Affordable Loans for Any Student Act

I 116TH CONGRESS 1ST SESSION H. R. 2065 To amend the Higher Education Act of 1965 in order to increase usage of the Federal student loan income-based repayment plan and improve repayment options for borrowers, and for other purposes. IN THE HOUSE OF REPRESENTATIVES APRIL 3, 2019 Ms. DELAURO introduced the following bill; which was referred to the Com- mittee on Education and Labor, and in addition to the Committees on Ways and Means, and Financial Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provi- sions as fall within the jurisdiction of the committee concerned A BILL To amend the Higher Education Act of 1965 in order to increase usage of the Federal student loan income-based repayment plan and improve repayment options for bor- rowers, 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; TABLE OF CONTENTS. 3 (a) SHORT TITLE.—This Act may be cited as the 4 ‘‘Affordable Loans for Any Student Act’’. 5 (b) TABLE OF CONTENTS.—The table of contents for 6 this Act is as follows: 7 VerDate Sep 11 2014 02:22 Apr 16, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H2065.IH H2065 pamtmann on DSKBFK8HB2PROD with BILLS 2 •HR 2065 IH Sec. 1. Short title; table of contents. Sec. 2. References in Act. TITLE I—SIMPLIFYING REPAYMENT PLANS Sec. 101. Income-based repayment plan. Sec. 102. Fixed repayment plan. Sec. 103. Termination of certain repayment plan options. Sec. 104. Providing incentives to switch into simplified repayment plans. Sec. 105. Automatic recertification of income. Sec. 106. Disclosure of tax return information to carry out certain higher edu- cation loan programs. Sec. 107. Study and procedures on determining family size. TITLE II—ENDING INTEREST CAPITALIZATION AND ORIGINATION FEES Sec. 201. Ending interest capitalization for Federal Direct Loans. Sec. 202. Elimination of origination fees for Federal Direct Loans. TITLE III—PROVIDING ASSISTANCE IN SITUATIONS OF BORROWER DISTRESS Sec. 301. Limits on seizing income for debt relating to Federal student loans. Sec. 302. Allowing for multiple loan rehabilitations. Sec. 303. Pause payment process. Sec. 304. Automatic enrollment into income-based repayment for borrowers who are delinquent on loans and for borrowers who rehabilitate defaulted loans. Sec. 305. Separating joint consolidation loans. Sec. 306. Removing the collection cost requirement. TITLE IV—IMPROVING LOAN INFORMATION AND COUNSELING Sec. 401. Student loan contract; simplifying loan disclosures. Sec. 402. Annual and pre-loan information and counseling requirements. Sec. 403. Exit counseling. Sec. 404. Online counseling tools. Sec. 405. Private education loan certification and information. TITLE V—EFFECTIVE DATE; TRANSITION Sec. 501. Effective date; rulemaking regarding termination of certain repay- ment plans. SEC. 2. REFERENCES IN ACT. 1 Except as otherwise expressly provided in this Act, 2 wherever an amendment or repeal is expressed in terms 3 of an amendment to or repeal of a section or other provi- 4 sion, the reference shall be considered to be made to that 5 VerDate Sep 11 2014 02:22 Apr 16, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H2065.IH H2065 pamtmann on DSKBFK8HB2PROD with BILLS 3 •HR 2065 IH section or other provision of the Higher Education Act of 1 1965 (20 U.S.C. 1001 et seq.). 2 TITLE I—SIMPLIFYING 3 REPAYMENT PLANS 4 SEC. 101. INCOME-BASED REPAYMENT PLAN. 5 (a) SIMPLIFYING THE INCOME-BASED REPAYMENT 6 PLAN.—Section 493C (20 U.S.C. 1098e) is amended— 7 (1) in subsection (b)— 8 (A) by striking ‘‘INCOME-BASED REPAY- 9 MENT PROGRAM AUTHORIZED.—’’ and insert- 10 ing the following: ‘‘INCOME-BASED REPAYMENT 11 PROGRAM FOR BORROWERS WHO ENTER IN- 12 COME-BASED REPAYMENT BEFORE JULY 1, 13 2020.—’’; 14 (B) in paragraph (3)(A), by striking ‘‘ex- 15 cept that’’ and all that follows through ‘‘section 16 435(o)’’; and 17 (C) in paragraph (8), by striking ‘‘the 18 standard repayment plan;’’ and inserting ‘‘the 19 fixed repayment plan under section 493E;’’; 20 and 21 (2) by striking subsection (c) and inserting the 22 following: 23 ‘‘(c) INCOME-BASED REPAYMENT PROGRAM FOR 24 NEW LOANS ON AND AFTER JULY 1, 2020 AND FOR BOR- 25 VerDate Sep 11 2014 02:22 Apr 16, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2065.IH H2065 pamtmann on DSKBFK8HB2PROD with BILLS 4 •HR 2065 IH ROWERS WHO ENTER INCOME-BASED REPAYMENT 1 AFTER JULY 1, 2020.— 2 ‘‘(1) IN GENERAL.—Notwithstanding any other 3 provision of this section, the provisions of this sub- 4 section shall apply— 5 ‘‘(A) with respect to any loan made, in- 6 sured, or guaranteed under part B or D on or 7 after July 1, 2020, for which the borrower 8 elects the income-based repayment plan under 9 this section; and 10 ‘‘(B) with respect to any loan made, in- 11 sured, or guaranteed under part B or D before 12 July 1, 2020, if such borrower elects to repay 13 the loan under the income-based repayment 14 plan on or after July 1, 2020, in accordance 15 with paragraph (3) and section 428(b)(1)(D)(ii) 16 or 455(d)(7), as applicable. 17 ‘‘(2) SPECIAL TERMS.—With respect to a loan 18 described in paragraph (1), the following terms shall 19 apply to the income-based repayment plan carried 20 out under this section: 21 ‘‘(A)(i) Notwithstanding subsection 22 (a)(3)(B), (b), or (e)— 23 ‘‘(I) the annual repayment amount 24 under this subsection shall be an amount 25 VerDate Sep 11 2014 02:22 Apr 16, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H2065.IH H2065 pamtmann on DSKBFK8HB2PROD with BILLS 5 •HR 2065 IH equal to 10 percent of the result obtained 1 by calculating, on at least an annual basis, 2 the amount by which— 3 ‘‘(aa) the borrower’s, and the 4 borrower’s spouse’s (if applicable), ad- 5 justed gross income; exceeds 6 ‘‘(bb) the applicable percentage 7 of the poverty line in accordance with 8 clause (ii) that is applicable to the 9 borrower’s family size as determined 10 under section 673(2) of the Commu- 11 nity Services Block Grant Act (42 12 U.S.C. 9902(2)); and 13 ‘‘(II) a borrower’s monthly payment 14 shall be determined in accordance with 15 subclause (I) divided by 12, which amount 16 may exceed the monthly repayment 17 amount under a standard 10-year repay- 18 ment plan or a fixed repayment plan de- 19 scribed in section 493E. 20 ‘‘(ii) For purposes of clause (i), the term 21 ‘applicable percentage’ means 250 percent re- 22 duced by 5 percentage points for each $1,000 23 by which the borrower’s adjusted gross income 24 exceeds $120,000. 25 VerDate Sep 11 2014 02:22 Apr 16, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H2065.IH H2065 pamtmann on DSKBFK8HB2PROD with BILLS 6 •HR 2065 IH ‘‘(B) Notwithstanding subsection (e)(2), 1 subsection (b)(7)(B) shall be applied by sub- 2 stituting ‘20 years’ for ‘25 years’. 3 ‘‘(C) Notwithstanding subparagraph (A) of 4 subsection (b)(6), a borrower of such a loan 5 shall not be required to have a partial financial 6 hardship and may elect, and remain enrolled in, 7 the income-based repayment plan under this 8 section regardless of income level, with the re- 9 payment amount calculated under subpara- 10 graph (A). 11 ‘‘(D) Notwithstanding subsection (b), a 12 borrower of an excepted PLUS loan or excepted 13 consolidation loan may elect the income-based 14 repayment plan under this subsection for the 15 excepted PLUS loan or excepted consolidation 16 loan, and the Secretary shall treat such loan for 17 purposes only of the repayment terms as a Fed- 18 eral Direct PLUS Loan issued to a student 19 borrower. The Secretary may issue rules and 20 regulations, as the Secretary determines nec- 21 essary, regarding the treatment of excepted 22 PLUS loans or excepted consolidation loans 23 that are to be repaid under an income-based re- 24 payment plan under this subsection. 25 VerDate Sep 11 2014 02:22 Apr 16, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H2065.IH H2065 pamtmann on DSKBFK8HB2PROD with BILLS 7 •HR 2065 IH ‘‘(3) RULE FOR BORROWERS IN INCOME-BASED 1 REPAYMENT BEFORE JULY 1, 2020.—A borrower of 2 a loan made, insured, or guaranteed under part B 3 or D who enrolled in the income-based repayment 4 plan under subsection (b), as such plan was in effect 5 on July 1, 2020, may choose to retain such repay- 6 ment plan or elect to enter an income-based repay- 7 ment plan under this subsection or a fixed repay- 8 ment plan described in section 493E, as provided in 9 section 428(b)(1)(D)(ii) or 455(d)(7) (as applicable). 10 ‘‘(4) INTEREST PAYMENTS AND ACCRUAL.— 11 Notwithstanding any other provision of this Act, if 12 a borrower’s monthly payment for a loan under an 13 income-based repayment plan under this subsection 14 is insufficient to pay the accrued interest on the bor- 15 rower’s loan for such month— 16 ‘‘(A) in the case of a subsidized loan (in- 17 cluding the portion of a consolidated loan that 18 is a subsidized loan), any interest due and not 19 paid under subsection (b)(2) on the subsidized 20 loan for that month shall be paid or forgiven by 21 the Secretary, except that a borrower of a sub- 22 sidized loan shall only receive the benefits of 23 this subparagraph for such loan for 36 months 24 of payments under the income-based repayment 25 VerDate Sep 11 2014 02:22 Apr 16, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H2065.IH H2065 pamtmann on DSKBFK8HB2PROD with BILLS 8 •HR 2065 IH plan, excluding any period of pause payment 1 under section 460B; and 2 ‘‘(B) in the case of an unsubsidized loan or 3 a subsidized loan that no longer qualifies under 4 subparagraph (A), 50 percent of the interest 5 not covered by the borrower’s monthly payment 6 shall be paid or forgiven by the Secretary and 7 the amount of the remaining interest shall be 8 added to the balance of interest due on the 9 loan, but shall not be capitalized. 10 ‘‘(5) WRITTEN, ELECTRONIC, OR VERBAL EN- 11 ROLLMENT IN INCOME-BASED REPAYMENT.— 12 ‘‘(A) IN GENERAL.—A borrower of a loan 13 made under this part may elect to repay such 14 loan under the income-based repayment plan 15 under this subsection by providing written, elec- 16 tronic, or verbal notice to the Secretary of the 17 borrower’s desire to make such election, subject 18 to subparagraph (C). 19 ‘‘(B) USE OF INFORMATION.— 20 ‘‘(i) IN GENERAL.—The estimated 21 monthly payment amount under this sec- 22 tion for a loan for a borrower who makes 23 an election described in subparagraph (A) 24 shall be immediately calculated using the 25 VerDate Sep 11 2014 02:22 Apr 16, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H2065.IH H2065 pamtmann on DSKBFK8HB2PROD with BILLS 9 •HR 2065 IH income and family size information pro- 1 vided through the borrower’s written, elec- 2 tronic, or verbal statement. 3 ‘‘(ii) VERIFICATION.—The informa- 4 tion described in clause (i) shall be verified 5 by the Secretary not later than 90 days 6 after the date the borrower states such in- 7 come and family size information. If the 8 Secretary is unable to verify the informa- 9 tion by the end of the 90-day period, the 10 borrower’s payment after such 90-day pe- 11 riod will be the amount applicable under 12 the fixed repayment plan under section 13 493E. 14 ‘‘(iii) ADJUSTMENT IF NECESSARY.— 15 Upon verification by the Secretary under 16 clause (ii), the Secretary shall adjust the 17 estimated monthly payment described in 18 clause (i) based on the verified income and 19 family size information of the borrower, if 20 necessary. Any adjusted monthly payment 21 shall take effect beginning with the pay- 22 ment due not less than 60 days after the 23 Secretary notifies the borrower of the ad- 24 justed amount. The Secretary shall con- 25 VerDate Sep 11 2014 02:22 Apr 16, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H2065.IH H2065 pamtmann on DSKBFK8HB2PROD with BILLS 10 •HR 2065 IH sider any payments made prior to the ad- 1 justed monthly payment as having satisfied 2 the amount due to qualify toward loan can- 3 cellation or forgiveness options under this 4 title. 5 ‘‘(C) LIMITATION.—The Secretary shall 6 permit a borrower to make an election of in- 7 come-based repayment in the written, elec- 8 tronic, or verbal manner described in subpara- 9 graph (A) only in connection with the first in- 10 stance of each of the following: 11 ‘‘(i) The borrower’s selection of a re- 12 payment plan during the grace period for 13 such loan. 14 ‘‘(ii) The borrower changing from the 15 fixed repayment plan under section 493E 16 to income-based repayment. 17 ‘‘(iii) The borrower’s failure to com- 18 plete the verification process described in 19 subparagraph (B)(ii). 20 ‘‘(iv) The borrower’s failure to recer- 21 tify enrollment in income-based repayment 22 under this subsection.’’. 23 VerDate Sep 11 2014 02:22 Apr 16, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H2065.IH H2065 pamtmann on DSKBFK8HB2PROD with BILLS 11 •HR 2065 IH (b) INCLUDING INCOME OF SPOUSES.—Subsection 1 (d) of section 493C (20 U.S.C. 1098e(d)) is amended to 2 read as follows: 3 ‘‘(d) CALCULATION OF ADJUSTED GROSS INCOME 4 FOR MARRIED BORROWERS.—The Secretary shall cal- 5 culate the adjusted gross income of a married borrower 6 under this section— 7 ‘‘(1) in the case of a married borrower and 8 spouse who jointly file a Federal income tax return, 9 based on the adjusted gross income of the borrower 10 and spouse as reported on the Federal income tax 11 return; and 12 ‘‘(2) in the case of a married borrower who files 13 a Federal income tax return separately from the 14 borrower’s spouse, based on the sum of the adjusted 15 gross income of the borrower and the spouse, as re- 16 ported on the applicable Federal income tax returns, 17 unless the borrower certifies, on a form approved by 18 the Secretary, that the borrower is— 19 ‘‘(A) separated from the borrower’s spouse; 20 or 21 ‘‘(B) unable to reasonably access the in- 22 come information of the borrower’s spouse.’’. 23 VerDate Sep 11 2014 02:22 Apr 16, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H2065.IH H2065 pamtmann on DSKBFK8HB2PROD with BILLS 12 •HR 2065 IH SEC. 102. FIXED REPAYMENT PLAN. 1 Part G of title IV (20 U.S.C. 1088 et seq.) is amend- 2 ed by adding at the end the following: 3 ‘‘SEC. 493E. FIXED REPAYMENT PLAN. 4 ‘‘(a) IN GENERAL.—A borrower of a loan made under 5 part D on or after July 1, 2020, and a borrower who is 6 in repayment on a loan made, insured, or guaranteed 7 under part B or D before July 1, 2020, may elect to repay 8 such loan under the fixed repayment plan described in this 9 [Text truncated for display. Full text available on Congress.gov.]