Sec. 311. Income-based repayment plan
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Section 493C ( 20 U.S.C. 1098e ) is amended to read as follows: In this section: The term excepted PLUS loan means a loan under section 428B, or a Federal Direct PLUS Loan, that is made, insured, or guaranteed on behalf of a dependent student. The term excepted consolidation loan means a consolidation loan under section 428C, or a Federal Direct Consolidation Loan, if the proceeds of such loan were used to the discharge the liability on an excepted PLUS loan. The term partial financial hardship , when used with respect to a borrower, means that for such borrower— the annual amount due on the total amount of loans made, insured, or guaranteed under part B or D (other than an excepted PLUS loan or excepted consolidation loan) to a borrower as calculated under the standard repayment plan under section 428(b)(9)(A)(i) or 455(d)(1)(A), based on a 10-year repayment period; exceeds 15 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) ).
Notwithstanding any other provision of this Act, the Secretary shall carry out a program under which— a borrower of any loan made, insured, or guaranteed under part B or D (other than an excepted PLUS loan or excepted consolidation loan) who has a partial financial hardship (whether or not the borrower's loan has been submitted to a guaranty agency for default aversion or had been in default) may elect, during any period the borrower has the partial financial hardship, to have the borrower's aggregate monthly payment for all such loans not exceed the result described in subsection (a)(3)(B) divided by 12; the holder of such a loan shall apply the borrower's monthly payment under this subsection first toward interest due on the loan, next toward any fees due on the loan, and then toward the principal of the loan; any interest due and not paid under paragraph (2)— shall, on subsidized loans, be paid by the Secretary for a period of not more than 3 years after the date of the borrower's election under paragraph (1); and beginning on the effective date of the Affordable Loans for Any Student Act, for an eligible loan made, insured, or guaranteed under this title, shall not be capitalized and shall be added to the balance of interest due for 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; if the borrower no longer has a partial financial hardship or no longer wishes to continue the election under this subsection, then— the maximum monthly payment required to be paid for all loans made to the borrower under part B or D (other than an excepted PLUS loan or excepted consolidation loan) shall not exceed the monthly amount calculated under section 428(b)(9)(A)(i) or 455(d)(1)(A), based on a 10-year repayment period, when the borrower first made the election described in this subsection; and the amount of time the borrower is permitted to repay such loans may exceed 10 years; the Secretary shall repay or cancel any outstanding balance of principal and interest due on all loans made under part B or D (other than a loan under section 428B or a Federal Direct PLUS Loan) to a borrower who— at any time, elected to participate in income-based repayment under paragraph (1); and for a period of time prescribed by the Secretary, not to exceed 25 years, meets 1 or more of the following requirements— has made reduced monthly payments under paragraph
(1)or paragraph (6); has made monthly payments of not less than the monthly amount calculated under section 428(b)(9)(A)(i) or 455(d)(1)(A), based on a 10-year repayment period, when the borrower first made the election described in this subsection; has made payments of not less than the payments required under a standard repayment plan under section 428(b)(9)(A)(i) or 455(d)(1)(A) with a repayment period of 10 years; has made payments under an income-contingent repayment plan under section 455(d)(1)(D); or has been in deferment due to an economic hardship described in section 435(o); a borrower who is repaying a loan made under part B or D pursuant to income-based repayment may elect, at any time, to terminate repayment pursuant to income-based repayment and repay such loan under the fixed repayment plan under section 493E; and the special allowance payment to a lender calculated under section 438(b)(2)(I), when calculated for a loan in repayment under this section, shall be calculated on the principal balance of the loan and on any accrued interest unpaid by the borrower in accordance with this section. Notwithstanding any other provision of this section, the provisions of this subsection shall apply— with respect to any loan made, insured, or guaranteed under this title for which the borrower enters repayment on or after January 1, 2026, and for which the borrower elects the income-based repayment plan under this section; and with respect to any loan made, insured, or guaranteed under this title for which the borrower enrolled in an income-based repayment plan before January 1, 2026, if such borrower elects to enter the income-based repayment plan under this subsection, in accordance with paragraph (3). With respect to a loan described in paragraph (1), the following terms shall apply to the income-based repayment plan carried out under this section: Notwithstanding subsection (a)(3)(B), (b), or (e)— the annual repayment amount under this subsection— with respect to a borrower whose (and whose spouse's, if applicable) adjusted gross income equals or exceeds 1,300 percent of the poverty line that is 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) ) shall be an amount equal to 10 percent of such adjusted gross income; with respect to a borrower whose (and whose spouse's, if applicable) adjusted gross income equals or exceeds 800 percent of the poverty line but is less than 1,300 percent of the poverty line that is 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) ) shall be equal to the amount determined under clause (ii)(I); with respect to a borrower whose (and whose spouse's, if applicable) adjusted gross income exceeds 250 percent of the poverty line but is less than 800 percent of the poverty line that is 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) ) shall be equal to the amount determined under clause (ii)(II); and with respect to a borrower whose (and whose spouse's, if applicable) adjusted gross income equals or is less than 250 percent of the poverty line that is 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) ) shall be an amount equal to 0 percent of such adjusted gross income; and a borrower’s monthly payment shall be determined in accordance with subclause
(I)divided by 12, which amount may exceed the monthly repayment amount under a standard 10-year repayment plan or a fixed repayment plan described in section 493E. For purposes of clause (i)(I)(bb), the annual repayment amount for borrowers described in such clause shall be 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 the percent determined under item
(bb)of the poverty line that is 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 percent shall be determined under this item as follows: If the borrower's, and the borrower's spouse's (if applicable), adjusted gross income equals 800 percent of the poverty line that is 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 percent shall be equal to 250 percent. If the borrower's, and the borrower's spouse's (if applicable), adjusted gross income exceeds 800 percent of the poverty line but is less than 1,300 percent of the poverty line that is 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 percent shall be equal to 250 percent reduced by 0.5 percentage points for every 1 percentage point increase in the borrower's, and the borrower's spouse's (if applicable), adjusted gross income that is more than 800 percent. For purposes of clause (i)(I)(cc), the annual repayment amount for borrowers described in such clause shall be 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 250 percent of the poverty line that is 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) ). Notwithstanding subsection (e)(2), subsection (b)(7)(B) shall be applied by substituting 20 years for 25 years . Notwithstanding subparagraph
(A)of subsection (b)(6), a borrower of such a loan shall not be required to have a partial financial hardship and may elect, and remain enrolled in, the income-based repayment plan under this section regardless of income level, with the repayment amount calculated under subparagraph (A). Notwithstanding subsection (b), a borrower of an excepted PLUS loan or excepted consolidation loan may elect the income-based repayment plan under this subsection for the excepted PLUS loan or excepted consolidation loan, and the Secretary shall treat such loan, only for the purposes of the repayment terms, as a Federal Direct PLUS Loan issued to a student borrower. The Secretary may issue rules and regulations, as the Secretary determines necessary, regarding the treatment of excepted PLUS loans or excepted consolidation loans that are to be repaid under an income-based repayment plan under this subsection. A borrower of a loan made, insured, or guaranteed under this title who enrolled in an income-based repayment plan before January 1, 2026, may choose to retain such repayment plan or elect to enter an income-based repayment plan under this subsection or a fixed repayment plan described in section 493E, as provided in section 428(b)(1)(D)(ii) or section 455(d)(7) (as applicable). Notwithstanding any other provision of this Act, if a borrower’s monthly payment for a loan under an income-based repayment plan under this subsection is insufficient to pay the accrued interest on the borrower’s loan for such month, any interest due and not paid on the loan for that month shall be paid or forgiven by the Secretary. A borrower of a loan made under this part may elect to repay such loan under the income-based repayment plan under this subsection by providing written, electronic, or verbal notice to the Secretary of the borrower’s desire to make such election, subject to subparagraph (C). The estimated monthly payment amount under this section for a loan for a borrower who makes an election described in subparagraph
(A)shall be immediately calculated using the income and family size information provided through the borrower’s written, electronic, or verbal statement. The information described in clause
(i)shall be verified by the Secretary not later than 90 days after the date the borrower states such income and family size information. If the Secretary is unable to verify the information by the end of the 90-day period, the borrower’s payment after such 90-day period will be the amount applicable under the fixed repayment plan under section 493E. Upon verification by the Secretary under clause (ii), the Secretary shall adjust the estimated monthly payment described in clause
(i)based on the verified income and family size information of the borrower, if necessary. Any adjusted monthly payment shall take effect beginning with the payment due not less than 60 days after the Secretary notifies the borrower of the adjusted amount. The Secretary shall consider any payments made prior to the adjusted monthly payment as having satisfied the amount due to qualify toward loan cancellation or forgiveness options under this title. The Secretary shall permit a borrower to make an election of income-based repayment in the written, electronic, or verbal manner described in subparagraph
(A)only in connection with the first instance of each of the following: The borrower’s selection of a repayment plan during the grace period for such loan. The borrower changing from the fixed repayment plan under section 493E to income-based repayment. The borrower’s failure to complete the verification process described in subparagraph (B)(ii). The borrower’s failure to recertify enrollment in income-based repayment under this subsection. The Secretary shall calculate the adjusted gross income of a married borrower under this section— in the case of a married borrower and spouse who jointly file a Federal income tax return, based on the adjusted gross income of the borrower and spouse as reported on the Federal income tax return; and in the case of a married borrower who files a Federal income tax return separately from the borrower’s spouse, based on the sum of the adjusted gross income of the borrower and the spouse, as reported on the applicable Federal income tax returns, unless the borrower certifies, on a form approved by the Secretary, that the borrower is— separated from the borrower’s spouse; or unable to reasonably access the income information of the borrower’s spouse. With respect to any loan made to a new borrower on or after July 1, 2014— subsection (a)(3)(B) shall be applied by substituting 10 percent for 15 percent ; and subsection (b)(7)(B) shall be applied by substituting 20 years for 25 years . Beginning as soon as the Secretary determines practicable after the Secretary finalizes the procedures under section 315 of the Affordable Loans for Any Student Act, the Secretary shall establish and implement, with respect to any borrower described in paragraph (2), procedures to— obtain (for each year of repayment and without further action by the borrower) such information as is reasonably necessary regarding the income of such borrower (and the borrower’s spouse, if applicable), for the purpose of determining the repayment obligation of the borrower for such year, including information with respect to the borrower’s family size in accordance with the procedures under such section 105, subject to subparagraph (B); allow the borrower, at any time, to opt out of subparagraph
(A)and prevent the Secretary from obtaining information under such subparagraph without further action by the borrower; provide the borrower with an opportunity to update the information obtained under subparagraph
(A)before the determination of the annual repayment obligation of the borrower; and in the case of a borrower for whom adjusted gross income can be obtained under this subsection and meets the qualifications of a payment amount of $0, ensure that the borrower will not be required to provide the Secretary with other documentation of income and provide the borrower with a calculated monthly payment of $0. Paragraph
(1)shall apply to each borrower of a loan made under this part who, on or after the date on which the Secretary establishes procedures under such paragraph— selects, or for whom the Secretary selected under subparagraph
(C)or
(D)of paragraph (8), or paragraph (9), of subsection (d), or section 428(m)(1), an income-based repayment plan; or recertifies income and family size under such plan. A borrower for whom adjusted gross income is unavailable because the borrower has been granted an extension on filing the borrower’s income taxes or is undergoing an audit or examination by the Internal Revenue Service shall not automatically be eligible for the calculated monthly payment of $0 in accordance with paragraph (1)(D) during such period. When the extension, audit, or examination is completed, the Secretary shall resume consideration of the borrower for automatic recertification under the procedures described in paragraph (1), including subparagraph
(D)of such paragraph (if applicable). Returns and return information (as defined in section 6103 of the Internal Revenue Code of 1986) may be obtained under paragraph (1)(A) only to the extent authorized by section 6103(l)(13) of such Code. .
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