Student Loan Fairness Act

II 116TH CONGRESS 2D SESSION S. 4237 To extend zero interest rate benefits and payment suspension to all Federal student loan borrowers, and for other purposes. IN THE SENATE OF THE UNITED STATES JULY 21, 2020 Mr. REED (for himself, Ms. MURKOWSKI, Mr. JONES, and Mr. TILLIS) intro- duced the following bill; which was read twice and referred to the Com- mittee on Health, Education, Labor, and Pensions A BILL To extend zero interest rate benefits and payment suspension to all Federal student loan borrowers, 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 Fairness 4 Act’’. 5 SEC. 2. ASSISTANCE FOR BORROWERS WITH FEDERAL FAM- 6 ILY EDUCATION LOANS AND FEDERAL PER- 7 KINS LOANS. 8 (a) TEMPORARY PROGRAM OF ASSISTANCE FOR BOR- 9 ROWERS WITH FEDERAL FAMILY EDUCATION LOANS 10 VerDate Sep 11 2014 18:48 Aug 01, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S4237.IS S4237 pbinns on DSKJLVW7X2PROD with BILLS 2 •S 4237 IS AND FEDERAL PERKINS LOANS.—Notwithstanding any 1 other provision of the Higher Education Act of 1965 (20 2 U.S.C. 1071 et seq.), the Secretary of Education shall 3 carry out a temporary program to make interest payments 4 on behalf of borrowers on loans made under part B of 5 the Higher Education Act of 1965 (20 U.S.C. 1071 et 6 seq.) or loans under part E of the Higher Education Act 7 of 1965 (20 U.S.C. 1087aa et seq.), that are not held by 8 the Federal Government (referred to in this section as 9 ‘‘qualifying loans’’) to assist such borrowers during the pe- 10 riod of response and recovery relating to the novel 11 coronavirus disease (COVID–19) outbreak. 12 (1) Under the program, the Secretary shall 13 enter into agreements, expeditiously, but not later 14 than 30 days after the date of enactment of this 15 Act, with eligible lenders and guaranty agencies 16 under which the Secretary shall make interest pay- 17 ments to such eligible lenders and guaranty agencies 18 on behalf of all borrowers of all qualifying loans in 19 accordance with this section. Under such agree- 20 ments— 21 (A) the Secretary shall— 22 (i) make payments on behalf of each 23 borrower of qualifying loans whose loans 24 are held by such eligible lender or guaranty 25 VerDate Sep 11 2014 18:48 Aug 01, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S4237.IS S4237 pbinns on DSKJLVW7X2PROD with BILLS 3 •S 4237 IS agency equal to the total amount of the in- 1 terest on the unpaid principal amount of 2 such loans, calculated at the borrower in- 3 terest rates established under section 427A 4 of the Higher Education Act of 1965 (20 5 U.S.C. 1077a) (or at a lesser rate as es- 6 tablished under section 427A(m) of such 7 Act, if applicable) for loans under part B 8 of such Act and calculated at the borrower 9 interest rates established under section 10 464 of such Act (20 U.S.C. 1087dd) for 11 loans under part E of such Act; and 12 (ii) make such payments to an eligible 13 lender or guaranty agency on a monthly 14 basis, for the period beginning on March 15 13, 2020, and ending on September 30, 16 2020 (referred to in this section as the 17 ‘‘applicable period’’); and 18 (B) each eligible lender and guaranty 19 agency who has entered into an agreement with 20 the Secretary under this subsection shall— 21 (i) credit the interest payments paid 22 by the Secretary under this subsection as 23 full satisfaction of the obligation of the 24 VerDate Sep 11 2014 18:48 Aug 01, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S4237.IS S4237 pbinns on DSKJLVW7X2PROD with BILLS 4 •S 4237 IS borrowers to pay interest during the appli- 1 cable period; 2 (ii) credit the account of a borrower, 3 as an amount paid on the principal or in- 4 terest of the qualifying loan in addition to 5 the amounts credited under clause (i), in 6 the case of a borrower who has made an 7 interest payment for the applicable period; 8 and 9 (iii) not later than 30 days from the 10 date of such agreement, provide a report to 11 the Secretary confirming that such bor- 12 rowers have been or will be credited in ac- 13 cordance with this subparagraph. 14 (2) For purposes of this subsection, an eligible 15 lender includes the holder of the loan or, if the hold- 16 er acts as eligible lender trustee for the beneficial 17 owner of the loan, the beneficial owner of the loan. 18 (3) Nothing in this subsection shall affect pay- 19 ment calculations under section 438 of the Higher 20 Education Act of 1965 (20 U.S.C. 1087). 21 (4) The Secretary shall ensure that each agree- 22 ment under this subsection includes every qualifying 23 loan held by the eligible lender or guaranty agency. 24 VerDate Sep 11 2014 18:48 Aug 01, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S4237.IS S4237 pbinns on DSKJLVW7X2PROD with BILLS 5 •S 4237 IS (b) TEMPORARY POSTPONEMENT OF PART B AND 1 PART E LOAN PAYMENTS.—Notwithstanding any other 2 provision of the Higher Education Act of 1965 (20 U.S.C. 3 1071 et seq.), the Secretary shall require eligible lenders 4 and guaranty agencies with agreements with the Secretary 5 under subsection (a) to suspend all payments due from 6 borrowers on qualifying loans through September 30, 7 2020. 8 (1) CONSIDERATION OF PAYMENTS.—Notwith- 9 standing any other provision of the Higher Edu- 10 cation Act of 1965 (20 U.S.C. 1001 et seq.), the 11 Secretary shall deem each month for which a loan 12 payment was suspended under this subsection as if 13 the borrower of the loan had made a qualified pay- 14 ment for the purpose of any loan forgiveness pro- 15 gram and loan rehabilitation program authorized 16 under the Higher Education Act of 1965 (20 U.S.C. 17 1071 et seq.). 18 (2) REPORTING TO CONSUMER REPORTING 19 AGENCIES.—During the period in which the bor- 20 rower payments on a loan are suspended under this 21 subsection, the Secretary shall ensure that, for the 22 purpose of reporting information about the loan to 23 a consumer reporting agency, any payment that has 24 VerDate Sep 11 2014 18:48 Aug 01, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S4237.IS S4237 pbinns on DSKJLVW7X2PROD with BILLS 6 •S 4237 IS been suspended is treated as if it were a regularly 1 scheduled payment made by a borrower. 2 (c) SUSPENDING INVOLUNTARY COLLECTION.—Not- 3 withstanding any other provision of the Higher Education 4 Act of 1965 (20 U.S.C. 1071 et seq.), the Secretary shall 5 suspend, and shall require guaranty agencies with agree- 6 ments with the Secretary under subsection (a) to suspend, 7 all involuntary collection related to the qualifying loan, 8 through September 30, 2020. Such efforts shall include— 9 (1) a wage garnishment authorized under sec- 10 tion 488A of the Higher Education Act of 1965 (20 11 U.S.C. 1095a) or section 3720D of title 31, United 12 States Code; 13 (2) a reduction of tax refund by amount of debt 14 authorized under section 3720A of title 31, United 15 States Code, or section 6402(d) of the Internal Rev- 16 enue Code of 1986; 17 (3) a reduction of any other Federal benefit 18 payment by administrative offset authorized under 19 section 3716 of title 31, United States Code (includ- 20 ing a benefit payment due to an individual under the 21 Social Security Act or any other provision described 22 in subsection (c)(3)(A)(i) of such section); and 23 (4) any other involuntary collection activity by 24 the Secretary. 25 VerDate Sep 11 2014 18:48 Aug 01, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S4237.IS S4237 pbinns on DSKJLVW7X2PROD with BILLS 7 •S 4237 IS (d) NOTICE TO BORROWERS AND TRANSITION PE- 1 RIOD.—To inform borrowers of the actions taken in ac- 2 cordance with this section and ensure an effective transi- 3 tion, the Secretary shall require eligible lenders and guar- 4 anty agencies with agreements under subsection (a) to— 5 (1) not later than 15 days after entering into 6 such agreement, notify borrowers— 7 (A) of the actions taken in accordance with 8 this section for whom payments have been sus- 9 pended and interest paid by the Secretary on 10 behalf of that borrower; 11 (B) of the actions taken in accordance with 12 subsection (c) for whom collections have been 13 suspended; 14 (C) of the option to continue making pay- 15 ments toward principal; and 16 (D) that the program under this section is 17 a temporary program; and 18 (2) beginning on August 1, 2020, carry out a 19 program to provide not less than 6 notices by postal 20 mail, telephone, or electronic communication to bor- 21 rowers indicating— 22 (A) when the borrower’s normal payment 23 obligations will resume; and 24 VerDate Sep 11 2014 18:48 Aug 01, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S4237.IS S4237 pbinns on DSKJLVW7X2PROD with BILLS 8 •S 4237 IS (B) any options the borrower may have for 1 income-driven repayment or forgiveness. 2 (e) WAIVERS.—In carrying out this section, the Sec- 3 retary may waive the application of— 4 (1) subchapter I of chapter 35 of title 44, 5 United States Code (commonly known as the ‘‘Pa- 6 perwork Reduction Act’’); 7 (2) the master calendar requirements under 8 section 482 of the Higher Education Act of 1965 9 (20 U.S.C. 1089); 10 (3) negotiated rulemaking under section 492 of 11 the Higher Education Act of 1965 (20 U.S.C. 12 1098a); and 13 (4) the requirement to publish the notices re- 14 lated to the system of records of the agency before 15 implementation required under paragraphs (4) and 16 (11) of section 552a(e) of title 5, United States 17 Code (commonly known as the ‘‘Privacy Act of 18 1974’’), except that the notices shall be published 19 not later than 180 days after the date of enactment 20 of this Act. 21 (f) DEFERMENT OR FORBEARANCE.—The Secretary 22 shall require eligible lenders and guaranty agencies with 23 agreements with the Secretary under subsection (a) to en- 24 sure that any period of deferment or forbearance on a 25 VerDate Sep 11 2014 18:48 Aug 01, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S4237.IS S4237 pbinns on DSKJLVW7X2PROD with BILLS 9 •S 4237 IS qualifying loan during the period beginning on March 13, 1 2020, and ending on September 30, 2020, shall not be 2 counted toward any cumulative limits on deferment or for- 3 bearance periods. 4 (g) ELIGIBLE LENDER.—In this section, the term 5 ‘‘eligible lender’’ shall include— 6 (1) an institution of higher education in the 7 case of a loan made under part E of the Higher 8 Education Act of 1965 (20 U.S.C. 1087aa et seq.); 9 and 10 (2) an eligible lender as defined by section 11 435(d) of the Higher Education Act of 1965 (20 12 U.S.C. 1085). 13 Æ VerDate Sep 11 2014 18:48 Aug 01, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6301 E:\BILLS\S4237.IS S4237 pbinns on DSKJLVW7X2PROD with BILLS