20 USC 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

U.S Code last checked for updates: Aug 21, 2025

§ 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

(a)

Repayment in full for death and disability

(1)

In general

If a student borrower who has received a loan described in subparagraph (A) or (B) of section 1078(a)(1) of this title dies or becomes permanently and totally disabled (as determined in accordance with regulations of the Secretary), 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 then the Secretary shall discharge the borrower’s liability on the loan by repaying the amount owed on the loan. 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 the reinstatement and resumption to be necessary.

(2)

Disability determinations

(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 title 26, pursuant to approval provided under section 1098h of this title, 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.

(b)

Payment of claims on loans in bankruptcy

The Secretary shall pay to the holder of a loan described in section 1078(a)(1)(A) or (B), 1078–1,1

 See References in Text note below.

1078–2, 1078–3, or 1078–8 of this title, 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;

(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.

(c)

Discharge

(1)

In general

(2)

Assignment

(3)

Eligibility for additional assistance

(4)

Special rule

(5)

Reporting

(d)

Repayment of loans to parents

(Pub. L. 89–329, title IV, § 437, as added Pub. L. 99–498, title IV, § 402(a), Oct. 17, 1986, 100 Stat. 1414; amended Pub. L. 102–325, title IV, § 428, July 23, 1992, 106 Stat. 551; Pub. L. 103–208, § 2(c)(63)–(65), Dec. 20, 1993, 107 Stat. 2469; Pub. L. 105–244, title IV, § 431, Oct. 7, 1998, 112 Stat. 1709;

cite as: 20 USC 1087