Sec. 225. Income-based repayment plan
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Part D of title IV ( 20 U.S.C. 1087e et seq. ) is further amended by adding at the end the following: Notwithstanding any other provision of this Act, the Secretary shall carry out a program under which— a borrower (other than a borrower described in section 455(d)(6)(E)) of a loan made under this part on or after July 1, 2023, may elect to have the borrower’s aggregate monthly payment for all such loans (other than an excepted PLUS Loan or excepted Consolidation Loan) made to the borrower— not to exceed the result obtained by dividing by 12, 15 percent of the result obtained by calculating, on at least an annual basis, the amount by which— the adjusted gross income of the borrower or, if the borrower is married and files a Federal income tax return jointly with or separately from the borrower’s spouse, the adjusted gross income of the borrower and the borrower’s spouse; 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) ); and not to be less than $25; the Secretary shall apply the borrower’s monthly payment under this section first toward interest due on such a loan, next toward any fees due on the loan, and then toward the principal of the loan; any principal due and not paid under paragraph
(2)shall be deferred; the amount of time the borrower makes monthly payments under paragraph
(1)may exceed 10 years; the Secretary shall cancel any outstanding balance due on all loans made on or after July 1, 2023, under this part (other than an excepted PLUS Loan or an excepted Consolidation Loan) to the borrower— who, at any time, elected to participate in income-based repayment under paragraph (1); whose final monthly payment for such loans prior to the loan cancellation under this paragraph was made under such income-based repayment; and who has repaid, pursuant to income-based repayment under paragraph (1), a standard repayment plan under section 455(d)(6)(A)(i), or a combination, or in the case of consolidation loans, a repayment schedule described in clause (i)(II)— except as otherwise provided in 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)(6)(A)(i), 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 period of deferment under subparagraph (A), (B), or
(F)of section 460B(b)(1); and a borrower who is repaying a loan made under this part pursuant to income-based repayment under paragraph
(1)may elect, at any time, to terminate repayment pursuant to such income-based repayment and repay such loan under the standard repayment plan. The Secretary shall establish and implement with respect to any borrower who chooses to repay a loan made under this part pursuant to income-based repayment under this section procedures to— use return information disclosed under section 6103(l)(13) of the Internal Revenue Code of 1986, pursuant to approval provided under section 494, to determine the repayment obligation of the borrower without further action by the borrower; allow the borrower (or the spouse of the borrower), at any time, to opt out of disclosure under such section 6103(l)(13) and instead provide such information as the Secretary may require to determine the repayment obligation of the borrower (or withdraw from the repayment plan under this subsection); and provide the borrower with an opportunity to update the return information so disclosed before the determination of the repayment obligation of the borrower. The Secretary shall establish procedures under which a borrower of a loan made under this part who chooses to repay such loan pursuant to income-based repayment under this section is notified of the terms and conditions of such plan, including notification that if a borrower considers that special circumstances, such as a loss of employment by the borrower or the borrower’s spouse, warrant an adjustment in the borrower’s loan repayment as determined using the borrower’s Federal tax return information, or the alternative documentation described in subsection (b)(2), the borrower may contact the Secretary, who shall determine whether such adjustment is appropriate, in accordance with criteria established by the Secretary. The Secretary shall authorize borrowers meeting the criteria under paragraph
(2)to make monthly payments of $5 for a period not in excess of 3 years, except that— for purposes of paragraph (2)(A), the Secretary may authorize reduced payments in 6-month increments, beginning on the date the borrower provides to the Secretary the evidence described in paragraph (2)(A)(i); and for purposes of paragraph (2)(B), the Secretary may authorize reduced payments in 3-month increments, beginning on the date the borrower provides to the Secretary the evidence described in paragraph (2)(B)(i). The Secretary shall authorize borrowers to make reduced payments under this subsection in the following circumstances: In a case of borrower who is seeking and unable to find full-time employment, as demonstrated by providing to the Secretary— evidence of the borrower’s eligibility for unemployment benefits to the Secretary; or the borrower recertifies the reason for the $5 monthly payment under this subparagraph. The Secretary determines that, due to high medical expenses, the $25 monthly payment the borrower would otherwise make would be an extreme economic hardship to the borrower, if— the borrower documents the reason why the $25 minimum payment is an extreme economic hardship; and the borrower recertifies the reason for the $5 minimum payment on a three-month basis. For purpose of this subsection, the term full-time employment means employment that will provide not less than 30 hours of work a week and is expected to continue for a period of not less than 3 months. In this section: The term adjusted gross income has the meaning given the term in section 62 of the Internal Revenue Code of 1986. The term excepted Consolidation Loan means a Federal Direct Consolidation Loan, if the proceeds of such loan were used to the discharge the liability on— an excepted PLUS loan; or a Federal Direct Consolidation loan, if the proceeds of such loan were used to discharge the liability on an excepted PLUS loan. The term excepted PLUS Loan has the meaning given the term in section 493C. . Section 494(a) ( 20 U.S.C. 1098h(a) ) is amended by adding at the end the following: In the case of any written or electronic application by an individual for an income-based repayment plan under section 460A for a loan made under part D on after July 1, 2023, the Secretary, with respect to such individual and any spouse of such individual, shall— provide to such individuals the notification described in paragraph (1)(A)(i); and require, as a condition of eligibility for such repayment plan, that such individuals— affirmatively approve the disclosures described in subclauses
(I)and
(II)of paragraph (1)(A)(i), to the extent applicable, and agree that such approval shall serve as an ongoing approval of such disclosures until the date on which the individual elects to opt out of such disclosures under section 465(b)(2); or provide such information as the Secretary may require to confirm the eligibility of such individual for such repayment plan. With respect to the first written or electronic recertification (after the date of the enactment of the REAL Reforms Act) of an individual’s income or family size for purposes of an income-based repayment plan under section 460A (entered into before the date of the enactment of the REAL Reforms Act) for a loan under part D, the Secretary, with respect to such individual and any spouse of such individual, shall meet the requirements of clauses
(i)and
(ii)of subparagraph
(A)with respect to such recertification. .
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