Student Loan Borrowers' Bill of Rights Act of 2019

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 2019 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 by striking paragraph (8). 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 the 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 the 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 the 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 . (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 . (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 . II Borrower’s Right to Reasonable and Flexible Repayment Options 201. Exclusion from gross income for discharge of student loan indebtedness (a) In general Section 108(f)(1) if such discharge (b) Student loans Section 108(f)(2) 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 (a) In general Section 529(e)(3)(A) 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) Part B loans (A) Repayment plans Section 428(b)(9)(A)(v) of the Higher Education Act of 1965 ( 20 U.S.C. 1078(b)(9)(A)(v) , except that the plan described in this clause shall not be available to a borrower for a loan under section 428B made on behalf of a dependent student or for a consolidation loan under section 428C, if the proceeds of such loan were used to discharge the liability of a loan under section 428B made on behalf of a dependent student (B) Consolidation loans Section 428C(c)(3) of such Act ( 20 U.S.C. 1078–3(c)(3) (i) in subparagraph (A), by inserting and (ii) in subparagraph (B), by striking and (iii) by striking subparagraph (C). (2) Part D loans 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 (3) IBR Section 493C of such Act ( 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) (iii) in paragraph (7), by striking other than a loan under section 428B or a Federal Direct PLUS Loan (C) in subsection (c), by striking (other than an excepted PLUS loan or excepted consolidation loan), (c) 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) (d) Other repayment plans Any plan for the repayment of loans made under title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1070 204. Determination of adverse credit history Section 428B(a) of the Higher Education Act of 1965 ( 20 U.S.C. 1078–2(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 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) (30) (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 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 any borrower 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, 2019 (B) by applying paragraph (2), by substituting 50 percent of the balance the balance .

Summary: Student Loan Borrowers' Bill of Rights Act of 2019 This bill permits a borrower to discharge a student loan in a bankruptcy case and establishes requirements concerning (1) student loan debt collection, (2) student loan forgiveness, (3) options for student loan payments, (4) the exclusion of discharged student loan debt from an individual's gross income, and (5) loan defaults. Specifically, the bill allows federal or private student loans to be discharged in bankruptcy cases and reinstates the six-year statute of limitations for certain student loans. The Department of Education must cancel 50% of the balance of the interest and principal due on student loans for borrowers who make 60 monthly payments on such loans after October 1, 2019, and work at a public service job for 5 years during the repayment period. In addition, the bill protects borrowers from efforts to collect student loan debt from (1) offsets of Social Security, railroad retirement, or black lung benefits; (2) wage garnishment; or (3) offsets of tax refunds. The bill amends the Internal Revenue Code to (1) exclude discharged student loan debt from an individual's gross income, and (2) allow distributions from qualified tuition programs (known as 529 plans) to be used for student loan payments. The bill makes parent PLUS loans eligible for income-based repayment plans. Finally, the bill prohibits evidence of an individual's default on a federal student loan from being used (1) in proceedings involving the individual's professional or vocational license, or (2) to prohibit the individual from accessing transcripts and degrees.