Student Loan Abuse Prevention Act of 1989

Student Loan Abuse Prevention Act of 1989 - Amends the Higher Education Act of 1965 (the Act) to authorize the Secretary of Education (the Secretary) to take emergency action to suspend disbursement of funds to an eligible institution under title IV (Student Assistance) of the Act, to prevent misuse of funds under specified circumstances.

Directs the Secretary, whenever eligibility of an institution has been terminated, to: (1) carry out a program review of each affiliated and successor institution; and (2) if any such institution is committing similar violations, carry out a proceeding to limit, suspend, or terminate eligibility or take emergency action suspending disbursement of funds.

Terminates the effectiveness of any program participation agreement with an institution after it undergoes a change of ownership resulting in a change of control, if the Secretary determines that the new owner, a member of the new owner's family, or a current business associate of the new owner was substantially involved in the ownership or administration of another institution that has: (1) been limited, suspended, or terminated by the Secretary; (2) declared bankruptcy; (3) failed to pay the Department of Education a liability for program management; or (4) failed to pay refunds owed to students or lenders on behalf of students. Requires that an institution be given the opportunity to demonstrate, by a preponderance of evidence, that it continues to be eligible for student assistance purposes, if the Secretary determines not to permit its eligibility to resume after the change of control.

Prohibits institutions, under student aid program participation agreements, from using any independent contractor or anyone other than a salaried employee, except in specified circumstances, to conduct any canvassing, surveying, recruiting, or similar activities, or to make final determinations that an individual meets the institution's admissions or financial aid eligibility requirements.

Authorizes the Secretary to prescribe regulations for civil penalties or the limitation, suspension (up to 60 days), or termination of eligibility of an institution on account of violations by an individual or organization having a contract to administer any aspect of such institution's student assistance program.

Requires the Secretary to establish the National Student Loan Data System and to assure that such computerized System is operational by October 1, 1989. (Such system is currently authorized but not mandated.)