I 

116TH CONGRESS 

1ST SESSION H. R. 231 

To amend the Higher Education Act of 1965 to provide loan deferment 

and loan cancellation for founders and employees of small business startups, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 3, 2019 

Ms. VELA ́ZQUEZ (for herself and Mr. SERRANO) introduced the following bill; 

which was referred to the Committee on Education and Labor, and in 

addition to the Committees on Ways and Means, and Small Business, 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 amend the Higher Education Act of 1965 to provide 

loan deferment and loan cancellation for founders and 

employees of small business start-ups, and for other purposes. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Supporting America’s 

5 Young Entrepreneurs Act of 2019’’. 


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1 SEC. 2. SMALL BUSINESS START-UP EMPLOYEE LOAN 

2 DEFERMENT AND CANCELLATION. 

3 (a) DEFERMENT.—Section 455(f) of the Higher Edu4 cation Act of 1965 (20 U.S.C. 1087e(f)) is amended— 

5 (1) in paragraph (1), by striking ‘‘A borrower 

6 of a loan’’ and inserting ‘‘Except as provided in 

7 paragraph (5), a borrower of a loan’’; and 

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

9 ‘‘(5) NO INTEREST DEFERMENT ELIGIBILITY

10 FOR FOUNDERS OF SMALL BUSINESS START-UPS.— 

11 A borrower of a loan made under this part shall be 

12 eligible for a deferment, during which periodic in13 stallments of principal and interest need not be paid, 

14 during any period not in excess of 3 years during 

15 which the borrower is employed as a founder of a 

16 small business start-up (as defined in subsection 

17 (r)(3)).’’. 

18 (b) LOAN CANCELLATION.—Section 455 of the High19 er Education Act of 1965 (20 U.S.C. 1087e) is amended 

20 by adding at the end the following: 

21 ‘‘(r) LOAN CANCELLATION FOR CERTAIN SMALL

22 BUSINESS START-UP EMPLOYEES.— 

23 ‘‘(1) FOUNDER OF A SMALL BUSINESS START24 UP IN A DISTRESSED AREA.— 

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

26 cancel $20,000 of the balance of interest and 


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1 principal due, in accordance with subparagraph 

2 (B), on any eligible Federal Direct Loan not in 

3 default for a borrower who— 

4 ‘‘(i) has made 24 monthly payments 

5 on the eligible Federal Direct Loan after 

6 the date of the enactment of this sub7 section pursuant to any one or a combina8 tion of payments under a repayment plan 

9 under subsection (d)(1) or (g); 

10 ‘‘(ii) has been employed as a founder 

11 of a small business start-up in a distressed 

12 area during the period in which the bor13 rower makes each of the 24 payments; 

14 ‘‘(iii) is employed as a founder of a 

15 small business start-up in a distressed area 

16 at the time of such cancellation; and 

17 ‘‘(iv) is approved for loan cancellation 

18 by the young entrepreneurs business center 

19 under section 47 of the Small Business Act 

20 (16 U.S.C. 631 et seq.). 

21 ‘‘(B) LOAN CANCELLATION AMOUNT.— 

22 ‘‘(i) IN GENERAL.—After the conclu23 sion of the employment period described in 

24 subparagraph (A), the Secretary shall can25 cel the obligation to repay $20,000 of the 


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1 balance of interest and principal due as of 

2 the time of such cancellation, on the eligi3 ble Federal Direct Loans made to the bor4 rower under this part. 

5 ‘‘(ii) LIMITATION.—A borrower may 

6 not receive an aggregate amount of more 

7 than $20,000 under this subparagraph. 

8 ‘‘(C) INELIGIBILITY FOR DOUBLE BENE9 FITS.—No borrower may, for the same service, 

10 receive a reduction of loan obligations under 

11 both this paragraph and— 

12 ‘‘(i) paragraph (2); 

13 ‘‘(ii) subsection (m); or 

14 ‘‘(iii) section 428J, 428K, 428L, or 

15 460. 

16 ‘‘(2) EMPLOYEE OF A SMALL BUSINESS START17 UP.— 

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

19 cancel $3,000 of the balance of interest and 

20 principal due, in accordance with subparagraph 

21 (B), on any eligible Federal Direct Loan not in 

22 default for a borrower who— 

23 ‘‘(i) has made 12 monthly payments 

24 on the eligible Federal Direct Loan after 

25 the date of the enactment of this subVerDate Sep 11 2014 21:42 Jan 16, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H231.IH H231

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1 section pursuant to any one or a combina2 tion of payments under a repayment plan 

3 under subsection (d)(1) or (g); 

4 ‘‘(ii) has been employed in a small 

5 business start-up job during the period in 

6 which the borrower makes each of the 12 

7 payments; and 

8 ‘‘(iii) is employed in a small business 

9 start-up job at the time of such cancella10 tion. 

11 ‘‘(B) LOAN CANCELLATION AMOUNT.— 

12 ‘‘(i) IN GENERAL.—After the conclu13 sion of the employment period described in 

14 subparagraph (A), the Secretary shall can15 cel the obligation to repay $3,000 of the 

16 balance of interest and principal due as of 

17 the time of such cancellation, on the eligi18 ble Federal Direct Loans made to the bor19 rower under this part. 

20 ‘‘(ii) LIMITATION.—A borrower may 

21 not receive an aggregate amount of more 

22 than $15,000 under this subparagraph. 

23 ‘‘(C) INELIGIBILITY FOR DOUBLE BENE24 FITS.—No borrower may, for the same service, 


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1 receive a reduction of loan obligations under 

2 both this paragraph and— 

3 ‘‘(i) paragraph (1); 

4 ‘‘(ii) subsection (m); or 

5 ‘‘(iii) section 428J, 428K, 428L, or 

6 460. 

7 ‘‘(3) DEFINITIONS.—In this subsection: 

8 ‘‘(A) DISTRESSED AREA.—The term ‘dis9 tressed area’ means an area identified under 

10 section 49 of the Small Business Act. 

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

12 The term ‘eligible Federal Direct Loan’ means 

13 a Federal Direct Stafford Loan, Federal Direct 

14 PLUS Loan, or Federal Direct Unsubsidized 

15 Stafford Loan, or a Federal Direct Consolida16 tion Loan. 

17 ‘‘(C) FOUNDER.—The term ‘founder’ shall 

18 have the meaning given such term by the Ad19 ministrator of the Small Business Administra20 tion under this paragraph. 

21 ‘‘(D) SMALL BUSINESS START-UP.—The 

22 term ‘small business start-up’ means a business 

23 that is certified by the young entrepreneurs 

24 business center under section 49 of the Small 

25 Business Act. 


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1 ‘‘(E) SMALL BUSINESS START-UP JOB.— 

2 The term ‘small business start-up job’ means a 

3 full-time job as an employee of a small business 

4 start-up.’’. 

5 SEC. 3. YOUNG ENTREPRENEURS BUSINESS CENTER. 

6 The Small Business Act (15 U.S.C. 631 et seq.) is 

7 amended— 

8 (1) by redesignating section 49 as section 50; 

9 and 

10 (2) by inserting after section 48 the following 

11 new section: 

12 ‘‘SEC. 49. YOUNG ENTREPRENEURS BUSINESS CENTER. 

13 ‘‘(a) ESTABLISHMENT.—There is established within 

14 the Administration a young entrepreneurs business center 

15 that shall, for purposes of loan cancellation for start-up 

16 employees established under subsection (r) of section 455 

17 of the Higher Education Act of 1965— 

18 ‘‘(1) certify small business start-ups under sub19 section (b); 

20 ‘‘(2) identify distressed areas under subsection 

21 (c); and 

22 ‘‘(3) approve loan cancellation for founders of 

23 small business start-ups in distressed areas under 

24 subsection (d). 

25 ‘‘(b) CERTIFICATION.— 


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1 ‘‘(1) APPLICATION.—To be certified by the 

2 young entrepreneurs business center, a small busi3 ness start-up shall submit an application to the Ad4 ministrator that includes— 

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

6 business start-up; and 

7 ‘‘(B) the number of employees the small 

8 business start-up intends to employ on a yearly 

9 basis. 

10 ‘‘(2) REQUIREMENTS.—The young entre11 preneurs business center may not certify a small 

12 business start-up unless such small business start13 up, on the date the application is submitted under 

14 paragraph (1)— 

15 ‘‘(A) has a founder who is a recent grad16 uate of a 4-year institution of higher education; 

17 ‘‘(B) is a start-up for which at least 50 

18 percent of the employees of the start-up are re19 cent graduates of such an institution. 

20 ‘‘(c) DISTRESSED AREA.— 

21 ‘‘(1) IN GENERAL.—Not less than once every 3 

22 years after the date of the enactment of this section, 

23 the young entrepreneurs business center shall iden24 tify and make publically available on the website of 

25 the Administration a list of distressed areas. 


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1 ‘‘(2) REQUIREMENTS.—A distressed area iden2 tified under paragraph (1) shall be a county or 

3 equivalent division of local government of a State in 

4 which the small business concern is located— 

5 ‘‘(A) that has, for the most recent 24- 

6 month period for which statistics are avail7 able— 

8 ‘‘(i) a per capita income of 80 percent 

9 or less of the national average; or 

10 ‘‘(ii) an unemployment rate that is 1 

11 percent greater than the national average; 

12 and 

13 ‘‘(B) for which the young entrepreneurs 

14 business center determines would economically 

15 benefit from having small business start-ups es16 tablished in such area. 

17 ‘‘(d) LOAN CANCELLATION FOR FOUNDERS OF A

18 SMALL BUSINESS START-UP IN A DISTRESSED AREA.— 

19 For purposes of loan cancellation under subsection (r)(1) 

20 of section 455 of the Higher Education Act of 1965, the 

21 young entrepreneurs business center shall approve a 

22 founder of a small business start-up in a distressed area 

23 if such founder— 

24 ‘‘(1) established a small business start-up 

25 that— 


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1 ‘‘(A) on the date such small business start2 up was established, was located in a distressed 

3 area identified by the young entrepreneurs busi4 ness center under subsection (c) not more than 

5 3 years before such date of establishment; 

6 ‘‘(B) was certified under subsection (b); 

7 and 

8 ‘‘(C) on the date of approval under this 

9 subsection, has been operating continuously for 

10 not less than 5 years; and 

11 ‘‘(2) was employed as a founder of a small busi12 ness start-up in a distressed area during the period 

13 in which such founder made the 24 payments de14 scribed in subsection (r)(1)(A) of such section 455. 

15 ‘‘(e) DEFINITIONS.—In this section: 

16 ‘‘(1) INSTITUTION OF HIGHER EDUCATION.— 

17 The term ‘institution of higher education’ has the 

18 meaning given such term in section 102 of the High19 er Education Act (20 U.S.C. 1002). 

20 ‘‘(2) SMALL BUSINESS START-UP.—The term 

21 ‘small business start-up’ means a small business 

22 concern that— 

23 ‘‘(A) is not yet in existence; or 

24 ‘‘(B) has been in existence for not more 

25 than 3 years.’’. 


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1 SEC. 4. TREATMENT OF LOAN CANCELLATION. 

2 (a) IN GENERAL.—Section 108(f) of the Internal 

3 Revenue Code of 1986 is amended by adding at the end 

4 the following new paragraph: 

5 ‘‘(5) CANCELLATION OF CERTAIN FEDERAL

6 STUDENT LOANS.—In the case of an individual, 

7 gross income shall not include the discharge (in 

8 whole or in part) of any student loan pursuant to 

9 the cancellation (in whole or in part) of such loan 

10 by the Secretary of Education under subsection (r) 

11 of section 455 of the Higher Education Act of 1965 

12 (20 U.S.C. 1087e).’’. 

13 (b) EFFECTIVE DATE.—The amendment made by 

14 this section shall apply to discharges of indebtedness oc15 curring after the date of the enactment of this Act. 

Æ 


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