I 

116TH CONGRESS 

1ST SESSION H. R. 3257 

To increase purchasing power, strengthen economic recovery, and restore 

fairness in financing higher education in the United States through 

student loan forgiveness, caps on interest rates on Federal student loans, 

and refinancing opportunities for private borrowers, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JUNE 13, 2019 

Ms. BASS (for herself, Ms. NORTON, Mr. BISHOP of Georgia, Mr. CLYBURN, 

Ms. JOHNSON of Texas, Mr. RUSH, Mr. THOMPSON of Mississippi, Ms. 

JACKSON LEE, Ms. LEE of California, Mrs. LAWRENCE, Mr. CLAY, Mr. 

BUTTERFIELD, Mr. CLEAVER, Mr. JOHNSON of Georgia, Ms. FUDGE, Mr. 

RICHMOND, Mr. PAYNE, Ms. KELLY of Illinois, Ms. ADAMS, Ms. 

PLASKETT, and Mrs. HAYES) introduced the following bill; which was referred to the Committee on Education and Labor, and in addition to the 

Committees on Financial Services, and 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 increase purchasing power, strengthen economic recovery, 

and restore fairness in financing higher education in 

the United States through student loan forgiveness, caps 

on interest rates on Federal student loans, and refinancing opportunities for private borrowers, and for 

other purposes. 


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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 ‘‘Student Loan Fairness 

5 Act’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 

8 (1) A well-educated citizenry is critical to our 

9 Nation’s ability to compete in the global economy. 

10 (2) The Federal Government has a vested inter11 est in ensuring access to higher education. 

12 (3) Higher education should be viewed as a 

13 public good benefitting our country rather than as a 

14 commodity solely benefitting individual students. 

15 (4) Total outstanding student loan debt offi16 cially surpassed total credit card debt in the United 

17 States in 2015, and now exceeds 

18 $1,400,000,000,000. 

19 (5) Excessive student loan debt is impeding eco20 nomic growth in the United States. Faced with ex21 cessive repayment burdens, many individuals are un22 able to start businesses, invest, or buy homes. Re23 lieving student loan debt would give these individuals 

24 greater control over their earnings and would inVerDate Sep 11 2014 02:23 Jun 18, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3257.IH H3257

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1 crease entrepreneurship and demand for goods and 

2 services. 

3 (6) Because of soaring tuition costs, students 

4 often have no choice but to amass significant debt 

5 to obtain an education that is widely considered a 

6 prerequisite for earning a living wage. 

7 (7) Amidst rising tuition rates and stagnant 

8 grant funding, many students are forced to supple9 ment Federal loans with private loans, which fre10 quently feature higher interest rates with fewer con11 sumer protections. 

12 (8) A borrower who experiences an extended 

13 hardship for whatever reason, or a borrower who ex14 periences a series of separate hardships over a 

15 longer period of time, will often have no choice but 

16 to default on his or her private student loans. Op17 portunities to put such private loans into forbear18 ance are limited. 

19 (9) During the period of forbearance on private 

20 student loans, interest continues to accrue and is 

21 capitalized, and once the borrower comes out of for22 bearance, he or she owes significantly more on the 

23 principal of the loan than before the hardship period 

24 began. 


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1 SEC. 3. 10/10 LOAN REPAYMENT AND FORGIVENESS. 

2 Part G of title IV of the Higher Education Act of 

3 1965 is amended by adding at the end the following: 

4 ‘‘SEC. 493E. 10/10 LOAN REPAYMENT AND FORGIVENESS. 

5 ‘‘(a) 10/10 LOAN REPAYMENT PLAN.— 

6 ‘‘(1) 10/10 LOAN REPAYMENT PLAN AUTHOR7 IZED.—Notwithstanding any other provision of this 

8 Act, the Secretary shall carry out a program (to be 

9 known as the ‘10/10 Loan Repayment Plan’) under 

10 which— 

11 ‘‘(A) a borrower of an eligible loan who is 

12 eligible under paragraph (3) may elect to have 

13 the borrower’s aggregate monthly payment for 

14 all such loans not exceed the monthly payment 

15 amount described in paragraph (2); 

16 ‘‘(B) any interest due and not paid under 

17 a monthly payment under this subsection— 

18 ‘‘(i) shall continue to accrue; and 

19 ‘‘(ii) shall be capitalized up to an 

20 amount equal to 10 percent of the original 

21 principal amount of all the eligible loans 

22 that the borrower is repaying under this 

23 subsection; 

24 ‘‘(C) any principal due and not paid under 

25 a monthly payment under this subsection shall 

26 be deferred, and shall be forgiven in accordance 


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1 with subsection (b) if the borrower meets the 

2 requirements for forgiveness under such sub3 section; 

4 ‘‘(D) the amount of time the borrower 

5 makes monthly payments under this subsection 

6 may exceed 10 years; 

7 ‘‘(E) a borrower who is repaying an eligi8 ble loan pursuant to 10/10 Loan Repayment 

9 under this subsection may elect, at any time, to 

10 terminate repayment pursuant to 10/10 Loan 

11 Repayment and repay such loan under the 

12 standard repayment plan, in which case the 

13 amount of time the borrower is permitted to 

14 repay such loans may exceed 10 years; and 

15 ‘‘(F) the special allowance payment to a 

16 lender calculated under section 438(b)(2)(I), 

17 when calculated for a loan in repayment under 

18 this section, shall be calculated on the principal 

19 balance of the loan and on any accrued interest 

20 unpaid by the borrower in accordance with this 

21 section. 

22 ‘‘(2) 10/10 LOAN REPAYMENT MONTHLY PAY23 MENT FORMULA.—A borrower who has elected to 

24 participate in the 10/10 Loan Repayment Plan 

25 under this subsection shall, during each month the 


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1 borrower is participating in such Plan, make a 

2 monthly payment in an amount equal to— 

3 ‘‘(A) one-twelfth of the amount that is 10 

4 percent of the result obtained by calculating, on 

5 at least an annual basis, the amount by 

6 which— 

7 ‘‘(i) the borrower’s, and the bor8 rower’s spouse’s (if applicable), adjusted 

9 gross income; exceeds 

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

11 applicable to the borrower’s family size as 

12 determined under section 673(2) of the 

13 Community Services Block Grant Act (42 

14 U.S.C. 9902(2)), as adjusted by 

15 ‘‘(iii) the regional variation in the cost 

16 of living (determined by the Secretary, in 

17 consultation with the Bureau of Economic 

18 Analysis of the Department of Commerce 

19 and the Bureau of Labor Statistics of the 

20 Department of Labor) for the geographic 

21 area in which the borrower resides, so that 

22 a borrower residing in a higher cost geo23 graphic area will experience a downward 

24 trend in such monthly payment amount; or 


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1 ‘‘(B) in the case of a borrower who is in 

2 deferment due to an economic hardship de3 scribed in section 435(o), $0. 

4 ‘‘(3) ELIGIBILITY.—The Secretary shall estab5 lish procedures for annually determining the bor6 rower’s eligibility for 10/10 Loan Repayment, includ7 ing verification of a borrower’s annual adjusted 

8 gross income and the annual amount due on the 

9 total amount of eligible loans, and such other proce10 dures as are necessary to effectively implement 10/ 

11 10 Loan Repayment under this subsection. 

12 ‘‘(4) SPECIAL RULE FOR MARRIED BORROWERS

13 FILING SEPARATELY.—In the case of a married bor14 rower who files a separate Federal income tax re15 turn, the Secretary shall calculate the amount of the 

16 borrower’s 10/10 Loan Repayment under this sub17 section solely on the basis of the borrower’s student 

18 loan debt and adjusted gross income, and the re19 gional variation in the cost of living described in 

20 paragraph (2)(A)(iii). 

21 ‘‘(b) 10/10 LOAN FORGIVENESS.— 

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

23 out a program (to be known as the ‘10/10 Loan 

24 Forgiveness Program’) to forgive a qualified loan 

25 amount, in accordance with paragraph (3), on an eliVerDate Sep 11 2014 02:23 Jun 18, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H3257.IH H3257

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1 gible loan for a borrower who, after the date that is 

2 10 years prior to the date of enactment of the Stu3 dent Loan Fairness Act, has made 120 monthly pay4 ments on the eligible loan pursuant to any one or a 

5 combination of the following: 

6 ‘‘(A) Monthly payment under the 10/10 

7 Loan Repayment Plan under subsection (a). 

8 ‘‘(B) Monthly payment under any other re9 payment plan authorized under part B or D of 

10 an amount that, for a given month, is not less 

11 than the monthly payment amount calculated 

12 under subsection (a) that the borrower would 

13 have owed in the year in which such payment 

14 was made, based on the borrower’s adjusted 

15 gross income and eligible loan balance for such 

16 year. 

17 ‘‘(C) For any month after such date dur18 ing which the borrower is in deferment due to 

19 an economic hardship described in section 

20 435(o), monthly payment of $0. 

21 ‘‘(2) METHOD OF LOAN FORGIVENESS.—To 

22 provide loan forgiveness under paragraph (1), the 

23 Secretary is authorized to carry out a program— 

24 ‘‘(A) through the holder of the loan, to as25 sume the obligation to repay a qualified loan 


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1 amount for a loan made, insured, or guaranteed 

2 under part B of this title; and 

3 ‘‘(B) to cancel a qualified loan amount for 

4 a loan made under part D of this title. 

5 ‘‘(3) QUALIFIED LOAN AMOUNT.—After the 

6 borrower has made 120 monthly payments described 

7 in paragraph (1), the Secretary shall forgive— 

8 ‘‘(A) with respect to new borrowers on or 

9 after the date of enactment of the Student 

10 Loan Fairness Act, the sum of— 

11 ‘‘(i) the balance of principal and fees 

12 due on the borrower’s eligible loans as of 

13 the time of such forgiveness, not to exceed 

14 $45,520; and 

15 ‘‘(ii) the amount of interest that has 

16 accrued on the balance described in clause 

17 (i) as of the time of such forgiveness; or 

18 ‘‘(B) with respect to any other eligible bor19 rower, the balance of principal, interest, and 

20 fees due on the borrower’s eligible loans as of 

21 the time of such forgiveness. 

22 ‘‘(4) EXCLUSION FROM TAXABLE INCOME.— 

23 The amount of a borrower’s eligible loans forgiven 

24 under this section shall not be included in the gross 


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1 income of the borrower for purposes of the Internal 

2 Revenue Code of 1986. 

3 ‘‘(c) SUPPORTING DOCUMENTATION REQUIRED.—A 

4 borrower who has elected to participate in the 10/10 Loan 

5 Repayment Plan under subsection (a), or who is request6 ing forgiveness under the 10/10 Loan Forgiveness Pro7 gram under subsection (b), shall provide to the Secretary 

8 such information and documentation as the Secretary de9 termines, by regulation, to be necessary to verify the bor10 rower’s adjusted gross income and payment amounts 

11 made on eligible loans of the borrower for the purposes 

12 of such Plan or Program. 

13 ‘‘(d) DEFINITION OF ELIGIBLE LOAN.—In this sec14 tion the term ‘eligible loan’ means any loan made, insured, 

15 or guaranteed under part B or D.’’. 

16 SEC. 4. CAPPING INTEREST RATES FOR ALL FEDERAL DI17 RECT LOANS. 

18 Section 455(b) of the Higher Education Act of 1965 

19 (20 U.S.C. 1087e(b)) is amended— 

20 (1) by redesignating paragraphs (9) and (10) 

21 as paragraphs (10) and (11), respectively; and 

22 (2) by inserting after paragraph (8) the fol23 lowing: 

24 ‘‘(8) RATE OF INTEREST FOR ALL NEW FED25 ERAL DIRECT LOANS.—Notwithstanding any other 


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1 provision of this Act, with respect to a loan under 

2 this part for which the first disbursement of prin3 cipal is made (or in the case of a Federal Direct 

4 Consolidation Loan, for which the application is re5 ceived) on or after October 1, 2020, or the date of 

6 enactment of the Student Loan Fairness Act, which7 ever is later, the applicable rate of interest shall not 

8 exceed 3.4 percent.’’. 

9 SEC. 5. 10/10 LOAN REPAYMENT PLAN AS PLAN SELECTED 

10 BY THE SECRETARY. 

11 (a) FFEL LOANS.— 

12 (1) IN GENERAL.—Section 428(b)(9) of the 

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

14 1078(b)(9)) is amended— 

15 (A) in subparagraph (A)— 

16 (i) by striking ‘‘and’’ at the end of 

17 clause (iv); 

18 (ii) in clause (v), by striking the pe19 riod at the end and inserting ‘‘; and’’; and 

20 (iii) by adding at the end the fol21 lowing new clause: 

22 ‘‘(vi) beginning October 1, 2020, a 

23 10/10 Loan Repayment Plan, with varying 

24 annual repayment amounts based on the 


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1 discretionary income of the borrower, in 

2 accordance with section 493E.’’; and 

3 (B) in subparagraph (B), by striking 

4 ‘‘(A)(i)’’ and inserting ‘‘(A)(vi)’’. 

5 (2) EFFECTIVE DATE.—The amendment made 

6 by paragraph (1)(B) shall be effective beginning Oc7 tober 1, 2020. 

8 (b) DIRECT LOANS.— 

9 (1) IN GENERAL.—Section 455(d) of the High10 er Education Act of 1965 (20 U.S.C. 1087e(d)) is 

11 amended— 

12 (A) in paragraph (1)— 

13 (i) by striking ‘‘and’’ at the end of 

14 subparagraph (D); 

15 (ii) in subparagraph (E), by striking 

16 the period at the end and inserting ‘‘; 

17 and’’; and 

18 (iii) by adding at the end the fol19 lowing new subparagraph: 

20 ‘‘(F) beginning on October 1, 2020, a 10/ 

21 10 Loan Repayment Plan, with varying annual 

22 repayment amounts based on the discretionary 

23 income of the borrower, in accordance with sec24 tion 493E.’’; and 

25 (B) in paragraph (2)— 


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1 (i) by striking ‘‘may’’ and inserting 

2 ‘‘shall’’; and 

3 (ii) by striking ‘‘(A), (B), or (C)’’ and 

4 inserting ‘‘(F)’’. 

5 (2) EFFECTIVE DATE.—The amendment made 

6 by paragraph (1)(B) shall be effective beginning Oc7 tober 1, 2020. 

8 SEC. 6. IMPROVING AND EXPANDING PUBLIC SERVICE 

9 LOAN FORGIVENESS. 

10 Section 455(m) of the Higher Education Act of 1965 

11 (20 U.S.C. 1087e(m)) is amended— 

12 (1) in paragraph (1), by striking ‘‘120’’ and in13 serting ‘‘60’’ each place it appears; and 

14 (2) in paragraph (3)(B)— 

15 (A) in clause (i), by striking ‘‘or’’ after the 

16 semicolon; 

17 (B) in clause (ii), by striking the period 

18 and inserting ‘‘; or’’; and 

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

20 ‘‘(iii) a full-time job as a primary care 

21 physician in an area or population des22 ignated as a Medically Underserved Area 

23 or Population by the Health Resource and 

24 Services Administration.’’. 


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1 SEC. 7. REFINANCING PRIVATE EDUCATION LOANS FOR 

2 CERTAIN BORROWERS. 

3 (a) CONSOLIDATION FOR CERTAIN BORROWERS.— 

4 Section 455(g) of the Higher Education Act of 1965 (20 

5 U.S.C. 1087e(g)) is amended— 

6 (1) by striking ‘‘A borrower’’ and inserting the 

7 following: 

8 ‘‘(1) IN GENERAL.—A borrower’’; 

9 (2) by inserting ‘‘, and any loan described in 

10 paragraph (2)’’ after ‘‘July 1, 2010’’; and 

11 (3) by adding at the end the following new 

12 paragraph: 

13 ‘‘(2) CONSOLIDATION OF PRIVATE EDUCATION

14 LOANS AS A FEDERAL DIRECT CONSOLIDATION LOAN

15 FOR CERTAIN BORROWERS.— 

16 ‘‘(A) IN GENERAL.—Notwithstanding any 

17 other provision of law, a borrower who meets 

18 the eligibility criteria described in subparagraph 

19 (B) shall be eligible to obtain a Federal Direct 

20 Consolidation loan under this paragraph that— 

21 ‘‘(i) shall include an eligible private 

22 education loan; and 

23 ‘‘(ii) may include a loan described in 

24 section 428C(a)(4). 

25 ‘‘(B) ELIGIBLE BORROWER.—A borrower 

26 of an eligible private education loan is eligible 


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1 to obtain a Federal Direct Consolidation Loan 

2 under this paragraph if the borrower— 

3 ‘‘(i) was eligible to borrow a loan 

4 under section 428H, a Federal Direct Un5 subsidized Stafford Loan, a loan under 

6 section 428B, or a Federal Direct PLUS 

7 loan for a period of enrollment at an insti8 tution of higher education, or, with respect 

9 to a borrower who was enrolled at an insti10 tution of higher education on less than a 

11 half-time basis, would have been eligible to 

12 borrow such a loan for such period of en13 rollment if the borrower had been enrolled 

14 on at least a half-time basis; 

15 ‘‘(ii) borrowed at least one eligible pri16 vate education loan for a period of enroll17 ment described in clause (i); and 

18 ‘‘(iii) has an average adjusted gross 

19 income (based on the borrower’s adjusted 

20 gross income from the 3 most recent cal21 endar years before application for consoli22 dation under this section) that is equal to 

23 or less than the borrower’s total education 

24 debt (determined by calculating the sum of 

25 the borrower’s loans described in section 


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1 428C(a)(4) and eligible private education 

2 loans) at the time of such application. 

3 ‘‘(C) DEFINITION OF ELIGIBLE PRIVATE

4 EDUCATION LOAN.—For purposes of this para5 graph, the term ‘eligible private education loan’ 

6 means a private education loan (as such term 

7 is defined in section 140 of the Truth in Lend8 ing Act (15 U.S.C. 1650)) made on or before 

9 the date of enactment of the Student Loan 

10 Fairness Act, including the amount of out11 standing principal, accrued interest, and related 

12 fees and costs (as determined by the Secretary) 

13 owed by a borrower on such a loan. 

14 ‘‘(D) PURCHASE OF LOAN.—For each eli15 gible private education loan that a borrower is 

16 consolidating under this paragraph, the Sec17 retary shall notify the holder that the Secretary 

18 is purchasing the loan, and the Secretary shall 

19 then purchase such loan, as described under 

20 section 140A of the Truth in Lending Act. 

21 ‘‘(E) TERMS AND RATE OF INTEREST.—A 

22 Federal Direct Consolidation Loan made under 

23 this paragraph shall have the same terms and 

24 conditions as a Federal Direct Consolidation 

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1 cable rate of interest for a Federal Direct Con2 solidation loan made under this paragraph shall 

3 not exceed 3.4 percent. 

4 ‘‘(F) NOTIFICATION OF ELIGIBLE BOR5 ROWERS.—The Secretary shall take such steps 

6 as may be necessary to notify eligible borrowers 

7 of the availability of consolidation under this 

8 paragraph no later than 60 days after the date 

9 of enactment of the Student Loan Fairness Act, 

10 including notifying such borrowers of the dead11 line to apply for such a loan under subpara12 graph (G). 

13 ‘‘(G) APPLICATION DEADLINE FOR LOANS

14 UNDER THIS PARAGRAPH.—A borrower may 

15 apply for loans under this paragraph during the 

16 1-year period beginning on the date of enact17 ment of the Student Loan Fairness Act. The 

18 Secretary shall not make a Federal Direct Con19 solidation Loan under this paragraph to any 

20 borrower who has not submitted an application 

21 for such a loan to the Secretary before the end 

22 of such period. 

23 ‘‘(H) AUTHORIZATION AND APPROPRIA24 TION.—There are authorized to be appro25 priated, and there are appropriated, such sums 


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1 as may be necessary to carry out this para2 graph.’’. 

3 (b) SALE OF PRIVATE EDUCATION LOANS TO THE

4 GOVERNMENT.—Chapter 2 of the Truth in Lending Act 

5 (15 U.S.C. 1631 et seq.) is amended— 

6 (1) by redesignating section 140A as section 

7 140B; and 

8 (2) by inserting after section 140 the following: 

9 ‘‘§ 140A. Sale of private education loans to the Gov10 ernment 

11 ‘‘(a) IN GENERAL.—The Bureau shall issue regula12 tions to require a private education lender to sell an eligi13 ble private education loan to the Secretary of Education, 

14 upon request of the Secretary, for purposes of consoli15 dating such loan, as described under section 455(g)(2) of 

16 the Higher Education Act of 1965. 

17 ‘‘(b) DETERMINATION OF PRICE.—The price paid for 

18 a private education loan under subsection (a) shall— 

19 ‘‘(1) include the amount of outstanding prin20 cipal on the loan, the amount of accrued interest on 

21 the loan, and any fees or other costs owed by the 

22 consumer on the loan; and 

23 ‘‘(2) be adjusted to account for the time value 

24 of such amount. 

25 ‘‘(c) DEFINITIONS.—For purposes of this section: 


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1 ‘‘(1) ELIGIBLE PRIVATE EDUCATION LOAN.— 

2 The term ‘eligible private education loan’ means a 

3 private education loan, as defined under section 

4 140(a), made on or before the date of enactment of 

5 the Student Loan Fairness Act. 

6 ‘‘(2) PRIVATE EDUCATION LENDER.—The term 

7 ‘private education lender’ has the meaning given 

8 such term under section 140(a).’’; and 

9 (3) in the table of contents for such chapter— 

10 (A) by redesignating the item relating to 

11 section 140A as item 140B; and 

12 (B) by inserting after the item relating to 

13 section 140 the following: 

‘‘140A. Sale of private education loans to the Government.’’. 

14 (c) CONFORMING AMENDMENT.—Section 

15 428C(a)(3)(B)(i)(V) of the Higher Education Act of 1965 

16 (20 U.S.C. 1078–3(a)(3)(B)(i)(V)) is amended— 

17 (1) by striking ‘‘or’’ at the end of item (bb); 

18 (2) by striking the period at the end of item 

19 (cc) and inserting ‘‘; or’’; and 

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

21 ‘‘(dd) for the purpose of 

22 consolidating an eligible private 

23 education loan under section 

24 455(g)(2), whether such loan is 

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1 gible private education loans, or 

2 with loans described in para3 graph (4).’’. 

4 SEC. 8. INTEREST-FREE DEFERMENT OF UNSUBSIDIZED 

5 LOANS DURING PERIODS OF UNEMPLOY6 MENT. 

7 (a) FFEL UNSUBSIDIZED LOAN DEFERMENT.— 

8 (1) Section 428H(e)(2) of the Higher Edu9 cation Act of 1965 (20 U.S.C. 1078–8(e)(2)) is 

10 amended— 

11 (A) in subparagraph (A), by striking ‘‘sub12 paragraph (C)’’ and inserting ‘‘subparagraphs 

13 (C) and (D)’’; and 

14 (B) by adding at the end the following: 

15 ‘‘(D) Interest on loans made under this section 

16 for which payments are deferred under clause (ii) of 

17 section 428(b)(1)(M), for a period of deferment 

18 granted to a borrower on or after the date of enact19 ment of the Student Loan Fairness Act, shall accrue 

20 and be paid by the Secretary during any period dur21 ing which loans are so deferred, not in excess of 3 

22 years.’’. 

23 (2) CONFORMING AMENDMENT.—Section 

24 428(b)(1)(Y)(iii) of the Higher Education Act of 

25 1965 (20 U.S.C. 1078(b)(1)(Y)(iii)) is amended by 


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1 inserting ‘‘(other than a deferment under clause (ii) 

2 of such subparagraph on or after the date of enact3 ment of the Student Loan Fairness Act)’’ after ‘‘of 

4 this paragraph’’. 

5 (b) DIRECT UNSUBSIDIZED LOAN DEFERMENT.— 

6 Section 455(f)(1) of the Higher Education Act of 1965 

7 (20 U.S.C. 1087e(f)(1)) is amended— 

8 (1) in subparagraph (A)— 

9 (A) by striking ‘‘or’’ at the end of clause 

10 (i); and 

11 (B) by adding at the end the following: 

12 ‘‘(iii) a Federal Direct Unsubsidized 

13 Stafford Loan, with respect to a period of 

14 deferment described in subparagraph (B) 

15 of paragraph (2) granted to a borrower on 

16 or after the date of enactment of the Stu17 dent Loan Fairness Act; or’’; and 

18 (2) in subparagraph (B), by inserting ‘‘not de19 scribed in subparagraph (A)(iii)’’ after ‘‘Unsub20 sidized Stafford Loan’’. 

21 (c) TREATMENT OF CONSOLIDATION LOANS.—Sec22 tion 428C(b)(4)(C)(ii) of the Higher Education Act of 

23 1965 (20 U.S.C. 1078–3(b)(4)(C)(ii)) is amended— 

24 (1) by striking ‘‘or’’ at the end of subclause 

25 (II); 


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1 (2) by redesignating subclause (III) as sub2 clause (IV); 

3 (3) by inserting after subclause (II) the fol4 lowing: 

5 ‘‘(III) by the Secretary, in the 

6 case of a consolidation loan for which 

7 the application is received on or after 

8 the date of enactment of the Student 

9 Loan Fairness Act, except that the 

10 Secretary shall pay such interest only 

11 for a period not in excess of 3 years 

12 for which the borrower would be eligi13 ble for a deferral under clause (ii) of 

14 section 428(b)(1)(M); or’’; and 

15 (4) in subclause (IV) (as redesignated by para16 graph (2)), by striking ‘‘(I) or (II)’’ and inserting 

17 ‘‘(I), (II), or (III)’’. 

18 (d) INCOME-BASED REPAYMENT.—Section 493C(b) 

19 of the Higher Education Act of 1965 (20 U.S.C. 

20 10983(b))— 

21 (1) in paragraph (3)— 

22 (A) in subparagraph (A), by striking 

23 ‘‘and’’ after the semicolon; 

24 (B) by redesignating subparagraph (B) as 

25 subparagraph (C); 


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1 (C) by inserting after subparagraph (A) 

2 the following: 

3 ‘‘(B) shall, on subsidized and unsubsidized 

4 loans, be paid by the Secretary for a period of 

5 not more than 3 years during which the bor6 rower is eligible for a deferment due to unem7 ployment described in section 455(f)(2)(B) (re8 gardless of whether the student is in such a 

9 deferment), except that— 

10 ‘‘(i) this subparagraph shall only 

11 apply to periods during which the borrower 

12 is eligible for such a deferment on or after 

13 the date of enactment of the Student Loan 

14 Fairness Act; and 

15 ‘‘(ii) in the case of a subsidized loan, 

16 such period shall not include any period 

17 described in subparagraph (A) or any pe18 riod during which the borrower is in 

19 deferment due to an economic hardship de20 scribed in section 435(o); and’’; and 

21 (D) in subparagraph (C) (as so redesig22 nated by subparagraph (B))— 

23 (i) in clause (i), by striking ‘‘subpara24 graph (A)’’ and inserting ‘‘subparagraphs 

25 (A) and (B)’’; and 


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1 (ii) in clause (ii), by inserting ‘‘, sub2 ject to subparagraph (B),’’ after ‘‘unsub3 sidized loan’’; 

4 (2) by striking ‘‘and’’ at the end of paragraph 

5 (8); 

6 (3) by striking the period at the end of para7 graph (9) and inserting ‘‘; and’’; and 

8 (4) by adding at the end the following new 

9 paragraph: 

10 ‘‘(10) the amount of the principal and interest 

11 on a borrower’s loans repaid or canceled under para12 graph (7) shall not be included in the gross income 

13 of the borrower for purposes of the Internal Revenue 

14 Code of 1986.’’. 

15 SEC. 9. EXCLUDING LOANS FORGIVEN UNDER CERTAIN RE16 PAYMENT PROGRAMS FROM GROSS INCOME. 

17 Section 455(e)(2) of the Higher Education Act of 

18 1965 (20 U.S.C. 1087e(e)(2)) is amended— 

19 (1) in the paragraph heading, by inserting 

20 ‘‘AND FORGIVENESS’’ after ‘‘REPAYMENT’’; and 

21 (2) by adding at the end the following: ‘‘The 

22 amount of the principal and interest on a borrower’s 

23 loans forgiven pursuant to income contingent repay24 ment shall not be included in the gross income of 


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25 

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1 the borrower for purposes of the Internal Revenue 

2 Code of 1986.’’. 

Æ 


kjohnson on DSK79L0C42 with BILLS