ExCEL Act of 2019

I 116TH CONGRESS 1ST SESSION H. R. 4079 To simplify and improve the Federal student loan program through income- contingent repayment to provide stronger protections for borrowers, en- courage responsible borrowing, and save money for taxpayers. IN THE HOUSE OF REPRESENTATIVES JULY 25, 2019 Mr. ZELDIN introduced the following bill; which was referred to the Com- mittee on Education and Labor, and in addition to the Committee on 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 jurisdiction of the committee concerned A BILL To simplify and improve the Federal student loan program through income-contingent repayment to provide stronger protections for borrowers, encourage responsible bor- rowing, and save money for taxpayers. 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 ‘‘Earnings Contingent 4 Education Loans Act of 2019’’ or the ‘‘ExCEL Act of 5 2019’’. 6 VerDate Sep 11 2014 02:09 Aug 15, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H4079.IH H4079 pamtmann on DSKBFK8HB2PROD with BILLS 2 •HR 4079 IH SEC. 2. TERMINATION OF AUTHORITY TO MAKE FEDERAL 1 DIRECT STAFFORD LOANS, FEDERAL DIRECT 2 UNSUBSIDIZED STAFFORD LOANS, AND FED- 3 ERAL DIRECT PLUS LOANS TO STUDENTS 4 UNDER THE WILLIAM D. FORD FEDERAL DI- 5 RECT LOAN PROGRAM. 6 Section 455(a) of the Higher Education Act of 1965 7 (20 U.S.C. 1087e(a)) is amended by adding at the end 8 the following: 9 ‘‘(4) TERMINATION OF AUTHORITY TO MAKE 10 FEDERAL DIRECT STAFFORD LOANS, FEDERAL DI- 11 RECT UNSUBSIDIZED STAFFORD LOANS, AND FED- 12 ERAL DIRECT PLUS LOANS TO STUDENTS UNDER 13 THIS PART.— 14 ‘‘(A) IN GENERAL.—Notwithstanding any 15 provision of this part or part B, for any period 16 of instruction beginning on or after July 1, 17 2019— 18 ‘‘(i) a student shall not be eligible to 19 receive a Federal Direct Stafford Loan 20 under this part; and 21 ‘‘(ii) a student shall not be eligible to 22 receive a Federal Direct Unsubsidized 23 Stafford Loan or Federal Direct PLUS 24 Loan under this part, except as provided in 25 subparagraph (B). 26 VerDate Sep 11 2014 02:09 Aug 15, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H4079.IH H4079 pamtmann on DSKBFK8HB2PROD with BILLS 3 •HR 4079 IH ‘‘(B) EXCEPTIONS.—Subparagraph (A)(ii) 1 shall not be applicable with respect to the fol- 2 lowing: 3 ‘‘(i) EXISTING STUDENT BOR- 4 ROWERS.—A student who, as of July 1, 5 2019, has an outstanding balance of prin- 6 cipal or interest owing on any loan made, 7 insured, or guaranteed under part B or 8 this part may continue to be eligible to 9 borrow a loan under this part, except for 10 a Federal Direct Stafford Loan, in accord- 11 ance with subparagraph (C) until June 30, 12 2021. 13 ‘‘(ii) PARENT PLUS LOANS.—An ex- 14 cepted PLUS loan or excepted consolida- 15 tion loan (as such terms are defined in sec- 16 tion 493C(a)) under this part that is made 17 to a parent on behalf of an undergraduate 18 dependent student. 19 ‘‘(iii) FEDERAL DIRECT CONSOLIDA- 20 TION LOANS.—A Federal Direct Consolida- 21 tion Loan under this part. 22 ‘‘(C) MAXIMUM ANNUAL AMOUNTS OF 23 FEDERAL DIRECT UNSUBSIDIZED STAFFORD 24 LOANS.—The maximum annual amount of Fed- 25 VerDate Sep 11 2014 02:09 Aug 15, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H4079.IH H4079 pamtmann on DSKBFK8HB2PROD with BILLS 4 •HR 4079 IH eral Direct Unsubsidized Stafford Loans a stu- 1 dent described in subparagraph (B)(i) may bor- 2 row in an academic year (as defined in section 3 481(a)(2)) or its equivalent shall be the max- 4 imum annual amount for such student deter- 5 mined under section 428H, plus an amount 6 equal to the amount of Federal Direct Stafford 7 Loans the student would have received in the 8 absence of subparagraph (A)(i).’’. 9 SEC. 3. ESTABLISHMENT OF THE INCOME DEPENDENT 10 EDUCATION ASSISTANCE LOAN PROGRAM 11 AND THE IDEA LOAN REPAYMENT PROGRAM. 12 Title IV of the Higher Education Act of 1965 (20 13 U.S.C. 1070a et seq.) is amended by adding at the end 14 the following new part: 15 ‘‘PART J—INCOME DEPENDENT EDUCATION 16 ASSISTANCE LOANS 17 ‘‘Subpart 1—IDEA Loans 18 ‘‘SEC. 499A. PROGRAM AUTHORITY AND AGREEMENTS. 19 ‘‘(a) PROGRAM AUTHORITY.— 20 ‘‘(1) IN GENERAL.—There are hereby made 21 available, in accordance with the provisions of this 22 part, such sums as may be necessary to make loans 23 to all eligible students in attendance at participating 24 institutions of higher education selected by the Sec- 25 VerDate Sep 11 2014 02:09 Aug 15, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H4079.IH H4079 pamtmann on DSKBFK8HB2PROD with BILLS 5 •HR 4079 IH retary, to enable such students to pursue their 1 courses of study at such institutions during the pe- 2 riod beginning July 1, 2019. Loans made under this 3 part shall be made by participating institutions, or 4 consortia thereof, that have agreements with the 5 Secretary to originate loans, or by alternative origi- 6 nators designated by the Secretary to make loans for 7 students in attendance at participating institutions. 8 ‘‘(2) DESIGNATION.—The program established 9 under this subpart shall be referred to as the ‘In- 10 come Dependent Education Assistance Loan Pro- 11 gram’, or the ‘IDEA Loan Program’. 12 ‘‘(b) FUNDS FOR THE ORIGINATION OF IDEA 13 LOANS.—The Secretary shall provide funds for student 14 loans under this part in the same manner as the Secretary 15 provides funds for the origination of Federal Direct Stu- 16 dent Loans under part D in accordance with section 452. 17 The requirements, rights, and limitations under section 18 452 with respect to the Secretary and institutions for 19 funds provided for loans under part D shall apply with 20 respect to the Secretary and institutions for funds pro- 21 vided for loans under this part, except that funds under 22 this part shall not be provided for parent loans. 23 VerDate Sep 11 2014 02:09 Aug 15, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H4079.IH H4079 pamtmann on DSKBFK8HB2PROD with BILLS 6 •HR 4079 IH ‘‘(c) SELECTION OF INSTITUTIONS FOR PARTICIPA- 1 TION AND ORIGINATION, AND AGREEMENTS WITH INSTI- 2 TUTIONS.— 3 ‘‘(1) SELECTION OF INSTITUTIONS FOR PAR- 4 TICIPATION AND ORIGINATION.—The Secretary shall 5 enter into agreements with institutions of higher 6 education to participate in the IDEA Loan Program 7 under this part and agreements with institutions of 8 higher education, or consortia thereof, to originate 9 loans in such program for academic years beginning 10 on or after July 1, 2019. The provisions of section 11 453 shall apply with respect to agreements under 12 this section. The Secretary shall provide alternative 13 origination services for loans under this part, as ap- 14 propriate, in a manner consistent with the provisions 15 of sections 453 and 456 related to alternative origi- 16 nation services for loans under part D. 17 ‘‘(2) PARTICIPATION AND ORIGINATION AGREE- 18 MENTS WITH INSTITUTIONS.—An agreement with 19 any institution of higher education for participation 20 in the IDEA Loan Program under this part, and an 21 agreement with any institution of higher education, 22 or consortia thereof, to originate loans in such pro- 23 gram, shall have the same terms as the terms re- 24 quired under section 454 for agreements with an in- 25 VerDate Sep 11 2014 02:09 Aug 15, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H4079.IH H4079 pamtmann on DSKBFK8HB2PROD with BILLS 7 •HR 4079 IH stitution for participation or origination, respec- 1 tively, in the student loan program under part D, 2 except that agreements for participation or origina- 3 tion under this part shall not apply to parent loans. 4 ‘‘(3) WITHDRAWAL AND TERMINATION PROCE- 5 DURES.—The Secretary shall establish procedures by 6 which institutions or consortia may withdraw or be 7 terminated from the program under this part. 8 ‘‘SEC. 499B. TERMS AND CONDITIONS OF IDEA LOANS. 9 ‘‘(a) PARALLEL TERMS, CONDITIONS, BENEFITS, 10 AND AMOUNTS.—Unless otherwise specified in this part, 11 Income Dependent Education Assistance Loans (herein- 12 after referred to as ‘IDEA Loans’) made to borrowers 13 under this part shall have the same terms, conditions, and 14 benefits, and be available in the same amounts, as Federal 15 Direct Unsubsidized Stafford Loans made to borrowers 16 under part D, and first disbursed on the day before the 17 date of enactment of the Earnings Contingent Education 18 Loans Act of 2019. 19 ‘‘(b) ELIGIBLE BORROWERS.— 20 ‘‘(1) IN GENERAL.—In addition to the require- 21 ments of section 484, to be eligible to receive a loan 22 (other than an IDEA Consolidation Loan) under 23 this part, a borrower— 24 VerDate Sep 11 2014 02:09 Aug 15, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H4079.IH H4079 pamtmann on DSKBFK8HB2PROD with BILLS 8 •HR 4079 IH ‘‘(A) shall be an individual who, on the 1 date of application for such loan, has no out- 2 standing balance of principal or interest owing 3 on any loan made, insured, or guaranteed under 4 part B or D (other than an excepted PLUS 5 loan or an excepted consolidation loan (as such 6 terms are defined in section 493C(a))); or 7 ‘‘(B) in the case of an individual with an 8 outstanding balance of principal or interest 9 owing on any loan described in subparagraph 10 (A), shall consolidate all such existing loans 11 into an IDEA Consolidation Loan under section 12 499C. 13 ‘‘(2) ONLY STUDENT BORROWERS ELIGIBLE.— 14 For purposes of this part, the term ‘borrower’ shall 15 not include a parent borrower. 16 ‘‘(c) ANNUAL AND AGGREGATE LIMITS.— 17 ‘‘(1) IN GENERAL.—Subject to paragraph (2), 18 the maximum annual amount of IDEA Loans in any 19 academic year (as defined in section 481(a)(2)) or 20 its equivalent, and the maximum aggregate amount 21 of IDEA Loans that a student may borrow, shall be 22 the maximum annual amounts and maximum aggre- 23 gate amounts, respectively, of Federal Direct Unsub- 24 sidized Stafford Loans under part D that such stu- 25 VerDate Sep 11 2014 02:09 Aug 15, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H4079.IH H4079 pamtmann on DSKBFK8HB2PROD with BILLS 9 •HR 4079 IH dent would have been eligible to borrow in the ab- 1 sence of section 455(a)(4), as added by Earnings 2 Contingent Education Loans Act of 2019. 3 ‘‘(2) GRADUATE AND PROFESSIONAL STU- 4 DENTS.—In the case of a graduate or professional 5 student who would have been eligible to borrow a 6 Federal Direct PLUS Loan under part D in the ab- 7 sence of section 455(a)(4), as added by Earnings 8 Contingent Education Loans Act of 2019, the max- 9 imum annual amounts and maximum aggregate 10 amounts, respectively, of IDEA Loans that the stu- 11 dent may borrow as determined under paragraph (1) 12 for any academic year (as defined in section 13 481(a)(2)) or its equivalent, may be increased to an 14 amount equal to the maximum annual amounts and 15 maximum aggregate amounts, respectively, of Fed- 16 eral Direct PLUS Loans that such student would 17 have been eligible to borrow in the absence of such 18 section 455(a)(4). 19 ‘‘(d) LOAN FEE.—The Secretary shall charge the 20 borrower of a loan (other than an IDEA Consolidation 21 Loan) made under this part an origination fee. Such fee 22 shall be the sum of— 23 ‘‘(1) for the portion of the principal amount of 24 the loan that is equal to (or less than) the maximum 25 VerDate Sep 11 2014 02:09 Aug 15, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H4079.IH H4079 pamtmann on DSKBFK8HB2PROD with BILLS 10 •HR 4079 IH annual amount a student may borrow under sub- 1 section (c)(1), 1.0 percent of such portion of the 2 principal amount of the loan, plus 3 ‘‘(2) for the portion of the principal amount of 4 the loan that exceeds the maximum annual amount 5 a student may borrow under subsection (c)(1), as 6 authorized by subsection (c)(2), 4.0 percent of such 7 portion of the principal amount of the loan. 8 ‘‘(e) INTEREST RATES.— 9 ‘‘(1) IN GENERAL.—Except as provided in para- 10 graph (2), for IDEA Loans for which the first dis- 11 bursement is made on or after July 1, 2019, the ap- 12 plicable rate of interest shall, during any 12-month 13 period beginning on July 1 and ending on June 30, 14 be determined on the preceding June 1 and be equal 15 to— 16 ‘‘(A) the bond equivalent rate of 10-year 17 Treasury bills auctioned at the final auction 18 held prior to such June 1, plus 19 ‘‘(B) 3.0 percent. 20 ‘‘(2) CERTAIN GRADUATE AND PROFESSIONAL 21 STUDENTS.—Notwithstanding paragraph (1), with 22 respect to graduate or professional students who 23 have increased maximum annual and aggregate loan 24 limits under subsection (c)(2), for IDEA Loans for 25 VerDate Sep 11 2014 02:09 Aug 15, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H4079.IH H4079 pamtmann on DSKBFK8HB2PROD with BILLS 11 •HR 4079 IH which the first disbursement is made on or after 1 July 1, 2019, the applicable rate of interest shall be 2 the weighted average of— 3 ‘‘(A) the rate determined under paragraph 4 (1) for the portion of the principal amount of 5 the loan that is equal to (or less than) the max- 6 imum annual amount a student may borrow 7 under subsection (c)(1); and 8 ‘‘(B) the rate determined under paragraph 9 (1), except that ‘4.1 percent’ shall be sub- 10 stituted for ‘3.0 percent’ in such determination, 11 for the portion of the principal amount of the 12 loan that exceeds the maximum annual amount 13 a student may borrow under subsection (c)(1), 14 as authorized by subsection (c)(2). 15 ‘‘(3) CONSULTATION.—The Secretary shall de- 16 termine the applicable rate of interest under para- 17 graph (1) after consultation with the Secretary of 18 the Treasury and shall publish such rate in the Fed- 19 eral Register as soon as practicable after the date of 20 determination. 21 ‘‘(4) APPLICATION OF INTEREST RATE DURING 22 THE LIFE OF THE LOAN.— 23 ‘‘(A) FIXED RATE UNTIL CAP.—The appli- 24 cable rate of interest determined under para- 25 VerDate Sep 11 2014 02:09 Aug 15, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H4079.IH H4079 pamtmann on DSKBFK8HB2PROD with BILLS 12 •HR 4079 IH graph (1) or (2) for an IDEA Loan shall be 1 fixed for the life of the loan, except that inter- 2 est shall cease to accrue when the total amount 3 of interest (both paid and unpaid) that has ac- 4 crued during the borrower’s grace and repay- 5 ment periods equals 50 percent of the total 6 amount of the loan (equal to the sum of the un- 7 paid principal, interest, penalties, and fees due 8 on the loan) as [Text truncated for display. 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