Sec. 137. Special rules relating to Federal Direct Consolidation Loans

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During the period described in subsection (e), the Secretary shall— include, in any application for a Federal Direct Consolidation Loan under part D of title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1087a et seq,), an option for the borrower to indicate that the borrower intends to participate in the public service loan forgiveness program under section 455(m) of such Act ( 20 U.S.C. 1087e(m) ); and for each borrower who submits an application for a Federal Direct Consolidation Loan, without regard to whether the borrower indicates the intention described in clause (i)— request that the borrower submit a certification of employment; and after receiving a complete certification of employment— carry out the requirements of paragraph (2); and inform the borrower of the number of qualifying monthly payments made on the component loans before consolidation that shall be deemed, in accordance with paragraph (2)(D), to be qualifying monthly payments made on the Federal Direct Consolidation Loan.

The Secretary may not change or otherwise rescind a calculation made under paragraph (2)(D) after informing the borrower of the results of such calculation under subparagraph (A)(ii)(II)(bb). Upon receipt of a complete certification of employment under paragraph (1)(A)(ii)(II) of a borrower who receives a Federal Direct Consolidation Loan described in paragraph (1)(A), the Secretary shall— review the borrower’s payment history to identify each component loan of such Federal Direct Consolidation Loan; for each such component loan— calculate the weighted factor of the component loan, which shall be the factor that represents the portion of such Federal Direct Consolidation Loan that is attributable to such component loan; and determine the number of qualifying monthly payments made on such component loan before consolidation; calculate the number of qualifying monthly payments determined under subparagraph (B)(ii) with respect to a component loan that shall be deemed as qualifying monthly payments made on the Federal Direct Consolidation Loan by multiplying— the weighted factor of such component loan as determined under subparagraph (B)(i), by the number of qualifying monthly payments made on such component loan as determined under subparagraph (B)(ii); and calculate the total number of qualifying monthly payments with respect to the component loans of the Federal Direct Consolidation Loan that shall be deemed as qualifying monthly payments made on such Federal Direct Consolidation Loan by— adding together the result of each calculation made under subparagraph

(C)with respect to each such component loan; and rounding the number determined under clause

(i)to the nearest whole number. For purposes of this subsection: The term certification of employment , used with respect to a borrower, means a certification of the employment of the borrower in a public service job (as defined in section 455(m)(3)(B) of the Higher Education Act of 1965) on or after October 1, 2007. The term component loan , used with respect to a Federal Direct Consolidation Loan, means each loan for which the liability has been discharged by the proceeds of the Federal Direct Consolidation Loan, which— may include a loan that is not an eligible Federal Direct Loan (as defined in section 455(m)(3)(A) of the Higher Education Act of 1965); and in the case of a subsequent consolidation loan, only includes loans for which the liability has been directly discharged by such subsequent consolidation loan. The term Federal Direct Consolidation Loan means a Federal Direct Consolidation Loan made under part D of title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1087a et seq.). The term qualifying monthly payment , used with respect to a component loan, means a monthly payment on such loan made by a borrower, during a period of employment in a public service job (as defined in section 455(m)(3)(B) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(m)(3)(B) ) on or after October 1, 2007, pursuant to— a repayment plan under part B, D, or E of title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1071 et seq.; 1087a et seq.; 1087aa et seq.); or in the case of a loan made under subpart II of part A of title VII of the Public Health Service Act or under part E of title VIII of the Public Health Service Act, a repayment plan under title VII or VIII of such Act. The term qualifying monthly payment , used with respect to a Federal Direct Consolidation Loan, means a monthly payment on such loan that counts as 1 of the 120 monthly payments described in section 455(m)(1)(A) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(m)(3)(B) ). During the period described in subsection (e), with respect to a borrower who receives a Federal Direct Consolidation Loan and who intends to repay such loan under an income-contingent repayment plan under section 455(d)(1)(D) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(d)(1)(D) ) or an income-based repayment plan under section 493C of such Act ( 20 U.S.C. 1098e ), the Secretary shall— review the borrower’s payment history to identify each component loan of such Federal Direct Consolidation Loan; for each such component loan— calculate the weighted factor of the component loan, which shall be the factor that represents the portion of such Federal Direct Consolidation Loan that is attributable to such component loan; and determine the number of qualifying monthly payments made on such component loan before consolidation; calculate the number of qualifying monthly payments determined under subparagraph (B)(ii) with respect to a component loan that shall be deemed as qualifying monthly payments made on the Federal Direct Consolidation Loan by multiplying— the weighted factor of such component loan as determined under subparagraph (B)(i), by the number of qualifying monthly payments made on such component loan as determined under subparagraph (B)(ii); and calculate and inform the borrower of the total number of qualifying monthly payments with respect to the component loans of the Federal Direct Consolidation Loan that shall be deemed as qualifying monthly payments made on such Federal Direct Consolidation Loan by— adding together the result of each calculation made under subparagraph

(C)with respect to each such component loan; and rounding the number determined under clause

(i)to the nearest whole number. The Secretary may not change or otherwise rescind a calculation made under paragraph (1)(D) after informing the borrower of the results of such calculation under such paragraph. In this subsection: The terms component loan and Federal Direct Consolidation Loan have the meanings given the terms in subsection (a). Subject to clause (ii), the term qualifying monthly payment , used with respect to a component loan, means a monthly payment on such loan made by a borrower pursuant to— a repayment plan under part B, D, or E of title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1071 et seq., 1087a et seq., 1087aa et seq.); or in the case of a loan made under subpart II of part A of title VII of the Public Health Service Act ( 42 U.S.C. 292q et seq.) or under part E of title VIII of the Public Health Service Act ( 42 U.S.C. 297a et seq.), a repayment plan under title VII or VIII of such Act. For purposes of determining the number of qualifying monthly payments made on a component loan pursuant to an income-contingent repayment plan under section 455(d)(1)(D) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(d)(1)(D) ), each month a borrower is determined to meet the requirements of section 455(e)(7)(B)(i) of such Act with respect to such loan shall be treated as such a qualifying monthly payment. For purposes of determining the number of qualifying monthly payments made on a component loan pursuant to an income-based repayment plan under section 493C of such Act ( 20 U.S.C. 1098e ), each month a borrower was determined to meet the requirements of subsection (b)(7)(B) of such section 493C with respect to such loan shall be treated as such a qualifying monthly payment. The term qualifying monthly payment , used with respect to a Federal Direct Consolidation Loan, means a monthly payment on such loan that counts as a monthly payment under an income-contingent repayment plan under section 455(d)(1)(D) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(d)(1)(D) ), or an income-based repayment plan under section 493C of the Higher Education Act of 1965 ( 20 U.S.C. 1098e ). During the period described in subsection (e), the Secretary and the Secretary of Health and Human Services shall undertake a campaign to alert borrowers of a loan described in paragraph (2)— on the benefits of consolidating such loans into a Federal Direct Consolidation Loan, including the benefits of the special rules under subsections

(a)and

(b)of this section; and under which servicers and holders of Federal student loans shall provide to borrowers such consumer information, and in such manner, as determined appropriate by the Secretaries, based on conducting consumer testing to determine how to make the information as meaningful to borrowers as possible. A loan described in this paragraph is— a loan made under subpart II of part A of title VII of the Public Health Service Act or under part E of title VIII of such Act; or a loan made under part E of the Higher Education Act of 1965. Any Federal Direct Consolidation Loan for which the application is received during the period described in subsection (e), shall bear interest at an annual rate as calculated under section 455(b)(8)(D) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(b)(8)(D) ), without regard to the requirement to round the weighted average of the interest rate to the nearest higher one-eighth of one percent. The period described in this clause is the period beginning on the date of enactment of this Act, and ending on the later of— September 30, 2021; or the day following the date of enactment of this Act that is 2 months after the national U–5 measure of labor underutilization shows initial signs of recovery (as such terms are defined in section 3513(b) of the Coronavirus Aid, Relief, and Economic Security Act ( Public Law 116–136 ), as amended by this Act)). Not later than 6 months after the date of enactment of this Act, the Comptroller General of the United States shall submit a report to the authorizing committees (defined in section 103 of the Higher Education Act of 1965 ( 20 U.S.C. 1003 ) on the implementation of this section, which shall include— information on borrowers who apply for or receive a Federal Direct Consolidation Loan under part D of the Higher Education Act of 1965 during the period described in subsection (e), disaggregated— by borrowers who intend to participate in the public service loan forgiveness program under section 455(m) of such Act ( 20 U.S.C. 1087e(m) ); and by borrowers who intend to repay such loans on an income-contingent repayment plan under section 455(d)(1)(D) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(d)(1)(D) ) or an income-based repayment plan under section 493C of such Act ( 20 U.S.C. 1098e ); the extent to which the Secretary has established procedures for carrying out subsections

(a)and (b); the extent to which the Secretary and the Secretary of Health and Human Services have carried out the notification to borrowers required under subsection (c); and recommendations on improving the implementation of this section to ensure increased borrower participation.

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