Section 1 Short title
This Act may be cited as the “Streamlining Income-driven, Manageable Payments on Loans for Education Act” or the “SIMPLE Act”.
Streamlining Income-driven, Manageable Payments on Loans for Education Act
A BILL
To amend the Higher Education Act of 1965 to provide for the automatic recertification of income for income-driven repayment plans, and for other purposes.
Sec. 2 Notification procedures for borrowers who are delinquent on loans
Amendments—
Notification procedures— Section 455(d) of the Higher Education Act of 1965 (20 U.S.C. 1087e(d)) is amended by adding at the end the following:
“(6) Notification procedures for borrowers who are delinquent on loans
“(A) Authority to obtain income information—The Secretary may obtain such information as is reasonably necessary regarding the income and family size of a borrower described in this paragraph (and the borrower’s spouse, if applicable). Returns and return information (as defined in section 6103 of the Internal Revenue Code of 1986) may be obtained under this subparagraph only to the extent authorized by section 6103(l)(13) of such Code, except that nothing in this subparagraph or such Code shall be construed to authorize the Secretary to obtain such returns and return information for a borrower who is not at least 60 days delinquent on a loan made under this part. The Secretary shall establish procedures as are necessary to effectively implement this paragraph.
“(B) Borrower notification—With respect to each borrower of a loan made under this part who is 60 days delinquent on such loan, the Secretary shall, at a minimum and as soon as practicable after such 60-day delinquency, provide to the borrower the following:
“(i) Notification that the borrower is at least 60 days delinquent on the loan, including a description of the loan.
“(ii) A description of the repayment plans under which the borrower is eligible to repay the loan.
“(iii) Clear and simple instructions on how to select the repayment plans described in clause (ii) for the loan.
“(iv) If the income information of the borrower is available to the Secretary under subparagraph (A), based on such income information, the amount of the monthly payments under each such repayment plan for the loan.
“(v) An explanation that in the case of a borrower for whom adjusted gross income is unavailable or does not reasonably reflect the borrower’s current income—
“(I) if the borrower selects to repay such loan pursuant to an income-driven repayment plan that defines discretionary income in such a manner that an individual not required under section 6012(a)(1) of the Internal Revenue Code of 1986 to file a return with respect to income taxes imposed by subtitle A of such Code may have a calculated monthly payment greater than $0, the borrower will be required to provide the Secretary with other documentation of income satisfactory to the Secretary, which documentation the Secretary may use to determine an appropriate repayment schedule; or
“(II) if the borrower selects to repay such loan pursuant to an income-driven repayment plan that is not described in subclause (I), the borrower will not be required to provide the Secretary with such other documentation of income, and the borrower will have a calculated monthly payment of $0.
“(vi) An explanation that the Secretary shall take the actions under subparagraph (D) with respect to such borrower if the borrower is 120 days delinquent on the loan and has not selected a new repayment plan for the loan.
“(vii) Instructions on updating the information of the borrower obtained under subparagraph (A).
“(C) Initial selection of plan—With respect to each borrower of a loan made under this part who does not select a new repayment plan for the loan in accordance with the notice received under subparagraph (B), and who is 120 days delinquent on the loan, the Secretary, as soon as practicable after such 120-day delinquency, shall—
“(i) in a case in which the loan is eligible for an income-driven repayment plan—
“(I) provide the borrower with the income-driven repayment plan for which the loan is eligible and which requires the lowest monthly payment amount for such loan, compared to the other such plans for which the loan is eligible, or if the loan is eligible for more than one income-driven repayment plan that has the same such lowest monthly payment amount, provide the borrower with such income-driven repayment plan that has the most favorable terms for the borrower;
“(II) if the plan described in subclause (I) is not the income-driven plan that would have the lowest monthly payment amount for the loan if the loan were eligible for such plan, notify the borrower of the actions, if any, the borrower may take for such loan to become eligible for such income-driven repayment plan; and
“(III) authorize the borrower to change the Secretary’s selection of a plan under this clause to any plan described in paragraph (1) for which the borrower is eligible; and
“(ii) in a case in which the loan is ineligible for an income-driven repayment plan, the Secretary shall notify the borrower of any actions, if any, the borrower may take for such loan to become eligible for such a plan.
“(D) Additional selection of plan—With respect to each borrower of a loan made under this part who selects a new repayment plan in accordance with the notice received under subparagraph (B), and who continues to be delinquent on such loan for a period after such selection that the Secretary determines is sufficient to indicate that the borrower may benefit from repaying such loan under a new repayment plan, but such period is not less than a 60-day period, the Secretary, as soon as practicable after such period, shall carry out the procedures under this paragraph for such loan.
“(E) Opt-out—The Secretary shall authorize a borrower to opt-out of the procedures under this paragraph.”
Definition of income-driven repayment plan— Section 455(d) of the Higher Education Act of 1965 (20 U.S.C. 1087e(d)) is further amended by adding at the end the following:
“(7) Definition—In this section, the term income-driven repayment plan means a plan described in subparagraph (D) or (E) of paragraph (1).”
Changing plans— Section 493C of the Higher Education Act of 1965 (20 U.S.C. 1098e) is amended by adding at the end the following:
“(f) Changing plans—A borrower changing from income-based repayment under this section to a different repayment plan shall not be required to pay the one monthly payment under the standard repayment plan described in section 682.215(d)(3) or 685.221(d)(2) of title 34, Code of Federal Regulations (or successor regulations) or any other amount.”
Effective date; application—
Automatic enrollment— The amendments made by paragraphs (1) and (2) of subsection (a) shall—
take effect as soon as practicable after the Secretary of Education finalizes the procedures under section 4 of this Act, but not later than 2 years after the date of enactment of such Act; and
apply with respect to any loan made under part D of title IV of the Higher Education Act of 1965 (20 U.S.C. 1087a et seq.) to a new borrower (defined in section 103 of the Higher Education Act of 1965 (20 U.S.C. 1003)) on or after the date on which such amendments take effect.
Changing plans— The amendment made by subsection (a)(3) shall take effect on the date of enactment of this Act.
Sec. 3 Automatic recertification of income
Income-Contingent repayment— Section 455(e) of the Higher Education Act of 1965 (20 U.S.C. 1087e(e)) is amended by adding at the end the following:
“(8) Automatic recertification
“(A) In general—Beginning as soon as practicable after the Secretary finalizes the procedures under section 4 of the Streamlining Income-driven, Manageable Payments on Loans for Education Act, but not later than 2 years after the date of enactment of such Act, the Secretary shall establish and implement procedures for the following:
“(i) With respect to any borrower who, on or after the date on which the Secretary establishes procedures for this subparagraph, selects (or for whom the Secretary selects) income contingent repayment for repayment of a loan made under this part—
“(I) obtain (for each year of such 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 section 4 of the Streamlining Income-driven, Manageable Payments on Loans for Education Act;
“(II) allow the borrower to opt-out, at anytime, of the Secretary being able to obtain information under subclause (I) without further action by the borrower; and
“(III) provide the borrower with an opportunity to update the information obtained under subclause (I) before the determination of the annual repayment obligation of the borrower; and
“(IV) in the case of a borrower for whom adjusted gross income is unavailable or does not reasonably reflect the borrower’s current income—
“(aa) if the borrower selects to repay such loan pursuant to an income-driven repayment plan that defines discretionary income in such a manner that an individual not required under section 6012(a)(1) of the Internal Revenue Code of 1986 to file a return with respect to income taxes imposed by subtitle A of such Code may have a calculated monthly payment greater than $0, such borrower will be required to provide the Secretary with other documentation of income satisfactory to the Secretary, which documentation the Secretary may use to determine an appropriate repayment schedule; or
“(bb) if the borrower selects to repay such loan pursuant to an income-driven repayment plan that is not described in item (aa), the borrower will not be required to provide the Secretary with such other documentation of income, and the borrower will have a calculated monthly payment of $0.
“(ii) With respect to any borrower who selects income contingent repayment for repayment of a loan made under this part before the date on which the Secretary establishes procedures for this subparagraph, the Secretary—
“(I) shall provide such borrower with the ability to opt into the procedures described in clause (i); and
“(II) until the borrower has opted into such procedures, shall not be able to obtain information under clause (i)(I) without further action by the borrower.
“(B) Returns and return information—Returns and return information (as defined in section 6103 of the Internal Revenue Code of 1986) may be obtained under subparagraph (A)(i)(I) only to the extent authorized by section 6103(l)(13) of such Code.
“(C) Other requirements—The procedures established by the Secretary under this paragraph shall be consistent with the requirements of paragraphs (1) through (7), except as otherwise provided in this paragraph.
“(9) Outreach—Beginning as soon as practicable after the Secretary finalizes the procedures under section 4 of the Streamlining Income-driven, Manageable Payments on Loans for Education Act, but not later than 2 years after the date of enactment of such Act, the Secretary shall—
“(A) inform borrowers repaying a loan made under this part pursuant to an income-driven repayment plan (defined in section 455(d)(7)) of the benefits of automatic recertification procedures under paragraph (8)(A)(i); and
“(B) encourage such borrowers to opt into such automatic recertification.”
Income-Based repayment— Section 493C(c) of the Higher Education Act of 1965 (20 U.S.C. 1098e(c)) is amended by adding at the end the following: “Beginning as soon as practicable after the Secretary finalizes the procedures under section 4 of the Streamlining Income-driven, Manageable Payments on Loans for Education Act, but not later than 2 years after the date of enactment of such Act, the Secretary shall carry out the procedures under 455(e)(8) with respect to income-based repayment under this section.”.
Sec. 4 Study and procedures on determining family size
In general— Not later than 1 year after the date of the enactment of this Act, the Secretary of Education shall—
jointly with the Secretary of the Treasury, conduct a study, which meets the specifications described in subsection (b), on the effect of using data from the Internal Revenue Service on the deduction for personal exemptions provided by section 151 of the Internal Revenue Code of 1986 for a proxy for family size in an income-driven repayment plan, and publish such study in the Federal Register;
use the results of the study conducted under paragraph (1) to develop procedures for determining family size for the automatic recertification of income for an income-driven repayment plan in a manner that minimizes burdens and unintended harm to borrowers;
publish the procedures developed under paragraph (2) in the Federal Register; and
after a notice and comment period on such procedures, use such comments to finalize the procedures.
Specifications— The study conducted under subsection (a)(1) shall—
determine how closely such personal exemptions match the family size that borrowers report on their income-driven repayment plan request form;
compare the borrower’s actual monthly payment amount with the monthly payment amount borrowers would have using family size information derived from tax returns; and
use data from more than one year, where possible, to analyze how much family size changes over time.
Definition— The term income-driven repayment plan has the meaning given the term in section 455(d)(7) of the Higher Education Act of 1965, as amended by this Act.
Sec. 5 Disclosure of tax return information to carry out income contingent repayment of student loans
Repeal of termination— Section 6103(l)(13) of the Internal Revenue Code of 1986 is amended by striking subparagraph (D).
Disclosure to contractors—
In general— Section 6103(l)(13) of such Code, as amended by subsection (a), is amended by redesignating subparagraph (C) as subparagraph (D) and by inserting after subparagraph (B) the following new subparagraph:
“(C) Disclosure to certain contractors—Officers and employees of the Department of Education may disclose the information described in subparagraph (A) to contractors of the Department of Education to the extent necessary for the purposes described in subparagraph (B).”
Conforming amendments—
Section 6103(a)(3) of such Code is amended by inserting “(13),” after “(12),”.
Section 6103(p)(4) of such Code is amended by inserting “(13),” after “(l)(10),” each place it occurs.
Disclosure of information regarding personal exemptions— Section 6103(l)(13)(A) of such Code is amended by striking “and” at the end of clause (ii), by striking the period at the end of clause (iii) and inserting “, and”, and by inserting after clause (iii) the following:
“(iv) the personal exemptions of such taxpayer provided by section 151.”
Use of disclosed information for enrollment in income-Driven repayment plan— Section 6103(l)(13)(B) of such Code is amended—
by striking “to the extent necessary in, establishing” and inserting
“(i) establishing”
by striking the period at the end and inserting “, and”, and
by adding at the end the following new clause:
“(ii) enrolling borrowers who are at least 120 days delinquent on a loan in an income-driven repayment plan (as defined in section 455(d)(7) of the Higher Education Act of 1965).”
Use of disclosed information for annual recertifications—
In general— Section 6103(l)(13)(B)(i) of such Code, as amended by subsection (d), is amended by inserting “(including annual recertification)” after “applicable student loan”.
Loans to which annual recertification applies— Section 6103(l)(13)(D), as amended by subsections (a) and (b), is amended by striking “and” at the end of clause (i), by striking the period at the end of clause (ii) and inserting “, and”, and by adding at the end the following new clause:
“(iii) with respect to any annual recertification referred to in subparagraph (B)(i), any loan made under part B or D of title IV of the Higher Education Act of 1965.”
Effective date— The amendments made by this section shall apply to disclosures made after the date of the enactment of this Act.