Student Loan Debt Relief Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 3887 To discharge the qualified loan amounts of each individual, and for other purposes. IN THE HOUSE OF REPRESENTATIVES JULY 23, 2019 Mr. CLYBURN (for himself, Ms. SCHAKOWSKY, Mr. KHANNA, and Ms. CLARKE of New York) 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 the Judiciary, 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 discharge the qualified loan amounts of each individual, 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 ‘‘Student Loan Debt 4 Relief Act of 2019’’. 5 SEC. 2. TABLE OF CONTENTS. 6 The table of contents for this Act is as follows: 7 Sec. 1. Short title. Sec. 2. Table of contents. VerDate Sep 11 2014 02:35 Aug 01, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6211 E:\BILLS\H3887.IH H3887 kjohnson on DSK79L0C42 with BILLS 2 •HR 3887 IH TITLE I—LOAN DISCHARGE AND FORBEARANCE Sec. 101. Loan discharge. Sec. 102. Automatic administrative forbearance; halting of wage garnishment. Sec. 103. Staying and prohibition on commencement of actions for collection. Sec. 104. Ineligibility for Treasury Offset. TITLE II—REFINANCING PROGRAMS Sec. 201. Refinancing programs. TITLE III—DISCHARGEABILITY OF STUDENT LOANS IN BANKRUPTCY Sec. 301. Dischargeability of student loans in bankruptcy. TITLE IV—GENERAL PROVISIONS Sec. 401. Report on progress of implementation. Sec. 402. Notification to borrowers. Sec. 403. Inapplicability of title IV negotiated rulemaking and master calendar exception. Sec. 404. Definitions. TITLE I—LOAN DISCHARGE AND 1 FORBEARANCE 2 SEC. 101. LOAN DISCHARGE. 3 (a) IN GENERAL.—Subject to subsection (f), not later 4 than the date that is 12 months after the date of enact- 5 ment of this Act, the Secretary of Education shall dis- 6 charge the qualified loan amount of each individual, with- 7 out regard to the repayment status of the loan or whether 8 the loan is in default. 9 (b) QUALIFIED LOAN AMOUNT.— 10 (1) IN GENERAL.—The qualified loan amount 11 of an individual is an amount equal to the lesser 12 of— 13 (A) $50,000; and 14 VerDate Sep 11 2014 02:35 Aug 01, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3887.IH H3887 kjohnson on DSK79L0C42 with BILLS 3 •HR 3887 IH (B) the aggregate loan obligation on the el- 1 igible Federal loans of the taxpayer that is out- 2 standing on the date of enactment of this Act 3 or, in the case of such loans issued under sec- 4 tion 460B of the Higher Education Act of 5 1965, as added by title II of this Act, on the 6 date on which such loans are issued under such 7 section 460B. 8 (2) LIMITATION BASED ON ADJUSTED GROSS 9 INCOME.—The amount discharged under subsection 10 (a) with respect to an individual shall be reduced 11 (but not below zero) by $1 for each $3 (or fraction 12 thereof) by which the taxpayer’s adjusted gross in- 13 come exceeds $100,000 (twice such amount in the 14 case of a joint return) for the most recent taxable 15 year ending before the date of the enactment of this 16 Act. 17 (c) METHOD OF LOAN DISCHARGE.— 18 (1) IN GENERAL.—To provide the loan dis- 19 charge required under subsection (a), the Secretary 20 is authorized to carry out a program— 21 (A) through the holder of the loan, to as- 22 sume the obligation to repay the qualified loan 23 amount for a loan made, insured, or guaranteed 24 VerDate Sep 11 2014 02:35 Aug 01, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3887.IH H3887 kjohnson on DSK79L0C42 with BILLS 4 •HR 3887 IH under part B of title IV of the Higher Edu- 1 cation Act of 1965 (20 U.S.C. 1071 et seq.); 2 (B) to cancel the qualified loan amount for 3 a loan made under part D of title IV of the 4 Higher Education Act of 1965 (20 U.S.C. 5 1087a et seq.), or assigned, referred, or trans- 6 ferred to, or purchased by, the Secretary under 7 such title IV (20 U.S.C. 1070 et seq.), includ- 8 ing a Federal Direct Stafford Loan issued 9 under section 460B of the Higher Education 10 Act of 1965, as added by title II of this Act; 11 and 12 (C) through the institution of higher edu- 13 cation that made the loan from its student loan 14 fund established under part E of such title (20 15 U.S.C. 1087aa et seq.), to assume the obliga- 16 tion to repay the qualified loan amount for such 17 loan. 18 (2) ORDER OF LOAN DISCHARGE.—With re- 19 spect to an individual with at least 2 eligible Federal 20 loans, the Secretary shall discharge the loans of the 21 individual as follows (except as otherwise indicated 22 by the individual): 23 (A) In the case in which the individual has 24 loans with different rates of interest, the loans 25 VerDate Sep 11 2014 02:35 Aug 01, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3887.IH H3887 kjohnson on DSK79L0C42 with BILLS 5 •HR 3887 IH should be discharged in descending order by 1 rate of interest. 2 (B) In the case in which the individual has 3 loans with the same rates of interest, the loans 4 should be discharged in descending order by 5 amount of outstanding principal. 6 (d) EXCLUSION FROM TAXABLE INCOME.—For pur- 7 poses of the Internal Revenue Code of 1986, in the case 8 of an individual, gross income does not include any 9 amount which (but for this subsection) would be includible 10 in gross income by reason of the discharge (in whole or 11 in part) of any loan if such discharge was pursuant to 12 this title. 13 (e) TAXPAYER INFORMATION.— 14 (1) IN GENERAL.—The Secretary of the Treas- 15 ury may, upon written request from the Secretary of 16 Education, disclose to officers and employees of the 17 Department of Education return information with 18 respect to a taxpayer who has received eligible Fed- 19 eral loans that are outstanding on the date described 20 in subsection (b)(1)(B). Such return information 21 shall be limited to— 22 (A) taxpayer identity information with re- 23 spect to such taxpayer; 24 (B) the filing status of such taxpayer; and 25 VerDate Sep 11 2014 02:35 Aug 01, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3887.IH H3887 kjohnson on DSK79L0C42 with BILLS 6 •HR 3887 IH (C) the adjusted gross income of such tax- 1 payer. 2 (2) RESTRICTION ON USE OF DISCLOSED IN- 3 FORMATION.—Return information disclosed under 4 paragraph (1) may be used by officers and employ- 5 ees of the Department of Education only for the 6 purposes of, and to the extent necessary in, estab- 7 lishing the appropriate qualified loan amount of a 8 taxpayer. 9 (f) LONG-TERM SETTLE AND COMPROMISE DIS- 10 CHARGE AUTHORITY.—Not later than the date that is 24 11 months after the date of enactment of this Act, the Sec- 12 retary of Education may use the authority under sections 13 432(a)(6) and 468(2) of the Higher Education Act of 14 1965 (20 U.S.C. 1082(a)(6); 1087hh(2)) to discharge 15 loans under this section beyond the period described in 16 subsection (a) for— 17 (1) an individual who, through an appeals proc- 18 ess established by the Secretary, successfully appeals 19 a loan discharge determination by the Secretary 20 under this section; 21 (2) an individual who, due to special cir- 22 cumstances, misses a deadline established by the 23 Secretary in the administration of loan discharges 24 under this section; or 25 VerDate Sep 11 2014 02:35 Aug 01, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3887.IH H3887 kjohnson on DSK79L0C42 with BILLS 7 •HR 3887 IH (3) an individual (or a group of individuals) 1 who the Secretary determines should have received a 2 loan discharge or a discharge amount that is dif- 3 ferent from the amount of loan discharge received 4 under this section, except that a loan discharge 5 amount received under this subsection may not ex- 6 ceed the qualified loan amount determined for the 7 individual (or the group of individuals) under sub- 8 section (b). 9 (g) PRIVATE STUDENT LOAN DISCHARGE.—Not 10 later than the date that is 3 months after the date of en- 11 actment of this Act, the Secretary of Education, in coordi- 12 nation with the Secretary of the Treasury and the Director 13 of the Bureau of Consumer Financial Protection, shall un- 14 dertake a campaign to alert borrowers of private education 15 loans— 16 (1) that such borrowers may be eligible to refi- 17 nance such private loans as Federal Direct Stafford 18 Loans under section 460B of the Higher Education 19 Act of 1965, as added by title II of this Act; and 20 (2) such Federal Direct Stafford Loans may be 21 eligible for loan discharge under this section. 22 (h) CREDIT REPORTING.—In the case of a borrower 23 of an eligible Federal loan that was in default prior to 24 being discharged under this section and on which, as a 25 VerDate Sep 11 2014 02:35 Aug 01, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H3887.IH H3887 kjohnson on DSK79L0C42 with BILLS 8 •HR 3887 IH result of such loan discharge, there is no outstanding bal- 1 ance of principal or interest, the Secretary, guaranty agen- 2 cy or other holder of the loan shall request any consumer 3 reporting agency to which the Secretary, guaranty agency 4 or holder, as applicable, reported the default of the loan, 5 to remove the record of the default from the borrower’s 6 credit history. 7 (i) MEMBERS OF CONGRESS.—In this section, the 8 terms ‘‘individual’’ and ‘‘taxpayer’’ do not include a Mem- 9 ber of Congress. 10 SEC. 102. AUTOMATIC ADMINISTRATIVE FORBEARANCE; 11 HALTING OF WAGE GARNISHMENT. 12 During the period beginning on the date of enactment 13 of this Act and ending on the date that is 12 months after 14 such date of enactment, the Secretary of Education— 15 (1) shall place each borrower of an eligible Fed- 16 eral loan with an outstanding balance, without any 17 further action required by the borrower (except that 18 the borrower may opt-out of this section), on an ad- 19 ministrative forbearance during which periodic in- 20 stallments of principal need not be paid, and interest 21 shall not accrue, on such loan; and 22 (2) may not issue an order for wage garnish- 23 ment or withholding under section 488A of the 24 Higher Education Act of 1965 (20 U.S.C. 1095a) or 25 VerDate Sep 11 2014 02:35 Aug 01, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3887.IH H3887 kjohnson on DSK79L0C42 with BILLS 9 •HR 3887 IH section 3720D of title 31, United States Code, ini- 1 tiate proceedings to collect debt through deductions 2 from pay under such section 488A or 3720D, or en- 3 force or otherwise require compliance with a wage 4 garnishment or withholding order issued under such 5 section 488A or 3720D before the date of enactment 6 of this Act (which shall include staying any related 7 proceedings). 8 SEC. 103. STAYING AND PROHIBITION ON COMMENCEMENT 9 OF ACTIONS FOR COLLECTION. 10 Until 12 months after the date of enactment of this 11 Act, no eligible Federal loan may be referred to the Attor- 12 ney General for any action seeking collection of any 13 amount owed on that loan and any action pending as of 14 the date of enactment of this Act shall be stayed. 15 SEC. 104. INELIGIBILITY FOR TREASURY OFFSET. 16 Until 12 months after the date of enactment of this 17 Act, no claim pertaining to an eligible Federal loan may 18 be certified under section 3716(c)(1) of title 31, United 19 States Code. 20 VerDate Sep 11 2014 02:35 Aug 01, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H3887.IH H3887 kjohnson on DSK79L0C42 with BILLS 10 •HR 3887 IH TITLE II—REFINANCING 1 PROGRAMS 2 SEC. 201. REFINANCING PROGRAMS. 3 (a) PROGRAM AUTHORITY.—Section 451(a) of the 4 Higher Education Act of 1965 (20 U.S.C. 1087a(a)) is 5 amended— 6 (1) by striking ‘‘and (2)’’ and inserting ‘‘(2)’’; 7 and 8 (2) by inserting ‘‘; and (3) to make loans under 9 section 460A and section 460B’’ after ‘‘section 10 459A’’. 11 (b) REFINANCING PROGRAM.—Part D of title IV of 12 the Higher Education Act of 1965 (20 U.S.C. 1087a et 13 seq.) is amended by adding at the end the following: 14 ‘‘SEC. 460A. REFINANCING FFEL AND FEDERAL DIRECT 15 LOANS. 16 ‘‘(a) IN GENERAL.—Beginning not later than 12 17 months after the date of enactment of the Student Loan 18 Debt Relief Act of 2019, the Secretary shall establish a 19 program under which the Secretary automatically refi- 20 nances loans made under this part in accordance with the 21 provisions of this section, in order to lower the rate of 22 interest on such loans. 23 ‘‘(b) REFINANCING DIRECT LOANS.— 24 VerDate Sep 11 2014 02:35 Aug 01, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H3887.IH H3887 kjohnson on DSK79L0C42 with BILLS 11 •HR 3887 IH ‘‘(1) FEDERAL DIRECT LOANS.—With respect 1 to each Federal Direct Stafford Loan, Federal Di- 2 rect Unsubsidized Stafford Loan, Federal Direct 3 PLUS Loan, and Federal Direct Consolidation 4 Loan, for which the first disbursement was made to 5 a borrower, or the application for the consolidation 6 loan was received from a borrower, on or before the 7 date of enactment of the Student Loan Debt Relief 8 Act of 2019, the Secretary shall, without any further 9 action by the borrower (other than under subpara- 10 graph (C))— 11 ‘‘(A) discharge the liability on such Fed- 12 eral Direct Stafford Loan, Federal Direct Un- 13 subsidized Stafford Loan, Federal Direct PLUS 14 Loan, or Federal Direct Consolidation Loan; 15 ‘‘(B) issue to the borrower a new Federal 16 Direct Stafford Loan, Federal Direct Unsub- 17 sidized Stafford Loan, Federal Direct PLUS 18 Loan, or Federal Direct Consolidation Loan, re- 19 spectively— 20 ‘‘(i) in an amount equal to the sum of 21 the unpaid principal, accrued unpaid inter- 22 est, and late charges of the loan for which 23 the liability is being discharged under sub- 24 paragraph (A); and 25 VerDate Sep 11 2014 02:35 Aug 01, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H3887.IH H3887 kjohnson on DSK79L0C42 with BILLS 12 •HR 3887 IH ‘‘(ii) which has the same terms and 1 conditions as the original loan, except that 2 the rate of interest shall be determined 3 under subsection (c); and 4 ‘‘(C) provide the borrower an opportunity 5 to opt-out of the refinancing under this para- 6 graph. 7 ‘‘(2) REFINANCING FFEL PROGRAM LOANS AS 8 REFINANCED FEDERAL DIRECT LOANS.— 9 ‘‘(A) IN GENERAL.—With respect to each 10 loan that was made, insured, or guaranteed 11 under part B and for which the first disburse- 12 ment was made to a borrower, or the applica- 13 tion for the consolidation loan was received 14 [Text truncated for display. Full text available on Congress.gov.]