I 

114TH CONGRESS 

2D SESSION H. R. 4652 

To amend the Higher Education Act of 1965 to codify the Revised Pay 

As You Earn Repayment plan, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 29, 2016 

Mr. TAKAI (for himself, Ms. JUDY CHU of California, Mr. HONDA, Ms. NORTON, Mr. BRADY of Pennsylvania, Ms. CLARKE of New York, Mr. 

BRENDAN F. BOYLE of Pennsylvania, Ms. MOORE, Mr. PALLONE, Ms. 

LEE, Mr. TED LIEU of California, Mrs. WATSON COLEMAN, Mr. NOLAN, 

Ms. SCHAKOWSKY, Mr. RANGEL, and Ms. JACKSON LEE) introduced the 

following bill; which was referred to the Committee on Education and the 

Workforce, and in addition to the Committee on Ways and Means, for 

a period to be subsequently determined by the Speaker, in each case for 

consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To amend the Higher Education Act of 1965 to codify the 

Revised Pay As You Earn Repayment plan, and for 

other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Clarity in Lending for 

5 Education and Repayment Act’’ or the ‘‘CLEAR Act’’. 


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1 SEC. 2. STREAMLINING REPAYMENT PLANS FOR NEW BOR2 ROWERS. 

3 Section 455 of the Higher Education Act of 1965 (20 

4 U.S.C. 1087e) is amended by striking subsection (d) and 

5 inserting the following: 

6 ‘‘(d) REPAYMENT PLANS.— 

7 ‘‘(1) DESIGN AND SELECTION FOR BORROWERS

8 BEFORE JULY 1, 2016.—With respect to a borrower 

9 of a loan made under this part before July 1, 2016, 

10 and consistent with criteria established by the Sec11 retary, the Secretary shall offer such borrower a va12 riety of plans for repayment of such loan, including 

13 principal and interest on the loan. The borrower 

14 shall be entitled to accelerate, without penalty, re15 payment on the borrower’s loans under this part. 

16 The borrower may choose— 

17 ‘‘(A) a standard repayment plan, con18 sistent with subsection (a)(1) of this section 

19 and with section 428(b)(9)(A)(i); 

20 ‘‘(B) a graduated repayment plan, con21 sistent with section 428(b)(9)(A)(ii); 

22 ‘‘(C) an extended repayment plan, con23 sistent with section 428(b)(9)(A)(iv), except 

24 that the borrower shall annually repay a min25 imum amount determined by the Secretary in 

26 accordance with section 428(b)(1)(L); 


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1 ‘‘(D) an income contingent repayment 

2 plan, with varying annual repayment amounts 

3 based on the income of the borrower, paid over 

4 an extended period of time prescribed by the 

5 Secretary, not to exceed 25 years, except that 

6 the plan described in this subparagraph shall 

7 not be available to the borrower of a Federal 

8 Direct PLUS loan made on behalf of a depend9 ent student; and 

10 ‘‘(E) an income-based repayment plan that 

11 enables borrowers who have a partial financial 

12 hardship to make a lower monthly payment in 

13 accordance with section 493C, except that the 

14 plan described in this subparagraph shall not be 

15 available to the borrower of a Federal Direct 

16 PLUS Loan made on behalf of a dependent 

17 student or a Federal Direct Consolidation 

18 Loan, if the proceeds of such loan were used to 

19 discharge the liability on such Federal Direct 

20 PLUS Loan or a loan under section 428B 

21 made on behalf of a dependent student. 

22 ‘‘(2) DESIGN AND SELECTION FOR NEW BOR23 ROWERS ON OR AFTER JULY 1, 2016.—The Secretary 

24 shall offer a borrower of a loan made under this part 

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1 payment of such loan, including principal and inter2 est on the loan. The borrower shall be entitled to ac3 celerate, without penalty, repayment on the bor4 rower’s loans under this part. The borrower may 

5 choose— 

6 ‘‘(A) a standard repayment plan, con7 sistent with subsection (a)(1) of this section 

8 and with section 428(b)(9)(A)(i); or 

9 ‘‘(B) a revised pay-as-you-earn repayment 

10 plan, consistent with section 461, except the 

11 plan described in this subparagraph shall not be 

12 available to a borrower of a Federal Direct 

13 PLUS Loan made on behalf of a dependent 

14 student, a Federal Direct Consolidation Loan, 

15 if the proceeds of such loan were used to dis16 charge the liability on such Federal Direct 

17 PLUS Loan or a loan under section 428B 

18 made on behalf of a dependent student. 

19 ‘‘(3) BORROWER NON-SELECTION.—If a bor20 rower of a loan made under this part does not select 

21 a repayment plan described in paragraph (1) or (2), 

22 the Secretary may provide the borrower with a re23 payment plan described in subparagraph (A), (B), or 

24 (C) of paragraph (1) for borrowers before July 1, 


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1 2016, or a repayment plan described in paragraph 

2 (2)(A) for new borrowers on or after July 1, 2016. 

3 ‘‘(4) CHANGES IN SELECTIONS.—The borrower 

4 of a loan made under this part may change the bor5 rower’s selection of a repayment plan under para6 graph (1) or (2), or the Secretary’s selection of a 

7 plan for the borrower under paragraph (3), as the 

8 case may be, under such terms and conditions as 

9 may be established by the Secretary. 

10 ‘‘(5) ALTERNATIVE REPAYMENT PLANS.—The 

11 Secretary may provide, on a case by case basis, an 

12 alternative repayment plan to a borrower of a loan 

13 made under this part on or after July 1, 2016, who 

14 demonstrates to the satisfaction of the Secretary 

15 that the terms and conditions of the repayment 

16 plans available under paragraph (2) are not ade17 quate to accommodate the borrower’s exceptional 

18 circumstances. Upon request, the Secretary shall 

19 make available for such borrowers repayment plans 

20 described in subparagraphs (B) and (C) of para21 graph (1). In designing such alternative repayment 

22 plans, the Secretary shall ensure that such plans do 

23 not exceed the cost to the Federal Government, as 

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1 ture payments by such borrowers, of loans made 

2 using the plans available under paragraph (2). 

3 ‘‘(6) REPAYMENT AFTER DEFAULT.—For any 

4 borrower who has defaulted on a loan made under 

5 this part, the Secretary— 

6 ‘‘(A) may require the borrower to pay all 

7 reasonable collection costs associated with such 

8 loan; and 

9 ‘‘(B) if such loan was made— 

10 ‘‘(i) to any borrower who, before July 

11 1, 2016, had an outstanding balance on a 

12 student loan made, insured, or guaranteed 

13 under this part or part B, may require the 

14 borrower to repay the loan pursuant to an 

15 income contingent repayment plan, as de16 scribed in paragraph (1)(D), or an income17 based repayment plan, as described in 

18 paragraph (1)(E); or 

19 ‘‘(ii) to a new borrower (as defined in 

20 section 493E(a)(5)), may provide the bor21 rower the option to enroll in the repayment 

22 plan described in paragraph (2)(B). 

23 ‘‘(7) APPLICABILITY PROVISION.— 

24 ‘‘(A) IN GENERAL.—Except as provided in 

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1 payment plans under subparagraphs (B), (C), 

2 (D), and (E) of paragraph (1) are not available 

3 for a borrower who received the borrower’s first 

4 disbursement of a Federal Direct Loan on or 

5 after July 1, 2016. 

6 ‘‘(B) EXCEPTION.—The repayment plans 

7 available to a borrower of a Federal Direct 

8 PLUS Loan made on behalf of a dependent 

9 student or a Federal Direct Consolidation Loan 

10 whose proceeds were used to discharge the li11 ability of a Federal Direct PLUS Loan made 

12 on behalf of a dependent student or a loan 

13 under section 428B made on behalf of a de14 pendent student on or after July 1, 2016, shall 

15 be those described under subparagraphs (A), 

16 (B), and (C) of paragraph (1).’’. 

17 SEC. 3. REPAYE. 

18 Part D of title IV of the Higher Education Act of 

19 1965 (20 U.S.C. 1087a et seq.) is amended by adding at 

20 the end the following: 

21 ‘‘SEC. 461. REPAYE. 

22 ‘‘(a) DEFINITIONS.— 

23 ‘‘(1) COVERED FEDERAL DIRECT LOAN.—The 

24 term ‘covered Federal Direct Loan’ means a Federal 

25 Direct Stafford Loan, a Federal Direct Unsubsidized 


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1 Stafford Loan, a Federal Direct Consolidation Loan 

2 (other than an excepted consolidation loan), or a 

3 Federal Direct PLUS Loan (other than an excepted 

4 plus loan) made under this part. 

5 ‘‘(2) NEW BORROWER.—The term ‘new bor6 rower’ means a borrower who— 

7 ‘‘(A) as of July 1, 2016, has no out8 standing balance on a student loan made, in9 sured, or guaranteed under part B or D; or 

10 ‘‘(B) has no outstanding balance on a stu11 dent loan made, insured, or guaranteed under 

12 part B or D on the date the borrower receives 

13 a loan made under part D on or after July 1, 

14 2016. 

15 ‘‘(3) EXCEPTED PLUS LOAN; EXCEPTED CON16 SOLIDATION LOAN.—The terms ‘excepted plus loan’ 

17 and ‘excepted consolidation loan’ have the meanings 

18 given such terms in section 493C. 

19 ‘‘(4) INCOME-DRIVEN CALCULATION.— 

20 ‘‘(A) IN GENERAL.—The term ‘income21 driven calculation’— 

22 ‘‘(i) when used with respect to an un23 married borrower 10 percent of the result 

24 obtained by calculating, on at least an an25 nual basis, the amount by which— 


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1 ‘‘(I) the borrower’s adjusted 

2 gross income, as defined by the Sec3 retary; exceeds 

4 ‘‘(II) 150 percent of the poverty 

5 line applicable to the borrower’s fam6 ily size as determined under section 

7 673(2) of the Community Services 

8 Block Grant Act (42 U.S.C. 9902(2)); 

9 and 

10 ‘‘(ii) subject to subparagraph (B), 

11 when used with respect to a married bor12 rower— 

13 ‘‘(I) the difference between the 

14 borrower’s and borrower’s spouse’s 

15 adjusted gross income, as defined by 

16 the Secretary; exceeds 

17 ‘‘(II) 150 percent of the poverty 

18 line applicable to the borrower’s fam19 ily size as determined under section 

20 673(2) of the Community Services 

21 Block Grant Act (42 U.S.C. 9902(2)). 

22 ‘‘(B) EXCEPTION FOR CERTAIN MARRIED

23 BORROWERS.—The income-driven calculation 

24 under subparagraph (A)(i) shall apply to a 


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1 married borrower who certifies, on a form ap2 proved by the Secretary that the borrower is— 

3 ‘‘(i) separated from the borrower’s 

4 spouse; or 

5 ‘‘(ii) unable to reasonably access the 

6 income information of the borrower’s 

7 spouse. 

8 ‘‘(b) REVISED PAY AS YOU EARN REPAYMENT PLAN

9 AUTHORIZED.—Notwithstanding any other provision of 

10 this Act, the Secretary shall carry out a program for new 

11 borrowers that meets the following requirements: 

12 ‘‘(1) MONTHLY PAYMENT AMOUNT.—Except as 

13 otherwise provided in this subsection, a new bor14 rower of any covered Federal Direct Loan may elect 

15 to have the borrower’s aggregate monthly payment 

16 for all such loans not to exceed the result of the in17 come-driven calculation divided by 12. 

18 ‘‘(2) ADJUSTED MONTHLY PAYMENT

19 AMOUNT.—The Secretary adjusts the aggregate 

20 monthly payment under paragraph (1), if— 

21 ‘‘(A) in addition to covered Federal Direct 

22 Loans, the borrower has an outstanding loan 

23 made under part B (other than an excepted 

24 PLUS Loan or an excepted consolidation loan), 

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1 rower’s adjusted monthly payment by multi2 plying the aggregate monthly payment by the 

3 percentage of the total outstanding principal 

4 amount of the borrower’s covered Federal Di5 rect Loans; 

6 ‘‘(B) the borrower and borrower’s spouse 

7 have covered Federal Direct Loans and out8 standing loans under part B (other than an ex9 cepted PLUS Loan or an excepted consolidation 

10 loan), in which case the Secretary determines— 

11 ‘‘(i) each borrower’s percentage of the 

12 couple’s total outstanding amount of prin13 cipal on such loans; 

14 ‘‘(ii) the adjusted monthly payment 

15 for each borrower by multiplying the bor16 rower’s aggregate monthly payment by the 

17 percentage determined under clause (i) ap18 plicable to the borrower; and 

19 ‘‘(iii) if the borrower’s loans are held 

20 by multiple holders, the borrower’s ad21 justed monthly payment for covered Fed22 eral Direct Loans by multiplying the ad23 justed monthly payment determined under 

24 clause (ii) by the percentage of the total 


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1 outstanding principal amount of the bor2 rower’s covered Federal Direct Loans; 

3 ‘‘(C) the calculated monthly payment 

4 amount under paragraph (1) or this paragraph 

5 is less than $5.00, in which case the borrower’s 

6 monthly payment is $0.00; or 

7 ‘‘(D) the calculated monthly payment 

8 amount under paragraph (1) or this paragraph 

9 or is equal to or greater than $5.00 but less 

10 than $10.00, in which case the borrower’s 

11 monthly payment is $10.00. 

12 ‘‘(3) ACCRUED INTEREST.— 

13 ‘‘(A) IN GENERAL.—If the borrower’s 

14 monthly payment amount under paragraph (1) 

15 or (2) is not sufficient to pay the accrued inter16 est on the borrower’s loan— 

17 ‘‘(i) for a Federal Direct Stafford 

18 Loan or the portion of a Federal Direct 

19 Consolidation Loan attributable to a Fed20 eral Direct Stafford Loan— 

21 ‘‘(I) the Secretary does not 

22 charge the borrower the remaining ac23 crued interest for a period not to ex24 ceed 3 consecutive years beginning at 


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1 the start of repayment period on such 

2 loan under this repayment plan; and 

3 ‘‘(II) after the three-year period, 

4 the Secretary charges the borrower 50 

5 percent of the remaining accrued in6 terest on such loan or such portion of 

7 a Federal Direct Consolidation Loan; 

8 and 

9 ‘‘(ii) for a Federal Direct Unsub10 sidized Stafford Loan, a Federal Direct 

11 PLUS Loan made to a graduate or profes12 sional student, or the portion of a Federal 

13 Direct Consolidation Loan attributable to 

14 a Federal Direct Unsubsidized Stafford 

15 Loan, or for a Federal Direct Subsidized 

16 Loan or the portion of a Federal Direct 

17 Consolidation Loan attributable to a Fed18 eral Direct Stafford Loan for which the 

19 borrower has become responsible for accru20 ing interest in accordance with section 

21 455(q)(2), the Secretary charges the bor22 rower 50 percent of the remaining accrued 

23 interest. 

24 ‘‘(B) THREE-YEAR PERIOD DEFINED.— 

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1 graph (A)(i) does not include any period during 

2 which the borrower receives an economic hard3 ship deferment. 

4 ‘‘(C) CAPITALIZATION OF ACCRUED INTER5 EST.— 

6 ‘‘(i) TIMING.—Accrued interest is cap7 italized at the time a borrower leaves the 

8 program under this section. 

9 ‘‘(ii) CAPITALIZATION.— 

10 ‘‘(I) LIMITATION.—The amount 

11 of accrued interest capitalized under 

12 clause (i)(I) is limited to 10 percent of 

13 the original principal balance at the 

14 time the borrower entered repayment 

15 under the plan under this section. 

16 ‘‘(II) PARTICIPATION.—After the 

17 amount of accrued interest reaches 

18 the limit described in subclause (I), 

19 interest continues to accrue, but is not 

20 capitalized while the borrower partici21 pates in the plan under this section. 

22 ‘‘(4) POSTPONEMENT OF PRINCIPAL PAY23 MENT.—If the borrower’s monthly payment amount 

24 is not sufficient to pay any of the principal due, the 


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1 payment of that principal is postponed until the bor2 rower leaves the plan under this section. 

3 ‘‘(5) SELECTION OF DIFFERENT REPAYMENT

4 PLAN.—A borrower who no longer wishes to repay 

5 under the plan under this section may change to a 

6 standard repayment plan in accordance with section 

7 455(d)(3). 

8 ‘‘(6) PAYMENT APPLICATION AND PREPAY9 MENT.— 

10 ‘‘(A) IN GENERAL.—The Secretary applies 

11 any payment made under the program under 

12 this section in the following order: 

13 ‘‘(i) Accrued interest. 

14 ‘‘(ii) Collection costs. 

15 ‘‘(iii) Late charges. 

16 ‘‘(iv) Loan principal. 

17 ‘‘(B) PREPAYMENT AUTHORIZED.—The 

18 borrower may prepay all or part of a loan at 

19 any time without penalty, as authorized under 

20 section 455(d)(1). 

21 ‘‘(C) APPLICATION OF PREPAYMENT.—If 

22 the prepayment amount equals or exceeds— 

23 ‘‘(i) a monthly payment amount of 

24 $10.00 or more under the repayment 

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1 retary applies the prepayment consistent 

2 with the requirements of section 455(d)(1); 

3 or 

4 ‘‘(ii) a monthly payment amount of 

5 $0.00 under the repayment schedule estab6 lished for the loan, the Secretary applies 

7 the prepayment consistent with the re8 quirements of subparagraph (A). 

9 ‘‘(7) ELIGIBILITY DOCUMENTATION, 

10 VERIFICATION, AND NOTIFICATIONS.— 

11 ‘‘(A) DOCUMENTATION.— 

12 ‘‘(i) AGI.—The Secretary requires the 

13 borrower to provide documentation, accept14 able to the Secretary, of the borrower’s ad15 justed gross income. 

16 ‘‘(ii) OTHER DOCUMENTATION.—If 

17 the borrower’s adjusted gross income is not 

18 available, or if the Secretary believes that 

19 the borrower’s reported adjusted gross in20 come does not reasonably reflect the bor21 rower’s current income, the borrower must 

22 provide other documentation to verify in23 come. 

24 ‘‘(iii) FAMILY SIZE.—Unless otherwise 

25 directed by the Secretary, the borrower 


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1 must annually certify the borrower’s family 

2 size. If the borrower fails to certify family 

3 size, the Secretary assumes a family size of 

4 one for the applicable year. 

5 ‘‘(B) NOTIFICATIONS.— 

6 ‘‘(i) IN GENERAL.—Each year that 

7 the borrower participates in the program 

8 under this section, the Secretary sends the 

9 borrower a written notification that pro10 vides the borrower with— 

11 ‘‘(I) the borrower’s monthly pay12 ment amount, as calculated under 

13 paragraph (1) or (2), and the time pe14 riod during which such monthly pay15 ment amount will apply (annual pay16 ment period); 

17 ‘‘(II) information about the re18 quirement for the borrower to annu19 ally provide the information described 

20 in subparagraph (A), and an expla21 nation that the borrower will be noti22 fied in advance of the date by which 

23 the Secretary must receive this infor24 mation; 


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1 ‘‘(III) an explanation of the con2 sequences, as described under sub3 paragraph (E), if the borrower does 

4 not provide the required information; 

5 and 

6 ‘‘(IV) information about the bor7 rower’s option to request, at any time 

8 during the borrower’s annual payment 

9 period, that the Secretary recalculate 

10 the borrower’s monthly payment 

11 amount if the borrower’s financial cir12 cumstances have changed and the in13 come amount that was used to cal14 culate the borrower’s current monthly 

15 payment no longer reflects the bor16 rower’s current income. 

17 ‘‘(ii) RECALCULATION.—If the Sec18 retary recalculates the borrower’s monthly 

19 payment amount based on the borrower’s 

20 request, the Secretary sends the borrower 

21 a written notification that includes the in22 formation described in this subparagraph. 

23 ‘‘(C) SUBSEQUENT YEARS.— 

24 ‘‘(i) IN GENERAL.—For each year fol25 lowing the first year in which a borrower 


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1 participating in the plan under this sec2 tion, the Secretary notifies the borrower in 

3 writing of the requirements of subpara4 graph (A) not later than 60 days and not 

5 earlier than 90 days prior to the date spec6 ified in clause (ii)(I). 

7 ‘‘(ii) CONTENTS.—The notification 

8 under clause (i) shall provide the borrower 

9 with— 

10 ‘‘(I) the date, no earlier than 35 

11 days before the end of the borrower’s 

12 annual payment period, by which the 

13 Secretary must receive all of the docu14 mentation described in subparagraph 

15 (A) (annual deadline); and 

16 ‘‘(II) the consequences if the Sec17 retary does not receive the informa18 tion within 10 days following the an19 nual deadline specified in the notice, 

20 as described under subparagraph (E). 

21 ‘‘(D) NO DOCUMENTATION PROVIDED.—If 

22 a borrower who is currently repaying under the 

23 standard repayment plan elects the plan under 

24 this section but does not provide the docu25 mentation described in subparagraph (A), the 


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1 borrower remains on such standard repayment 

2 plan. 

3 ‘‘(E) ALTERNATE REPAYMENT PLAN.— 

4 ‘‘(i) IN GENERAL.—If a borrower who 

5 is currently repaying under the plan under 

6 this section elects to participate in such 

7 program for a subsequent year but the 

8 Secretary does not receive the documenta9 tion described in subparagraph (A) not 

10 later than 10 days after the specified an11 nual deadline, the Secretary removes the 

12 borrower from the plan and places the bor13 rower on an alternative repayment plan 

14 under which the borrower’s required 

15 monthly payment is the amount necessary 

16 to repay the borrower’s eligible loans in 

17 full within the earlier of— 

18 ‘‘(I) 10 years from the date the 

19 borrower begins repayment under the 

20 alternative repayment plan; or 

21 ‘‘(II) the ending date of the 20- 

22 year period as described in paragraph 

23 (8)(A)(i)(II). 

24 ‘‘(ii) NOTIFICATION.—If the Secretary 

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1 payment plan in accordance with clause 

2 (i), the Secretary sends the borrower a 

3 written notification informing the borrower 

4 that— 

5 ‘‘(I) the borrower has been 

6 placed on an alternative repayment 

7 plan; 

8 ‘‘(II) the borrower’s monthly pay9 ment amount has been recalculated 

10 under clause (i); and 

11 ‘‘(III) the borrower may change 

12 to the standard repayment plan in ac13 cordance with section 455(d)(3). 

14 ‘‘(iii) RETURN TO PROGRAM.—A bor15 rower who has been removed from the plan 

16 under this section or changes to the stand17 ard repayment plan may return to the plan 

18 under this section if the borrower provides 

19 the documentation under subparagraph 

20 (A), necessary for the Secretary to cal21 culate the borrower’s current monthly pay22 ment amount and the monthly amount the 

23 borrower would have been required to pay 

24 under the plan during the period when the 


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1 borrower was on the alternative repayment 

2 plan or the standard repayment plan. 

3 ‘‘(iv) ADJUSTMENT OF MONTHLY PAY4 MENT AMOUNT.—If the Secretary deter5 mines that the total amount of the pay6 ments the borrower was required to make 

7 while on the alternative repayment plan or 

8 the standard repayment plan are less than 

9 the total amount the borrower would have 

10 been required to make under the program 

11 during that period, the Secretary will ad12 just the borrower’s monthly payment 

13 amount to ensure that the difference be14 tween the two amounts is paid in full by 

15 the end of the 20-year period described in 

16 paragraph (8)(A)(i)(II). 

17 ‘‘(v) APPLICATION OF LOAN FORGIVE18 NESS.—If the borrower returns to the plan 

19 under this section, any payments that the 

20 borrower made under the alternative re21 payment plan after the borrower was re22 moved from the plan shall count towards 

23 forgiveness under the plan under this sec24 tion. 


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1 ‘‘(vi) PSLF.—Payments made under 

2 the alternative repayment plan described in 

3 clause (i) will not count towards public 

4 service loan forgiveness under section 

5 455(m). 

6 ‘‘(vii) EXCEPTION.—The Secretary 

7 does not take the action described in clause 

8 (i) if the Secretary receives the documenta9 tion described in subparagraph (A) more 

10 than 10 days after the specified annual 

11 deadline, but is able to determine the bor12 rower’s new monthly payment amount be13 fore the end of the borrower’s current an14 nual payment period. 

15 ‘‘(viii) MONTHLY PAYMENT

16 AMOUNT.—If the Secretary receives the 

17 documentation described in subparagraph 

18 (A) within 10 days of the specified annual 

19 deadline— 

20 ‘‘(I) the Secretary promptly de21 termines the borrower’s new scheduled 

22 monthly payment amount and main23 tains the borrower’s current scheduled 

24 monthly payment amount until the 


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1 new scheduled monthly payment 

2 amount is determined; 

3 ‘‘(II) if the new monthly payment 

4 amount is less than the borrower’s 

5 previously calculated plan monthly 

6 payment amount, and the borrower 

7 made payments at the previously cal8 culated amount after the end of the 

9 most recent annual payment period— 

10 ‘‘(aa) the Secretary makes 

11 the appropriate adjustment to 

12 the borrower’s account; and 

13 ‘‘(bb) unless the borrower 

14 requests otherwise, the Secretary 

15 applies the excess payment 

16 amounts made after the end of 

17 the most recent annual payment 

18 period in accordance with the re19 quirements of paragraph (6)(A); 

20 ‘‘(III) if the new monthly pay21 ment amount is equal to or greater 

22 than the borrower’s previously cal23 culated monthly payment amount, and 

24 the borrower made payments at the 

25 previously calculated payment amount 


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1 after the end of the most recent an2 nual payment period, the Secretary 

3 does not make any adjustment to the 

4 borrower’s account; 

5 ‘‘(IV) any payments that the bor6 rower continued to make at the pre7 viously calculated payment amount 

8 after the end of the prior annual pay9 ment period and before the new 

10 monthly payment amount is calculated 

11 are considered to be qualifying pay12 ments for purposes of public service 

13 loan forgiveness under section 

14 455(m), provided that the payments 

15 otherwise meet the requirements de16 scribed in such section 455(m); and 

17 ‘‘(V) the new annual payment pe18 riod begins on the day after the end 

19 of the most recent annual payment 

20 period. 

21 ‘‘(8) LOAN FORGIVENESS.— 

22 ‘‘(A) IN GENERAL.— 

23 ‘‘(i) CANCELLATION.—The Secretary 

24 cancels any remaining outstanding balance 

25 of principal and accrued interest on a borVerDate Sep 11 2014 00:39 Mar 01, 2016 Jkt 059200 PO 00000 Frm 00025 Fmt 6652 Sfmt 6201 E:\BILLS\H4652.IH H4652

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1 rower’s covered Federal Direct Loans that 

2 are being repaid under the plan under this 

3 section after— 

4 ‘‘(I) the borrower has made the 

5 equivalent of 240 qualifying monthly 

6 payments as defined in subparagraph 

7 (B); and 

8 ‘‘(II) 20 years have elapsed, be9 ginning on the date determined in ac10 cordance with subparagraph (C). 

11 ‘‘(ii) DETERMINATION.—The Sec12 retary determines when a borrower has 

13 met the loan forgiveness requirements 

14 under clause (i) and does not require the 

15 borrower to submit a request for loan for16 giveness. 

17 ‘‘(B) QUALIFYING MONTHLY PAYMENT DE18 FINED.— 

19 ‘‘(i) IN GENERAL.—For purposes of 

20 this paragraph, a qualifying monthly pay21 ment is— 

22 ‘‘(I) a monthly payment under 

23 the plan under this section, including 

24 a monthly payment amount of $0.00, 

25 as provided under paragraph (2)(C); 


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1 ‘‘(II) a monthly payment made 

2 under the standard repayment plan 

3 under section 455(d)(2)(A); or 

4 ‘‘(III) a month during which the 

5 borrower was not required to make a 

6 payment due to receiving an economic 

7 hardship deferment on the borrower’s 

8 covered Federal Direct Loans. 

9 ‘‘(ii) DEFAULTED LOANS EX10 CLUDED.—Any payments made on a de11 faulted loan are not qualifying monthly 

12 payments and are not counted toward the 

13 20-year forgiveness period. 

14 ‘‘(C) DETERMINATION OF BEGINNING

15 DATE.—For a borrower who qualifies for the 

16 program under this section, the beginning date 

17 for the 20-year repayment period is— 

18 ‘‘(i) for a borrower who has a Federal 

19 Direct Consolidation Loan, the date the 

20 borrower made a qualifying monthly pay21 ment on the consolidation loan, before the 

22 date the borrower qualified for the pro23 gram plan under this section; 

24 ‘‘(ii) for a borrower who has one or 

25 more other covered Federal Direct Loans, 


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1 the date the borrower made a qualifying 

2 monthly payment on that loan, before the 

3 date the borrower qualified for the plan 

4 under this section; 

5 ‘‘(iii) for a borrower who did not make 

6 a qualifying monthly payment under clause 

7 (i) or (ii), the date the borrower made a 

8 payment on the borrower’s covered Federal 

9 Direct Loans under the plan under this 

10 section; 

11 ‘‘(iv) if the borrower consolidates the 

12 borrower’s loans under this title, the date 

13 the borrower made a qualifying monthly 

14 payment on the Federal Direct Consolida15 tion Loan; or 

16 ‘‘(v) if the borrower did not make a 

17 qualifying monthly payment on the loan 

18 under clauses (i) through (iv), the date the 

19 borrower made a payment on the loan 

20 under the plan under this section. 

21 ‘‘(D) NOTIFICATION.— 

22 ‘‘(i) PRIOR TO LOAN CANCELLA23 TION.—Not later than 6 months prior to 

24 the anticipated date that the borrower will 

25 meet the forgiveness requirements, the 


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1 Secretary sends the borrower a written no2 tice that includes— 

3 ‘‘(I) an explanation that the bor4 rower is approaching the date that the 

5 borrower is expected to meet the re6 quirements to receive loan forgiveness; 

7 ‘‘(II) a reminder that the bor8 rower must continue to make the bor9 rower’s scheduled monthly payments; 

10 and 

11 ‘‘(III) general information on the 

12 current treatment of the forgiveness 

13 amount for tax purposes, and instruc14 tions for the borrower to contact the 

15 Internal Revenue Service for more in16 formation. 

17 ‘‘(ii) AFTER LOAN CANCELLATION.— 

18 After determining that a borrower has sat19 isfied the loan forgiveness requirements, 

20 the Secretary— 

21 ‘‘(I) notifies the borrower that 

22 the borrower’s obligation on the loans 

23 is satisfied; 


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1 ‘‘(II) provides the borrower with 

2 the information described in clause 

3 (i)(III); and 

4 ‘‘(III) returns to the sender any 

5 payment received on a loan after loan 

6 forgiveness has been granted.’’. 

7 SEC. 4. DISCLOSURES. 

8 Section 455(p) of the Higher Education Act of 1965 

9 (20 U.S.C. 1087e(p)) is amended— 

10 (1) by striking ‘‘Each institution’’ and inserting 

11 the following: 

12 ‘‘(1) IN GENERAL.—Each institution’’; and 

13 ‘‘(2) CONSULTATION.—The Secretary shall reg14 ularly consult with current and prospective college 

15 students, family members of such students, institu16 tions of higher education, and other experts to im17 prove the usefulness and relevance of the disclosures 

18 described in paragraph (1).’’. 

19 SEC. 5. EXCLUSION OF CERTAIN STUDENT LOAN DIS20 CHARGE BY REASON OF DEATH OR DIS21 ABILITY. 

22 (a) IN GENERAL.—Section 108(f)(1) of the Internal 

23 Revenue Code of 1986 is amended— 

24 (1) by striking the period at the end and insert25 ing ‘‘, or’’, 


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1 (2) by striking ‘‘if such discharge was pursuant 

2 to a provision’’ and inserting the following: ‘‘if such 

3 discharge was pursuant to— 

4 ‘‘(A) a provision’’, and 

5 (3) by adding at the end the following: 

6 ‘‘(B) section 437(a) of the Higher Edu7 cation Act of 1965.’’. 

8 (b) EFFECTIVE DATE.—The amendments made by 

9 this section shall apply to discharges of indebtedness after 

10 the date of the enactment of this Act. 

Æ 


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