II 

113TH CONGRESS 

2D SESSION S. 2812 

To amend the Higher Education Act of 1965 to establish a simplified incomedriven repayment plan, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 16, 2014 

Mr. KING (for himself and Mr. BURR) introduced the following bill; which was 

read twice and referred to the Committee on Finance 

A BILL 

To amend the Higher Education Act of 1965 to establish 

a simplified income-driven repayment plan, 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 ‘‘Repay Act of 2014’’. 

5 SEC. 2. SIMPLIFIED INCOME-DRIVEN REPAYMENT PLAN. 

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

7 1965 (20 U.S.C. 1088 et seq.) is amended by adding at 

8 the end the following: 


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1 ‘‘SEC. 493E. SIMPLIFIED INCOME-DRIVEN REPAYMENT 

2 PLAN. 

3 ‘‘(a) DEFINITIONS.—In this section: 

4 ‘‘(1) COVERED FEDERAL DIRECT LOAN.—The 

5 term ‘covered Federal Direct Loan’ means a Federal 

6 Direct Stafford Loan, a Federal Direct Unsubsidized 

7 Stafford Loan, a Federal Direct Consolidation Loan 

8 (other than a Federal Direct Consolidation Loan 

9 whose proceeds were used to discharge the liability 

10 of a Federal Direct PLUS loan made on behalf of 

11 a dependent student or a loan under section 428B 

12 made on behalf of a dependent student), or a Fed13 eral Direct PLUS Loan (other than a Federal Di14 rect PLUS Loan made on behalf of a dependent stu15 dent) made under part D. 

16 ‘‘(2) DISCRETIONARY INCOME.—The term ‘dis17 cretionary income’ means the amount by which a 

18 borrower’s (and the borrower’s spouse, if applicable) 

19 annual adjusted gross income exceeds 150 percent of 

20 the poverty line applicable to the borrower’s family 

21 size. 

22 ‘‘(3) DISCRETIONARY INCOME BEND POINT.— 

23 The term ‘discretionary income bend point’ means 

24 $25,000, adjusted annually for inflation as deter25 mined by the Consumer Price Index (as such term 


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1 is defined in section 478(f)) for the previous cal2 endar year. 

3 ‘‘(4) INCOME-DRIVEN CALCULATION.— 

4 ‘‘(A) IN GENERAL.—The term ‘income5 driven calculation’, when used with respect to a 

6 borrower, means the annual amount due on the 

7 total amount of covered Federal Direct Loans, 

8 which annual amount is equivalent to— 

9 ‘‘(i) 10 percent of the borrower’s dis10 cretionary income that is less than the dis11 cretionary income bend point, plus 

12 ‘‘(ii) 15 percent of the borrower’s dis13 cretionary income that is equal to or great14 er than the discretionary income bend 

15 point 

16 ‘‘(B) ANNUAL CALCULATION.—The cal17 culation under subparagraph (A) shall be deter18 mined on an annual basis for the duration of 

19 the repayment period described in subsection 

20 (b). 

21 ‘‘(5) NEW BORROWER.—The term ‘new bor22 rower’ means a borrower who— 

23 ‘‘(A) as of July 1, 2015, has no out24 standing balance on a student loan made, in25 sured, or guaranteed under part B or D; or 


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1 ‘‘(B) has no outstanding balance on a stu2 dent loan made, insured, or guaranteed under 

3 part B or D on the date the borrower receives 

4 a loan made under part D on or after July 1, 

5 2015. 

6 ‘‘(b) SIMPLIFIED INCOME-DRIVEN REPAYMENT

7 PLAN AUTHORIZED.— 

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

9 out a simplified income-driven repayment program 

10 for new borrowers that meets the following require11 ments: 

12 ‘‘(A) A new borrower of any covered Fed13 eral Direct Loan may elect to have the bor14 rower’s aggregate monthly payment for all such 

15 loans equal to the income-driven calculation, di16 vided by 12. 

17 ‘‘(B) The holder of such a loan shall apply 

18 the borrower’s monthly payment under this sub19 section first toward interest due on the loan, 

20 next toward any fees due on the loan, and then 

21 toward the principal of the loan. 

22 ‘‘(C) Any interest due and not paid under 

23 subparagraph (B)— 

24 ‘‘(i) shall, on Federal Direct Stafford 

25 Loans, be paid by the Secretary for a peVerDate Sep 11 2014 18:06 Sep 17, 2014 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S2812.IS S2812

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1 riod of not more than 3 years after the 

2 date of the borrower’s election under sub3 paragraph (A), except that such period 

4 shall not include any period during which 

5 the borrower is in deferment due to an eco6 nomic hardship described in section 

7 435(o); and 

8 ‘‘(ii) be capitalized— 

9 ‘‘(I) in the case of a Federal Di10 rect Stafford Loan, subject to clause 

11 (i), at the time the borrower’s month12 ly payment calculation under subpara13 graph (A) exceeds the monthly pay14 ment calculation under the fixed re15 payment plan, based on a 10-year re16 payment period, when the borrower 

17 first made the election under subpara18 graph (A); and 

19 ‘‘(II) in the case of a Federal Di20 rect Unsubsidized Stafford Loan, at 

21 the time the borrower’s monthly pay22 ment calculation under subparagraph 

23 (A) exceeds the monthly payment cal24 culation under the fixed repayment 

25 plan, based on a 10-year repayment 


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1 period, when the borrower first made 

2 the election under subparagraph (A). 

3 ‘‘(D) Any principal due and not paid under 

4 subparagraph (B) shall be deferred. 

5 ‘‘(E) The amount of time a new borrower 

6 shall make monthly payments under subpara7 graph (A) may exceed 10 years. 

8 ‘‘(F) If the borrower no longer wishes to 

9 continue the election under this subsection, 

10 then— 

11 ‘‘(i) the maximum monthly payment 

12 required to be paid for all covered Federal 

13 Direct Loans shall be equal to the monthly 

14 amount calculated under section 

15 428(b)(9)(A)(i) or 455(d)(1)(A), based on 

16 a 10-year repayment period, when the bor17 rower first made the election described in 

18 this subsection; and 

19 ‘‘(ii) the amount of time the borrower 

20 is permitted to repay such loans may ex21 ceed 10 years. 

22 ‘‘(G) The Secretary shall cancel the out23 standing balance of principal and interest due 

24 for a new borrower whose balance of principal 

25 of covered Federal Direct Loans did not exceed 


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1 $57,500 on the date the borrower’s repayment 

2 period began, or whose balance of principal of 

3 covered Federal Direct Loans did not exceed 

4 the maximum aggregate amount of loans an 

5 independent undergraduate student could bor6 row, pursuant to section 428H(d)(4)(B), on the 

7 date the borrower’s final covered Federal Direct 

8 Loan was disbursed, whichever amount is great9 er, if the borrower— 

10 ‘‘(i) at any time, elected to participate 

11 under subparagraph (A); and 

12 ‘‘(ii) for 20 years— 

13 ‘‘(I) made monthly payments 

14 pursuant to subparagraph (A); or 

15 ‘‘(II) was in deferment due to an 

16 economic hardship described in sec17 tion 435(o). 

18 ‘‘(H) The Secretary shall cancel the out19 standing balance of principal and interest due 

20 for a new borrower whose balance of principal 

21 of covered Federal Direct Loans exceeded 

22 $57,500 on the date the borrower’s repayment 

23 period began, or whose balance of principal of 

24 covered Federal Direct Loans exceeded the 

25 maximum aggregate amount of loans an indeVerDate Sep 11 2014 18:06 Sep 17, 2014 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S2812.IS S2812

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1 pendent undergraduate student could borrow, 

2 pursuant to section 428H(d)(4)(B), on the date 

3 the borrower’s final covered Federal Direct 

4 Loan was disbursed, whichever amount is great5 er, if the borrower— 

6 ‘‘(i) at any time, elected to participate 

7 under subparagraph (A); and 

8 ‘‘(ii) for 25 years— 

9 ‘‘(I) made monthly payments 

10 pursuant to subparagraph (A); or 

11 ‘‘(II) was in deferment due to an 

12 economic hardship described in sec13 tion 435(o). 

14 ‘‘(I) A borrower may elect to discontinue 

15 repayment pursuant to this subsection, at any 

16 time, and enter into repayment pursuant to sec17 tion 455(d)(2)(A). 

18 ‘‘(2) MONTHLY PAYMENTS.—Only monthly pay19 ments made pursuant to paragraph (1)(A) shall be 

20 considered eligible payments toward the forgiveness 

21 of outstanding loan principal and interest under sub22 paragraphs (G) and (H) of paragraph (1). 

23 ‘‘(c) ELIGIBILITY DETERMINATIONS.—The Secretary 

24 shall annually determine a borrower’s eligibility for the 


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1 simplified income-driven repayment plan under this sec2 tion through— 

3 ‘‘(1) verification of a borrower’s annual ad4 justed gross income; 

5 ‘‘(2) the annual amount due on the total 

6 amount of covered Federal Direct Loans; and 

7 ‘‘(3) such other procedures as are necessary to 

8 effectively implement the simplified income-driven 

9 repayment plan under this section. 

10 ‘‘(d) SPECIAL RULE FOR MARRIED BORROWERS FIL11 ING SEPARATELY.—In the case of a married borrower who 

12 files a separate Federal income tax return, the Secretary 

13 shall calculate the borrower’s income-driven calculation on 

14 the basis of the borrower’s total amount due on covered 

15 Federal Direct Loans and the married couple’s combined 

16 adjusted gross income. In the case of a married couple 

17 in which both individuals repay their loans under this sec18 tion, the Secretary shall calculate each borrower’s income19 driven calculation on the basis of each borrower’s total 

20 amount due on covered Federal Direct Loans and the 

21 married couple’s combined adjusted gross income divided 

22 by 2. 

23 ‘‘(e) ANNUAL INCOME VERIFICATION.— 

24 ‘‘(1) IN GENERAL.—A borrower who elects to 

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1 ment plan under this section shall submit to the Sec2 retary, on an annual basis, verification of the bor3 rower’s annual adjusted gross income. 

4 ‘‘(2) CONSEQUENCE OF FAILURE TO SUBMIT.— 

5 With respect to a borrower who fails to submit to 

6 the Secretary verification of the borrower’s annual 

7 adjusted gross income as required under paragraph 

8 (1), any monthly payments made during the period 

9 the borrower is in violation of the requirement of 

10 paragraph (1) shall not be considered eligible pay11 ments toward the forgiveness of outstanding loan 

12 principal and interest under subparagraphs (G) and 

13 (H) of subsection (b)(1).’’. 

14 SEC. 3. STREAMLINING REPAYMENT PLANS FOR NEW BOR15 ROWERS. 

16 Section 455 of the Higher Education Act of 1965 (20 

17 U.S.C. 1087e) is amended— 

18 (1) by striking subsection (d) and inserting the 

19 following: 

20 ‘‘(d) REPAYMENT PLANS.— 

21 ‘‘(1) DESIGN AND SELECTION FOR BORROWERS

22 BEFORE JULY 1, 2015.—With respect to a borrower 

23 of a loan made under this part before July 1, 2015, 

24 and consistent with criteria established by the Sec25 retary, the Secretary shall offer such borrower a vaVerDate Sep 11 2014 18:06 Sep 17, 2014 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S2812.IS S2812

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1 riety of plans for repayment of such loan, including 

2 principal and interest on the loan. The borrower 

3 shall be entitled to accelerate, without penalty, re4 payment on the borrower’s loans under this part. 

5 The borrower may choose— 

6 ‘‘(A) a fixed repayment plan, consistent 

7 with subsection (a)(1) of this section and with 

8 section 428(b)(9)(A)(i); 

9 ‘‘(B) a graduated repayment plan, con10 sistent with section 428(b)(9)(A)(ii); 

11 ‘‘(C) an extended repayment plan, con12 sistent with section 428(b)(9)(A)(iv), except 

13 that the borrower shall annually repay a min14 imum amount determined by the Secretary in 

15 accordance with section 428(b)(1)(L); 

16 ‘‘(D) an income contingent repayment 

17 plan, with varying annual repayment amounts 

18 based on the income of the borrower, paid over 

19 an extended period of time prescribed by the 

20 Secretary, not to exceed 25 years, except that 

21 the plan described in this subparagraph shall 

22 not be available to the borrower of a Federal 

23 Direct PLUS loan made on behalf of a depend24 ent student; and 


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1 ‘‘(E) an income-based repayment plan that 

2 enables borrowers who have a partial financial 

3 hardship to make a lower monthly payment in 

4 accordance with section 493C, except that the 

5 plan described in this subparagraph shall not be 

6 available to the borrower of a Federal Direct 

7 PLUS Loan made on behalf of a dependent 

8 student or a Federal Direct Consolidation 

9 Loan, if the proceeds of such loan were used to 

10 discharge the liability on such Federal Direct 

11 PLUS Loan or a loan under section 428B 

12 made on behalf of a dependent student. 

13 ‘‘(2) DESIGN AND SELECTION FOR NEW BOR14 ROWERS ON OR AFTER JULY 1, 2015.—The Secretary 

15 shall offer a borrower of a loan made under this part 

16 on or after July 1, 2015, the following plans for re17 payment of such loan, including principal and inter18 est on the loan. The borrower shall be entitled to ac19 celerate, without penalty, repayment on the bor20 rower’s loans under this part. The borrower may 

21 choose— 

22 ‘‘(A) a fixed repayment plan, consistent 

23 with subsection (a)(1) of this section and with 

24 section 428(b)(9)(A)(i); or 


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1 ‘‘(B) a simplified income-driven repayment 

2 plan, consistent with section 493E, except the 

3 plan described in this subparagraph shall not be 

4 available to a borrower of a Federal Direct 

5 PLUS Loan made on behalf of a dependent 

6 student, a Federal Direct Consolidation Loan, 

7 if the proceeds of such loan were used to dis8 charge the liability on such Federal Direct 

9 PLUS Loan or a loan under section 428B 

10 made on behalf of a dependent student. 

11 ‘‘(3) BORROWER NON-SELECTION.—If a bor12 rower of a loan made under this part does not select 

13 a repayment plan described in paragraph (1) or (2), 

14 the Secretary may provide the borrower with a re15 payment plan described in subparagraph (A), (B), or 

16 (C) of paragraph (1) for borrowers before July 1, 

17 2015, or a repayment plan described in paragraph 

18 (2)(A) for new borrowers on or after July 1, 2015. 

19 ‘‘(4) CHANGES IN SELECTIONS.—The borrower 

20 of a loan made under this part may change the bor21 rower’s selection of a repayment plan under para22 graph (1) or (2), or the Secretary’s selection of a 

23 plan for the borrower under paragraph (3), as the 

24 case may be, under such terms and conditions as 

25 may be established by the Secretary. 


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1 ‘‘(5) ALTERNATIVE REPAYMENT PLANS.—The 

2 Secretary may provide, on a case by case basis, an 

3 alternative repayment plan to a borrower of a loan 

4 made under this part on or after July 1, 2015, who 

5 demonstrates to the satisfaction of the Secretary 

6 that the terms and conditions of the repayment 

7 plans available under paragraph (2) are not ade8 quate to accommodate the borrower’s exceptional 

9 circumstances. Upon request, the Secretary shall 

10 make available for such borrowers repayment plans 

11 described in subparagraphs (B) and (C) of para12 graph (1). In designing such alternative repayment 

13 plans, the Secretary shall ensure that such plans do 

14 not exceed the cost to the Federal Government, as 

15 determined on the basis of the present value of fu16 ture payments by such borrowers, of loans made 

17 using the plans available under paragraph (2). 

18 ‘‘(6) REPAYMENT AFTER DEFAULT.—The Sec19 retary may require any borrower who has defaulted 

20 on a loan made under this part to— 

21 ‘‘(A) pay all reasonable collection costs as22 sociated with such loan; and 

23 ‘‘(B) repay the loan pursuant to a repay24 ment plan described in paragraph (2)(A), or, 

25 following sufficient consultation and income 


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1 verification, the Secretary may provide the bor2 rower the option to enroll in the repayment 

3 plan described in paragraph (2)(B). 

4 ‘‘(7) APPLICABILITY PROVISION.— 

5 ‘‘(A) IN GENERAL.—Except as provided in 

6 paragraph (5) and subparagraph (B), the re7 payment plans under subparagraphs (B), (C), 

8 (D), and (E) of paragraph (1) are not available 

9 for a borrower who received the borrower’s first 

10 disbursement of a Federal Direct Loan on or 

11 after July 1, 2015. 

12 ‘‘(B) EXCEPTION.—The repayment plans 

13 available to a borrower of a Federal Direct 

14 PLUS Loan made on behalf of a dependent 

15 student or a Federal Direct Consolidation Loan 

16 whose proceeds were used to discharge the li17 ability of a Federal Direct PLUS Loan made 

18 on behalf of a dependent student or a loan 

19 under section 428B made on behalf of a de20 pendent student on or after July 1, 2015, shall 

21 be those described under subparagraphs (A), 

22 (B), and (C) of paragraph (1).’’; and 

23 (2) in subsection (m)— 

24 (A) in paragraph (1)— 


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1 (i) in the paragraph heading, by strik2 ing ‘‘IN GENERAL’’ and inserting ‘‘BOR3 ROWERS BEFORE JULY 1, 2015’’; and 

4 (ii) in the matter preceding subpara5 graph (A), by striking ‘‘The Secretary’’ 

6 and inserting ‘‘Except as provided in para7 graph (5), the Secretary’’; 

8 (B) in paragraph (2), by inserting ‘‘or (5)’’ 

9 after ‘‘paragraph (1)’’; and 

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

11 ‘‘(5) SIMPLIFIED INCOME-DRIVEN REPAYMENT

12 FOR NEW BORROWERS ON OR AFTER JULY 1, 2015.— 

13 ‘‘(A) IN GENERAL.—With respect to an eli14 gible Federal Direct Loan not in default made 

15 under this part on or after July 1, 2015, the 

16 Secretary shall cancel the balance of interest 

17 and principal due, after the conclusion of the 

18 employment period described in paragraph 

19 clause (iv), as of the time of such cancellation, 

20 on any such loan for a borrower who— 

21 ‘‘(i) as of July 1, 2015, had no out22 standing balance on a student loan made, 

23 insured, or guaranteed under this part or 

24 part B or had no outstanding balance on 

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1 teed under this part or part B on the date 

2 the borrower received the loan made under 

3 this part on or after July 1, 2015; 

4 ‘‘(ii) has made 120 monthly payments 

5 on the eligible Federal Direct Loan under 

6 a simplified income-driven repayment plan 

7 under subsection (d)(2)(B); 

8 ‘‘(iii) is employed in a public service 

9 job at the time of such forgiveness; and 

10 ‘‘(iv) has been employed in a public 

11 service job during the period in which the 

12 borrower makes each of the 120 payments 

13 described in clause (ii). 

14 ‘‘(B) ANNUAL INCOME VERIFICATION.— 

15 With respect to a borrower who fails to submit 

16 to the Secretary verification of the borrower’s 

17 annual adjusted gross income as required under 

18 section 493E(e), any monthly payments made 

19 during the period the borrower is in violation of 

20 such requirement shall not be considered eligi21 ble payments under subparagraph (A)(ii) to22 ward the cancellation pursuant to this para23 graph of the balance of interest and principal 

24 due on the borrower’s loan.’’. 


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1 SEC. 4. FIXED REPAYMENT PLAN. 

2 The Higher Education Act of 1965 (20 U.S.C. 1001 

3 et seq.) is amended— 

4 (1) in section 153(a)(1)(B)(iii)(V), by striking 

5 ‘‘standard repayment plan’’ and inserting ‘‘fixed re6 payment plan’’; 

7 (2) in section 428(b)(9)(A)(i), by striking 

8 ‘‘standard repayment plan’’ and inserting ‘‘fixed re9 payment plan’’; 

10 (3) in section 433(b)(7)(B), by striking ‘‘stand11 ard repayment plan’’ and inserting ‘‘fixed repayment 

12 plan’’; 

13 (4) in section 455— 

14 (A) in subsection (e)(7)(B)(iv), by striking 

15 ‘‘standard repayment plan’’ and inserting 

16 ‘‘fixed repayment plan’’; and 

17 (B) in subsection (m)(1)(A)(ii), by striking 

18 ‘‘standard repayment plan’’ and inserting 

19 ‘‘fixed repayment plan’’; and 

20 (5) in section 493C— 

21 (A) in subsection (a)(3)(A), by striking 

22 ‘‘standard repayment plan’’ and inserting 

23 ‘‘fixed repayment plan’’; and 

24 (B) in subsection (b)— 


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1 (i) in paragraph (7)(B)(iii), by strik2 ing ‘‘standard repayment plan’’ and insert3 ing ‘‘fixed repayment plan’’; and 

4 (ii) in paragraph (8), by striking 

5 ‘‘standard repayment plan’’ and inserting 

6 ‘‘fixed repayment plan’’. 

7 SEC. 5. AMENDMENTS TO THE INTERNAL REVENUE CODE. 

8 (a) IN GENERAL.—Paragraph (1) of section 108(f) 

9 of the Internal Revenue Code of 1986 is amended by strik10 ing ‘‘any student loan if’’ and all that follows and inserting 

11 ‘‘any student loan if— 

12 ‘‘(A) such discharge was pursuant to a 

13 provision of such loan under which all or part 

14 of the indebtedness of the individual would be 

15 discharged if the individual worked for a certain 

16 period of time in certain professions for any of 

17 a broad class of employers, or 

18 ‘‘(B) such discharge was pursuant to sec19 tion 437(a) of the Higher Education Act of 

20 1965 (relating to the repayment of loan liabil21 ity).’’. 

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

23 subsection (a) shall apply to discharges of loans after the 

24 date of enactment of this Act. 


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1 SEC. 6. NOTIFICATION TO BORROWERS ABOUT REPAYMENT 

2 OPTIONS AND ALTERNATIVES TO DEFAULT. 

3 Not later than 1 year after the date of enactment 

4 of this Act, the Secretary of Education shall require 

5 servicers of loans made, insured, or guaranteed under part 

6 B or D of title IV of the Higher Education Act of 1965 

7 (20 U.S.C. 1071 et seq. and 1087a et seq.) to— 

8 (1) notify borrowers, in writing and through 

9 electronic format, about all repayment options for 

10 which the borrower may qualify; 

11 (2) provide borrowers, in writing and through 

12 electronic format, information about alternative re13 payment plans, including the borrower’s estimated 

14 monthly payment, expected number of years to 

15 repay, expected amount of loan forgiveness, expected 

16 total loan forgiveness, and expected total principal 

17 and interest paid, associated with each repayment 

18 plan in a format that permits the borrower to com19 pare the current repayment plan with alternative re20 payment plans; and 

21 (3) offer to enroll such borrowers in alternative 

22 plans, if eligible. 

Æ 


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