H.R. 1 — what changed

“(D) beginning on July 1, 2026, the income-based Repayment Assistance Plan under subsection (q), provided that—

“(i) the borrower is required to pay each outstanding loan of the borrower made under this part under such Repayment Assistance Plan;

“(ii) such Plan shall not be available to borrowers with an excepted loan (as defined in paragraph (7)); and

“(iii) the borrower may not change the borrower’s selection of the Repayment Assistance Plan except in accordance with paragraph (7)(C).”

“(B) repay the loan pursuant to an income-based repayment plan under subsection (q) or section 493C, as applicable.”

“(6) Termination and limitation of repayment authority

“(A) Sunset of repayment plans available before July 1, 2026—Paragraphs (1) through (4) of this subsection shall only apply to loans made under this part before July 1, 2026.

“(B) Prohibitions—The Secretary may not, for any loan made under this part on or after July 1, 2026—

“(i) authorize a borrower of such a loan to repay such loan pursuant to a repayment plan that is not described in paragraph (7)(A); or

“(ii) carry out or modify a repayment plan that is not described in such paragraph.

“(7) Repayment plans for loans made on or after July 1, 2026

“(A) Design and selection—Beginning on July 1, 2026, the Secretary shall offer a borrower of a loan made under this part on or after such date (including such a borrower who also has a loan made under this part before such date) two plans for repayment of the borrower’s loans under this part, including principal and interest on such loans. The borrower shall be entitled to accelerate, without penalty, repayment on such loans. The borrower may choose—

“(i) a standard repayment plan—

“(I) with a fixed monthly repayment amount paid over a fixed period of time equal to the applicable period determined under subclause (II); and

“(II) with the applicable period of time for repayment determined based on the total outstanding principal of all loans of the borrower made under this part before, on, or after July 1, 2026, at the time the borrower is entering repayment under such plan, as follows—

“(aa) for a borrower with total outstanding principal of less than $25,000, a period of 10 years;

“(bb) for a borrower with total outstanding principal of not less than $25,000 and less than $50,000, a period of 15 years;

“(cc) for a borrower with total outstanding principal of not less than $50,000 and less than $100,000, a period of 20 years; and

“(dd) for a borrower with total outstanding principal of $100,000 or more, a period of 25 years; or

“(ii) the income-based Repayment Assistance Plan under subsection (q).

“(B) Selection by Secretary—If a borrower of a loan made under this part on or after July 1, 2026, does not select a repayment plan described in subparagraph (A), the Secretary shall provide the borrower with the standard repayment plan described in subparagraph (A)(i).

“(C) Selection available for each new loan; selection applies to all outstanding loans—Each time a borrower receives a loan made under this part on or after July 1, 2026, the borrower may select either the standard repayment plan under subparagraph (A)(i) or the Repayment Assistance Plan under subparagraph (A)(ii), provided that the borrower is required to pay each outstanding loan of the borrower made under this part under such selected repayment plan.

“(D) Permissible changes of repayment plan

“(i) Changing from standard repayment plan—A borrower may change the borrower’s selection of the standard repayment plan under subparagraph (A)(i), or the Secretary’s selection of such plan for the borrower under subparagraph (C), as the case may be, to the Repayment Assistance Plan under subparagraph (A)(ii) at any time.

“(ii) Limited change from Repayment Assistance Plan—A borrower may not change the borrower’s selection of the Repayment Assistance Plan under subparagraph (A)(ii), except in accordance with subparagraph (C).

“(E) Special rule for excepted loan borrowers with loans made on or after July 1, 2026

“(i) Standard repayment plan required—Notwithstanding subparagraphs (A) through (D), beginning on July 1, 2026, the Secretary shall require a borrower who has an excepted loan and who has received a loan made under this part on or after such date to repay each outstanding loan of the borrower made under this part, including principal and interest on such loans, under the standard repayment plan under subparagraph (A)(i). The borrower shall be entitled to accelerate, without penalty, repayment on such loans.

“(ii) Excepted loan defined—For the purposes of this paragraph, the term “excepted loan” means a loan with an outstanding balance that is—

“(I) a Federal Direct PLUS Loan that is made on behalf of a dependent student; or

“(II) a Federal Direct Consolidation Loan, if the proceeds of such loan were used to the discharge the liability on—

“(aa) an excepted PLUS loan, as defined in section 493C(a)(1); or

“(bb) an excepted consolidation loan (as such term is defined in section 493C(a)(2)(A), notwithstanding subparagraph (B) of such section).

“(F) Treatment of borrowers without loans made on or after July 1, 2026—A borrower who has an outstanding loan (including an excepted loan) made under this part before July 1, 2026, and who has not received a loan made under this part on or after July 1, 2026, shall not be eligible to change the borrower’s selection of a repayment plan to the standard repayment plan under subparagraph (A)(i).”

“(1) Authority of Secretary to require—The Secretary may require borrowers who have defaulted on loans made under this part that are assigned to the Secretary under subsection (c)(8) to repay those loans pursuant to an income-based repayment plan under section 455(q) or section 493C, as applicable.”

“(q) Repayment Assistance Plan

“(1) In general—Notwithstanding any other provision of this Act, beginning on July 1, 2026, the Secretary shall carry out an income-based repayment plan (to be known as the “Repayment Assistance Plan”), that shall have the following terms and conditions:

“(A) The total monthly repayment amount owed by a borrower for all of the loans of the borrower that are repaid pursuant to the Repayment Assistance Plan shall be equal to the applicable monthly payment of a borrower calculated under paragraph (3)(B), except that the borrower may not be precluded from repaying an amount that exceeds such amount for any month.

“(B) The Secretary shall apply the borrower’s applicable monthly payment under this paragraph first toward interest due on each such loan, next toward any fees due on each loan, and then toward the principal of each loan.

“(C) Any principal due and not paid under subparagraph (B) or paragraph (2)(B) shall be deferred.

“(D) A borrower who is not in a period of deferment or forbearance shall make an applicable monthly payment for each month until the earlier of—

“(i) the date on which the outstanding balance of principal and interest due on all of the loans of the borrower that are repaid pursuant to the Repayment Assistance Plan is $0; or

“(ii) the date on which the borrower has made 360 qualifying monthly payments.

“(E) The Secretary shall repay or cancel any outstanding balance of principal and interest due on a loan made under this part to a borrower—

“(i) who, for any period of time, participated in the Repayment Assistance Plan under this subsection;

“(ii) whose most recent payment for such loan prior to the loan cancellation under this subparagraph was made under such Repayment Assistance Plan; and

“(iii) who has made 360 qualifying monthly payments on such loan.

“(F) For the purposes of this subsection, the term “qualifying monthly payment” means any of the following:

“(i) An on-time applicable monthly payment under this subsection.

“(ii) An on-time monthly payment under the standard repayment plan under subsection (d)(7)(A)(i) of not less than the monthly payment required under such plan.

“(iii) A monthly payment under any repayment plan of not less than the monthly payment that would be required under a standard repayment plan under section 455(d)(1)(A) with a repayment period of 10 years.

“(iv) A monthly payment under section 493C of not less than the monthly payment required under such section, including a monthly payment equal to the minimum payment amount permitted under such section.

“(v) A monthly payment made before the date of enactment of this subsection under an income-contingent repayment plan carried out under section 455(d)(1)(D) (or under an alternative repayment plan in lieu of repayment under such an income-contingent repayment plan, if placed in such an alternative repayment plan by the Secretary) of not less than the monthly payment required under such a plan, including a monthly payment equal to the minimum payment amount permitted under such a plan.

“(vi) A month when the borrower did not make a payment because the borrower was in deferment due to an economic hardship described in section 435(o).

“(vii) A month that ended before the date of enactment of this subsection when the borrower did not make a payment because the borrower was in a period deferment or forbearance described in section 685.209(k)(4)(iv) of title 34, Code of Federal Regulations (as in effect on the date of enactment of this subsection).

“(G) With respect to carrying out section 494(a)(2) for the Repayment Assistance Plan, an individual may elect to opt out of the disclosures required under section 494(a)(2)(A)(ii) in accordance with the procedures established under section 493C(c)(2)(B).

“(2) Balance assistance for distressed borrowers

“(A) Interest subsidy—With respect to a borrower of a loan made under this part, for each month for which such a borrower makes an on-time applicable monthly payment required under paragraph (1)(A) and such monthly payment is insufficient to pay the total amount of interest that accrues for the month on all loans of the borrower repaid pursuant to the Repayment Assistance Plan under this subsection, the amount of interest accrued and not paid for the month shall not be charged to the borrower.

“(B) Matching principal payment—With respect to a borrower of a loan made under this part and not in a period of deferment or forbearance, for each month for which a borrower makes an on-time applicable monthly payment required under paragraph (1)(A) and such monthly payment reduces the total outstanding principal balance of all loans of the borrower repaid pursuant to the Repayment Assistance Plan under this subsection by less than $50, the Secretary shall reduce such total outstanding principal balance of the borrower by an amount that is equal to—

“(i) the amount that is the lesser of—

“(I) $50; or

“(II) the total amount paid by the borrower for such month pursuant to paragraph (1)(A), minus

“(ii) the total amount paid by the borrower for such month pursuant to paragraph (1)(A) that is applied to such total outstanding principal balance.

“(3) Definitions—In this paragraph:

“(A) Adjusted gross income—The term adjusted gross income, when used with respect to a borrower, means the adjusted gross income (as such term is defined in section 62 of the Internal Revenue Code of 1986) of the borrower (and the borrower’s spouse, as applicable) for the most recent taxable year, except that, in the case of a married borrower who files a separate Federal income tax return, the term does not include the adjusted gross income of the borrower’s spouse.

“(B) Applicable monthly payment

“(i) In general—Except as provided in clause (ii), (iii), or (vi), the term applicable monthly payment means, when used with respect to a borrower, the amount equal to—

“(I) the applicable base payment of the borrower, divided by 12; minus

“(II) $50 for each dependent child of the borrower.

“(ii) Minimum amount—In the case of a borrower with an applicable monthly payment amount calculated under clause (i) that is less than $10, the applicable monthly payment of the borrower shall be $10.

“(iii) Final payment—In the case of a borrower whose total outstanding balance of principal and interest on all of the loans of the borrower that are repaid pursuant to the Repayment Assistance Plan is less than the applicable monthly payment calculated pursuant to clause (i) or (ii), as applicable, then the applicable monthly payment of the borrower shall be the total outstanding balance of principal and interest on all such loans.

“(iv) Base payment—The amount of the applicable base payment for a borrower with an adjusted gross income of—

“(I) not more than $10,000, is $120;

“(II) more than $10,000 and not more than $20,000, is 1 percent of such adjusted gross income;

“(III) more than $20,000 and not more than $30,000, is 2 percent of such adjusted gross income;

“(IV) more than $30,000 and not more than $40,000, is 3 percent of such adjusted gross income;

“(V) more than $40,000 and not more than $50,000, is 4 percent of such adjusted gross income;

“(VI) more than $50,000 and not more than $60,000, is 5 percent of such adjusted gross income;

“(VII) more than $60,000 and not more than $70,000, is 6 percent of such adjusted gross income;

“(VIII) more than $70,000 and not more than $80,000, is 7 percent of such adjusted gross income;

“(IX) more than $80,000 and not more than $90,000, is 8 percent of such adjusted gross income;

“(X) more than $90,000 and not more than $100,000, is 9 percent of such adjusted gross income; and

“(XI) more than $100,000, is 10 percent of such adjusted gross income.

“(v) Dependent child of the borrower—For the purposes of this paragraph, the term “dependent child of the borrower” means an individual who—

“(I) is under 17 years of age; and

“(II) is the borrower’s dependent child or another person who lives with and receives more than one-half of their support from the borrower.

“(vi) Special rule—In the case of a borrower who is required by the Secretary to provide information to the Secretary to determine the applicable monthly payment of the borrower under this subparagraph, and who does not comply with such requirement, the applicable monthly payment of the borrower shall be—

“(I) the sum of the monthly payment amounts the borrower would have paid for each of the borrower’s loans made under this part under a standard repayment plan with a fixed monthly repayment amount, paid over a period of 10 years, based on the outstanding principal due on such loan when such loan entered repayment; and

“(II) determined pursuant to this clause until the date on which the borrower provides such information to the Secretary.”

“(3) Consolidation loans made on or after July 1, 2026—Notwithstanding subsections (b)(5), (c)(2), and (c)(3)(A) and (B) of section 428C, a Federal Direct Consolidation Loan offered to a borrower under this part on or after July 1, 2026, may only be repaid pursuant to a repayment plan described in subsection (d)(7)(A)(i) or (ii) of this section, as applicable, and the repayment schedule of such a Consolidation Loan shall be determined in accordance with such repayment plan.”

“(2) Excepted consolidation loan

“(A) In general—The term excepted consolidation loan means—

“(i) a consolidation loan under section 428C, or a Federal Direct Consolidation Loan, if the proceeds of such loan were used to the discharge the liability on an excepted PLUS loan; or

“(ii) a consolidation loan under section 428C, or a Federal Direct Consolidation Loan, if the proceeds of such loan were used to discharge the liability on a consolidation loan under section 428C or a Federal Direct Consolidation Loan described in clause (i).

“(B) Exclusion—The term “excepted consolidation loan” does not include a Federal Direct Consolidation Loan described in subparagraph (A) that (on the day before the date of enactment of this subparagraph) was being repaid pursuant to the Income-Contingent Repayment (ICR) plan in accordance with section 685.209(a) of title 34, Code of Federal Regulations (as in effect on June 30, 2023).”

“(1) a borrower of any loan made, insured, or guaranteed under part B or D (other than an excepted PLUS loan or excepted consolidation loan), may elect to have the borrower’s aggregate monthly payment for all such loans not exceed the result described in subsection (a)(3)(B) divided by 12;”

“224. Qualified tips

“(a) In general—There shall be allowed as a deduction an amount equal to the qualified tips received during the taxable year that are included on statements furnished to the individual pursuant to section 6041(d)(3), 6041A(e)(3), 6050W(f)(2), 6051(a)(18), or reported by the taxpayer on Form 4137 (or successor).

“(b) Tips received in course of trade or business—In the case of qualified tips received by an individual during any taxable year in the course of any trade or business of such individual, such qualified tips shall be taken into account under subsection (a) only to the extent that the gross receipts of the taxpayer from such trade or business for such taxable year (including such qualified tips) exceeds the sum of—

“(1) cost of goods sold that are allocable to such receipts, plus

“(2) other expenses, losses, or deductions (other than the deduction allowed under this section), which are properly allocable to such receipts.

“(c) Qualified tips—For purposes of this section—

“(1) In general—The term qualified tip means any cash tip received by an individual in an occupation which traditionally and customarily received tips on or before December 31, 2024, as provided by the Secretary.

“(2) Exclusions—Such term shall not include any amount received by an individual unless—

“(A) such amount is paid voluntarily without any consequence in the event of nonpayment, is not the subject of negotiation, and is determined by the payor,

“(B) the trade or business in the course of which the individual receives such amount is not a specified service trade or business (as defined in section 199A(d)(2)),

“(C) such individual does not receive earned income (within the meaning of section 32) in excess of the dollar amount in effect under section 414(q)(1)(B)(i) for the calendar year in which the taxable year begins, and

“(D) such other requirements as may be established by the Secretary in regulations or other guidance are satisfied.

“(d) Social security number required

“(1) In general—No deduction shall be allowed under this section unless the taxpayer includes on the return of tax for the taxable year—

“(A) such individual’s social security number, and

“(B) if the individual is married, the social security number of such individual’s spouse.

“(2) Married individuals—Rules similar to the rules of section 32(d) shall apply to this section.

“(3) Social security number defined—For purposes of paragraph (1), the term “social security number” shall have the meaning given such term in section 24(h)(7).

“(e) Regulations—The Secretary shall prescribe such regulations or other guidance as may be necessary to prevent reclassification of income as qualified tips, including regulations or other guidance to prevent abuse of the deduction allowed by this section.

“(f) Termination—No deduction shall be allowed under this section for any taxable year beginning after December 31, 2028.”

“(5) the deduction provided in section 224.”

“(X) an omission of a correct social security number required under section 224(d) (relating to deduction for qualified tips).”

“(D) any amount with respect to which a deduction is allowable to the taxpayer under section 224(a) for the taxable year.”

“(2) Application only to certain lines of business—In applying paragraph (1) there shall be taken into account only tips received from customers or clients in connection with the following services:

“(A) The providing, delivering, or serving of food or beverages for consumption, if the tipping of employees delivering or serving food or beverages by customers is customary.

“(B) The providing of any of the following services to a customer or client if the tipping of employees providing such services is customary:

“(i) Barbering and hair care.

“(ii) Nail care.

“(iii) Esthetics.

“(iv) Body and spa treatments.”

“(3) in the case of compensation to non-employees, the portion of payments that have been properly designated as tips and whether such tips are received in an occupation described in section 224(c)(1).”

“(3) the portion of payments that have been properly designated as tips and whether such tips are received in an occupation described in section 224(c)(1).”

“(3) in the case of a third party settlement organization, the portion of reportable payment transactions that have been properly designated by payors as tips and whether such tips are received in an occupation described in section 224(c)(1).”

“(18) the total amount of tips reported by the employee under section 6053(a).”