Student Debt Cancellation Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 3448 To forgive outstanding Federal and private student loans. IN THE HOUSE OF REPRESENTATIVES JUNE 24, 2019 Ms. OMAR (for herself, Ms. JAYAPAL, Ms. JACKSON LEE, Ms. TLAIB, Ms. NORTON, Mr. THOMPSON of Mississippi, Ms. LEE of California, Mr. GARCI´A of Illinois, and Ms. OCASIO-CORTEZ) introduced the following bill; which was referred to the Committee on Education and Labor, and in addition to the Committees on Financial Services, and Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdic- tion of the committee concerned A BILL To forgive outstanding Federal and private student loans. 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 Debt Cancella- 4 tion Act of 2019’’. 5 SEC. 2. FORGIVENESS OF OUTSTANDING FEDERAL STU- 6 DENT LOANS. 7 (a) FORGIVENESS REQUIRED.—Notwithstanding any 8 other provision of law, not later than 180 days after the 9 VerDate Sep 11 2014 00:06 Jun 29, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3448.IH H3448 pamtmann on DSKBFK8HB2PROD with BILLS 2 •HR 3448 IH date of the enactment of this Act, the Secretary of Edu- 1 cation shall forgive the outstanding balance of interest and 2 principal due on all eligible Federal student loans. 3 (b) DEFINITION OF ELIGIBLE FEDERAL STUDENT 4 LOAN.—In this Act, the term ‘‘eligible Federal student 5 loan’’ means any loan made, insured, or guaranteed under 6 part B, part D, or part E of title IV of the Higher Edu- 7 cation Act of 1965 before the date of enactment of this 8 Act, including— 9 (1) loans made to a parent borrower on behalf 10 of a dependent student under part B or part D of 11 such Act; 12 (2) consolidation loans made under such Act; 13 and 14 (3) any grant treated as a loan under such part 15 D in accordance with section 258(e), section 16 420M(c), or section 807(d) of such Act. 17 (c) METHOD OF LOAN FORGIVENESS.—To provide 18 the loan forgiveness required under subsection (a), the 19 Secretary of Education is authorized to carry out a pro- 20 gram— 21 (1) through the holder of a loan, to assume the 22 obligation to repay the outstanding balance of inter- 23 est and principal due on loans made, insured, or 24 guaranteed under part B of title IV of the Higher 25 VerDate Sep 11 2014 00:06 Jun 29, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3448.IH H3448 pamtmann on DSKBFK8HB2PROD with BILLS 3 •HR 3448 IH Education Act of 1965 (20 U.S.C. 1071 et seq.); 1 and 2 (2) to cancel the outstanding balance of interest 3 and principal due on loans made under part D or 4 part E of such title. 5 (d) REPAYMENT REFUNDS.— 6 (1) PRIOR REPAYMENT.—Nothing in this sec- 7 tion shall be construed to authorize any refunding of 8 any eligible Federal student loan repayment made 9 before the date of enactment of this Act. 10 (2) PAYMENTS MADE AFTER ENACTMENT.— 11 The Secretary shall refund to each borrower who re- 12 ceives forgiveness under this section the amount of 13 any payments the borrower makes on an eligible 14 Federal student loan during the period beginning on 15 the date of the enactment of this Act and ending on 16 the date on which the Secretary forgives the out- 17 standing balance of such eligible Federal student 18 loan. 19 (e) EXCLUSION FROM TAXABLE INCOME.—The 20 amount of a borrower’s eligible Federal student loans for- 21 given under this section, and the amount of any repay- 22 ments to a borrower under subsection (d)(2), shall not be 23 included in the gross income of the borrower for purposes 24 of the Internal Revenue Code of 1986. 25 VerDate Sep 11 2014 00:06 Jun 29, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3448.IH H3448 pamtmann on DSKBFK8HB2PROD with BILLS 4 •HR 3448 IH SEC. 3. PURCHASE AND FORGIVENESS OF OUTSTANDING 1 PRIVATE STUDENT LOANS. 2 (a) IN GENERAL.—Part D of title IV of the Higher 3 Education Act of 1965 (20 U.S.C. 1087a et seq.) is 4 amended by inserting after section 459B the following: 5 ‘‘SEC. 459C. TEMPORARY AUTHORITY TO PURCHASE AND 6 FORGIVE ELIGIBLE PRIVATE STUDENT 7 LOANS. 8 ‘‘(a) PRIVATE EDUCATION LOAN PURCHASE AND 9 FORGIVENESS.—Notwithstanding any other provision of 10 law, not later than 180 days after the date of enactment 11 of the Student Debt Cancellation Act of 2019, the Sec- 12 retary, in consultation with the Secretary of the Treasury, 13 shall carry out a program under which the Secretary shall 14 purchase, and then forgive, the outstanding balance of in- 15 terest and principal due on eligible private student loans. 16 ‘‘(b) DEFINITIONS.—In this section: 17 ‘‘(1) ELIGIBLE PRIVATE STUDENT LOAN.—In 18 this section, the term ‘eligible private student loan’ 19 means a private education loan, as defined in section 20 140(a) of the Truth in Lending Act (15 U.S.C. 21 1650(a)), that was expressly for the cost of attend- 22 ance (as defined in section 472) at an institution of 23 higher education participating in a loan program 24 under part B, part D, or part E of title IV of the 25 Higher Education Act of 1965 (20 U.S.C. 1070 et 26 VerDate Sep 11 2014 00:06 Jun 29, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3448.IH H3448 pamtmann on DSKBFK8HB2PROD with BILLS 5 •HR 3448 IH seq.), as of the date that the loan was disbursed, 1 and that was made before the date of enactment of 2 the Student Debt Cancellation Act of 2019. 3 ‘‘(2) PRIVATE EDUCATIONAL LENDER.—The 4 term private educational lender has the meaning 5 given the term in section 140(a) of the Truth in 6 Lending Act (15 U.S.C. 1650(a)). 7 ‘‘(c) METHOD OF LOAN PURCHASE AND FORGIVE- 8 NESS.—The Secretary, in consultation with the Secretary 9 of the Treasury, shall carry out a program under which 10 the Secretary, upon application by a borrower who has an 11 eligible private student loan, shall purchase the eligible 12 private student loans of the borrower, issue such borrower 13 a loan under this section, and forgive such loan, in accord- 14 ance with the following: 15 ‘‘(1) The Secretary shall pay to the private edu- 16 cational lender of the eligible private student loan an 17 amount equal to the sum of the unpaid principal, ac- 18 crued unpaid interest, and late charges of the eligi- 19 ble private student loan, as calculated on the date of 20 the purchase of such loan, in order to discharge the 21 borrower from any remaining obligation to the pri- 22 vate educational lender with respect to the eligible 23 private student loan. 24 VerDate Sep 11 2014 00:06 Jun 29, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3448.IH H3448 pamtmann on DSKBFK8HB2PROD with BILLS 6 •HR 3448 IH ‘‘(2) The Secretary shall issue to the borrower 1 a loan, known as a Federal Direct Forgiveness 2 Loan, in an amount equal to the sum of the amount 3 paid to the private educational lender of the eligible 4 private student loan of the borrower that was pur- 5 chased by the Secretary in accordance with para- 6 graph (1). 7 ‘‘(3) The Secretary shall, immediately upon 8 issuance of a Federal Direct Forgiveness Loan, can- 9 cel the outstanding balance of interest and principal 10 due on such loan. 11 ‘‘(d) REPAYMENT REFUNDS PROHIBITED.—Nothing 12 in this section shall be construed to authorize any refund- 13 ing of any repayment of a loan. 14 ‘‘(e) EXCLUSION FROM TAXABLE INCOME.—The 15 amount of a borrower’s Federal Direct Forgiveness Loans 16 forgiven under this section shall not be included in the 17 gross income of the borrower for purposes of the Internal 18 Revenue Code of 1986.’’. 19 (b) NOTICE TO BORROWERS.—Section 128(e) of the 20 Truth in Lending Act (15 U.S.C. 1638(e)) is amended by 21 adding at the end the following new paragraph: 22 ‘‘(12) NOTICE REQUIRED ALONG WITH BILLING 23 STATEMENTS.—Along with each billing statement 24 sent to the borrower during the six-month period be- 25 VerDate Sep 11 2014 00:06 Jun 29, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3448.IH H3448 pamtmann on DSKBFK8HB2PROD with BILLS 7 •HR 3448 IH ginning on the day after the date of enactment of 1 the Student Debt Cancellation Act of 2019, the pri- 2 vate educational lender shall include a statement in- 3 forming the borrower that— 4 ‘‘(A) the borrower may be eligible for loan 5 forgiveness of eligible private student loans 6 under section 459C of the Higher Education 7 Act of 1965; and 8 ‘‘(B) to be eligible for such loan forgive- 9 ness, the borrower must apply to the Secretary 10 of Education no later than the date that is 180 11 days after the date of enactment of the Student 12 Debt Cancellation Act of 2019.’’. 13 SEC. 4. NOTICE TO THE PUBLIC. 14 Not later than 15 days after the date of enactment 15 of this Act, the Secretary of Education, in consultation 16 with institutions of higher education and lenders of Fed- 17 eral student loans and private education loans, shall take 18 such actions as may be necessary to ensure that borrowers 19 who have outstanding eligible Federal student loans or 20 outstanding eligible private student loans (as defined in 21 section 459C of the Higher Education Act of 1965, as 22 added by this Act) are aware of the loan forgiveness pro- 23 grams authorized by this Act. Such information shall— 24 VerDate Sep 11 2014 00:06 Jun 29, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H3448.IH H3448 pamtmann on DSKBFK8HB2PROD with BILLS 8 •HR 3448 IH (1) be presented in a form that is widely avail- 1 able to the public, especially to borrowers with out- 2 standing Federal and private student loans; 3 (2) be easily understandable; and 4 (3) clearly notify borrowers of eligible private 5 student loans— 6 (A) that borrowers must apply for loan 7 forgiveness under this Act, and must do so no 8 later than the date that is 180 days after the 9 date of enactment of this Act; and 10 (B) of the application process and require- 11 ments to apply for forgiveness of eligible private 12 student loans in accordance with this Act. 13 Æ VerDate Sep 11 2014 00:06 Jun 29, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6301 E:\BILLS\H3448.IH H3448 pamtmann on DSKBFK8HB2PROD with BILLS