REPAYMENTS BY SECRETARY.

SEC. 428. REPAYMENTS BY SECRETARY. Section 437 of the Act (20 U.S.C. 1087) is amended to read as follows: “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 “Sec. 437. (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. 106 STAT. 552 “(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.”.