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

H.R. 3027 · 116th Congress · May 24, 2019 · 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— Section 108(f)(1) 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— Section 108(f)(2) 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— Section 529(e)(3)(A) 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)
Part B loans—
(A)
Repayment plans— Section 428(b)(9)(A)(v) of the Higher Education Act of 1965 (20 U.S.C. 1078(b)(9)(A)(v)) is amended by striking “, except that the plan described in this clause shall not be available to a borrower for a loan under section 428B made on behalf of a dependent student or for a consolidation loan under section 428C, if the proceeds of such loan were used to discharge the liability of a loan under section 428B made on behalf of a dependent student”.
(B)
Consolidation loans— Section 428C(c)(3) of such Act (20 U.S.C. 1078–3(c)(3)) is amended—
(i)
in subparagraph (A), by inserting “and” at the end;
(ii)
in subparagraph (B), by striking “and” at the end and inserting a period; and
(iii)
by striking subparagraph (C).
(2)
Part D loans— 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”.
(3)
IBR— Section 493C of such Act (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)”;
(ii)
in paragraph (6)(A), by striking “(other than an excepted PLUS loan or excepted consolidation loan)”; and
(iii)
in paragraph (7), by striking “other than a loan under section 428B or a Federal Direct PLUS Loan”; and
(C)
in subsection (c), by striking “(other than an excepted PLUS loan or excepted consolidation loan),”.
(c)
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)”.
(d)
Other repayment plans— Any plan for the repayment of loans made under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.), which is finalized by the Secretary of Education on or after the date of enactment of this Act, shall include the repayment of a loan under section 428B of the Higher Education Act of 1965, or a Federal Direct PLUS Loan under part D of title IV of such Act, that is made, insured, or guaranteed on behalf of a dependent student.

Sec. 204 Determination of adverse credit history

Section 428B(a) of the Higher Education Act of 1965 (20 U.S.C. 1078–2(a)) is amended in paragraph (1)(A), 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)”.