Sec. 104. Providing incentives to switch into simplified repayment plans
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Section 455(g) ( 20 U.S.C. 1087e(g) ) is amended— by striking and all that follows through Loans .— A borrower of and inserting the following: Loans.— A borrower of ; by striking the second sentence; and by adding at the end the following: To be eligible for a Federal Direct Consolidation Loan under this part, a borrower shall meet the eligibility criteria set forth in section 428C(a)(3), except that, notwithstanding section 428C(a)(3)(B), a borrower may obtain a Federal Direct Consolidation Loan if the borrower— obtains the Federal Direct Consolidation Loan for the purpose of— selecting the income-based repayment plan under section 493C(c) or fixed-income repayment plan under section 495E; or participating in the pause payment process under section 460B; and meets the requirements of section 428C(a)(3)(A). .
Part G of title IV ( 20 U.S.C. 1088 et seq.), as amended by section 102, is further amended by adding at the end the following: To facilitate the transition of borrowers to simplified repayment plan options, the Secretary shall reduce the interest rate applicable under section 455(b) or 427A to a loan under part B or D held by a borrower as of July 1, 2020, by 100 basis points (or the equivalent), if the borrower of the loan, after the effective date of the Affordable Loans for Any Student Act — changes from a repayment plan described in subparagraphs
(A)through
(E)of section 455(d)(1) for such loan to an income-based repayment plan under section 493C(c) or a fixed repayment plan under section 493E; or consolidates 1 or more loans under this title, or described in section 428C(a)(4), that were under a repayment plan described in subparagraphs
(A)through
(E)of section 455(d)(1), or clauses
(i)through
(v)of section 428(b)(9), into a Federal Direct Consolidation Loan and selects an income-based repayment plan under section 493C(c) or a fixed repayment plan under section 493E for the loan. The interest rate for a loan eligible for the incentive under subsection
(a)may be reduced only once under this section. The Secretary shall promulgate rules carrying out the incentive program established under this section. .
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