[Code of Federal Regulations]
[Title 34, Volume 3]
[Revised as of July 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 34CFR685.206]

[Page 840-841]
 
                           TITLE 34--EDUCATION
 
             CHAPTER VI--OFFICE OF POSTSECONDARY EDUCATION,
                         DEPARTMENT OF EDUCATION
 
PART 685--WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM--Table of Contents
 
                     Subpart B--Borrower Provisions
 
Sec. 685.206  Borrower responsibilities and defenses.

    (a) The borrower shall give the school the following information as 
part of the origination process for a Direct Subsidized, Direct 
Unsubsidized, or Direct PLUS Loan:
    (1) A statement, as described in 34 CFR part 668, that the loan will 
be used for the cost of the student's attendance.
    (2) Information demonstrating that the borrower is eligible for the 
loan.
    (3) Information concerning the outstanding FFEL Program and Direct 
Loan Program loans of the borrower and, for a parent borrower, of the 
student, including any Federal Consolidation Loan or Direct 
Consolidation Loan.
    (4) A statement authorizing the school to release to the Secretary 
information relevant to the student's eligibility to borrow or to have a 
parent borrow on the student's behalf (e.g., the student's enrollment 
status, financial assistance, and employment records).
    (b)(1) The borrower shall promptly notify the Secretary of any 
change of name, address, student status to less than half-time, 
employer, or employer's address; and
    (2) The borrower shall promptly notify the school of any change in 
address during enrollment.
    (c) Borrower defenses. (1) In any proceeding to collect on a Direct 
Loan, the borrower may assert as a defense against repayment, any act or 
omission of the school attended by the student that would give rise to a 
cause of action against the school under applicable State law. These 
proceedings include, but are not limited to, the following:
    (i) Tax refund offset proceedings under 34 CFR 30.33.
    (ii) Wage garnishment proceedings under section 488A of the Act.
    (iii) Salary offset proceedings for Federal employees under 34 CFR 
part 31.
    (iv) Credit bureau reporting proceedings under 31 U.S.C. 3711(f).
    (2) If the borrower's defense against repayment is successful, the 
Secretary notifies the borrower that the borrower is relieved of the 
obligation to repay all or part of the loan and associated costs and 
fees that the borrower would otherwise be obligated to pay. The 
Secretary affords the borrower such further relief as the Secretary 
determines is appropriate under the circumstances. Further relief may 
include, but is not limited to, the following:
    (i) Reimbursing the borrower for amounts paid toward the loan 
voluntarily or through enforced collection.
    (ii) Determining that the borrower is not in default on the loan and 
is eligible to receive assistance under title IV of the Act.
    (iii) Updating reports to credit bureaus to which the Secretary 
previously made adverse credit reports with regard to the borrower's 
Direct Loan.
    (3) The Secretary may initiate an appropriate proceeding to require 
the school whose act or omission resulted in the borrower's successful 
defense against repayment of a Direct Loan to pay to the Secretary the 
amount of the loan to which the defense applies. However, the Secretary 
does not initiate such a proceeding after the period for the retention 
of records described in Sec. 685.309(c) unless the school received

[[Page 841]]

actual notice of the claim during that period.

(Approved by the Office of Management and Budget under control number 
1845-0021)

(Authority: 20 U.S.C. 1087a et seq.)

[59 FR 61690, Dec. 1, 1994, as amended at 60 FR 33345, June 28, 1995; 64 
FR 58972, Nov. 1, 1999]