Sec. 508. REPAYE
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Part G of title IV of the Higher Education Act of 1965 is amended by adding at the end the following: The term eligible loan means any outstanding loan made under part D or part B, except for a defaulted loan, an excepted PLUS loan, or an excepted consolidation loan. The terms excepted plus loan and excepted consolidation loan have the meanings given such terms in section 493C. The term partial financial hardship — when used with respect to an unmarried borrower— means that for such borrower the annual amount due on the total amount of eligible loans, as calculated under the standard repayment plan under section 455(d)(1)(A), based on a 10-year repayment period, and using the greater of— the amount due on such loans at the time the borrower entered repayment for such loans; or the amount due on such loans at the time the borrower elected the plan under this section; exceeds 10 percent of the result obtained by calculating, on at least an annual basis, the amount by which— the borrower’s adjusted gross income; exceeds 150 percent of the poverty line applicable to the borrower's family size as determined under section 673(2) of the Community Services Block Grant Act ( 42 U.S.C. 9902(2) ); and when used with respect to a married borrower— means that for such borrower the annual amount due on the total amount of the borrower’s eligible loans, and, if applicable, the borrower’s spouse’s eligible loans, as calculated under the standard repayment plan under section 455(d)(1)(A), based on a 10-year repayment period, and using the greater of— the amount due on such loans at the time the borrower or borrower’s spouse entered repayment on such loans; or the amount due on such loans at the time the borrower or the borrower’s spouse elected the plan under this section; exceeds 10 percent of the result obtained by calculating, on at least an annual basis, the amount by which— the difference between the borrower’s and borrower’s spouse’s adjusted gross income; exceeds 150 percent of the poverty line applicable to the borrower’s family size as determined under section 673(2) of the Community Services Block Grant Act ( 42 U.S.C. 9902(2) ).
The term Pay As You Earn repayment plan means the Pay As You Earn repayment plan described in section 685.209 of title 34, Code of Federal Regulations (as in effect on the date of enactment of America First Act). Notwithstanding any other provision of this Act, the Secretary shall carry out a program that meets the following requirements: Except as otherwise provided in this subsection, a borrower of any eligible loan may elect to have the borrower’s aggregate monthly payment for all such loans not to exceed the result described in subsection (a)(3) divided by 12.
The Secretary adjusts the aggregate monthly payment under paragraph (1), if— the borrower's eligible loans are not solely loans made under part D, in which case the Secretary determines the borrower’s adjusted monthly payment by multiplying the aggregate monthly payment by the percentage of the total outstanding principal amount of the borrower’s eligible loans that are loans made under part D; the borrower and borrower’s spouse have eligible loans, in which case the Secretary determines— each borrower’s percentage of the couple’s total eligible loan debt; the adjusted monthly payment for each borrower by multiplying the calculated payment by the percentage determined under clause
(i)applicable to the borrower; and if the borrower’s loans are held by multiple holders, the borrower’s adjusted monthly payment for part D loans by multiplying the adjusted monthly payment determined under clause
(ii)by the percentage of the total outstanding principal amount of the borrower's eligible loans that are made under part D; the calculated monthly payment amount under paragraph
(1)or this paragraph is less than $5.00, in which case the borrower’s monthly payment is $0.00; or the calculated monthly payment amount under paragraph
(1)or this paragraph or is equal to or greater than $5.00 but less than $10.00, in which case the borrower’s monthly payment is $10.00. If the borrower's monthly payment amount under paragraph
(1)or
(2)is not sufficient to pay the accrued interest on the borrower’s loan— for a subsidized loan made under part D or the subsidized portion of a Federal Direct Consolidation Loan— the Secretary does not charge the borrower the remaining accrued interest for a period not to exceed three consecutive years from the established repayment period start date on that loan; and after the three-year period, the Secretary charges the borrower 50 percent of the remaining accrued interest on such subsidized loan or portion of a Federal Direct Consolidation Loan; and for an unsubsidized loan made under part D, a Federal Direct PLUS Loan made to a graduate or professional student, or the unsubsidized portion of a Federal Direct Consolidation Loan, or for a subsidized loan made under part D or the subsidized portion of a Federal Direct Consolidation Loan for which the borrower has become responsible for accruing interest in accordance with section 455(q)(2), the Secretary charges the borrower 50 percent of the remaining accrued interest. The three-year period described in subparagraph (A)(i)— does not include any period during which the borrower receives an economic hardship deferment; includes any prior period of repayment under an income-based repayment plan under section 493C or the Pay-As-You-Earn repayment plan; and for a Federal Direct Consolidation Loan, includes any period in which the underlying loans were repaid under a plan described in clause
(ii)of this subparagraph. Accrued interest is capitalized— when the Secretary determines that a borrower does not have a partial financial hardship; or at the time a borrower leaves the program under this section. The amount of accrued interest capitalized under clause (i)(I) is limited to 10 percent of the original principal balance at the time the borrower entered repayment under the program under this section. After the amount of accrued interest reaches the limit described in subclause (I), interest continues to accrue, but is not capitalized while the borrower participates in the program under this section. If the borrower's monthly payment amount is not sufficient to pay any of the principal due, the payment of that principal is postponed until the borrower leaves the program under this section or the Secretary determines the borrower does not have a partial financial hardship. A borrower who no longer wishes to repay under the program under this section may change to a different repayment plan in accordance with section 455(d)(3). The Secretary applies any payment made under the program under this section in the following order: Accrued interest. Collection costs. Late charges. Loan principal. The borrower may prepay all or part of a loan at any time without penalty, as authorized under section 455(d)(1). If the prepayment amount equals or exceeds— a monthly payment amount of $10.00 or more under the repayment schedule established for the loan, the Secretary applies the prepayment consistent with the requirements of section 455(d)(1); or a monthly payment amount of $0.00 under the repayment schedule established for the loan, the Secretary applies the prepayment consistent with the requirements of subparagraph (A). The Secretary requires the borrower to provide documentation, acceptable to the Secretary, of the borrower's adjusted gross income. If the borrower's adjusted gross income is not available, or if the Secretary believes that the borrower's reported adjusted gross income does not reasonably reflect the borrower's current income, the borrower must provide other documentation to verify income. Unless otherwise directed by the Secretary, the borrower must annually certify the borrower's family size. If the borrower fails to certify family size, the Secretary assumes a family size of one for the applicable year. Each year that the borrower participates in the program under this section, the Secretary sends the borrower a written notification that provides the borrower with— the borrower’s monthly payment amount, as calculated under paragraph
(1)or (2), and the time period during which such monthly payment amount will apply (annual payment period); information about the requirement for the borrower to annually provide the information described in subparagraph (A), and an explanation that the borrower will be notified in advance of the date by which the Secretary must receive this information; an explanation of the consequences, as described under subparagraph (F), if the borrower does not provide the required information; and information about the borrower's option to request, at any time during the borrower's annual payment period, that the Secretary recalculate the borrower's monthly payment amount if the borrower's financial circumstances have changed and the income amount that was used to calculate the borrower's current monthly payment no longer reflects the borrower's current income. If the Secretary recalculates the borrower's monthly payment amount based on the borrower's request, the Secretary sends the borrower a written notification that includes the information described in this subparagraph. For each year following the first year in which a borrower participating in the plan under this section, the Secretary notifies the borrower in writing of the requirements of subparagraph
(A)not later than 60 days and not earlier than 90 days prior to the date specified in clause (ii)(I). The notification under clause
(i)shall provide the borrower with— the date, no earlier than 35 days before the end of the borrower's annual payment period, by which the Secretary must receive all of the documentation described in subparagraph
(A)(annual deadline); and the consequences if the Secretary does not receive the information within 10 days following the annual deadline specified in the notice, as described under subparagraph (F). Each time the Secretary makes a determination that a borrower does not have a partial financial hardship for each year following the first year for which borrower wishes to participate in the program under this section, the Secretary sends the borrower a written notification that unpaid interest will be capitalized in accordance with paragraph (3)(C). If a borrower who is currently repaying under another repayment plan elects the program under this section but does not provide the documentation described in subparagraph (A), the borrower remains on his or her current repayment plan. If a borrower who is currently repaying under the program under this section elects to participate in such program for a subsequent year but the Secretary does not receive the documentation described in subparagraph
(A)not later than 10 days after the specified annual deadline, the Secretary removes the borrower from the program under this section and places the borrower on an alternative repayment plan under which the borrower’s required monthly payment is the amount necessary to repay the borrower’s eligible loans in full within the earlier of— 10 years from the date the borrower begins repayment under the alternative repayment plan; or the ending date of the 20-year period as described in paragraph (8)(A)(i)(II). If the Secretary places the borrower on an alternative repayment plan in accordance with clause (i), the Secretary sends the borrower a written notification informing the borrower that— the borrower has been placed on an alternative repayment plan; the borrower’s monthly payment amount has been recalculated under clause (i); or the borrower may change to another repayment plan in accordance with section 455(d)(3). A borrower who has been removed from the program under this section or changes to another repayment plan may return to the program under this section if the borrower provides the documentation under subparagraph (A), necessary for the Secretary to calculate the borrower’s current monthly payment amount and the monthly amount the borrower would have been required to pay under the program during the period when the borrower was on the alternative repayment plan or any other repayment plan. If the Secretary determines that the total amount of the payments the borrower was required to make while on the alternative repayment plan or any other repayment plan are less than the total amount the borrower would have been required to make under the program during that period, the Secretary will adjust the borrower’s monthly payment amount to ensure that the difference between the two amounts is paid in full by the end of the 20-year period described in paragraph (8)(A)(i)(II). If the borrower returns to the program under this section or changes to the Pay As You Earn Repayment plan, the income-contingent repayment plan; or the income-based repayment plan, any payments that the borrower made under the alternative repayment plan after the borrower was removed from the program under this section will count towards forgiveness under such program or such other repayment plans. Payments made under the alternative repayment plan described in clause
(i)will not count towards public service loan forgiveness under section 455(m). The Secretary does not take the action described in clause
(i)if the Secretary receives the documentation described in subparagraph
(A)more than 10 days after the specified annual deadline, but is able to determine the borrower’s new monthly payment amount before the end of the borrower’s current annual payment period. If the Secretary receives the documentation described in subparagraph
(A)within 10 days of the specified annual deadline— the Secretary promptly determines the borrower’s new scheduled monthly payment amount and maintains the borrower’s current scheduled monthly payment amount until the new scheduled monthly payment amount is determined; if the new monthly payment amount is less than the borrower’s previously calculated plan monthly payment amount, and the borrower made payments at the previously calculated amount after the end of the most recent annual payment period— the Secretary makes the appropriate adjustment to the borrower’s account; and unless the borrower requests otherwise, the Secretary applies the excess payment amounts made after the end of the most recent annual payment period in accordance with the requirements of paragraph (6)(A); if the new monthly payment amount is equal to or greater than the borrower's previously calculated monthly payment amount, and the borrower made payments at the previously calculated payment amount after the end of the most recent annual payment period, the Secretary does not make any adjustment to the borrower's account; any payments that the borrower continued to make at the previously calculated payment amount after the end of the prior annual payment period and before the new monthly payment amount is calculated are considered to be qualifying payments for purposes of public service loan forgiveness under section 455(m), provided that the payments otherwise meet the requirements described in such section 455(m); and the new annual payment period begins on the day after the end of the most recent annual payment period. The Secretary cancels any remaining outstanding balance of principal and accrued interest on a borrower’s loans made under part D that are being repaid under the program under this section after— the borrower has made the equivalent of 240 qualifying monthly payments as defined in subparagraph (B); and 20 years have elapsed, beginning on the date determined in accordance with subparagraph (C). The Secretary determines when a borrower has met the loan forgiveness requirements under clause
(i)and does not require the borrower to submit a request for loan forgiveness. For purposes of this paragraph, a qualifying monthly payment is— a monthly payment under the program under this section, including a monthly payment amount of $0.00, as provided under paragraph (2)(C); or a month during which the borrower was not required to make a payment due to receiving an economic hardship deferment on his or her eligible loans that are made under part D. Any payments made on a defaulted loan are not qualifying monthly payments and are not counted toward the 20-year forgiveness period. For a borrower who qualifies for the program under this section, the beginning date for the 20-year repayment period is— for a borrower who has an eligible Federal Direct Consolidation Loan, the date the borrower made a qualifying monthly payment on the consolidation loan, before the date the borrower qualified for the program under this section; for a borrower who has one or more other eligible Direct Loans, the date the borrower made a qualifying monthly payment on that loan, before the date the borrower qualified for the program under this section; for a borrower who did not make a qualifying monthly payment under clause
(i)or (ii), the date the borrower made a payment on the loan under the program under this section; or if the borrower consolidates his or her eligible loans, the date the borrower made a qualifying monthly payment on the Federal Direct Consolidation Loan. Not later than 6 months prior to the anticipated date that the borrower will meet the forgiveness requirements, the Secretary sends the borrower a written notice that includes— an explanation that the borrower is approaching the date that the borrower is expected to meet the requirements to receive loan forgiveness; a reminder that the borrower must continue to make the borrower’s scheduled monthly payments; and general information on the current treatment of the forgiveness amount for tax purposes, and instructions for the borrower to contact the Internal Revenue Service for more information. After determining that a borrower has satisfied the loan forgiveness requirements, the Secretary— notifies the borrower that the borrower's obligation on the loans is satisfied; provides the borrower with the information described in clause (i)(III); and returns to the sender any payment received on a loan after loan forgiveness has been granted. .
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