Simplifying Student Loans Act

I 116TH CONGRESS 1ST SESSION H. R. 4670 To amend the Higher Education Act of 1965 to establish an income-based repayment for new loans on and after July 1, 2021, and for borrowers who enter income-based repayment after June 30, 2021, and for other purposes. IN THE HOUSE OF REPRESENTATIVES OCTOBER 11, 2019 Ms. WILD (for herself and Mrs. HAYES) 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 establish an income-based repayment for new loans on and after July 1, 2021, and for borrowers who enter income-based repayment after June 30, 2021, 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 ‘‘Simplifying Student 4 Loans Act’’. 5 VerDate Sep 11 2014 02:01 Oct 19, 2019 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H4670.IH H4670 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 4670 IH SEC. 2. TERMINATION OF CERTAIN REPAYMENT PLAN OP- 1 TIONS AND OPPORTUNITY TO CHANGE RE- 2 PAYMENT PLANS. 3 (a) SELECTION OF REPAYMENT PLANS.—Section 4 428(b) of the Higher Education Act of 1965 (20 U.S.C. 5 1078(b)) is amended— 6 (1) in paragraph (1)— 7 (A) in subparagraph (D)— 8 (i) in clause (ii), by striking ‘‘may an- 9 nually change the selection of a repayment 10 plan under this part,’’ and inserting ‘‘may 11 at any time after July 1, 2021, change the 12 selection of a repayment plan under this 13 part to one of the 2 repayment plans de- 14 scribed in paragraph (9)(C),’’; and 15 (ii) in clause (iii), by striking ‘‘be sub- 16 ject to income contingent repayment in ac- 17 cordance with subsection (m);’’ and insert- 18 ing ‘‘be subject to income-based repayment 19 in accordance with section 493C(f);’’; and 20 (B) in subparagraph (E)(i), by striking 21 ‘‘the option of repaying the loan in accordance 22 with a standard, graduated, income-sensitive, or 23 extended repayment schedule (as described in 24 paragraph (9)) established by the lender in ac- 25 cordance with regulations of the Secretary; 26 VerDate Sep 11 2014 02:01 Oct 19, 2019 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H4670.IH H4670 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 4670 IH and’’ and inserting ‘‘the option of repaying the 1 loan in accordance with a repayment plan de- 2 scribed in paragraph (9)(C) established by the 3 lender in accordance with regulations of the 4 Secretary; and’’; and 5 (2) in paragraph (9), by adding at the end the 6 following: 7 ‘‘(C) SELECTION OF REPAYMENT PLANS 8 ON AND AFTER JULY 1, 2021; OPPORTUNITY TO 9 CHANGE REPAYMENT PLANS.—Notwithstanding 10 any other provision of this paragraph, or any 11 other provision of law, and in accordance with 12 regulations, beginning on July 1, 2021, the 13 lender shall offer a borrower of a loan made, in- 14 sured, or guaranteed under this part the oppor- 15 tunity to change repayment plans, and to enroll 16 in one of the following repayment plans: 17 ‘‘(i) A fixed repayment plan described 18 in section 493E. 19 ‘‘(ii) The income-based repayment 20 plan under section 493C(f).’’. 21 SEC. 3. AMENDMENTS TO TERMS AND CONDITIONS OF 22 LOANS AND REPAYMENT PLANS. 23 (a) RULEMAKING REGARDING TERMINATION OF 24 CERTAIN REPAYMENT PLANS.—Before July 1, 2021, the 25 VerDate Sep 11 2014 02:01 Oct 19, 2019 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H4670.IH H4670 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 4670 IH Secretary of Education shall carry out a plan to end all 1 eligibility for repayment plans other than a fixed repay- 2 ment plan described in section 493E of the Higher Edu- 3 cation Act of 1965 (20 U.S.C. 1001 et seq.), as added 4 by this Act, and an income-based repayment plan de- 5 scribed under section 493C(f) of the Higher Education 6 Act of 1965 (20 U.S.C. 1001 et seq.), as added by this 7 Act, for loans made under part B or D of title IV of the 8 Higher Education Act of 1965 (20 U.S.C. 1070 et seq.), 9 unless the borrower is enrolled in another repayment plan 10 before July 1, 2021, in accordance with the amendments 11 made by this Act. 12 (b) REPAYMENT PLANS.—Section 455(d) of the 13 Higher Education Act of 1965 (20 U.S.C. 1087e(d)) is 14 amended— 15 (1) by redesignating paragraphs (2) through 16 (5) as paragraphs (3) through (6), respectively; 17 (2) by inserting after paragraph (1), the fol- 18 lowing: 19 ‘‘(2) DESIGN AND SELECTION ON AND AFTER 20 JULY 1, 2021.— 21 ‘‘(A) IN GENERAL.—Notwithstanding para- 22 graph (1), for the borrower of a loan made on 23 or after July 1, 2021, and for other borrowers 24 subject to paragraph (7), the Secretary shall 25 VerDate Sep 11 2014 02:01 Oct 19, 2019 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H4670.IH H4670 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 4670 IH offer a borrower of a loan made under this part 1 2 plans for repayment of such loan, including 2 principal and interest on the loan. The borrower 3 shall be entitled to accelerate, without penalty, 4 repayment on the borrower’s loans under this 5 part. The borrower may choose— 6 ‘‘(i) a fixed repayment plan described 7 in section 493E; or 8 ‘‘(ii) the income-based repayment plan 9 under section 493C(f). 10 ‘‘(B) SELECTION BY THE SECRETARY.—If 11 a borrower of a loan made under this part on 12 or after July 1, 2021, does not select a repay- 13 ment plan described in subparagraph (A), the 14 Secretary may provide the borrower with a 15 fixed repayment plan described in section 493E. 16 ‘‘(C) CHANGES IN SELECTIONS.—Begin- 17 ning on July 1, 2021, a borrower of a loan 18 made under this part may change the bor- 19 rower’s selection of a repayment plan in accord- 20 ance with paragraph (7) and under such terms 21 and conditions as may be established by the 22 Secretary.’’; 23 (3) in paragraph (6)(B), as redesignated, by 24 striking ‘‘an income contingent repayment plan.’’ 25 VerDate Sep 11 2014 02:01 Oct 19, 2019 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H4670.IH H4670 pamtmann on DSKBC07HB2PROD with BILLS 6 •HR 4670 IH and inserting ‘‘the income-based repayment plan 1 under section 493C(f).’’; and 2 (4) by adding at the end the following: 3 ‘‘(7) BORROWERS OF LOANS MADE BEFORE 4 JULY 1, 2021.—A borrower who is in repayment on 5 a loan made under part B or part D before July 1, 6 2021— 7 ‘‘(A) may choose to retain the repayment 8 plan that the borrower was enrolled in on the 9 day before such date; 10 ‘‘(B) may elect to— 11 ‘‘(i) enter the income-based repayment 12 plan under section 493C(f); or 13 ‘‘(ii) enter a fixed repayment plan de- 14 scribed in section 493E; 15 ‘‘(C) after electing to leave a repayment 16 plan other than an income-based repayment 17 plan described under this subsection or a fixed 18 repayment plan described in section 493E, shall 19 not be permitted to re-elect a repayment plan 20 that is not an income-based repayment plan 21 under this subsection or a fixed repayment plan 22 described in section 493E; and 23 ‘‘(D) shall retain, for purposes of repay- 24 ment or cancellation of any outstanding balance 25 VerDate Sep 11 2014 02:01 Oct 19, 2019 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H4670.IH H4670 pamtmann on DSKBC07HB2PROD with BILLS 7 •HR 4670 IH of principal and interest due on a loan as de- 1 scribed in section 493C(b)(7) any years of re- 2 payment under another income-based or income 3 contingent repayment plan under this title.’’. 4 (c) MAXIMUM REPAYMENT PERIOD FOR INCOME- 5 CONTINGENT REPAYMENT.—Section 455(e) of the Higher 6 Education Act of 1965 (20 U.S.C. 1087e(e)) is further 7 amended— 8 (1) in paragraph (7)(B)— 9 (A) by striking ‘‘or’’ at the end of clause 10 (iv); 11 (B) by striking the period at the end of 12 clause (v) and inserting a semicolon; and 13 (C) by adding at the end the following: 14 ‘‘(vi) makes payments under the in- 15 come-based repayment plan under section 16 493C(f); or 17 ‘‘(vii) makes payments under the fixed 18 repayment plan described in section 493E. 19 ‘‘(8) ADDITIONAL QUALIFYING REPAYMENT 20 PLANS.—A borrower repaying a loan pursuant to in- 21 come-contingent repayment under this subsection 22 may elect at any time to terminate repayment under 23 such repayment plan and repay such loan under the 24 income-based repayment plan under section 493C(f) 25 VerDate Sep 11 2014 02:01 Oct 19, 2019 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H4670.IH H4670 pamtmann on DSKBC07HB2PROD with BILLS 8 •HR 4670 IH or the fixed repayment plan described in section 1 493E.’’. 2 SEC. 4. INCOME-BASED REPAYMENT PLAN. 3 (a) OPTIONS TO ENTER INTO THE NEW FIXED RE- 4 PAYMENT PLAN AND INCOME-BASED REPAYMENT 5 PLAN.—Section 493C(b) of the Higher Education Act of 6 1965 (20 U.S.C. 1098e) is amended— 7 (1) in paragraph (7)(B)— 8 (A) by striking ‘‘or’’ at the end of clause 9 (iv); and 10 (B) by adding at the end the following: 11 ‘‘(vi) has made payments under the 12 income-based repayment plan under sec- 13 tion 493C(f); or 14 ‘‘(vii) has made payments under the 15 fixed repayment plan described in section 16 493E;’’; 17 (2) by amending paragraph (8) to read as fol- 18 lows: 19 ‘‘(8) a borrower who is repaying a loan made 20 under part B or D pursuant to income-based repay- 21 ment may elect, at any time, to terminate repayment 22 pursuant to income-based repayment and repay such 23 loan under the income-based repayment plan under 24 VerDate Sep 11 2014 02:01 Oct 19, 2019 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H4670.IH H4670 pamtmann on DSKBC07HB2PROD with BILLS 9 •HR 4670 IH section 493C(f) or the fixed repayment plan de- 1 scribed in section 493E;’’; 2 (3) in paragraph (9), by striking the period at 3 the end and inserting ‘‘; and’’; and 4 (4) by adding at the end the following: 5 ‘‘(10) a borrower who is repaying a loan made, 6 insured, or guaranteed under part B or D pursuant 7 to this section may repay such loan in full at any 8 time without penalty.’’. 9 (b) INCOME-BASED REPAYMENT.—Section 493C of 10 the Higher Education Act of 1965 (20 U.S.C. 1098e) is 11 amended by adding at the end the following: 12 ‘‘(f) INCOME-BASED REPAYMENT FOR NEW LOANS 13 ON AND AFTER JULY 1, 2021, AND FOR BORROWERS 14 WHO ENTER INCOME-BASED REPAYMENT AFTER JUNE 15 30, 2021.— 16 ‘‘(1) IN GENERAL.—The income-based repay- 17 ment plan under this subsection shall be carried out 18 in accordance with this section, except as otherwise 19 specified in this subsection— 20 ‘‘(A) with respect to any loan made under 21 part D on or after July 1, 2021, if such bor- 22 rower elects such income-based repayment plan 23 for the loan; and 24 VerDate Sep 11 2014 02:01 Oct 19, 2019 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H4670.IH H4670 pamtmann on DSKBC07HB2PROD with BILLS 10 •HR 4670 IH ‘‘(B) with respect to any loan made, in- 1 sured, or guaranteed under part B or D on or 2 before June 30, 2021, if such borrower elects to 3 repay the loan under such income-based repay- 4 ment plan on or after July 1, 2021. 5 ‘‘(2) SPECIAL TERMS.—Notwithstanding any 6 other provision of this section, with respect to a loan 7 described under paragraph (1), the following terms 8 shall apply to the income-based repayment plan 9 under this subsection: 10 ‘‘(A)(i) Notwithstanding subsection 11 (a)(3)(B), the repayment amount under this 12 subsection shall be an amount equal to 10 per- 13 cent of the result obtained by calculating, on at 14 least an annual basis, the amount by which the 15 adjusted gross income of the borrower (subject 16 to clause (ii)) exceeds the applicable percentage 17 of the poverty line in accordance with clause 18 (iii). 19 ‘‘(ii)(I) Subject to subclause (II), in the 20 case of a married borrower (regardless of tax 21 filing status), clause (i) shall be applied by sub- 22 stituting ‘the adjusted gross income of the bor- 23 rower and the borrower’s spouse’ for ‘the ad- 24 justed gross income of the borrower’. 25 VerDate Sep 11 2014 02:01 Oct 19, 2019 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H4670.IH H4670 pamtmann on DSKBC07HB2PROD with BILLS 11 •HR 4670 IH ‘‘(II) Subclause (I) shall not be applicable 1 to any borrower who is married and who cer- 2 tifies to the Secretary through a form approved 3 by the Secretary that the borrower is— 4 ‘‘(aa) separated from the spouse of 5 the borrower; or 6 ‘‘(bb) unable to reasonably access the 7 income information the spouse of such bor- 8 rower. 9 ‘‘(iii) For purposes of clause (i), the term 10 ‘applicable percentage’ means 200 percent of 11 the poverty line applicable to the borrower’s 12 family size (as determined under section 673(2) 13 of the Community Services Block Grant Act 14 (42 U.S.C. 9902(2))) reduced by 5 percentage 15 points for each $1,000 by which the borrower’s 16 adjusted gross income exceeds— 17 ‘‘(I) in the case of a single borrower, 18 $80,000; and 19 ‘‘(II) in the case of a married bor- 20 rower (regardless of tax filing status), 21 $160,000. 22 ‘‘(B) Subsection (b)(7)(B) shall apply by 23 substituting ‘20 years’ for ‘25 years’. 24 VerDate Sep 11 2014 02:01 Oct 19, 2019 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H4670.IH H4670 pamtmann on DSKBC07HB2PROD with BILLS 12 •HR 4670 IH ‘‘(C) A borrower of such a loan may elect, 1 and remain enrolled in, the income-based repay- 2 ment plan under this subsection regardless of— 3 ‘‘(i) whether such borrower has a par- 4 tial financial hardship; and 5 ‘‘(ii) the income level of the borrower. 6 ‘‘(D) Notwithstanding subparagraph (A) of 7 subsection (b)(6), a borrower’s monthly pay- 8 ment— 9 ‘‘(i) shall be equal to the repayment 10 amount determined under subparagraph 11 (A) divided by 12; and 12 ‘‘(ii) may exceed the monthly repay- 13 ment amount under a standard 10-year re- 14 payment plan or a fixed repayment plan 15 described in section 493E. 16 ‘‘(E) Subparagraph (B) of subsection 17 (b)(3) shall not apply. 18 ‘‘(F) Subsection (d) shall not apply. 19 ‘‘(G) In the case of a consolidation loan 20 made under part B or D on or after the date 21 of enactment of the ‘Simplifying Student Loans 22 Act’ that is being repaid under this subsection, 23 any monthly payment made pursuant to any re- 24 payment plan listed in subsection (b)(7)(B) on 25 VerDate Sep 11 2014 02:01 Oct 19, 2019 Jkt 099200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H4670.IH H4670 pamtmann on DSKBC07HB2PROD with BILLS 13 •HR 4670 IH a loan for which the liability has been dis- 1 charged by the proceeds of such consolidation 2 loan shall be treated as a monthly payment 3 under this subsection on the portion of such 4 consolidation loan that is attributable to such 5 discharged loa [Text truncated for display. 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