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Title II — Borrower’s Right to Reasonable and Flexible Repayment Options

H.R. 3892 · 113th Congress · Jan 15, 2014 · Lineage

II Borrower’s Right to Reasonable and Flexible Repayment Options

Sec. 201 Exclusion from gross income for discharge of student loan indebtedness

(a)
In general— Paragraph (1) of section 108(f) of the Internal Revenue Code of 1986 is amended by striking “if such discharge” and all that follows and inserting a period.
(b)
Student loans— Paragraph (2) of section 108(f) of such Code is amended by striking “made by—” and all that follows and inserting the following: “. Such term includes indebtedness used to refinance indebtedness which qualifies as a student loan under the preceding sentence.”.
(c)
Conforming amendments— Section 108(f) of such Code is amended by striking paragraphs (3) and (4).
(d)
Effective date— The amendments made by this section shall apply to discharges of indebtedness after the date of the enactment of this Act.

Sec. 202 529 plan distribution for student loan payments

(a)
In general— Subparagraph (A) of section 529(e)(3) is amended by striking clause (iii) and inserting the following new clause:

“(iii) interest or principal paid with respect to a qualified education loan (as defined in section 221) with respect to a designated beneficiary.”

(b)
Conforming amendments—
(1)
Section 529(e)(3)(A) of such Code is amended by striking the second sentence.
(2)
Section 72(t)(7)(A) of such Code is amended by inserting “determined without regard to subparagraph (A)(iii) thereof” after “section 529(e)(3)”.
(3)
Section 530(b)(2)(A)(i) of such Code is amended by inserting “determined without regard to subparagraph (A)(iii) thereof” after “section 529(e)(3)”.
(c)
Effective date— The amendments made by this section shall apply to distributions made after the date of the enactment of this Act.

Sec. 203 Inclusion of Parent PLUS Loans in Repayment Programs

(a)
Income contingent repayment plan— Section 455(d)(1)(D) of the Higher Education Act of 1965 (20 U.S.C. 1087e(d)(1)(D)) is amended by striking “, 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;”.
(b)
Income-Based repayment—
(1)
Section 493C— Section 493C of the Higher Education Act of 1965 (20 U.S.C. 1098e) is amended—
(A)
in subsection (a)—
(i)
by striking “this section” and all that follows through “hardship” and inserting “In this section, the term “partial financial hardship””; and
(ii)
by striking, “(other than an excepted PLUS loan or excepted consolidation loan)”;
(B)
in subsection (b)—
(i)
in paragraph (1), by striking “(other than an excepted PLUS loan or excepted consolidation loan)”; and
(ii)
in paragraph (6)(A), by striking “(other than an excepted PLUS loan or excepted consolidation loan)”; and
(C)
in subsection (c), by striking “(other than an excepted PLUS loan or excepted consolidation loan),”.
(2)
Section 455(d)(1)(E)— Section 455(d)(1)(E) of such Act (20 U.S.C. 1087e(d)(1)(D)) is amended by striking “, 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”.
(c)
Pay As You Earn— The income-contingent repayment plan (based on the President's “Pay As You Earn” repayment initiative) implemented in parts 674, 682, and 685 of title 34, Code of Federal Regulations, as amended by the final regulations published by the Department of Education in the Federal Register on November 1, 2012 (77 Fed. Reg. 66088 et seq.), shall be available to borrowers of—
(1)
a Federal Direct PLUS loan made on behalf of a dependent student; and
(2)
a Federal Direct Consolidation Loan, the proceeds of which 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.
(d)
Loan forgiveness for service in areas of national need— Section 428K(a)(2) of such Act (20 U.S.C. 1078–11(a)(2)) is amended—
(1)
in subparagraph (A), by striking “(other than an excepted PLUS loan or an excepted consolidation loan (as such terms are defined in section 493C(a)))”; and
(2)
in subparagraph (B), by striking “(other than an excepted PLUS loan or an excepted consolidation loan)”.

Sec. 204 Determination of adverse credit history

Section 428B(a)(1)(A) of the Higher Education Act of 1965 (20 U.S.C. 1078–2(a)(1)(A)) is amended by striking “regulations promulgated by the Secretary” and inserting “section 685.200(c) of title 34, Code of Federal Regulations (as in effect on September 30, 2011)”.