SIMPLE Act

To amend the Higher Education Act of 1965 to provide for the automatic recertification of income for income-driven repayment plans, and for other purposes. 1. Short title This Act may be cited as the Streamlining Income-driven, Manageable Payments on Loans for Education Act SIMPLE Act 2. Automatic income monitoring procedures after a total and permanent disability discharge Section 437(a) of the Higher Education Act of 1965 ( 20 U.S.C. 1087(a) (3) Automatic income monitoring (A) In general Not later than 2 years after the date of enactment of the Streamlining Income-driven, Manageable Payments on Loans for Education Act (i) obtain (for each year of the income-monitoring period described in subparagraph (B) and without further action by the borrower) such information as is reasonably necessary regarding the income of such borrower (and the borrower’s spouse, if applicable) for the purpose of determining the borrower’s continued eligibility for the loan discharge described in subparagraph (B) for such year, and any other information necessary to determine such continued eligibility of the borrower for such year, except that— (I) in the case of a borrower whose returns and return information indicate that the borrower has no earned income for any year of such income-monitoring period, such borrower shall be treated as not having earned income in excess of the poverty line for such year; and (II) this clause shall be subject to clause (ii); (ii) allow the borrower, at any time, to opt out of clause (i) and prevent the Secretary from obtaining information under such clause without further action by the borrower; and (iii) provide the borrower with an opportunity to update the information obtained under clause (i) before the determination of the borrower’s continued eligibility for such loan discharge for such year. (B) Applicability Subparagraph (A) shall apply— (i) to each borrower of a covered loan (defined in section 455(d)(8)) that is discharged under this subsection or section 464(c)(1)(F) due to the permanent and total disability of the borrower; and (ii) during the income-monitoring period under this subsection, defined in this paragraph as the period— (I) beginning on the date on which such loan is so discharged; and (II) during which the Secretary determines whether a reinstatement of the obligation of, and resumption of collection on, such loan may be necessary. (C) Availability of returns and return information Returns and return information may be obtained under subparagraph (A)(i) only to the extent authorized by section 6103(l)(13) (D) Definition In this paragraph, the term returns and return information section 6103 . 3. Notification and automatic enrollment procedures for borrowers who are delinquent on loans and for borrowers who rehabilitated defaulted loans (a) Amendments (1) Notification and automatic enrollment procedures Section 455(d) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(d) (6) Notification and automatic enrollment procedures for borrowers who are delinquent on loans (A) Authority to obtain income information (i) In general In the case of any borrower who is at least 60 days delinquent on a covered loan, the Secretary may obtain such information as is reasonably necessary regarding the income and family size of the borrower (and the borrower's spouse, if applicable). (ii) Availability of returns and return information Returns and return information (as defined in section 6103 (B) Borrower notification With respect to each borrower of a covered loan who is at least 60 days delinquent on such loan and who has not been subject to the procedures under this paragraph for such loan in the preceding 120 days, the Secretary shall, as soon as practicable after such 60-day delinquency, provide to the borrower the following: (i) Notification that the borrower is at least 60 days delinquent on at least 1 covered loan, and a description of all delinquent covered loans, nondelinquent covered loans, and noncovered loans of the borrower. (ii) A brief description of the repayment plans for which the borrower is eligible and the covered loans and noncovered loans of the borrower that may be eligible for such plans, based on information available to the Secretary. (iii) Clear and simple instructions on how to select the repayment plans. (iv) The amount of monthly payments for the covered and noncovered loans under the repayment plans for which the borrower is eligible, based on information available to the Secretary, including, if the income information of the borrower is available to the Secretary under subparagraph (A)— (I) the amount of the monthly payment under each income-driven repayment plan for which the borrower is eligible for the borrower's covered and noncovered loans, based on such income information; and (II) the income, family size, tax filing status, and tax year information on which each monthly payment is based. (v) An explanation that in the case of a borrower for whom adjusted gross income is unavailable— (I) if the borrower selects to repay the covered loans of such borrower pursuant to an income-driven repayment plan that defines discretionary income in such a manner that an individual not required under section 6012(a)(1) (II) if the borrower selects to repay such loans pursuant to an income-driven repayment plan that is not described in subclause (I), the borrower will not be required to provide the Secretary with such other documentation of income, and the borrower will have a calculated monthly payment of $0. (vi) An explanation that the Secretary shall take the actions under subparagraph (C) with respect to such borrower, if— (I) the borrower is 120 days delinquent on one or more covered loans and has not selected a new repayment plan for the covered loans of the borrower; and (II) in the case of such a borrower whose repayment plan for the covered loans of the borrower is not an income-driven repayment plan, the monthly payments under such repayment plan are higher than such monthly payments would be under an income-driven repayment plan for such loans. (vii) Instructions on updating the information of the borrower obtained under subparagraph (A). (C) Secretary's initial selection of plan With respect to each borrower described in subparagraph (B) who has a repayment plan for the covered loans of the borrower that meets the requirements of clause (vi)(II) of subparagraph (B) and has not selected a new repayment plan for such loans in accordance with the notice received under such subparagraph, and who is at least 120 days delinquent on such a loan, the Secretary shall, as soon as practicable— (i) in a case in which any of the borrower's covered loans are eligible for an income-driven repayment plan— (I) (aa) provide the borrower with the income-driven repayment plan that requires the lowest monthly payment amount for each covered loan of the borrower, compared to any other such plan for which the borrower is eligible; or (bb) if more than one income-driven repayment plan would offer the borrower the same lowest monthly payment amount, provide the borrower with the income-driven repayment plan that has the most favorable terms for the borrower; (II) if the plan selected under subclause (I) is not the income-driven repayment plan that would have the lowest monthly payment amount if the borrower were eligible for such plan for the borrower’s covered loans and noncovered loans, notify the borrower of the actions, if any, the borrower may take to become eligible for such income-driven repayment plan; and (III) authorize the borrower to change the Secretary’s selection of a plan under this clause to any plan described in paragraph (1) for which the borrower is eligible; and (ii) in a case in which none of the borrower’s covered loans are eligible for an income-driven repayment plan, notify the borrower of the actions, if any, the borrower may take for such loans to become eligible for such a plan. (D) Secretary's additional selection of plan (i) In general With respect to each borrower of a covered loan who selects a new repayment plan in accordance with the notice received under subparagraph (B) and who continues to be delinquent on such loan for a period described in clause (ii), the Secretary shall, as soon as practicable after such period, carry out the procedures described in clauses (i) and (ii) of subparagraph (C) for the covered loans of the borrower, if such procedures would result in lower monthly repayment amounts on such loan. (ii) Description of period The duration of the period described in clause (i) shall be the amount of time that the Secretary determines is sufficient to indicate that the borrower may benefit from repaying such loan under a new repayment plan, but in no case shall such period be less than 60 days. (E) Opt-out A borrower of a covered loan shall have the right to opt out of the procedures under this paragraph. (F) Procedures The Secretary shall establish procedures as are necessary to effectively implement this paragraph. (7) Notification and automatic enrollment procedures for borrowers who are rehabilitating defaulted loans (A) Authority to obtain income information (i) In general In the case of any borrower who is rehabilitating a covered loan pursuant to section 428F(a), the Secretary may obtain such information as is reasonably necessary regarding the income and family size of the borrower (and the borrower's spouse, if applicable). (ii) Availability of returns and return information Returns and return information (as defined in section 6103 (B) Borrower notification Not later than 30 days after a borrower makes the 6th payment required for the loan rehabilitation described in subparagraph (A), the Secretary shall notify the borrower of the process under subparagraph (C) with respect to such loan. (C) Secretary's selection of plan With respect to each borrower who has made the 9th payment required for the loan rehabilitation described in subparagraph (A), the Secretary shall, as soon as practicable after such payment— (i) in a case in which any of the borrower's covered loans, without regard to whether the loan has been so rehabilitated, is eligible for an income-driven repayment plan— (I) (aa) provide the borrower with the income-driven repayment plan that requires the lowest monthly payment amount for each covered loan of the borrower, compared to any other such plan for which the borrower is eligible; or (bb) if more than one income-driven repayment plan would offer the borrower the same lowest monthly payment amount, provide the borrower with the income-driven repayment plan that has the most favorable terms for the borrower; and (II) if the plan selected under subclause (I) is not the income-driven repayment plan that would have the lowest monthly payment amount if the borrower were eligible for such plan for the borrower’s covered loans and noncovered loans, notify the borrower of the actions, if any, the borrower may take to become eligible for such income-driven repayment plan; and (ii) in a case in which none of the borrower’s covered loans are eligible for an income-driven repayment plan, notify the borrower of the actions, if any, the borrower may take for such a loan to become eligible for such a plan. (D) Opt-out A borrower of a covered loan shall have the right to opt out of the procedures under this paragraph. (E) Procedures The Secretary shall establish procedures as are necessary to effectively implement this paragraph. . (2) Definitions Section 455(d) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(d) (8) Definitions In this subsection: (A) Covered loan The term covered loan (i) a loan made under this part; (ii) a loan purchased under section 459A; or (iii) a loan that has been assigned to the Secretary under section 428(c)(8) or part E. (B) Income-driven repayment plan The term income-driven repayment plan (C) Noncovered loan The term noncovered loan . (3) Changing plans Section 493C(b)(8) of the Higher Education Act of 1965 ( 20 U.S.C. 1098e(b)(8) (8) a borrower who is repaying a loan made, insured, or guaranteed under part B or D pursuant to income-based repayment may elect, at any time, to terminate repayment pursuant to income-based repayment and repay such loan under any repayment plan for which the loan is eligible in accordance with the requirements of part B or part D, respectively; and . (b) Effective date; application (1) Automatic enrollment The amendments made by paragraphs (1) and (2) of subsection (a) shall— (A) take effect as soon as the Secretary of Education determines practicable after the Secretary finalizes the procedures under section 5, but not later than 2 years after the date of enactment of this Act; and (B) apply to all borrowers of covered loans (as defined in section 455(d)(8) of the Higher Education Act of 1965, as added by subsection (a)). (2) Changing plans The amendment made by subsection (a)(3) shall take effect on the date of enactment of this Act. 4. Automatic recertification of income (a) Income contingent repayment Section 455(e) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(e) (1) in paragraph (3)— (A) by striking does not reasonably reflect the borrower's current income whose income has decreased relative to the adjusted gross income available to the Secretary (B) by inserting , consistent with the procedures established under paragraph (8)(B)(iv) (2) by adding at the end the following: (8) Automatic recertification (A) Definition In this paragraph, the term covered loan (B) In general Beginning as soon as the Secretary determines practicable after the Secretary finalizes the procedures under section 5 of the Streamlining Income-driven, Manageable Payments on Loans for Education Act (i) obtain (for each year of repayment and without further action by the borrower) such information as is reasonably necessary regarding the income of such borrower (and the borrower’s spouse, if applicable), for the purpose of determining the repayment obligation of the borrower for such year, including information with respect to the borrower’s family size in accordance with the procedures under section 5 of the Streamlining Income-driven, Manageable Payments on Loans for Education Act (ii) allow the borrower, at any time, to opt out of clause (i) and prevent the Secretary from obtaining information under such clause without further action by the borrower; (iii) provide the borrower with an opportunity to update the information obtained under clause (i) before the determination of the annual repayment obligation of the borrower; and (iv) in the case of a borrower for whom adjusted gross income is unavailable— (I) if the borrower has selected to repay the covered loans of such borrower pursuant to an income contingent repayment plan that defines discretionary income in such a manner that an individual not required under section 6012(a)(1) (II) if the borrower has selected to repay such loans pursuant to an income contingent repayment that is not described in subclause (I), the borrower will not be required to provide the Secretary with such other documentation of income, and the borrower will have a calculated monthly payment of $0. (C) Applicability Subparagraph (B) shall apply to each borrower of a covered loan who, on or after the date on which the Secretary establishes procedures under such subparagraph— (i) selects, or for whom the Secretary selects under subparagraph (C) or (D) of paragraph (6) or paragraph (7)(C) of subsection (d), or section 428(m)(1), an income contingent repayment plan; or (ii) recertifies income and family size under such plan. (D) Availability of returns and return information Returns and return information (as defined in section 6103 (E) Other requirements The procedures established by the Secretary under this paragraph shall be consistent with the requirements of paragraphs (1) through (7), except as otherwise provided in this paragraph. . (b) Income-Based repayment Section 493C(c) of the Higher Education Act of 1965 ( 20 U.S.C. 1098e(c) (1) by striking The Secretary shall establish (1) In general The Secretary shall establish ; and (2) by striking The Secretary shall consider (2) Procedures for eligibility The Secretary shall— (A) consider ; (3) by striking 428C(b)(1)(E). 428C(b)(1)(E); and (B) beginning as soon as the Secretary determines practicable after the Secretary finalizes the procedures under section 5 of the Streamlining Income-driven, Manageable Payments on Loans for Education Act . 5. Study and procedures on determining family size (a) In general Not later than 1 year after the date of enactment of this Act, the Secretary of Education shall— (1) jointly with the Secretary of the Treasury, conduct a study, which meets the specifications described in subsection (b), on the effect of using data from the Internal Revenue Service on the deduction for personal exemptions provided by section 151 (2) use the results of the study conducted under paragraph (1) to develop procedures for determining family size for the automatic recertification of income for an income-driven repayment plan in a manner that minimizes burdens and unintended harm to borrowers; (3) publish the procedures developed under paragraph (2) in the Federal Register; and (4) after a notice and comment period on such procedures, use such comments to finalize the procedures. (b) Specifications The study conducted under subsection (a)(1) shall— (1) determine how closely such personal exemptions match the family size that borrowers report on their income-driven repayment plan request form; (2) compare the borrower’s actual monthly payment amount with the monthly payment amount borrowers would have using family size information derived from tax returns; and (3) use data from more than one year, where possible, to analyze how much family size changes over time. (c) Definition The term income-driven repayment plan 6. Disclosure of tax return information to carry out certain higher education loan programs (a) In general Paragraph (13) of section 6103(l) (13) Disclosure of returns and return information for purposes of student loan administration (A) In general The Secretary, subject to such requirements and conditions as the Secretary may prescribe, shall upon written request from the Secretary of Education disclose to officers and employees of the Department of Education returns and return information with respect to a taxpayer who has received an applicable student loan. (B) Restriction on use of disclosed information Return information disclosed under subparagraph (A) may be used by officers and employees of the Department of Education only for the purposes of, and to the extent necessary for purposes of— (i) carrying out income monitoring under section 437(a) of the Higher Education Act of 1965 ( 20 U.S.C. 1087(a) (ii) establishing the appropriate income contingent repayment amount in connection with an applicable student loan, (iii) establishing the appropriate repayment amount under an applicable income-driven repayment plan (as defined in section 455(d)(8) of such Act ( 20 U.S.C. 1087e(d) (I) borrowers who have selected such a plan, and (II) in the case of any recertification under section 455(e)(8) or 493C(c)(2)(B) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(e) (iv) in the case of borrowers who are at least 60 days delinquent on an applicable student loan— (I) providing notice of eligibility for an income-driven repayment plan (as so defined) pursuant to section 455(d)(6)(B) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(d) (II) automatic enrollment in such an income-driven repayment plan after such borrowers are at least 120 days delinquent on such a loan pursuant to section 455(d)(6)(C) of such Act ( 20 U.S.C. 1087e(d) (v) in the case of borrowers who are rehabilitating defaulted loans, providing notice of eligibility for an income-driven repayment plan (as so defined) and automatic enrollment in such a plan pursuant to section 455(d)(7) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(d) (C) Disclosure to certain contractors Officers and employees of the Department of Education may disclose the information described in subparagraph (A) to persons awarded contracts by the Secretary of Education under section 456 of the Higher Education Act of 1965 ( 20 U.S.C. 1087f (D) Spousal information for married individuals filing separate returns For purposes of this paragraph, in the case of a married individual filing a separate return, the term taxpayer (E) Applicable student loan (i) In general For purposes of this paragraph, the term applicable student loan (I) any loan which is made, insured, or guaranteed under a program authorized under part B or D of title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1071 (II) any loan which is made under part E of such title IV ( 20 U.S.C. 1087aa (ii) Exception For purposes of subparagraph (B)(iv), the term applicable student loan 20 U.S.C. 1071 . (b) Conforming amendments (1) Section 6103(a)(3) of such Code is amended by inserting (13), (12), (2) Section 6103(p)(4) of such Code is amended— (A) by inserting (13), (l)(10), (B) by inserting (13), (10), (c) Effective date The amendments made by this section shall apply to disclosures made after the date of enactment of this Act.

Summary: Streamlining Income-driven, Manageable Payments on Loans for Education Act or the SIMPLE Act This bill requires the Department of Education to establish and implement a process for automatically recertifying a borrowers' income to determine eligibility for a loan discharge due to permanent and total disability under the Federal Family Education Loan Program. In addition, the bill establishes a process for enrolling a delinquent borrower in federal student loan repayment in an income-driven repayment plan.