FAIR Act

I 118TH CONGRESS 1ST SESSION H. R. 4144 To streamline and improve the Federal student loan repayment system to protect borrowers and taxpayers. IN THE HOUSE OF REPRESENTATIVES JUNE 15, 2023 Mr. OWENS (for himself, Mrs. MCCLAIN, and Ms. FOXX) introduced the fol- lowing bill; which was referred to the Committee on Education and the Workforce A BILL To streamline and improve the Federal student loan repayment system to protect borrowers and taxpayers. 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; TABLE OF CONTENTS. 3 (a) SHORT TITLE.—This Act may be cited as the 4 ‘‘Federal Assistance to Initiate Repayment Act’’ or the 5 ‘‘FAIR Act’’. 6 (b) TABLE OF CONTENTS.—The table of contents for 7 this Act is as follows: 8 Sec. 1. Short title; table of contents. Sec. 2. References. Sec. 3. Return to repayment requirements. Sec. 4. Repayment plans. VerDate Sep 11 2014 04:59 Jul 21, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6211 E:\BILLS\H4144.IH H4144 kjohnson on DSK79L0C42PROD with BILLS 2 •HR 4144 IH Sec. 5. Income-driven repayment assistance plan. Sec. 6. Deferment on loans made on or after July 1, 2024. Sec. 7. Loan rehabilitation. Sec. 8. Limitation on authority of Secretary to propose or issue regulations and executive actions. SEC. 2. REFERENCES. 1 Except as otherwise expressly provided, whenever in 2 this Act an amendment or repeal is expressed in terms 3 of an amendment to, or repeal of, a section or other provi- 4 sion, the reference shall be considered to be made to a 5 section or other provision of the Higher Education Act of 6 1965 (20 U.S.C. 1001 et seq.). 7 SEC. 3. RETURN TO REPAYMENT REQUIREMENTS. 8 (a) BORROWER NOTIFICATION.— 9 (1) NOTICE TO FEDERAL STUDENT LOAN BOR- 10 ROWERS WHO RECEIVED TEMPORARY RELIEF.— 11 During the period beginning on the date of the en- 12 actment of this Act and ending on August 31, 2023, 13 the Secretary of Education shall provide, through 2 14 or more methods of communication (including postal 15 mail, telephone, and electronic communication), a 16 total of not fewer than 12 notices to each borrower 17 of any loan made, insured, or guaranteed under title 18 IV of the Higher Education Act of 1965 (20 U.S.C. 19 1070 et seq.) indicating— 20 (A) the date on which such borrower is re- 21 quired to make monthly payments on such a 22 VerDate Sep 11 2014 04:59 Jul 21, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H4144.IH H4144 kjohnson on DSK79L0C42PROD with BILLS 3 •HR 4144 IH loan pursuant to section 271 of the Fiscal Re- 1 sponsibility Act (Public Law 118–5); 2 (B) indicating the borrower’s options for 3 repayment, including that such borrower may 4 be eligible to enroll, or may be automatically en- 5 rolled, as applicable, in an income driven repay- 6 ment assistance plan under section 494A of the 7 Higher Education Act of 1965 (as added by 8 section 5 of this Act), including a brief descrip- 9 tion of the plan and its associated benefits; and 10 (C) the options available to such a bor- 11 rower who is in default, including— 12 (i) the option to consolidate or reha- 13 bilitate the loans under section 428F(a)(5) 14 (as amended by section 7 of this Act); and 15 (ii) a brief description of the benefits 16 and consequences of each option. 17 (2) ADDITIONAL NOTIFICATION.— 18 (A) IN GENERAL.—During the period de- 19 scribed in paragraph (1), and in addition to the 20 notices required under such subsection, the Sec- 21 retary of Education shall provide the informa- 22 tion described in subparagraph (B) to each at- 23 risk borrower. 24 VerDate Sep 11 2014 04:59 Jul 21, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H4144.IH H4144 kjohnson on DSK79L0C42PROD with BILLS 4 •HR 4144 IH (B) AT-RISK BORROWER OUTREACH.—In 1 carrying out subparagraph (A), the Secretary of 2 Education shall provide, in the manner de- 3 scribed in paragraph (1), a total of not fewer 4 than 6 notices to each at-risk borrower indi- 5 cating— 6 (i) the information described in sub- 7 paragraphs (A) through (C) of paragraph 8 (1); and 9 (ii) information specific to such bor- 10 rower detailing— 11 (I) why such borrower is receiv- 12 ing the notice; and 13 (II) the steps such borrower may 14 take to avoid delinquency and default. 15 (3) RETURN TO REPAYMENT PORTAL.—Not 16 later than 30 days after the date of the enactment 17 of this Act, the Secretary of Education shall— 18 (A) publish, on a publicly accessible 19 website of the Department, an electronic re- 20 source portal; and 21 (B) through the use of such portal— 22 (i) disclose, in an easily searchable 23 format, the date or dates upon which the 24 Secretary carried out the borrower notifi- 25 VerDate Sep 11 2014 04:59 Jul 21, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H4144.IH H4144 kjohnson on DSK79L0C42PROD with BILLS 5 •HR 4144 IH cations required under paragraphs (1) and 1 (2); 2 (ii) disclose copies of any final con- 3 tract modifications (as such term is de- 4 fined in section 2.101 of title 48, Code of 5 Federal Regulations) the Secretary pro- 6 vided to Federal student loan servicers 7 under contract during the period beginning 8 March 1, 2020 and ending September 30, 9 2024, except that proprietary or confiden- 10 tial information related to such contracts 11 or contract modifications, including source 12 selection information (as such term is de- 13 fined in section 2.101 of title 48, Code of 14 Federal Regulations) and any information 15 treated as confidential by such a loan 16 servicer and obtained by the Secretary for 17 purposes of such a final contract modifica- 18 tion, shall be deemed confidential and ex- 19 empt from disclosure under this clause and 20 section 552 of title 5, United States Code, 21 relating to freedom of information; 22 (iii) provide template examples of the 23 language the Secretary used to carry out 24 VerDate Sep 11 2014 04:59 Jul 21, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H4144.IH H4144 kjohnson on DSK79L0C42PROD with BILLS 6 •HR 4144 IH the borrower notifications required under 1 paragraphs (1) and (2); and 2 (iv) provide examples of social media 3 posts for public stakeholders who wish to 4 amplify the Secretary’s communications 5 and provide borrowers with accurate infor- 6 mation. 7 (4) AT-RISK BORROWER DEFINED.—In this 8 subsection, the term ‘‘at-risk borrower’’ means a 9 borrower of a loan described in paragraph (1) that 10 is held by the Secretary of Education who, with re- 11 spect to any such loan— 12 (A) on or after March 1, 2020, was as- 13 signed a new student loan servicer; 14 (B) on or after March 1, 2020, entered re- 15 payment for the first time; 16 (C) on or after March 1, 2020, was in de- 17 fault; 18 (D) during the 2-year period preceding 19 March 1, 2020, missed a payment or payments 20 for a period of not less than 60 days; 21 (E) submitted an application for one-time 22 student debt cancellation (as described by the 23 Department of Education in the Federal Reg- 24 VerDate Sep 11 2014 04:59 Jul 21, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H4144.IH H4144 kjohnson on DSK79L0C42PROD with BILLS 7 •HR 4144 IH ister on October 12, 2022 (87 Fed. Reg. 61513 1 et seq.)); or 2 (F) received a refund from the Department 3 of Education for any payment made during the 4 period beginning on March 1, 2020, and ending 5 on August 31, 2023, that, pursuant to a waiver 6 or modification described by the Department of 7 Education in the Federal Register on October 8 12, 2022 (87 Fed. Reg. 61513 et seq.), was not 9 required. 10 (b) FEDERAL PREEMPTION.—Section 456 (20 U.S.C. 11 1087f) is amended by adding at the end the following: 12 ‘‘(c) FEDERAL PREEMPTION.— 13 ‘‘(1) IN GENERAL.—Covered activities shall not 14 be subject to any law or other requirement of any 15 State or political subdivision of a State with respect 16 to— 17 ‘‘(A) disclosure requirements; 18 ‘‘(B) requirements or restrictions on the 19 content, time, quantity, or frequency of commu- 20 nications with borrowers, endorsers, or ref- 21 erences with respect to such loans; or 22 ‘‘(C) any other requirement relating to the 23 servicing or collection of a loan made under this 24 title. 25 VerDate Sep 11 2014 04:59 Jul 21, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H4144.IH H4144 kjohnson on DSK79L0C42PROD with BILLS 8 •HR 4144 IH ‘‘(2) COVERED ACTIVITIES DEFINED.—In this 1 subsection, the term ‘covered activities’ means any 2 of the following activities, as carried out by a quali- 3 fied entity: 4 ‘‘(A) Origination of a loan made under this 5 title. 6 ‘‘(B) Servicing of a loan made under this 7 title. 8 ‘‘(C) Collection of a loan made under this 9 title. 10 ‘‘(D) Any other activity related to the ac- 11 tivities described in subparagraphs (A) through 12 (C).’’. 13 (c) PROCUREMENT FLEXIBILITY.—Section 142 (20 14 U.S.C. 1018a) is amended— 15 (1) by redesignating subsection (l) as subsection 16 (m); and 17 (2) by inserting after subsection (k) the fol- 18 lowing: 19 ‘‘(l) GUIDANCE TO STUDENT LOAN SERVICERS.— 20 ‘‘(1) IN GENERAL.—In notifying a student loan 21 servicer of a final contract modification (as such 22 term is defined in section 2.101 of title 48, Code of 23 Federal Regulations) that instructs such loan 24 servicer to perform a function that is new or dif- 25 VerDate Sep 11 2014 04:59 Jul 21, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H4144.IH H4144 kjohnson on DSK79L0C42PROD with BILLS 9 •HR 4144 IH ferent from a function such servicer performs pursu- 1 ant to an existing contract, the PBO shall, not later 2 than 30 days before such contract change takes ef- 3 fect, provide such servicers with written guidance in 4 the form of— 5 ‘‘(A) a change order (as such term is de- 6 fined in section 2.101 of title 48, Code of Fed- 7 eral Regulations); 8 ‘‘(B) a dear colleague letter; or 9 ‘‘(C) an electronic announcement. 10 ‘‘(2) NON-BINDING DIRECTIVES.—A student 11 loan servicer that is notified of a final contract 12 modification described in paragraph (1) and receives 13 guidance in a form other than a form described in 14 paragraph (1) (including through emails or phone 15 calls) shall not be subject to such contract modifica- 16 tion.’’. 17 (d) REQUIREMENTS RELATING TO ANNUAL BO- 18 NUSES OF PERFORMANCE-BASED ORGANIZATION OFFI- 19 CERS.—Section 141 (20 U.S.C. 1018) is amended— 20 (1) in subsection (c)(4)— 21 (A) in subparagraph (A), by striking 22 ‘‘and’’ at the end; 23 (B) in subparagraph (B), by striking the 24 period at the end and inserting ‘‘; and’’; and 25 VerDate Sep 11 2014 04:59 Jul 21, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H4144.IH H4144 kjohnson on DSK79L0C42PROD with BILLS 10 •HR 4144 IH (C) by adding at the end the following: 1 ‘‘(C) that the Department has carried out 2 the borrower notifications required under sec- 3 tion 3(a) of the FAIR Act.’’; 4 (2) by amending subsection (d)(5)(B) to read 5 as follows: 6 ‘‘(B) BONUS.— 7 ‘‘(i) IN GENERAL.—In addition, sub- 8 ject to clause (ii), the Chief Operating Of- 9 ficer may receive a bonus in an amount 10 that does not exceed 50 percent of such 11 annual rate of basic pay, based upon the 12 Secretary’s evaluation of the Chief Oper- 13 ating Officer’s performance in relation to 14 the goals set forth in the performance 15 agreement described in paragraph (4). 16 ‘‘(ii) EXCEPTION.—In the case of a 17 year in which the Department does not 18 carry out the activities required under sec- 19 tion 3(a) of the FAIR Act or comply with 20 the requirements of sections 142(l) or 21 456(c), the Chief Operating Officer may 22 not receive a bonus described in clause 23 (i).’’; and 24 VerDate Sep 11 2014 04:59 Jul 21, 2023 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H4144.IH H4144 kjohnson on DSK79L0C42PROD with BILLS 11 •HR 4144 IH (3) by amending subsection (e)(3)(B) to read as 1 follows: 2 ‘‘(B) BONUS.— 3 ‘‘(i) IN GENERAL.—In addition, sub- 4 ject to clause (ii), a senior manager may 5 receive a bonus in an amount such that the 6 manager’s total annual compensation does 7 not exceed 125 percent of the maximum 8 rate of basic pay for the Senior Executive 9 Service, including any applicable locality- 10 based comparability payment, based upon 11 the Chief Operating Officer’s evaluation of 12 the manager’s performance in relation to 13 the goals set forth in the performance 14 agreement described in paragraph (2). 15 ‘‘(ii) EXCEPTION.—In the case of a 16 year in which the Department does not 17 carry out the activities required under sec- 18 tion 3(a) of the FAIR Act or comply with 19 the requirements of sections 142(l) or 20 456(c), the senior manager may not re- 21 ceive a bonus described in clause (i).’’. 22 SEC. 4. REPAYMENT PLANS. 23 (a) DIRECT LOANS.—Section 455(d) (20 U.S.C. 24 1087e(d)) is amended by adding at the end the following: 25 VerDate Sep 11 2014 04:59 Jul 21, 2023 Jkt 039200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H4144.IH H4144 kjohnson on DSK79L0C42PROD with BILLS 12 •HR 4144 IH ‘‘(6) REPAYMENT PLANS FOR LOANS IN REPAY- 1 MENT ON OR AFTER JULY 1, 2023.— 2 ‘‘(A) DESIGN AND SELECTION.—Notwith- 3 standing paragraph (1), and subject to sub- 4 paragraph (E), beginning on July 1, 2023, the 5 Secretary shall offer a borrower of a loan made 6 under this part two plans for repayment of such 7 loan, including principal and interest on the 8 loan. The borrower shall be entitled to accel- 9 erate, without penalty, repayment on such 10 loans. The borrower may choose— 11 ‘‘(i) a standard repayment plan with a 12 fixed monthly repayment amount paid over 13 a fixed period of time, not to exceed 10 14 years; or 15 ‘‘(ii) an income-driven repayment as- 16 sistance plan under section 494A. 17 ‘‘(B) SELECTION BY SECRETARY.—If such 18 borrower does not select a repayment plan de- 19 scribed in subparagraph (A), the Secretary shall 20 provide the borrower with the repayment plan 21 described in subparagraph (A)(i). 22 ‘‘(C) CHANGES IN SELECTION.— 23 ‘‘(i) IN GENERAL.—Subject to clause 24 (ii), a borrower may change the borrower’s 25 VerDate Sep 11 2014 04:59 Jul 21, 2023 Jkt 039200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H4144.IH H4144 kjohnson on DSK79L0C42PROD with BILLS 13 •HR 4144 IH selection of a repayment plan under sub- 1 paragraph (A), or the Secretary’s selection 2 of a plan for the borrower under subpara- 3 graph (B), as the case may be. Nothing in 4 this subsection shall prohibit the Secretary 5 from encouraging distressed borrowers 6 from enrolling in the income-driven repay- 7 ment assistance plan under section 494A. 8 ‘‘(ii) SAME REPAYMENT PLAN RE- 9 QUIRED.— [Text truncated for display. Full text available on Congress.gov.]