Sec. 201. Income-contingent and income-based repayment plans
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Section 455(e) ( 20 U.S.C. 1087e(e) ) is amended by adding at the end the following: The Secretary shall cancel any outstanding balance due on all loans made under this part (other than an excepted PLUS Loan or an excepted Consolidation Loan as such terms are defined in section 493C) to a borrower— for whom an income contingent repayment plan under this subsection is in effect, without regard to the period of time for which such plan has been so in effect for such borrower; who, in the absence of this paragraph, would not yet be eligible for loan cancellation under such plan; and who has repaid, pursuant to paragraph (7)— subject to subclause (II), an amount on such loans that is equal to the total amount of principal and interest that the borrower would have repaid under a standard repayment plan under section 455(d)(1)(A), based on a 10-year repayment period, when the borrower entered repayment on such loans; or in the case of a Federal Direct Consolidation Loan, an amount on such loan that is equal to the total amount of principal and interest that the borrower would have repaid under the repayment schedule established for such loan under section 428C(c)(2) on the date on which such loan was made; and an amount equal to the amount of any unpaid interest that has accrued, but was not included in the calculation of the total amount principal and interest that would have been repaid under the standard repayment plan or schedule described in clause (i)— during any deferment period described in clause
(i)or
(ii)of section 455(f)(2)(A); and during any forbearance period while serving in a medical or dental internship or residency program as described in section 428(c)(3)(A)(i)(I); and . Section 455(e) ( 20 U.S.C. 1087e(e) ) is further amended by adding at the end the following: The Secretary shall cancel the balance of interest due (in accordance with subparagraph (B)) on any loan made under this part (other than an excepted PLUS or excepted consolidation loan (as defined in section 493C)) to a borrower— who has been in repayment for not less than a 10-year period on such loan; or in the case of a Federal Direct Consolidation Loan, who has been in repayment on such loan for not less than the repayment period under the repayment schedule established for such loan under section 428C(c)(2) on the date on which such loan was made; and whose first monthly payment on such loan pursuant to paragraph
(7)that is not less than the full amount due on such loan for such month, after the date of enactment of the REAL Reforms Act, is insufficient to cover the interest that has accrued on such loan for such month, and results in higher balance of principal and interest on such loan. The Secretary shall cancel the obligation to repay the balance of interest due on such loan as of the time of the payment described in subparagraph (A)(ii) on such loan. . Section 493C(b)(7)(B) ( 20 U.S.C. 1098e(b)(7)(B) ) is amended— by redesignating clauses
(i)through
(v)as subclauses
(I)through (V), respectively, and moving the margins accordingly; by striking the following: for a period ; and inserting the following: for a period ; by inserting or at the end of clause (i)(V), as so redesignated; and by adding at the end the following: in the absence of this clause, would not yet be eligible for loan cancellation or repayment under this paragraph, and has repaid, pursuant to clause (i)— subject to item (bb), an amount on such loans that is equal to the total amount of principal and interest that the borrower would have repaid under a standard repayment plan under section 428(b)(9)(A)(i) or section 455(d)(1)(A), based on a 10-year repayment period, when the borrower entered repayment on such loans; or in the case of a Federal Direct Consolidation Loan or a loan made under section 428C, an amount on such loan that is equal to the total amount of principal and interest that the borrower would have repaid under the repayment schedule established for such loan under section 428C(c)(2) on the date on which such loan was made; and an amount equal to the amount of any unpaid interest that has accrued, but was not included in the calculation of the total amount principal and interest that would have been repaid under the standard repayment plan or schedule described in subclause (I)— during any deferment period described in section 427(a)(2)(C)(i) or 428(b)(1)(M)(i), or clause
(i)or
(ii)of section 455(f)(2)(A); and during any forbearance period while serving in a medical or dental internship or residency program as described in section 428(c)(3)(A)(i)(I); . Section 493C(b) ( 20 U.S.C. 1098e(b) ) is further amended— by striking and at end of paragraph (8); by striking the period at the end of paragraph (9); and by adding the end the following: in repaying under clause
(ii)of paragraph (7)(B) the outstanding balance of principal and interest due on a loan made under part B to a borrower who meets the requirements of such clause (ii), or in repaying under subsection
(g)the balance of interest due on a loan made under part B to a borrower who meets the requirements of such subsection (g), the Secretary shall— enter into an agreement with the holder of such loan (or, if the holder acts as an eligible lender trustee for the beneficial owner of the loan, the beneficial owner of the loan) for the purpose of assuming the repayment obligations of the borrower in accordance with subparagraph (B), except that the Secretary shall not assign to the United States the right to such loan; in the case of a repayment under paragraph (7)(B)(ii), assume the obligation of the borrower to repay the holder of such loan (or, if the holder acts as an eligible lender trustee for the beneficial owner of the loan, the beneficial owner of the loan) the total amount of principal and interest remaining to be repaid on such loan (after taking into account the amounts repaid by the borrower under paragraph (7)(B)(ii) and the Secretary under subsection (g), if applicable) according to the terms and conditions, including the repayment schedule, that were in effect with respect to such loan on the day before the Secretary assumes such obligation; or in the case of a repayment under subsection (g), assume the obligation of the borrower to repay the holder of such loan (or, if the holder acts as an eligible lender trustee for the beneficial owner of the loan, the beneficial owner of the loan) the balance of interest due on such loan as of the time of the payment described in subsection (g)(1)(B) on such loan according to the terms and conditions, including the repayment schedule, that were in effect with respect to such loan on the day before the Secretary assumes such obligation; and ensure that the holder of such loan (or, if the holder acts as an eligible lender trustee for the beneficial owner of the loan, the beneficial owner of the loan) shall, upon entering into an agreement described in subparagraph
(A)with respect to a loan of a borrower, reports to consumer reporting agencies that— in the case of a repayment under paragraph (7)(B)(ii), the borrower’s liability on such loan has been discharged; and in the case of a repayment under subsection (g), the borrower’s liability has been discharged with respect to the balance of the interest due on such loan as of the time of the payment described in subsection (g)(1)(B) on such loan. . Section 493C ( 20 U.S.C. 1098e ) is amended by adding at the end the following: Nothing in subsection (b)(10) shall be construed to authorize the Secretary to— revoke the rights to a special allowance under section 438 of the holder (or, if the holder acts as an eligible lender trustee for the beneficial owner of the loan, the beneficial owner of the loan) of the loans being repaid by the Secretary under subsection (b)(10); prepay such loan ahead of repayment schedule with respect to such loans described in subparagraph
(B)of subsection (b)(10); or use any authority or take any actions beyond what is authorized explicitly in subsection (b)(10). . Section 493C ( 20 U.S.C. 1098e ) is further amended by adding at the end the following: The Secretary shall repay or cancel the balance of interest due (in accordance with paragraph (2)) on any loan made under part B or D (other than an excepted PLUS or excepted consolidation loan) to a borrower— who has been in repayment for not less than a 10-year period on such loan; or in the case of a Federal Direct Consolidation Loan or a consolidation loan under section 428C, who has been in repayment on such loan for not less than the repayment period under the repayment schedule established for such loan under section 428C(c)(2) on the date on which such loan was made; and whose first monthly payment on such loan pursuant to subsection (b)(7) that is not less than the full amount due on such loan for such month, after the date of enactment of the REAL Reforms Act, is insufficient to cover the interest that has accrued on such loan for such month, and results in higher balance of principal and interest on such loan. The Secretary shall repay or cancel the obligation to repay the balance of interest due on such loan as of the time of the payment described in paragraph (1)(B) on such loan. .
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