Sec. 4302. Amendments to terms and conditions of loans and repayment plans
3,239 words·~15 min read·
/bill/116/hr/4674/ih/section-4302·A research copy — for the controlling text, always check the official state or federal source. Not legal advice.
Subsection
(c)of section 455 of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(c) ) is repealed. Beginning on the date of enactment of this Act, the Secretary of Education shall carry out a plan to end all eligibility for repayment plans other than a fixed repayment plan described in section 493E and an income-based repayment plan described under section 493C(f) for loans made under part B or D of title IV of the Higher Education Act of 1965, unless the borrower is enrolled in another repayment plan before such effective date, in accordance with the amendments made by this Act. Section 455(d) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(d) ) is amended— by redesignating paragraphs
(2)through
(5)as paragraphs
(3)through (6), respectively; by inserting after paragraph (1), the following: Notwithstanding paragraph (1), for the borrower of a loan made on or after July 1, 2021, and for other borrowers subject to paragraph (7), the Secretary shall offer a borrower of a loan made under this part 2 plans for repayment of such loan, including principal and interest on the loan. The borrower shall be entitled to accelerate, without penalty, repayment on the borrower’s loans under this part. The borrower may choose— a fixed repayment plan described in section 493E; or the income-based repayment plan under section 493C(f). If a borrower of a loan made under this part on or after July 1, 2021, does not select a repayment plan described in subparagraph (A), the Secretary may provide the borrower with a fixed repayment plan described in section 493E. Beginning on July 1, 2021, a borrower of a loan made under this part may change the borrower’s selection of a repayment plan in accordance with paragraph
(7)and under such terms and conditions as may be established by the Secretary. ; in paragraph (6)(B), as redesignated, by striking an income contingent repayment plan. and inserting the income-based repayment plan under section 493C(f). ; and by adding at the end the following: A borrower who is in repayment on a loan made under part B or part D before July 1, 2021— may choose to retain the repayment plan that the borrower was enrolled in on the day before such date; may elect to— enter the income-based repayment plan under section 493C(f); or enter a fixed repayment plan described in section 493E; and after electing to leave a repayment plan other than an income-based repayment plan described under section 493C(f) or a fixed repayment plan described in section 493E, shall not be permitted to re-elect a repayment plan that is not an income-based repayment plan under section 493C(f) or a fixed repayment plan described in section 493E. 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). 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. The amount of monthly payments for the covered and noncovered loans under the income-based repayment plan under section 493C(f) and the fixed repayment plan described in section 493E, 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 the income-based repayment plan under section 493C(f) and the fixed repayment plan described in section 493E 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. Clear and simple instructions on how to select the repayment plans. 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 the income-based repayment plan under section 493C(f) 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 1 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 described in subparagraph
(D)or
(E)of paragraph (1), the monthly payments under such repayment plan are higher than such monthly payments would be under the income-based repayment plan under section 493C(f). 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— provide the borrower with the income-based repayment plan under section 493C(f); and authorize the borrower to change the Secretary’s selection of a plan under this clause to the fixed repayment plan described in section 493E. 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). 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, provide the borrower with the income-based repayment plan under section 493C(f), without regard to whether the loan has been so rehabilitated. 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 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 noncovered loan means a loan made, insured, or guaranteed under this title that is not a covered loan. Notwithstanding any other provision of this subsection or any other provision of law— with respect to loans made to an eligible borrower under this part or part B, which are held by the same holder and which have different applicable rates of interest, the holder of such loans shall, unless otherwise requested by the borrower in writing, apply the borrower’s prepayment amount (within the meaning of section 682.209(b) of title 34, Code of Federal Regulations, or a successor regulation) for one or more of such loans, first toward the outstanding balance of principal due on the loan with the highest applicable rate of interest among such loans; and except as provided in clause (i), with respect to loans made to an eligible borrower under this part or part B, which are held by the same holder and which have the same applicable rates of interest, the holder of such loans shall, unless otherwise requested by the borrower in writing, apply the borrower’s prepayment amount (within the meaning of section 682.209(b) of title 34, Code of Federal Regulations, or a successor regulation) for one or more of such loans, first toward the outstanding balance of principal due on the loan with the highest principal balance among such loans. For purposes of this paragraph, the term eligible borrower means a borrower with no outstanding balance of fees, including collection costs and authorized late charges, due on any loan made under this part or part B. A prepayment amount (as described in subparagraph (A)) made by a borrower who is not an eligible borrower to a holder shall be applied first toward the borrower’s outstanding balance of fees, including collection costs and authorized late charges, due on any loan made under this part or part B held by such holder. . The amendments made by subsection (c)(4) shall— take effect as soon as the Secretary of Education determines practicable after the Secretary finalizes the procedures under section 9004, 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)(10) of the Higher Education Act of 1965, as added by subsection (c)(4)). Section 455(e) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(e) ) is further amended— in paragraph (7)(B)— by striking “or” at the end of clause (iv); by striking the period at the end of clause
(v)and inserting a semicolon; and by adding at the end the following: makes payments under the income-based repayment plan under section 493C(f); or makes payments under the fixed repayment plan described in section 493E. ; and A borrower repaying a loan pursuant to income-contingent repayment under this subsection may elect at any time to terminate repayment under such repayment plan and repay such loan under the income-based repayment plan under section 493C(f) or the fixed repayment plan described in section 493E. . Section 455(e) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(e) ) is amended— in paragraph (3)— by striking does not reasonably reflect the borrower’s current income and inserting whose income has decreased relative to the adjusted gross income available to the Secretary ; and by inserting , consistent with the procedures established under paragraph (9)(B)(iv) before the period at the end; and by adding at the end the following: In this paragraph, the term covered loan has the meaning given the term in subsection (d)(10). Beginning as soon as the Secretary determines practicable after the Secretary finalizes the procedures under section 9004 of the College Affordability Act , but not later than 2 years after the date of enactment of such Act, the Secretary shall establish and implement, with respect to any borrower described in subparagraph (C), procedures to— obtain (for each year of repayment and without further action by the borrower) such information as is reasonably necessary regarding the income of such borrower (and the borrower’s spouse, if applicable), for the purpose of determining the repayment obligation of the borrower for such year, including information with respect to the borrower’s family size in accordance with the procedures under section 9004 of the College Affordability Act , subject to clause (ii); allow the borrower, at any time, to opt out of clause
(i)and prevent the Secretary from obtaining information under such clause without further action by the borrower; provide the borrower with an opportunity to update the information obtained under clause
(i)before the determination of the annual repayment obligation of the borrower; and in the case of a borrower for whom adjusted gross income is unavailable— if the borrower has selected to repay the covered loans of such borrower pursuant to an income contingent 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; or if the borrower has selected to repay such loans pursuant to an income contingent repayment 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. Subparagraph
(B)shall apply to each borrower of a covered loan who, on or after the date on which the Secretary establishes procedures under such subparagraph, recertifies income and family size under such plan. The procedures established by the Secretary under this paragraph shall be consistent with the requirements of paragraphs
(1)through (7), except as otherwise provided in this paragraph. . Subparagraph
(B)of section 455(f)(1) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(f)(1) ) is amended to read as follows: in the case of a Federal Direct PLUS Loan, a Federal Direct Unsubsidized Stafford Loan, or a Federal Direct Consolidation Loan not described in subparagraph (A)(ii), beginning on or after the date of enactment of the College Affordability Act— for a deferment during a period described in paragraph (2)(A)(i), shall accrue and be capitalized or paid by the borrower; and for a deferment during a period described in subparagraphs
(B)through
(D)of paragraph (2), shall accrue but not be capitalized. . Section 455(g) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(g) ) is amended— by striking A borrower and inserting the following: A borrower ; and by adding at the end the following: A married couple, or 2 individuals who were previously a married couple, and who received a joint consolidation loan as such married couple under subparagraph
(C)of section 428C(a)(3) (as such subparagraph was in effect on or before June 30, 2006), may apply to the Secretary for each individual borrower in the married couple (or previously married couple) to receive a separate Federal Direct Consolidation Loan under this part— that shall— unless the Secretary receives notice of an agreement described in subclause (II)(aa), be equal to the sum of— the unpaid principal and accrued unpaid interest of the percentage of the joint consolidation loan that, as of the day before such joint consolidation loan was made, was attributable to the loans of the individual borrower for whom such separate consolidation loan is being made; and any other loans described in section 428C(a)(4) that such individual borrower selects for consolidation under this part; or be equal to the sum of— the unpaid principal and accrued unpaid interest of the percentage of the joint consolidation loan that, as of the date of application under this paragraph, the married couple (or previously married couple) agrees shall be considered attributable to the loans of the individual borrower for whom such separate consolidation loan is being made; and any other loans described in section 428C(a)(4) that such individual borrower selects for consolidation under this part; the proceeds of which shall be paid by the Secretary to the holder or holders— of the joint consolidation loan for the purpose of discharging the liability on the percentage of such joint consolidation loan described in subclause (I)(aa) or (II)(aa) of clause (i); and of the loans selected for consolidation under subclause (I)(bb) or subclause (II)(bb) of clause
(i)for the purpose of discharging the liability on such loans; except as otherwise provided in this paragraph, that has the same terms and conditions, and rate of interest as the joint consolidation loan; for which any payment made under section 455(m)(1)(A) on the joint consolidation loan during a period in which the individual borrower for whom such separate consolidation loan is being made was employed in a public service job described in section 455(m)(1)(B) shall be treated as if such payment were made on the portion of the separate consolidation loan described in clause (i)(I)(aa); and for which any payment made under any repayment plan described in section 455(d)(1) on the joint consolidation loan shall be treated as if such payment were made on such portion of such separate consolidation loan. Except as provided in clause (ii), to receive separate consolidation loans under subparagraph (A), both individual borrowers in a married couple (or previously married couple) shall jointly apply under subparagraph (A). An individual borrower in a married couple (or previously married couple) may apply for a separate consolidation loan under subparagraph
(A)separately and without regard to whether or when the other individual borrower in the married couple (or previously married couple) applies under subparagraph (A), in a case in which— the individual borrower has experienced from the other individual borrower— domestic violence (as defined in section 40002(a) of the Violence Against Women Act of 1994 ( 34 U.S.C. 12291(a) )); or economic abuse (including behaviors that control such borrower’s ability to acquire, use, and maintain access to money, credit, or the joint financial obligations of both borrowers); the individual borrower certifies, on a form approved by the Secretary, that such borrower is unable to reasonably reach or access the loan information of the other individual borrower; or the Secretary determines that authorizing each individual borrower to apply separately under subparagraph
(A)would be in the best fiscal interests of the Federal Government. Notwithstanding section 428C(a)(3)(A), the Secretary shall award a consolidation loan under this part to each borrower who— applies for such loan under subparagraph (A); and meets the requirements of subparagraphs
(A)and (B). Upon obtaining a Federal Direct Consolidation Loan that discharges the liability on a defaulted loan made, insured, or guaranteed under this title, the Secretary, guaranty agency, or other holder of the loan shall request any consumer reporting agency to which the Secretary, guaranty agency or holder, as applicable, reported the default of the loan, to remove any adverse item of information relating to a delinquent or defaulted loan made, insured, or guaranteed under this title from the borrower’s credit history. . Subsection
(q)of section 455 of the Higher Education Act of 1965 ( 20 U.S.C. 1087e ) is repealed.
Connectionstraces to 2
Traces to 2 documents
Citation graph
cites case law
Cites 2Cited by 0 across 0 sources