Federal

Student Loan Borrower Safety Net Act of 2023

Source: Congress.gov · 1,630 words in original text

What This Bill Does

This bill protects federal student loan borrowers during the transition period after the COVID-19 student loan pause ends. It requires the government to notify borrowers about their payment obligations restarting and provide options for managing their loans. The bill also gives borrowers extended time to apply for income-based repayment plans and economic hardship deferrals.

Who It Affects

Borrowers with federal student loans that had payments suspended during COVID-19, particularly those who had trouble making payments before the pause began. The U.S. Department of Education (the federal agency that manages student loans) and any servicers of student loans also must follow these rules.

Key Provisions

• The Department of Education must send borrowers at least 6 notices through mail, phone, or email at least 60 days before their payment obligations restart, explaining when payments resume, income-driven repayment options, and options for borrowers in default (Sec. 2(a)). • Borrowers who previously struggled with payments receive priority for additional notifications and outreach activities (Sec. 2(a)). • Borrowers have one year from when payments restart to apply for an income-driven repayment plan and may self-certify their income and family size (Sec. 2(a)). • Borrowers can switch repayment plans without fees or payments while switching, and the Department must tell them about the most affordable option available (Sec. 2(a)). • Borrowers facing economic hardship can apply for an economic hardship deferment (suspension of payments) for one year after payments restart by submitting written, verbal, or electronic certification (Sec. 2(a)). • If a borrower misses a payment in the first 60 days after payments restart, the loan goes into administrative forbearance (a temporary pause) for 90 days, and the Department must contact the borrower at least 6 times (Sec. 2(a)).

What Changes

The government must implement an extensive notification system for student loan borrowers before and after the payment pause ends. Borrowers gain new rights to apply for income-based repayment plans without fees for up to one year. Borrowers who miss early payments receive automatic protection through administrative forbearance instead of immediately going into default. Borrowers struggling financially can request a one-year hardship deferment more easily.

Important Definitions

"Covered loan" means a federal student loan that had payments suspended under the Higher Education Relief Opportunities for Students Act of 2003 during a qualifying emergency. "Income-driven repayment" means a repayment plan based on the borrower's income and family size. "Economic hardship deferment" means postponing loan payments due to financial difficulty. "Administrative forbearance" means a temporary pause in required payments.

Effective Date

The bill does not specify an effective date. Provisions reference "the date of enactment of the Student Loan Borrower Safety Net Act of 2023" but no specific date is stated in the bill text.

I 118TH CONGRESS 1ST SESSION H. R. 644 To protect borrowers of Federal student loans during the transition period following the end of the COVID–19 student loan repayment pause, and for other purposes. IN THE HOUSE OF REPRESENTATIVES JANUARY 31, 2023 Ms. BONAMICI (for herself, Mrs. MCBATH, Ms. WILD, Ms. NORTON, Ms. WIL- SON of Florida, Mr. CARSON, Mr. VARGAS, Mr. CLEAVER, Mr. DAVIS of Illinois, Mr. EVANS, Mr. THOMPSON of California, Ms. TITUS, Mr. TAKANO, Mr. COURTNEY, and Ms. SALINAS) introduced the following bill; which was referred to the Committee on Education and the Workforce A BILL To protect borrowers of Federal student loans during the transition period following the end of the COVID–19 student loan repayment pause, 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 Bor- 4 rower Safety Net Act of 2023’’. 5 VerDate Sep 11 2014 23:25 Feb 15, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H644.IH H644 pbinns on DSKBC07HB2PROD with BILLS 2 •HR 644 IH SEC. 2. EXTENSION OF APPLICATION AND RECERTIFI- 1 CATION DEADLINE. 2 (a) IN GENERAL.—Section 3513 of the CARES Act 3 (20 U.S.C. 1001 note) is amended— 4 (1) by amending subsection (g) to read as fol- 5 lows: 6 ‘‘(g) NOTICE TO BORROWERS OF COVERED LOANS 7 RELATING TO TRANSITION PERIOD.—Not later than the 8 date that is 60 days prior to the first day on which a bor- 9 rower’s payment obligations on a covered loan are no 10 longer suspended, as determined by the Secretary, the 11 Secretary shall carry out a program to provide a total of 12 not fewer than 6 notices through a combination of postal 13 mail, telephone, and electronic communication to such a 14 borrower indicating— 15 ‘‘(1) when the borrower’s normal payment obli- 16 gations will resume; 17 ‘‘(2) that the borrower may be eligible to enroll 18 in income-driven repayment, including a brief de- 19 scription of the most affordable and generous in- 20 come-driven repayment options; and 21 ‘‘(3) the options available to a borrower who is 22 in default, including— 23 ‘‘(A) the option to participate in the Fresh 24 Start program of the Department of Education; 25 VerDate Sep 11 2014 23:25 Feb 15, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H644.IH H644 pbinns on DSKBC07HB2PROD with BILLS 3 •HR 644 IH ‘‘(B) the option to rehabilitate or consoli- 1 date the borrower’s loans; and 2 ‘‘(C) a brief description of the benefits and 3 consequences of each option.’’; and 4 (2) by adding at the end the following: 5 ‘‘(h) PRIORITY NOTIFICATION.— 6 ‘‘(1) IN GENERAL.—In carrying out subsection 7 (g), the Secretary shall give priority in accordance 8 with paragraph (2) to notifying borrowers who— 9 ‘‘(A) during the 5-year period preceding 10 March 31, 2020, missed a payment or pay- 11 ments for a period of not less than 60 days 12 with respect to a covered loan; and 13 ‘‘(B) in the 5 years preceding March 31, 14 2020— 15 ‘‘(i) missed a payment in the first 3 16 months of entering repayment with respect 17 to such a covered loan; 18 ‘‘(ii) entered into a non-administrative 19 forbearance or a economic hardship 20 deferment with respect to such a covered 21 loan— 22 ‘‘(I) on 2 or more occasions; or 23 ‘‘(II) for a period of longer than 24 1 year; 25 VerDate Sep 11 2014 23:25 Feb 15, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H644.IH H644 pbinns on DSKBC07HB2PROD with BILLS 4 •HR 644 IH ‘‘(iii) were enrolled and subsequently 1 unenrolled, or changed to less-than-half- 2 time enrollment status, more than twice 3 after entering repayment with respect to 4 such a covered loan; 5 ‘‘(iv) defaulted on such a covered 6 loan; or 7 ‘‘(v) on 3 or more occasions, missed 8 two or more consecutive payments with re- 9 spect to such a covered loan. 10 ‘‘(2) PRIORITY.—In carrying out paragraph (1), 11 the Secretary shall— 12 ‘‘(A) notify borrowers described in such 13 paragraph of the information specified in sub- 14 section (g) through at least 3 additional and 15 subsequent notifications after the initial notifi- 16 cation; or 17 ‘‘(B) carry out other evidence-based out- 18 reach activities that are designed to assist 19 struggling borrowers or borrowers who were 20 otherwise at risk for default before the COVID– 21 19 pandemic, and report to Congress on such 22 activities. 23 ‘‘(i) APPLICATION OR RECERTIFICATION.— 24 VerDate Sep 11 2014 23:25 Feb 15, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H644.IH H644 pbinns on DSKBC07HB2PROD with BILLS 5 •HR 644 IH ‘‘(1) IN GENERAL.—A borrower of a covered 1 loan may— 2 ‘‘(A) during the period beginning on the 3 date of enactment of the Student Loan Bor- 4 rower Safety Net Act of 2023, and ending on 5 the date that is one year after the first day on 6 which a borrower’s payment obligations on such 7 loan are no longer suspended, submit a written, 8 verbal, or electronic application or reapplication 9 for an income-driven repayment plan with re- 10 spect to such loan; and 11 ‘‘(B) under an application described in 12 subparagraph (A), self-certify the income and 13 family size of such borrower. 14 ‘‘(2) CHANGE OF REPAYMENT PLANS.—With 15 respect to a covered loan, in the case of a borrower 16 of such a loan who opts to change the repayment 17 plan in which such borrower was enrolled on the 18 date of the enactment of this section— 19 ‘‘(A) no fee or payment shall be required 20 during the period in which it takes such bor- 21 rower to become enrolled in such repayment 22 plan; and 23 ‘‘(B) before the borrower selects a new re- 24 payment plan, the Secretary shall notify the 25 VerDate Sep 11 2014 23:25 Feb 15, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H644.IH H644 pbinns on DSKBC07HB2PROD with BILLS 6 •HR 644 IH borrower of the most affordable and generous 1 repayment plan available to the borrower. 2 ‘‘(3) ECONOMIC HARDSHIP.— 3 ‘‘(A) IN GENERAL.—A borrower of a cov- 4 ered loan who, due to an economic hardship, is 5 unable to make payments with respect to such 6 loan on or after the first day on which the bor- 7 rower’s payment obligations on such loan are no 8 longer suspended, may apply to the Secretary 9 for an economic hardship deferment for the pe- 10 riod beginning on the date of enactment of the 11 Student Loan Borrower Safety Net Act of 2023 12 and ending on the date that is one year after 13 the first day on which the borrower’s payment 14 obligations on such loan are no longer sus- 15 pended. To apply for such a deferment, a bor- 16 rower shall submit a written, verbal, or elec- 17 tronic certification of such economic hardship to 18 the Secretary. 19 ‘‘(B) NOTIFICATION.—The Secretary and 20 any other servicer of a covered loan shall notify 21 borrowers who miss a payment on such a loan 22 of the availability of— 23 VerDate Sep 11 2014 23:25 Feb 15, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H644.IH H644 pbinns on DSKBC07HB2PROD with BILLS 7 •HR 644 IH ‘‘(i) income-driven repayment plans 1 available in accordance with paragraph (1); 2 and 3 ‘‘(ii) an economic hardship deferment 4 under this paragraph. 5 ‘‘(C) TREATMENT OF BORROWER WITH 6 ECONOMIC HARDSHIP.—In the case of a bor- 7 rower who submits certification of an economic 8 hardship under subparagraph (A), the Sec- 9 retary shall treat such borrower in the same 10 manner as a borrower with an economic hard- 11 ship under section 435(o) of the Higher Edu- 12 cation Act of 1965 (20 U.S.C. 1085(o)). 13 ‘‘(j) MISSED PAYMENTS.—In the case of a borrower 14 of a covered loan who misses a payment or payments on 15 such a loan for the 60-day period beginning on the first 16 day on which the borrower’s payment obligations on such 17 loan are no longer suspended, the Secretary or the holder 18 of a loan described in subsection (k)(2) shall— 19 ‘‘(1) hold such loan in administrative forbear- 20 ance for a 90-day period beginning on the date that 21 is 60 days after the first day on which the bor- 22 rower’s payment obligations on such loan are no 23 longer suspended; and 24 VerDate Sep 11 2014 23:25 Feb 15, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H644.IH H644 pbinns on DSKBC07HB2PROD with BILLS 8 •HR 644 IH ‘‘(2) contact such borrower on at least 6 sepa- 1 rate occasions regarding the information included in 2 subsection (g). 3 ‘‘(k) COVERED LOAN.—In this section, the term ‘cov- 4 ered loan’ means— 5 ‘‘(1) a loan described in subsection (a); or 6 ‘‘(2) a loan— 7 ‘‘(A) made, insured, or guaranteed under 8 part B of title IV of the Higher Education Act 9 of 1965 (20 U.S.C. 1071 et seq.); and 10 ‘‘(B) for which payments were sus- 11 pended— 12 ‘‘(i) pursuant to the Higher Education 13 Relief Opportunities for Students Act of 14 2003 (Public Law 108–76; 20 U.S.C. 1070 15 note); and 16 ‘‘(ii) during a qualifying emergency.’’. 17 Æ VerDate Sep 11 2014 23:25 Feb 15, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6301 E:\BILLS\H644.IH H644 pbinns on DSKBC07HB2PROD with BILLS

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