Student Loan Repayment and FAFSA Simplification Act

II 116TH CONGRESS 2D SESSION S. 4247 To simplify loan repayment for Federal student loans under title IV of the Higher Education Act of 1965, to make it easier to apply for Federal aid and making that aid predictable, and for other purposes. IN THE SENATE OF THE UNITED STATES JULY 21, 2020 Mr. ALEXANDER introduced the following bill; which was read twice and referred to the Committee on Health, Education, Labor, and Pensions A BILL To simplify loan repayment for Federal student loans under title IV of the Higher Education Act of 1965, to make it easier to apply for Federal aid and making that aid predictable, 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 Repay- 4 ment and FAFSA Simplification Act’’. 5 SEC. 2. SIMPLIFYING STUDENT LOAN REPAYMENT. 6 (a) IN GENERAL.—Section 455 of the Higher Edu- 7 cation Act of 1965 (20 U.S.C. 1087e) is amended— 8 VerDate Sep 11 2014 04:56 Aug 04, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S4247.IS S4247 kjohnson on DSK79L0C42PROD with BILLS 2 •S 4247 IS (1) in subsection (d)(1)— 1 (A) in subparagraph (D), by striking 2 ‘‘and’’ after the semicolon; 3 (B) in subparagraph (E), by striking the 4 period at the end and inserting ‘‘; and’’; and 5 (C) by adding at the end the following: 6 ‘‘(F) notwithstanding any other provision 7 of law, in the case of a loan described in sub- 8 section (a) that enters repayment on or after 9 October 1, 2020, or for which a borrower seeks 10 to change to a different repayment plan on or 11 after October 1, 2020, only a repayment plan 12 described in subsection (r).’’; and 13 (2) by adding at the end the following: 14 ‘‘(r) REPAYMENT.— 15 ‘‘(1) IN GENERAL.—For loans described under 16 subsection (a) that enter repayment on or after Oc- 17 tober 1, 2020, or for which the borrower seeks to 18 change to a different repayment plan on or after Oc- 19 tober 1, 2020, only the following repayment options 20 shall be made available: 21 ‘‘(A) A standard repayment plan, with a 22 fixed annual repayment amount paid over a 23 fixed period of time, not to exceed 10 years. 24 VerDate Sep 11 2014 04:56 Aug 04, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S4247.IS S4247 kjohnson on DSK79L0C42PROD with BILLS 3 •S 4247 IS ‘‘(B) An income determined repayment 1 plan, with an annual repayment amount in the 2 amount determined in accordance with para- 3 graph (2). 4 ‘‘(2) INCOME DETERMINED REPAYMENT 5 PLANS.— 6 ‘‘(A) IN GENERAL.—An income determined 7 repayment plan under paragraph (1)(B) shall 8 require a borrower to pay an amount equal to 9 10 percent of the result obtained by calculating, 10 on at least an annual basis, the amount by 11 which— 12 ‘‘(i) the borrower’s, and the bor- 13 rower’s spouse’s (if applicable), adjusted 14 gross income; exceeds 15 ‘‘(ii) 150 percent of the poverty line 16 applicable to the borrower’s family size as 17 determined under section 673(2) of the 18 Community Services Block Grant Act (42 19 U.S.C. 9902(2)). 20 ‘‘(B) EXCEPTIONS.— 21 ‘‘(i) REDUCTION FOR CERTAIN BOR- 22 ROWERS.—For a borrower, and the bor- 23 rower’s spouse (if applicable), whose ad- 24 justed gross income exceeds 800 percent of 25 VerDate Sep 11 2014 04:56 Aug 04, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S4247.IS S4247 kjohnson on DSK79L0C42PROD with BILLS 4 •S 4247 IS the poverty line applicable to the bor- 1 rower’s family size as determined under 2 section 673(2) of the Community Services 3 Block Grant Act (42 U.S.C. 9902(2)), the 4 percentage amount calculated under sub- 5 paragraph (A)(ii) shall decrease by 5 per- 6 cent for each percentage point that the 7 borrower’s adjusted gross income exceeds 8 800 percent. 9 ‘‘(ii) UNAVAILABILITY TO CERTAIN 10 BORROWERS.—The plan described in para- 11 graph (1)(B) shall not be available to the 12 borrower of a Federal Direct PLUS Loan 13 made on behalf of a dependent student or 14 a Federal Direct Consolidation Loan, if 15 proceeds of such loan were used to dis- 16 charge the liability on such Federal Direct 17 PLUS Loan. 18 ‘‘(C) REPAYMENT PERIOD.—The amount 19 of time a borrower is permitted to repay such 20 loans under paragraph (1)(B) may exceed 10 21 years. 22 ‘‘(D) LOAN FORGIVENESS.— 23 ‘‘(i) IN GENERAL.—The Secretary 24 shall repay or cancel any outstanding bal- 25 VerDate Sep 11 2014 04:56 Aug 04, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S4247.IS S4247 kjohnson on DSK79L0C42PROD with BILLS 5 •S 4247 IS ance of principal and interest due on any 1 loan repaid under the repayment plan de- 2 scribed under paragraph (1)(B)— 3 ‘‘(I) for any undergraduate bor- 4 rower who has made payments under 5 such plan for 20 years; or 6 ‘‘(II) for any graduate borrower 7 who has made payments under such 8 plan for 25 years. 9 ‘‘(ii) LIMITATION.—Any period of 10 time in which a borrower is in delinquency 11 or default shall not count toward the re- 12 payment or cancellation described in clause 13 (i). 14 ‘‘(3) MONTHLY PAYMENTS.—The Secretary 15 shall determine the borrower’s monthly payment ob- 16 ligation to satisfy the payment amount determined 17 in accordance with subparagraphs (A) or (B) of 18 paragraph (1). 19 ‘‘(4) BORROWER CHOICE.—A borrower who is 20 repaying a loan under paragraph (1)(B) may elect, 21 at any time, to terminate repayment pursuant to the 22 income determined repayment plan and repay such 23 loan under the standard repayment plan under para- 24 graph (1)(A).’’. 25 VerDate Sep 11 2014 04:56 Aug 04, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S4247.IS S4247 kjohnson on DSK79L0C42PROD with BILLS 6 •S 4247 IS (b) PUBLIC SERVICE LOAN FORGIVENESS RULES 1 FOR INCOME-DETERMINED REPAYMENT PLANS.—Section 2 455(m) of the Higher Education Act of 1965 (20 U.S.C. 3 1087e(m)) is amended— 4 (1) in paragraph (1)(A)— 5 (A) in clause (iii), by striking ‘‘or’’ after 6 the semicolon; 7 (B) in clause (iv), by striking ‘‘; and’’ and 8 inserting ‘‘; or’’; and 9 (C) by adding at the end the following: 10 ‘‘(v) payments under an income deter- 11 mined repayment plan or a standard re- 12 payment plan under subsection (r), except 13 as provided in paragraph (3); and’’; 14 (2) by redesignating paragraphs (3) and (4) as 15 paragraphs (4) and (5), respectively; and 16 (3) by inserting after paragraph (2) the fol- 17 lowing: 18 ‘‘(3) EXCEPTION.— 19 ‘‘(A) IN GENERAL.—To be eligible for loan 20 cancellation under this subsection, a borrower 21 who elects an income determined repayment 22 plan under subsection (r) shall remain in such 23 plan for the duration of repayment until such 24 loan is cancelled. 25 VerDate Sep 11 2014 04:56 Aug 04, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S4247.IS S4247 kjohnson on DSK79L0C42PROD with BILLS 7 •S 4247 IS ‘‘(B) REQUIRED NOTIFICATION AND AC- 1 KNOWLEDGEMENT.— 2 ‘‘(i) NOTIFICATION.—If a borrower 3 who has elected an income determined re- 4 payment plan under subsection (r) subse- 5 quently indicates that the borrower wishes 6 to change repayment plans, the Secretary 7 shall notify the borrower that changing re- 8 payment plans will cause any monthly pay- 9 ments made prior to such change to not 10 qualify toward the 120 monthly payments 11 required for loan cancellation under this 12 subsection. 13 ‘‘(ii) ACKNOWLEDGEMENT.—The Sec- 14 retary shall require acknowledgment of re- 15 ceipt of the notification under clause (i) 16 from any borrower who has elected an in- 17 come determined repayment plan under 18 subsection (r) and subsequently indicates 19 that the borrower wishes to change repay- 20 ment plans.’’. 21 SEC. 3. MAKING IT EASIER TO APPLY FOR FEDERAL AID 22 AND MAKING THAT AID PREDICTABLE. 23 (a) NEED ANALYSIS.— 24 VerDate Sep 11 2014 04:56 Aug 04, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S4247.IS S4247 kjohnson on DSK79L0C42PROD with BILLS 8 •S 4247 IS (1) IN GENERAL.—Section 471 of the Higher 1 Education Act of 1965 (20 U.S.C. 1087kk) is 2 amended to read as follows: 3 ‘‘SEC. 471. AMOUNT OF NEED. 4 ‘‘(a) IN GENERAL.—Except as otherwise provided 5 therein, beginning with award year 2022–2023, the 6 amount of need of any student for financial assistance 7 under this title (except subpart 1 or 2 of part A) is equal 8 to— 9 ‘‘(1) the cost of attendance of such student, 10 minus 11 ‘‘(2) the student aid index (as defined in section 12 473) for such student, minus 13 ‘‘(3) other financial assistance not received 14 under this title (as defined in section 480(j)). 15 ‘‘(b) EFFECTIVE DATE OF CHANGES.—The amend- 16 ments made to this title under the Student Loan Repay- 17 ment and FAFSA Simplification Act shall take effect be- 18 ginning with award year 2022–2023. The amounts pro- 19 vided under such amendments for award year 2020–2021 20 shall be used solely as a base to determine adjustments 21 for subsequent award years.’’. 22 (2) MAXIMUM AID UNDER PART D.—Section 23 451 of the Higher Education Act of 1965 (20 24 VerDate Sep 11 2014 04:56 Aug 04, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S4247.IS S4247 kjohnson on DSK79L0C42PROD with BILLS 9 •S 4247 IS U.S.C. 1087a) is amended by adding at the end the 1 following: 2 ‘‘(c) MAXIMUM AID.—The maximum dollar amount 3 of financial assistance provided under this part to a stu- 4 dent shall not exceed the cost of attendance for such stu- 5 dent.’’. 6 (3) GUIDANCE TO STATES.—The Secretary of 7 Education shall issue guidance for States on inter- 8 pretation and implementation of the terminology and 9 formula adjustments made under the amendments 10 made by this Act, including the student aid index, 11 formerly known as the expected family contribution, 12 and the need analysis formulas. 13 (b) COST OF ATTENDANCE AND STUDENT AID 14 INDEX.—Sections 472 and 473 of the Higher Education 15 Act of 1965 (20 U.S.C. 1087ll and 1087mm) are amended 16 to read as follows: 17 ‘‘SEC. 472. COST OF ATTENDANCE. 18 ‘‘(a) IN GENERAL.—For the purpose of this title, the 19 term ‘cost of attendance’ means— 20 ‘‘(1) tuition and fees normally assessed a stu- 21 dent carrying the same academic workload as deter- 22 mined by the institution, and including costs for 23 rental or purchase of any equipment, materials, or 24 VerDate Sep 11 2014 04:56 Aug 04, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S4247.IS S4247 kjohnson on DSK79L0C42PROD with BILLS 10 •S 4247 IS supplies required of all students in the same course 1 of study; 2 ‘‘(2) an allowance for books, supplies, and 3 transportation, including a reasonable allowance for 4 the documented rental or purchase of suggested elec- 5 tronic equipment, as determined by the institution; 6 ‘‘(3) an allowance for miscellaneous personal 7 expenses, for a student attending the institution on 8 at least a half-time basis, as determined by the insti- 9 tution; 10 ‘‘(4) an allowance for living expenses, including 11 food and housing costs, to be incurred by the stu- 12 dent attending the institution on at least a half-time 13 basis, as determined by the institution, which in- 14 cludes— 15 ‘‘(A) for students electing institutionally 16 owned or operated food services, such as board 17 or meal plans, shall be a standard allowance for 18 such services that provides the equivalent of 19 three meals each day; 20 ‘‘(B) for students not electing institution- 21 ally owned or operated food services, such as 22 board or meal plans, shall be a standard allow- 23 ance for purchasing food off campus that pro- 24 vides the equivalent of three meals each day, 25 VerDate Sep 11 2014 04:56 Aug 04, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S4247.IS S4247 kjohnson on DSK79L0C42PROD with BILLS 11 •S 4247 IS which shall not exceed the standard allowance 1 provided in paragraph (A); 2 ‘‘(C) for students without dependents re- 3 siding in institutionally owned or operated 4 housing, shall be a standard allowance deter- 5 mined by the institution based on average or 6 median amount assessed to such residents for 7 housing charges, whichever is greater; 8 ‘‘(D) for students with dependents residing 9 in institutionally owned or operated housing, 10 shall be a standard allowance determined by the 11 institution based on the average or median 12 amount assessed to such residents for housing 13 charges, whichever is greater; 14 ‘‘(E) for students living off campus, and 15 not in institutionally owned or operated hous- 16 ing, shall be a standard allowance for rent or 17 other housing costs, which, if applicable, shall 18 not exceed the standard allowance provided in 19 paragraph (C) or (D) with respect to whether 20 the student has dependents; 21 ‘‘(F) for dependent students residing at 22 home with parents shall be a standard allow- 23 ance determined by the institution; 24 VerDate Sep 11 2014 04:56 Aug 04, 2020 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S4247.IS S4247 kjohnson on DSK79L0C42PROD with BILLS 12 •S 4247 IS ‘‘(G) for students who live in housing lo- 1 cated on a military base or for which a basic al- 2 lowance is provided under section 403(b) of title 3 37, United States Code, shall be a standard al- 4 lowance for food based upon a student’s choice 5 of purchasing food on-campus or off-campus 6 (determined respectively in accordance with 7 subparagraph (A) or (B)), but not for housing 8 costs; and 9 ‘‘(H) for all other students shall be an al- 10 lowance based on the expenses reasonably in- 11 curred by such students for housing and food; 12 ‘‘(5) for a student engaged in a program of 13 study by correspondence, only tuition and fees and, 14 if required, books and supplies, travel, and housing 15 and food costs incurred specifically in fulfilling a re- 16 quired period of residential training; 17 ‘‘(6) for incarcerated students, only tuition, 18 fees, books, supplies, and the cost of obtaining a li- 19 cense, certification, or a first professional credential 20 in accordance with paragraph (13); 21 ‘‘(7) for a student enrolled in an academic pro- 22 gram in a program of study abroad approved for 23 credit by the student’s home institution, reasonable 24 VerDate Sep 11 2014 04:56 Aug 04, 2020 Jkt 099200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S4247.IS S4247 kjohnson on DSK79L0C42PROD with BILLS 13 •S 4247 IS costs associated with such study (as determined by 1 the institution at which such student is enrolled); 2 ‘‘(8) for a student with one or more dependents, 3 an allowance based on the estimated actual expenses 4 incurred for such dependent care, based on the num- 5 ber and age of such dependents, except that— 6 ‘‘(A) such [Text truncated for display. 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