; (II) the Secretary shall discharge the appropriate portion of the Direct Consolidation Loan if the borrower is determined to have a borrower defense with respect to a loan made under this part or part B that was paid off by the Direct Consolidation Loan; and (III) the Secretary shall return to the borrower any payments made by the borrower or otherwise recovered on the Direct Consolidation Loan or the loans that were paid off by the Direct Consolidation Loan that exceed the amount owed on that portion of the Direct Consolidation Loan that was not discharged, if— (aa) the borrower is determined to have a borrower defense with respect to a loan made under this part or part B that was paid off by the Direct Consolidation Loan; and (bb) the payment was made directly to the Secretary on the loan. (iii) PLUS Loan In the case of a Direct PLUS Loan made on behalf of a student, the Secretary shall consider a borrower defense claim related to the student on whose behalf the Direct PLUS Loan was borrowed.Any amounts discharged will be applied to the parent or borrower of the Direct PLUS Loan. (B) Establishing a borrower defense A borrower has established a borrower defense if— (i) the borrower (whether as an individual or as a member of a group or class) or a government agency, has obtained against the institution of higher education a judgment relating to the borrower's claim based on State or Federal law in a court or administrative tribunal of competent jurisdiction; (ii) the institution of higher education that the borrower attended using a loan under this part failed to perform the institution’s obligations under the terms of a contract with the borrower; (iii) the borrower was subject to any act or omission of the institution related to the making of the loan for enrollment at the institution or the provision of educational services for which the loan was provided that would give rise to a cause of action against the institution under applicable State law