Repay Act of 2021

II 117TH CONGRESS 1ST SESSION S. 821 To amend the Higher Education Act of 1965 to establish a simplified income- driven repayment plan, and for other purposes. IN THE SENATE OF THE UNITED STATES MARCH 18, 2021 Mr. BURR (for himself and Mr. KING) introduced the following bill; which was read twice and referred to the Committee on Health, Education, Labor, and Pensions A BILL To amend the Higher Education Act of 1965 to establish a simplified income-driven repayment plan, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Repay Act of 2021’’. 4 SEC. 2. SIMPLIFIED INCOME-DRIVEN REPAYMENT PLAN. 5 Part G of title IV of the Higher Education Act of 6 1965 (20 U.S.C. 1088 et seq.) is amended by inserting 7 after section 493D the following: 8 VerDate Sep 11 2014 20:37 Apr 10, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S821.IS S821 pamtmann on DSKBC07HB2PROD with BILLS 2 •S 821 IS ‘‘SEC. 493E. SIMPLIFIED INCOME-DRIVEN REPAYMENT 1 PLAN. 2 ‘‘(a) DEFINITIONS.—In this section: 3 ‘‘(1) COVERED FEDERAL DIRECT LOAN.—The 4 term ‘covered Federal Direct Loan’ means a Federal 5 Direct Stafford Loan, a Federal Direct Unsubsidized 6 Stafford Loan, a Federal Direct Consolidation Loan 7 (other than a Federal Direct Consolidation Loan 8 whose proceeds were used to discharge the liability 9 of a Federal Direct PLUS loan made on behalf of 10 a dependent student or a loan under section 428B 11 made on behalf of a dependent student), or a Fed- 12 eral Direct PLUS Loan (other than a Federal Di- 13 rect PLUS Loan made on behalf of a dependent stu- 14 dent) made under part D. 15 ‘‘(2) DISCRETIONARY INCOME.—The term ‘dis- 16 cretionary income’ means the amount by which a 17 borrower’s (and the borrower’s spouse, if applicable) 18 annual adjusted gross income exceeds 150 percent of 19 the poverty line applicable to the borrower’s family 20 size. 21 ‘‘(3) DISCRETIONARY INCOME BEND POINT.— 22 The term ‘discretionary income bend point’ means 23 $25,000, adjusted annually for inflation as deter- 24 mined by the Consumer Price Index (as such term 25 VerDate Sep 11 2014 20:37 Apr 10, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S821.IS S821 pamtmann on DSKBC07HB2PROD with BILLS 3 •S 821 IS is defined in section 478(f)) for the previous cal- 1 endar year. 2 ‘‘(4) INCOME-DRIVEN CALCULATION.— 3 ‘‘(A) IN GENERAL.—The term ‘income- 4 driven calculation’, when used with respect to a 5 borrower, means the annual amount due on the 6 total amount of covered Federal Direct Loans, 7 which annual amount is equivalent to— 8 ‘‘(i) 10 percent of the borrower’s dis- 9 cretionary income that is less than the dis- 10 cretionary income bend point, plus 11 ‘‘(ii) 15 percent of the borrower’s dis- 12 cretionary income that is equal to or great- 13 er than the discretionary income bend 14 point. 15 ‘‘(B) ANNUAL CALCULATION.—The cal- 16 culation under subparagraph (A) shall be deter- 17 mined on an annual basis for the duration of 18 the repayment period described in subsection 19 (b). 20 ‘‘(5) NEW BORROWER.—The term ‘new bor- 21 rower’ means a borrower who— 22 ‘‘(A) as of July 1, 2022, has no out- 23 standing balance on a student loan made, in- 24 sured, or guaranteed under part B or D; or 25 VerDate Sep 11 2014 20:37 Apr 10, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S821.IS S821 pamtmann on DSKBC07HB2PROD with BILLS 4 •S 821 IS ‘‘(B) has no outstanding balance on a stu- 1 dent loan made, insured, or guaranteed under 2 part B or D on the date the borrower receives 3 a loan made under part D on or after July 1, 4 2022. 5 ‘‘(b) SIMPLIFIED INCOME-DRIVEN REPAYMENT 6 PLAN AUTHORIZED.— 7 ‘‘(1) IN GENERAL.—The Secretary shall carry 8 out a simplified income-driven repayment program 9 for new borrowers that meets the following require- 10 ments: 11 ‘‘(A) A new borrower of any covered Fed- 12 eral Direct Loan may elect to have the bor- 13 rower’s aggregate monthly payment for all such 14 loans equal to the income-driven calculation, di- 15 vided by 12. 16 ‘‘(B) The holder of such a loan shall apply 17 the borrower’s monthly payment under this sub- 18 section first toward interest due on the loan, 19 next toward any fees due on the loan, and then 20 toward the principal of the loan. 21 ‘‘(C) Any interest due and not paid under 22 subparagraph (B)— 23 ‘‘(i) shall, on Federal Direct Stafford 24 Loans, be paid by the Secretary for a pe- 25 VerDate Sep 11 2014 20:37 Apr 10, 2021 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S821.IS S821 pamtmann on DSKBC07HB2PROD with BILLS 5 •S 821 IS riod of not more than 3 years after the 1 date of the borrower’s election under sub- 2 paragraph (A), except that such period 3 shall not include any period during which 4 the borrower is in deferment due to an eco- 5 nomic hardship described in section 6 435(o); and 7 ‘‘(ii) shall be capitalized— 8 ‘‘(I) in the case of a Federal Di- 9 rect Stafford Loan, subject to clause 10 (i)— 11 ‘‘(aa) at the time the bor- 12 rower ends the election to make 13 simplified income-driven repay- 14 ment under this subsection; or 15 ‘‘(bb) at the time the bor- 16 rower’s monthly payment calcula- 17 tion under subparagraph (A) ex- 18 ceeds the monthly payment cal- 19 culation under the fixed repay- 20 ment plan, based on a 10-year 21 repayment period, when the bor- 22 rower first made the election 23 under subparagraph (A); and 24 VerDate Sep 11 2014 20:37 Apr 10, 2021 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S821.IS S821 pamtmann on DSKBC07HB2PROD with BILLS 6 •S 821 IS ‘‘(II) in the case of a Federal Di- 1 rect Unsubsidized Stafford Loan— 2 ‘‘(aa) at the time the bor- 3 rower ends the election to make 4 simplified income-driven repay- 5 ment under this subsection; or 6 ‘‘(bb) at the time the bor- 7 rower’s monthly payment calcula- 8 tion under subparagraph (A) ex- 9 ceeds the monthly payment cal- 10 culation under the fixed repay- 11 ment plan, based on a 10-year 12 repayment period, when the bor- 13 rower first made the election 14 under subparagraph (A). 15 ‘‘(D) Any principal due and not paid under 16 subparagraph (B) shall be deferred. 17 ‘‘(E) The amount of time a new borrower 18 shall make monthly payments under subpara- 19 graph (A) may exceed 10 years. 20 ‘‘(F) If the borrower no longer wishes to 21 continue the election under this subsection, 22 then— 23 ‘‘(i) the maximum monthly payment 24 required to be paid for all covered Federal 25 VerDate Sep 11 2014 20:37 Apr 10, 2021 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S821.IS S821 pamtmann on DSKBC07HB2PROD with BILLS 7 •S 821 IS Direct Loans shall be equal to the monthly 1 amount calculated under section 2 428(b)(9)(A)(i) or 455(d)(1)(A), based on 3 a 10-year repayment period, when the bor- 4 rower first made the election described in 5 this subsection; and 6 ‘‘(ii) the amount of time the borrower 7 is permitted to repay such loans may ex- 8 ceed 10 years. 9 ‘‘(G) The Secretary shall cancel the out- 10 standing balance of principal and interest due 11 for a new borrower whose balance of principal 12 of covered Federal Direct Loans did not exceed 13 $57,500 on the date the borrower’s repayment 14 period began, or whose balance of principal of 15 covered Federal Direct Loans did not exceed 16 the maximum aggregate amount of loans an 17 independent undergraduate student could bor- 18 row, pursuant to section 428H(d)(4)(B), on the 19 date the borrower’s final covered Federal Direct 20 Loan was disbursed, whichever amount is great- 21 er, if the borrower— 22 ‘‘(i) at any time, elected to participate 23 under subparagraph (A); and 24 ‘‘(ii) for 20 years— 25 VerDate Sep 11 2014 20:37 Apr 10, 2021 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S821.IS S821 pamtmann on DSKBC07HB2PROD with BILLS 8 •S 821 IS ‘‘(I) made monthly payments 1 pursuant to subparagraph (A); or 2 ‘‘(II) was in deferment due to an 3 economic hardship described in sec- 4 tion 435(o). 5 ‘‘(H) The Secretary shall cancel the out- 6 standing balance of principal and interest due 7 for a new borrower whose balance of principal 8 of covered Federal Direct Loans exceeded 9 $57,500 on the date the borrower’s repayment 10 period began, or whose balance of principal of 11 covered Federal Direct Loans exceeded the 12 maximum aggregate amount of loans an inde- 13 pendent undergraduate student could borrow, 14 pursuant to section 428H(d)(4)(B), on the date 15 the borrower’s final covered Federal Direct 16 Loan was disbursed, whichever amount is great- 17 er, if the borrower— 18 ‘‘(i) at any time, elected to participate 19 under subparagraph (A); and 20 ‘‘(ii) for 25 years— 21 ‘‘(I) made monthly payments 22 pursuant to subparagraph (A); or 23 VerDate Sep 11 2014 20:37 Apr 10, 2021 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S821.IS S821 pamtmann on DSKBC07HB2PROD with BILLS 9 •S 821 IS ‘‘(II) was in deferment due to an 1 economic hardship described in sec- 2 tion 435(o). 3 ‘‘(I) A borrower may elect to discontinue 4 repayment pursuant to this subsection, at any 5 time, and enter into repayment pursuant to sec- 6 tion 455(d)(2)(A). 7 ‘‘(2) MONTHLY PAYMENTS.—Only monthly pay- 8 ments made pursuant to paragraph (1)(A) shall be 9 considered eligible payments toward the forgiveness 10 of outstanding loan principal and interest under sub- 11 paragraphs (G) and (H) of paragraph (1). 12 ‘‘(c) ELIGIBILITY DETERMINATIONS.—The Secretary 13 shall annually determine a borrower’s eligibility for the 14 simplified income-driven repayment plan under this sec- 15 tion through— 16 ‘‘(1) verification of a borrower’s annual ad- 17 justed gross income; 18 ‘‘(2) the annual amount due on the total 19 amount of covered Federal Direct Loans; and 20 ‘‘(3) such other procedures as are necessary to 21 effectively implement the simplified income-driven 22 repayment plan under this section. 23 ‘‘(d) SPECIAL RULE FOR MARRIED BORROWERS FIL- 24 ING SEPARATELY.—In the case of a married borrower who 25 VerDate Sep 11 2014 20:37 Apr 10, 2021 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S821.IS S821 pamtmann on DSKBC07HB2PROD with BILLS 10 •S 821 IS files a separate Federal income tax return, the Secretary 1 shall calculate the borrower’s income-driven calculation on 2 the basis of the borrower’s total amount due on covered 3 Federal Direct Loans and the married couple’s combined 4 adjusted gross income. In the case of a married couple 5 in which both individuals repay their loans under this sec- 6 tion, the Secretary shall calculate each borrower’s income- 7 driven calculation on the basis of each borrower’s total 8 amount due on covered Federal Direct Loans and the 9 married couple’s combined adjusted gross income divided 10 by 2. 11 ‘‘(e) ANNUAL INCOME VERIFICATION.— 12 ‘‘(1) IN GENERAL.—A borrower who elects to 13 participate in the simplified income-driven repay- 14 ment plan under this section shall submit to the Sec- 15 retary, on an annual basis, verification of the bor- 16 rower’s annual adjusted gross income. 17 ‘‘(2) CONSEQUENCE OF FAILURE TO SUBMIT.— 18 With respect to a borrower who fails to submit to 19 the Secretary verification of the borrower’s annual 20 adjusted gross income as required under paragraph 21 (1), any monthly payments made during the period 22 the borrower is in violation of the requirement of 23 paragraph (1) shall not be considered eligible pay- 24 ments toward the forgiveness of outstanding loan 25 VerDate Sep 11 2014 20:37 Apr 10, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S821.IS S821 pamtmann on DSKBC07HB2PROD with BILLS 11 •S 821 IS principal and interest under subparagraphs (G) and 1 (H) of subsection (b)(1).’’. 2 SEC. 3. STREAMLINING REPAYMENT PLANS FOR NEW BOR- 3 ROWERS. 4 Section 455 of the Higher Education Act of 1965 (20 5 U.S.C. 1087e) is amended— 6 (1) by striking subsection (d) and inserting the 7 following: 8 ‘‘(d) REPAYMENT PLANS.— 9 ‘‘(1) DESIGN AND SELECTION FOR BORROWERS 10 BEFORE JULY 1, 2022.—With respect to a borrower 11 of a loan made under this part before July 1, 2022, 12 and consistent with criteria established by the Sec- 13 retary, the Secretary shall offer such borrower a va- 14 riety of plans for repayment of such loan, including 15 principal and interest on the loan. The borrower 16 shall be entitled to accelerate, without penalty, re- 17 payment on the borrower’s loans under this part. 18 The borrower may choose— 19 ‘‘(A) a fixed repayment plan, consistent 20 with subsection (a)(1) of this section and with 21 section 428(b)(9)(A)(i); 22 ‘‘(B) a graduated repayment plan, con- 23 sistent with section 428(b)(9)(A)(ii); 24 VerDate Sep 11 2014 20:37 Apr 10, 2021 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S821.IS S821 pamtmann on DSKBC07HB2PROD with BILLS 12 •S 821 IS ‘‘(C) an extended repayment plan, con- 1 sistent with section 428(b)(9)(A)(iv), except 2 that the borrower shall annually repay a min- 3 imum amount determined by the Secretary in 4 accordance with section 428(b)(1)(L); 5 ‘‘(D) an income contingent repayment 6 plan, with varying annual repayment amounts 7 based on the income of the borrower, paid over 8 an extended period of time prescribed by the 9 Secretary, not to exceed 25 years, except that 10 the plan described in this subparagraph shall 11 not be available to the borrower of a Federal 12 Direct PLUS loan made on behalf of a depend- 13 ent student; and 14 ‘‘(E) an income-based repayment plan that 15 enables borrowers who have a partial financial 16 hardship to make a lower monthly payment in 17 accordance with section 493C, except that the 18 plan described in this subparagraph shall not be 19 available to the borrower of a Federal Direct 20 PLUS Loan made on behalf of a dependent 21 student or a Federal Direct Consolidation 22 Loan, if the proceeds of such loan were used to 23 discharge the liability on such Federal Direct 24 VerDate Sep 11 2014 20:37 Apr 10, 2021 Jkt 019200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S821.IS S821 pamtmann on DSKBC07HB2PROD with BILLS 13 •S 821 IS PLUS Loan or a loan under section 428B 1 made on behalf of a dependent student. 2 ‘‘(2) DESIGN AND SELECTION FOR NEW BOR- 3 ROWERS ON OR AFTER JULY 1, 2022.—The Secretary 4 shall offer a borrower of a loan made under this part 5 on or after July 1, 2022, the following plans for re- 6 payment of such loan, including principal and inter- 7 est on the loan. The borrower shall be entitled to ac- 8 celerate, without penalty, repayment on the bor- 9 rower’s loans under this part. The borrower may 10 choose— 11 ‘‘(A) a fixe [Text truncated for display. Full text available on Congress.gov.]