1. Short title
This Act may be cited as the “Student Loan Fairness Act”.
Student Loan Fairness Act
A BILL
To extend zero interest rate benefits and payment suspension to all Federal student loan borrowers, and for other purposes.
2. Assistance for Borrowers With Federal Family Education Loans and Federal Perkins Loans
Temporary program of Assistance for Borrowers With Federal Family Education Loans and Federal Perkins Loans— Notwithstanding any other provision of the Higher Education Act of 1965 (20 U.S.C. 1071 et seq.), the Secretary of Education shall carry out a temporary program to make interest payments on behalf of borrowers on loans made under part B of the Higher Education Act of 1965 (20 U.S.C. 1071 et seq.) or loans under part E of the Higher Education Act of 1965 (20 U.S.C. 1087aa et seq.), that are not held by the Federal Government (referred to in this section as “qualifying loans”) to assist such borrowers during the period of response and recovery relating to the novel coronavirus disease (COVID–19) outbreak.
Under the program, the Secretary shall enter into agreements, expeditiously, but not later than 30 days after the date of enactment of this Act, with eligible lenders and guaranty agencies under which the Secretary shall make interest payments to such eligible lenders and guaranty agencies on behalf of all borrowers of all qualifying loans in accordance with this section. Under such agreements—
the Secretary shall—
make payments on behalf of each borrower of qualifying loans whose loans are held by such eligible lender or guaranty agency equal to the total amount of the interest on the unpaid principal amount of such loans, calculated at the borrower interest rates established under section 427A of the Higher Education Act of 1965 (20 U.S.C. 1077a) (or at a lesser rate as established under section 427A(m) of such Act, if applicable) for loans under part B of such Act and calculated at the borrower interest rates established under section 464 of such Act (20 U.S.C. 1087dd) for loans under part E of such Act; and
make such payments to an eligible lender or guaranty agency on a monthly basis, for the period beginning on March 13, 2020, and ending on September 30, 2020 (referred to in this section as the “applicable period”); and
each eligible lender and guaranty agency who has entered into an agreement with the Secretary under this subsection shall—
credit the interest payments paid by the Secretary under this subsection as full satisfaction of the obligation of the borrowers to pay interest during the applicable period;
credit the account of a borrower, as an amount paid on the principal or interest of the qualifying loan in addition to the amounts credited under clause (i), in the case of a borrower who has made an interest payment for the applicable period; and
not later than 30 days from the date of such agreement, provide a report to the Secretary confirming that such borrowers have been or will be credited in accordance with this subparagraph.
For purposes of this subsection, an eligible lender includes the holder of the loan or, if the holder acts as eligible lender trustee for the beneficial owner of the loan, the beneficial owner of the loan.
Nothing in this subsection shall affect payment calculations under section 438 of the Higher Education Act of 1965 (20 U.S.C. 1087).
The Secretary shall ensure that each agreement under this subsection includes every qualifying loan held by the eligible lender or guaranty agency.
Temporary postponement of part B and part E loan payments— Notwithstanding any other provision of the Higher Education Act of 1965 (20 U.S.C. 1071 et seq.), the Secretary shall require eligible lenders and guaranty agencies with agreements with the Secretary under subsection (a) to suspend all payments due from borrowers on qualifying loans through September 30, 2020.
Consideration of payments— Notwithstanding any other provision of the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.), the Secretary shall deem each month for which a loan payment was suspended under this subsection as if the borrower of the loan had made a qualified payment for the purpose of any loan forgiveness program and loan rehabilitation program authorized under the Higher Education Act of 1965 (20 U.S.C. 1071 et seq.).
Reporting to consumer reporting agencies— During the period in which the borrower payments on a loan are suspended under this subsection, the Secretary shall ensure that, for the purpose of reporting information about the loan to a consumer reporting agency, any payment that has been suspended is treated as if it were a regularly scheduled payment made by a borrower.
Suspending involuntary collection— Notwithstanding any other provision of the Higher Education Act of 1965 (20 U.S.C. 1071 et seq.), the Secretary shall suspend, and shall require guaranty agencies with agreements with the Secretary under subsection (a) to suspend, all involuntary collection related to the qualifying loan, through September 30, 2020. Such efforts shall include—
a wage garnishment authorized under section 488A of the Higher Education Act of 1965 (20 U.S.C. 1095a) or section 3720D of title 31, United States Code;
a reduction of tax refund by amount of debt authorized under section 3720A of title 31, United States Code, or section 6402(d) of the Internal Revenue Code of 1986;
a reduction of any other Federal benefit payment by administrative offset authorized under section 3716 of title 31, United States Code (including a benefit payment due to an individual under the Social Security Act or any other provision described in subsection (c)(3)(A)(i) of such section); and
any other involuntary collection activity by the Secretary.
Notice to borrowers and transition period— To inform borrowers of the actions taken in accordance with this section and ensure an effective transition, the Secretary shall require eligible lenders and guaranty agencies with agreements under subsection (a) to—
not later than 15 days after entering into such agreement, notify borrowers—
of the actions taken in accordance with this section for whom payments have been suspended and interest paid by the Secretary on behalf of that borrower;
of the actions taken in accordance with subsection (c) for whom collections have been suspended;
of the option to continue making payments toward principal; and
that the program under this section is a temporary program; and
beginning on August 1, 2020, carry out a program to provide not less than 6 notices by postal mail, telephone, or electronic communication to borrowers indicating—
when the borrower’s normal payment obligations will resume; and
any options the borrower may have for income-driven repayment or forgiveness.
Waivers— In carrying out this section, the Secretary may waive the application of—
subchapter I of chapter 35 of title 44, United States Code (commonly known as the “Paperwork Reduction Act”);
the master calendar requirements under section 482 of the Higher Education Act of 1965 (20 U.S.C. 1089);
negotiated rulemaking under section 492 of the Higher Education Act of 1965 (20 U.S.C. 1098a); and
the requirement to publish the notices related to the system of records of the agency before implementation required under paragraphs (4) and (11) of section 552a(e) of title 5, United States Code (commonly known as the “Privacy Act of 1974”), except that the notices shall be published not later than 180 days after the date of enactment of this Act.
Deferment or forbearance— The Secretary shall require eligible lenders and guaranty agencies with agreements with the Secretary under subsection (a) to ensure that any period of deferment or forbearance on a qualifying loan during the period beginning on March 13, 2020, and ending on September 30, 2020, shall not be counted toward any cumulative limits on deferment or forbearance periods.
Eligible lender— In this section, the term eligible lender shall include—
an institution of higher education in the case of a loan made under part E of the Higher Education Act of 1965 (20 U.S.C. 1087aa et seq.); and
an eligible lender as defined by section 435(d) of the Higher Education Act of 1965 (20 U.S.C. 1085).