[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 1220 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
1st Session
S. 1220
To amend the Higher Education Act of 1965 to provide for a Savings
Opportunity and Affordable Repayment plan as an income contingent
repayment plan.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
April 1 (legislative day, March 31), 2025
Mr. Merkley (for himself, Mr. Kaine, Mr. Schumer, Ms. Hirono, Mr.
Blumenthal, Ms. Warren, Mr. Welch, Mrs. Gillibrand, Mr. Padilla, Mr.
Booker, Ms. Smith, Mr. Sanders, Mr. Wyden, Mr. Kim, and Mr. Markey)
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 provide for a Savings
Opportunity and Affordable Repayment plan as an income contingent
repayment plan.
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 ``Savings Opportunity and Affordable
Repayment Act''.
SEC. 2. SAVINGS OPPORTUNITY AND AFFORDABLE REPAYMENT PLAN.
(a) Amendments to the Higher Education Act of 1965.--The Higher
Education Act of 1965 (20 U.S.C. 1001 et seq.) is amended--
(1) in section 428(b)(9)(A)--
(A) in clause (iv), by striking ``and'' after the
semicolon;
(B) in clause (v), by striking the period at the
end and inserting ``; and''; and
(C) by adding at the end the following:
``(vi) beginning on the date that is 180
days after the date of enactment of the Savings
Opportunity and Affordable Repayment Act, an
income contingent repayment plan known as the
`Savings Opportunity and Affordable Repayment
plan', consistent with section 493E.'';
(2) in section 428C(c)(2)(A)--
(A) in the first sentence, by striking ``or income-
based'' and inserting ``income-based, or income
contingent Savings Opportunity and Affordable Repayment
(consistent with section 493E)''; and
(B) in the second sentence, by striking ``or
income-based'' and inserting ``income-based, or income
contingent Savings Opportunity and Affordable
Repayment'';
(3) in section 455(d)--
(A) in paragraph (1), by striking subparagraph (D)
and inserting the following:
``(D) except as provided in paragraph (6), an
income contingent repayment plan--
``(i) 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 clause shall not be
available to the borrower of a Federal Direct
PLUS loan made on behalf of a dependent
student; and
``(ii) which, beginning on the date that is
180 days after the date of enactment of the
Savings Opportunity and Affordable Repayment
Act, shall include the `Savings Opportunity and
Affordable Repayment plan', consistent with
section 493E; and''; and
(B) by adding at the end the following:
``(6) Phase outs.--
``(A) PAYE repayment plan.--
``(i) In general.--A borrower may choose
the Pay As You Earn Repayment Plan, as
described in section 685.209 of title 34, Code
of Federal Regulations (as in effect on January
19, 2025), as an income contingent repayment
plan pursuant to paragraph (1)(D)--
``(I) before the date that is 2
years after the date of enactment of
the Savings Opportunity and Affordable
Repayment Act, only if the borrower--
``(aa) has loans eligible
for repayment under such plan,
as described in such section as
in effect on such date; and
``(bb) has a partial
financial hardship when the
borrower initially enters such
plan, as described in such
section as in effect on such
date; and
``(II) on or after the date that is
2 years after the date of enactment of
the Savings Opportunity and Affordable
Repayment Act, only if the borrower
meets the conditions described in
subclause (I) and was repaying a loan
under such plan before such date that
is 2 years after the date of enactment
of the Savings Opportunity and
Affordable Repayment Act.
``(ii) Prohibition against re-enrollment.--
Beginning on the date that is 2 years after the
date of enactment of the Savings Opportunity
and Affordable Repayment Act, a borrower who
was repaying a loan under the Pay As You Earn
Repayment Plan, as described in clause (i), and
changes to a different repayment plan may not
re-enroll in the Pay As You Earn Repayment
Plan.
``(B) Income contingent repayment plan.--
``(i) In general.--A borrower may choose
the ICR plan, as described in section 685.209
of title 34, Code of Federal Regulations (as in
effect on January 19, 2025), as an income
contingent repayment plan pursuant to paragraph
(1)(D)--
``(I) before the date that is 2
years after the date of enactment of
the Savings Opportunity and Affordable
Repayment Act, only if the borrower has
loans eligible for repayment under such
plan, as described in such section as
in effect on such date, except as
provided in clause (iii); and
``(II) on or after the date that is
2 years after the date of enactment of
the Savings Opportunity and Affordable
Repayment Act, only if the borrower has
loans eligible for repayment under such
plan, as described in such section as
in effect on such date, except as
provided in clause (iii), and was
repaying a loan under such plan before
such date that is 2 years after the
date of enactment of the Savings
Opportunity and Affordable Repayment
Act.
``(ii) Prohibition against re-enrollment.--
Beginning on the date that is 2 years after the
date of enactment of the Savings Opportunity
and Affordable Repayment Act, a borrower who
was repaying a loan under the ICR plan, as
described in clause (i), and changes to a
different repayment plan may not re-enroll in
the ICR plan.
``(iii) Eligible loans for purposes of icr
repayment.--In addition to the loans eligible
for repayment under the ICR plan as described
in section 685.209 of title 34, Code of Federal
Regulations (as in effect on January 19, 2025),
an eligible loan for purposes of repayment
under the ICR plan may include--
``(I) a Federal Direct PLUS Loan
made on behalf of a dependent student;
``(II) a Federal Direct
Consolidation Loan for which the
proceeds were used to discharge the
liability on a Federal Direct PLUS Loan
or a loan under section 428B made on
behalf of a dependent student;
``(III) a loan under section 428B
made on behalf of a dependent student;
or
``(IV) a loan under section 428C
for which the proceeds were used to
discharge the liability on a Federal
Direct PLUS Loan or a loan under
section 428B made on behalf of a
dependent student.'';
(4) by inserting after section 493D the following:
``SEC. 493E. SAVINGS OPPORTUNITY AND AFFORDABLE REPAYMENT PLAN.
``(a) Definitions.--In this section:
``(1) Eligible loan.-- The term `eligible loan' means a
loan made, insured, or guaranteed under part B or D.
``(2) Monthly payment obligation.--
``(A) In general.--The term `monthly payment
obligation', when used with respect to a borrower,
means that for such borrower the monthly payment amount
due on the total amount of eligible loans made to such
borrower that is equal to, except as provided in
subparagraph (B)--
``(i) $0 for the portion of the borrower's,
and the borrower's spouse's (if applicable),
adjusted gross income (as defined in section 62
of the Internal Revenue Code of 1986) that is
less than or equal to 250 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)); plus
``(ii) 5 percent of the portion of the
borrower's, and the borrower's spouse's (if
applicable), adjusted gross income (as defined
in section 62 of the Internal Revenue Code of
1986) that is greater than 250 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)), prorated by the percentage
that is the result of dividing the borrower's
original total loan balance attributable to
eligible loans received for the borrower's
undergraduate study by the original total loan
balance attributable to all eligible loans,
divided by 12; plus
``(iii) for loans not subject to clause
(ii), 10 percent of the portion of the
borrower's, and the borrower's spouse's (if
applicable), adjusted gross income (as defined
in section 62 of the Internal Revenue Code of
1986) that is greater than 250 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)), prorated by the percentage
that is the result of dividing the borrower's
original total loan balance minus the original
total loan balance of loans subject to clause
(ii) by the borrower's original total loan
balance attributable to all eligible loans,
divided by 12.
``(B) Minimal payment obligation.--If the
calculation of the monthly payment amount due under
subparagraph (A) for a borrower is--
``(i) less than $5, then the monthly
payment obligation for such borrower is equal
to $0; and
``(ii) equal to or greater than $5 but less
than $10, then the monthly payment obligation
for such borrower is equal to $10.
``(b) Savings Opportunity and Affordable Repayment Authorized.--
Notwithstanding any other provision of this Act, the Secretary shall
carry out a Savings Opportunity and Affordable Repayment plan program
that complies with the following:
``(1) A borrower of any eligible loan may elect to have the
borrower's aggregate monthly payment for all such loans not
exceed the monthly payment obligation of such borrower.
``(2) The holder of such eligible loan shall apply--
``(A) 50 percent of the borrower's monthly payment
under this subsection toward outstanding principal; and
``(B) 50 percent of the borrower's monthly payment
under this subsection--
``(i) first toward accrued charges and
collection costs on the loan;
``(ii) then toward outstanding interest;
and
``(iii) then toward outstanding principal.
``(3) During all periods of repayment on all loans being
repaid under the Savings Opportunity and Affordable Repayment
plan, the Secretary shall not charge the borrower's account any
accrued interest that is not covered by the borrower's monthly
payment obligation.
``(4) Any principal due and not paid under paragraph (2)
shall be deferred.
``(5) In the case of a borrower repaying under the Savings
Opportunity and Affordable Repayment plan, the Secretary shall
cancel the remaining balance due on all eligible loans for a
borrower in the case the borrower--
``(A) is repaying only eligible loans received for
undergraduate study, or a consolidation loan that
repaid only loans received for such study, for which
the borrower's attendance in such undergraduate study
was not more than 2 years, after the borrower has
satisfied 120 monthly payments or the equivalent (as
described in paragraph (6)), over a period of at least
10 years; and
``(B) is repaying at least one eligible loan not
described in subparagraph (A), after the borrower has
satisfied 180 monthly payments or the equivalent (as
described in paragraph (6)), over a period of at least
15 years.
``(6) A monthly payment or the equivalent shall be
satisfied by any of the following:
``(A) A month in which the borrower--
``(i) makes a monthly payment that is equal
to not less than the monthly payment obligation
of the borrower; or
``(ii) has a monthly payment obligation of
$0.
``(B) A month in which the borrower receives a
deferment or forbearance of repayment under any of the
following:
``(i) A cancer treatment deferment under
section 455(f)(3).
``(ii) A rehabilitation training program
deferment.
``(iii) An unemployment deferment.
``(iv) An economic hardship deferment,
which includes volunteer service in the Peace
Corps as an economic hardship condition.
``(v) A military service deferment.
``(vi) A post active-duty student
deferment.
``(vii) A national service forbearance.
``(viii) A national guard duty forbearance.
``(ix) A Department of Defense Student Loan
Repayment forbearance.
``(x) An administrative forbearance under a
period--
``(I) during which the Secretary
has authorized forbearance due to a
national military mobilization or other
local or national emergency;
``(II) necessary for the Secretary
to collect and process documentation
supporting the borrower's request for a
deferment, forbearance, change in
repayment plan, or consolidation loan;
or
``(III) determined necessary by the
Secretary.
``(xi) A bankruptcy forbearance if the
borrower made the required payments on a
confirmed bankruptcy plan.
``(C) A month in which the borrower receives a
deferment or forbearance of repayment not described in
subparagraph (B), but for which the borrower makes an
additional payment equal to or greater than their
monthly payment obligation (including a monthly payment
obligation of $0), for a deferment or forbearance that
ended within 3 years of the date of such additional
payment and occurred on or after the date that is 180
days after the date of enactment of the Savings
Opportunity and Affordable Repayment Act.
``(D) A month in which the borrower--
``(i) makes a payment pursuant to a
repayment plan under section 493C or section
455(d)(1)(E), or another income continent
repayment plan under section 455(d)(1)(D), or
had a monthly payment obligation under such a
plan of $0;
``(ii) makes a payment under the standard
repayment plan, as described in section
428(b)(9)(A)(i); or
``(iii) makes a payment under a repayment
plan with payments that are as least as much as
they would have been under the standard
repayment plan, as described in section
428(b)(9)(A)(i).
``(7) A borrower who is repaying an eligible loan pursuant
to this section may elect, at any time, to terminate repayment
pursuant to this section and repay such loan under any other
repayment plan for which the borrower is eligible.
``(8) A borrower who is repaying an eligible loan pursuant
to this section may--
``(A) pay in multiple installments that equal the
full scheduled monthly payment obligation of such
borrower; or
``(B) pay a lump sum or monthly payment amount that
is equal to or greater than the full scheduled monthly
payment obligation of such borrower in advance of the
borrower's scheduled payment due date for a period of
months not to exceed the period from the Secretary's
receipt of the payment until the borrower's next annual
repayment plan recertification date.
``(c) Eligibility Determinations.--
``(1) In general.--The Secretary shall establish procedures
for annually determining the borrower's eligibility for
repayment under this section, including verification of a
borrower's annual income and the annual amount due on the total
amount of eligible loans, and such other procedures as are
necessary to effectively implement repayment under this
section.
``(2) Procedures for eligibility.--The Secretary shall--
``(A) consider, but is not limited to, the
procedures established in accordance with section
455(e)(1); and
``(B) carry out, with respect to borrowers of any
eligible loan, procedures for repayment plans that are
equivalent to the procedures carried out under section
455(e)(8) with respect to other income contingent
repayment plans.
``(3) Failure to timely certify information.--If the
Secretary requires information from the borrower to recalculate
the borrower's monthly payment obligation under this section,
and the borrower does not provide the necessary documentation
to the Secretary by the time the Secretary requires such
documentation, the Secretary shall remove the borrower from the
Savings Opportunity and Affordable Repayment plan under this
section and place the borrower on an alternative repayment plan
under which the borrower's required monthly payment is the
amount the borrower would have paid on a 10-year standard
repayment plan based on the current eligible loan balances and
interest rates on the eligible loans at the time the borrower
is removed from the plan under this section.
``(4) Procedures.--
``(A) Approval for the disclosure of tax
information.--A borrower shall provide approval for the
disclosure of applicable tax information to the
Secretary to initially enter repayment, or recertify
the borrower's intent to repay, under this section
either as part of the process of completing a Direct
Loan Master Promissory Note or a Direct Consolidation
Loan Application and Promissory Note in accordance with
sections 455(e)(8) and 493C(c)(2) or on an application
form approved by the Secretary.
``(B) Failure to provide approval.--If a borrower
does not provide approval for the disclosure of
applicable tax information pursuant to subparagraph
(A), the borrower shall provide documentation of the
borrower's income and family size to the Secretary.
``(C) Inability to obtain information from the
irs.--If the Secretary has received approval for
disclosure of applicable tax information pursuant to
subparagraph (A), but cannot obtain the borrower's
income and family size from the Internal Revenue
Service, the borrower and, if applicable, the
borrower's spouse, shall provide documentation of
income and family size to the Secretary.
``(D) Calculation of payment amount.--After the
Secretary obtains sufficient information to calculate
the borrower's monthly payment obligation, the
Secretary shall--
``(i) calculate the borrower's monthly
payment obligation; and
``(ii) establish the 12-month period during
which the borrower will be obligated to make
payments in the amount of the monthly payment
obligation.
``(E) Repayment disclosure.--The Secretary shall
send to each borrower a repayment disclosure that--
``(i) specifies the borrower's calculated
monthly payment obligation;
``(ii) explains how the payment was
calculated;
``(iii) informs the borrower of the terms
and conditions of repayment under this section;
and
``(iv) informs the borrower of how to
contact the Secretary if the calculated monthly
payment obligation amount is not reflective of
the borrower's current income or family size.
``(F) Request for recalculation.--
``(i) In general.--If a borrower believes
that the calculated monthly payment obligation
amount is not reflective of the borrower's
current income or family size, the borrower may
request that the Secretary recalculate the
monthly payment obligation amount.
``(ii) Alternative documentation.--To
support a request under clause (i), the
borrower shall submit alternative documentation
of income or family size not based on tax
information to account for circumstances such
as a decrease in income since the borrower last
filed a tax return, the borrower's separation
from a spouse with whom the borrower had
previously filed a joint tax return, the birth
or impending birth of a child, or other
comparable circumstances.
``(G) Forbearance.--If a borrower provides
alternative documentation under subparagraph (F) or if
the Secretary receives documentation from the borrower
or the borrower's spouse under subparagraph (C), the
Secretary shall grant forbearance to provide time for
the Secretary to recalculate the borrower's monthly
payment obligation based on the documentation.
``(H) 3 monthly payments remaining.--Once a
borrower has 3 monthly payments remaining under a 12-
month period specified under subparagraph (D), the
Secretary shall follow the procedures described in
subparagraphs (C) through (G).
``(I) Resetting of 12-month period.--At any point
during a 12-month period specified under subparagraph
(D), a borrower may request that the Secretary
recalculate the borrower's monthly payment obligation
earlier than would have otherwise been the case to
account for a change in the borrower's circumstances,
such as a loss of income or employment or divorce. In
such a case, the 12-month period specified under
subparagraph (D) shall be reset based on the borrower's
new information.
``(J) Tracking forgiveness.--The Secretary shall
track a borrower's progress toward eligibility for loan
cancellation under subsection (b)(5) and cancel loans
that meet the criteria under such subsection without
the need for an application or documentation from the
borrower.
``(d) Married Borrowers.--
``(1) Calculation based solely on borrower's information.--
In the case of a married borrower, the Secretary shall
calculate the amount of the borrower's monthly payment
obligation under this section solely on the basis of the
borrower's eligible loan debt and adjusted gross income (as
defined in section 62 of the Internal Revenue Code of 1986)
if--
``(A) the borrower files a separate Federal income
tax return; or
``(B) the borrower files a joint Federal income tax
return and certifies that the borrower is currently
separated from the borrower's spouse or is currently
unable to reasonably access the spouse's income.
``(2) Calculation including spouse's information.--In the
case of a married borrower not described in subparagraph (A) or
(B), the Secretary shall--
``(A) include the spouse's income in the
calculation of the borrower's monthly payment
obligation under this section; and
``(B) if the spouse has eligible loan debt, adjust
the borrower's monthly payment obligation under this
section by--
``(i) dividing the outstanding principal
and interest balance of the borrower's eligible
loans by the couple's combined outstanding
principal and interest balance on eligible
loans; and
``(ii) multiplying the borrower's payment
amount as calculated under subsection (a)(5) by
the percentage determined under clause (i).'';
and
(5) in section 494(a)(2)(A)--
(A) in the matter preceding clause (i), by
inserting ``or a Savings Opportunity and Affordable
Repayment plan for a loan under part B'' after ``part
D''; and
(B) in clause (ii)(I), by inserting ``or section
493E(c)(2)(B)'' after ``section 493C(c)(2)(B)''.
<all>