II 

118TH CONGRESS 

1ST SESSION S. 300 

To amend the Higher Education Act of 1965 to provide for Federal student 

loan reform. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 7, 2023 

Mr. RUBIO 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 provide 

for Federal student loan reform. 

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 ‘‘Leveraging Opportuni5 ties for Americans Now Act of 2023’’ or the ‘‘LOAN Act 

6 of 2023’’. 


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1 SEC. 2. ELIMINATION OF INTEREST AND REPLACEMENT 

2 WITH FINANCING FEES. 

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

4 U.S.C. 1087e) is amended by adding at the end the fol5 lowing: 

6 ‘‘(r) ELIMINATION OF INTEREST AND REPLACEMENT

7 WITH FINANCING FEES.— 

8 ‘‘(1) IN GENERAL.— 

9 ‘‘(A) IN GENERAL.—Except as provided 

10 under subparagraph (B), beginning on July 1, 

11 2024, the Secretary shall make loans under this 

12 part in accordance with this subsection. 

13 ‘‘(B) EXCEPTION.—Beginning on July 1, 

14 2024, the Secretary shall make loans under this 

15 part in accordance with the provisions of this 

16 part other than this subsection to a borrower 

17 who— 

18 ‘‘(i) was enrolled in an institution of 

19 higher education on June 30, 2024; and 

20 ‘‘(ii) elects to borrow a loan under 

21 this part in accordance with the provisions 

22 of this part other than this subsection. 

23 ‘‘(2) ELIMINATION OF INTEREST.—For loans 

24 made under this part in accordance with this sub25 section for which the first disbursement is made on 


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1 or after July 1, 2024, the applicable rate of interest 

2 shall be equal to 0 percent. 

3 ‘‘(3) FINANCING FEES.— 

4 ‘‘(A) IN GENERAL.—Beginning on July 1, 

5 2024, the Secretary shall charge the borrower 

6 of a loan made under this part in accordance 

7 with this subsection a financing fee determined 

8 in accordance with this paragraph and issued 

9 on the date the loan is dispersed. 

10 ‘‘(B) DETERMINATION OF FEE.—The fi11 nancing fee for a borrower of a loan made 

12 under this part— 

13 ‘‘(i) that is used for enrollment in an 

14 undergraduate course of study (except a 

15 Federal Direct PLUS Loan made on be16 half of a dependent student), shall be equal 

17 to, from the principal amount of the loan, 

18 20 percent of the amount of such loan; 

19 ‘‘(ii) that is used for enrollment in a 

20 course of study necessary for enrollment in 

21 a program leading to a degree or certifi22 cate, shall be equal to, from the principal 

23 amount of the loan, 20 percent of the 

24 amount of such loan; 


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1 ‘‘(iii) that is used for enrollment in a 

2 program that is necessary for a profes3 sional credential or certification from a 

4 State that is required for employment as a 

5 teacher in an elementary or secondary 

6 school in that State, shall be equal to, 

7 from the principal amount of the loan, 20 

8 percent of the amount of such loan; and 

9 ‘‘(iv) that is a Federal Direct PLUS 

10 Loan made on behalf of a dependent stu11 dent or used for enrollment in a graduate 

12 or professional course of study, shall be 

13 equal to, from the principal amount of the 

14 loan, 35 percent of the amount of such 

15 loan. 

16 ‘‘(C) REDUCTION DUE TO PREPAYMENT.— 

17 ‘‘(i) IN GENERAL.—In order to pro18 vide an incentive to borrowers to pay the 

19 balance of a loan made under this part 

20 earlier than required under the applicable 

21 repayment plan, the Secretary may credit 

22 or refund any such borrowers for an 

23 amount of the financing fee charged under 

24 this subsection. 

25 ‘‘(ii) REGULATIONS.— 


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1 ‘‘(I) IN GENERAL.—Not later 

2 than 9 months after the date of enact3 ment of the Leveraging Opportunities 

4 for Americans Now Act of 2023, the 

5 Secretary shall promulgate regulations 

6 establishing the methodology for cred7 iting or refunding a financing fee 

8 charged under this subsection pursu9 ant to clause (i). Such credit or re10 fund shall not reduce the financing 

11 fee by more than— 

12 ‘‘(aa) with respect to a bor13 rower whose income, as deter14 mined under subclause (II), was 

15 not more than $45,000 in the 

16 taxable year in which the bor17 rower paid an amount from the 

18 balance of a loan made under 

19 this part earlier than required 

20 under the applicable repayment 

21 plan, 15 percentage points of 

22 such amount; 

23 ‘‘(bb) with respect to a bor24 rower whose income, as deter25 mined under subclause (II), was 


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1 more than $45,000 but not more 

2 than $95,000 in the taxable year 

3 in which the borrower paid an 

4 amount from the balance of a 

5 loan made under this part earlier 

6 than required under the applica7 ble repayment plan, 10 percent8 age points of such amount; and 

9 ‘‘(cc) with respect to a bor10 rower whose income, as deter11 mined under subclause (II), was 

12 more than $95,000 in the taxable 

13 year in which the borrower paid 

14 an amount from the balance of a 

15 loan made under this part earlier 

16 than required under the applica17 ble repayment plan, 5 percentage 

18 points of such amount. 

19 ‘‘(II) INCOME DETERMINA20 TION.—For purposes of subclause (I), 

21 a borrower’s income is equal to the 

22 amount by which— 

23 ‘‘(aa) the borrower’s, and 

24 the borrower’s spouse’s (if appliVerDate Sep 11 2014 03:30 Feb 17, 2023 Jkt 047007 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S300.IS S300

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1 cable), adjusted gross income; ex2 ceeds 

3 ‘‘(bb) 150 percent of the 

4 poverty line applicable to the bor5 rower’s family size as determined 

6 under section 673(2) of the Com7 munity Services Block Grant Act 

8 (42 U.S.C. 9902(2)). 

9 ‘‘(D) METHODOLOGY OF PAYMENT.—The 

10 Secretary shall establish an amortization sched11 ule for the repayment of financing fees charged 

12 under this subsection. 

13 ‘‘(4) RULEMAKING FOR CONSOLIDATION.—Not 

14 later than 18 months after the date of enactment of 

15 the Leveraging Opportunities for Americans Now 

16 Act of 2023, the Secretary shall promulgate rules re17 garding Federal Direct Consolidation Loans made 

18 under this part in accordance with this subsection, 

19 including a rule that the financing fee for such a 

20 Federal Direct Consolidation Loan determined in ac21 cordance with this subsection shall not exceed the 

22 sum of the financing fees applicable to the consoli23 dated loans.’’. 


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1 SEC. 3. INCOME DEPENDENT EDUCATION ASSISTANCE RE2 PAYMENT PLAN. 

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

4 1965 (20 U.S.C. 1087a et seq.) is amended by adding at 

5 the end the following: 

6 ‘‘SEC. 460A. INCOME DEPENDENT EDUCATION ASSISTANCE 

7 REPAYMENT PLAN. 

8 ‘‘(a) IN GENERAL.— 

9 ‘‘(1) APPLICABILITY.—Notwithstanding any 

10 other provision of this Act, with respect to any loan 

11 made under this part after the date of enactment of 

12 the Leveraging Opportunities for Americans Now 

13 Act of 2023, the repayment plan options are only a 

14 10-year fixed repayment plan and the repayment 

15 plan under this section. If the borrower of the loan 

16 does not select a repayment plan, the repayment of 

17 such loan shall be made in accordance with this sec18 tion. A borrower of a loan made under this part 

19 after the date of enactment of the Leveraging Op20 portunities for Americans Now Act of 2023 may af21 firmatively select the repayment plan under this sec22 tion. 

23 ‘‘(2) REGULATIONS.—Not later than 18 months 

24 after the date of enactment of the Leveraging Op25 portunities for Americans Now Act of 2023, the Sec26 retary shall promulgate rules— 


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1 ‘‘(A) outlining how the Department will 

2 implement the income dependent education as3 sistance repayment plan requirements for bor4 rowers under this section; and 

5 ‘‘(B) regarding monthly repayment proc6 esses for borrowers of loans made under this 

7 part before the date of enactment of the 

8 Leveraging Opportunities for Americans Now 

9 Act of 2023. 

10 ‘‘(3) RULE OF CONSTRUCTION.—Nothing in 

11 this section shall be construed to eliminate or other12 wise affect the loan forgiveness or loan cancellation 

13 options available under this part to a borrower. 

14 ‘‘(b) DUTIES OF THE SECRETARY OF THE TREAS15 URY.— 

16 ‘‘(1) IN GENERAL.—The Secretary of the 

17 Treasury shall, with respect to each individual for 

18 whom a loan made under this part after the date of 

19 enactment of the Leveraging Opportunities for 

20 Americans Now Act of 2023 is in repayment status, 

21 transmit to the Secretary of Education— 

22 ‘‘(A) in the case of such an individual who 

23 files an income tax return for such taxable year, 

24 such tax information as is necessary to deter25 mine the individual’s repayment obligation and 


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1 financing fee adjustments, as determined by the 

2 Secretary under this part; and 

3 ‘‘(B) in the case of any such individual 

4 who does not file a return for such taxable year, 

5 any available tax information of the individual 

6 as may be necessary to determine such obliga7 tion and whether such individual is delinquent 

8 under the terms of such loan for not so filing. 

9 ‘‘(2) ADDITIONAL PROGRAM REQUIREMENTS.— 

10 The Secretary of the Treasury shall establish such 

11 other policies, procedures, and guidance as may be 

12 necessary to carry out the purposes of this section, 

13 including measures to prevent underreporting and 

14 evasion of repayment or filing. 

15 ‘‘(c) DUTIES OF THE SECRETARY OF EDUCATION.— 

16 ‘‘(1) IN GENERAL.—The Secretary shall carry 

17 out, as part of the loan repayment plan established 

18 under this section, the following activities: 

19 ‘‘(A) CALCULATION OF ANNUAL REPAY20 MENT AMOUNTS.—The Secretary shall calculate 

21 the annual repayment amount under this sec22 tion for borrowers with 1 or more loans made 

23 under this part after the date of enactment of 

24 the Leveraging Opportunities for Americans 

25 Now Act of 2023 in repayment status for one 


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1 or more months in the taxable year for which 

2 the amount is determined regardless of which 

3 repayment plan the borrower is in, including 

4 the repayment obligations of such borrowers in 

5 accordance with subsection (d)(3). 

6 ‘‘(B) COMMUNICATION WITH THE SEC7 RETARY OF THE TREASURY.—The Secretary 

8 shall transmit to the Secretary of the Treasury 

9 such information as is necessary for the Sec10 retary of the Treasury to carry out subsection 

11 (d)(3). 

12 ‘‘(C) ANNUAL STATEMENTS.—Upon calcu13 lating the annual repayment amounts under 

14 subparagraph (A) for a taxable year, the Sec15 retary shall provide a statement, on an annual 

16 basis, to each borrower with a loan made under 

17 this part after the date of enactment of the 

18 Leveraging Opportunities for Americans Now 

19 Act of 2023 regardless of which repayment plan 

20 the borrower is in, which lists the following: 

21 ‘‘(i) Total payments made on the bor22 rower’s annual repayment amount for such 

23 taxable year. 

24 ‘‘(ii) The borrower’s annual repay25 ment amount for such taxable year. 


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1 ‘‘(iii) The outstanding balances on all 

2 the loans made to the borrower under this 

3 part after the date of enactment of the 

4 Leveraging Opportunities for Americans 

5 Now Act of 2023 and any other out6 standing balances on loans of the borrower 

7 that were made, insured, or guaranteed 

8 under this title. 

9 ‘‘(iv) A description of how the bor10 rower’s annual repayment amount was cal11 culated. 

12 ‘‘(D) PAYMENTS ON A BORROWER’S BE13 HALF.— 

14 ‘‘(i) IN GENERAL.—The Secretary 

15 shall— 

16 ‘‘(I) provide a mechanism for 

17 other individuals or entities to make 

18 payments on the annual repayment 

19 amount of a borrower for a taxable 

20 year; and 

21 ‘‘(II) notify the borrower that 

22 any payments made under subclause 

23 (I) for the taxable year that exceed 

24 the annual repayment amount for the 

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1 rower, except as provided through the 

2 appeals process described in clause 

3 (ii). 

4 ‘‘(ii) APPEALS PROCESS.—The Sec5 retary shall make available a process 

6 through which a borrower can appeal for 

7 refund of payments made under clause (i) 

8 that exceed the annual repayment amount 

9 for the year if such payments were made 

10 pursuant to improper wage garnishment. 

11 ‘‘(E) APPEALS PROCESS.— 

12 ‘‘(i) IN GENERAL.—The Secretary 

13 shall make available a process through 

14 which a borrower can appeal the calcula15 tion of the borrower’s annual repayment 

16 amount, including a worksheet that en17 ables a borrower to calculate the bor18 rower’s annual repayment amount. 

19 ‘‘(ii) GOOD STANDING.—A borrower 

20 who makes an appeal under clause (i) with 

21 respect to a loan shall be considered in 

22 good standing on such loan during the du23 ration of the appeal. 

24 ‘‘(iii) REGULATIONS.—The Secretary 

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1 ess not later than 18 months after the date 

2 of enactment of the Leveraging Opportuni3 ties for Americans Now Act of 2023. 

4 ‘‘(F) DELINQUENT FOR FAILURE TO FILE

5 A RETURN.— 

6 ‘‘(i) IN GENERAL.—In a case in which 

7 the Secretary receives information from 

8 the Secretary of the Treasury under sub9 section (b) that a borrower with a loan 

10 made under this part after the date of en11 actment of the Leveraging Opportunities 

12 for Americans Now Act of 2023 in repay13 ment status in the repayment plan under 

14 this section, has failed to file a return 

15 under section 6012(a)(1) of the Internal 

16 Revenue Code of 1986 and such borrower 

17 was required to file such a return, the Sec18 retary shall— 

19 ‘‘(I) notify the borrower of the 

20 borrower’s failure to file such a re21 turn; and 

22 ‘‘(II) if the borrower fails to file 

23 such a return within 90 days of re24 ceipt of the notice described in sub25 clause (I), consider the borrower’s 


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1 loans made under this part after the 

2 date of enactment of the Leveraging 

3 Opportunities for Americans Now Act 

4 of 2023 in repayment status in the re5 payment plan under this section to be 

6 delinquent. 

7 ‘‘(ii) APPEALS PROCESS.—The Sec8 retary shall make available a process 

9 through which a borrower can appeal a de10 termination under clause (i) that the bor11 rower has failed to file a return under sec12 tion 6012(a)(1) of the Internal Revenue 

13 Code of 1986 and such borrower was re14 quired to file such a return. The Secretary 

15 shall issue regulations outlining such proc16 ess not later than 18 months after the date 

17 of enactment of the Leveraging Opportuni18 ties for Americans Now Act of 2023. 

19 ‘‘(G) MONTHLY PAYMENTS PROCESS.—The 

20 Secretary shall— 

21 ‘‘(i) establish a monthly payments 

22 process described in paragraph (2); and 

23 ‘‘(ii) issue regulations establishing 

24 penalties for default on such monthly pay25 ments. 


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1 ‘‘(H) CALCULATING LOAN FORGIVENESS.— 

2 The Secretary shall determine appropriate loan 

3 forgiveness options for students who select the 

4 repayment plan under this section. 

5 ‘‘(I) FINANCIAL HARDSHIPS.— 

6 ‘‘(i) IN GENERAL.—The Secretary 

7 shall establish a process for providing an 

8 adjustment in both the monthly payment 

9 and annual repayment amount obligations 

10 on a loan for a borrower experiencing ex11 treme unforeseen financial circumstances 

12 unrelated to a change in annual income. 

13 ‘‘(ii) REPAYMENT STATUS.—A bor14 rower who receives an adjustment under 

15 clause (i) for a loan shall be deemed in re16 payment status with respect to such loan. 

17 ‘‘(2) MONTHLY PAYMENTS PROCESS.— 

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

19 establish a process under which a borrower, or 

20 one making payments on behalf of a borrower 

21 under paragraph (1)(D), shall make monthly 

22 payments towards the borrower’s annual repay23 ment amount. 

24 ‘‘(B) INFORMATION REQUIRED.—The pro25 cedure for initiating the monthly payments 


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1 process under subparagraph (A) shall include 

2 an income estimate based on the income 

3 verification provided by the Secretary of the 

4 Treasury under subsection (b). 

5 ‘‘(C) AUTOMATIC CONTINUATION.—The 

6 monthly payments process shall continue until 

7 the borrower’s loans made under this part after 

8 the date of enactment of the Leveraging Oppor9 tunities for Americans Now Act of 2023 are re10 paid. 

11 ‘‘(D) UPDATING PAYMENT AMOUNTS.— 

12 ‘‘(i) SECRETARY.—The Secretary 

13 shall automatically recalculate a borrower’s 

14 monthly payment amount— 

15 ‘‘(I) at the beginning of a new 

16 taxable year using the most recent in17 come estimate provided under sub18 section (b)(1) by the Secretary of the 

19 Treasury; and 

20 ‘‘(II) not later than 30 days after 

21 the date the borrower’s income esti22 mate is adjusted after an appeal 

23 under paragraph (1)(E). 

24 ‘‘(ii) BORROWER.—A borrower may 

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1 rower’s income estimate to adjust monthly 

2 payment amounts pursuant to subpara3 graph (E) or (I) of paragraph (1) at any 

4 time. 

5 ‘‘(d) BORROWER REPAYMENT.— 

6 ‘‘(1) REPAYMENT PERIOD.—The repayment pe7 riod of a loan in the repayment plan under this sec8 tion shall— 

9 ‘‘(A) begin on the first day of the first tax10 able year that begins after the borrower’s in11 school deferment period; and 

12 ‘‘(B) continue until the loan is paid in full, 

13 except that the Secretary may grant a borrower 

14 deferment of the borrower’s annual repayment 

15 amount— 

16 ‘‘(i) for a period not to exceed 60 

17 days, due to administrative or technical 

18 reasons; 

19 ‘‘(ii) for a period not to exceed 3 

20 months, due to unusual circumstances that 

21 disrupt the borrower’s ability to make 

22 timely payments on the loan; or 

23 ‘‘(iii) renewable at 12-month intervals 

24 for a period not to exceed 3 years, due to 


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1 documented extreme economic hardship on 

2 the part of a borrower. 

3 ‘‘(2) PREPAYMENT AUTHORIZED.—A borrower 

4 shall have the right to prepay all or part of such 

5 loan, at any time and without penalty. Any such pre6 payment amount shall be applied in accordance with 

7 section 455(r)(3)(C). 

8 ‘‘(3) DETERMINATION OF INCOME-BASED RE9 PAYMENT OBLIGATION.— 

10 ‘‘(A) IN GENERAL.—The repayment obliga11 tion under this section with respect to an indi12 vidual for any taxable year is an amount equal 

13 to 10 percent of the amount by which— 

14 ‘‘(i) the individual’s, and the individ15 ual’s spouse’s (if applicable), adjusted 

16 gross income; exceeds 

17 ‘‘(ii) 150 percent of the poverty line 

18 applicable to the borrower’s family size as 

19 determined under section 673(2) of the 

20 Community Services Block Grant Act (42 

21 U.S.C. 9902(2)). 

22 ‘‘(B) EXCLUSION OF CERTAIN AMOUNTS

23 PAID ON BEHALF OF INDIVIDUAL.—Any 

24 amount paid on the borrower’s behalf under 

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1 count in determining such borrower’s income2 based repayment obligation. 

3 ‘‘(C) INDIVIDUALS NOT FILING A RE4 TURN.—The income-based repayment obligation 

5 with respect to an individual not required to file 

6 a return under section 6012(a)(1) of the Inter7 nal Revenue Code of 1986 shall be treated as 

8 zero.’’. 

Æ 


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