End Capitalization for Struggling Borrowers Act

I 116TH CONGRESS 1ST SESSION H. R. 4590 To amend the Higher Education Act of 1965 to terminate capitalization of interest after forbearance and certain deferment periods. IN THE HOUSE OF REPRESENTATIVES OCTOBER 1, 2019 Mr. DANNY K. DAVIS of Illinois (for himself, Mr. CASTEN of Illinois, and Ms. SPANBERGER) introduced the following bill; which was referred to the Committee on Education and Labor A BILL To amend the Higher Education Act of 1965 to terminate capitalization of interest after forbearance and certain deferment periods. 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 ‘‘End Capitalization for 4 Struggling Borrowers Act’’. 5 SEC. 2. TERMINATION OF CAPITALIZATION OF INTEREST 6 AFTER DEFERMENT OR FORBEARANCE. 7 (a) PART B AMENDMENTS.— 8 VerDate Sep 11 2014 18:51 Oct 07, 2019 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H4590.IH H4590 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 4590 IH (1) SUBSIDIZED LOANS.—Section 428(c)(3)(C) 1 of the Higher Education Act of 1965 (20 U.S.C. 2 1078(c)(3)(C)) is amended— 3 (A) in clause (iii), by inserting before the 4 semicolon the following: ‘‘, and with respect to 5 a forbearance granted to a borrower on or after 6 the date of enactment of the End Capitalization 7 for Struggling Borrowers Act on a loan made, 8 insured or guaranteed under this section or on 9 a Federal Direct Stafford Loan, provide infor- 10 mation to the borrower to assist the borrower 11 in understanding that interest shall accrue on 12 the loan but not be capitalized at the expiration 13 of such period of forbearance’’; and 14 (B) in clause (iv)— 15 (i) in subclause (III), by inserting be- 16 fore the semicolon at the end the following: 17 ‘‘, except that this subclause shall not 18 apply with respect to any period of for- 19 bearance beginning on or after the date of 20 enactment of the End Capitalization for 21 Struggling Borrowers Act’’; and 22 (ii) in subclause (IV), by inserting be- 23 fore the semicolon at the end the following: 24 ‘‘except that this subclause shall not apply 25 VerDate Sep 11 2014 18:51 Oct 07, 2019 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H4590.IH H4590 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 4590 IH with respect to any period of forbearance 1 beginning on or after the date of enact- 2 ment of the End Capitalization for Strug- 3 gling Borrowers Act’’. 4 (2) UNSUBSIDIZED LOANS.—Section 5 428H(e)(2)(A)(ii)(III) of the Higher Education Act 6 of 1965 (20 U.S.C. 1078–8(e)(2)(A)(ii)(III)) is 7 amended by inserting before the semicolon the fol- 8 lowing: ‘‘, except that with respect to a deferment 9 during a period described in clauses (ii) through (iv) 10 of section 427(a)(2)(C) or clauses (ii) through (v) of 11 section 428(b)(1)(M), or any period of forbearance 12 beginning on or after the date of enactment of the 13 End Capitalization for Struggling Borrowers Act, on 14 a loan made, insured, or guaranteed under this sec- 15 tion or on a Federal Direct Unsubsidized Stafford 16 Loan, interest shall not be added to the principal 17 amount of the loan at the expiration of such period’’. 18 (b) PART D AMENDMENTS.—Subparagraph (B) of 19 section 455(f)(1) of the Higher Education Act of 1965 20 (20 U.S.C. 1087e(f)(1)) is amended to read as follows: 21 ‘‘(B) in the case of a Federal Direct PLUS 22 Loan, a Federal Direct Unsubsidized Stafford 23 Loan, or a Federal Direct Consolidation Loan 24 not described in subparagraph (A)(ii)— 25 VerDate Sep 11 2014 22:43 Oct 07, 2019 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H4590.IH H4590 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 4590 IH ‘‘(i) for a deferment during a period 1 described in paragraph (2)(A), shall accrue 2 and be capitalized or paid by the borrower; 3 and 4 ‘‘(ii) for a deferment during a period 5 described in subparagraphs (B) through 6 (D) of paragraph (2), shall accrue but not 7 be capitalized.’’. 8 Æ VerDate Sep 11 2014 18:51 Oct 07, 2019 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6301 E:\BILLS\H4590.IH H4590 pamtmann on DSKBC07HB2PROD with BILLS