Student Loan Borrowers’ Bill of Rights Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 3027 To establish student loan borrowers’ rights to basic consumer protections, reasonable and flexible repayment options, access to earned credentials, and effective loan cancellation in exchange for public service, and for other purposes. IN THE HOUSE OF REPRESENTATIVES MAY 24, 2019 Ms. WILSON of Florida introduced the following bill; which was referred to the Committee on Education and Labor, and in addition to the Commit- tees on Ways and Means, the Judiciary, and Oversight and Reform, 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 establish student loan borrowers’ rights to basic consumer protections, reasonable and flexible repayment options, access to earned credentials, and effective loan cancella- tion in exchange for public service, 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 ‘‘Student Loan Bor- 4 rowers’ Bill of Rights Act of 2019’’. 5 VerDate Sep 11 2014 03:05 Jun 08, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3027.IH H3027 pamtmann on DSKBFK8HB2PROD with BILLS 2 •HR 3027 IH TITLE I—BORROWERS’ RIGHT TO 1 BASIC CONSUMER PROTEC- 2 TIONS 3 SEC. 101. DISCHARGEABILITY OF STUDENT LOANS IN 4 BANKRUPTCY CASES. 5 Section 523(a) of title 11 of the United States Code 6 is amended by striking paragraph (8). 7 SEC. 102. REINSTATEMENT OF THE 6-YEAR STATUTE OF 8 LIMITATIONS FOR STUDENT LOANS. 9 Subsection (a) of section 484A of the Higher Edu- 10 cation Act of 1965 (20 U.S.C. 1091a(a)) is amended to 11 read as follows: 12 ‘‘(a) STATUTE OF LIMITATIONS.—Notwithstanding 13 any Federal or State statutory, regulatory, or administra- 14 tive limitation on the period within which debts may be 15 enforced— 16 ‘‘(1) an institution that receives funds under 17 this title may file a suit or initiate or take another 18 action for collection of a refund due from a student 19 on a grant made, or work assistance awarded, under 20 this title, during the 6-year period beginning on the 21 day after the refund first became due (exclusive of 22 the period during which the State statute of limita- 23 tions otherwise applicable to a suit under this para- 24 graph would be tolled under State law); 25 VerDate Sep 11 2014 03:05 Jun 08, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3027.IH H3027 pamtmann on DSKBFK8HB2PROD with BILLS 3 •HR 3027 IH ‘‘(2) a guaranty agency that has an agreement 1 with the Secretary under section 428(c) may file a 2 suit or initiate or take another action for collection 3 of the amount due from a borrower on a loan made 4 under part B during the 6-year period beginning on 5 the day after such guaranty agency reimburses the 6 previous holder of the loan for its loss on account of 7 the default of the borrower (exclusive of the period 8 during which the State statute of limitations other- 9 wise applicable to a suit under this paragraph would 10 be tolled under State law); 11 ‘‘(3) an institution that has an agreement with 12 the Secretary pursuant to section 487 may file a suit 13 or initiate or take another action for collection of the 14 amount due from a borrower on a loan made under 15 part D or E after the default of the borrower on 16 such loan during the 6-year period beginning on the 17 day after the date of the default of the borrower 18 with respect to such amount (exclusive of the period 19 during which the State statute of limitations other- 20 wise applicable to a suit under this paragraph would 21 be tolled under State law); or 22 ‘‘(4) the Secretary, the Attorney General, or the 23 administrative head of another Federal agency, as 24 the case may be, may file a suit or initiate or take 25 VerDate Sep 11 2014 03:05 Jun 08, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3027.IH H3027 pamtmann on DSKBFK8HB2PROD with BILLS 4 •HR 3027 IH another action for collection of a refund due from a 1 student on a grant made under this title, or for the 2 repayment of the amount due from a borrower on a 3 loan made under this title that has been assigned to 4 the Secretary under this title, during the 6-year pe- 5 riod beginning on the day after the refund or the 6 amount first became due.’’. 7 SEC. 103. PROHIBITION OF COLLECTION OF STUDENT 8 LOANS THROUGH CERTAIN OFFSETS OR 9 THROUGH WAGE GARNISHMENT. 10 (a) PROHIBITION ON OFFSET OF SOCIAL SECURITY 11 BENEFITS.—Section 3716(c)(3)(A) of title 31, United 12 States Code, is amended— 13 (1) in clause (i), by striking ‘‘except as provided 14 in clause (ii)’’ and inserting ‘‘except as provided in 15 clauses (ii) and (iii)’’; and 16 (2) by adding at the end the following new 17 clause: 18 ‘‘(iii) Notwithstanding clause (i), any payments due 19 to an individual under Federal benefits programs cited 20 under clause (i) shall not be subject to offset under this 21 subsection if the offset is for payments certified by the 22 Department of Education under a program administered 23 by the Secretary of Education under title IV of the Higher 24 Education Act of 1965 (20 U.S.C. 1070 et seq.).’’. 25 VerDate Sep 11 2014 20:34 Jun 13, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3027.IH H3027 pamtmann on DSKBFK8HB2PROD with BILLS 5 •HR 3027 IH (b) PROHIBITION ON OFFSET OF TAX REFUND.— 1 Section 3720A(a) of title 31, United States Code, is 2 amended— 3 (1) by striking ‘‘Any Federal agency’’ and in- 4 serting ‘‘(1) Except as provided in paragraph (2), 5 any Federal agency’’; and 6 (2) by adding at the end the following new 7 paragraph: 8 ‘‘(2) Any past-due legally enforceable debt owed by 9 an individual to the Department of Education under a 10 program administered by the Secretary of Education 11 under title IV of the Higher Education Act of 1965 (20 12 U.S.C. 1070 et seq.) shall not be subject to notification 13 under paragraph (1), and any refund of Federal taxes 14 paid by the individual shall not be subject to reduction 15 under subsection (c) for such debt.’’. 16 (c) PROHIBITION ON WAGE GARNISHMENT.—Section 17 3720D(a) of title 31, United States Code, is amended— 18 (1) by striking ‘‘Notwithstanding’’ and insert- 19 ing: ‘‘(1) Except as provided in paragraph (2) and 20 notwithstanding’’; and 21 (2) by adding at the end the following new 22 paragraph: 23 ‘‘(2) Any delinquent nontax debt owed by an indi- 24 vidual to the Department of Education under a program 25 VerDate Sep 11 2014 20:34 Jun 13, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3027.IH H3027 pamtmann on DSKBFK8HB2PROD with BILLS 6 •HR 3027 IH administered by the Secretary of Education under title IV 1 of the Higher Education Act of 1965 (20 U.S.C. 1070 2 et seq.) shall not be subject to collection under this section 3 through garnishment of disposable pay of the individual.’’. 4 TITLE II—BORROWER’S RIGHT 5 TO REASONABLE AND FLEXI- 6 BLE REPAYMENT OPTIONS 7 SEC. 201. EXCLUSION FROM GROSS INCOME FOR DIS- 8 CHARGE OF STUDENT LOAN INDEBTEDNESS. 9 (a) IN GENERAL.—Section 108(f)(1) of the Internal 10 Revenue Code of 1986 is amended by striking ‘‘if such 11 discharge’’ and all that follows and inserting a period. 12 (b) STUDENT LOANS.—Section 108(f)(2) of such 13 Code is amended by striking ‘‘made by—’’ and all that 14 follows and inserting the following: ‘‘. Such term includes 15 indebtedness used to refinance indebtedness which quali- 16 fies as a student loan under the preceding sentence.’’. 17 (c) CONFORMING AMENDMENTS.—Section 108(f) of 18 such Code is amended by striking paragraphs (3) and (4). 19 (d) EFFECTIVE DATE.—The amendments made by 20 this section shall apply to discharges of indebtedness after 21 the date of the enactment of this Act. 22 VerDate Sep 11 2014 20:34 Jun 13, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3027.IH H3027 pamtmann on DSKBFK8HB2PROD with BILLS 7 •HR 3027 IH SEC. 202. 529 PLAN DISTRIBUTION FOR STUDENT LOAN 1 PAYMENTS. 2 (a) IN GENERAL.—Section 529(e)(3)(A) is amended 3 by striking clause (iii) and inserting the following new 4 clause: 5 ‘‘(iii) interest or principal paid with 6 respect to a qualified education loan (as 7 defined in section 221) with respect to a 8 designated beneficiary.’’. 9 (b) CONFORMING AMENDMENTS.— 10 (1) Section 529(e)(3)(A) of such Code is 11 amended by striking the second sentence. 12 (2) Section 72(t)(7)(A) of such Code is amend- 13 ed by inserting ‘‘, determined without regard to sub- 14 paragraph (A)(iii) thereof’’ after ‘‘section 15 529(e)(3)’’. 16 (3) Section 530(b)(2)(A)(i) of such Code is 17 amended by inserting ‘‘, determined without regard 18 to subparagraph (A)(iii) thereof’’ after ‘‘section 19 529(e)(3)’’. 20 (c) EFFECTIVE DATE.—The amendments made by 21 this section shall apply to distributions made after the 22 date of the enactment of this Act. 23 VerDate Sep 11 2014 03:05 Jun 08, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H3027.IH H3027 pamtmann on DSKBFK8HB2PROD with BILLS 8 •HR 3027 IH SEC. 203. INCLUSION OF PARENT PLUS LOANS IN REPAY- 1 MENT PROGRAMS. 2 (a) INCOME CONTINGENT REPAYMENT PLAN.—Sec- 3 tion 455(d)(1)(D) of the Higher Education Act of 1965 4 (20 U.S.C. 1087e(d)(1)(D)) is amended by striking ‘‘, ex- 5 cept that the plan described in this subparagraph shall 6 not be available to the borrower of a Federal Direct PLUS 7 loan made on behalf of a dependent student;’’. 8 (b) INCOME-BASED REPAYMENT.— 9 (1) PART B LOANS.— 10 (A) REPAYMENT PLANS.—Section 11 428(b)(9)(A)(v) of the Higher Education Act of 12 1965 (20 U.S.C. 1078(b)(9)(A)(v)) is amended 13 by striking ‘‘, except that the plan described in 14 this clause shall not be available to a borrower 15 for a loan under section 428B made on behalf 16 of a dependent student or for a consolidation 17 loan under section 428C, if the proceeds of such 18 loan were used to discharge the liability of a 19 loan under section 428B made on behalf of a 20 dependent student’’. 21 (B) CONSOLIDATION LOANS.—Section 22 428C(c)(3) of such Act (20 U.S.C. 1078– 23 3(c)(3)) is amended— 24 (i) in subparagraph (A), by inserting 25 ‘‘and’’ at the end; 26 VerDate Sep 11 2014 03:05 Jun 08, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3027.IH H3027 pamtmann on DSKBFK8HB2PROD with BILLS 9 •HR 3027 IH (ii) in subparagraph (B), by striking 1 ‘‘and’’ at the end and inserting a period; 2 and 3 (iii) by striking subparagraph (C). 4 (2) PART D LOANS.—Section 455(d)(1)(E) of 5 such Act (20 U.S.C. 1087e(d)(1)(D)) is amended by 6 striking ‘‘, except that the plan described in this 7 subparagraph shall not be available to the borrower 8 of a Federal Direct PLUS Loan made on behalf of 9 a dependent student or a Federal Direct Consolida- 10 tion Loan, if the proceeds of such loan were used to 11 discharge the liability on such Federal Direct PLUS 12 Loan or a loan under section 428B made on behalf 13 of a dependent student’’. 14 (3) IBR.—Section 493C of such Act (20 U.S.C. 15 1098e) is amended— 16 (A) in subsection (a)— 17 (i) by striking ‘‘this section’’ and all 18 that follows through ‘‘hardship’’ and in- 19 serting ‘‘In this section, the term ‘partial 20 financial hardship’ ’’; and 21 (ii) by striking, ‘‘(other than an ex- 22 cepted PLUS loan or excepted consolida- 23 tion loan)’’; 24 (B) in subsection (b)— 25 VerDate Sep 11 2014 03:05 Jun 08, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H3027.IH H3027 pamtmann on DSKBFK8HB2PROD with BILLS 10 •HR 3027 IH (i) in paragraph (1), by striking 1 ‘‘(other than an excepted PLUS loan or 2 excepted consolidation loan)’’; 3 (ii) in paragraph (6)(A), by striking 4 ‘‘(other than an excepted PLUS loan or 5 excepted consolidation loan)’’; and 6 (iii) in paragraph (7), by striking 7 ‘‘other than a loan under section 428B or 8 a Federal Direct PLUS Loan’’; and 9 (C) in subsection (c), by striking ‘‘(other 10 than an excepted PLUS loan or excepted con- 11 solidation loan),’’. 12 (c) LOAN FORGIVENESS FOR SERVICE IN AREAS OF 13 NATIONAL NEED.—Section 428K(a)(2) of such Act (20 14 U.S.C. 1078–11(a)(2)) is amended— 15 (1) in subparagraph (A), by striking ‘‘(other 16 than an excepted PLUS loan or an excepted consoli- 17 dation loan (as such terms are defined in section 18 493C(a)))’’; and 19 (2) in subparagraph (B), by striking ‘‘(other 20 than an excepted PLUS loan or an excepted consoli- 21 dation loan)’’. 22 (d) OTHER REPAYMENT PLANS.—Any plan for the 23 repayment of loans made under title IV of the Higher 24 Education Act of 1965 (20 U.S.C. 1070 et seq.), which 25 VerDate Sep 11 2014 03:05 Jun 08, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H3027.IH H3027 pamtmann on DSKBFK8HB2PROD with BILLS 11 •HR 3027 IH is finalized by the Secretary of Education on or after the 1 date of enactment of this Act, shall include the repayment 2 of a loan under section 428B of the Higher Education 3 Act of 1965, or a Federal Direct PLUS Loan under part 4 D of title IV of such Act, that is made, insured, or guaran- 5 teed on behalf of a dependent student. 6 SEC. 204. DETERMINATION OF ADVERSE CREDIT HISTORY. 7 Section 428B(a) of the Higher Education Act of 8 1965 (20 U.S.C. 1078–2(a)) is amended in paragraph 9 (1)(A), by striking ‘‘regulations promulgated by the Sec- 10 retary’’ and inserting ‘‘section 685.200(c) of title 34, Code 11 of Federal Regulations (as in effect on September 30, 12 2011)’’. 13 TITLE III—BORROWERS’ RIGHT 14 TO A MEANINGFUL DEGREE 15 SEC. 301. PROHIBITION ON SUSPENSIONS OF PROFES- 16 SIONAL LICENSES FOR LOAN DEFAULT. 17 No evidence of an individual’s default on the repay- 18 ment of a loan made, insured, or guaranteed under title 19 IV of the Higher Education Act of 1965 (20 U.S.C. 1070 20 et seq.) may be admitted into evidence in a Federal or 21 State proceeding involving the individual’s professional or 22 vocational license. 23 VerDate Sep 11 2014 03:05 Jun 08, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H3027.IH H3027 pamtmann on DSKBFK8HB2PROD with BILLS 12 •HR 3027 IH SEC. 302. PROHIBITION ON LOSS OF ACCESS TO TRAN- 1 SCRIPTS FOR LOAN DEFAULT. 2 Section 487(a) of the Higher Education Act of 1965 3 (20 U.S.C. 1094(a)) (as amended by section 301) is fur- 4 ther amended by adding at the end the following new para- 5 graph: 6 ‘‘(30)(A) The institution will not prohibit a stu- 7 dent from accessing the student’s transcripts, degree 8 scrolls, or other certifications of coursework or edu- 9 cational attainments at the institution because the 10 student is in default on the repayment of a loan 11 ma [Text truncated for display. Full text available on Congress.gov.]