Posted Date: June 16, 2016

Author:  Lynn B. Mahaffie, Deputy Assistant Secretary for Policy, Planning, and Innovation Delegated the Duties of Assistant Secretary for Postsecondary Education

Subject: Notice of Proposed Rulemaking on the Borrower Defense to Repayment Regulations under Title IV of the Higher Education Act of 1965, as amended.

On June 16, 2016, the U.S. Department of Education published a notice in the Federal Register (81 FR 39329) proposing to amend the regulations governing the William D. Ford Federal Direct Loan (Direct Loan) Program to establish a new Federal standard and a process for determining whether a borrower has a defense to repayment on a loan based on an act or omission of a school.

The Secretary proposes to amend the Student Assistance General Provisions regulations to revise the financial responsibility standards and add disclosure requirements for schools.

The Secretary also proposes to amend the Direct Loan Program regulations by prohibiting participating schools from using certain contractual provisions regarding dispute resolution processes, such as mandatory pre-dispute arbitration agreements or class action waivers, and to require certain notifications and disclosures by schools regarding their use of arbitration.

Finally, the Secretary proposes to amend the discharge provisions in the Federal Perkins Loan, Direct Loan, Federal Family Education Loan (FFEL), and Teacher Education Assistance for College and Higher Education (TEACH) Grant programs; and to amend the Direct Loan Program regulations to codify our current policy regarding the impact that discharges have on the 150 percent Direct Subsidized Loan Limit.

You may submit comments on the proposed regulations electronically through

We must receive your comments no later than August 1, 2016. We attached a pdf copy of the NPRM to this announcement.


Notice of Proposed Rulemaking on the Borrower Defense to Repayment Regulation in PDF Format, 193KB, 94 Pages


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