I 

114TH CONGRESS 

2D SESSION H. R. 5487 

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 15, 2016 

Ms. BASS introduced the following bill; which was referred to the Committee 

on Education and the Workforce, 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. 

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


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1 SECTION 1. SHORT TITLE. 

2 This Act may be cited as the ‘‘Student Loan Fairness 

3 Act’’. 

4 SEC. 2. FINDINGS. 

5 Congress finds the following: 

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

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

8 (2) The Federal Government has a vested inter9 est in ensuring access to higher education. 

10 (3) Higher education should be viewed as a 

11 public good benefiting our country rather than as a 

12 commodity solely benefiting individual students. 

13 (4) Recently, total outstanding student loan 

14 debt officially surpassed total credit card debt in the 

15 United States in 2015, and is on track to exceed 

16 $1,230,000,000,000. 

17 (5) Excessive student loan debt is impeding eco18 nomic growth in the United States. Faced with ex19 cessive repayment burdens, many individuals are un20 able to start businesses, invest, or buy homes. Re21 lieving student loan debt would give these individuals 

22 greater control over their earnings and would in23 crease entrepreneurship and demand for goods and 

24 services. 

25 (6) Because of soaring tuition costs, students 

26 often have no choice but to amass significant debt 


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1 to obtain an education that is widely considered a 

2 prerequisite for earning a living wage. 

3 (7) Amidst rising tuition rates and stagnant 

4 grant funding, many students are forced to supple5 ment Federal loans with private loans, which fre6 quently feature higher interest rates with fewer con7 sumer protections. 

8 (8) A borrower who experiences an extended 

9 hardship for whatever reason, or a borrower who ex10 periences a series of separate hardships over a 

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

12 to default on his or her private student loans. Op13 portunities to put such private loans into forbear14 ance are limited. 

15 (9) During the period of forbearance on private 

16 student loans, interest continues to accrue and is 

17 capitalized, and once the borrower comes out of for18 bearance, he or she owes significantly more on the 

19 principal of the loan than before the hardship period 

20 began. 

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

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

23 1965 is amended by adding at the end the following: 

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

25 ‘‘(a) 10/10 LOAN REPAYMENT PLAN.— 


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1 ‘‘(1) 10/10 LOAN REPAYMENT PLAN AUTHOR2 IZED.—Notwithstanding any other provision of this 

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

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

5 which— 

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

7 eligible under paragraph (3) may elect to have 

8 the borrower’s aggregate monthly payment for 

9 all such loans not exceed the monthly payment 

10 amount described in paragraph (2); 

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

12 a monthly payment under this subsection— 

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

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

15 amount equal to 10 percent of the original 

16 principal amount of all the eligible loans 

17 that the borrower is repaying under this 

18 subsection; 

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

20 a monthly payment under this subsection shall 

21 be deferred, and shall be forgiven in accordance 

22 with subsection (b) if the borrower meets the 

23 requirements for forgiveness under such sub24 section; 


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

2 makes monthly payments under this subsection 

3 may exceed 10 years; 

4 ‘‘(E) a borrower who is repaying an eligi5 ble loan pursuant to 10/10 Loan Repayment 

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

7 terminate repayment pursuant to 10/10 Loan 

8 Repayment and repay such loan under the 

9 standard repayment plan, in which case the 

10 amount of time the borrower is permitted to 

11 repay such loans may exceed 10 years; and 

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

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

14 when calculated for a loan in repayment under 

15 this section, shall be calculated on the principal 

16 balance of the loan and on any accrued interest 

17 unpaid by the borrower in accordance with this 

18 section. 

19 ‘‘(2) 10/10 LOAN REPAYMENT MONTHLY PAY20 MENT FORMULA.—A borrower who has elected to 

21 participate in the 10/10 Loan Repayment Plan 

22 under this subsection shall, during each month the 

23 borrower is participating in such Plan, make a 

24 monthly payment in an amount equal to— 


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

2 percent of the result obtained by calculating, on 

3 at least an annual basis, the amount by 

4 which— 

5 ‘‘(i) the borrower’s, and the bor6 rower’s spouse’s (if applicable), adjusted 

7 gross income; exceeds 

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

9 applicable to the borrower’s family size as 

10 determined under section 673(2) of the 

11 Community Services Block Grant Act (42 

12 U.S.C. 9902(2)); or 

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

14 deferment due to an economic hardship de15 scribed in section 435(o), $0. 

16 ‘‘(3) ELIGIBILITY.—The Secretary shall estab17 lish procedures for annually determining the bor18 rower’s eligibility for 10/10 Loan Repayment, includ19 ing verification of a borrower’s annual adjusted 

20 gross income and the annual amount due on the 

21 total amount of eligible loans, and such other proce22 dures as are necessary to effectively implement 10/ 

23 10 Loan Repayment under this subsection. 

24 ‘‘(4) SPECIAL RULE FOR MARRIED BORROWERS

25 FILING SEPARATELY.—In the case of a married borVerDate Sep 11 2014 02:55 Jun 16, 2016 Jkt 059200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H5487.IH H5487

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1 rower who files a separate Federal income tax re2 turn, the Secretary shall calculate the amount of the 

3 borrower’s 10/10 Loan Repayment under this sub4 section solely on the basis of the borrower’s student 

5 loan debt and adjusted gross income. 

6 ‘‘(b) 10/10 LOAN FORGIVENESS.— 

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

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

9 Forgiveness Program’) to forgive a qualified loan 

10 amount, in accordance with paragraph (3), on an eli11 gible loan for a borrower who, after the date that is 

12 10 years prior to the date of enactment of the Stu13 dent Loan Fairness Act, has made 120 monthly pay14 ments on the eligible loan pursuant to any one or a 

15 combination of the following: 

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

17 Loan Repayment Plan under subsection (a). 

18 ‘‘(B) Monthly payment under any other re19 payment plan authorized under part B or D of 

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

21 than the monthly payment amount calculated 

22 under subsection (a) that the borrower would 

23 have owed in the year in which such payment 

24 was made, based on the borrower’s adjusted 


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1 gross income and eligible loan balance for such 

2 year. 

3 ‘‘(C) For any month after such date dur4 ing which the borrower is in deferment due to 

5 an economic hardship described in section 

6 435(o), monthly payment of $0. 

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

8 provide loan forgiveness under paragraph (1), the 

9 Secretary is authorized to carry out a program— 

10 ‘‘(A) through the holder of the loan, to as11 sume the obligation to repay a qualified loan 

12 amount for a loan made, insured, or guaranteed 

13 under part B of this title; and 

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

15 a loan made under part D of this title. 

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

17 borrower has made 120 monthly payments described 

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

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

20 after the date of enactment of the Student 

21 Loan Fairness Act, the sum of— 

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

23 due on the borrower’s eligible loans as of 

24 the time of such forgiveness, not to exceed 

25 $45,520; and 


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

2 accrued on the balance described in clause 

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

4 ‘‘(B) with respect to any other eligible bor5 rower, the balance of principal, interest, and 

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

7 the time of such forgiveness. 

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

9 The amount of a borrower’s eligible loans forgiven 

10 under this section shall not be included in the gross 

11 income of the borrower for purposes of the Internal 

12 Revenue Code of 1986. 

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

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

15 Repayment Plan under subsection (a), or who is request16 ing forgiveness under the 10/10 Loan Forgiveness Pro17 gram under subsection (b), shall provide to the Secretary 

18 such information and documentation as the Secretary de19 termines, by regulation, to be necessary to verify the bor20 rower’s adjusted gross income and payment amounts 

21 made on eligible loans of the borrower for the purposes 

22 of such Plan or Program. 

23 ‘‘(d) DEFINITION OF ELIGIBLE LOAN.—In this sec24 tion the term ‘eligible loan’ means any loan made, insured, 

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


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1 SEC. 4. CAPPING INTEREST RATES FOR ALL FEDERAL DI2 RECT LOANS. 

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

4 (20 U.S.C. 1087e(b)) is amended— 

5 (1) by redesignating paragraphs (8) and (9) as 

6 paragraphs (9) and (10), respectively; and 

7 (2) by inserting after paragraph (7) the fol8 lowing: 

9 ‘‘(8) RATE OF INTEREST FOR ALL NEW FED10 ERAL DIRECT LOANS.—Notwithstanding any other 

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

12 this part for which the first disbursement of prin13 cipal is made (or in the case of a Federal Direct 

14 Consolidation Loan, for which the application is re15 ceived) on or after October 1, 2016, or the date of 

16 enactment of the Student Loan Fairness Act, which17 ever is later, the applicable rate of interest shall not 

18 exceed 3.4 percent.’’. 

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

20 BY THE SECRETARY. 

21 (a) FFEL LOANS.— 

22 (1) IN GENERAL.—Section 428(b) of the High23 er Education Act of 1965 (20 U.S.C. 1078(b)(9)) is 

24 amended— 

25 (A) in subparagraph (A)— 


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

2 clause (iv); 

3 (ii) in clause (v), by striking the pe4 riod at the end and inserting ‘‘; and’’; and 

5 (iii) by adding at the end the fol6 lowing new clause: 

7 ‘‘(vi) beginning October 1, 2016, a 

8 10/10 Loan Repayment Plan, with varying 

9 annual repayment amounts based on the 

10 discretionary income of the borrower, in 

11 accordance with section 493E.’’; and 

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

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

14 (2) EFFECTIVE DATE.—The amendment made 

15 by paragraph (1)(B) shall be effective beginning Oc16 tober 1, 2016. 

17 (b) DIRECT LOANS.— 

18 (1) IN GENERAL.—Section 455(d) of the High19 er Education Act of 1965 (20 U.S.C. 1087e(d)) is 

20 amended— 

21 (A) in paragraph (1)— 

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

23 subparagraph (D); 


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

2 the period at the end and inserting a semi3 colon; and 

4 (iii) by adding at the end the fol5 lowing new subparagraph: 

6 ‘‘(F) beginning on October 1, 2016, a 10/ 

7 10 Loan Repayment Plan, with varying annual 

8 repayment amounts based on the discretionary 

9 income of the borrower, in accordance with sec10 tion 493E.’’; and 

11 (B) in paragraph (2)— 

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

13 ‘‘shall’’; and 

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

15 inserting ‘‘(F)’’. 

16 (2) EFFECTIVE DATE.—The amendment made 

17 by paragraph (1)(B) shall be effective beginning Oc18 tober 1, 2016. 

19 SEC. 6. IMPROVING AND EXPANDING PUBLIC SERVICE 

20 LOAN FORGIVENESS. 

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

22 (20 U.S.C. 1087e(m)) is amended— 

23 (1) in paragraph (1), by striking ‘‘120’’ and in24 serting ‘‘60’’ each place it appears; and 

25 (2) in paragraph (3)(B)— 


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

2 semicolon; 

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

4 and inserting ‘‘; or’’; and 

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

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

7 physician in an area or population des8 ignated as a Medically Underserved Area 

9 or Population by the Health Resources and 

10 Services Administration.’’. 

11 SEC. 7. REFINANCING PRIVATE EDUCATION LOANS FOR 

12 CERTAIN BORROWERS. 

13 (a) CONSOLIDATION FOR CERTAIN BORROWERS.— 

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

15 U.S.C. 1087e(g)) is amended— 

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

17 following: 

18 ‘‘(1) IN GENERAL.—A borrower’’; 

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

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

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

22 paragraph: 

23 ‘‘(2) CONSOLIDATION OF PRIVATE EDUCATION

24 LOANS AS A FEDERAL DIRECT CONSOLIDATION LOAN

25 FOR CERTAIN BORROWERS.— 


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

2 other provision of law, a borrower who meets 

3 the eligibility criteria described in subparagraph 

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

5 Consolidation loan under this paragraph that— 

6 ‘‘(i) shall include an eligible private 

7 education loan; and 

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

9 section 428C(a)(4). 

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

11 of an eligible private education loan is eligible 

12 to obtain a Federal Direct Consolidation Loan 

13 under this paragraph if the borrower— 

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

15 under section 428H, a Federal Direct Un16 subsidized Stafford Loan, a loan under 

17 section 428B, or a Federal Direct PLUS 

18 loan for a period of enrollment at an insti19 tution of higher education, or, with respect 

20 to a borrower who was enrolled at an insti21 tution of higher education on less than a 

22 half-time basis, would have been eligible to 

23 borrow such a loan for such period of en24 rollment if the borrower had been enrolled 

25 on at least a half-time basis; 


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1 ‘‘(ii) borrowed at least one eligible pri2 vate education loan for a period of enroll3 ment described in clause (i); and 

4 ‘‘(iii) has an average adjusted gross 

5 income (based on the borrower’s adjusted 

6 gross income from the 3 most recent cal7 endar years before application for consoli8 dation under this section) that is equal to 

9 or less than the borrower’s total education 

10 debt (determined by calculating the sum of 

11 the borrower’s loans described in section 

12 428C(a)(4) and eligible private education 

13 loans) at the time of such application. 

14 ‘‘(C) DEFINITION OF ELIGIBLE PRIVATE

15 EDUCATION LOAN.—For purposes of this para16 graph, the term ‘eligible private education loan’ 

17 means a private education loan (as such term 

18 is defined in section 140 of the Truth in Lend19 ing Act (15 U.S.C. 1650)) made on or before 

20 the date of enactment of the Student Loan 

21 Fairness Act, including the amount of out22 standing principal, accrued interest, and related 

23 fees and costs (as determined by the Secretary) 

24 owed by a borrower on such a loan. 


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1 ‘‘(D) PURCHASE OF LOAN.—For each eli2 gible private education loan that a borrower is 

3 consolidating under this paragraph, the Sec4 retary shall notify the holder that the Secretary 

5 is purchasing the loan, and the Secretary shall 

6 then purchase such loan, as described under 

7 section 140A of the Truth in Lending Act. 

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

9 Federal Direct Consolidation Loan made under 

10 this paragraph shall have the same terms and 

11 conditions as a Federal Direct Consolidation 

12 loan under paragraph (1), except that the appli13 cable rate of interest for a Federal Direct Con14 solidation loan made under this paragraph shall 

15 not exceed 3.4 percent. 

16 ‘‘(F) NOTIFICATION OF ELIGIBLE BOR17 ROWERS.—The Secretary shall take such steps 

18 as may be necessary to notify eligible borrowers 

19 of the availability of consolidation under this 

20 paragraph no later than 60 days after the date 

21 of enactment of the Student Loan Fairness Act, 

22 including notifying such borrowers of the dead23 line to apply for such a loan under subpara24 graph (G). 


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1 ‘‘(G) APPLICATION DEADLINE FOR LOANS

2 UNDER THIS PARAGRAPH.—A borrower may 

3 apply for loans under this paragraph during the 

4 1-year period beginning on the date of enact5 ment of the Student Loan Fairness Act. The 

6 Secretary shall not make a Federal Direct Con7 solidation Loan under this paragraph to any 

8 borrower who has not submitted an application 

9 for such a loan to the Secretary before the end 

10 of such period. 

11 ‘‘(H) AUTHORIZATION AND APPROPRIA12 TION.—There are authorized to be appro13 priated, and there are appropriated, such sums 

14 as may be necessary to carry out this para15 graph.’’. 

16 (b) SALE OF PRIVATE EDUCATION LOANS TO THE

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

18 (15 U.S.C. 1631 et seq.) is amended— 

19 (1) by redesignating section 140A as section 

20 140B; 

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

22 ‘‘§ 140A. Sale of private education loans to the Gov23 ernment 

24 ‘‘(a) IN GENERAL.—The Bureau shall issue regula25 tions to require a private education lender to sell an eligiVerDate Sep 11 2014 02:55 Jun 16, 2016 Jkt 059200 PO 00000 Frm 00017 Fmt 6652 Sfmt 6201 E:\BILLS\H5487.IH H5487

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1 ble private education loan to the Secretary of Education, 

2 upon request of the Secretary, for purposes of consoli3 dating such loan, as described under section 455(g)(2) of 

4 the Higher Education Act of 1965. 

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

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

7 ‘‘(1) include the amount of outstanding prin8 cipal on the loan, the amount of accrued interest on 

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

10 consumer on the loan; and 

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

12 of such amount. 

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

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

15 The term ‘eligible private education loan’ means a 

16 private education loan, as defined under section 

17 140(a), made on or before the date of enactment of 

18 the Student Loan Fairness Act. 

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

20 ‘private education lender’ has the meaning given 

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

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

23 (A) by redesignating the item relating to 

24 section 140A as item 140B; and 


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1 (B) by inserting after the item relating to 

2 section 140 the following: 

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

3 (c) CONFORMING AMENDMENT.—Section 

4 428C(a)(3)(B)(i)(V) of the Higher Education Act of 1965 

5 (20 U.S.C. 1078–3(a)(3)(B)(i)(V)) is amended— 

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

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

8 (cc) and inserting ‘‘; or’’; and 

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

10 ‘‘(dd) for the purpose of 

11 consolidating an eligible private 

12 education loan under section 

13 455(g)(2), whether such loan is 

14 consolidated alone, with other eli15 gible private education loans, or 

16 with loans described in para17 graph (4).’’. 

18 SEC. 8. INTEREST-FREE DEFERMENT OF UNSUBSIDIZED 

19 LOANS DURING PERIODS OF UNEMPLOY20 MENT. 

21 (a) FFEL UNSUBSIDIZED LOAN DEFERMENT.— 

22 (1) Section 428H(e)(2) of the Higher Edu23 cation Act of 1965 (20 U.S.C. 1078–8(e)(2)) is 

24 amended— 


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1 (A) in subparagraph (A), by inserting ‘‘Ex2 cept as provided in subparagraph (C),’’ before 

3 ‘‘Interest on’’; and 

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

5 ‘‘(C) Interest on loans made under this section 

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

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

8 granted to a borrower on or after the date of enact9 ment of the Student Loan Fairness Act, shall accrue 

10 and be paid by the Secretary during any period dur11 ing which loans are so deferred, not in excess of 3 

12 years.’’. 

13 (2) CONFORMING AMENDMENT.—Section 

14 428(b)(1)(Y)(iii) of the Higher Education Act of 

15 1965 (20 U.S.C. 1078(b)(1)(Y)(iii)) is amended by 

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

17 of such subparagraph on or after the date of enact18 ment of the Student Loan Fairness Act)’’ after ‘‘of 

19 this paragraph’’. 

20 (b) DIRECT UNSUBSIDIZED LOAN DEFERMENT.— 

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

22 (20 U.S.C. 1087e(f)(1)) is amended— 

23 (1) in subparagraph (A)— 

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

25 (i); and 


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

2 ‘‘(iii) a Federal Direct Unsubsidized 

3 Stafford Loan, with respect to a period of 

4 deferment described in subparagraph (B) 

5 of paragraph (2) granted to a borrower on 

6 or after the date of enactment of the Stu7 dent Loan Fairness Act; or’’; and 

8 (2) in subparagraph (B), by inserting ‘‘not de9 scribed in subparagraph (A)(iii)’’ after ‘‘Unsub10 sidized Stafford Loan’’. 

11 (c) TREATMENT OF CONSOLIDATION LOANS.—Sec12 tion 428C(b)(4)(C)(ii) of the Higher Education Act of 

13 1965 (20 U.S.C. 1078–3(b)(4)(C)(ii)) is amended— 

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

15 (II); 

16 (2) by redesignating subclause (III) as sub17 clause (IV); 

18 (3) by inserting after subclause (II) the fol19 lowing: 

20 ‘‘(III) by the Secretary, in the 

21 case of a consolidation loan for which 

22 the application is received on or after 

23 the date of enactment of the Student 

24 Loan Fairness Act, except that the 

25 Secretary shall pay such interest only 


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1 for a period not in excess of 3 years 

2 for which the borrower would be eligi3 ble for a deferral under clause (ii) of 

4 section 428(b)(1)(M); or’’; and 

5 (4) in subclause (IV) (as so redesignated by 

6 this subsection), by striking ‘‘(I) or (II)’’ and insert7 ing ‘‘(I), (II), or (III)’’. 

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

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

10 10983(b)) is amended— 

11 (1) in paragraph (3)— 

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

13 ‘‘and’’ after the semicolon; 

14 (B) by redesignating subparagraph (B) as 

15 subparagraph (C); 

16 (C) by inserting after subparagraph (A) 

17 the following: 

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

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

20 not more than 3 years during which the bor21 rower is eligible for a deferment due to unem22 ployment described in section 455(f)(2)(B) (re23 gardless of whether the student is in such a 

24 deferment), except that— 


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1 ‘‘(i) this subparagraph shall only 

2 apply to periods during which the borrower 

3 is eligible for a such deferment on or after 

4 the date of enactment of the Student Loan 

5 Fairness Act; and 

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

7 such period shall not include any period 

8 described in subparagraph (A) or any pe9 riod during which the borrower is in 

10 deferment due to an economic hardship de11 scribed in section 435(o); and’’; 

12 (D) in subparagraph (C) (as so redesig13 nated by paragraph (2))— 

14 (i) in clause (i), by striking ‘‘subpara15 graph (A)’’ and inserting ‘‘subparagraphs 

16 (A) and (B)’’; and 

17 (ii) in clause (ii), by inserting ‘‘, sub18 ject to subparagraph (B),’’ after ‘‘unsub19 sidized loan’’; 

20 (E) by striking ‘‘and’’ at the end of para21 graph (8); 

22 (F) by striking the period at the end of 

23 paragraph (9) and inserting a semicolon; and 

24 (G) by adding at the end the following new 

25 paragraph: 


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

2 on a borrower’s loans repaid or canceled under para3 graph (7) shall not be included in the gross income 

4 of the borrower for purposes of the Internal Revenue 

5 Code of 1986.’’. 

6 SEC. 9. EXCLUDING LOANS FORGIVEN UNDER CERTAIN RE7 PAYMENT PROGRAMS FROM GROSS INCOME. 

8 (a) INCOME-CONTINGENT REPAYMENT.—Section 

9 455(e)(2) of the Higher Education Act of 1965 (20 U.S.C. 

10 1087e(e)(2)) is amended— 

11 (1) in the subsection heading, by inserting 

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

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

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

15 loans forgiven pursuant to income contingent repay16 ment shall not be included in the gross income of 

17 the borrower for purposes of the Internal Revenue 

18 Code of 1986.’’. 

19 (b) PAY AS YOU EARN REPAYMENT; REVISE PAY AS

20 YOU EARN REPAYMENT.—The amount of the principal 

21 and interest on a borrower’s loans forgiven pursuant to 

22 the income-contingent repayment plan based on the Pay 

23 As You Earn repayment plan described in section 685.209 

24 of title 34, Code of Federal Regulations (or the successor 

25 regulations), or the income-contingent repayment based on 


smartinez on DSK3GLQ082PROD with BILLS
25 

•HR 5487 IH

1 the Revised Pay As You Earn repayment plan described 

2 in sections 685.208 and 685.209 of title 34, Code of Fed3 eral Regulations, as amended the final regulations pub4 lished by the Department of Education in the Federal 

5 Register on October 30, 2015 (80 Fed. Reg. 67203 et 

6 seq.), shall not be included in the gross income of the bor7 rower for purposes of the Internal Revenue Code of 1986. 

Æ 


smartinez on DSK3GLQ082PROD with BILLS