Prohibition on institutions limiting student legal action

(a) Enforcement of arbitration agreements (1) In general Chapter 1 of title 9, United States Code, (relating to the enforcement of arbitration agreements) shall not apply to an enrollment agreement made between a student and an institution of higher education. (2) Definition In this section, the term institution of higher education has the meaning given such term in section 102 of the Higher Education Act of 1965 (20 U.S.C. 1002). (b) Prohibition on limitations on ability of students To pursue claims against certain institutions of higher education Section 487(a) (20 U.S.C. 1094(a)) is amended by adding at the end the following: (30) The institution— (A) will not require any student to agree to, and will not enforce, any limitation or restriction (including a limitation or restriction on any available choice of applicable law, a jury trial, or venue) on the ability of a student to pursue a claim, individually or with others, against an institution in court; and (B) will provide written notification to students enrolled at the institution that any limitation or restriction on the ability of a student to pursue a claim, individually or with others, against an institution in court contained in any enrollment or other agreement with a student will not be enforced.. (c) Private right of action (1) In general (A) Private right of action A violation described in subparagraph (B) shall be subject to a private right of action enforceable by a student or former student of an institution of higher education, on behalf of such individual or such individual and a class, in an appropriate district court of the United States or any other court of competent jurisdiction that also has jurisdiction over the defendant. The student or former student may seek any relief provided under section 455(h) for such violation, or any remedies otherwise available to the individual under law and equity. (B) Violations A violation described in this subparagraph is any of the following: (i) A substantial misrepresentation, including a substantial omission of fact. (ii) A violation of section 487(a)(20) of the Higher Education Act of 1965 (20 U.S.C. 1094(a)(20)). (iii) A violation of the default rate regulations promulgated by the Secretary under section 435(m)(3) of the Higher Education Act of 1965 (20 U.S.C. 1085(m)(3)). (iv) A violation of the program integrity regulations promulgated by the Secretary under the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.), including regulations promulgated to carry out section 102, section 455, and part H of such Act. (2) Amount of damages (A) In general Any institution of higher education, third party servicer that contracts with such institution, or third party contractor that commits a substantial misrepresentation may be held liable to a student or former student of that institution in an amount equal to the sum of— (i) any actual damage sustained by such individual as a result of each substantial misrepresentation; (ii) any additional damages as the court may allow; and (iii) in the case of any successful action to enforce the foregoing liability, the costs of the action, together with a reasonable attorney’s fee as determined by the court. (B) Ability to assess punitive damages (i) In general On a finding by the court that an institution of higher education, third party servicer that contracts with such institution, or third party contractor has committed a violation described in paragraph (1)(B) with actual or constructive knowledge or reckless disregard for such violation, the court may assess punitive damages not to exceed threefold the sum of actual damages sustained by the plaintiff or class, including court costs and a reasonable attorney’s fee. (ii) Factors considered by the court In determining the amount of liability in any action under clause (i), the court shall consider, among other relevant factors— (I) in any individual action under this subsection, the frequency and persistence of noncompliance by the institution of higher education, third party servicer that contracts with such institution, or third party contractor and the nature of such noncompliance; or (II) in any class action under this subsection, in addition to the factors listed in subclause (I), the financial resources of the institution of higher education, third party servicer that contracts with such institution, or third party contractor and the number of persons adversely affected. (3) Jurisdiction An action to enforce any liability created by this subsection may be brought in any appropriate United States district court without regard to the amount in controversy, or in any other court of competent jurisdiction. (d) Prohibition on transcript withholding Section 487(a) (20 U.S.C. 1094(a)), as amended by subsection (b), is further amended by adding at the end the following: (31) The institution— (A) will not withhold official transcripts related to a balance owed by the student to the institution; and (B) will provide an official transcript to a student upon request by the student..