II 

115TH CONGRESS 

1ST SESSION S. 848 

To amend the Higher Education Act of 1965 to encourage entrepreneurship 

by providing loan deferment and loan cancellation for founders and 

employees of small business startups, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

APRIL 5 (legislative day, APRIL 4), 2017 

Ms. HASSAN introduced the following bill; which was read twice and referred 

to the Committee on Health, Education, Labor, and Pensions 

A BILL 

To amend the Higher Education Act of 1965 to encourage 

entrepreneurship by providing loan deferment and loan 

cancellation for founders and employees of small business 

startups, 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 ‘‘Reigniting Opportunity 

5 for Innovators Act’’. 


SSpencer on DSK4SPTVN1PROD with BILLS
2 

•S 848 IS

1 SEC. 2. SMALL BUSINESS STARTUP FOUNDER AND EM2 PLOYEE LOAN DEFERMENT AND CANCELLA3 TION. 

4 (a) DEFERMENT WITHOUT INTEREST ACCRUAL FOR

5 SMALL BUSINESS STARTUP FOUNDERS AND EMPLOY6 EES.—Section 455(f) of the Higher Education Act of 

7 1965 (20 U.S.C. 1087e(f)) is amended by adding at the 

8 end the following: 

9 ‘‘(5) DEFERMENT WITHOUT INTEREST AC10 CRUAL FOR SMALL BUSINESS STARTUP FOUNDERS

11 AND EMPLOYEES.— 

12 ‘‘(A) IN GENERAL.—Subject to subpara13 graph (B), a qualifying small business startup 

14 borrower shall be eligible for a deferment, dur15 ing which periodic installments of principal 

16 need not be paid and interest shall not accrue, 

17 during any period while the borrower is em18 ployed as a founder or full-time employee of a 

19 small business startup. 

20 ‘‘(B) LIMITATIONS.—A qualifying small 

21 business startup borrower shall not receive a 

22 deferment under this paragraph for any pe23 riod— 

24 ‘‘(i) in excess of 3 years; or 

25 ‘‘(ii) that begins more than 5 years, 

26 or ends more than 8 years, after the date 


SSpencer on DSK4SPTVN1PROD with BILLS
3 

•S 848 IS

1 the small business startup was established 

2 (as determined by the small business devel3 opment center that approved such bor4 rower under section 21(o)(5) of the Small 

5 Business Act (15 U.S.C. 648(o)(5))). 

6 ‘‘(C) DEFINITIONS.—In this paragraph— 

7 ‘‘(i) the terms ‘founder’, ‘full-time em8 ployee’, and ‘small business startup’ have 

9 the meanings given the terms in subsection 

10 (r)(2); and 

11 ‘‘(ii) the term ‘qualifying small busi12 ness startup borrower’ means a borrower 

13 of a loan made under this part whose em14 ployment as a small business startup 

15 founder or full-time employee is approved 

16 by a small business development center 

17 under section 21(o)(5) of the Small Busi18 ness Act (15 U.S.C. 648(o)(5)).’’. 

19 (b) LOAN CANCELLATION.—Section 455 of the High20 er Education Act of 1965 (20 U.S.C. 1087e) is amended 

21 by adding at the end the following: 

22 ‘‘(r) LOAN CANCELLATION FOR FOUNDERS AND EM23 PLOYEES OF SMALL BUSINESS STARTUPS IN DISTRESSED

24 AREAS.— 

25 ‘‘(1) LOAN CANCELLATION.— 


SSpencer on DSK4SPTVN1PROD with BILLS
4 

•S 848 IS

1 ‘‘(A) IN GENERAL.—The Secretary shall 

2 cancel the balance of interest and principal due, 

3 subject to subparagraph (B), on any eligible 

4 Federal Direct Loan not in default for a bor5 rower who— 

6 ‘‘(i) at the time of such cancellation, 

7 is employed as a founder or full-time em8 ployee of a small business startup in a dis9 tressed area who— 

10 ‘‘(I) has been approved for loan 

11 cancellation by a small business devel12 opment center under section 21(o)(6) 

13 of the Small Business Act (15 U.S.C. 

14 648(o)(6)); and 

15 ‘‘(II) began such employment 

16 during the 5-year period beginning on 

17 the date that the small business start18 up was established (as determined by 

19 such small business development cen20 ter); and 

21 ‘‘(ii) during the time period for which 

22 the borrower has been approved by the 

23 small business development center, which 

24 in no case shall be more than 10 years 

25 after the date on which the small business 


SSpencer on DSK4SPTVN1PROD with BILLS
5 

•S 848 IS

1 startup was established, has made 24 

2 monthly payments on the eligible Federal 

3 Direct Loan pursuant to any repayment 

4 plan under subsection (d)(1) or a combina5 tion of such plans while so employed. 

6 ‘‘(B) LOAN CANCELLATION MAXIMUM.— 

7 The Secretary shall cancel under this subsection 

8 not more than an aggregate of $20,000 of the 

9 loan obligation on the eligible Federal Direct 

10 Loans of a borrower. 

11 ‘‘(C) TIMING REQUIREMENTS.—Each of 

12 the 24 monthly payments required under this 

13 subsection shall be made after the date of en14 actment of this subsection. 

15 ‘‘(D) INELIGIBILITY FOR DOUBLE BENE16 FITS.—No borrower may, for the same service, 

17 receive a reduction of loan obligations under 

18 both this subsection and— 

19 ‘‘(i) subsection (m); or 

20 ‘‘(ii) section 428J, 428K, 428L, or 

21 460. 

22 ‘‘(2) DEFINITIONS.—In this subsection: 

23 ‘‘(A) DISTRESSED AREA.—The term ‘dis24 tressed area’ has the meaning given the term in 


SSpencer on DSK4SPTVN1PROD with BILLS
6 

•S 848 IS

1 section 21(o)(1) of the Small Business Act (15 

2 U.S.C. 648(o)(1)). 

3 ‘‘(B) ELIGIBLE FEDERAL DIRECT LOAN.— 

4 The term ‘eligible Federal Direct Loan’ means 

5 a Federal Direct Stafford Loan, Federal Direct 

6 PLUS Loan, Federal Direct Unsubsidized Staf7 ford Loan, or a Federal Direct Consolidation 

8 Loan. 

9 ‘‘(C) FOUNDER; FULL-TIME EMPLOYEE.— 

10 The terms ‘founder’ and ‘full-time employee’ 

11 have the meanings given the terms in section 

12 21(o)(1) of the Small Business Act (15 U.S.C. 

13 648(o)(1)). 

14 ‘‘(D) SMALL BUSINESS STARTUP.—The 

15 term ‘small business startup’ means a business 

16 that is certified by a small business develop17 ment center under section 21(o)(3) of the Small 

18 Business Act (15 U.S.C. 648(o)(3)).’’. 

19 (c) CONFORMING AMENDMENTS.—Title IV of the 

20 Higher Education Act of 1965 (20 U.S.C. 1070a et seq.) 

21 is further amended— 

22 (1) in section 428J(g)(2), by striking ‘‘section 

23 455(m)’’ and inserting ‘‘subsection (m) or (r) of sec24 tion 455’’; 

25 (2) in section 428K(f)— 


SSpencer on DSK4SPTVN1PROD with BILLS
7 

•S 848 IS

1 (A) by inserting ‘‘subsection (m) or (r) of 

2 section 455 or’’ before ‘‘section 428J’’; and 

3 (B) by striking ‘‘455(m)’’; 

4 (3) in section 428L(g), by striking ‘‘455(m)’’ 

5 and inserting ‘‘subsection (m) or (r) of section 455’’; 

6 (4) in section 455(m)(4), by inserting ‘‘sub7 section (r) or’’ before ‘‘section 428J’’; and 

8 (5) in section 460(g)(2)(B), by striking ‘‘section 

9 455(m)’’ and inserting ‘‘subsection (m) or (r) of sec10 tion 455’’. 

11 SEC. 3. SMALL BUSINESS DEVELOPMENT CENTERS. 

12 Section 21 of the Small Business Act (15 U.S.C. 648) 

13 is amended— 

14 (1) in subsection (c)(3)— 

15 (A) in subparagraph (S), by striking 

16 ‘‘and’’ at the end; 

17 (B) in subparagraph (T), by striking the 

18 period at the end and inserting a semicolon; 

19 and 

20 (C) by adding at the end the following: 

21 ‘‘(U) certifying small business startups under 

22 subsection (o)(3); and 

23 ‘‘(V) approving loan deferment or cancellation 

24 under paragraph (5) or (6) of subsection (o) for 


SSpencer on DSK4SPTVN1PROD with BILLS
8 

•S 848 IS

1 founders and full-time employees of certain small 

2 business startups.’’; and 

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

4 ‘‘(o) DEFERMENT OR CANCELLATION OF CERTAIN

5 LOANS.— 

6 ‘‘(1) DEFINITIONS.—In this subsection— 

7 ‘‘(A) the term ‘distressed area’ has the 

8 meaning given the term ‘low-income community’ 

9 in section 45D(e) of the Internal Revenue Code 

10 of 1986; 

11 ‘‘(B) the term ‘eligible Federal Direct 

12 Loan’ has the meaning given the term in sec13 tion 455(r)(2) of the Higher Education Act of 

14 1965; 

15 ‘‘(C) the terms ‘founder’ and ‘full-time em16 ployee’, with respect to a small business start17 up, have the meanings given the terms by the 

18 Administrator; and 

19 ‘‘(D) the term ‘small business startup’ 

20 means a small business concern that, as of the 

21 date that the small business concern submits an 

22 application under paragraph (3), has been in 

23 existence for not more than 3 years. 

24 ‘‘(2) ROLE OF SMALL BUSINESS DEVELOPMENT

25 CENTERS.—Any small business development center 


SSpencer on DSK4SPTVN1PROD with BILLS
9 

•S 848 IS

1 may, for purposes of eligible Federal Direct Loan 

2 deferment or cancellation under subsection (f)(5) or 

3 (r) of section 455 of the Higher Education Act of 

4 1965 (20 U.S.C. 1087e)— 

5 ‘‘(A) certify a small business startup under 

6 paragraph (3); and 

7 ‘‘(B) approve eligible Federal Direct Loan 

8 deferment or cancellation for a founder or full9 time employee of a qualifying small business 

10 startup under paragraph (5) or (6). 

11 ‘‘(3) CERTIFICATION.—In order to be certified 

12 by a small business development center, a small 

13 business startup shall submit to the small business 

14 development center an application that includes— 

15 ‘‘(A) a 5-year business plan for the small 

16 business startup; 

17 ‘‘(B) the number of employees that the 

18 small business startup intends to employ on an 

19 annual basis; and 

20 ‘‘(C) information that demonstrates that 

21 the small business startup has the potential for 

22 success. 

23 ‘‘(4) PUBLICATION OF DISTRESSED AREAS.— 

24 The Administrator shall identify and make publicly 


SSpencer on DSK4SPTVN1PROD with BILLS
10 

•S 848 IS

1 available on the website of the Administration a list 

2 of distressed areas. 

3 ‘‘(5) LOAN DEFERMENT FOR FOUNDERS AND

4 FULL-TIME EMPLOYEES OF A SMALL BUSINESS

5 STARTUP.— 

6 ‘‘(A) APPLICATION.—In order to be ap7 proved by a small business development center 

8 for eligible Federal Direct Loan deferment 

9 under subsection (f)(5) of section 455 of the 

10 Higher Education Act of 1965 (20 U.S.C. 

11 1087e), a borrower of an eligible Federal Direct 

12 Loan shall submit to the small business devel13 opment center an application that includes such 

14 information as the Administrator may require. 

15 ‘‘(B) REQUIREMENTS.—A small business 

16 development center shall approve a borrower 

17 who applies under subparagraph (A) for eligible 

18 Federal Direct Loan deferment if the small 

19 business development center determines that— 

20 ‘‘(i) the borrower is, as of the date of 

21 the application, a founder or full-time em22 ployee of a small business startup that is 

23 certified under paragraph (3); and 

24 ‘‘(ii) the employment of the borrower 

25 with the small business startup began durVerDate Sep 11 2014 00:53 Apr 11, 2017 Jkt 069200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S848.IS S848

SSpencer on DSK4SPTVN1PROD with BILLS
11 

•S 848 IS

1 ing the 5-year period beginning on the date 

2 on which the small business startup was 

3 established. 

4 ‘‘(6) LOAN CANCELLATION FOR FOUNDERS AND

5 FULL-TIME EMPLOYEES OF A SMALL BUSINESS

6 STARTUP IN A DISTRESSED AREA.— 

7 ‘‘(A) APPLICATION.—In order to be ap8 proved by a small business development center 

9 for eligible Federal Direct Loan cancellation 

10 under subsection (r) of section 455 of the High11 er Education Act of 1965 (20 U.S.C. 1087e), a 

12 borrower of an eligible Federal Direct Loan 

13 shall submit to the small business development 

14 center an application that includes such infor15 mation as the Administrator may require, in16 cluding an identification of the time period dur17 ing which the borrower has made 24 monthly 

18 payments on the eligible Federal Direct Loan, 

19 as required under subparagraphs (A)(ii) and 

20 (C) of paragraph (1) of such subsection (r). 

21 ‘‘(B) REQUIREMENTS.—A small business 

22 development center shall approve a borrower 

23 who applies under subparagraph (A) for eligible 

24 Federal Direct Loan cancellation if the small 


SSpencer on DSK4SPTVN1PROD with BILLS
12 

•S 848 IS

1 business development center determines that 

2 the borrower— 

3 ‘‘(i) as of the date of the application, 

4 is employed as a founder or full-time em5 ployee of a small business startup that— 

6 ‘‘(I) is located in an area that 

7 was a distressed area when the small 

8 business startup was established; 

9 ‘‘(II) is certified under paragraph 

10 (3) by the small business development 

11 center; and 

12 ‘‘(III) as of the date that the 

13 small business development center ap14 proves the borrower under this para15 graph, has been operating continu16 ously for not less than 5 years and 

17 not more than 10 years; and 

18 ‘‘(ii) was employed as a founder or a 

19 full-time employee by a small business 

20 startup described in clause (i) during a pe21 riod beginning not more than 5 years after 

22 the date on which the small business start23 up was established, as identified by the 

24 borrower under subparagraph (A).’’. 

Æ 


SSpencer on DSK4SPTVN1PROD with BILLS