[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[S. 821 Introduced in Senate (IS)]
<DOC>
117th CONGRESS
1st Session
S. 821
To amend the Higher Education Act of 1965 to establish a simplified
income-driven repayment plan, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
March 18, 2021
Mr. Burr (for himself and Mr. King) introduced the following bill;
which was read twice and referred to the Committee on Health,
Education, Labor, and Pensions
_______________________________________________________________________
A BILL
To amend the Higher Education Act of 1965 to establish a simplified
income-driven repayment plan, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Repay Act of 2021''.
SEC. 2. SIMPLIFIED INCOME-DRIVEN REPAYMENT PLAN.
Part G of title IV of the Higher Education Act of 1965 (20 U.S.C.
1088 et seq.) is amended by inserting after section 493D the following:
``SEC. 493E. SIMPLIFIED INCOME-DRIVEN REPAYMENT PLAN.
``(a) Definitions.--In this section:
``(1) Covered federal direct loan.--The term `covered
Federal Direct Loan' means a Federal Direct Stafford Loan, a
Federal Direct Unsubsidized Stafford Loan, a Federal Direct
Consolidation Loan (other than a Federal Direct Consolidation
Loan whose proceeds were used to discharge the liability of a
Federal Direct PLUS loan made on behalf of a dependent student
or a loan under section 428B made on behalf of a dependent
student), or a Federal Direct PLUS Loan (other than a Federal
Direct PLUS Loan made on behalf of a dependent student) made
under part D.
``(2) Discretionary income.--The term `discretionary
income' means the amount by which a borrower's (and the
borrower's spouse, if applicable) annual adjusted gross income
exceeds 150 percent of the poverty line applicable to the
borrower's family size.
``(3) Discretionary income bend point.--The term
`discretionary income bend point' means $25,000, adjusted
annually for inflation as determined by the Consumer Price
Index (as such term is defined in section 478(f)) for the
previous calendar year.
``(4) Income-driven calculation.--
``(A) In general.--The term `income-driven
calculation', when used with respect to a borrower,
means the annual amount due on the total amount of
covered Federal Direct Loans, which annual amount is
equivalent to--
``(i) 10 percent of the borrower's
discretionary income that is less than the
discretionary income bend point, plus
``(ii) 15 percent of the borrower's
discretionary income that is equal to or
greater than the discretionary income bend
point.
``(B) Annual calculation.--The calculation under
subparagraph (A) shall be determined on an annual basis
for the duration of the repayment period described in
subsection (b).
``(5) New borrower.--The term `new borrower' means a
borrower who--
``(A) as of July 1, 2022, has no outstanding
balance on a student loan made, insured, or guaranteed
under part B or D; or
``(B) has no outstanding balance on a student loan
made, insured, or guaranteed under part B or D on the
date the borrower receives a loan made under part D on
or after July 1, 2022.
``(b) Simplified Income-Driven Repayment Plan Authorized.--
``(1) In general.--The Secretary shall carry out a
simplified income-driven repayment program for new borrowers
that meets the following requirements:
``(A) A new borrower of any covered Federal Direct
Loan may elect to have the borrower's aggregate monthly
payment for all such loans equal to the income-driven
calculation, divided by 12.
``(B) 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.
``(C) Any interest due and not paid under
subparagraph (B)--
``(i) shall, on Federal Direct Stafford
Loans, be paid by the Secretary for a period of
not more than 3 years after the date of the
borrower's election under subparagraph (A),
except that such period shall not include any
period during which the borrower is in
deferment due to an economic hardship described
in section 435(o); and
``(ii) shall be capitalized--
``(I) in the case of a Federal
Direct Stafford Loan, subject to clause
(i)--
``(aa) at the time the
borrower ends the election to
make simplified income-driven
repayment under this
subsection; or
``(bb) at the time the
borrower's monthly payment
calculation under subparagraph
(A) exceeds the monthly payment
calculation under the fixed
repayment plan, based on a 10-
year repayment period, when the
borrower first made the
election under subparagraph
(A); and
``(II) in the case of a Federal
Direct Unsubsidized Stafford Loan--
``(aa) at the time the
borrower ends the election to
make simplified income-driven
repayment under this
subsection; or
``(bb) at the time the
borrower's monthly payment
calculation under subparagraph
(A) exceeds the monthly payment
calculation under the fixed
repayment plan, based on a 10-
year repayment period, when the
borrower first made the
election under subparagraph
(A).
``(D) Any principal due and not paid under
subparagraph (B) shall be deferred.
``(E) The amount of time a new borrower shall make
monthly payments under subparagraph (A) may exceed 10
years.
``(F) If the borrower no longer wishes to continue
the election under this subsection, then--
``(i) the maximum monthly payment required
to be paid for all covered Federal Direct Loans
shall be equal to 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
``(ii) the amount of time the borrower is
permitted to repay such loans may exceed 10
years.
``(G) The Secretary shall cancel the outstanding
balance of principal and interest due for a new
borrower whose balance of principal of covered Federal
Direct Loans did not exceed $57,500 on the date the
borrower's repayment period began, or whose balance of
principal of covered Federal Direct Loans did not
exceed the maximum aggregate amount of loans an
independent undergraduate student could borrow,
pursuant to section 428H(d)(4)(B), on the date the
borrower's final covered Federal Direct Loan was
disbursed, whichever amount is greater, if the
borrower--
``(i) at any time, elected to participate
under subparagraph (A); and
``(ii) for 20 years--
``(I) made monthly payments
pursuant to subparagraph (A); or
``(II) was in deferment due to an
economic hardship described in section
435(o).
``(H) The Secretary shall cancel the outstanding
balance of principal and interest due for a new
borrower whose balance of principal of covered Federal
Direct Loans exceeded $57,500 on the date the
borrower's repayment period began, or whose balance of
principal of covered Federal Direct Loans exceeded the
maximum aggregate amount of loans an independent
undergraduate student could borrow, pursuant to section
428H(d)(4)(B), on the date the borrower's final covered
Federal Direct Loan was disbursed, whichever amount is
greater, if the borrower--
``(i) at any time, elected to participate
under subparagraph (A); and
``(ii) for 25 years--
``(I) made monthly payments
pursuant to subparagraph (A); or
``(II) was in deferment due to an
economic hardship described in section
435(o).
``(I) A borrower may elect to discontinue repayment
pursuant to this subsection, at any time, and enter
into repayment pursuant to section 455(d)(2)(A).
``(2) Monthly payments.--Only monthly payments made
pursuant to paragraph (1)(A) shall be considered eligible
payments toward the forgiveness of outstanding loan principal
and interest under subparagraphs (G) and (H) of paragraph (1).
``(c) Eligibility Determinations.--The Secretary shall annually
determine a borrower's eligibility for the simplified income-driven
repayment plan under this section through--
``(1) verification of a borrower's annual adjusted gross
income;
``(2) the annual amount due on the total amount of covered
Federal Direct Loans; and
``(3) such other procedures as are necessary to effectively
implement the simplified income-driven repayment plan under
this section.
``(d) Special Rule for Married Borrowers Filing Separately.--In the
case of a married borrower who files a separate Federal income tax
return, the Secretary shall calculate the borrower's income-driven
calculation on the basis of the borrower's total amount due on covered
Federal Direct Loans and the married couple's combined adjusted gross
income. In the case of a married couple in which both individuals repay
their loans under this section, the Secretary shall calculate each
borrower's income-driven calculation on the basis of each borrower's
total amount due on covered Federal Direct Loans and the married
couple's combined adjusted gross income divided by 2.
``(e) Annual Income Verification.--
``(1) In general.--A borrower who elects to participate in
the simplified income-driven repayment plan under this section
shall submit to the Secretary, on an annual basis, verification
of the borrower's annual adjusted gross income.
``(2) Consequence of failure to submit.--With respect to a
borrower who fails to submit to the Secretary verification of
the borrower's annual adjusted gross income as required under
paragraph (1), any monthly payments made during the period the
borrower is in violation of the requirement of paragraph (1)
shall not be considered eligible payments toward the
forgiveness of outstanding loan principal and interest under
subparagraphs (G) and (H) of subsection (b)(1).''.
SEC. 3. STREAMLINING REPAYMENT PLANS FOR NEW BORROWERS.
Section 455 of the Higher Education Act of 1965 (20 U.S.C. 1087e)
is amended--
(1) by striking subsection (d) and inserting the following:
``(d) Repayment Plans.--
``(1) Design and selection for borrowers before july 1,
2022.--With respect to a borrower of a loan made under this
part before July 1, 2022, and consistent with criteria
established by the Secretary, the Secretary shall offer such
borrower a variety of plans for repayment of such loan,
including principal and interest on the loan. The borrower
shall be entitled to accelerate, without penalty, repayment on
the borrower's loans under this part. The borrower may choose--
``(A) a fixed repayment plan, consistent with
subsection (a)(1) of this section and with section
428(b)(9)(A)(i);
``(B) a graduated repayment plan, consistent with
section 428(b)(9)(A)(ii);
``(C) an extended repayment plan, consistent with
section 428(b)(9)(A)(iv), except that the borrower
shall annually repay a minimum amount determined by the
Secretary in accordance with section 428(b)(1)(L);
``(D) an income contingent repayment plan, with
varying annual repayment amounts based on the income of
the borrower, paid over an extended period of time
prescribed by the Secretary, not to exceed 25 years,
except that the plan described in this subparagraph
shall not be available to the borrower of a Federal
Direct PLUS loan made on behalf of a dependent student;
and
``(E) an income-based repayment plan that enables
borrowers who have a partial financial hardship to make
a lower monthly payment in accordance with section
493C, except that the plan described in this
subparagraph 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 the proceeds of such loan were used to
discharge the liability on such Federal Direct PLUS
Loan or a loan under section 428B made on behalf of a
dependent student.
``(2) Design and selection for new borrowers on or after
july 1, 2022.--The Secretary shall offer a borrower of a loan
made under this part on or after July 1, 2022, the following
plans for repayment of such loan, including principal and
interest on the loan. The borrower shall be entitled to
accelerate, without penalty, repayment on the borrower's loans
under this part. The borrower may choose--
``(A) a fixed repayment plan, consistent with
subsection (a)(1) of this section and with section
428(b)(9)(A)(i); or
``(B) a simplified income-driven repayment plan,
consistent with section 493E, except the plan described
in this subparagraph shall not be available to a
borrower of a Federal Direct PLUS Loan made on behalf
of a dependent student, a Federal Direct Consolidation
Loan, if the proceeds of such loan were used to
discharge the liability on such Federal Direct PLUS
Loan or a loan under section 428B made on behalf of a
dependent student.
``(3) Borrower non-selection.--If a borrower of a loan made
under this part does not select a repayment plan described in
paragraph (1) or (2), the Secretary may provide the borrower
with a repayment plan described in subparagraph (A), (B), or
(C) of paragraph (1) for borrowers before July 1, 2022, or a
repayment plan described in paragraph (2)(A) for new borrowers
on or after July 1, 2022.
``(4) Changes in selections.--The borrower of a loan made
under this part may change the borrower's selection of a
repayment plan under paragraph (1) or (2), or the Secretary's
selection of a plan for the borrower under paragraph (3), as
the case may be, under such terms and conditions as may be
established by the Secretary.
``(5) Alternative repayment plans.--The Secretary may
provide, on a case-by-case basis, an alternative repayment plan
to a borrower of a loan made under this part on or after July
1, 2022, who demonstrates to the satisfaction of the Secretary
that the terms and conditions of the repayment plans available
under paragraph (2) are not adequate to accommodate the
borrower's exceptional circumstances. Upon request, the
Secretary shall make available for such borrower's repayment
plans described in subparagraphs (B) and (C) of paragraph (1).
In designing such alternative repayment plans, the Secretary
shall ensure that such plans do not exceed the cost to the
Federal Government, as determined on the basis of the present
value of future payments by such borrowers, of loans made using
the plans available under paragraph (2).
``(6) Repayment after default.--For any borrower who has
defaulted on a loan made under this part, the Secretary--
``(A) may require the borrower to pay all
reasonable collection costs associated with such loan;
and
``(B) if such loan was made--
``(i) to any borrower who, before July 1,
2022, had an outstanding balance on a student
loan made, insured, or guaranteed under this
part or part B, may require the borrower to
repay the loan pursuant to an income contingent
repayment plan, as described in paragraph
(1)(D), or an income-based repayment plan, as
described in paragraph (1)(E); or
``(ii) to a new borrower (as defined in
section 493E(a)(5)), may provide the borrower
the option to enroll in the repayment plan
described in paragraph (2)(B).
``(7) Applicability provision.--
``(A) In general.--Except as provided in paragraph
(5) and subparagraph (B), the repayment plans under
subparagraphs (B), (C), (D), and (E) of paragraph (1)
are not available for a borrower who received the
borrower's first disbursement of a Federal Direct Loan
on or after July 1, 2022.
``(B) Exception.--The repayment plans available to
a borrower of a Federal Direct PLUS Loan made on behalf
of a dependent student or a Federal Direct
Consolidation Loan whose proceeds were used to
discharge the liability of a Federal Direct PLUS Loan
made on behalf of a dependent student or a loan under
section 428B made on behalf of a dependent student on
or after July 1, 2022, shall be those described under
subparagraphs (A), (B), and (C) of paragraph (1).'';
and
(2) in subsection (m)--
(A) in paragraph (1)--
(i) in the paragraph heading, by striking
``In general'' and inserting ``Borrowers before
july 1, 2022''; and
(ii) in the matter preceding subparagraph
(A), by striking ``The Secretary'' and
inserting ``Except as provided in paragraph
(5), the Secretary'';
(B) in paragraph (2), by inserting ``or (5)'' after
``paragraph (1)''; and
(C) by adding at the end the following:
``(5) Simplified income-driven repayment for new borrowers
on or after july 1, 2022.--
``(A) In general.--With respect to an eligible
Federal Direct Loan not in default made under this part
on or after July 1, 2022, the Secretary shall cancel
the balance of interest and principal due, after the
conclusion of the employment period described in
paragraph clause (iv), as of the time of such
cancellation, on any such loan for a borrower who--
``(i) as of July 1, 2022, had no
outstanding balance on a student loan made,
insured, or guaranteed under this part or part
B or had no outstanding balance on a student
loan made, insured, or guaranteed under this
part or part B on the date the borrower
received the loan made under this part on or
after July 1, 2022;
``(ii) has made 120 monthly payments on the
eligible Federal Direct Loan under a simplified
income-driven repayment plan under subsection
(d)(2)(B);
``(iii) is employed in a public service job
at the time of such forgiveness; and
``(iv) has been employed in a public
service job during the period in which the
borrower makes each of the 120 payments
described in clause (ii).
``(B) Annual income verification.--With respect to
a borrower who fails to submit to the Secretary
verification of the borrower's annual adjusted gross
income as required under section 493E(e), any monthly
payments made during the period the borrower is in
violation of such requirement shall not be considered
eligible payments under subparagraph (A)(ii) toward the
cancellation pursuant to this paragraph of the balance
of interest and principal due on the borrower's
loan.''.
SEC. 4. FIXED REPAYMENT PLAN.
The Higher Education Act of 1965 (20 U.S.C. 1001 et seq.) is
amended--
(1) in section 153(a)(1)(B)(iii)(V), by striking ``standard
repayment plan'' and inserting ``fixed repayment plan'';
(2) in section 428(b)(9)(A)(i), by striking ``standard
repayment plan'' and inserting ``fixed repayment plan'';
(3) in section 433(b)(7)(B), by striking ``standard
repayment plan'' and inserting ``fixed repayment plan'';
(4) in section 455--
(A) in subsection (e)(7)(B)(iv), by striking
``standard repayment plan'' and inserting ``fixed
repayment plan''; and
(B) in subsection (m)(1)(A)(ii), by striking
``standard repayment plan'' and inserting ``fixed
repayment plan''; and
(5) in section 493C--
(A) in subsection (a)(3)(A), by striking ``standard
repayment plan'' and inserting ``fixed repayment
plan''; and
(B) in subsection (b)--
(i) in paragraph (7)(B)(iii), by striking
``standard repayment plan'' and inserting
``fixed repayment plan''; and
(ii) in paragraph (8), by striking
``standard repayment plan'' and inserting
``fixed repayment plan''.
SEC. 5. NOTIFICATION TO BORROWERS ABOUT REPAYMENT OPTIONS AND
ALTERNATIVES TO DEFAULT.
Not later than 1 year after the date of enactment of this Act, the
Secretary of Education shall require servicers of loans made, insured,
or guaranteed under part B or D of title IV of the Higher Education Act
of 1965 (20 U.S.C. 1071 et seq. and 1087a et seq.) to--
(1) notify borrowers, in writing and through electronic
format, about all repayment options for which the borrower may
qualify;
(2) provide borrowers, in writing and through electronic
format, information about alternative repayment plans,
including the borrower's estimated monthly payment, expected
number of years to repay, expected amount of loan forgiveness,
expected total loan forgiveness, and expected total principal
and interest paid, associated with each repayment plan in a
format that permits the borrower to compare the current
repayment plan with alternative repayment plans; and
(3) offer to enroll such borrowers in alternative plans, if
eligible.
SEC. 6. GAO STUDY ON IMPROVING ENROLLMENT AND VERIFICATION ASSOCIATED
WITH INCOME-DRIVEN REPAYMENT.
Not later than 2 years after the date of enactment of this Act, the
Comptroller General of the United States, in consultation with the
Secretary of the Treasury, shall--
(1) complete a study that--
(A) examines the feasibility of simplifying the
process for enrolling in, and verifying annual
eligibility for, the simplified income-driven repayment
program authorized under the amendments made by this
Act; and
(B) provides recommendations, including those
relating to streamlined income and employment
verification and simplified methods of repayment, for
efficient administration of income-based repayment
programs, including those authorized under the
amendments made by this Act; and
(2) prepare and submit a report to the Committee on Health,
Education, Labor, and Pensions of the Senate and the Committee
on Education and the Workforce of the House of Representatives
setting forth the conclusions of the study described in
paragraph (1) in such a manner that the recommendations
included in the report can inform future reauthorizations of
the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.).
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