preserving students’ state law defenses for FISLP loans “seems a sound way to protect the interests of student borrowers and to deter lenders from abusing the program”
How later courts described this case
- preserving students’ state law defenses for FISLP loans “seems a sound way to protect the interests of student borrowers and to deter lenders from abusing the program”
Written by the judges who cited it.
The opinion
WILKEY, Circuit Judge,
concurring in the judgment:
Under the Guaranteed Student Loan Program, Title IV-B of the Higher Education Act, 20 U.S.C. §§ 1071 — 1087-4 (1976), the government undertakes to answer for the debt of student borrowers in case of default. The government’s obligations under this program “bring it squarely within hornbook definitions of a guarantor.” United States v. Bellard, 674 F.2d 330, 333 (5th Cir.1982). Accord United States v. Frisk, 675 F.2d 1079, 1082-83 (9th Cir.1982) (per curiam). As Judge McGowan’s opinion acknowledges, when a guarantor pays the principal’s obligations, “it is entitled to reimbursement subject only to the principal’s defenses to the obligation known to the surety when it paid the creditor.” Majority Opinion, supra at 1481.
I seriously question whether the provisions of the Higher Education Act cited by Judge McGowan, which permit the Office of Education (OE) to exercise forbearance or waive claims in individual cases, 20 U.S.C. §§ 1080 (c) & 1082(a)(6), also permit the OE to throw away by general regulation all its statutory rights as a guarantor. The statute fully protects the government’s rights as a guarantor; the regulation abandons them.
At any rate, we need not reach this question to resolve the case at hand. Gary Griffin had defenses to raise, and he raised them prior to payment according to instructions in a personal letter sent to him by the OE. His defenses were thereby preserved. With this ground of decision readily available, I find it unnecessary to make broad pronouncements concerning the scope and efficacy of a regulation discussed neither by the parties to this proceeding nor by the district court below. Accordingly, I concur in the result only.