Sec. 3. Notification and automatic enrollment procedures for borrowers who are delinquent on loans and for borrowers who rehabilitated defaulted loans
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Section 455(d) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(d) ) is amended by adding at the end the following: In the case of any borrower who is at least 60 days delinquent on a covered loan, the Secretary may obtain such information as is reasonably necessary regarding the income and family size of the borrower (and the borrower's spouse, if applicable). Returns and return information (as defined in section 6103 of the Internal Revenue Code of 1986) may be obtained under this subparagraph only to the extent authorized by section 6103(l)(13) of such Code.
With respect to each borrower of a covered loan who is at least 60 days delinquent on such loan and who has not been subject to the procedures under this paragraph for such loan in the preceding 120 days, the Secretary shall, as soon as practicable after such 60-day delinquency, provide to the borrower the following: Notification that the borrower is at least 60 days delinquent on at least 1 covered loan, and a description of all delinquent covered loans, nondelinquent covered loans, and noncovered loans of the borrower.
A brief description of the repayment plans for which the borrower is eligible and the covered loans and noncovered loans of the borrower that may be eligible for such plans, based on information available to the Secretary. Clear and simple instructions on how to select the repayment plans. The amount of monthly payments for the covered and noncovered loans under the repayment plans for which the borrower is eligible, based on information available to the Secretary, including, if the income information of the borrower is available to the Secretary under subparagraph (A)— the amount of the monthly payment under each income-driven repayment plan for which the borrower is eligible for the borrower's covered and noncovered loans, based on such income information; and the income, family size, tax filing status, and tax year information on which each monthly payment is based.
An explanation that in the case of a borrower for whom adjusted gross income is unavailable— if the borrower selects to repay the covered loans of such borrower pursuant to an income-driven repayment plan that defines discretionary income in such a manner that an individual not required under section 6012(a)(1) of the Internal Revenue Code of 1986 to file a return with respect to income taxes imposed by subtitle A of such Code may have a calculated monthly payment greater than $0, the borrower will be required to provide the Secretary with other documentation of income satisfactory to the Secretary, which documentation the Secretary may use to determine an appropriate repayment schedule; and if the borrower selects to repay such loans pursuant to an income-driven repayment plan that is not described in subclause (I), the borrower will not be required to provide the Secretary with such other documentation of income, and the borrower will have a calculated monthly payment of $0.
An explanation that the Secretary shall take the actions under subparagraph
(C)with respect to such borrower, if— the borrower is 120 days delinquent on one or more covered loans and has not selected a new repayment plan for the covered loans of the borrower; and in the case of such a borrower whose repayment plan for the covered loans of the borrower is not an income-driven repayment plan, the monthly payments under such repayment plan are higher than such monthly payments would be under an income-driven repayment plan for such loans. Instructions on updating the information of the borrower obtained under subparagraph (A). With respect to each borrower described in subparagraph
(B)who has a repayment plan for the covered loans of the borrower that meets the requirements of clause (vi)(II) of subparagraph
(B)and has not selected a new repayment plan for such loans in accordance with the notice received under such subparagraph, and who is at least 120 days delinquent on such a loan, the Secretary shall, as soon as practicable— in a case in which any of the borrower's covered loans are eligible for an income-driven repayment plan— provide the borrower with the income-driven repayment plan that requires the lowest monthly payment amount for each covered loan of the borrower, compared to any other such plan for which the borrower is eligible; or if more than one income-driven repayment plan would offer the borrower the same lowest monthly payment amount, provide the borrower with the income-driven repayment plan that has the most favorable terms for the borrower; if the plan selected under subclause
(I)is not the income-driven repayment plan that would have the lowest monthly payment amount if the borrower were eligible for such plan for the borrower’s covered loans and noncovered loans, notify the borrower of the actions, if any, the borrower may take to become eligible for such income-driven repayment plan; and authorize the borrower to change the Secretary’s selection of a plan under this clause to any plan described in paragraph
(1)for which the borrower is eligible; and in a case in which none of the borrower’s covered loans are eligible for an income-driven repayment plan, notify the borrower of the actions, if any, the borrower may take for such loans to become eligible for such a plan. With respect to each borrower of a covered loan who selects a new repayment plan in accordance with the notice received under subparagraph
(B)and who continues to be delinquent on such loan for a period described in clause (ii), the Secretary shall, as soon as practicable after such period, carry out the procedures described in clauses
(i)and
(ii)of subparagraph
(C)for the covered loans of the borrower, if such procedures would result in lower monthly repayment amounts on such loan. The duration of the period described in clause
(i)shall be the amount of time that the Secretary determines is sufficient to indicate that the borrower may benefit from repaying such loan under a new repayment plan, but in no case shall such period be less than 60 days. A borrower of a covered loan shall have the right to opt out of the procedures under this paragraph. The Secretary shall establish procedures as are necessary to effectively implement this paragraph. In the case of any borrower who is rehabilitating a covered loan pursuant to section 428F(a), the Secretary may obtain such information as is reasonably necessary regarding the income and family size of the borrower (and the borrower's spouse, if applicable). Returns and return information (as defined in section 6103 of the Internal Revenue Code of 1986) may be obtained under this subparagraph only to the extent authorized by section 6103(l)(13) of such Code. Not later than 30 days after a borrower makes the 6th payment required for the loan rehabilitation described in subparagraph (A), the Secretary shall notify the borrower of the process under subparagraph
(C)with respect to such loan. With respect to each borrower who has made the 9th payment required for the loan rehabilitation described in subparagraph (A), the Secretary shall, as soon as practicable after such payment— in a case in which any of the borrower's covered loans, without regard to whether the loan has been so rehabilitated, is eligible for an income-driven repayment plan— provide the borrower with the income-driven repayment plan that requires the lowest monthly payment amount for each covered loan of the borrower, compared to any other such plan for which the borrower is eligible; or if more than one income-driven repayment plan would offer the borrower the same lowest monthly payment amount, provide the borrower with the income-driven repayment plan that has the most favorable terms for the borrower; and if the plan selected under subclause
(I)is not the income-driven repayment plan that would have the lowest monthly payment amount if the borrower were eligible for such plan for the borrower’s covered loans and noncovered loans, notify the borrower of the actions, if any, the borrower may take to become eligible for such income-driven repayment plan; and in a case in which none of the borrower’s covered loans are eligible for an income-driven repayment plan, notify the borrower of the actions, if any, the borrower may take for such a loan to become eligible for such a plan. A borrower of a covered loan shall have the right to opt out of the procedures under this paragraph. The Secretary shall establish procedures as are necessary to effectively implement this paragraph. . Section 455(d) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(d) ), as amended by paragraph (1), is further amended by adding at the end the following: In this subsection: The term covered loan means— a loan made under this part; a loan purchased under section 459A; or a loan that has been assigned to the Secretary under section 428(c)(8) or part E. The term income-driven repayment plan means a plan described in subparagraph
(D)or
(E)of paragraph (1). The term noncovered loan means a loan made, insured, or guaranteed under this title that is not a covered loan. . Section 493C(b)(8) of the Higher Education Act of 1965 ( 20 U.S.C. 1098e(b)(8) ) is amended to read as follows: a borrower who is repaying a loan made, insured, or guaranteed under part B or D pursuant to income-based repayment may elect, at any time, to terminate repayment pursuant to income-based repayment and repay such loan under any repayment plan for which the loan is eligible in accordance with the requirements of part B or part D, respectively; and . The amendments made by paragraphs
(1)and
(2)of subsection
(a)shall— take effect as soon as the Secretary of Education determines practicable after the Secretary finalizes the procedures under section 5, but not later than 2 years after the date of enactment of this Act; and apply to all borrowers of covered loans (as defined in section 455(d)(8) of the Higher Education Act of 1965, as added by subsection (a)). The amendment made by subsection (a)(3) shall take effect on the date of enactment of this Act.
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Sec. 3
Notification and automatic enrollment procedures for borrowers who are delinquent on loans and for borrowers who rehabilitated defaulted loans
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