I 

113TH CONGRESS 

1ST SESSION H. R. 1330 

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 

MARCH 21, 2013 

Ms. BASS (for herself, Ms. WILSON of Florida, Mr. HINOJOSA, Ms. FUDGE, 

Mrs. CHRISTENSEN, Ms. CLARKE, Mr. AL GREEN of Texas, Mr. PAYNE, 

Mr. JOHNSON of Georgia, Mr. CLYBURN, Mr. CLAY, Mr. WATT, Mr. 

CLEAVER, Mr. DANNY K. DAVIS of Illinois, Mr. HASTINGS of Florida, 

Mr. SCOTT of Virginia, Ms. LEE of California, Mr. RICHMOND, Mr. 

LEWIS, Ms. BROWN of Florida, Ms. EDWARDS, Mr. CONYERS, Ms. NORTON, Ms. JACKSON LEE, Mr. RANGEL, Ms. BORDALLO, Mr. SABLAN, Ms. 

MOORE, Mr. RYAN of Ohio, Mr. GENE GREEN of Texas, Mr. JEFFRIES, 

Mr. SCHIFF, Mr. BISHOP of Georgia, Ms. LOFGREN, Ms. BROWNLEY of 

California, and Mr. ELLISON) 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 refiVerDate Mar 15 2010 02:37 Mar 28, 2013 Jkt 029200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6652 E:\BILLS\H1330.IH H1330

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nancing 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, 

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) Recently, total outstanding student loan 

16 debt officially surpassed total credit card debt in the 

17 United States in 2010, and is on track to exceed 

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

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 Mar 15 2010 02:37 Mar 28, 2013 Jkt 029200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1330.IH H1330

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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)); or 

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

16 deferment due to an economic hardship de17 scribed in section 435(o), $0. 

18 ‘‘(3) ELIGIBILITY.—The Secretary shall estab19 lish procedures for annually determining the bor20 rower’s eligibility for 10/10 Loan Repayment, includ21 ing verification of a borrower’s annual adjusted 

22 gross income and the annual amount due on the 

23 total amount of eligible loans, and such other proce24 dures as are necessary to effectively implement 10/ 

25 10 Loan Repayment under this subsection. 


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1 ‘‘(4) SPECIAL RULE FOR MARRIED BORROWERS

2 FILING SEPARATELY.—In the case of a married bor3 rower who files a separate Federal income tax re4 turn, the Secretary shall calculate the amount of the 

5 borrower’s 10/10 Loan Repayment under this sub6 section solely on the basis of the borrower’s student 

7 loan debt and adjusted gross income. 

8 ‘‘(b) 10/10 LOAN FORGIVENESS.— 

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

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

11 Forgiveness Program’) to forgive a qualified loan 

12 amount, in accordance with paragraph (3), on an eli13 gible loan for a borrower who, after the date that is 

14 10 years prior to the date of enactment of the Stu15 dent Loan Fairness Act, has made 120 monthly pay16 ments on the eligible loan pursuant to any one or a 

17 combination of the following: 

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

19 Loan Repayment Plan under subsection (a). 

20 ‘‘(B) Monthly payment under any other re21 payment plan authorized under part B or D of 

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

23 than the monthly payment amount calculated 

24 under subsection (a) that the borrower would 

25 have owed in the year in which such payment 


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1 was made, based on the borrower’s adjusted 

2 gross income and eligible loan balance for such 

3 year. 

4 ‘‘(C) For any month after such date dur5 ing which the borrower is in deferment due to 

6 an economic hardship described in section 

7 435(o), monthly payment of $0. 

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

9 provide loan forgiveness under paragraph (1), the 

10 Secretary is authorized to carry out a program— 

11 ‘‘(A) through the holder of the loan, to as12 sume the obligation to repay a qualified loan 

13 amount for a loan made, insured, or guaranteed 

14 under part B of this title; and 

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

16 a loan made under part D of this title. 

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

18 borrower has made 120 monthly payments described 

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

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

21 after the date of enactment of the Student 

22 Loan Fairness Act, the sum of— 

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

24 due on the borrower’s eligible loans as of 


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1 the time of such forgiveness, not to exceed 

2 $45,520; and 

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

4 accrued on the balance described in clause 

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

6 ‘‘(B) with respect to any other eligible bor7 rower, the balance of principal, interest, and 

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

9 the time of such forgiveness. 

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

11 The amount of a borrower’s eligible loans forgiven 

12 under this section shall not be included in the gross 

13 income of the borrower for purposes of the Internal 

14 Revenue Code of 1986. 

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

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

17 Repayment Plan under subsection (a), or who is request18 ing forgiveness under the 10/10 Loan Forgiveness Pro19 gram under subsection (b), shall provide to the Secretary 

20 such information and documentation as the Secretary de21 termines, by regulation, to be necessary to verify the bor22 rower’s adjusted gross income and payment amounts 

23 made on eligible loans of the borrower for the purposes 

24 of such Plan or Program. 


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1 ‘‘(d) DEFINITION OF ELIGIBLE LOAN.—In this sec2 tion the term ‘eligible loan’ means any loan made, insured, 

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

4 SEC. 4. CAPPING INTEREST RATES FOR ALL FEDERAL DI5 RECT LOANS. 

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

7 (20 U.S.C. 1087e(b)) is amended— 

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

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

10 (2) by inserting after paragraph (7) the fol11 lowing: 

12 ‘‘(8) RATE OF INTEREST FOR ALL NEW FED13 ERAL DIRECT LOANS.—Notwithstanding any other 

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

15 this part for which the first disbursement of prin16 cipal is made (or in the case of a Federal Direct 

17 Consolidation Loan, for which the application is re18 ceived) on or after July 1, 2013, or the date of en19 actment of the Student Loan Fairness Act, which20 ever is later, the applicable rate of interest shall not 

21 exceed 3.4 percent.’’. 

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

23 BY THE SECRETARY. 

24 (a) FFEL LOANS.— 


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1 (1) IN GENERAL.—Section 428(b) of the High2 er Education Act of 1965 (20 U.S.C. 1078(b)(9)) is 

3 amended— 

4 (A) in subparagraph (A)— 

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

6 clause (iv); 

7 (ii) in clause (v), by striking the pe8 riod at the end and inserting ‘‘; and’’; and 

9 (iii) by adding at the end the fol10 lowing new clause: 

11 ‘‘(vi) beginning July 1, 2013, a 10/10 

12 Loan Repayment Plan, with varying an13 nual repayment amounts based on the dis14 cretionary income of the borrower, in ac15 cordance with section 493E.’’; and 

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

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

18 (2) EFFECTIVE DATE.—The amendment made 

19 by paragraph (1)(B) shall be effective beginning 

20 July 1, 2013. 

21 (b) DIRECT LOANS.— 

22 (1) IN GENERAL.—Section 455(d) of the High23 er Education Act of 1965 (20 U.S.C. 1087e(d)) is 

24 amended— 

25 (A) in paragraph (1)— 


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

2 subparagraph (D); 

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

4 the period at the end and inserting a semi5 colon; and 

6 (iii) by adding at the end the fol7 lowing new subparagraph: 

8 ‘‘(F) beginning on July 1, 2013, a 10/10 

9 Loan Repayment Plan, with varying annual re10 payment amounts based on the discretionary in11 come of the borrower, in accordance with sec12 tion 493E.’’; and 

13 (B) in paragraph (2)— 

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

15 ‘‘shall’’; and 

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

17 inserting ‘‘(F)’’. 

18 (2) EFFECTIVE DATE.—The amendment made 

19 by paragraph (1)(B) shall be effective beginning 

20 July 1, 2013. 

21 SEC. 6. IMPROVING AND EXPANDING PUBLIC SERVICE 

22 LOAN FORGIVENESS. 

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

24 (20 U.S.C. 1087e(m)) is amended— 


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1 (1) in paragraph (1), by striking ‘‘120’’ and in2 serting ‘‘60’’ each place it appears; and 

3 (2) in paragraph (3)(B)— 

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

5 semicolon; 

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

7 and inserting ‘‘; or’’; and 

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

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

10 physician in an area or population des11 ignated as a Medically Underserved Area 

12 or Population by the Health Resource and 

13 Services Administration.’’. 

14 SEC. 7. REFINANCING PRIVATE EDUCATION LOANS FOR 

15 CERTAIN BORROWERS. 

16 (a) CONSOLIDATION FOR CERTAIN BORROWERS.— 

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

18 U.S.C. 1087e(g)) is amended— 

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

20 following: 

21 ‘‘(1) IN GENERAL.—A borrower’’; 

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

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

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

25 paragraph: 


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1 ‘‘(2) CONSOLIDATION OF PRIVATE EDUCATION

2 LOANS AS A FEDERAL DIRECT CONSOLIDATION LOAN

3 FOR CERTAIN BORROWERS.— 

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

5 other provision of law, a borrower who meets 

6 the eligibility criteria described in subparagraph 

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

8 Consolidation loan under this paragraph that— 

9 ‘‘(i) shall include an eligible private 

10 education loan; and 

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

12 section 428C(a)(4). 

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

14 of an eligible private education loan is eligible 

15 to obtain a Federal Direct Consolidation Loan 

16 under this paragraph if the borrower— 

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

18 under section 428H, a Federal Direct Un19 subsidized Stafford Loan, a loan under 

20 section 428B, or a Federal Direct PLUS 

21 loan for a period of enrollment at an insti22 tution of higher education, or, with respect 

23 to a borrower who was enrolled at an insti24 tution of higher education on less than a 

25 half-time basis, would have been eligible to 


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1 borrow such a loan for such period of en2 rollment if the borrower had been enrolled 

3 on at least a half-time basis; 

4 ‘‘(ii) borrowed at least one eligible pri5 vate education loan for a period of enroll6 ment described in clause (i); and 

7 ‘‘(iii) has an average adjusted gross 

8 income (based on the borrower’s adjusted 

9 gross income from the 3 most recent cal10 endar years before application for consoli11 dation under this section) that is equal to 

12 or less than the borrower’s total education 

13 debt (determined by calculating the sum of 

14 the borrower’s loans described in section 

15 428C(a)(4) and eligible private education 

16 loans) at the time of such application. 

17 ‘‘(C) DEFINITION OF ELIGIBLE PRIVATE

18 EDUCATION LOAN.—For purposes of this para19 graph, the term ‘eligible private education loan’ 

20 means a private education loan (as such term 

21 is defined in section 140 of the Truth in Lend22 ing Act (15 U.S.C. 1650)) made on or before 

23 the date of enactment of the Student Loan 

24 Fairness Act, including the amount of out25 standing principal, accrued interest, and related 


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1 fees and costs (as determined by the Secretary) 

2 owed by a borrower on such a loan. 

3 ‘‘(D) PURCHASE OF LOAN.—For each eli4 gible private education loan that a borrower is 

5 consolidating under this paragraph, the Sec6 retary shall notify the holder that the Secretary 

7 is purchasing the loan, and the Secretary shall 

8 then purchase such loan, as described under 

9 section 140A of the Truth in Lending Act. 

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

11 Federal Direct Consolidation Loan made under 

12 this paragraph shall have the same terms and 

13 conditions as a Federal Direct Consolidation 

14 loan under paragraph (1), except that the appli15 cable rate of interest for a Federal Direct Con16 solidation loan made under this paragraph shall 

17 not exceed 3.4 percent. 

18 ‘‘(F) NOTIFICATION OF ELIGIBLE BOR19 ROWERS.—The Secretary shall take such steps 

20 as may be necessary to notify eligible borrowers 

21 of the availability of consolidation under this 

22 paragraph no later than 60 days after the date 

23 of enactment of the Student Loan Fairness Act, 

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1 line to apply for such a loan under subpara2 graph (G). 

3 ‘‘(G) APPLICATION DEADLINE FOR LOANS

4 UNDER THIS PARAGRAPH.—A borrower may 

5 apply for loans under this paragraph during the 

6 1-year period beginning on the date of enact7 ment of the Student Loan Fairness Act. The 

8 Secretary shall not make a Federal Direct Con9 solidation Loan under this paragraph to any 

10 borrower who has not submitted an application 

11 for such a loan to the Secretary before the end 

12 of such period. 

13 ‘‘(H) AUTHORIZATION AND APPROPRIA14 TION.—There are authorized to be appro15 priated, and there are appropriated, such sums 

16 as may be necessary to carry out this para17 graph.’’. 

18 (b) SALE OF PRIVATE EDUCATION LOANS TO THE

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

20 (15 U.S.C. 1631 et seq.) is amended— 

21 (1) by redesignating section 140A as section 

22 140B; 

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


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1 ‘‘§ 140A. Sale of private education loans to the Gov2 ernment 

3 ‘‘(a) IN GENERAL.—The Bureau shall issue regula4 tions to require a private education lender to sell an eligi5 ble private education loan to the Secretary of Education, 

6 upon request of the Secretary, for purposes of consoli7 dating such loan, as described under section 455(g)(2) of 

8 the Higher Education Act of 1965. 

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

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

11 ‘‘(1) include the amount of outstanding prin12 cipal on the loan, the amount of accrued interest on 

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

14 consumer on the loan; and 

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

16 of such amount. 

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

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

19 The term ‘eligible private education loan’ means a 

20 private education loan, as defined under section 

21 140(a), made on or before the date of enactment of 

22 the Student Loan Fairness Act. 

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

24 ‘private education lender’ has the meaning given 

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

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


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1 (A) by redesignating the item relating to 

2 section 140A as item 140B; and 

3 (B) by inserting after the item relating to 

4 section 140 the following: 

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

5 (c) CONFORMING AMENDMENT.—Section 

6 428C(a)(3)(B)(i)(V) of the Higher Education Act of 1965 

7 (20 U.S.C. 1078–3(a)(3)(B)(i)(V)) is amended— 

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

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

10 (cc) and inserting ‘‘; or’’; and 

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

12 ‘‘(dd) for the purpose of 

13 consolidating an eligible private 

14 education loan under section 

15 455(g)(2), whether such loan is 

16 consolidated alone, with other eli17 gible private education loans, or 

18 with loans described in para19 graph (4).’’. 

20 SEC. 8. INTEREST-FREE DEFERMENT OF UNSUBSIDIZED 

21 LOANS DURING PERIODS OF UNEMPLOY22 MENT. 

23 (a) FFEL UNSUBSIDIZED LOAN DEFERMENT.— 


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1 (1) Section 428H(e)(2) of the Higher Edu2 cation Act of 1965 (20 U.S.C. 1078–8(e)(2)) is 

3 amended— 

4 (A) in subparagraph (A), by inserting ‘‘Ex5 cept as provided in subparagraph (C),’’ before 

6 ‘‘Interest on’’; and 

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

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

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

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

11 granted to a borrower on or after the date of enact12 ment of the Student Loan Fairness Act, shall accrue 

13 and be paid by the Secretary during any period dur14 ing which loans are so deferred, not in excess of 3 

15 years.’’. 

16 (2) CONFORMING AMENDMENT.—Section 

17 428(b)(1)(Y)(iii) of the Higher Education Act of 

18 1965 (20 U.S.C. 1078(b)(1)(Y)(iii)) is amended by 

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

20 of such subparagraph on or after the date of enact21 ment of the Student Loan Fairness Act)’’ after ‘‘of 

22 this paragraph’’. 

23 (b) DIRECT UNSUBSIDIZED LOAN DEFERMENT.— 

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

25 (20 U.S.C. 1087e(f)(1)) is amended— 


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1 (1) in subparagraph (A)— 

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

3 (i); and 

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

5 ‘‘(iii) a Federal Direct Unsubsidized 

6 Stafford Loan, with respect to a period of 

7 deferment described in subparagraph (B) 

8 of paragraph (2) granted to a borrower on 

9 or after the date of enactment of the Stu10 dent Loan Fairness Act; or’’; and 

11 (2) in subparagraph (B), by inserting ‘‘not de12 scribed in subparagraph (A)(iii)’’ after ‘‘Unsub13 sidized Stafford Loan’’. 

14 (c) TREATMENT OF CONSOLIDATION LOANS.—Sec15 tion 428C(b)(4)(C)(ii) of the Higher Education Act of 

16 1965 (20 U.S.C. 1078–3(b)(4)(C)(ii)) is amended— 

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

18 (II); 

19 (2) by redesignating subclause (III) as sub20 clause (IV); 

21 (3) by inserting after subclause (II) the fol22 lowing: 

23 ‘‘(III) by the Secretary, in the 

24 case of a consolidation loan for which 

25 the application is received on or after 


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1 the date of enactment of the Student 

2 Loan Fairness Act, except that the 

3 Secretary shall pay such interest only 

4 for a period not in excess of 3 years 

5 for which the borrower would be eligi6 ble for a deferral under clause (ii) of 

7 section 428(b)(1)(M); or’’; and 

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

9 this subsection), by striking ‘‘(I) or (II)’’ and insert10 ing ‘‘(I), (II), or (III)’’. 

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

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

13 10983(b))— 

14 (1) in paragraph (3)— 

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

16 ‘‘and’’ after the semicolon; 

17 (B) by redesignating subparagraph (B) as 

18 subparagraph (C); 

19 (C) by inserting after subparagraph (A) 

20 the following: 

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

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

23 not more than 3 years during which the bor24 rower is eligible for a deferment due to unem25 ployment described in section 455(f)(2)(B) (reVerDate Mar 15 2010 02:37 Mar 28, 2013 Jkt 029200 PO 00000 Frm 00022 Fmt 6652 Sfmt 6201 E:\BILLS\H1330.IH H1330

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1 gardless of whether the student is in such a 

2 deferment), except that— 

3 ‘‘(i) this subparagraph shall only 

4 apply to periods during which the borrower 

5 is eligible for such a deferment on or after 

6 the date of enactment of the Student Loan 

7 Fairness Act; and 

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

9 such period shall not include any period 

10 described in subparagraph (A) or any pe11 riod during which the borrower is in 

12 deferment due to an economic hardship de13 scribed in section 435(o); and’’; and 

14 (D) in subparagraph (C) (as so redesig15 nated by paragraph (2))— 

16 (i) in clause (i), by striking ‘‘subpara17 graph (A)’’ and inserting ‘‘subparagraphs 

18 (A) and (B)’’; and 

19 (ii) in clause (ii), by inserting ‘‘, sub20 ject to subparagraph (B),’’ after ‘‘unsub21 sidized loan’’; and 

22 (E) by striking ‘‘and’’ at the end of para23 graph (8); 

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

25 paragraph (9) and inserting a semicolon; and 


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

2 paragraph: 

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

4 on a borrower’s loans repaid or canceled under para5 graph (7) shall not be included in the gross income 

6 of the borrower for purposes of the Internal Revenue 

7 Code of 1986.’’. 

8 SEC. 9. EXCLUDING LOANS FORGIVEN UNDER CERTAIN RE9 PAYMENT PROGRAMS FROM GROSS INCOME. 

10 (a) INCOME-CONTINGENT REPAYMENT.—Section 

11 455(e)(2) of the Higher Education Act of 1965 (20 U.S.C. 

12 1087e(e)(2)) is amended— 

13 (1) in the subsection heading, by inserting 

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

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

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

17 loans forgiven pursuant to income contingent repay18 ment shall not be included in the gross income of 

19 the borrower for purposes of the Internal Revenue 

20 Code of 1986.’’. 

21 (b) PAY AS YOU EARN REPAYMENT.—The amount 

22 of the principal and interest on a borrower’s loans forgiven 

23 pursuant to the income-contingent repayment plan (based 

24 on the President’s ‘‘Pay As You Earn’’ repayment initia25 tive) implemented in parts 674, 682, and 685 of title 34, 


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•HR 1330 IH

1 Code of Federal Regulations, as amended by the final reg2 ulations published by the Department of Education in the 

3 Federal Register on November 1, 2012 (77 Fed. Reg. 

4 66088 et seq.), shall not be included in the gross income 

5 of the borrower for purposes of the Internal Revenue Code 

6 of 1986. 

Æ 


tjames on DSK6SPTVN1PROD with BILLS