Opportunity Act

    Pub. L. 110–315 § 437(a)(1) · 122 Stat. 3078

    1. Amended · 20 U.S.C. § 1087(a)

       Pub. L. 110–315, § 437(a)(1), (2), designated existing provisions as par. (1)

    2. Inserted · 20 U.S.C. § 1087(a)

       Pub. L. 110–315, § 437(a)(1), (2), inserted par. (1) heading

    3. Inserted · 20 U.S.C. § 1087(a)

       Pub. L. 110–315, § 437(a)(1), (2), inserted “, or if a student borrower who has received such a loan is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death, has lasted for a continuous period of not less than 60 months, or can be expected to last for a continuous period of not less than 60 months” after “of the Secretary),”

    Target inherited from the preceding amendment note.

    Source evidence

    Code amendment note
    Pub. L. 110–315, § 437(a)(1), (2), designated existing provisions as par. (1), inserted par. (1) heading, and inserted “, or if a student borrower who has received such a loan is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death, has lasted for a continuous period of not less than 60 months, or can be expected to last for a continuous period of not less than 60 months” after “of the Secretary),”.

    Enacted provision · exact public law section
    (1) by striking “(a) Repayment in Full for Death and Disability.—If a” and inserting the following: “(a) Repayment in Full for Death and Disability.— “(1) In general.— If a” ;

    Effective date note
    Pub. L. 111–39, title IV, § 402(e)(2), July 1, 2009, 123 Stat. 1943, provided that: “The amendments made by paragraph (1) [amending this section] shall be effective as if enacted as part of the amendments in section 437(a) of the Higher Education Opportunity Act (Public Law 110–315) [amending this section], and shall take effect on July 1, 2010.”

11. 2008

    Higher Education Opportunity Act

    Pub. L. 110–315 § 437(b) · 122 Stat. 3078

    Added · 20 U.S.C. § 1087(a)(2)

    Pub. L. 110–315, § 437(b), added par. (2)

    Source evidence

    Code amendment note
    Subsec. (a)(2). Pub. L. 110–315, § 437(b), added par. (2).

    Enacted provision · exact public law section
    (b) Disability Determinations.— Section 437(a) (20 U.S.C. 1087(a)) is further amended by adding at the end the following: “(2) Disability determinations.— A borrower who has been determined by the Secretary of Veterans Affairs to be unemployable due to a service-connected condition and who provides documentation of such determination to the Secretary of Education, shall be considered permanently and totally disabled for the purpose of discharging such borrower’s loans under this subsection, and such borrower shall not be required to present additional documentation for purposes of this subsection.” .

    Effective date note
    Pub. L. 111–39, title IV, § 402(e)(2), July 1, 2009, 123 Stat. 1943, provided that: “The amendments made by paragraph (1) [amending this section] shall be effective as if enacted as part of the amendments in section 437(a) of the Higher Education Opportunity Act (Public Law 110–315) [amending this section], and shall take effect on July 1, 2010.”

12. 2008

    Higher Education Opportunity Act

    Pub. L. 110–315 § 103(b)(7) · 122 Stat. 3078

    Substituted · 20 U.S.C. § 1087(c)(1)

    Pub. L. 110–315, § 103(b)(7), substituted “authorizing committees” for “Committee on Education and the Workforce of the House of Representatives and the Committee on Labor and Human Resources of the Senate”

    Source evidence

    Code amendment note
    Subsec. (c)(1). Pub. L. 110–315, § 103(b)(7), substituted “authorizing committees” for “Committee on Education and the Workforce of the House of Representatives and the Committee on Labor and Human Resources of the Senate”.

    Enacted provision · exact public law section
    (7) in section 437(c)(1) (20 U.S.C. 1087(c)(1)), by striking “Committee on Education and the Workforce of the House of Representatives and the Committee on Labor and Human Resources of the Senate” and inserting “authorizing committees”;

    Effective date note
    Pub. L. 111–39, title IV, § 402(e)(2), July 1, 2009, 123 Stat. 1943, provided that: “The amendments made by paragraph (1) [amending this section] shall be effective as if enacted as part of the amendments in section 437(a) of the Higher Education Opportunity Act (Public Law 110–315) [amending this section], and shall take effect on July 1, 2010.”

13. 2008

    Higher Education Opportunity Act

    Pub. L. 110–315 § 432(b)(4) · 122 Stat. 3078

    Substituted · 20 U.S.C. § 1087(c)(5)

    Pub. L. 110–315, § 432(b)(4), substituted “consumer reporting agencies” for “credit bureaus”

    Source evidence

    Code amendment note
    Subsec. (c)(5). Pub. L. 110–315, § 432(b)(4), substituted “consumer reporting agencies” for “credit bureaus”.

    Enacted provision · exact public law section
    (4) in section 437(c)(5) (20 U.S.C. 1087(c)(5)), by striking “credit bureaus” and inserting “consumer reporting agencies”;

    Effective date note
    Pub. L. 111–39, title IV, § 402(e)(2), July 1, 2009, 123 Stat. 1943, provided that: “The amendments made by paragraph (1) [amending this section] shall be effective as if enacted as part of the amendments in section 437(a) of the Higher Education Opportunity Act (Public Law 110–315) [amending this section], and shall take effect on July 1, 2010.”

14. 2009

    Pub. L. 111–39 title IV § 402(e)(1) · 123 Stat. 1934

    1. Substituted · 20 U.S.C. § 1087(a)(1)

       Pub. L. 111–39 substituted “Secretary), or if” for “Secretary),, or if” in introductory provisions

    2. Inserted · 20 U.S.C. § 1087(a)(1)

       Pub. L. 111–39 inserted “the reinstatement and resumption to be” after “determines” in subpar. (B)

    Source evidence

    Code amendment note
    Subsec. (a)(1). Pub. L. 111–39 substituted “Secretary), or if” for “Secretary),, or if” in introductory provisions and inserted “the reinstatement and resumption to be” after “determines” in subpar. (B).

    Enacted provision · exact public law section
    (1) In general.— Section 437(a)(1) (20 U.S.C. 1087(a)(1)), as amended by section 437 of the Higher Education Opportunity Act (Public Law 110–315), is amended— (A) in the matter preceding subparagraph (A), by striking “Secretary),, or if” and inserting “Secretary), or if”; and (B) in subparagraph (B), by inserting “the reinstatement and resumption to be” after “determines”.

    Effective date note
    Pub. L. 111–39, title IV, § 402(e)(2), July 1, 2009, 123 Stat. 1943, provided that: “The amendments made by paragraph (1) [amending this section] shall be effective as if enacted as part of the amendments in section 437(a) of the Higher Education Opportunity Act (Public Law 110–315) [amending this section], and shall take effect on July 1, 2010.”

15. 2019

    Fostering Undergraduate Talent by Unlocking Resources for Education Act

    Pub. L. 116–91 § 5 · 133 Stat. 1189

    Added · 20 U.S.C. § 1087(a)(3)

    Pub. L. 116–91 added par. (3)

    Source evidence

    Code amendment note
    Subsec. (a)(3). Pub. L. 116–91 added par. (3).

    Enacted provision · exact public law section
    SEC. 5. AUTOMATIC INCOME MONITORING PROCEDURES AFTER A TOTAL AND PERMANENT DISABILITY DISCHARGE.   Section 437(a) of the Higher Education Act of 1965 (20 U.S.C. 1087(a)) is amended by adding at the end the following: “(3) Automatic income monitoring.— “(A) In general.— The Secretary shall establish and implement, with respect to any borrower described in subparagraph (B), procedures to— “(i) use return information disclosed under section 6103(l)(13) of the Internal Revenue Code of 1986, pursuant to approval provided under section 494, to determine the borrower’s continued eligibility for the loan discharge described in subparagraph (B); “(ii) allow the borrower, at any time, to opt out of disclosure under such section 6103(l)(13) and instead provide such information as the Secretary may require to determine the borrower’s continued eligibility for such loan discharge; and “(iii) provide the borrower with an opportunity to update the return information so disclosed before determination of such borrower’s continued eligibility for such loan discharge. “(B) Applicability.— Subparagraph (A) shall apply— “(i) to each borrower of a loan that is discharged due to the total and permanent disability (within the meaning of this subsection) of the borrower; and “(ii) during the period beginning on the date on which such loan is so discharged and ending on the first day on which such loan may no longer be reinstated.” .

21 of 22 references resolved to an enrolled provision · 1 partial