Income-Driven Student Loan Forgiveness Act

To direct the Secretary of Education to forgive the Federal student loans of borrowers meeting certain income requirements, and for other purposes. 1. Short title This Act may be cited as the Income-Driven Student Loan Forgiveness Act 2. Federal student loan forgiveness for borrowers meeting certain income requirements (a) Forgiveness required Notwithstanding any other provision of law, the Secretary of Education shall forgive the outstanding balance of principal, interest, and fees due on the eligible Federal student loans of borrowers who meet the requirements of subsection (b). (b) Eligibility (1) In general A borrower is eligible to receive forgiveness under this section if, at the time of application for forgiveness, such borrower— (A) has an eligible Federal student loan in repayment; (B) filed a Federal income tax return for the most recently ended tax year; (C) (i) is employed; or (ii) if not employed, was employed during the period of three years immediately preceding March 1, 2020; and (D) meets the income requirements specified in paragraph (2). (2) Income requirements The income requirements specified in this subsection are the following: (A) In the case of borrower who is not married, the adjusted gross income of the borrower does not exceed $100,000. (B) In the case of a borrower who is married and files a Federal income tax return jointly with the borrower’s spouse, the adjusted gross income of the borrower and the borrower’s spouse does not exceed $200,000. (C) In the case of a borrower who is married and files a Federal income tax return separately from the borrower’s spouse, the adjusted gross income of the borrower does not exceed $100,000. The income of a borrower’s spouse shall not be considered in making the determination under this subparagraph. (3) Return information The determinations under paragraph (2) shall be based on the Federal income tax return filed by the borrower for the most recent tax year ending before the date of the borrower’s application for forgiveness under this section. (c) Method of loan forgiveness As soon as practicable after the Secretary of Education confirms that an applicant meets the requirements of subsection (b), the Secretary of Education shall— (1) for each eligible Federal student loan of the borrower that is held by the Department of Education, cancel the outstanding balance of principal, interest, and fees due on the loan; and (2) for each eligible Federal student loan of the borrower that is not held by the Department of Education— (A) through the holder of a loan, assume the obligation to repay the outstanding balance of principal, interest, and fees due on the loan; and (B) upon assuming such obligation, cancel the outstanding balance of such principal, interest, and fees. (d) Application To be eligible to receive forgiveness under this section a borrower shall submit to the Secretary of Education an application at such time, in such manner, and containing such information as the Secretary may require. (e) Repayment refunds prohibited Nothing in this section shall be construed to authorize the refund of any payments made by a borrower on an eligible Federal student before the date on which the borrower’s loans are forgiven in accordance with this section. (f) Exclusion from taxable income The amount of a borrower’s eligible Federal student loans forgiven under this section shall not be included in the gross income of the borrower for purposes of the Internal Revenue Code of 1986. (g) Determination of ineligibility If the Secretary of Education denies a borrower’s application for forgiveness under this section, the Secretary shall notify the borrower that the borrower’s application was denied and indicate the specific reasons for such denial. 3. Notice to the public Not later than 15 days after the date of enactment of this Act, the Secretary of Education, in consultation with institutions of higher education and lenders and holders of Federal student loans, shall take such actions as may be necessary to ensure that borrowers who have outstanding eligible Federal student loans are aware of the loan forgiveness program authorized by this Act. Such information shall— (1) be presented in a form that is widely available to the public, especially to borrowers with eligible Federal student loans; (2) be easily understandable; and (3) clearly notify borrowers that to be considered for loan forgiveness under this Act, borrowers must submit an application to the Secretary of Education. 4. Definitions In this Act: (1) Adjusted gross income The term adjusted gross income section 62 26 U.S.C. 62 (2) Eligible Federal student loan The term eligible Federal student loan (A) received by a borrower before the date of enactment of this Act; (B) used to pay for— (i) the undergraduate education of the borrower; or (ii) in the case of a loan made to a parent on behalf a dependent student, the undergraduate education of such dependent student; and (C) made, insured, or guaranteed under— (i) part B, part D, or part E of title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1070 (ii) part E of title VIII of the Public Health Service Act. (3) Fees The term fees (4) Institution of higher education The term institution of higher education 20 U.S.C. 1002 (5) Undergraduate education The term undergraduate education

Summary: Income-Driven Student Loan Forgiveness Act This bill requires the Department of Education (ED) to forgive the outstanding balance of principal, interest, and fees due on federal student loans for eligible borrowers who meet certain income requirements. Eligible borrower refers to an individual who (1) has an eligible federal student loan in repayment, (2) filed a federal income tax return for the most recent tax year, (3) is employed or was employed during the three-year period immediately preceding March 1, 2020, and (4) meets income requirements (e.g., an adjusted gross income of $100,000 or less for a borrower who is not married). Further, the borrower must submit an application to ED for loan forgiveness. The bill prohibits borrowers from receiving refunds for any previously made payments. Further, the bill specifies the notification requirements related to the availability of loan forgiveness. The bill also excludes discharged student loan debt from an individual's gross income for tax purposes.