Sec. 5. Income-driven repayment assistance plan
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Part G of title IV ( 20 U.S.C. 1088 et seq. ) is 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 of any loan made, insured, or guaranteed under part B or D (other than an excepted PLUS loan or excepted consolidation loan), may elect to have the borrower’s aggregate monthly payment for all such loans not exceed the applicable monthly payment for the borrower, except that a borrower may not be precluded from repaying an amount that exceeds such applicable monthly payment for any month; 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 provides the repayment assistance for distressed borrowers described in subsection (c); 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 excepted PLUS loans or excepted consolidation loans) to a borrower— who, at any time, elected to participate in income-driven repayment assistance under paragraph (1); whose final monthly payment for such loans prior to the loan cancellation under this paragraph was made under such income-driven repayment assistance; and who has repaid on such loans (pursuant to income-driven repayment assistance under paragraph (1), a standard repayment plan under section 428(b)(9)(A)(i) or 455(d)(6)(A)(i), or a combination of any such plan or any of the repayment plans listed in clauses
(i)through
(iv)of section 493C(b)(7)(B), or in the case of a consolidation loan, pursuant to a repayment schedule described clause (i)(II) of this subparagraph) an amount 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 paragraph (1)(A) or (6)(A)(i) of section 455(d), 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 loans made under section 428C, the total amount of principal and interest that the borrower would have repaid under the repayment schedule established for the loan under section 428C(c)(2) on the date on which such loan was made; plus an amount equal to the amount of any unpaid interest that has accrued, but was not included in the calculation of the total amount of 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) or during any period of deferment under subparagraph
(A)or
(B)of section 460A(b)(1); 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) or subparagraph
(F)of section 460A(b)(1); in repaying under paragraph
(6)the outstanding balance of principal and interest due on a loan made under part B to a borrower who meets the requirements of paragraph (6), 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; 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 pursuant to paragraph
(6)and the Secretary under subsection (c), 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; 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 the borrower’s liability on such loan has been discharged; a borrower who is repaying a loan pursuant to income-driven repayment under paragraph
(1)may elect, at any time, to terminate repayment pursuant to such income-driven repayment assistance and repay such loan under the standard repayment plan under section 455(d)(6)(A)(i); in the case of a borrower who, as of the date before the date of enactment of the FAIR Act , was repaying any loan made, insured, or guaranteed under part B or D (other than an excepted PLUS loan or excepted consolidation loan) pursuant to an income-based repayment plan described in section 493C or an income-contingent repayment plan described in section 455(d)(1)(D), which has a term or condition (including a term or condition related to loan forgiveness or cancellation, required monthly payments, or interest subsidies) that is more favorable for such borrower than a similar term or condition under the income-driven repayment assistance plan under paragraph (1), the Secretary shall apply the more favorable term or condition to the income-driven repayment assistance plan under paragraph
(1)pursuant to which the borrower is repaying such loan, in lieu of the similar, less favorable term or condition; and the special allowance payment to a lender calculated under section 438, 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. The Secretary shall establish and implement with respect to any borrower who is (or will be) repaying a loan pursuant to income-driven repayment assistance under this section, procedures to— enroll into such income-driven repayment assistance plan, any borrower who, as of the date before the date of enactment of the FAIR Act , was repaying a loan pursuant to an income-based repayment plan described in section 493C or an income-contingent repayment plan described in section 455(d)(1)(D), without further action from the borrower, other than any action related to compliance with the recertification requirements applicable to the borrower under section 494(a)(4)(B); notify the borrower of the terms and conditions of such plan; 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 section); and provide the borrower with an opportunity to update the return information so disclosed before the determination of the repayment obligation of the borrower. For each month for which a borrower’s aggregate monthly payment under this section is insufficient to pay the total amount of interest that accrues on a loan for the month, the amount of interest accrued and not paid for the month shall be subtracted from the total amount of interest due on such loan for the month. For each month for which a borrower’s aggregate monthly payment under this section repays an amount due on an individual loan that is less than twice the total amount of interest that accrues on such loan for the month, the amount of the total principal due on such loan shall be reduced by an amount equal to half of the monthly payment under this section on such loan for the month. With respect to any borrower whose adjusted gross income exceeds 300 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) ), paragraph
(1)or
(2)may only apply to such borrower for any month in which the borrower’s aggregate monthly payment under this section is equal to or greater than the amount obtained by applying subsection (e)(2) by substituting 15 percent for 10 percent with respect to such borrower. In carrying out the requirements of subsection (a)(7), the Secretary may not— 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 (a)(7); prepay any such loan ahead of the loan’s repayment schedule referenced in subsection (a)(7)(B); or use any authority or take any actions beyond what is authorized explicitly in subsection (a)(7). 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 applicable monthly payment means, when used with respect to a borrower, the amount obtained by dividing by 12, 10 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) ). 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-driven repayment plan under section 494A for a loan made under part B or D, 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 494A(b)(3); or provide such information as the Secretary may require to confirm the eligibility of such individual for such repayment plan. In the case of an individual whom the Secretary enrolls, pursuant to section 494A(b)(1), in an income-driven repayment assistance plan under section 494A, the Secretary shall meet the requirements of clauses
(i)and
(ii)of subparagraph (A), with respect to such individual and any spouse of such individual, for the first written or electronic recertification of such individual’s income or family size for purposes of such income-driven repayment assistance plan. .
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