Sec. 2. Simplifying student loan repayment
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Section 455 of the Higher Education Act of 1965 ( 20 U.S.C. 1087e ) is amended— in subsection (d)(1)— in subparagraph (D), by striking and after the semicolon; in subparagraph (E), by striking the period at the end and inserting ; and ; and by adding at the end the following: notwithstanding any other provision of law, in the case of a loan described in subsection
(a)that enters repayment on or after October 1, 2020, or for which a borrower seeks to change to a different repayment plan on or after October 1, 2020, only a repayment plan described in subsection (r). ; and by adding at the end the following: For loans described under subsection
(a)that enter repayment on or after October 1, 2020, or for which the borrower seeks to change to a different repayment plan on or after October 1, 2020, only the following repayment options shall be made available: A standard repayment plan, with a fixed annual repayment amount paid over a fixed period of time, not to exceed 10 years. An income determined repayment plan, with an annual repayment amount in the amount determined in accordance with paragraph (2). An income determined repayment plan under paragraph (1)(B) shall require a borrower to pay an amount equal to 10 percent of the result obtained by calculating, on at least an annual basis, the amount by which— the borrower’s, and the borrower’s spouse's (if applicable), adjusted gross income; exceeds 150 percent of the poverty line applicable to the borrower’s family size as determined under section 673(2) of the Community Services Block Grant Act ( 42 U.S.C. 9902(2) ). For a borrower, and the borrower’s spouse (if applicable), whose adjusted gross income exceeds 800 percent of the poverty line applicable to the borrower’s family size as determined under section 673(2) of the Community Services Block Grant Act ( 42 U.S.C. 9902(2) ), the percentage amount calculated under subparagraph (A)(ii) shall decrease by 5 percent for each percentage point that the borrower’s adjusted gross income exceeds 800 percent. The plan described in paragraph (1)(B) shall not be available to the borrower of a Federal Direct PLUS Loan made on behalf of a dependent student or a Federal Direct Consolidation Loan, if proceeds of such loan were used to discharge the liability on such Federal Direct PLUS Loan. The amount of time a borrower is permitted to repay such loans under paragraph (1)(B) may exceed 10 years. The Secretary shall repay or cancel any outstanding balance of principal and interest due on any loan repaid under the repayment plan described under paragraph (1)(B)— for any undergraduate borrower who has made payments under such plan for 20 years; or for any graduate borrower who has made payments under such plan for 25 years. Any period of time in which a borrower is in delinquency or default shall not count toward the repayment or cancellation described in clause (i). The Secretary shall determine the borrower’s monthly payment obligation to satisfy the payment amount determined in accordance with subparagraphs
(A)or
(B)of paragraph (1). A borrower who is repaying a loan under paragraph (1)(B) may elect, at any time, to terminate repayment pursuant to the income determined repayment plan and repay such loan under the standard repayment plan under paragraph (1)(A). . Section 455(m) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(m) ) is amended— in paragraph (1)(A)— in clause (iii), by striking or after the semicolon; in clause (iv), by striking ; and and inserting ; or ; and by adding at the end the following: payments under an income determined repayment plan or a standard repayment plan under subsection (r), except as provided in paragraph (3); and ; by redesignating paragraphs
(3)and
(4)as paragraphs
(4)and (5), respectively; and by inserting after paragraph
(2)the following: To be eligible for loan cancellation under this subsection, a borrower who elects an income determined repayment plan under subsection
(r)shall remain in such plan for the duration of repayment until such loan is cancelled. If a borrower who has elected an income determined repayment plan under subsection
(r)subsequently indicates that the borrower wishes to change repayment plans, the Secretary shall notify the borrower that changing repayment plans will cause any monthly payments made prior to such change to not qualify toward the 120 monthly payments required for loan cancellation under this subsection. The Secretary shall require acknowledgment of receipt of the notification under clause
(i)from any borrower who has elected an income determined repayment plan under subsection
(r)and subsequently indicates that the borrower wishes to change repayment plans. .
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