Parent PLUS Loan Fairness and Responsibility Act

I 116TH CONGRESS 2D SESSION H. R. 8400 To amend the Higher Education Act of 1965 to allow certain Federal student loans to be transferred from a parent to a child, and for other purposes. IN THE HOUSE OF REPRESENTATIVES SEPTEMBER 25, 2020 Mr. FOSTER 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 allow certain Federal student loans to be transferred from a parent to a child, 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 ‘‘Parent PLUS Loan 4 Fairness and Responsibility Act’’. 5 SEC. 2. TRANSFER OF FEDERAL STUDENT LOANS FROM 6 PARENT TO CHILD. 7 Part G of title IV of the Higher Education Act of 8 1965 (20 U.S.C. 1088 et seq.) is amended by inserting 9 after section 493D the following: 10 VerDate Sep 11 2014 18:46 Oct 21, 2020 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H8400.IH H8400 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 8400 IH ‘‘SEC. 493E. TRANSFER OF FEDERAL STUDENT LOANS FROM 1 PARENT TO CHILD. 2 ‘‘(a) IN GENERAL.—A covered parent loan may be 3 transferred from the original borrower of the loan to a 4 child of such borrower in accordance with this section. 5 ‘‘(b) TRANSFER REQUIREMENTS.—A covered parent 6 loan may be transferred to a child under subsection (a) 7 only if— 8 ‘‘(1) the loan is in good standing, as determined 9 by the Secretary; 10 ‘‘(2) the loan was used to pay the educational 11 expenses of the child to whom the loan is to be 12 transferred; 13 ‘‘(3) the child to whom the loan is to be trans- 14 ferred— 15 ‘‘(A) has attained the age of 18 years; and 16 ‘‘(B) demonstrates the ability to repay the 17 loan, as determined by the Secretary in accord- 18 ance with subsection (c); 19 ‘‘(4) the child, the parent, and the lender agree, 20 in writing, to the transfer of the loan; 21 ‘‘(5) the agreement described in paragraph (4) 22 notifies the child to whom the loan is transferred of 23 the effect of the transfer on the eligibility of the loan 24 for forgiveness under section 455(m); and 25 VerDate Sep 11 2014 18:46 Oct 21, 2020 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H8400.IH H8400 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 8400 IH ‘‘(6) a period of 180 days has elapsed during 1 which the child was not pursuing— 2 ‘‘(A) at least a half-time course of study as 3 determined by an institution of higher edu- 4 cation; or 5 ‘‘(B) a course of study pursuant to a grad- 6 uate fellowship program approved by the Sec- 7 retary, or pursuant to a rehabilitation training 8 program for disabled individuals approved by 9 the Secretary. 10 ‘‘(c) DETERMINATION OF ABILITY TO REPAY 11 LOAN.—In determining the ability of a child to repay a 12 covered parent loan under subsection (b)(3)(B), the Sec- 13 retary shall consider the following: 14 ‘‘(1) The child’s employment status, income 15 level, and credit history. 16 ‘‘(2) The total dollar amount of the loans pro- 17 posed to be transferred to the child. 18 ‘‘(3) The debt-to-income ratio of the child be- 19 fore such transfer. 20 ‘‘(4) The projected debt-to-income ratio of the 21 child after such transfer. 22 ‘‘(5) Any other factors the Secretary determines 23 to be relevant to the ability of the child to repay the 24 loan. 25 VerDate Sep 11 2014 18:46 Oct 21, 2020 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H8400.IH H8400 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 8400 IH ‘‘(d) TREATMENT OF TRANSFERRED LOAN.—A cov- 1 ered parent loan transferred to a child under subsection 2 (a) shall have the same terms, conditions, and benefits ap- 3 plicable to the loan before the date of such transfer except 4 that— 5 ‘‘(1) the child to whom the loan is transferred 6 shall be treated as the original borrower of the loan; 7 and 8 ‘‘(2) the parent who transferred the loan to the 9 child shall not be responsible for paying— 10 ‘‘(A) the outstanding balance of principal 11 or interest on the loan; or 12 ‘‘(B) any other costs associated with the 13 loan, including fees. 14 ‘‘(e) EFFECT ON LOAN LIMITS.—Notwithstanding 15 any other provision of this Act, a covered parent loan 16 transferred to a child under subsection (a) shall not be 17 counted toward the child’s annual or aggregate maximum 18 loan limits under this title. 19 ‘‘(f) COVERED PARENT LOAN DEFINED.—In this 20 section, the term ‘covered parent loan’ means— 21 ‘‘(1) a loan made to a parent on behalf of a de- 22 pendent student under section 428B; 23 ‘‘(2) a Federal Direct PLUS Loan made to the 24 parent of a dependent student; or 25 VerDate Sep 11 2014 18:46 Oct 21, 2020 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H8400.IH H8400 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 8400 IH ‘‘(3) a loan made under section 428C or 1 455(g), to the extent that such loan was used to 2 repay— 3 ‘‘(A) a loan made to the parent of a de- 4 pendent student under section 428B; or 5 ‘‘(B) a Federal Direct PLUS Loan made 6 to the parent of a dependent student.’’. 7 Æ VerDate Sep 11 2014 18:46 Oct 21, 2020 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6301 E:\BILLS\H8400.IH H8400 pamtmann on DSKBC07HB2PROD with BILLS