Supporting America’s Young Entrepreneurs Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 231 To amend the Higher Education Act of 1965 to provide loan deferment and loan cancellation for founders and employees of small business start- ups, and for other purposes. IN THE HOUSE OF REPRESENTATIVES JANUARY 3, 2019 Ms. VELA´ZQUEZ (for herself and Mr. SERRANO) introduced the following bill; which was referred to the Committee on Education and Labor, and in addition to the Committees on Ways and Means, and Small Business, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the com- mittee concerned A BILL To amend the Higher Education Act of 1965 to provide loan deferment and loan cancellation for founders and employees of small business start-ups, and for other pur- poses. 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 ‘‘Supporting America’s 4 Young Entrepreneurs Act of 2019’’. 5 VerDate Sep 11 2014 21:42 Jan 16, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H231.IH H231 pamtmann on DSKBFK8HB2PROD with BILLS 2 •HR 231 IH SEC. 2. SMALL BUSINESS START-UP EMPLOYEE LOAN 1 DEFERMENT AND CANCELLATION. 2 (a) DEFERMENT.—Section 455(f) of the Higher Edu- 3 cation Act of 1965 (20 U.S.C. 1087e(f)) is amended— 4 (1) in paragraph (1), by striking ‘‘A borrower 5 of a loan’’ and inserting ‘‘Except as provided in 6 paragraph (5), a borrower of a loan’’; and 7 (2) by adding at the end the following: 8 ‘‘(5) NO INTEREST DEFERMENT ELIGIBILITY 9 FOR FOUNDERS OF SMALL BUSINESS START-UPS.— 10 A borrower of a loan made under this part shall be 11 eligible for a deferment, during which periodic in- 12 stallments of principal and interest need not be paid, 13 during any period not in excess of 3 years during 14 which the borrower is employed as a founder of a 15 small business start-up (as defined in subsection 16 (r)(3)).’’. 17 (b) LOAN CANCELLATION.—Section 455 of the High- 18 er Education Act of 1965 (20 U.S.C. 1087e) is amended 19 by adding at the end the following: 20 ‘‘(r) LOAN CANCELLATION FOR CERTAIN SMALL 21 BUSINESS START-UP EMPLOYEES.— 22 ‘‘(1) FOUNDER OF A SMALL BUSINESS START- 23 UP IN A DISTRESSED AREA.— 24 ‘‘(A) IN GENERAL.—The Secretary shall 25 cancel $20,000 of the balance of interest and 26 VerDate Sep 11 2014 21:42 Jan 16, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H231.IH H231 pamtmann on DSKBFK8HB2PROD with BILLS 3 •HR 231 IH principal due, in accordance with subparagraph 1 (B), on any eligible Federal Direct Loan not in 2 default for a borrower who— 3 ‘‘(i) has made 24 monthly payments 4 on the eligible Federal Direct Loan after 5 the date of the enactment of this sub- 6 section pursuant to any one or a combina- 7 tion of payments under a repayment plan 8 under subsection (d)(1) or (g); 9 ‘‘(ii) has been employed as a founder 10 of a small business start-up in a distressed 11 area during the period in which the bor- 12 rower makes each of the 24 payments; 13 ‘‘(iii) is employed as a founder of a 14 small business start-up in a distressed area 15 at the time of such cancellation; and 16 ‘‘(iv) is approved for loan cancellation 17 by the young entrepreneurs business center 18 under section 47 of the Small Business Act 19 (16 U.S.C. 631 et seq.). 20 ‘‘(B) LOAN CANCELLATION AMOUNT.— 21 ‘‘(i) IN GENERAL.—After the conclu- 22 sion of the employment period described in 23 subparagraph (A), the Secretary shall can- 24 cel the obligation to repay $20,000 of the 25 VerDate Sep 11 2014 21:42 Jan 16, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H231.IH H231 pamtmann on DSKBFK8HB2PROD with BILLS 4 •HR 231 IH balance of interest and principal due as of 1 the time of such cancellation, on the eligi- 2 ble Federal Direct Loans made to the bor- 3 rower under this part. 4 ‘‘(ii) LIMITATION.—A borrower may 5 not receive an aggregate amount of more 6 than $20,000 under this subparagraph. 7 ‘‘(C) INELIGIBILITY FOR DOUBLE BENE- 8 FITS.—No borrower may, for the same service, 9 receive a reduction of loan obligations under 10 both this paragraph and— 11 ‘‘(i) paragraph (2); 12 ‘‘(ii) subsection (m); or 13 ‘‘(iii) section 428J, 428K, 428L, or 14 460. 15 ‘‘(2) EMPLOYEE OF A SMALL BUSINESS START- 16 UP.— 17 ‘‘(A) IN GENERAL.—The Secretary shall 18 cancel $3,000 of the balance of interest and 19 principal due, in accordance with subparagraph 20 (B), on any eligible Federal Direct Loan not in 21 default for a borrower who— 22 ‘‘(i) has made 12 monthly payments 23 on the eligible Federal Direct Loan after 24 the date of the enactment of this sub- 25 VerDate Sep 11 2014 21:42 Jan 16, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H231.IH H231 pamtmann on DSKBFK8HB2PROD with BILLS 5 •HR 231 IH section pursuant to any one or a combina- 1 tion of payments under a repayment plan 2 under subsection (d)(1) or (g); 3 ‘‘(ii) has been employed in a small 4 business start-up job during the period in 5 which the borrower makes each of the 12 6 payments; and 7 ‘‘(iii) is employed in a small business 8 start-up job at the time of such cancella- 9 tion. 10 ‘‘(B) LOAN CANCELLATION AMOUNT.— 11 ‘‘(i) IN GENERAL.—After the conclu- 12 sion of the employment period described in 13 subparagraph (A), the Secretary shall can- 14 cel the obligation to repay $3,000 of the 15 balance of interest and principal due as of 16 the time of such cancellation, on the eligi- 17 ble Federal Direct Loans made to the bor- 18 rower under this part. 19 ‘‘(ii) LIMITATION.—A borrower may 20 not receive an aggregate amount of more 21 than $15,000 under this subparagraph. 22 ‘‘(C) INELIGIBILITY FOR DOUBLE BENE- 23 FITS.—No borrower may, for the same service, 24 VerDate Sep 11 2014 21:42 Jan 16, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H231.IH H231 pamtmann on DSKBFK8HB2PROD with BILLS 6 •HR 231 IH receive a reduction of loan obligations under 1 both this paragraph and— 2 ‘‘(i) paragraph (1); 3 ‘‘(ii) subsection (m); or 4 ‘‘(iii) section 428J, 428K, 428L, or 5 460. 6 ‘‘(3) DEFINITIONS.—In this subsection: 7 ‘‘(A) DISTRESSED AREA.—The term ‘dis- 8 tressed area’ means an area identified under 9 section 49 of the Small Business Act. 10 ‘‘(B) ELIGIBLE FEDERAL DIRECT LOAN.— 11 The term ‘eligible Federal Direct Loan’ means 12 a Federal Direct Stafford Loan, Federal Direct 13 PLUS Loan, or Federal Direct Unsubsidized 14 Stafford Loan, or a Federal Direct Consolida- 15 tion Loan. 16 ‘‘(C) FOUNDER.—The term ‘founder’ shall 17 have the meaning given such term by the Ad- 18 ministrator of the Small Business Administra- 19 tion under this paragraph. 20 ‘‘(D) SMALL BUSINESS START-UP.—The 21 term ‘small business start-up’ means a business 22 that is certified by the young entrepreneurs 23 business center under section 49 of the Small 24 Business Act. 25 VerDate Sep 11 2014 21:42 Jan 16, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H231.IH H231 pamtmann on DSKBFK8HB2PROD with BILLS 7 •HR 231 IH ‘‘(E) SMALL BUSINESS START-UP JOB.— 1 The term ‘small business start-up job’ means a 2 full-time job as an employee of a small business 3 start-up.’’. 4 SEC. 3. YOUNG ENTREPRENEURS BUSINESS CENTER. 5 The Small Business Act (15 U.S.C. 631 et seq.) is 6 amended— 7 (1) by redesignating section 49 as section 50; 8 and 9 (2) by inserting after section 48 the following 10 new section: 11 ‘‘SEC. 49. YOUNG ENTREPRENEURS BUSINESS CENTER. 12 ‘‘(a) ESTABLISHMENT.—There is established within 13 the Administration a young entrepreneurs business center 14 that shall, for purposes of loan cancellation for start-up 15 employees established under subsection (r) of section 455 16 of the Higher Education Act of 1965— 17 ‘‘(1) certify small business start-ups under sub- 18 section (b); 19 ‘‘(2) identify distressed areas under subsection 20 (c); and 21 ‘‘(3) approve loan cancellation for founders of 22 small business start-ups in distressed areas under 23 subsection (d). 24 ‘‘(b) CERTIFICATION.— 25 VerDate Sep 11 2014 21:42 Jan 16, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H231.IH H231 pamtmann on DSKBFK8HB2PROD with BILLS 8 •HR 231 IH ‘‘(1) APPLICATION.—To be certified by the 1 young entrepreneurs business center, a small busi- 2 ness start-up shall submit an application to the Ad- 3 ministrator that includes— 4 ‘‘(A) a 5-year business plan for such small 5 business start-up; and 6 ‘‘(B) the number of employees the small 7 business start-up intends to employ on a yearly 8 basis. 9 ‘‘(2) REQUIREMENTS.—The young entre- 10 preneurs business center may not certify a small 11 business start-up unless such small business start- 12 up, on the date the application is submitted under 13 paragraph (1)— 14 ‘‘(A) has a founder who is a recent grad- 15 uate of a 4-year institution of higher education; 16 ‘‘(B) is a start-up for which at least 50 17 percent of the employees of the start-up are re- 18 cent graduates of such an institution. 19 ‘‘(c) DISTRESSED AREA.— 20 ‘‘(1) IN GENERAL.—Not less than once every 3 21 years after the date of the enactment of this section, 22 the young entrepreneurs business center shall iden- 23 tify and make publically available on the website of 24 the Administration a list of distressed areas. 25 VerDate Sep 11 2014 21:42 Jan 16, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H231.IH H231 pamtmann on DSKBFK8HB2PROD with BILLS 9 •HR 231 IH ‘‘(2) REQUIREMENTS.—A distressed area iden- 1 tified under paragraph (1) shall be a county or 2 equivalent division of local government of a State in 3 which the small business concern is located— 4 ‘‘(A) that has, for the most recent 24- 5 month period for which statistics are avail- 6 able— 7 ‘‘(i) a per capita income of 80 percent 8 or less of the national average; or 9 ‘‘(ii) an unemployment rate that is 1 10 percent greater than the national average; 11 and 12 ‘‘(B) for which the young entrepreneurs 13 business center determines would economically 14 benefit from having small business start-ups es- 15 tablished in such area. 16 ‘‘(d) LOAN CANCELLATION FOR FOUNDERS OF A 17 SMALL BUSINESS START-UP IN A DISTRESSED AREA.— 18 For purposes of loan cancellation under subsection (r)(1) 19 of section 455 of the Higher Education Act of 1965, the 20 young entrepreneurs business center shall approve a 21 founder of a small business start-up in a distressed area 22 if such founder— 23 ‘‘(1) established a small business start-up 24 that— 25 VerDate Sep 11 2014 21:42 Jan 16, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H231.IH H231 pamtmann on DSKBFK8HB2PROD with BILLS 10 •HR 231 IH ‘‘(A) on the date such small business start- 1 up was established, was located in a distressed 2 area identified by the young entrepreneurs busi- 3 ness center under subsection (c) not more than 4 3 years before such date of establishment; 5 ‘‘(B) was certified under subsection (b); 6 and 7 ‘‘(C) on the date of approval under this 8 subsection, has been operating continuously for 9 not less than 5 years; and 10 ‘‘(2) was employed as a founder of a small busi- 11 ness start-up in a distressed area during the period 12 in which such founder made the 24 payments de- 13 scribed in subsection (r)(1)(A) of such section 455. 14 ‘‘(e) DEFINITIONS.—In this section: 15 ‘‘(1) INSTITUTION OF HIGHER EDUCATION.— 16 The term ‘institution of higher education’ has the 17 meaning given such term in section 102 of the High- 18 er Education Act (20 U.S.C. 1002). 19 ‘‘(2) SMALL BUSINESS START-UP.—The term 20 ‘small business start-up’ means a small business 21 concern that— 22 ‘‘(A) is not yet in existence; or 23 ‘‘(B) has been in existence for not more 24 than 3 years.’’. 25 VerDate Sep 11 2014 21:42 Jan 16, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H231.IH H231 pamtmann on DSKBFK8HB2PROD with BILLS 11 •HR 231 IH SEC. 4. TREATMENT OF LOAN CANCELLATION. 1 (a) IN GENERAL.—Section 108(f) of the Internal 2 Revenue Code of 1986 is amended by adding at the end 3 the following new paragraph: 4 ‘‘(5) CANCELLATION OF CERTAIN FEDERAL 5 STUDENT LOANS.—In the case of an individual, 6 gross income shall not include the discharge (in 7 whole or in part) of any student loan pursuant to 8 the cancellation (in whole or in part) of such loan 9 by the Secretary of Education under subsection (r) 10 of section 455 of the Higher Education Act of 1965 11 (20 U.S.C. 1087e).’’. 12 (b) EFFECTIVE DATE.—The amendment made by 13 this section shall apply to discharges of indebtedness oc- 14 curring after the date of the enactment of this Act. 15 Æ VerDate Sep 11 2014 21:42 Jan 16, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6301 E:\BILLS\H231.IH H231 pamtmann on DSKBFK8HB2PROD with BILLS