I

103D CONGRESS

1ST SESSION H. R. 2073

To establish a higher education loan program in which a borrower’s annual

repayment obligation is dependent upon both postschool income level

and borrowing history, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

MAY 11, 1993

Mr. PETRI (for himself, Mr. GEJDENSON, Mr. ACKERMAN, Mr. GUNDERSON,

Mr. SUNDQUIST, Mr. TAYLOR of North Carolina, Mr. CUNNINGHAM, Mr.

INHOFE, and Mr. DURBIN) introduced the following bill; which was referred jointly to the Committees on Education and Labor and Ways and

Means

A BILL

To establish a higher education loan program in which a

borrower’s annual repayment obligation is dependent

upon both postschool income level and borrowing history,

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 ‘‘Income-Dependent

5 Education Assistance Act of 1993’’.
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1 TITLE I—SYSTEM FOR MAKING INCOME2 DEPENDENT EDUCATION ASSISTANCE LOANS

3 SEC. 101. PROGRAM AUTHORITY.

4 The Secretary of the Treasury shall, in accordance

5 with the provisions of this title—

6 (1) make loans to eligible students in accord7 ance with this title, and

8 (2) establish an account for each borrower of

9 such a loan, and collect repayments on such loans,

10 in accordance with section 6306 of the Internal Rev11 enue Code of 1986.

12 SEC. 102. AGREEMENTS BY ELIGIBLE INSTITUTIONS.

13 (a) TERMS OF AGREEMENT.—In order to qualify its

14 students for loans under this title, an eligible institution

15 shall enter into an agreement with the Secretary of

16 Education which—

17 (1) provides that the institution will collect ap18 plications for loans under this title from its students

19 that are in such form and contain or are accom20 panied by such information as the Secretary of the

21 Treasury may require by regulation;

22 (2) contains assurances that the institution will,

23 on the basis of such applications, provide to the Sec24 retary of the Treasury the information required by
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1 section 104 and will certify to the Secretary of the

2 Treasury—

3 (A) the cost of attendance determination

4 for each student; and

5 (B) the amount of any outstanding loans

6 to such student under title IV of the Higher

7 Education Act of 1965 or title VII of the Public

8 Health Service Act;

9 (3) provides that the institution will provide to

10 each student applying for a loan under this title a

11 notice provided by the Secretary of Education of the

12 student’s obligations and responsibilities under the

13 loan;

14 (4) provides that, if a student withdraws after

15 receiving a loan under this title and is owed a re16 fund—

17 (A) the institution will pay to the Sec18 retary of the Treasury a portion of such refund,

19 in accordance with regulations prescribed by the

20 Secretary of the Treasury to ensure receipt of

21 an amount which bears the same ratio to such

22 refund as such loan bore to the cost of attend23 ance of such student; and
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1 (B) the Secretary of the Treasury will

2 credit the amount of such refund to the

3 student’s account; and

4 (5) contains such additional terms and condi5 tions as the Secretary of the Treasury or Secretary

6 of Education prescribes by regulation to protect the

7 fiscal interest of the United States and to ensure ef8 fective administration of the program under this

9 Act.

10 (b) ENFORCEMENT OF AGREEMENT.—The Secretary

11 of Education may, after notice and opportunity for a hear12 ing to the institution concerned, suspend or revoke, in

13 whole or in part, the agreement of any eligible institution

14 if the Secretary of Education finds that such institution

15 has failed to comply with this title or any regulation pre16 scribed under this title or has failed to comply with any

17 term or condition of its agreement under subsection (a).

18 No funds shall be loaned under this title to any student

19 at any institution while its agreement is suspended or re20 voked, and the Secretary of Education may institute pro21 ceedings to recover any funds held by such an institution.

22 The Secretary of Education shall have the same authority

23 with respect to his functions under this Act as the Sec24 retary of Education has with respect to his functions
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1 under part B of title IV of the Higher Education Act of

2 1965.

3 (c) NOTICE TO SECRETARY.—The Secretary of Edu4 cation shall annually submit to the Secretary of the Treas5 ury a list of the eligible institutions having effective agree6 ments under this section, and shall promptly notify the

7 Secretary of the Treasury of any action taken under sub8 section (b) to suspend, revoke, or reinstate any such

9 agreement.

10 SEC. 103. AMOUNT AND TERMS OF LOANS.

11 (a) ELIGIBLE AMOUNTS.—

12 (1) ANNUAL LIMITS.—Any individual who is de13 termined by an eligible institution to be an eligible

14 student for any academic year shall be eligible to re15 ceive an IDEA loan for such academic year in an

16 amount which is not less than $500 or more than

17 the cost of attendance at such institution, deter18 mined in accordance with section 484 of the Higher

19 Education Act of 1965. The amount of such loan

20 shall not exceed—

21 (A) $6,500 in the case of any student who

22 has not completed his or her first year of

23 undergraduate study;
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1 (B) $7,000 in the case of any student who

2 has not completed his or her second year of

3 undergraduate study;

4 (C) $10,000 in the case of any student

5 who has completed such second year but who

6 has not completed his or her course of under7 graduate study;

8 (D) $30,000 in the case of any student

9 who is enrolled in a graduate degree program in

10 medicine, dentistry, veterinary medicine, podia11 try, optometry, or osteopathic medicine; or

12 (E) $22,500 in the case of any student

13 who is enrolled in a graduate degree program in

14 pharmacy, chiropractic, public health, health

15 administration, clinical psychology, or allied

16 health fields, or in an undergraduate degree

17 program in pharmacy; or

18 (F) $18,500 in the case of any other

19 student.

20 (2) LIMITATION ON BORROWING CAPACITY.—

21 No individual may receive any amount in an addi22 tional IDEA loan if the sum of the original principal

23 amounts of all IDEA loans to such individual (in24 cluding the pending additional loan) would equal or

25 exceed—
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1 (A) $100,000, minus

2 (B) the product of (i) the number of years

3 by which the borrower’s age (as of the close of

4 the preceding calendar year) exceeds 35, and

5 (ii) one-twentieth of the amount specified in

6 subparagraph (A), as adjusted pursuant to

7 paragraph (3).

8 (3) EXCEPTIONS TO BORROWING CAPACITY LIM9 ITS FOR CERTAIN GRADUATE STUDENTS.—For a

10 student who is—

11 (A) a student described in paragraph

12 (1)(C), paragraph (2) shall be applied by sub13 stituting ‘‘$148,870’’ for ‘‘$100,000’’; or

14 (B) a student described in paragraph

15 (1)(D), paragraph (2) shall be applied by sub16 stituting ‘‘$120,270’’ for ‘‘$100,000’’.

17 (4) ADJUSTMENT OF LIMITS FOR INFLATION.—

18 Each of the dollar amounts specified in paragraphs

19 (1), (2), and (3) shall be adjusted for any academic

20 year after calendar year 1994 by the cost-of-living

21 adjustment for the calendar year preceding such

22 academic year determined under section

23 6306(h)(3)(C) of the Internal Revenue Code of

24 1986, rounded to the nearest multiple of $100 (or,

25 if such adjustment is a multiple of $50 and not a
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1 multiple of $100, such adjustment shall be increased

2 to the next higher multiple of $100).

3 (5) COMPUTATION OF OUTSTANDING LOAN OB4 LIGATIONS.—For the purposes of this subsection,

5 any loan obligations of an individual under student

6 loan programs under title IV of the Higher Edu7 cation Act of 1965 or title VII of the Public Health

8 Service Act shall be counted toward IDEA annual

9 and aggregate borrowing capacity limits. For pur10 poses of annual and aggregate loan limits under any

11 such student loan program, IDEA loans shall be

12 counted as loans under such program.

13 (6) ADJUSTMENTS OF ANNUAL LIMITS FOR

14 LESS THAN FULL-TIME STUDENTS.—For any stu15 dent who is enrolled on a less than full-time basis,

16 loan amounts for which such student shall be eligible

17 for any academic year under this subsection shall be

18 reduced in accordance with regulations prescribed by

19 the Secretary of Education.

20 (b) DURATION OF ELIGIBILITY.—An eligible student

21 shall not be eligible to receive a loan under this title for

22 more than a total of the full-time equivalent of 9 academic

23 years, of which not more than the full-time equivalent of

24 5 academic years shall be as an undergraduate student
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1 and not more than the full-time equivalent of 5 academic

2 years shall be as a graduate student.

3 (c) TERMS OF LOANS.—Each eligible student apply4 ing for a loan under this title shall sign a written agree5 ment which—

6 (1) is made without security and without en7 dorsement, except that if the borrower is a minor

8 and such note or other written agreement executed

9 by him would not, under the applicable law, create

10 a binding obligation, endorsement may be required;

11 (2) provides that such student will repay the

12 principal amount of the loan and any interest or ad13 ditional charges thereon in accordance with section

14 6306 of the Internal Revenue Code of 1954;

15 (3) provides that the interest on the loan will

16 accrue in accordance with section 105;

17 (4) certifies that the student has received and

18 read the notice required by section 102(a)(3); and

19 (5) contains such additional terms and condi20 tions as the Secretary of the Treasury may prescribe

21 by regulation.

22 (d) DISBURSEMENT OF PROCEEDS OF LOANS.—The

23 Secretary of the Treasury shall, by regulation, provide for

24 the distribution of loans to eligible students and for the

25 appropriate notification of eligible institutions of the
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1 amounts of loans which are approved for any eligible stu2 dent, and for the allocation of the proceeds of such loan

3 by semester or other portion of an academic year. The

4 Secretary of the Treasury shall distribute the proceeds of

5 loans under this title by disbursing to the institution a

6 check or other instrument that is payable to and requires

7 the endorsement or other certification by the student.

8 Such proceeds shall be credited to any obligations of the

9 eligible student to the institution related to the cost of at10 tendance at such institution, with any excess being paid

11 to the student. The first installment of the proceeds of

12 any loan under this title that is made to a student bor13 rower who is entering the first year of a program of under14 graduate education, and who has not previously obtained

15 a loan under this title, shall not be presented by the insti16 tution to the student for endorsement until 30 days after

17 the borrower begins a course of study, but may be deliv18 ered to the eligible institution prior to the end of that 30-

19 day period.

20 SEC. 104. INFORMATION REQUIREMENTS FOR LOAN PRO21 GRAM.

22 (a) RESPONSIBILITIES OF ELIGIBLE INSTITU23 TIONS.—Each eligible institution which receives funds

24 under this title shall—
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1 (1) submit to the Secretary of the Treasury, at

2 such time and in such form as the Secretary may re3 quire by regulation, a machine-readable list of appli4 cants and the amounts for which they are qualified

5 under section 103;

6 (2) promptly notify the Secretary of the Treas7 ury, on request, of any change in enrollment status

8 of any recipient of a loan under this title; and

9 (3) submit to the Secretary of the Treasury, at

10 such time and in such forms as the Secretary of the

11 Treasury may require by regulation for use in deter12 mining the repayment status of borrowers, a ma13 chine-readable list of eligible students who have pre14 viously received loans under this title but who are

15 not included as current applicants in the list

16 required by paragraph (1).

17 (b) RESPONSIBILITIES OF THE SECRETARY OF THE

18 TREASURY.—The Secretary of the Treasury shall, on the

19 basis of the lists received under subsection (a)(2), estab20 lish an obligation account, by name and taxpayer identi21 fication number, with respect to each recipient of a loan

22 under this title. The Secretary of the Treasury shall pro23 vide for the increase in the total amount stated for each

24 such account by any amounts subsequently loaned to that

25 recipient under this title and by the amount of any interest
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1 charges imposed pursuant to section 105. The Secretary

2 of the Treasury shall, with the notice required by section

3 6306(a)(1) of the Internal Revenue Code of 1986, trans4 mit to each recipient of a loan under this title a statement

5 of the total amount of the obligation of such recipient as

6 of the close of the preceding calendar year.

7 SEC. 105. INTEREST CHARGES.

8 Interest charges on loans made under this title shall

9 be added to the recipient’s obligation account at the end

10 of each calendar year. Such interest charges shall be based

11 upon an interest rate equal to the lesser of—

12 (1) the sum of the average bond equivalent

13 rates of 91-day Treasury bills auctioned during that

14 calendar year, plus 2 percentage points, rounded to

15 the next higher one-eighth of 1 percent; or

16 (2) 9 percent.

17 SEC. 106. CONVERSION AND CONSOLIDATION OF OTHER

18 LOANS.

19 (a) IN GENERAL.—The Secretary of the Treasury

20 may, upon request of a borrower who has received a feder21 ally insured or guaranteed loan or loans under title IV

22 of the Higher Education Act of 1965 or under title VII

23 of the Public Health Service Act, make a new loan to such

24 borrower in an amount equal to the sum of the unpaid

25 principal on the title IV or title VII loans. The proceeds
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1 of the new loan shall be used to discharge the liability on

2 such title IV or title VII loans. Except as provided in sub3 section (b), any loan made under this subsection shall be

4 made on the same terms and conditions as any other loan

5 under this Act and shall be considered a new IDEA loan

6 for purposes of this title and section 6306 of the Internal

7 Revenue Code of 1986.

8 (b) CONVERSION REGULATIONS.—The Secretary of

9 the Treasury shall prescribe regulations concerning the

10 methods and calculations required for conversion to IDEA

11 loans under subsection (a). Such regulations shall provide

12 appropriate adjustments in the determination of the prin13 cipal and interest owed on the IDEA loan in order to—

14 (1) secure payments to the Government com15 mensurate with the amounts the Government would

16 have received had the original loans been IDEA

17 loans;

18 (2) fairly credit the borrower for principal and

19 interest payments made on such original loans and

20 for origination fees deducted from such original

21 loans; and

22 (3) prevent borrowers from evading their obli23 gations or otherwise taking unfair advantage of the

24 conversion option provided under this section.
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1 (c) MANDATORY CONVERSION OF DEFAULTED

2 LOANS.—

3 (1) CONVERSION IN ACCORDANCE WITH REGU4 LATIONS.—Any loan which is—

5 (A) made, insured, or guaranteed under

6 title IV of the Higher Education Act of 1965

7 or title VII of the Public Health Service Act

8 after the date of enactment of this Act, and

9 (B) assigned to the Secretary of Education

10 or Health and Human Services for collection

11 after a default by the borrower in repayment of

12 such loan,

13 shall, in accordance with regulations prescribed by

14 the Secretaries of Education and Health and

15 Human Services, be treated for purposes of collec16 tion, under section 6306 of the Internal Revenue

17 Code of 1986, as if such loan had been converted to

18 an IDEA loan under subsections (a) and (b) of this

19 section.

20 (2) NOTICES.—The Secretaries of Education

21 and Health and Human Services shall notify—

22 (A) the Secretary of the Treasury of the

23 need to establish or adjust an account balance

24 of any borrower by reason of the provisions of

25 this subsection; and
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1 (B) the borrower of the conversion of the

2 defaulted loans to an IDEA loan and of the

3 procedures for collection under section 6306 of

4 the Internal Revenue Code of 1986.

5 SEC. 107. TERMINATION OF OTHER STUDENT LOAN PRO6 GRAMS.

7 The authority to make additional loans under part

8 B of title IV of the Higher Education Act of 1965 (20

9 U.S.C. 1071), other than loans made pursuant to section

10 428B of such title, is terminated for any academic year

11 beginning after the date that regulations are prescribed

12 by the Secretaries of the Treasury and Education to carry

13 out this title. This section shall not affect the administra14 tion of such section and part with respect to loans made

15 prior to that date.

16 SEC. 108. AUTHORIZATION OF APPROPRIATIONS.

17 (a) LOAN FUNDS.—There are authorized to be ap18 propriated to make distributions of loan funds under

19 section 102 such sums as may be necessary.

20 (b) ADMINISTRATIVE EXPENSES.—There are author21 ized to be appropriated such sums as may be necessary

22 to administer and carry out this title.

23 SEC. 109. DEFINITIONS.

24 For purposes of this title—
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1 (1) the term ‘‘eligible institution’’ has the

2 meaning given it by section 435(a) (1) or (2) of the

3 Higher Education Act of 1965;

4 (2) the term ‘‘eligible student’’ means a student

5 who is eligible for assistance under title IV of the

6 Higher Education Act of 1965 as required by sec7 tion 484 of such Act (relating to eligibility for stu8 dent assistance) and who is carrying at least one9 half the normal full-time academic workload (as de10 termined by the institution); and

11 (3) the term ‘‘IDEA loan’’ means a loan made

12 under this title.

13 TITLE II—COLLECTION OF INCOME14 DEPENDENT EDUCATION ASSISTANCE LOANS

15 SEC. 201. REPAYMENTS USING INCOME TAX COLLECTION

16 SYSTEM.

17 (a) IN GENERAL.—Subchapter A of chapter 64 of the

18 Internal Revenue Code of 1986 (relating to collection) is

19 amended by adding at the end thereof the following

20 new section:

21 ‘‘SEC. 6306. COLLECTION OF INCOME-DEPENDENT EDU22 CATION ASSISTANCE LOANS.

23 ‘‘(a) NOTICE TO BORROWER.—
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1 ‘‘(1) IN GENERAL.—During January of each

2 calendar year, the Secretary shall furnish to each

3 borrower of an IDEA loan notice as to—

4 ‘‘(A) whether the records of the Secretary

5 indicate that such borrower is in repayment

6 status,

7 ‘‘(B) the maximum account balance of

8 such borrower,

9 ‘‘(C) the current account balance of such

10 borrower as of the close of the preceding

11 calendar year, and

12 ‘‘(D) the procedure for computing the

13 amount of repayment owing for the taxable year

14 beginning in the preceding calendar year.

15 ‘‘(2) FORM, ETC.—The notice under paragraph

16 (1) shall be in such form as the Secretary may by

17 regulations prescribe and shall be sent by mail to the

18 individual’s last known address or shall be left at the

19 dwelling or usual place of business of such individ20 ual.

21 ‘‘(b) COMPUTATION OF ANNUAL REPAYMENT

22 AMOUNT.—

23 ‘‘(1) IN GENERAL.—The annual amount pay24 able under this section by the taxpayer for any tax25 able year shall be the lesser of—
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1 ‘‘(A) the product of—

2 ‘‘(i) the base amortization amount,

3 and

4 ‘‘(ii) the progressivity factor for the

5 taxpayer for such taxable year, or

6 ‘‘(B) 20 percent of the excess of—

7 ‘‘(i) the modified adjusted gross in8 come of the taxpayer for such taxable year,

9 over

10 ‘‘(ii)(I) in the case of a joint return,

11 the sum of the standard deduction applica12 ble to such return and twice the exemption

13 amount for the taxable year, and

14 ‘‘(II) in any other case, the sum of

15 the standard deduction applicable to such

16 individual and the exemption amount for

17 the taxable year.

18 For purposes of subparagraph (B)(ii), the term

19 ‘standard deduction’ has the meaning given

20 such term by section 63(c), and the term ‘ex21 emption amount’ has the meaning given such

22 term by section 151(d).

23 ‘‘(2) BASE AMORTIZATION AMOUNT.—

24 ‘‘(A) IN GENERAL.—For purposes of this

25 section, the term ‘base amortization amount’
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1 means the amount which, if paid at the close of

2 each year for a period of 12 consecutive years,

3 would fully repay (with interest) at the close of

4 such period the maximum account balance of

5 the borrower. For purposes of the preceding

6 sentence, an 7-percent annual rate of interest

7 shall be assumed.

8 ‘‘(B) JOINT RETURNS.—In the case of a

9 joint return where each spouse has an account

10 balance and is in repayment status, the amount

11 determined under subparagraph (A) shall be

12 the sum of the base amortization amounts of

13 each spouse.

14 ‘‘(3) PROGRESSIVITY FACTOR.—

15 ‘‘(A) IN GENERAL.—For purposes of this

16 section, the term ‘progressivity factor’ means

17 the number determined under tables prescribed

18 by the Secretary which is based on the following

19 tables for the circumstances specified:

20 ‘‘(i) JOINT RETURNS; SURVIVING

21 SPOUSES.—In the case of a taxpayer to

22 whom section 1(a) applies—

‘‘If the taxpayer’s modified The progressivity

adjusted gross income is: factor is:

Not over $8,253 ............................................................ 0.429

$12,285 ......................................................................... 0.500

$17,577 ......................................................................... 0.571

$22,806 ......................................................................... 0.643

$28,224 ......................................................................... 0.786
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$34,335 ......................................................................... 0.893

$41,013 ......................................................................... 1.000

$51,030 ......................................................................... 1.000

$66,654 ......................................................................... 1.152

$91,728 ......................................................................... 1.272

$122,890 ....................................................................... 1.364

$171,234 ....................................................................... 1.485

$253,000 and over ........................................................ 2.000

1 ‘‘(ii) HEADS OF HOUSEHOLDS.—In

2 the case of a taxpayer to whom section

3 1(b) applies—

‘‘If the taxpayer’s modified The progressivity

adjusted gross income is: factor is:

Not over $6,867 ............................................................ 0.429

$10,836 ......................................................................... 0.500

$12,915 ......................................................................... 0.607

$16,884 ......................................................................... 0.643

$20,916 ......................................................................... 0.714

$26,271 ......................................................................... 0.857

$32,949 ......................................................................... 1.000

$39,627 ......................................................................... 1.000

$49,644 ......................................................................... 1.094

$66,339 ......................................................................... 1.313

$89,712 ......................................................................... 1.406

$125,466 ....................................................................... 1.500

$205,020 and over ........................................................ 2.000

4 ‘‘(iii) UNMARRIED INDIVIDUALS,

5 ETC.—In the case of a taxpayer to whom

6 section 1(c) applies—

‘‘If the taxpayer’s modified The progressivity

adjusted gross income is: factor is:

Not over $6,867 ............................................................ 0.467

$9,450 ........................................................................... 0.500

$12,159 ......................................................................... 0.533

$14,931 ......................................................................... 0.600

$17,577 ......................................................................... 0.667

$20,916 ......................................................................... 0.767

$26,271 ......................................................................... 0.867

$32,949 ......................................................................... 1.000

$39,627 ......................................................................... 1.000

$47,628 ......................................................................... 1.118

$60,984 ......................................................................... 1.235

$86,373 ......................................................................... 1.412

$99,036 ......................................................................... 1.500

$176,400 and over ........................................................ 2.000
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1 ‘‘(iv) MARRIED INDIVIDUALS FILING

2 SEPARATE RETURNS.—In the case of a

3 taxpayer to whom section 1(d) applies—

‘‘If the taxpayer’s modified The progressivity

adjusted gross income is: factor is:

Not over $4,127 ............................................................ 0.483

$6,143 ........................................................................... 0.552

$8,789 ........................................................................... 0.655

$11,403 ......................................................................... 0.759

$14,112 ......................................................................... 0.862

$17,168 ......................................................................... 1.000

$20,507 ......................................................................... 1.000

$25,515 ......................................................................... 1.182

$33,327 ......................................................................... 1.333

$45,864 ......................................................................... 1.485

$88,200 and over .......................................................... 2.000

4 ‘‘(B) RATABLE CHANGES.—The tables pre5 scribed by the Secretary under subparagraph

6 (A) shall provide for ratable increases (rounded

7 to the nearest 1/1,000) in the progressivity fac8 tors between the amounts of modified adjusted

9 gross income contained in the tables.

10 ‘‘(C) INFLATION ADJUSTMENT OF MODI11 FIED AGI AMOUNTS.—For inflation adjustment

12 of amounts of modified adjusted gross income,

13 see subsection (h)(3).

14 ‘‘(4) MODIFIED ADJUSTED GROSS INCOME.—

15 For purposes of this subsection, the term ‘modified

16 adjusted gross income’ means adjusted gross income

17 for the taxable year—

18 ‘‘(A) determined without regard to section

19 62(b) and without regard to the deductions
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1 from gross income allowable under section

2 62(a) by reason of—

3 ‘‘(i) paragraph (6) thereof (relating to

4 profit-sharing, annuities, and bond-pur5 chase plans of self-employed individuals),

6 ‘‘(ii) paragraph (7) thereof (relating

7 to retirement savings), and

8 ‘‘(iii) paragraph (11) thereof (relating

9 to reforestation expenses), and

10 ‘‘(B) increased by—

11 ‘‘(i) interest exempt from the tax im12 posed by chapter 1, and

13 ‘‘(ii) the items of tax preference de14 scribed in section 57 (other than sub15 section (a)(5) thereof).

16 ‘‘(c) TERMINATION OF BORROWER’S REPAYMENT

17 OBLIGATION.—

18 ‘‘(1) IN GENERAL.—The repayment obligation

19 of a borrower of an IDEA loan shall terminate only

20 if there is repaid with respect to such loan an

21 amount equal to—

22 ‘‘(A) in the case of any repayment during

23 the first 12 years for which the borrower is in

24 repayment status with respect to any loan, the

25 sum of—
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1 ‘‘(i) the principal amount of the loan,

2 plus

3 ‘‘(ii) interest computed for each year

4 the loan is outstanding at an annual rate

5 equal to the annual rate otherwise applica6 ble to such loan for such year, plus 1 per7 cent, and

8 ‘‘(B) in the case of any repayment during

9 any subsequent year, the principal amount of

10 the loan plus interest computed at the rates

11 applicable to the loan.

12 ‘‘(2) NO REPAYMENT REQUIRED AFTER 25

13 YEARS IN REPAYMENT STATUS.—No amount shall be

14 required to be repaid under this section with respect

15 to any loan for any taxable year after the 25th year

16 for which the borrower is in repayment status with

17 respect to such loan.

18 ‘‘(3) EXCEPTION FOR DE MINIMUS LOANS RE19 PAID DURING FIRST 12 YEARS IN REPAYMENT STA20 TUS.—In any case where the maximum account bal21 ance of any borrower is $3,000 or less, subpara22 graph (B), and not subparagraph (A), of paragraph

23 (1) shall apply to repayment of such loan.

24 ‘‘(4) DETERMINATION OF YEARS IN REPAY25 MENT STATUS.—For purposes of paragraphs (1)(A)
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1 and (2), the number of years in which a borrower

2 is in repayment status with respect to any IDEA

3 loan shall be determined without regard to any year

4 before the most recent year in which the borrower

5 received an IDEA loan.

6 ‘‘(5) EXTENSION OF REPAYMENT YEARS FOR

7 MEDICAL INTERNS.—The number of years specified

8 in paragraphs (1)(A) and (2) shall be increased by

9 1 year for each calendar year during any 5 months

10 of which the individual is an intern in medicine, den11 tistry, veterinary medicine, or osteopathic medicine.

12 ‘‘(d) DEFINITIONS.—For purposes of this section—

13 ‘‘(1) MAXIMUM ACCOUNT BALANCE.—The term

14 ‘maximum account balance’ means the highest

15 amount (as of the close of any calendar year) of un16 paid principal and unpaid accrued interest on all

17 IDEA loan obligations of a borrower.

18 ‘‘(2) CURRENT ACCOUNT BALANCE.—The term

19 ‘current account balance’ means the amount (as of

20 the close of a calendar year) of unpaid principal and

21 unpaid accrued interest on all IDEA loans of a

22 borrower.

23 ‘‘(3) REPAYMENT STATUS.—A borrower is in

24 repayment status for any taxable year unless—
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1 ‘‘(A) such borrower was, during at least 7

2 months of such year, an eligible student, as

3 that term is defined in section 109(2) of the In4 come-Dependent Education Assistance Act of

5 1993; or

6 ‘‘(B) such taxable year was the first year

7 in which the borrower was such an eligible stu8 dent and the borrower was such an eligible stu9 dent during the last 3 months of such taxable

10 year.

11 ‘‘(4) IDEA LOAN.—The term ‘IDEA loan’

12 means any loan made under title I of the Income13 Dependent Education Assistance Act of 1993.

14 ‘‘(e) PAYMENT OF AMOUNT OWING.—Any amount to

15 be collected from an individual under this section shall be

16 paid—

17 ‘‘(1) not later than the last date (determined

18 without regard to extensions) prescribed for filing

19 his return of tax imposed by chapter 1 for the tax20 able year ending before the date the notice under

21 subsection (a) is sent, and

22 ‘‘(2)(A) if such return is filed not later than

23 such date, with such return, or
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1 ‘‘(B) in any case not described in subparagraph

2 (A), in such manner as the Secretary may by regula3 tions prescribe.

4 ‘‘(f) FAILURE TO PAY AMOUNT OWING.—If an indi5 vidual fails to pay the full amount required to be paid on

6 or before the last date described in subsection (e)(1), the

7 Secretary shall assess and collect the unpaid amount in

8 the same manner, with the same powers, and subject to

9 the same limitations applicable to a tax imposed by sub10 title C the collection of which would be jeopardized by

11 delay.

12 ‘‘(g) LOANS OF DECEASED AND PERMANENTLY DIS13 ABLED BORROWERS; DISCHARGE BY SECRETARY.—

14 ‘‘(1) DISCHARGE IN THE EVENT OF DEATH.—

15 If a borrower of an IDEA loan dies or becomes per16 manently and totally disabled (as determined in ac17 cordance with regulations of the Secretary), then the

18 Secretary shall discharge the borrower’s liability on

19 the loan.

20 ‘‘(2) LIMITATION ON DISCHARGE.—The dis21 charge of the liability of an individual under this

22 subsection shall not discharge the liability of any

23 spouse with respect to any IDEA loan made to such

24 spouse.
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1 ‘‘(h) CREDITING OF COLLECTIONS; SPECIAL

2 RULES.—

3 ‘‘(1) CREDITING OF AMOUNTS PAID ON A JOINT

4 RETURN.—Amounts collected under this section on a

5 joint return from a husband and wife both of whom

6 are in repayment status shall be credited to the ac7 counts of such spouses in the following order:

8 ‘‘(A) first, to repayment of interest added

9 to each account at the end of the preceding cal10 endar year in proportion to the interest so

11 added to the respective accounts of the spouses,

12 and

13 ‘‘(B) then, to repayment of unpaid prin14 cipal, and unpaid interest accrued before such

15 preceding calendar year, in proportion to the re16 spective maximum account balances of the

17 spouses.

18 ‘‘(2) COMPUTATION OF ALTERNATIVE ANNUAL

19 PAYMENT FOR INDIVIDUALS WHO HAVE ATTAINED

20 AGE 55.—In the case of an individual who attains

21 age 55 before the close of the calendar year ending

22 in the taxable year, or of an individual filing a joint

23 return whose spouse attains age 55 before the close

24 of such calendar year, the progressivity factor appli25 cable to the base amortization amount of such indi-
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1 vidual for such taxable year shall not be less than

2 1.0.

3 ‘‘(3) INFLATION ADJUSTMENT IN COMPUTATION

4 OF PROGRESSIVITY FACTOR.—

5 ‘‘(A) IN GENERAL.—Not later than De6 cember 15 of 1996 and of each 3d calendar

7 year thereafter, the Secretary shall prescribe ta8 bles which shall apply in lieu of the tables con9 tained in subsection (b)(3)(A) with respect to

10 the succeeding 3 calendar years.

11 ‘‘(B) METHOD OF PRESCRIBING TABLES.—

12 The table which under subparagraph (A) is to

13 apply in lieu of the table contained in clause (i),

14 (ii), (iii), or (iv) of subsection (b)(3)(A), as the

15 case may be, shall be prescribed—

16 ‘‘(i) by increasing each amount of

17 modified adjusted gross income in such

18 table by the cost-of-living adjustment for

19 the calendar year, and

20 ‘‘(ii) by not changing the progressivity

21 factor applicable to the modified adjusted

22 gross income as adjusted under clause (i).

23 If any increase under the preceding sentence is

24 not a multiple of $10, such increase shall be

25 rounded to the nearest multiple of $10 (or, if
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1 such increase is a multiple of $5 and is not a

2 multiple of $10, such increase shall be in3 creased to the next highest multiple of $10).

4 ‘‘(C) COST-OF-LIVING ADJUSTMENT.—For

5 purposes of this paragraph, the cost-of-living

6 adjustment for any calendar year is the per7 centage (if any) by which—

8 ‘‘(i) the CPI for the preceding cal9 endar year, exceeds

10 ‘‘(ii) the CPI for the calendar year

11 1995.

12 ‘‘(D) CPI FOR ANY CALENDAR YEAR.—For

13 purposes of subparagraph (C), the CPI for any

14 calendar year is the average of the Consumer

15 Price Index as of the close of the 12-month pe16 riod ending on September 30 of such calendar

17 year.

18 ‘‘(E) CONSUMER PRICE INDEX.—For pur19 poses of subparagraph (D), the term ‘Consumer

20 Price Index’ means the last Consumer Price

21 Index for all-urban consumers published by the

22 Department of Labor.

23 ‘‘(5) RULES RELATING TO BANKRUPTCY.—
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1 ‘‘(A) IN GENERAL.—An IDEA loan shall

2 not be dischargeable in a case under title 11 of

3 the United States Code.

4 ‘‘(B) CERTAIN AMOUNTS MAY BE POST5 PONED.—If any individual receives a discharge

6 in a case under title 11 of the United States

7 Code, the Secretary may postpone any amount

8 of the portion of the liability of such individual

9 on any IDEA loan which is attributable to

10 amounts required to be paid on such loan for

11 periods preceding the date of such discharge.

12 ‘‘(6) FINALITY OF ASSESSMENT AND COLLEC13 TION.—The first sentence of subsection (b) of sec14 tion 6305 shall apply to assessments and collections

15 under subsection (f) of this section.’’

16 (b) APPLICATION OF ESTIMATED TAX.—Subsection

17 (f) of section 6654 of such Code (relating to failure by

18 individual to pay estimated income tax) is amended by

19 striking ‘‘minus’’ at the end of paragraph (2) and insert20 ing ‘‘plus’’, by redesignating paragraph (3) as paragraph

21 (4), and by inserting after paragraph (2) the following new

22 paragraph:

23 ‘‘(3) the amount required to be repaid under

24 section 6306 (relating to collection of income-de25 pendent education assistance loans), minus.’’
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1 (c) FILING REQUIREMENT.—Subsection (a) of sec2 tion 6012 of such Code (relating to persons required to

3 make returns of income) is amended by inserting after

4 paragraph (9) the following new paragraph:

5 ‘‘(10) Every individual required to make a pay6 ment for the taxable year under section 6306 (relat7 ing to collection of income-dependent education as8 sistance loans).’’

9 (d) CLERICAL AMENDMENT.—The table of sections

10 for subchapter A of chapter 64 of such Code is amended

11 by adding at the end thereof the following new item:

‘‘Sec. 6306. Collection of income-dependent education assistance

loans.’’

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