I 

116TH CONGRESS 

1ST SESSION H. R. 4603 

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

loan reform. 

IN THE HOUSE OF REPRESENTATIVES 

OCTOBER 4, 2019 

Mr. CARBAJAL (for himself and Ms. JACKSON LEE) introduced the following 

bill; which was referred to the Committee on Education and Labor, and 

in addition to the Committee on 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 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 2019’’ or the ‘‘LOAN Act 

6 of 2019’’. 


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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 2021, the Secretary shall make loans under this 

12 part in accordance with this subsection. 

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

14 2021, 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, 2021; 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, 2021, 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 2021, 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 25 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, 25 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, 25 

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, 38 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 2019, 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 of the gross income of the 

22 borrower for the taxable year that ex23 ceeds $10,000 (adjusted each year to 

24 reflect changes in the Consumer Price 

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1 lished by the Bureau of Labor Statis2 tics for the Department of Labor for 

3 the most recent 12-month period for 

4 which such data are available). 

5 ‘‘(D) METHODOLOGY OF PAYMENT.—The 

6 Secretary shall establish an amortization sched7 ule for the repayment of financing fees charged 

8 under this subsection. 

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

10 later than 18 months after the date of enactment of 

11 the LOAN Act of 2019, the Secretary shall promul12 gate rules regarding Federal Direct Consolidation 

13 Loans made under this part in accordance with this 

14 subsection, including a rule that the financing fee 

15 for such a Federal Direct Consolidation Loan deter16 mined in accordance with this subsection shall not 

17 exceed the sum of the financing fees applicable to 

18 the consolidated loans.’’. 

19 SEC. 3. INCOME DEPENDENT EDUCATION ASSISTANCE RE20 PAYMENT PLAN. 

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

22 1965 (20 U.S.C. 1087a et seq.) is amended by adding at 

23 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 2019, 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 2019 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 2019, 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 2019. 


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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 2019 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 one or more loans made 

15 under this part after the date of enactment of 

16 the LOAN Act of 2019 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 

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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 2019 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 2019 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.—The Secretary shall— 

6 ‘‘(i) provide a mechanism for other in7 dividuals or entities to make payments on 

8 the annual repayment amount of a bor9 rower for a taxable year; and 

10 ‘‘(ii) notify the borrower that any pay11 ments made under clause (i) for the tax12 able year that exceed the annual repay13 ment amount for the year shall not be re14 funded to the borrower. 

15 ‘‘(E) APPEALS PROCESS.— 

16 ‘‘(i) IN GENERAL.—The Secretary 

17 shall make available a process through 

18 which a borrower can appeal the calcula19 tion of the borrower’s annual repayment 

20 amount, including a worksheet that en21 ables a borrower to calculate the bor22 rower’s annual repayment amount. 

23 ‘‘(ii) GOOD STANDING.—A borrower 

24 who makes an appeal under clause (i) with 

25 respect to a loan shall be considered in 


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1 good standing on such loan during the du2 ration of the appeal. 

3 ‘‘(iii) REGULATIONS.—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 2019. 

7 ‘‘(F) DELINQUENT FOR FAILURE TO FILE

8 A RETURN.— 

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

10 the Secretary receives information from 

11 the Secretary of the Treasury under sub12 section (b) that a borrower with a loan 

13 made under this part after the date of en14 actment of the LOAN Act of 2019 in re15 payment status in the repayment plan 

16 under this section, has failed to file a re17 turn under section 6012(a)(1) of the Inter18 nal Revenue Code of 1986 and such bor19 rower was required to file such a return, 

20 the Secretary shall— 

21 ‘‘(I) notify the borrower of the 

22 borrower’s failure to file such a re23 turn; and 

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

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1 ceipt of the notice described in sub2 clause (I), consider the borrower’s 

3 loans made under this part after the 

4 date of enactment of the LOAN Act 

5 of 2019 in repayment status in the re6 payment plan under this section to be 

7 delinquent. 

8 ‘‘(ii) APPEALS PROCESS.—The Sec9 retary shall make available a process 

10 through which a borrower can appeal a de11 termination under clause (i) that the bor12 rower has failed to file a return under sec13 tion 6012(a)(1) of the Internal Revenue 

14 Code of 1986 and such borrower was re15 quired to file such a return. The Secretary 

16 shall issue regulations outlining such proc17 ess not later than 18 months after the date 

18 of enactment of the LOAN Act of 2019. 

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 LOAN Act of 

9 2019 are repaid. 

10 ‘‘(D) UPDATING PAYMENT AMOUNTS.— 

11 ‘‘(i) SECRETARY.—The Secretary 

12 shall automatically recalculate a borrower’s 

13 monthly payment amount— 

14 ‘‘(I) at the beginning of a new 

15 taxable year using the most recent in16 come estimate provided under sub17 section (b)(1) by the Secretary of the 

18 Treasury; and 

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

20 the date the borrower’s income esti21 mate is adjusted after an appeal 

22 under paragraph (1)(E). 

23 ‘‘(ii) BORROWER.—A borrower may 

24 request that the Secretary update the bor25 rower’s income estimate to adjust monthly 


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1 payment amounts pursuant to subpara2 graph (E) or (I) of paragraph (1) at any 

3 time. 

4 ‘‘(d) BORROWER REPAYMENT.— 

5 ‘‘(1) REPAYMENT PERIOD.—The repayment pe6 riod of a loan in the repayment plan under this sec7 tion shall— 

8 ‘‘(A) begin on the first day of the first tax9 able year that begins after the borrower’s in10 school deferment period; and 

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

12 except that the Secretary may grant a borrower 

13 deferment of the borrower’s annual repayment 

14 amount— 

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

16 days, due to administrative or technical 

17 reasons; 

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

19 months, due to unusual circumstances that 

20 disrupt the borrower’s ability to make 

21 timely payments on the loan; or 

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

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

24 documented extreme economic hardship on 

25 the part of a borrower. 


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

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

3 loan, at any time and without penalty. Any such pre4 payment amount shall be applied in accordance with 

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

6 ‘‘(3) DETERMINATION OF INCOME-BASED RE7 PAYMENT OBLIGATION.— 

8 ‘‘(A) IN GENERAL.—The repayment obliga9 tion under this section with respect to an indi10 vidual for any taxable year is an amount equal 

11 to 10 percent of the amount of the gross in12 come of the borrower for the taxable year that 

13 exceeds the exemption amount under subpara14 graph (C). 

15 ‘‘(B) EXCLUSION OF CERTAIN AMOUNTS

16 PAID ON BEHALF OF INDIVIDUAL.—Any 

17 amount paid on the borrower’s behalf under 

18 subsection (c)(1)(D) shall not be taken into ac19 count in determining such borrower’s income20 based repayment obligation. 

21 ‘‘(C) EXEMPTION AMOUNT.—For purposes 

22 of this section, the exemption amount with re23 spect to an individual shall be $10,000 (ad24 justed each year to reflect changes in the Con25 sumer Price Index for All Urban Consumers 


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1 published by the Bureau of Labor Statistics of 

2 the Department of Labor for the most recent 

3 12-month period for which such data are avail4 able). 

5 ‘‘(D) INDIVIDUALS NOT FILING A RE6 TURN.—The income-based repayment obligation 

7 with respect to an individual not required to file 

8 a return under section 6012(a)(1) of the Inter9 nal Revenue Code of 1986 shall be treated as 

10 zero.’’. 

Æ 


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