II 

113TH CONGRESS 

2D SESSION S. 2612 

To simplify and improve the Federal student loan program through incomecontingent repayment to provide stronger protections for borrowers, encourage responsible borrowing, and save money for taxpayers. 

IN THE SENATE OF THE UNITED STATES 

JULY 16, 2014 

Mr. WARNER (for himself and Mr. RUBIO) introduced the following bill; which 

was read twice and referred to the Committee on Finance 

A BILL 

To simplify and improve the Federal student loan program 

through income-contingent repayment to provide stronger 

protections for borrowers, encourage responsible borrowing, and save money for taxpayers. 

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 ‘‘Dynamic Repayment 

5 Act of 2014’’. 


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1 SEC. 2. TERMINATION OF AUTHORITY TO MAKE FEDERAL 

2 DIRECT STAFFORD LOANS, FEDERAL DIRECT 

3 UNSUBSIDIZED STAFFORD LOANS, AND FED4 ERAL DIRECT PLUS LOANS TO STUDENTS 

5 UNDER THE WILLIAM D. FORD FEDERAL DI6 RECT LOAN PROGRAM. 

7 Section 455(a) of the Higher Education Act of 1965 

8 (20 U.S.C. 1087e(a)) is amended by adding at the end 

9 the following: 

10 ‘‘(4) TERMINATION OF AUTHORITY TO MAKE

11 FEDERAL DIRECT STAFFORD LOANS, FEDERAL DI12 RECT UNSUBSIDIZED STAFFORD LOANS, AND FED13 ERAL DIRECT PLUS LOANS TO STUDENTS UNDER

14 THIS PART.— 

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

16 provision of this part or part B, for any period 

17 of instruction beginning on or after July 1, 

18 2015— 

19 ‘‘(i) a student shall not be eligible to 

20 receive a Federal Direct Stafford Loan 

21 under this part; and 

22 ‘‘(ii) a student shall not be eligible to 

23 receive a Federal Direct Unsubsidized 

24 Stafford Loan or Federal Direct PLUS 

25 Loan under this part, except as provided in 

26 subparagraph (B). 


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1 ‘‘(B) EXCEPTIONS.—Subparagraph (A)(ii) 

2 shall not be applicable with respect to the fol3 lowing: 

4 ‘‘(i) EXISTING STUDENT BOR5 ROWERS.—A student who, as of July 1, 

6 2015, has an outstanding balance of prin7 cipal or interest owing on any loan made, 

8 insured, or guaranteed under part B or 

9 this part may continue to be eligible to 

10 borrow a loan under this part, except for 

11 a Federal Direct Stafford Loan, in accord12 ance with subparagraph (C) until June 30, 

13 2019. 

14 ‘‘(ii) PARENT PLUS LOANS.—An ex15 cepted PLUS loan or excepted consolida16 tion loan (as such terms are defined in sec17 tion 493C(a)) under this part that is made 

18 to a parent on behalf of an undergraduate 

19 dependent student. 

20 ‘‘(iii) FEDERAL DIRECT CONSOLIDA21 TION LOANS.—A Federal Direct Consolida22 tion Loan under this part. 

23 ‘‘(C) MAXIMUM ANNUAL AMOUNTS OF

24 FEDERAL DIRECT UNSUBSIDIZED STAFFORD

25 LOANS.—The maximum annual amount of FedVerDate Mar 15 2010 03:06 Jul 19, 2014 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S2612.IS S2612

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1 eral Direct Unsubsidized Stafford Loans a stu2 dent described in subparagraph (B)(i) may bor3 row in an academic year (as defined in section 

4 481(a)(2)) or its equivalent shall be the max5 imum annual amount for such student deter6 mined under section 428H, plus an amount 

7 equal to the amount of Federal Direct Stafford 

8 Loans the student would have received in the 

9 absence of subparagraph (A)(i).’’. 

10 SEC. 3. ESTABLISHMENT OF THE INCOME DEPENDENT 

11 EDUCATION ASSISTANCE LOAN PROGRAM 

12 AND THE IDEA LOAN REPAYMENT PROGRAM. 

13 Title IV of the Higher Education Act of 1965 (20 

14 U.S.C. 1070 et seq.) is amended by adding at the end 

15 the following: 

16 ‘‘PART J—INCOME DEPENDENT EDUCATION 

17 ASSISTANCE LOANS 

18 ‘‘Subpart 1—IDEA Loans 

19 ‘‘SEC. 499A. PROGRAM AUTHORITY AND AGREEMENTS. 

20 ‘‘(a) PROGRAM AUTHORITY.— 

21 ‘‘(1) IN GENERAL.—There are authorized to be 

22 appropriated, in accordance with the provisions of 

23 this part, such sums as may be necessary to make 

24 loans to all eligible students in attendance at partici25 pating institutions of higher education selected by 


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1 the Secretary, to enable such students to pursue 

2 their courses of study at such institutions beginning 

3 July 1, 2015. Loans made under this part shall be 

4 made by participating institutions, or consortia 

5 thereof, that have agreements with the Secretary to 

6 originate loans, or by alternative originators des7 ignated by the Secretary to make loans for students 

8 in attendance at participating institutions. 

9 ‘‘(2) DESIGNATION.—The program established 

10 under this subpart shall be referred to as the ‘In11 come Dependent Education Assistance Loan Pro12 gram’, or the ‘IDEA Loan Program’. 

13 ‘‘(b) FUNDS FOR THE ORIGINATION OF IDEA 

14 LOANS.—The Secretary shall provide funds for student 

15 loans under this part in the same manner as the Secretary 

16 provided funds for the origination of Federal Direct Stu17 dent Loans under part D in accordance with section 452 

18 on the day before the date of enactment of the Dynamic 

19 Repayment Act of 2014. The requirements, rights, and 

20 limitations with respect to the Secretary and institutions 

21 for funds provided for loans under part D on the day be22 fore the date of enactment of the Dynamic Repayment Act 

23 of 2014 shall apply with respect to the Secretary and insti24 tutions for funds provided for loans under this part, except 


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1 that funds under this part shall not be provided for parent 

2 loans. 

3 ‘‘(c) SELECTION OF INSTITUTIONS FOR PARTICIPA4 TION AND ORIGINATION, AND AGREEMENTS WITH INSTI5 TUTIONS.— 

6 ‘‘(1) SELECTION OF INSTITUTIONS FOR PAR7 TICIPATION AND ORIGINATION.—The Secretary shall 

8 enter into agreements with institutions of higher 

9 education to participate in the IDEA Loan Program 

10 under this part and agreements with institutions of 

11 higher education, or consortia thereof, to originate 

12 loans in such program for academic years beginning 

13 on or after July 1, 2015. The provisions of section 

14 453 as in effect on the day before the date of enact15 ment of the Dynamic Repayment Act of 2014 shall 

16 apply with respect to agreements under this section. 

17 The Secretary shall provide alternative origination 

18 services for loans under this part, as appropriate, in 

19 a manner consistent with the provisions of sections 

20 453 and 456 as in effect on the day before the date 

21 of enactment of the Dynamic Repayment Act of 

22 2014 related to alternative origination services for 

23 loans under part D. 

24 ‘‘(2) PARTICIPATION AND ORIGINATION AGREE25 MENTS WITH INSTITUTIONS.—An agreement with 


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1 any institution of higher education for participation 

2 in the IDEA Loan Program under this part, and an 

3 agreement with any institution of higher education, 

4 or consortia thereof, to originate loans in such pro5 gram, shall have the same terms as the terms re6 quired under section 454 as in effect on the day be7 fore the date of enactment of the Dynamic Repay8 ment Act of 2014 for agreements with an institution 

9 for participation or origination, respectively, in the 

10 student loan program under part D, except that 

11 agreements for participation or origination under 

12 this part shall not apply to parent loans. 

13 ‘‘(3) WITHDRAWAL AND TERMINATION PROCE14 DURES.—The Secretary shall establish procedures by 

15 which institutions or consortia may withdraw or be 

16 terminated from the program under this part. 

17 ‘‘SEC. 499B. TERMS AND CONDITIONS OF IDEA LOANS. 

18 ‘‘(a) PARALLEL TERMS, CONDITIONS, BENEFITS, 

19 AND AMOUNTS.—Unless otherwise specified in this part, 

20 Income Dependent Education Assistance Loans (referred 

21 to in this part as ‘IDEA Loans’) made to borrowers under 

22 this part shall have the same terms, conditions, and bene23 fits, and be available in the same amounts, as Federal Di24 rect Unsubsidized Stafford Loans made to borrowers 

25 under part D, and first disbursed on the day before the 


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1 date of enactment of the Dynamic Repayment Act of 

2 2014. 

3 ‘‘(b) ELIGIBLE BORROWERS.— 

4 ‘‘(1) IN GENERAL.—In addition to the require5 ments of section 484, to be eligible to receive a loan 

6 (other than an IDEA Consolidation Loan) under 

7 this part, a borrower— 

8 ‘‘(A) shall be an individual who, on the 

9 date of application for such loan, has no out10 standing balance of principal or interest owing 

11 on any loan made, insured, or guaranteed under 

12 part B or D (other than an excepted PLUS 

13 loan or an excepted consolidation loan (as such 

14 terms are defined in section 493C(a))); or 

15 ‘‘(B) in the case of an individual with an 

16 outstanding balance of principal or interest 

17 owing on any loan described in subparagraph 

18 (A), shall consolidate all such existing loans 

19 into an IDEA Consolidation Loan under section 

20 499C. 

21 ‘‘(2) ONLY STUDENT BORROWERS ELIGIBLE.— 

22 For purposes of this part, the term ‘borrower’ shall 

23 not include a parent borrower. 

24 ‘‘(c) ANNUAL AND AGGREGATE LIMITS.— 


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1 ‘‘(1) IN GENERAL.—Subject to paragraph (2), 

2 the maximum annual amount of IDEA Loans in any 

3 academic year (as defined in section 481(a)(2)) or 

4 its equivalent, and the maximum aggregate amount 

5 of IDEA Loans that a student may borrow, shall be 

6 the maximum annual amounts and maximum aggre7 gate amounts, respectively, of Federal Direct Unsub8 sidized Stafford Loans under part D that such stu9 dent would have been eligible to borrow in the ab10 sence of section 455(a)(4), as added by the Dynamic 

11 Repayment Act of 2014. 

12 ‘‘(2) GRADUATE AND PROFESSIONAL STUDENTS

13 ELIGIBLE FOR PLUS LOANS.—In the case of a grad14 uate or professional student who would have been el15 igible to borrow a Federal Direct PLUS Loan under 

16 part D in the absence of section 455(a)(4), as added 

17 by the Dynamic Repayment Act of 2014, the max18 imum annual amounts and maximum aggregate 

19 amounts, respectively, of IDEA Loans that such a 

20 student may borrow as determined under paragraph 

21 (1) for any academic year (as defined in section 

22 481(a)(2)) or its equivalent, may be increased to an 

23 amount equal to the maximum annual amounts and 

24 maximum aggregate amounts, respectively, of Fed25 eral Direct PLUS Loans that such student would 


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1 have been eligible to borrow in the absence of such 

2 section 455(a)(4). 

3 ‘‘(d) LOAN FEE.—The Secretary shall charge the 

4 borrower of a loan (other than an IDEA Consolidation 

5 Loan) made under this part an origination fee. Such fee 

6 shall be the sum of— 

7 ‘‘(1) for the portion of the principal amount of 

8 the loan that is equal to (or less than) the maximum 

9 annual amount a student may borrow under sub10 section (c)(1), 1.0 percent of such portion of the 

11 principal amount of the loan; plus 

12 ‘‘(2) for the portion of the principal amount of 

13 the loan that exceeds the maximum annual amount 

14 a student may borrow under subsection (c)(1), as 

15 authorized by subsection (c)(2), 4.0 percent of such 

16 portion of the principal amount of the loan. 

17 ‘‘(e) INTEREST RATES.— 

18 ‘‘(1) UNDERGRADUATE STUDENTS.—With re19 spect to IDEA Loans made to undergraduate stu20 dents for which the first disbursement is made on or 

21 after July 1, 2015, the applicable rate of interest 

22 shall, during any 12-month period beginning on July 

23 1 and ending on June 30, be determined on the pre24 ceding June 1 and be equal to the lesser of— 


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1 ‘‘(A) a rate equal to the high yield of the 

2 10-year Treasury note auctioned at the final 

3 auction held prior to such June 1, plus 2.05 

4 percent; or 

5 ‘‘(B) 8.25 percent. 

6 ‘‘(2) GRADUATE AND PROFESSIONAL STU7 DENTS.—With respect to IDEA Loans made to 

8 graduate or professional students for which the first 

9 disbursement is made on or after July 1, 2015, the 

10 applicable rate of interest shall, during any 12- 

11 month period beginning on July 1 and ending on 

12 June 30, be determined on the preceding June 1 

13 and be equal to the lesser of— 

14 ‘‘(A) the rate determined under paragraph 

15 (1)(A), except that ‘3.6 percent’ shall be sub16 stituted for ‘2.05 percent’ in such determina17 tion; or 

18 ‘‘(B) 9.25 percent. 

19 ‘‘(3) CONSULTATION.—The Secretary shall de20 termine the applicable rate of interest under para21 graphs (1) and (2) after consultation with the Sec22 retary of the Treasury and shall publish such rate 

23 in the Federal Register as soon as practicable after 

24 the date of determination. 


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1 ‘‘(4) APPLICATION OF INTEREST RATE DURING

2 THE LIFE OF THE LOAN.— 

3 ‘‘(A) IN-SCHOOL DEFERMENT PERIOD.— 

4 Interest shall accrue and be capitalized or paid 

5 by the borrower (but periodic installments of 

6 principal need not be paid) during the in-school 

7 deferment period with respect to an IDEA 

8 Loan. For the purposes of this part, the in9 school deferment period with respect to an 

10 IDEA Loan is the first period during which the 

11 borrower is pursuing at least one-half the nor12 mal full-time academic workload (as determined 

13 by the institution) in the course of study for 

14 which the borrower received such loan and end15 ing on the first day of the first month that be16 gins after the borrower ceases to carry at least 

17 one-half the normal full-time academic workload 

18 (as determined by the institution) in the course 

19 of study. 

20 ‘‘(B) GRACE AND REPAYMENT PERIODS.— 

21 Interest that accrues during the borrower’s 

22 grace period (for the purposes of this title, de23 fined as the period between the borrower’s in24 school deferment period and the borrower’s reVerDate Mar 15 2010 03:06 Jul 19, 2014 Jkt 039200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S2612.IS S2612

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1 payment period) and during the borrower’s re2 payment period shall not be capitalized. 

3 ‘‘(f) ARMED FORCES STUDENT LOAN INTEREST

4 PAYMENT PROGRAM.—Using funds received by transfer to 

5 the Secretary under section 2174(f)(2) of title 10, United 

6 States Code, the Secretary shall pay the interest on a loan 

7 made under this part to a member of the Armed Forces 

8 as due for a period not in excess of 36 consecutive months. 

9 The Secretary may not pay interest on such a loan out 

10 of any funds other than funds that have been so trans11 ferred. 

12 ‘‘(g) NO ACCRUAL OF INTEREST FOR ACTIVE DUTY

13 SERVICE MEMBERS.— 

14 ‘‘(1) IN GENERAL.—Notwithstanding any other 

15 provision of this part and in accordance with para16 graphs (2) and (4), interest shall not accrue for an 

17 eligible military borrower on a loan made under this 

18 part for which the first disbursement is made on or 

19 after July 1, 2015. 

20 ‘‘(2) IDEA CONSOLIDATION LOANS.—In the 

21 case of any IDEA Consolidation loan made under 

22 this part that is disbursed on or after July 1, 2015, 

23 interest shall not accrue pursuant to this subsection 

24 only on such portion of such loan as was used to 


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1 repay a loan made under part D for which the first 

2 disbursement is made on or after October 1, 2008. 

3 ‘‘(3) ELIGIBLE MILITARY BORROWER.—In this 

4 subsection, the term ‘eligible military borrower’ 

5 means an individual who— 

6 ‘‘(A)(i) is serving on active duty during a 

7 war or other military operation or national 

8 emergency; or 

9 ‘‘(ii) is performing qualifying National 

10 Guard duty during a war or other military op11 eration or national emergency; and 

12 ‘‘(B) is serving in an area of hostilities in 

13 which service qualifies for special pay under 

14 section 310 of title 37, United States Code. 

15 ‘‘(4) LIMITATION.—An individual who qualifies 

16 as an eligible military borrower under this sub17 section may receive the benefit of this subsection for 

18 not more than 60 months. 

19 ‘‘(h) LOAN CANCELLATION AND DISCHARGE.—The 

20 Secretary shall discharge a borrower’s liability on a loan 

21 made under this part in accordance with subsections (a) 

22 and (c) of section 437. 

23 ‘‘(i) LOAN FORGIVENESS.—A loan made under this 

24 part shall be eligible for loan forgiveness under the fol25 lowing conditions: 


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1 ‘‘(1) After 20 years of payments pursuant to 

2 section 499F for borrowers who begin repayment 

3 with an outstanding balance of principal and interest 

4 that is less than the maximum aggregate amount of 

5 IDEA Loans that an undergraduate student may 

6 borrow as provided under subsection (c). 

7 ‘‘(2) After 30 years of payments pursuant to 

8 section 499F for borrowers who begin repayment 

9 with an outstanding balance of principal and interest 

10 that is equal to or greater than the maximum aggre11 gate amount of IDEA Loans that an undergraduate 

12 student may borrow as provided under subsection 

13 (c). 

14 ‘‘SEC. 499C. IDEA CONSOLIDATION LOANS. 

15 ‘‘(a) IDEA CONSOLIDATION LOANS.— 

16 ‘‘(1) IN GENERAL.—Except as otherwise pro17 vided in this section, an IDEA Consolidation Loan 

18 under this section shall have the same terms, condi19 tions, and benefits as IDEA Loans made under this 

20 part. 

21 ‘‘(2) BORROWER AND LOAN ELIGIBILITY.—To 

22 be eligible to receive an IDEA Consolidation Loan 

23 under this section, a borrower— 

24 ‘‘(A) shall— 


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1 ‘‘(i) meet the criteria described in sec2 tion 428C(a)(3)(A); and 

3 ‘‘(ii) in the case of a borrower de4 scribed in section 499B(b)(1)(B), agree to 

5 consolidate into an IDEA Consolidation 

6 Loan all loans made to the borrower that 

7 are described in subparagraphs (A) and 

8 (C) of section 428C(a)(4) (other than an 

9 excepted PLUS loan or an excepted con10 solidation loan (as such terms are defined 

11 in section 493C(a))); 

12 ‘‘(B) may consolidate the loans described 

13 in subparagraphs (B), (D), and (E) of section 

14 428C(a)(4) into such IDEA Consolidation 

15 Loan; and 

16 ‘‘(C) may not consolidate an IDEA Loan 

17 made under section 499B into such IDEA Con18 solidation Loan. 

19 ‘‘(3) REQUIREMENTS FOR THE SECRETARY.— 

20 In making IDEA Consolidation Loans under this 

21 section, the Secretary— 

22 ‘‘(A) shall ensure that— 

23 ‘‘(i) each IDEA Consolidation Loan 

24 will be made, notwithstanding any other 

25 provision of this title limiting the annual or 


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1 aggregate principal amount for all loans 

2 made to the borrower, in an amount that 

3 is equal to the sum of the unpaid principal, 

4 interest, penalties, and fees of all loans re5 ceived by the borrower which are selected 

6 by the borrower for consolidation under 

7 this section; and 

8 ‘‘(ii) the proceeds of each IDEA Con9 solidation Loan will be paid by the Sec10 retary to the holder or holders of the loans 

11 being consolidated to discharge the liability 

12 on such loans; 

13 ‘‘(B) shall not discriminate against any 

14 borrower seeking such an IDEA Consolidation 

15 Loan— 

16 ‘‘(i) based on the number or type of 

17 loans the borrower seeks to consolidate; 

18 ‘‘(ii) based on the interest rate to be 

19 charged to the borrower with respect to the 

20 consolidation loan; or 

21 ‘‘(iii) based on the type or category of 

22 institution of higher education that the 

23 borrower attends or attended; and 

24 ‘‘(C) shall disclose to a prospective bor25 rower, in simple and understandable terms, at 


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1 the time the Secretary provides an application 

2 for an IDEA Consolidation Loan— 

3 ‘‘(i) whether consolidation would re4 sult in a loss of loan benefits under part 

5 B or part D, including loan forgiveness, 

6 cancellation, and deferment; 

7 ‘‘(ii) with respect to Federal Perkins 

8 Loans under part E— 

9 ‘‘(I) that if a borrower includes a 

10 Federal Perkins Loan under part E in 

11 the consolidation loan, the borrower 

12 will lose all interest-free periods that 

13 would have been available for the Fed14 eral Perkins Loan, including— 

15 ‘‘(aa) the periods during 

16 which no interest accrues on such 

17 loan while the borrower is en18 rolled in school at least half-time; 

19 ‘‘(bb) the grace period under 

20 section 464(c)(1)(A); and 

21 ‘‘(cc) the periods during 

22 which the borrower’s student 

23 loan repayments are deferred 

24 under section 464(c)(2); 


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1 ‘‘(II) that if a borrower includes 

2 a Federal Perkins Loan in the con3 solidation loan, the borrower will no 

4 longer be eligible for cancellation of 

5 part or all of the Federal Perkins 

6 Loan under section 465(a); and 

7 ‘‘(III) the occupations listed in 

8 section 465 that qualify for Federal 

9 Perkins Loan cancellation under sec10 tion 465(a); 

11 ‘‘(iii) the options of the borrower to 

12 prepay the IDEA Consolidation Loan; 

13 ‘‘(iv) the consequences of default on 

14 the IDEA Consolidation Loan; and 

15 ‘‘(v) that by applying for an IDEA 

16 Consolidation Loan, the borrower is not 

17 obligated to agree to take the consolidation 

18 loan. 

19 ‘‘(b) INTEREST RATE.—Notwithstanding section 

20 499B(e), an IDEA Consolidation Loan for which the ap21 plication is received on or after July 1, 2015, shall bear 

22 interest at an annual rate on the unpaid principal balance 

23 of the loan that is equal to the weighted average of the 

24 interest rates on the loans consolidated, rounded to the 

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1 crues on such an IDEA Consolidation Loan shall not be 

2 capitalized. 

3 ‘‘Subpart 2—IDEA Loan Repayment Program 

4 ‘‘CHAPTER 1—ESTABLISHMENT OF THE 

5 IDEA LOAN REPAYMENT PROGRAM 

6 ‘‘SEC. 499D. DUTIES OF THE SECRETARY OF THE TREAS7 URY. 

8 ‘‘(a) IN GENERAL.—As part of the IDEA Loan Re9 payment Program established under this subpart, the Sec10 retary of the Treasury shall, with respect to each indi11 vidual for whom a loan made under this part is in repay12 ment status during a taxable year, transmit to the Sec13 retary of Education— 

14 ‘‘(1) in the case of such an individual who files 

15 an income tax return for such taxable year, such tax 

16 information as is necessary to determine the individ17 ual’s income-based repayment obligation under sec18 tion 499E; and 

19 ‘‘(2) in the case of any such individual who does 

20 not file a return for such taxable year, any available 

21 tax information of the individual as may be nec22 essary to determine such obligation and whether 

23 such individual is in default under the terms of such 

24 loan for not so filing. 


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1 ‘‘(b) ADDITIONAL PROGRAM REQUIREMENTS.—The 

2 Secretary of the Treasury shall establish such other poli3 cies, procedures, and guidance as may be necessary to 

4 carry out the purposes of this subpart, including measures 

5 to prevent underreporting and evasion of repayment or fil6 ing. 

7 ‘‘SEC. 499E. DUTIES OF THE SECRETARY OF EDUCATION. 

8 ‘‘(a) IN GENERAL.—The Secretary shall carry out, 

9 as part of the IDEA Loan Repayment Program estab10 lished under this subpart, the following activities: 

11 ‘‘(1) CALCULATION OF ANNUAL REPAYMENT

12 AMOUNTS.—The Secretary shall calculate the annual 

13 repayment amount under this subpart for borrowers 

14 with 1 or more loans made under this part in repay15 ment status, including the income-based repayment 

16 obligations of such borrowers in accordance with sec17 tion 499F(i). 

18 ‘‘(2) COMMUNICATION WITH THE SECRETARY

19 OF THE TREASURY.—The Secretary shall transmit 

20 to the Secretary of the Treasury such information as 

21 is necessary for the Secretary of the Treasury to 

22 carry out section 499F(i). 

23 ‘‘(3) ANNUAL STATEMENTS.—Upon calculating 

24 the annual repayment amounts under paragraph (1) 

25 for a taxable year, the Secretary shall provide a 


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1 statement, on an annual basis, to each borrower 

2 with a loan made under this part, which lists the fol3 lowing: 

4 ‘‘(A) Total payments made on the bor5 rower’s annual repayment amount for such tax6 able year. 

7 ‘‘(B) The borrower’s annual repayment 

8 amount for such taxable year. 

9 ‘‘(C) In the case of a borrower who, ac10 cording to section 499F(f), has underpaid such 

11 annual repayment amount, the amount of such 

12 underpayment and the process for paying such 

13 underpayment under section 499F(f)(2). 

14 ‘‘(D) In the case of a borrower with an 

15 overpayment on such annual repayment 

16 amount, the amount of such overpayment and 

17 the process for requesting a refund of such 

18 amount under section 499F(g), if applicable. 

19 ‘‘(E) The outstanding balances on all the 

20 loans made to the borrower under this part. 

21 ‘‘(F) A description of how the borrower’s 

22 annual repayment amount was calculated under 

23 paragraph (1) or (2) of section 499F(b). 

24 ‘‘(4) DIRECT PAYMENT.—The Secretary shall 

25 enable a borrower to make direct payments on the 


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1 borrower’s annual repayment amount for the taxable 

2 year to the Secretary throughout the year. 

3 ‘‘(5) PAYMENTS ON A BORROWER’S BEHALF.— 

4 The Secretary shall— 

5 ‘‘(A) provide a mechanism for other indi6 viduals or entities to make payments on the an7 nual repayment amount of a borrower for a tax8 able year; and 

9 ‘‘(B) notify the borrower that any pay10 ments made under subparagraph (A) for the 

11 taxable year that exceed the annual repayment 

12 amount for the year shall not be refunded to 

13 the borrower. 

14 ‘‘(6) CALCULATING INTEREST ACCRUED.—The 

15 Secretary shall calculate the interest accrued for the 

16 taxable year as if the borrower’s payments under 

17 wage withholding under paragraph (10) for the tax18 able year were made in 12 equal increments 

19 throughout the year. 

20 ‘‘(7) APPEALS PROCESS.—The Secretary shall 

21 make available a process through which a borrower 

22 can appeal the calculation of the borrower’s annual 

23 repayment amount, including a worksheet that en24 ables a borrower to calculate the borrower’s annual 

25 repayment amount. 


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1 ‘‘(8) DEFAULT FOR FAILURE TO FILE A RE2 TURN.—In a case in which the Secretary receives in3 formation from the Secretary of the Treasury under 

4 section 499D that a borrower with a loan made 

5 under this part in repayment status has failed to file 

6 a return under section 6012(a)(1) of the Internal 

7 Revenue Code of 1986 and such borrower was re8 quired to file such a return, the Secretary shall— 

9 ‘‘(A) notify the borrower of the borrower’s 

10 failure to file such a return; and 

11 ‘‘(B) if the borrower fails to file such a re12 turn within 90 days of receipt of the notice de13 scribed in subparagraph (A), consider the bor14 rower’s loans made under this part in repay15 ment status to be in default. 

16 ‘‘(9) WITHHOLDING OPT-OUT.—The Secretary 

17 shall establish a process through which a borrower 

18 can indicate that the borrower would like to opt-out 

19 of the withholding process under subsection (b) and, 

20 in lieu of such process, make payments on a monthly 

21 basis, as described in subsection (c). 

22 ‘‘(10) EMPLOYER WITHHOLDING.—The Sec23 retary shall establish a process that meets the re24 quirements of subsection (b) under which employers 

25 making payment of wages deduct and withhold upon 


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1 such wages amounts determined in accordance with 

2 subsection (b)(3) with respect to an employee— 

3 ‘‘(A) who has a loan made under this part 

4 that is in repayment status; 

5 ‘‘(B) who has not opted out of the with6 holding process under this paragraph; and 

7 ‘‘(C) who is not in a forbearance period 

8 under section 499F(a)(2)(C). 

9 ‘‘(11) MONTHLY PAYMENTS PROCESS.—The 

10 Secretary shall establish a monthly payments proc11 ess described in subsection (c). 

12 ‘‘(b) REQUIREMENTS FOR EMPLOYER WITH13 HOLDING.— 

14 ‘‘(1) WITHHOLDING ORDERS.—In carrying out 

15 the employer withholding process under subsection 

16 (a)(10), the Secretary shall carry out the following: 

17 ‘‘(A) NEW EMPLOYMENT.—Upon deter18 mining, using the information provided under 

19 section 453(j)(12) of the Social Security Act 

20 (42 U.S.C. 653(j)(12)), that a borrower who 

21 meets the requirements of subparagraphs (A) 

22 through (C) of subsection (a)(10) obtains new 

23 employment, issue a withholding order to the 

24 borrower’s employer directing the employer to 


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1 withhold and transmit the amounts described in 

2 paragraph (3) to the Secretary. 

3 ‘‘(B) OTHER PURPOSES.—Upon notifica4 tion by a borrower that the borrower no longer 

5 wishes to opt out of the withholding process 

6 under subsection (a)(10) or that a borrower 

7 who has been in forbearance under section 

8 499F(a)(2)(C), voluntarily ends or no longer 

9 qualifies for such forbearance, or upon deter10 mining that a borrower has entered repayment 

11 status on 1 or more loans made under this part 

12 (and the borrower had no loans made under 

13 this part already in repayment status), using 

14 the information provided under section 

15 453(j)(12) of the Social Security Act (42 

16 U.S.C. 653(j)(12)), issue a withholding order to 

17 all of the borrower’s employers directing such 

18 employers to withhold and transmit the 

19 amounts described in paragraph (3) to the Sec20 retary. 

21 ‘‘(C) STOP WITHHOLDING ORDER.—Upon 

22 determining that a borrower is eligible for a for23 bearance under section 499F(a)(2)(C), that the 

24 borrower has opted out of the withholding proc25 ess under subsection (a)(10), or that a borrower 


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1 has repaid the borrower’s loans made under 

2 this part, using the information provided under 

3 paragraph 12 of section 453(j)(12) of the So4 cial Security Act (42 U.S.C. 653(j)(12)), issue 

5 a withholding order to the borrower’s employers 

6 directing such employers to cease withholding 

7 under this paragraph. 

8 ‘‘(D) TRANSFER OF PAYMENTS.—Outline 

9 clearly the process through which employers 

10 shall transfer money withheld under this sub11 section to the Secretary. 

12 ‘‘(E) ELECTRONIC TRANSMISSION.— 

13 ‘‘(i) IN GENERAL.—Make available 

14 electronic means of transmitting and proc15 essing both withholding orders and pay16 ments from employers, including a means 

17 to correct under- and overpayments to the 

18 extent feasible, with the goal of stream19 lining the processing of such orders and 

20 payments and minimizing impacts on em21 ployers. 

22 ‘‘(ii) NO REQUIREMENT TO USE ELEC23 TRONIC TRANSMISSION.—Nothing in this 

24 part shall be construed to require an em25 ployer, in carrying out a withholding order 


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1 under this section, to use the electronic 

2 process described in clause (i). 

3 ‘‘(2) EMPLOYER REMITTANCE.— 

4 ‘‘(A) IN GENERAL.—In the case where an 

5 employer has received a withholding order 

6 under subparagraph (A) or (B) of paragraph 

7 (1) or the employee has indicated under para8 graph (4)(A) that the employee has a loan that 

9 meets the requirements of subparagraphs (A) 

10 through (C) of subsection (a)(10), and the em11 ployer has not subsequently received an order to 

12 stop withholding under paragraph (1)(C) for 

13 such employee, the employer shall withhold and 

14 transmit the amounts described in paragraph 

15 (3) to the Secretary as directed under para16 graph (1)(D) and shall be liable for, and the 

17 Secretary, as appropriate, may sue the em18 ployer in a State or Federal court of competent 

19 jurisdiction to recover any amount that such 

20 employer fails to withhold from wages with re21 spect to an employee after being directed to do 

22 so for such employee, plus attorneys’ fees, costs, 

23 and, in the court’s discretion, punitive damages. 

24 Such employer shall not be required to vary the 


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1 normal pay and disbursement cycles in order to 

2 comply with this subparagraph. 

3 ‘‘(B) TIMING.—An employer transmitting 

4 to the Secretary withholding payments under 

5 this subsection shall transmit such payments on 

6 a periodic basis, as determined by the employer 

7 but not less frequently than quarterly. 

8 ‘‘(3) WITHHOLDING AMOUNT.—The amount 

9 withheld by an employer for each pay period with re10 spect to any employee for whom the employer is 

11 withholding under this subsection shall be an 

12 amount equal to the sum of— 

13 ‘‘(A) the amount that results from the em14 ployer withholding— 

15 ‘‘(i) 10 percent of the employee’s 

16 wages for such pay period that will count 

17 towards the employee’s annual repayment 

18 amount under section 499F(b) that is in 

19 excess of the employee’s exemption amount 

20 for such pay period (as determined by di21 viding the employee’s exemption amount 

22 under section 499F(i)(3) by the number of 

23 pay periods for the taxable year); or 

24 ‘‘(ii) in a case in which an employee 

25 requests that such exemption amount not 


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1 be taken into account, 10 percent of the 

2 employee’s wages for such pay period that 

3 will count towards the employee’s annual 

4 repayment amount under section 499F(b); 

5 and 

6 ‘‘(B) any additional amounts the employee 

7 wishes to have withheld in accordance with 

8 paragraph (4)(C). 

9 ‘‘(4) WITHHOLDING PREFERENCES.—The Sec10 retary shall provide forms and procedures to allow 

11 an employee to indicate to the employee’s em12 ployer— 

13 ‘‘(A) that the employee has a loan that 

14 meets the requirements of subparagraphs (A) 

15 through (C) of subsection (a)(10) and therefore 

16 the employer shall withhold payments under 

17 this subsection; 

18 ‘‘(B) that the employer shall not take into 

19 account the exemption amount to which the em20 ployee is eligible under this part in determining 

21 the employee’s withholding amount because the 

22 exemption amount has already been taken into 

23 account with respect to such employee; and 

24 ‘‘(C) an election by the employee to have 

25 amounts withheld in addition to the employee’s 


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1 withholding amount as calculated under para2 graph (3). 

3 ‘‘(5) EMPLOYEE PROTECTION.—An employer 

4 may not discharge from employment, refuse to em5 ploy, or take disciplinary action against an indi6 vidual subject to wage withholding in accordance 

7 with this section by reason of the fact that the indi8 vidual’s wages have been subject to withholding 

9 under this section, nor may an employer require that 

10 an individual opt-out under subsection (a)(9) and 

11 such individual may sue in a State or Federal court 

12 of competent jurisdiction any employer who takes 

13 such action. The court shall award attorneys’ fees to 

14 a prevailing employee and, in its discretion, may 

15 order reinstatement of the individual, award punitive 

16 damages and back pay to the employee, or order 

17 such other remedy as may be reasonably necessary. 

18 ‘‘(6) GARNISHMENT.—For purposes of title III 

19 of the Consumer Credit Protection Act (15 U.S.C. 

20 1671 et seq.), amounts withheld under this sub21 section shall— 

22 ‘‘(A) not be considered a garnishment; and 

23 ‘‘(B) be considered to be amounts required 

24 by law to be withheld. 

25 ‘‘(c) MONTHLY PAYMENTS PROCESS.— 


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1 ‘‘(1) IN GENERAL.—The Secretary shall estab2 lish a process under which a borrower may make 

3 monthly payments towards the borrower’s annual re4 payment amount, at any time in the taxable year, 

5 because the borrower— 

6 ‘‘(A) has opted-out of withholding under 

7 subsection (a)(10); or 

8 ‘‘(B) expects to have income that is not 

9 subject to the withholding process described in 

10 subsection (b). 

11 ‘‘(2) INFORMATION REQUIRED.—The procedure 

12 for initiating the monthly payments process under 

13 paragraph (1) shall include the following: 

14 ‘‘(A) INCOME ESTIMATE.—A requirement 

15 for a borrower to provide an estimate of the 

16 borrower’s income for the taxable year that will 

17 count towards the borrower’s income-based re18 payment obligation, excluding, in the case of a 

19 borrower subject to the withholding process, 

20 any income subject to the withholding process. 

21 ‘‘(B) AMORTIZATION SCHEDULE.—In the 

22 case of a borrower who has opted out of the 

23 withholding process, the ability for the borrower 

24 to indicate that the borrower would like the bor25 rower’s monthly payments set such that the 


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1 borrower’s outstanding loans made under this 

2 part would be repaid within a specified number 

3 of years. 

4 ‘‘(3) MONTHLY PAYMENTS AMOUNTS.—The 

5 Secretary shall set the borrower’s monthly payment 

6 amount to the greater of— 

7 ‘‘(A) the difference between the borrower’s 

8 annual repayment amount that would result 

9 given the income estimate provided by the bor10 rower under paragraph (2)(A) and the pay11 ments the borrower has already made in the 

12 year towards such amount (excluding, for bor13 rowers who have not opted-out of withholding, 

14 payments through the withholding process), di15 vided by the remaining months in the taxable 

16 year; or 

17 ‘‘(B) for a borrower who indicates a time 

18 frame under paragraph (2)(B), the monthly 

19 payment amount that would result in the bor20 rower’s currently outstanding loans made under 

21 this part being repaid within the number of 

22 years specified by the borrower. 

23 ‘‘(4) AUTOMATIC CONTINUATION.—The month24 ly payments process shall continue until— 


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1 ‘‘(A) the borrower elects to stop such pay2 ments; or 

3 ‘‘(B) the borrower’s loans made under this 

4 part are repaid. 

5 ‘‘(5) UPDATING PAYMENT AMOUNTS.— 

6 ‘‘(A) SECRETARY.—The Secretary shall 

7 automatically recalculate a borrower’s monthly 

8 payment amount at the beginning of a new tax9 able year using the most recent income estimate 

10 provided under paragraph (2)(A) by the bor11 rower. 

12 ‘‘(B) BORROWER.—The borrower may up13 date the borrower’s income estimate under 

14 paragraph (2)(A) at any time. 

15 ‘‘CHAPTER 2—BORROWER REPAYMENT OF 

16 IDEA LOANS AND IDEA CONSOLIDA17 TION LOANS 

18 ‘‘SEC. 499F. BORROWER REPAYMENT. 

19 ‘‘(a) REPAYMENT PERIOD.—The repayment period of 

20 a loan made under this part shall— 

21 ‘‘(1) begin on the first day of the first taxable 

22 year that begins after the borrower’s in-school 

23 deferment period, or in the case of an IDEA Con24 solidation Loan, on the first day of the first taxable 


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1 year that begins after such Consolidation Loan is 

2 disbursed; and 

3 ‘‘(2) continue until the loan is paid in full, ex4 cept that the Secretary may grant a borrower for5 bearance of the borrower’s annual repayment 

6 amount— 

7 ‘‘(A) for a period not to exceed 60 days, 

8 due to administrative or technical reasons; 

9 ‘‘(B) for a period not to exceed 3 months, 

10 due to unusual circumstances that disrupt the 

11 borrower’s ability to make timely payments on 

12 the loan; or 

13 ‘‘(C) renewable at 12-month intervals for a 

14 period not to exceed 3 years, due to docu15 mented extreme economic hardship on the part 

16 of a borrower. 

17 ‘‘(b) ANNUAL REPAYMENT AMOUNT.—The annual 

18 repayment amount under this part for a taxable year for 

19 a borrower with 1 or more loans made under this part 

20 in repayment status shall be equal to the lesser of— 

21 ‘‘(1) the income-based repayment obligation for 

22 such borrower for such year, as calculated under 

23 section 499E(a)(1); or 

24 ‘‘(2) an amount equal to the sum of the out25 standing balances (equal to the sum of the unpaid 


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1 principal, interest, penalties, and fees) that the bor2 rower owes on such loans. 

3 ‘‘(c) METHODS OF REPAYMENT.—A borrower who 

4 expects to have an annual repayment amount for the tax5 able year that is greater than the amount specified in sub6 section (f)(1)(D) shall make payments through the fol7 lowing methods: 

8 ‘‘(1) With respect to any wages earned by the 

9 borrower that are subject to Federal income tax 

10 withholding, the withholding process described in 

11 section 499E(a)(10). 

12 ‘‘(2) The monthly payments process described 

13 in section 499E(c), to meet the portion of the bor14 rower’s obligation that is not paid through with15 holding, or, in the case of a borrower who opts out 

16 of the withholding process, to meet the borrower’s 

17 entire obligation. 

18 ‘‘(3) The direct payments process under section 

19 499E(a)(4). 

20 ‘‘(4) The process described in section 

21 499E(a)(5) that allows other individuals or entities 

22 to make payments on the borrower’s annual repay23 ment amount for the year. 

24 ‘‘(d) ORDER OF CREDITING.—Payments on loans 

25 made under this part shall be applied, without regard to 


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1 the method of such payments, first toward penalties due 

2 on the loans, next toward any fees due on the loans, then 

3 toward any interest due on the loans, and finally toward 

4 the principal due on the loan with the highest applicable 

5 rate of interest among such loans. 

6 ‘‘(e) PREPAYMENT AUTHORIZED.—A borrower shall 

7 have the right to prepay all or part of such loan, at any 

8 time and without penalty. Any such prepayment amount 

9 will be applied to loans made under this part in the same 

10 order as described in subsection (d). 

11 ‘‘(f) UNDERPAYMENTS.— 

12 ‘‘(1) PENALTIES FOR UNDERPAYMENTS.— 

13 ‘‘(A) IN GENERAL.—Subject to subpara14 graph (C), if, as of the last day of a taxable 

15 year, a borrower has not paid at least 90 per16 cent of the borrower’s annual repayment 

17 amount for such year, the borrower shall be 

18 charged a penalty in an amount equal to 10 

19 percent of the difference between— 

20 ‘‘(i) an amount equal to 90 percent of 

21 the borrower’s annual repayment amount 

22 for such year; and 

23 ‘‘(ii) the amount paid on such annual 

24 repayment amount as of such day. 


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1 ‘‘(B) INCREASE OF ANNUAL REPAYMENT

2 AMOUNT.—A borrower’s annual repayment 

3 amount calculated under subsection (b) for such 

4 year shall be increased by the amount of such 

5 penalty, but such penalty shall not be treated as 

6 a principal or interest amount for a loan made 

7 under this part. 

8 ‘‘(C) EXCEPTION FOR MEETING THE OBLI9 GATION FOR THE PREVIOUS YEAR.—A borrower 

10 who has paid 100 percent of the borrower’s an11 nual repayment amount for the taxable year 

12 preceding the taxable year described in sub13 paragraph (A) shall not be subject to the pen14 alty under this paragraph for the taxable year 

15 described in subparagraph (A). 

16 ‘‘(D) DE MINIMUS EXCEPTION.—A bor17 rower whose annual repayment amount is less 

18 than $300 shall not be subject to the penalty 

19 under this paragraph for the taxable year de20 scribed in subparagraph (A). 

21 ‘‘(2) RECONCILING UNDERPAYMENTS.— 

22 ‘‘(A) IN GENERAL.—If, as of the last day 

23 of a taxable year, the sum of the payments 

24 made on a borrower’s annual repayment 

25 amount for such year is less than the total 


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1 amount of the borrower’s annual repayment 

2 amount for such year, the borrower— 

3 ‘‘(i) in the case of the first year that 

4 the borrower has a difference between such 

5 amounts— 

6 ‘‘(I) may request, in such manner 

7 as the Secretary shall require, that 

8 the Secretary reduce the borrower’s 

9 annual repayment amount for such 

10 year to the sum of— 

11 ‘‘(aa) the payments made, 

12 as of such day, on the borrower’s 

13 annual repayment amount for 

14 such year; and 

15 ‘‘(bb) any penalties cal16 culated under paragraph (1) re17 sulting from such underpayment; 

18 and 

19 ‘‘(II) if the borrower qualifies for 

20 the reduction requested under sub21 clause (I), shall pay the sum cal22 culated under such subclause at such 

23 time and in such manner as required 

24 by the Secretary; 


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1 ‘‘(ii) if the borrower does not qualify 

2 for a reduction under clause (i) or does not 

3 request such a reduction, shall pay to the 

4 Secretary an amount equal to the dif5 ference between such amounts within the 

6 30-day period beginning on the date of re7 ceipt by the borrower of the borrower’s an8 nual statement described in section 

9 499E(a)(3) for such year; or 

10 ‘‘(iii) if the borrower fails to pay the 

11 amount owed by the borrower as calculated 

12 under clause (ii) within the 30-day period, 

13 shall be charged a penalty equal to 2 per14 cent of such amount for each month (pro15 rated based on the percentage of a month 

16 such penalty is charged) that such amount 

17 is owed or until the borrower defaults on 

18 the loan for which such amount is owed, 

19 whichever occurs first. 

20 ‘‘(B) DEFAULT.—A loan for which an 

21 amount is owed under subparagraph (A) and 

22 that is not paid within 270 days after the date 

23 of receipt by the borrower of the borrower’s an24 nual statement described in section 499E(a)(3) 

25 shall be considered to be in default. 


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1 ‘‘(g) OVERPAYMENTS.—If, as of the last day of a tax2 able year, the sum of the payments made on a borrower’s 

3 annual repayment amount for such year is greater than 

4 the total amount of the borrower’s annual repayment 

5 amount for such year, the Secretary shall— 

6 ‘‘(1) refund the overpayment amount, if the 

7 borrower notifies the Secretary, within the 90-day 

8 period beginning on the date of receipt of the bor9 rower’s annual statement described in section 

10 499E(a)(3) for such year and in a manner pre11 scribed by the Secretary, that the borrower desires 

12 to have the overpayment amount refunded; or 

13 ‘‘(2) if a borrower fails to notify the Secretary 

14 of the borrower’s desire for a refund of such amount 

15 within such 90-day period, apply such amount as a 

16 prepayment to the borrower’s loans made under this 

17 part in the same manner as a prepayment author18 ized under subsection (e). 

19 ‘‘(h) EMPLOYER FAILURE TO WITHHOLD PAY20 MENTS.—In the case of a borrower whose employer fails 

21 to withhold amounts under section 499E(b) upon any 

22 wages earned by the borrower that are subject to Federal 

23 income tax withholding and with respect to which the bor24 rower made an election to have amounts withheld under 

25 such section, the Secretary shall— 


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1 ‘‘(1) reduce the borrower’s annual repayment to 

2 an amount equal to the borrower’s annual repay3 ment amount had wages from such employer been 

4 excluded when calculating the borrower’s annual re5 payment amount; and 

6 ‘‘(2) reduce any penalties for underpayments 

7 calculated under subsection (f)(1) and refund any 

8 overpayments on such annual repayment amount, 

9 accordingly. 

10 ‘‘(i) DETERMINATION OF INCOME-BASED REPAY11 MENT OBLIGATION.— 

12 ‘‘(1) IN GENERAL.—The income-based repay13 ment obligation with respect to an individual for any 

14 taxable year is an amount equal to 10 percent of the 

15 excess of— 

16 ‘‘(A) the sum of— 

17 ‘‘(i) the wages, salaries, tips, and 

18 other employee compensation of the indi19 vidual, but only if such amounts are in20 cludible in gross income for the taxable 

21 year (determined without regard to sec22 tions 911, 931, and 933 of the Internal 

23 Revenue Code of 1986) and are readily at24 tributable to the individual, plus 


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1 ‘‘(ii) any other amount included in 

2 total income of the taxpayer for the tax3 able year but not described in clause (i), 

4 except that such amount shall be divided 

5 by 2 in the case of an individual who is 

6 married and filing a joint tax return, over 

7 ‘‘(B) the sum of— 

8 ‘‘(i) the exemption amount with re9 spect to such individual, plus 

10 ‘‘(ii) the lesser of the amount deter11 mined with respect to the taxpayer under 

12 subparagraph (A)(ii), or $3,000. 

13 ‘‘(2) EXCLUSION OF CERTAIN AMOUNTS PAID

14 ON BEHALF OF INDIVIDUAL.—Any amount paid on 

15 the borrower’s behalf under section 499E(a)(5) shall 

16 not be taken into account in determining such bor17 rower’s income-based repayment obligation. 

18 ‘‘(3) EXEMPTION AMOUNT.—For purposes of 

19 this subpart, the exemption amount with respect to 

20 an individual shall be $10,000 (adjusted each year 

21 to reflect changes in the Consumer Price Index for 

22 All Urban Consumers published by the Bureau of 

23 Labor Statistics of the Department of Labor for the 

24 most recent 12-month period for which such data 

25 are available). 


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1 ‘‘(4) INDIVIDUALS NOT FILING A RETURN.— 

2 The income-based repayment obligation with respect 

3 to an individual not required to file a return under 

4 section 6012(a)(1) of the Internal Revenue Code of 

5 1986 shall be treated as zero.’’. 

6 SEC. 4. CONFORMING CHANGES TO THE HIGHER EDU7 CATION ACT OF 1965. 

8 (a) LOAN FORGIVENESS AND CANCELLATION FOR

9 TEACHERS.— 

10 (1) LOAN FORGIVENESS FOR TEACHERS.—Sec11 tion 428J of the Higher Education Act of 1965 (20 

12 U.S.C. 1078–10) is amended— 

13 (A) in subsection (b), by inserting ‘‘or for 

14 an IDEA loan made under part J,’’ after ‘‘or 

15 428H,’’; and 

16 (B) in subsection (c)— 

17 (i) in paragraph (1), by inserting ‘‘or 

18 an IDEA loan made under part J’’ after 

19 ‘‘or 428H’’; and 

20 (ii) in paragraph (2)— 

21 (I) by striking ‘‘A loan’’ and in22 serting the following: 

23 ‘‘(A) LOANS MADE UNDER SECTION

24 428C.—A loan’’; and 


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1 (II) by adding at the end the fol2 lowing: 

3 ‘‘(B) IDEA CONSOLIDATION LOAN.—A 

4 loan amount for an IDEA Consolidation Loan 

5 may be a qualified loan amount for purposes of 

6 this subsection only to the extent that such loan 

7 amount was used to repay a Federal Direct 

8 Stafford Loan, a Federal Direct Consolidation 

9 Loan, a Federal Direct Unsubsidized Stafford 

10 Loan, or a loan made under section 428, 428C, 

11 or 428H.’’. 

12 (2) LOAN CANCELLATION FOR TEACHERS.— 

13 Section 460 of the Higher Education Act of 1965 

14 (20 U.S.C. 1087j) is amended— 

15 (A) in subsection (b), in the matter pre16 ceding paragraph (1), by inserting ‘‘or for an 

17 IDEA loan made under part J’’ after ‘‘under 

18 this part’’; and 

19 (B) in subsection (c)— 

20 (i) in paragraph (1), by striking ‘‘or a 

21 Federal Direct Unsubsidized Stafford 

22 Loan’’ and inserting ‘‘, a Federal Direct 

23 Unsubsidized Stafford Loan, or an IDEA 

24 loan made under part J’’; and 

25 (ii) in paragraph (2)— 


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1 (I) by striking ‘‘A loan’’ and in2 serting the following: 

3 ‘‘(A) FEDERAL DIRECT CONSOLIDATION

4 LOAN.—A loan’’; and 

5 (II) by adding at the end the fol6 lowing new subparagraph: 

7 ‘‘(B) IDEA CONSOLIDATION LOAN.—A 

8 loan amount for an IDEA Consolidation Loan 

9 may be a qualified loan amount for purposes of 

10 this subsection only to the extent that such loan 

11 amount was used to repay a Federal Direct 

12 Stafford Loan, a Federal Direct Consolidation 

13 Loan, a Federal Direct Unsubsidized Stafford 

14 Loan, or a loan made under section 428, 428C, 

15 or 428H.’’. 

16 (b) LOAN FORGIVENESS FOR SERVICE IN AREAS OF

17 NATIONAL NEED.—Section 428K(a)(2) of the Higher 

18 Education Act of 1965 (20 U.S.C. 1078–11(a)(2)) is 

19 amended— 

20 (1) in subparagraph (A), by striking ‘‘and’’ 

21 after the semicolon; 

22 (2) in subparagraph (B), by striking the period 

23 at the end and inserting ‘‘; and’’; and 

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


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1 ‘‘(C) to cancel a qualified loan amount for 

2 a loan made under part J.’’. 

3 (c) LOAN REPAYMENT FOR CIVIL LEGAL ASSIST4 ANCE ATTORNEYS.—Section 428L(b)(2)(A) of the Higher 

5 Education Act of 1965 (20 U.S.C. 1078–12(b)(2)(A)) is 

6 amended— 

7 (1) in clause (i), by striking ‘‘or part E’’ and 

8 inserting ‘‘, part E, or part J’’; and 

9 (2) in clause (ii)— 

10 (A) in the matter preceding subclause (I), 

11 by striking ‘‘or 455(g)’’ and inserting ‘‘, 455(g), 

12 or 499C’’; 

13 (B) in subclause (II), by striking ‘‘or’’ 

14 after the semicolon; 

15 (C) by redesignating subclause (III) as 

16 subclause (IV); and 

17 (D) by inserting after subclause (II) the 

18 following: 

19 ‘‘(III) a Federal Direct Consoli20 dation loan or a loan made under sec21 tion 428C, in the case of a loan made 

22 under section 499C; or’’. 

23 (d) MASTER PROMISSORY NOTE.—Section 

24 432(m)(1)(D) of the Higher Education Act of 1965 (20 

25 U.S.C. 1082(m)(1)(D)) is amended— 


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1 (1) by striking ‘‘this part and part D’’ each 

2 place it appears and by inserting ‘‘this part, part D, 

3 and part J’’; and 

4 (2) by striking ‘‘this part or part D’’ each place 

5 it appears and by inserting ‘‘this part, part D, or 

6 part J’’. 

7 (e) CONTRACTS.—Section 456 of the Higher Edu8 cation Act of 1965 (20 U.S.C. 1087f) is amended— 

9 (1) in subsection (a)— 

10 (A) in paragraph (2), by striking ‘‘this 

11 part’’ each place it appears and inserting ‘‘this 

12 part or part J’’; and 

13 (B) in paragraph (4), by inserting ‘‘or part 

14 J’’ after ‘‘this part’’; and 

15 (2) in subsection (b)— 

16 (A) in paragraph (1), by inserting ‘‘or the 

17 program under part J’’ after ‘‘(or their par18 ents)’’; 

19 (B) in paragraph (2), by inserting ‘‘or part 

20 J’’ after ‘‘this part’’; 

21 (C) in paragraph (3), by inserting ‘‘or part 

22 J’’ after ‘‘this part’’; and 

23 (D) in paragraph (4), by inserting ‘‘or the 

24 IDEA Loan Program’’ after ‘‘loan program’’. 


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1 (f) FUNDS FOR ADMINISTRATIVE EXPENSES.—Sec2 tion 458(a)(3) of the Higher Education Act of 1965 (20 

3 U.S.C. 1087h(a)(3)) is amended— 

4 (1) by striking ‘‘this part and part B’’ and in5 serting ‘‘this part, part B, and part J’’; and 

6 (2) by inserting before the period at the end the 

7 following: ‘‘and part J’’. 

8 (g) STUDENT ELIGIBILITY.—Section 484 of the 

9 Higher Education Act of 1965 (20 U.S.C. 1091) is 

10 amended— 

11 (1) in subsection (b)— 

12 (A) in paragraph (3), by striking ‘‘or D’’ 

13 and inserting ‘‘, D, or E’’; and 

14 (B) in paragraph (4)(B), by striking ‘‘or 

15 E’’ and inserting ‘‘E, or J’’; 

16 (2) in subsection (d), by striking ‘‘and E’’ and 

17 inserting ‘‘E, and J’’; 

18 (3) in subsection (f), by striking ‘‘or part E’’ 

19 both places it appears and inserting ‘‘part E, or part 

20 J’’; and 

21 (4) in subsection (m), by striking ‘‘and E’’ and 

22 inserting ‘‘E, and J’’. 

23 (h) INSTITUTIONAL AND FINANCIAL ASSISTANCE IN24 FORMATION FOR STUDENTS.—Section 485 of the Higher 

25 Education Act of 1965 (20 U.S.C. 1092) is amended— 


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1 (1) in subsection (a)— 

2 (A) in paragraph (1)(M), by striking ‘‘and 

3 E’’ and inserting ‘‘E, and J’’; and 

4 (B) in paragraph (7)(A)(i), by striking 

5 ‘‘Loan)’’ each place it appears and inserting 

6 ‘‘Loan) or part J’’; 

7 (2) in subsection (b)— 

8 (A) in paragraph (1)(A)— 

9 (i) in the matter preceding clause (i), 

10 by inserting ‘‘or made under part J’’ after 

11 ‘‘part E’’; and 

12 (ii) in clause (vii)— 

13 (I) by inserting ‘‘or an IDEA 

14 Consolidation Loan’’ after ‘‘Federal 

15 Direct Consolidation Loan’’; and 

16 (II) by striking ‘‘and E’’ and in17 serting ‘‘E, and J’’; and 

18 (B) in paragraph (2)(A), by striking ‘‘or 

19 E’’ and inserting ‘‘E, or J’’; and 

20 (3) in subsection (l)(1)— 

21 (A) in subparagraph (A), in the matter 

22 preceding clause (i), by inserting ‘‘or made 

23 under part J’’ after ‘‘student)’’; and 

24 (B) in subparagraph (B), by striking ‘‘or 

25 D’’ and inserting ‘‘, D, or J’’. 


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1 SEC. 5. NATIONAL DIRECTORY OF NEW HIRES. 

2 Section 453(j) of the Social Security Act (42 U.S.C. 

3 653(j)) is amended by adding at the end the following: 

4 ‘‘(12) INFORMATION COMPARISONS AND DIS5 CLOSURE TO ASSIST WITH COLLECTION OF IDEA

6 STUDENT LOANS.— 

7 ‘‘(A) FURNISHING OF INFORMATION BY

8 THE SECRETARY OF EDUCATION.—The Sec9 retary of Education shall furnish to the Sec10 retary, on such periodic basis as determined by 

11 the Secretary of Education in consultation with 

12 the Secretary, information in the custody of the 

13 Secretary of Education for comparison with in14 formation in the National Directory of New 

15 Hires, in order to obtain information in such 

16 Directory with respect to persons who have a 

17 loan made under part J of title IV of the High18 er Education Act of 1965 in repayment status. 

19 ‘‘(B) REQUIREMENT TO SEEK MINIMUM

20 INFORMATION.—The Secretary of Education 

21 shall seek information pursuant to this section 

22 only to the extent necessary to improve collec23 tion of the debts owed on the loans described in 

24 subparagraph (A). 

25 ‘‘(C) DUTIES OF THE SECRETARY.— 


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1 ‘‘(i) INFORMATION DISCLOSURE.—The 

2 Secretary, in cooperation with the Sec3 retary of Education, shall compare infor4 mation in the National Directory of New 

5 Hires with information provided by the 

6 Secretary of Education with respect to per7 sons described in subparagraph (A) and 

8 shall disclose information in such Directory 

9 regarding such persons to the Secretary of 

10 Education in accordance with this para11 graph, for the purposes specified in this 

12 paragraph. 

13 ‘‘(ii) CONDITION ON DISCLOSURE.— 

14 The Secretary shall make disclosures in ac15 cordance with clause (i) only to the extent 

16 that the Secretary determines that such 

17 disclosures do not interfere with the effec18 tive operation of the program under this 

19 part. 

20 ‘‘(D) PROHIBITION AND UNAUTHORIZED

21 USE.— 

22 ‘‘(i) IN GENERAL.—Individual data 

23 collected under this paragraph shall not be 

24 used for any purpose not specifically au25 thorized by Federal law. 


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1 ‘‘(ii) PENALTIES FOR UNAUTHORIZED

2 DISCLOSURE OF DATA.—Any individual 

3 who willfully discloses information provided 

4 under this paragraph, in any manner to an 

5 entity not entitled to receive the informa6 tion, shall be fined under title 18, United 

7 States Code, imprisoned not more than 5 

8 years, or both. 

9 ‘‘(E) USE OR DISCLOSURE OF INFORMA10 TION BY THE SECRETARY OF EDUCATION.—The 

11 Secretary of Education may use or disclose in12 formation provided under this paragraph only 

13 for purposes of collecting the debts owed on the 

14 loans described in subparagraph (A). 

15 ‘‘(F) REIMBURSEMENT OF HHS COSTS.— 

16 The Secretary of Education shall reimburse the 

17 Secretary, in accordance with subsection (k)(3), 

18 for the costs incurred by the Secretary in fur19 nishing the information requested under this 

20 paragraph. 

21 ‘‘(G) COMPLIANCE WITH FERPA.—In car22 rying out this paragraph, the Secretary and 

23 Secretary of Education shall not share any per24 sonally identifiable information and shall act in 

25 accordance with section 444 of the General 


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1 Education Provisions Act (20 U.S.C. 1232g, 

2 commonly known as the ‘Family Educational 

3 Rights and Privacy Act of 1974’).’’. 

4 SEC. 6. DISCLOSURE OF RETURN INFORMATION FOR PUR5 POSES OF IDEA LOAN REPAYMENT PRO6 GRAM. 

7 (a) IN GENERAL.—Subsection (l) of section 6103 of 

8 the Internal Revenue Code of 1986 is amended by adding 

9 at the end the following new paragraph: 

10 ‘‘(23) DISCLOSURE OF RETURN INFORMATION

11 TO DEPARTMENT OF EDUCATION FOR PURPOSES OF

12 ADMINISTERING IDEA LOAN REPAYMENT PRO13 GRAM.— 

14 ‘‘(A) IN GENERAL.—The Secretary shall, 

15 upon written request, disclose to the Depart16 ment of Education such return information as 

17 is necessary for purposes of carrying out the 

18 IDEA Loan Repayment Program established 

19 under subpart 2 of part J of the Higher Edu20 cation Act of 1965. 

21 ‘‘(B) RESTRICTION ON DISCLOSURE.—Re22 turn information disclosed under subparagraph 

23 (A) may be used by officers, employees, and 

24 contractors of the Department of Education 

25 only for purposes of, and to the extent necVerDate Mar 15 2010 23:38 Jul 21, 2014 Jkt 039200 PO 00000 Frm 00054 Fmt 6652 Sfmt 6201 E:\BILLS\S2612.IS S2612

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1 essary in determining income-based repayment 

2 obligations under the IDEA Loan Repayment 

3 Program.’’. 

4 (b) EFFECTIVE DATE.—The amendments made by 

5 this section shall take effect on the date of enactment of 

6 this Act. 

7 SEC. 7. EXCLUSION FOR LOAN FORGIVENESS OF CERTAIN 

8 STUDENT LOANS. 

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

10 of the Internal Revenue Code of 1986 is amended by strik11 ing ‘‘any student loan if’’ and all that follows and inserting 

12 ‘‘any student loan if— 

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

14 provision of such loan under which all or part 

15 of the indebtedness of the individual would be 

16 discharged if the individual worked for a certain 

17 period of time in certain professions for any of 

18 a broad class of employers, or 

19 ‘‘(B) such discharge was pursuant to sec20 tion 499B(i) of the Higher Education Act of 

21 1965 (relating to the cancellation of loan liabil22 ity).’’. 


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

2 subsection (a) shall apply to discharges of indebtedness 

3 after the date of enactment of this Act. 

Æ 


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