To amend the Higher Education Act of 1965 to establish limitations on debt collection practices under that Act.

Amends the Higher Education Act of 1965 (HEA) to establish limitations on debt collection practices under HEA.

Prohibits garnishment or other actions to collect on defaulted student loans unless the net income of the borrower and spouse (including any cash benefits received under a needs-based government assistance program) exceeds 150 percent of the poverty level for the relevant family size. Sets other procedural requirements for garnishments and for tax refund intercepts to collect such debts.

Requires eligible lenders or loan servicing agents to provide student borrowers with information about their rights to forbearance or deferment. Provides for cure of delinquency and cessation of collection activity if a borrower eligible for forbearance or deferment was not adequately informed of his or her right to apply or was not given assistance in completing the application. Provides for removal from default status if the borrower is granted a forbearance or deferment.

Directs the Secretary of Education (the Secretary) to discharge the student borrower's liability and repay the loan in cases of where the institution has engaged in fraud, misrepresentation, or any violation of State or Federal law in connection with soliciting, offering, contracting for, or providing instruction.

Subjects lenders, guaranty agencies, and any other persons involved in collecting a student loan under title IV of HEA to the same due process requirements that would apply to the Secretary if the Secretary were collecting the loan.