Sec. 109. Discharge of student loans
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Section 437(a) of the Higher Education Act of 1965 ( 20 U.S.C. 1087(a) ) is amended— by redesignating paragraph
(3)as paragraph (4); and by inserting after paragraph
(2)the following: A student borrower whom the Commissioner of Social Security has classified as medical improvement not expected for purposes of entitlement to benefits under title II of the Social Security Act ( 42 U.S.C. 401 et seq.) on the basis of a disability— shall be considered permanently and totally disabled for the purpose of discharging such borrower's loans under this subsection; and shall not be required to present additional documentation for purposes of this subsection. The Secretary and the Commissioner of Social Security shall jointly develop procedures through which the Commissioner shall, on not less than a quarterly basis, provide the Secretary with such information regarding individuals who are classified as medical improvement not expected for purposes of entitlement to benefits under title II of the Social Security Act on the basis of a disability as the Secretary shall require for purposes of carrying out this paragraph. After receiving information regarding a borrower from the Commissioner under subparagraph (B), the Secretary shall— identify whether the individual has any loans under this title; if the individual is a student borrower of a loan described in subparagraph
(A)or
(B)of section 428(a)(1), or a loan under part D, notify the borrower, in writing, that— the borrower qualifies for discharge under this section based on the determination of the Commissioner; unless the borrower requests otherwise within 30 days after receiving the notification under subclause (I), the Secretary shall discharge the borrower's liability on the loan in accordance with the requirements of this section; and there may be tax implications to the borrower for a discharge under this paragraph; and if the borrower does not opt out of the discharge under this paragraph by the date specified in the notice, discharge the borrower's liability on the loan, in accordance with the requirements of this section. Any borrower who receives a discharge under this paragraph may, during the 1-year period immediately following the discharge, request that the Secretary restore the loan and reverse the discharge without suffering any penalty. An individual who is classified by the Commissioner of Social Security as medical improvement not expected for purposes of entitlement to benefits under title II of the Social Security Act ( 42 U.S.C. 401 et seq.) on the basis of a disability and who is subsequently reclassified for such purposes as a result of changes to the standards or procedures under which the Commissioner makes such classifications— shall, notwithstanding such reclassification, be considered permanently and totally disabled for the purpose of discharging such borrower's loans under this subsection; and shall, notwithstanding such reclassification, not be required to present additional documentation for purposes of this subsection. . Section 464(c) of the Higher Education Act of 1965 ( 20 U.S.C. 1087dd(c) ) is amended by adding at the end the following: A student borrower whom the Commissioner of Social Security has classified as medical improvement not expected for purposes of entitlement to benefits under title II of the Social Security Act ( 42 U.S.C. 401 et seq.) on the basis of a disability— shall be considered permanently and totally disabled for the purpose of cancelling such borrower's loans under paragraph (1)(F); and shall not be required to present additional documentation for purposes of paragraph (1)(F). The Secretary and the Commissioner of Social Security shall jointly develop procedures through which the Commissioner shall, on not less than a quarterly basis, provide the Secretary with such information regarding individuals who are classified as medical improvement not expected for purposes of entitlement to benefits under title II of the Social Security Act on the basis of a disability as the Secretary shall require for purposes of carrying out this paragraph. After receiving information regarding a borrower from the Commissioner under subparagraph (B), the Secretary shall— identify whether the individual has any loans under this part; if the individual is a student borrower of a loan under this part, notify the borrower, in writing, that— the borrower qualifies for cancellation under this subsection based on the determination of the Commissioner; unless the borrower requests otherwise within 30 days after receiving the notification under subclause (I), the Secretary shall cancel the borrower's liability on the loan in accordance with the requirements of this subsection; and there may be tax implications to the borrower for a loan cancellation under this paragraph; and if the borrower does not opt out of the cancellation under this paragraph by the date specified in the notice, cancel the borrower's liability on the loan, in accordance with the requirements of this subsection. Any borrower who receives a cancellation under this paragraph may, during the 1-year period immediately following the cancellation, request that the Secretary restore the loan and reverse the cancellation without suffering any penalty. . The amendments made by subsections
(a)and
(b)shall take effect on the date that is 120 days after the date of enactment of this Act.
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