II 

117TH CONGRESS 

1ST SESSION S. 2596 

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

loan reform. 

IN THE SENATE OF THE UNITED STATES 

AUGUST 4, 2021 

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 2021’’ or the ‘‘LOAN Act 

6 of 2021’’. 


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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 2022, the Secretary shall make loans under this 

12 part in accordance with this subsection. 

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

14 2022, 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, 2022; 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, 2022, 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 2022, 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 LOAN Act of 2021, the 

4 Secretary shall promulgate regulations 

5 establishing the methodology for cred6 iting or refunding a financing fee 

7 charged under this subsection pursu8 ant to clause (i). Such credit or re9 fund shall not reduce the financing 

10 fee by more than— 

11 ‘‘(aa) with respect to a bor12 rower whose income, as deter13 mined under subclause (II), was 

14 not more than $45,000 in the 

15 taxable year in which the bor16 rower paid an amount from the 

17 balance of a loan made under 

18 this part earlier than required 

19 under the applicable repayment 

20 plan, 15 percentage points of 

21 such amount; 

22 ‘‘(bb) with respect to a bor23 rower whose income, as deter24 mined under subclause (II), was 

25 more than $45,000 but not more 


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1 than $95,000 in the taxable year 

2 in which the borrower paid an 

3 amount from the balance of a 

4 loan made under this part earlier 

5 than required under the applica6 ble repayment plan, 10 percent7 age points of such amount; and 

8 ‘‘(cc) with respect to a bor9 rower whose income, as deter10 mined under subclause (II), was 

11 more than $95,000 in the taxable 

12 year in which the borrower paid 

13 an amount from the balance of a 

14 loan made under this part earlier 

15 than required under the applica16 ble repayment plan, 5 percentage 

17 points of such amount. 

18 ‘‘(II) INCOME DETERMINA19 TION.—For purposes of subclause (I), 

20 a borrower’s income is equal to the 

21 amount by which— 

22 ‘‘(aa) the borrower’s, and 

23 the borrower’s spouse’s (if appli24 cable), adjusted gross income; ex25 ceeds 


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1 ‘‘(bb) 150 percent of the 

2 poverty line applicable to the bor3 rower’s family size as determined 

4 under section 673(2) of the Com5 munity Services Block Grant Act 

6 (42 U.S.C. 9902(2)). 

7 ‘‘(D) METHODOLOGY OF PAYMENT.—The 

8 Secretary shall establish an amortization sched9 ule for the repayment of financing fees charged 

10 under this subsection. 

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

12 later than 18 months after the date of enactment of 

13 the LOAN Act of 2021, the Secretary shall promul14 gate rules regarding Federal Direct Consolidation 

15 Loans made under this part in accordance with this 

16 subsection, including a rule that the financing fee 

17 for such a Federal Direct Consolidation Loan deter18 mined in accordance with this subsection shall not 

19 exceed the sum of the financing fees applicable to 

20 the consolidated loans.’’. 

21 SEC. 3. INCOME DEPENDENT EDUCATION ASSISTANCE RE22 PAYMENT PLAN. 

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

24 1965 (20 U.S.C. 1087a et seq.) is amended by adding at 

25 the end the following: 


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

2 REPAYMENT PLAN. 

3 ‘‘(a) IN GENERAL.— 

4 ‘‘(1) APPLICABILITY.—Notwithstanding any 

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

6 made under this part after the date of enactment of 

7 the LOAN Act of 2021, the repayment plan options 

8 are only a 10-year fixed repayment plan and the re9 payment plan under this section. If the borrower of 

10 the loan does not select a repayment plan, the repay11 ment of such loan shall be made in accordance with 

12 this section. A borrower of a loan made under this 

13 part after the date of enactment of the LOAN Act 

14 of 2021 may affirmatively select the repayment plan 

15 under this section. 

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

17 after the date of enactment of the LOAN Act of 

18 2021, the Secretary shall promulgate rules— 

19 ‘‘(A) outlining how the Department will 

20 implement the income dependent education as21 sistance repayment plan requirements for bor22 rowers under this section; and 

23 ‘‘(B) regarding monthly repayment proc24 esses for borrowers of loans made under this 

25 part before the date of enactment of the LOAN 

26 Act of 2021. 


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

2 this section shall be construed to eliminate or other3 wise affect the loan forgiveness or loan cancellation 

4 options available under this part to a borrower. 

5 ‘‘(b) DUTIES OF THE SECRETARY OF THE TREAS6 URY.— 

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

8 Treasury shall, with respect to each individual for 

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

10 enactment of the LOAN Act of 2021 is in repay11 ment status, transmit to the Secretary of Edu12 cation— 

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

14 files an income tax return for such taxable year, 

15 such tax information as is necessary to deter16 mine the individual’s repayment obligation and 

17 financing fee adjustments, as determined by the 

18 Secretary under this part; and 

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

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

21 any available tax information of the individual 

22 as may be necessary to determine such obliga23 tion and whether such individual is delinquent 

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


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1 ‘‘(2) ADDITIONAL PROGRAM REQUIREMENTS.— 

2 The Secretary of the Treasury shall establish such 

3 other policies, procedures, and guidance as may be 

4 necessary to carry out the purposes of this section, 

5 including measures to prevent underreporting and 

6 evasion of repayment or filing. 

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

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

9 out, as part of the loan repayment plan established 

10 under this section, the following activities: 

11 ‘‘(A) CALCULATION OF ANNUAL REPAY12 MENT AMOUNTS.—The Secretary shall calculate 

13 the annual repayment amount under this sec14 tion for borrowers with 1 or more loans made 

15 under this part after the date of enactment of 

16 the LOAN Act of 2021 in repayment status for 

17 one or more months in the taxable year for 

18 which the amount is determined regardless of 

19 which repayment plan the borrower is in, in20 cluding the repayment obligations of such bor21 rowers in accordance with subsection (d)(3). 

22 ‘‘(B) COMMUNICATION WITH THE SEC23 RETARY OF THE TREASURY.—The Secretary 

24 shall transmit to the Secretary of the Treasury 

25 such information as is necessary for the SecVerDate Sep 11 2014 05:19 Aug 05, 2021 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S2596.IS S2596

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1 retary of the Treasury to carry out subsection 

2 (d)(3). 

3 ‘‘(C) ANNUAL STATEMENTS.—Upon calcu4 lating the annual repayment amounts under 

5 subparagraph (A) for a taxable year, the Sec6 retary shall provide a statement, on an annual 

7 basis, to each borrower with a loan made under 

8 this part after the date of enactment of the 

9 LOAN Act of 2021 regardless of which repay10 ment plan the borrower is in, which lists the 

11 following: 

12 ‘‘(i) Total payments made on the bor13 rower’s annual repayment amount for such 

14 taxable year. 

15 ‘‘(ii) The borrower’s annual repay16 ment amount for such taxable year. 

17 ‘‘(iii) The outstanding balances on all 

18 the loans made to the borrower under this 

19 part after the date of enactment of the 

20 LOAN Act of 2021 and any other out21 standing balances on loans of the borrower 

22 that were made, insured, or guaranteed 

23 under this title. 


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1 ‘‘(iv) A description of how the bor2 rower’s annual repayment amount was cal3 culated. 

4 ‘‘(D) PAYMENTS ON A BORROWER’S BE5 HALF.— 

6 ‘‘(i) IN GENERAL.—The Secretary 

7 shall— 

8 ‘‘(I) provide a mechanism for 

9 other individuals or entities to make 

10 payments on the annual repayment 

11 amount of a borrower for a taxable 

12 year; and 

13 ‘‘(II) notify the borrower that 

14 any payments made under subclause 

15 (I) for the taxable year that exceed 

16 the annual repayment amount for the 

17 year shall not be refunded to the bor18 rower, except as provided through the 

19 appeals process described in clause 

20 (ii). 

21 ‘‘(ii) APPEALS PROCESS.—The Sec22 retary shall make available a process 

23 through which a borrower can appeal for 

24 refund of payments made under clause (i) 

25 that exceed the annual repayment amount 


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1 for the year if such payments were made 

2 pursuant to improper wage garnishment. 

3 ‘‘(E) APPEALS PROCESS.— 

4 ‘‘(i) IN GENERAL.—The Secretary 

5 shall make available a process through 

6 which a borrower can appeal the calcula7 tion of the borrower’s annual repayment 

8 amount, including a worksheet that en9 ables a borrower to calculate the bor10 rower’s annual repayment amount. 

11 ‘‘(ii) GOOD STANDING.—A borrower 

12 who makes an appeal under clause (i) with 

13 respect to a loan shall be considered in 

14 good standing on such loan during the du15 ration of the appeal. 

16 ‘‘(iii) REGULATIONS.—The Secretary 

17 shall issue regulations outlining such proc18 ess not later than 18 months after the date 

19 of enactment of the LOAN Act of 2021. 

20 ‘‘(F) DELINQUENT FOR FAILURE TO FILE

21 A RETURN.— 

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

23 the Secretary receives information from 

24 the Secretary of the Treasury under sub25 section (b) that a borrower with a loan 


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1 made under this part after the date of en2 actment of the LOAN Act of 2021 in re3 payment status in the repayment plan 

4 under this section, has failed to file a re5 turn under section 6012(a)(1) of the Inter6 nal Revenue Code of 1986 and such bor7 rower was required to file such a return, 

8 the Secretary shall— 

9 ‘‘(I) notify the borrower of the 

10 borrower’s failure to file such a re11 turn; and 

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

13 such a return within 90 days of re14 ceipt of the notice described in sub15 clause (I), consider the borrower’s 

16 loans made under this part after the 

17 date of enactment of the LOAN Act 

18 of 2021 in repayment status in the re19 payment plan under this section to be 

20 delinquent. 

21 ‘‘(ii) APPEALS PROCESS.—The Sec22 retary shall make available a process 

23 through which a borrower can appeal a de24 termination under clause (i) that the bor25 rower has failed to file a return under secVerDate Sep 11 2014 05:19 Aug 05, 2021 Jkt 019200 PO 00000 Frm 00014 Fmt 6652 Sfmt 6201 E:\BILLS\S2596.IS S2596

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1 tion 6012(a)(1) of the Internal Revenue 

2 Code of 1986 and such borrower was re3 quired to file such a return. The Secretary 

4 shall issue regulations outlining such proc5 ess not later than 18 months after the date 

6 of enactment of the LOAN Act of 2021. 

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

8 Secretary shall— 

9 ‘‘(i) establish a monthly payments 

10 process described in paragraph (2); and 

11 ‘‘(ii) issue regulations establishing 

12 penalties for default on such monthly pay13 ments. 

14 ‘‘(H) CALCULATING LOAN FORGIVENESS.— 

15 The Secretary shall determine appropriate loan 

16 forgiveness options for students who select the 

17 repayment plan under this section. 

18 ‘‘(I) FINANCIAL HARDSHIPS.— 

19 ‘‘(i) IN GENERAL.—The Secretary 

20 shall establish a process for providing an 

21 adjustment in both the monthly payment 

22 and annual repayment amount obligations 

23 on a loan for a borrower experiencing ex24 treme unforeseen financial circumstances 

25 unrelated to a change in annual income. 


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1 ‘‘(ii) REPAYMENT STATUS.—A bor2 rower who receives an adjustment under 

3 clause (i) for a loan shall be deemed in re4 payment status with respect to such loan. 

5 ‘‘(2) MONTHLY PAYMENTS PROCESS.— 

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

7 establish a process under which a borrower, or 

8 one making payments on behalf of a borrower 

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

10 payments towards the borrower’s annual repay11 ment amount. 

12 ‘‘(B) INFORMATION REQUIRED.—The pro13 cedure for initiating the monthly payments 

14 process under subparagraph (A) shall include 

15 an income estimate based on the income 

16 verification provided by the Secretary of the 

17 Treasury under subsection (b). 

18 ‘‘(C) AUTOMATIC CONTINUATION.—The 

19 monthly payments process shall continue until 

20 the borrower’s loans made under this part after 

21 the date of enactment of the LOAN Act of 

22 2021 are repaid. 

23 ‘‘(D) UPDATING PAYMENT AMOUNTS.— 


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1 ‘‘(i) SECRETARY.—The Secretary 

2 shall automatically recalculate a borrower’s 

3 monthly payment amount— 

4 ‘‘(I) at the beginning of a new 

5 taxable year using the most recent in6 come estimate provided under sub7 section (b)(1) by the Secretary of the 

8 Treasury; and 

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

10 the date the borrower’s income esti11 mate is adjusted after an appeal 

12 under paragraph (1)(E). 

13 ‘‘(ii) BORROWER.—A borrower may 

14 request that the Secretary update the bor15 rower’s income estimate to adjust monthly 

16 payment amounts pursuant to subpara17 graph (E) or (I) of paragraph (1) at any 

18 time. 

19 ‘‘(d) BORROWER REPAYMENT.— 

20 ‘‘(1) REPAYMENT PERIOD.—The repayment pe21 riod of a loan in the repayment plan under this sec22 tion shall— 

23 ‘‘(A) begin on the first day of the first tax24 able year that begins after the borrower’s in25 school deferment period; and 


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

2 except that the Secretary may grant a borrower 

3 deferment of the borrower’s annual repayment 

4 amount— 

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

6 days, due to administrative or technical 

7 reasons; 

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

9 months, due to unusual circumstances that 

10 disrupt the borrower’s ability to make 

11 timely payments on the loan; or 

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

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

14 documented extreme economic hardship on 

15 the part of a borrower. 

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

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

18 loan, at any time and without penalty. Any such pre19 payment amount shall be applied in accordance with 

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

21 ‘‘(3) DETERMINATION OF INCOME-BASED RE22 PAYMENT OBLIGATION.— 

23 ‘‘(A) IN GENERAL.—The repayment obliga24 tion under this section with respect to an indiVerDate Sep 11 2014 05:19 Aug 05, 2021 Jkt 019200 PO 00000 Frm 00018 Fmt 6652 Sfmt 6201 E:\BILLS\S2596.IS S2596

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1 vidual for any taxable year is an amount equal 

2 to 10 percent of the amount by which— 

3 ‘‘(i) the individual’s, and the individ4 ual’s spouse’s (if applicable), adjusted 

5 gross income; exceeds 

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

7 applicable to the borrower’s family size as 

8 determined under section 673(2) of the 

9 Community Services Block Grant Act (42 

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

11 ‘‘(B) EXCLUSION OF CERTAIN AMOUNTS

12 PAID ON BEHALF OF INDIVIDUAL.—Any 

13 amount paid on the borrower’s behalf under 

14 subsection (c)(1)(D) shall not be taken into ac15 count in determining such borrower’s income16 based repayment obligation. 

17 ‘‘(C) INDIVIDUALS NOT FILING A RE18 TURN.—The income-based repayment obligation 

19 with respect to an individual not required to file 

20 a return under section 6012(a)(1) of the Inter21 nal Revenue Code of 1986 shall be treated as 

22 zero.’’. 

Æ 


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