Student Loan Borrowers' Bill of Rights Act of 2015

To establish student loan borrowers’ rights to basic consumer protections, reasonable and flexible repayment options, access to earned credentials, and effective loan cancellation in exchange for public service, and for other purposes. 1. Short title This Act may be cited as the Student Loan Borrowers’ Bill of Rights Act of 2015 I Borrowers’ Right to Basic Consumer Protections 101. Dischargeability of student loans in bankruptcy cases Section 523(a) of title 11 of the United States Code is amended— (1) by striking paragraph (8); and (2) by redesignating paragraphs (9) through (19) as paragraphs (8) through (18). 102. Reinstatement of the 6-year Statute of Limitations for student loans Subsection (a) of section 484A of the Higher Education Act of 1965 ( 20 U.S.C. 1091a(a) (a) Statute of limitations Notwithstanding any Federal or State statutory, regulatory, or administrative limitation on the period within which debts may be enforced— (1) an institution that receives funds under this title may file a suit or initiate or take another action for collection of a refund due from a student on a grant made, or work assistance awarded, under this title, during the 6-year period beginning on the day after the refund first became due (exclusive of period during which the State statute of limitations otherwise applicable to a suit under this paragraph would be tolled under State law); (2) a guaranty agency that has an agreement with the Secretary under section 428(c) may file a suit or initiate or take another action for collection of the amount due from a borrower on a loan made under part B during the 6-year period beginning on the day after such guaranty agency reimburses the previous holder of the loan for its loss on account of the default of the borrower (exclusive of period during which the State statute of limitations otherwise applicable to a suit under this paragraph would be tolled under State law); (3) an institution that has an agreement with the Secretary pursuant to section 487 may file a suit or initiate or take another action for collection of the amount due from a borrower on a loan made under part D or E after the default of the borrower on such loan during the 6-year period beginning on the day after the date of the default of the borrower with respect to such amount (exclusive of period during which the State statute of limitations otherwise applicable to a suit under this paragraph would be tolled under State law); or (4) the Secretary, the Attorney General, or the administrative head of another Federal agency, as the case may be, may file a suit or initiate or take another action for collection of a refund due from a student on a grant made under this title, or for the repayment of the amount due from a borrower on a loan made under this title that has been assigned to the Secretary under this title, during the 6-year period beginning on the day after the refund or the amount first became due. . 103. Prohibition of collection of student loans through certain offsets or through wage garnishment (a) Prohibition on offset of social security benefits Section 3716(c)(3)(A) of title 31, United States Code, is amended— (1) in clause (i), by striking except as provided in clause (ii) except as provided in clauses (ii) and (iii) (2) by adding at the end the following new clause: (iii) Notwithstanding clause (i), any payments due to an individual under Federal benefits programs cited under clause (i) shall not be subject to offset under this subsection if the offset is for payments certified by the Department of Education under a program administered by the Secretary of Education under title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1070 et seq. . (b) Prohibition on offset of tax refund Section 3720A(a) of title 31, United States Code, is amended— (1) by striking Any Federal agency (1) Except as provided in paragraph (2), any Federal agency (2) by adding at the end the following new paragraph: (2) Any past-due legally enforceable debt owed by an individual to the Department of Education under a program administered by the Secretary of Education under title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1070 et seq. . (c) Prohibition on wage garnishment Section 3720D(a) of title 31, United States Code, is amended— (1) by striking Notwithstanding (1) Except as provided in paragraph (2) and notwithstanding (2) by adding at the end the following new paragraph: (2) Any delinquent nontax debt owed by an individual to the Department of Education under a program administered by the Secretary of Education under title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1070 et seq. . II Borrower’s Right to Reasonable and Flexible Repayment Options 201. Exclusion from gross income for discharge of student loan indebtedness (a) In general Paragraph (1) of section 108(f) if such discharge (b) Student loans Paragraph (2) of section 108(f) of such Code is amended by striking made by— . Such term includes indebtedness used to refinance indebtedness which qualifies as a student loan under the preceding sentence. (c) Conforming amendments Section 108(f) of such Code is amended by striking paragraphs (3) and (4). (d) Effective date The amendments made by this section shall apply to discharges of indebtedness after the date of the enactment of this Act. 202. 529 plan distribution for student loan payments (a) In general Subparagraph (A) of section 529(e)(3) is amended by striking clause (iii) and inserting the following new clause: (iii) interest or principal paid with respect to a qualified education loan (as defined in section 221) with respect to a designated beneficiary. . (b) Conforming amendments (1) Section 529(e)(3)(A) of such Code is amended by striking the second sentence. (2) Section 72(t)(7)(A) of such Code is amended by inserting determined without regard to subparagraph (A)(iii) thereof section 529(e)(3) (3) Section 530(b)(2)(A)(i) of such Code is amended by inserting determined without regard to subparagraph (A)(iii) thereof section 529(e)(3) (c) Effective date The amendments made by this section shall apply to distributions made after the date of the enactment of this Act. 203. Inclusion of Parent PLUS Loans in Repayment Programs (a) Income contingent repayment plan Section 455(d)(1)(D) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(d)(1)(D) , except that the plan described in this subparagraph shall not be available to the borrower of a Federal Direct PLUS loan made on behalf of a dependent student; (b) Income-Based repayment (1) Section 493C Section 493C of the Higher Education Act of 1965 ( 20 U.S.C. 1098e (A) in subsection (a)— (i) by striking this section hardship In this section, the term partial financial hardship (ii) by striking, (other than an excepted PLUS loan or excepted consolidation loan) (B) in subsection (b)— (i) in paragraph (1), by striking (other than an excepted PLUS loan or excepted consolidation loan) (ii) in paragraph (6)(A), by striking (other than an excepted PLUS loan or excepted consolidation loan) (C) in subsection (c), by striking (other than an excepted PLUS loan or excepted consolidation loan), (2) Section 455(d)(1)(E) Section 455(d)(1)(E) of such Act ( 20 U.S.C. 1087e(d)(1)(D) , except that the plan described in this subparagraph shall not be available to the borrower of a Federal Direct PLUS Loan made on behalf of a dependent student or a Federal Direct Consolidation Loan, if the proceeds of such loan were used to discharge the liability on such Federal Direct PLUS Loan or a loan under section 428B made on behalf of a dependent student (c) Pay As You Earn The income-contingent repayment plan (based on the President's Pay As You Earn (1) a Federal Direct PLUS loan made on behalf of a dependent student; and (2) a Federal Direct Consolidation Loan, the proceeds of which were used to discharge the liability on a Federal Direct PLUS Loan or a loan under section 428B made on behalf of a dependent student. (d) Loan forgiveness for service in areas of national need Section 428K(a)(2) of such Act ( 20 U.S.C. 1078–11(a)(2) (1) in subparagraph (A), by striking (other than an excepted PLUS loan or an excepted consolidation loan (as such terms are defined in section 493C(a))) (2) in subparagraph (B), by striking (other than an excepted PLUS loan or an excepted consolidation loan) 204. Determination of adverse credit history Section 428B(a)(1)(A) of the Higher Education Act of 1965 ( 20 U.S.C. 1078–2(a)(1)(A) regulations promulgated by the Secretary section 685.200(c) of title 34, Code of Federal Regulations (as in effect on September 30, 2011) III Borrowers’ right to a meaningful degree 301. Prohibition on suspensions of professional licenses for loan default No evidence of an individual’s default on the repayment of a loan made, insured, or guaranteed under title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1070 et seq. 302. Prohibition on loss of access to transcripts for loan default Section 487(a) of the Higher Education Act of 1965 ( 20 U.S.C. 1094(a) (31) (A) The institution will not prohibit a student from accessing the student’s transcripts, degree scrolls, or other certifications of coursework or educational attainments at the institution because the student is in default on the repayment of a loan made, insured, or guaranteed under this title. (B) For purposes of this paragraph, the term student . IV Right to effective loan cancellation for borrowers engaged in public service careers 401. Extension of loan cancellation for borrowers employed in public service jobs for 5 years Section 455(m) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e (5) Loan cancellation after 5 years Beginning fiscal year 2016, the Secretary shall also cancel 50 percent of the balance of interest and principal due on any eligible Federal Direct Loan not in default for borrowers employed in a public service job for 5 years during the repayment of such loans— (A) by applying paragraph (1)(A)— (i) by substituting 60 120 (ii) by substituting October 1, 2007 October 1, 2015 (B) by applying paragraph (2), by substituting 50 percent of the balance the balance .

Summary: Student Loan Borrowers' Bill of Rights Act of 2015 Removes educational loans from the list of debts that are non-dischargeable in bankruptcy. Amends title IV (Student Assistance) of the Higher Education Act of 1965 (HEA) to reinstate the six-year statute of limitations on the recovery by: institutions of higher education (IHEs) of refund amounts owed by students on grants made, or work assistance awarded, under title IV; guaranty agencies of amounts owed on loans made under the Federal Family Education Loan (FFEL) program; IHEs that have program participation agreements with the Secretary of Education of amounts owed under the William D. Ford Federal Direct Loan program or Federal Perkins Loans program; and the federal government of amounts owed by students on grants made under title IV or amounts owed by borrowers on loans made under title IV that have been assigned to the Secretary. Prohibits the collection of amounts individuals owe the Department of Education under title IV of the HEA through: (1) offsets of social security, railroad retirement, or black lung benefits; (2) offsets of tax refunds; or (3) wage garnishment. Amends the Internal Revenue Code to exclude discharged student loan debt from an individual's gross income. Excludes from gross income distributions from qualified tuition plans that are use to pay the interest or principal on student loans. Amends the HEA to make borrowers of PLUS loans made on behalf of dependent students under: the Direct Loan program eligible for income-contingent repayment plans, including plans based on the President's Pay As You Earn repayment initiative; the Direct Loan or FFEL programs eligible for income-based repayment plans that enable borrowers who have a partial financial hardship to make lower monthly payments; and the Direct Loan or FFEL programs eligible for loan forgiveness for service in areas of national need. Specifies the regulation to be used in determining whether individuals have an adverse credit history that disqualifies them from borrowing a Direct Plus loan (provided to graduate or professional students or the parents of dependent students). Prohibits evidence of an individual's default on a loan made, insured, or guaranteed under title IV of the HEA from being used in a federal or state proceeding involving the individual's professional or vocational license. Prohibits an IHE from blocking students' access to their student records at the IHE due to such students being in default on such loans. Directs the Secretary to cancel 50% of the balance of the interest and principal due on Direct loans that are not in default for borrowers who are employed in a public service job and make 60 monthly payments on such loans after October 1, 2015.