Student Loan Debt Protection Act of 2015

Summary:  Student Loan Debt Protection Act of 2015 This bill amends the federal bankruptcy code to permit a borrower to discharge in bankruptcy a nonprofit, government, or private student loan, or an obligation to repay an educational benefit, scholarship, or stipend.  It amends title IV (Student Assistance) of the Higher Education Act of 1965 to reinstate the six-year statute of limitations on actions to recover on defaulted student loans.  The bill prohibits collecting the amount owed on a defaulted federal student loan through: (1) offsets of social security, railroad retirement, or black lung benefits; (2) offsets of tax refunds; or (3) wage garnishment. It amends the Internal Revenue Code to exclude from an individual's gross income: (1) discharged student loan debt, and (2) income distributions from qualified tuition plans that are used to pay the interest or principal on student loans. The bill makes parent PLUS loans eligible for income-contingent repayment plans, including the Pay As You Earn repayment plan. Additionally, it makes parent PLUS loans and consolidation loans that repay parent PLUS loans eligible for income-based repayment plans and loan forgiveness for service in areas of national need.  It prohibits: (1) evidence of an individual's default on a federal student loan from being used in a federal or state proceeding involving the individual's professional or vocational license, and (2) an institution of higher education from blocking access to a student's records due to federal student loan default. Finally, the bill modifies the public service loan forgiveness program to require the Department of Education to forgive 50% of the Direct loan balance for an eligible borrower who is employed in a public service job and makes 60 monthly payments after October 1, 2015.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Student Loan Debt Protection Act of 
2015''.

        TITLE I--BORROWERS' RIGHT TO BASIC CONSUMER PROTECTIONS

SEC. 101. DISCHARGEABILITY OF STUDENT LOANS IN BANKRUPTCY CASES.

    Section 523(a) of title 11 of the United States Code is amended--
            (1) by striking paragraph (8); and
            (2) by redesignating paragraphs (9) through (19) as 
        paragraphs (8) through (18).

SEC. 102. REINSTATEMENT OF THE 6-YEAR STATUTE OF LIMITATIONS FOR 
              STUDENT LOANS.

    Subsection (a) of section 484A of the Higher Education Act of 1965 
(20 U.S.C. 1091a(a)) is amended to read as follows:
    ``(a) Statute of Limitations.--Notwithstanding any Federal or State 
statutory, regulatory, or administrative limitation on the period 
within which debts may be enforced--
            ``(1) an institution that receives funds under this title 
        may file a suit or initiate or take another action for 
        collection of a refund due from a student on a grant made, or 
        work assistance awarded, under this title, during the 6-year 
        period beginning on the day after the refund first became due 
        (exclusive of period during which the State statute of 
        limitations otherwise applicable to a suit under this paragraph 
        would be tolled under State law);
            ``(2) a guaranty agency that has an agreement with the 
        Secretary under section 428(c) may file a suit or initiate or 
        take another action for collection of the amount due from a 
        borrower on a loan made under part B during the 6-year period 
        beginning on the day after such guaranty agency reimburses the 
        previous holder of the loan for its loss on account of the 
        default of the borrower (exclusive of period during which the 
        State statute of limitations otherwise applicable to a suit 
        under this paragraph would be tolled under State law);
            ``(3) an institution that has an agreement with the 
        Secretary pursuant to section 487 may file a suit or initiate 
        or take another action for collection of the amount due from a 
        borrower on a loan made under part D or E after the default of 
        the borrower on such loan during the 6-year period beginning on 
        the day after the date of the default of the borrower with 
        respect to such amount (exclusive of period during which the 
        State statute of limitations otherwise applicable to a suit 
        under this paragraph would be tolled under State law); or
            ``(4) the Secretary, the Attorney General, or the 
        administrative head of another Federal agency, as the case may 
        be, may file a suit or initiate or take another action for 
        collection of a refund due from a student on a grant made under 
        this title, or for the repayment of the amount due from a 
        borrower on a loan made under this title that has been assigned 
        to the Secretary under this title, during the 6-year period 
        beginning on the day after the refund or the amount first 
        became due.''.

SEC. 103. PROHIBITION OF COLLECTION OF STUDENT LOANS THROUGH CERTAIN 
              OFFSETS OR THROUGH WAGE GARNISHMENT.

    (a) Prohibition on Offset of Social Security Benefits.--Section 
3716(c)(3)(A) of title 31, United States Code, is amended--
            (1) in clause (i), by striking ``except as provided in 
        clause (ii)'' and inserting ``except as provided in clauses 
        (ii) and (iii)''; and
            (2) by adding at the end the following new clause:
    ``(iii) Notwithstanding clause (i), any payments due to an 
individual under Federal benefits programs cited under clause (i) shall 
not be subject to offset under this subsection if the offset is for 
payments certified by the Department of Education under a program 
administered by the Secretary of Education under title IV of the Higher 
Education Act of 1965 (20 U.S.C. 1070 et seq.).''.
    (b) Prohibition on Offset of Tax Refund.--Section 3720A(a) of title 
31, United States Code, is amended--
            (1) by striking ``Any Federal agency'' and inserting ``(1) 
        Except as provided in paragraph (2), any Federal agency''; and
            (2) by adding at the end the following new paragraph:
    ``(2) Any past-due legally enforceable debt owed by an individual 
to the Department of Education under a program administered by the 
Secretary of Education under title IV of the Higher Education Act of 
1965 (20 U.S.C. 1070 et seq.) shall not be subject to notification 
under paragraph (1), and any refund of Federal taxes paid by the 
individual shall not be subject to reduction under subsection (c) for 
such debt.''.
    (c) Prohibition on Wage Garnishment.--Section 3720D(a) of title 31, 
United States Code, is amended--
            (1) by striking ``Notwithstanding'' and inserting: ``(1) 
        Except as provided in paragraph (2) and notwithstanding''; and
            (2) by adding at the end the following new paragraph:
    ``(2) Any delinquent nontax debt owed by an individual to the 
Department of Education under a program administered by the Secretary 
of Education under title IV of the Higher Education Act of 1965 (20 
U.S.C. 1070 et seq.) shall not be subject to collection under this 
section through garnishment of disposable pay of the individual.''.

TITLE 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.--Paragraph (1) of section 108(f) 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.--Paragraph (2) of section 108(f) 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.--Subparagraph (A) of section 529(e)(3) of the 
Internal Revenue Code of 1986 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) Section 493c.--Section 493C of the Higher Education Act 
        of 1965 (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)''; and
                            (ii) in paragraph (6)(A), by striking 
                        ``(other than an excepted PLUS loan or excepted 
                        consolidation loan)''; and
                    (C) in subsection (c), by striking ``(other than an 
                excepted PLUS loan or excepted consolidation loan),''.
            (2) Section 455(d)(1)(E).--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''.
    (c) Pay As You Earn.--The income-contingent repayment plan (based 
on the President's ``Pay As You Earn'' repayment initiative) 
implemented in parts 674, 682, and 685 of title 34, Code of Federal 
Regulations, as amended by the final regulations published by the 
Department of Education in the Federal Register on November 1, 2012 (77 
Fed. Reg. 66088 et seq.), shall be available to borrowers of--
            (1) a Federal Direct PLUS loan made on behalf of a 
        dependent student; and
            (2) a Federal Direct Consolidation Loan, the proceeds of 
        which were used to discharge the liability on a Federal Direct 
        PLUS Loan under part D of title IV of the Higher Education Act 
        of 1965 or a loan under section 428B of such Act made, insured, 
        or guaranteed on behalf of a dependent student.
    (d) 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)''.
    (e) 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.

           TITLE III--BORROWERS' RIGHT TO A MEANINGFUL DEGREE

SEC. 301. PROHIBITION ON SUSPENSIONS OF PROFESSIONAL LICENSES FOR LOAN 
              DEFAULT.

    No evidence of an individual's default on the repayment of a loan 
made, insured, or guaranteed under title IV of the Higher Education Act 
of 1965 (20 U.S.C. 1070 et seq.) may be admitted into evidence in a 
Federal or State proceeding involving the individual's professional or 
vocational license.

SEC. 302. PROHIBITION ON LOSS OF ACCESS TO TRANSCRIPTS FOR LOAN 
              DEFAULT.

    Section 487(a) of the Higher Education Act of 1965 (20 U.S.C. 
1094(a)) (as amended by section 301) is further amended by adding at 
the end the following new paragraph:
            ``(31)(A) The institution will not prohibit a student from 
        accessing the student's transcripts, degree scrolls, or other 
        certifications of coursework or educational attainments at the 
        institution because the student is in default on the repayment 
        of a loan made, insured, or guaranteed under this title.
            ``(B) For purposes of this paragraph, the term `student' 
        includes former students.''.

TITLE IV--RIGHT TO EFFECTIVE LOAN CANCELLATION FOR BORROWERS ENGAGED IN 
                         PUBLIC SERVICE CAREERS

SEC. 401. EXTENSION OF LOAN CANCELLATION FOR BORROWERS EMPLOYED IN 
              PUBLIC SERVICE JOBS FOR 5 YEARS.

    Section 455(m) of the Higher Education Act of 1965 (20 U.S.C. 
1087e(m)) is amended--
            (1) by redesignating paragraphs (3) and (4) as paragraphs 
        (4) and (5), respectively; and
            (2) by inserting after paragraph (2), the following:
            ``(3) Additional loan cancellation for certain borrowers.--
                    ``(A) In general.--The Secretary shall--
                            ``(i) after the conclusion of the 
                        employment period described in subparagraph 
                        (B)(ii) for an eligible borrower, cancel the 
                        obligation to repay 10 percent of the balance 
                        of interest and principal due, as of the time 
                        of such cancellation, on the eligible Federal 
                        Direct Loans made to the borrower under this 
                        part; and
                            ``(ii) after the loan cancellation under 
                        clause (i), carry out such loan cancellation 
                        for each year in which the borrower makes 12 
                        monthly payments on the eligible Federal Direct 
                        Loans pursuant to any one or a combination of 
                        the repayment plans described in subclauses (I) 
                        through (IV) of subparagraph (B)(i) and is 
                        employed in a public service job during the 
                        period in which the borrower makes each of such 
                        payments, except that once the borrower is 
                        eligible for the loan cancellation under 
                        paragraph (2) the Secretary shall carry out the 
                        loan cancellation under paragraph (2) in lieu 
                        of the loan cancellation under this clause.
                    ``(B) Eligible borrower.--In this paragraph, an 
                eligible borrower is a borrower who--
                            ``(i) has made 60 monthly payments on the 
                        eligible Federal Direct Loan after October 1, 
                        2015, pursuant to any one or a combination of 
                        the following--
                                    ``(I) payments under an income-
                                based repayment plan under section 
                                493C;
                                    ``(II) payments under a standard 
                                repayment plan under subsection 
                                (d)(1)(A), based on a 10-year repayment 
                                period;
                                    ``(III) monthly payments under a 
                                repayment plan under subsection (d)(1) 
                                or (g) of not less than the monthly 
                                amount calculated under subsection 
                                (d)(1)(A), based on a 10-year repayment 
                                period; or
                                    ``(IV) payments under an income 
                                contingent repayment plan under 
                                subsection (d)(1)(D); and
                            ``(ii) has been employed in a public 
                        service job during the period in which the 
                        borrower makes each of the 60 payments 
                        described in clause (i).''.