1. Short title
This Act may be cited as the “Simplifying Student Loans Act”.
Simplifying Student Loans Act
A BILL
To amend the Higher Education Act of 1965 to establish an income-based repayment for new loans on and after July 1, 2021, and for borrowers who enter income-based repayment after June 30, 2021, and for other purposes.
2. Termination of certain repayment plan options and opportunity to change repayment plans
Selection of repayment plans— Section 428(b) of the Higher Education Act of 1965 (20 U.S.C. 1078(b)) is amended—
in paragraph (1)—
in subparagraph (D)—
in clause (ii), by striking “may annually change the selection of a repayment plan under this part,” and inserting “may at any time after July 1, 2021, change the selection of a repayment plan under this part to one of the 2 repayment plans described in paragraph (9)(C),”; and
in clause (iii), by striking “be subject to income contingent repayment in accordance with subsection (m);” and inserting “be subject to income-based repayment in accordance with section 493C(f);”; and
in subparagraph (E)(i), by striking “the option of repaying the loan in accordance with a standard, graduated, income-sensitive, or extended repayment schedule (as described in paragraph (9)) established by the lender in accordance with regulations of the Secretary; and” and inserting “the option of repaying the loan in accordance with a repayment plan described in paragraph (9)(C) established by the lender in accordance with regulations of the Secretary; and”; and
in paragraph (9), by adding at the end the following:
“(C) Selection of repayment plans on and after July 1, 2021; opportunity to change repayment plans—Notwithstanding any other provision of this paragraph, or any other provision of law, and in accordance with regulations, beginning on July 1, 2021, the lender shall offer a borrower of a loan made, insured, or guaranteed under this part the opportunity to change repayment plans, and to enroll in one of the following repayment plans:
“(i) A fixed repayment plan described in section 493E.
“(ii) The income-based repayment plan under section 493C(f).”
3. Amendments to terms and conditions of loans and repayment plans
Rulemaking regarding termination of certain repayment plans— Before July 1, 2021, the Secretary of Education shall carry out a plan to end all eligibility for repayment plans other than a fixed repayment plan described in section 493E of the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.), as added by this Act, and an income-based repayment plan described under section 493C(f) of the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.), as added by this Act, for loans made under part B or D of title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.), unless the borrower is enrolled in another repayment plan before July 1, 2021, in accordance with the amendments made by this Act.
Repayment plans— Section 455(d) of the Higher Education Act of 1965 (20 U.S.C. 1087e(d)) is amended—
by redesignating paragraphs (2) through (5) as paragraphs (3) through (6), respectively;
by inserting after paragraph (1), the following:
“(2) Design and selection on and after July 1, 2021
“(A) In general—Notwithstanding paragraph (1), for the borrower of a loan made on or after July 1, 2021, and for other borrowers subject to paragraph (7), the Secretary shall offer a borrower of a loan made under this part 2 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—
“(i) a fixed repayment plan described in section 493E; or
“(ii) the income-based repayment plan under section 493C(f).
“(B) Selection by the Secretary—If a borrower of a loan made under this part on or after July 1, 2021, does not select a repayment plan described in subparagraph (A), the Secretary may provide the borrower with a fixed repayment plan described in section 493E.
“(C) Changes in selections—Beginning on July 1, 2021, a borrower of a loan made under this part may change the borrower’s selection of a repayment plan in accordance with paragraph (7) and under such terms and conditions as may be established by the Secretary.”
in paragraph (6)(B), as redesignated, by striking “an income contingent repayment plan.” and inserting “the income-based repayment plan under section 493C(f).”; and
by adding at the end the following:
“(7) Borrowers of loans made before July 1, 2021—A borrower who is in repayment on a loan made under part B or part D before July 1, 2021—
“(A) may choose to retain the repayment plan that the borrower was enrolled in on the day before such date;
“(B) may elect to—
“(i) enter the income-based repayment plan under section 493C(f); or
“(ii) enter a fixed repayment plan described in section 493E;
“(C) after electing to leave a repayment plan other than an income-based repayment plan described under this subsection or a fixed repayment plan described in section 493E, shall not be permitted to re-elect a repayment plan that is not an income-based repayment plan under this subsection or a fixed repayment plan described in section 493E; and
“(D) shall retain, for purposes of repayment or cancellation of any outstanding balance of principal and interest due on a loan as described in section 493C(b)(7) any years of repayment under another income-based or income contingent repayment plan under this title.”
Maximum repayment period for income-Contingent repayment— Section 455(e) of the Higher Education Act of 1965 (20 U.S.C. 1087e(e)) is further amended—
in paragraph (7)(B)—
by striking “or” at the end of clause (iv);
by striking the period at the end of clause (v) and inserting a semicolon; and
by adding at the end the following:
“(vi) makes payments under the income-based repayment plan under section 493C(f); or
“(vii) makes payments under the fixed repayment plan described in section 493E.
“(8) Additional qualifying repayment plans—A borrower repaying a loan pursuant to income-contingent repayment under this subsection may elect at any time to terminate repayment under such repayment plan and repay such loan under the income-based repayment plan under section 493C(f) or the fixed repayment plan described in section 493E.”
4. Income-based repayment plan
Options To enter into the new fixed repayment plan and income-Based repayment plan— Section 493C(b) of the Higher Education Act of 1965 (20 U.S.C. 1098e) is amended—
in paragraph (7)(B)—
by striking “or” at the end of clause (iv); and
by adding at the end the following:
“(vi) has made payments under the income-based repayment plan under section 493C(f); or
“(vii) has made payments under the fixed repayment plan described in section 493E;”
by amending paragraph (8) to read as follows:
“(8) a borrower who is repaying a loan made under part B or D pursuant to income-based repayment may elect, at any time, to terminate repayment pursuant to income-based repayment and repay such loan under the income-based repayment plan under section 493C(f) or the fixed repayment plan described in section 493E;”
in paragraph (9), by striking the period at the end and inserting “; and”; and
by adding at the end the following:
“(10) a borrower who is repaying a loan made, insured, or guaranteed under part B or D pursuant to this section may repay such loan in full at any time without penalty.”
Income-Based repayment— Section 493C of the Higher Education Act of 1965 (20 U.S.C. 1098e) is amended by adding at the end the following:
“(f) Income-Based repayment for new loans on and after July 1, 2021, and for borrowers who enter income-Based repayment after June 30, 2021
“(1) In general—The income-based repayment plan under this subsection shall be carried out in accordance with this section, except as otherwise specified in this subsection—
“(A) with respect to any loan made under part D on or after July 1, 2021, if such borrower elects such income-based repayment plan for the loan; and
“(B) with respect to any loan made, insured, or guaranteed under part B or D on or before June 30, 2021, if such borrower elects to repay the loan under such income-based repayment plan on or after July 1, 2021.
“(2) Special terms—Notwithstanding any other provision of this section, with respect to a loan described under paragraph (1), the following terms shall apply to the income-based repayment plan under this subsection:
“(A)
“(i) Notwithstanding subsection (a)(3)(B), the repayment amount under this subsection shall be an amount equal to 10 percent of the result obtained by calculating, on at least an annual basis, the amount by which the adjusted gross income of the borrower (subject to clause (ii)) exceeds the applicable percentage of the poverty line in accordance with clause (iii).
“(ii)
“(I) Subject to subclause (II), in the case of a married borrower (regardless of tax filing status), clause (i) shall be applied by substituting “the adjusted gross income of the borrower and the borrower’s spouse” for “the adjusted gross income of the borrower”.
“(II) Subclause (I) shall not be applicable to any borrower who is married and who certifies to the Secretary through a form approved by the Secretary that the borrower is—
“(aa) separated from the spouse of the borrower; or
“(bb) unable to reasonably access the income information the spouse of such borrower.
“(iii) For purposes of clause (i), the term applicable percentage means 200 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))) reduced by 5 percentage points for each $1,000 by which the borrower’s adjusted gross income exceeds—
“(I) in the case of a single borrower, $80,000; and
“(II) in the case of a married borrower (regardless of tax filing status), $160,000.
“(B) Subsection (b)(7)(B) shall apply by substituting “20 years” for “25 years”.
“(C) A borrower of such a loan may elect, and remain enrolled in, the income-based repayment plan under this subsection regardless of—
“(i) whether such borrower has a partial financial hardship; and
“(ii) the income level of the borrower.
“(D) Notwithstanding subparagraph (A) of subsection (b)(6), a borrower’s monthly payment—
“(i) shall be equal to the repayment amount determined under subparagraph (A) divided by 12; and
“(ii) may exceed the monthly repayment amount under a standard 10-year repayment plan or a fixed repayment plan described in section 493E.
“(E) Subparagraph (B) of subsection (b)(3) shall not apply.
“(F) Subsection (d) shall not apply.
“(G) In the case of a consolidation loan made under part B or D on or after the date of enactment of the “Simplifying Student Loans Act” that is being repaid under this subsection, any monthly payment made pursuant to any repayment plan listed in subsection (b)(7)(B) on a loan for which the liability has been discharged by the proceeds of such consolidation loan shall be treated as a monthly payment under this subsection on the portion of such consolidation loan that is attributable to such discharged loan, except that in the case of a subsequent consolidation loan, any monthly payment on a loan for which the liability has been discharged by the first consolidation loan shall not be applicable for the purposes of this subparagraph.
“(3) Additional special terms for certain borrowers—A borrower described in paragraph (1)(B)—
“(A) may—
“(i) choose to continue repayment pursuant to the repayment plan in which the borrower is enrolled on June 30, 2021; or
“(ii) make a one-time election to—
“(I) terminate repayment pursuant to the repayment plan described in clause (i) and enter the income-based repayment plan under this subsection; or
“(II) terminate repayment pursuant to the repayment plan described in clause (i) and enter a fixed repayment plan described in section 493E; and
“(B) who makes an election under subparagraph (A)(ii), shall not repay a loan described in paragraph (1)(B) under a repayment plan that is not an income-based repayment plan under this subsection or a fixed repayment plan described in section 493E.”
5. Fixed repayment plan
Part G of title IV of the Higher Education Act of 1965 (20 U.S.C. 1088 et seq.) is further amended by adding at the end the following:
“493E. Fixed repayment plan
“(a) In general—A borrower of a loan made under this part on or after July 1, 2021, and a borrower who is in repayment on a loan made, insured, or guaranteed under part B or part D before July 1, 2021, may elect to repay such loan under the fixed repayment plan described in this section.
“(b) Fixed repayment plan—Under the fixed repayment plan, a borrower whose total outstanding amount of principal and interest on such a loan (as of the day before entering repayment on such loan)—
“(1) is equal to or less than $20,000, shall repay such loan with a fixed monthly repayment amount paid over a period of 10 years;
“(2) is more than $20,000 and less than $30,000, shall repay such loan with a fixed monthly repayment amount paid over a period of—
“(A) 15 years; or
“(B) the period described in paragraph (1), if the borrower elects such period;
“(3) is equal to or greater than $30,000, and less than $40,000, shall repay such loan with a fixed monthly repayment amount paid over a period of—
“(A) 20 years; or
“(B) the period described in paragraph (1) or (2), if the borrower elects such period; and
“(4) is equal to or greater than $40,000, shall repay such loan with a fixed monthly repayment amount paid over a period of—
“(A) 25 years; or
“(B) the period described in any of paragraphs (1) through (3), if the borrower elects such period.
“(c) Treatment of certain consolidation loans—In the case of a consolidation loan made under part B or D on or after the date of enactment of the “Simplifying Student Loans Act” that is being repaid under this section, any monthly payment made pursuant to any repayment plan listed in section 493C(b)(7)(B) on a loan for which the liability has been discharged by the proceeds of such consolidation loan shall be treated as a monthly payment under this section on the portion of such consolidation loan that is attributable to such discharged loan, except that in the case of a subsequent consolidation loan, any monthly payment on a loan for which the liability has been discharged by the first consolidation loan shall not be applicable for the purposes of this subsection.”