Help Students Repay Act

To amend the Higher Education Act of 1965 to require borrowers to repay Federal student loans under an income-based repayment plan or a standard repayments plan, and for other purposes. 1. Short title This Act may be cited as the Help Students Repay Act 2. Streamlining repayment plans for new borrowers Section 455 of the Higher Education Act of 1965 ( 20 U.S.C. 1087e (d) Repayment plans (1) Design and selection for borrowers before July 1, 2018 With respect to a borrower of a loan made under this part before July 1, 2018, and consistent with criteria established by the Secretary, the Secretary shall offer such borrower a variety of plans for repayment of such loan, including principal and interest on the loan. The borrower shall be entitled to accelerate, without penalty, repayment on the borrower's loans under this part. The borrower may choose— (A) a standard repayment plan, consistent with subsection (a)(1) of this section and with section 428(b)(9)(A)(i); (B) a graduated repayment plan, consistent with section 428(b)(9)(A)(ii); (C) an extended repayment plan, consistent with section 428(b)(9)(A)(iv), except that the borrower shall annually repay a minimum amount determined by the Secretary in accordance with section 428(b)(1)(L); (D) an income contingent repayment plan, with varying annual repayment amounts based on the income of the borrower, paid over an extended period of time prescribed by the Secretary, not to exceed 25 years, 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; and (E) an income-based repayment plan that enables borrowers who have a partial financial hardship to make a lower monthly payment in accordance with section 493C, 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. (2) Design and selection for borrowers on or after July 1, 2018 The Secretary shall offer a borrower of a loan made under this part on or after July 1, 2018, the following plans for repayment of such loan, including principal and interest on the loan. The borrower shall be entitled to accelerate, without penalty, repayment on the borrower’s loans under this part. The borrower may choose— (A) a standard repayment plan, consistent with subsection (a)(1) of this section and with section 428(b)(9)(A)(i); or (B) an income-based repayment plan, consistent with section 460A, except the plan described in this subparagraph shall not be available to a borrower of a Federal Direct PLUS Loan made on behalf of a dependent student, 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) Borrower non-selection If a borrower of a loan made under this part does not select a repayment plan described in paragraph (1) or (2), the Secretary may provide the borrower with a repayment plan described in subparagraph (A), (B), or (C) of paragraph (1) in the case of a borrower of a loan first disbursed before July 1, 2018, or a repayment plan described in paragraph (2)(A) in the case of a borrower of a loans first disbursed on or after July 1, 2018. (4) Changes in selections The borrower of a loan made under this part may change the borrower's selection of a repayment plan under paragraph (1) or (2), or the Secretary's selection of a plan for the borrower under paragraph (3), as the case may be, under such terms and conditions as may be established by the Secretary. (5) Repayment after default For any borrower who has defaulted on a loan made under this part, the Secretary— (A) may require the borrower to pay all reasonable collection costs associated with such loan; and (B) if such loan was made— (i) to any borrower who, before July 1, 2018, had an outstanding balance on a student loan made, insured, or guaranteed under this part or part B, may require the borrower to repay the loan pursuant to an income contingent repayment plan, as described in paragraph (1)(D), or an income-based repayment plan, as described in paragraph (1)(E); or (ii) to a new borrower (as defined in section 460A(a)(2)), may provide the borrower the option to enroll in the repayment plan described in paragraph (2)(B). (6) Applicability provision (A) In general Except as provided in paragraph (5) and subparagraph (B), the repayment plans under subparagraphs (B), (C), (D), and (E) of paragraph (1) are not available for a borrower who received the borrower's first disbursement of a Federal Direct Loan on or after July 1, 2018. (B) Exception The repayment plans available to a borrower of a Federal Direct PLUS Loan made on behalf of a dependent student or a Federal Direct Consolidation Loan whose proceeds were used to discharge the liability of a Federal Direct PLUS Loan made on behalf of a dependent student or a loan under section 428B made on behalf of a dependent student on or after July 1, 2018, shall be those described under subparagraphs (A), (B), and (C) of paragraph (1). . 3. Income-based repayment for new borrowers and new loans Part D of title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1087a 460A. Income-based repayment plan (a) Definitions (1) Covered Federal Direct Loan The term covered Federal Direct Loan (2) New borrower The term new borrower (A) as of July 1, 2018, has no outstanding balance on a student loan made, insured, or guaranteed under part B or D; or (B) has no outstanding balance on a student loan made, insured, or guaranteed under part B or D on the date the borrower receives a loan made under part D on or after July 1, 2018. (3) Excepted plus loan; excepted consolidation loan The terms excepted plus loan excepted consolidation loan (4) Income-based calculation The term income-based calculation (A) the borrower's, and the borrower's spouse's (if applicable), adjusted gross income; exceeds, as defined by the Secretary; exceeds (B) 150 percent of the poverty line applicable to the borrower's family size as determined under section 673(2) of the Community Services Block Grant Act ( 42 U.S.C. 9902(2) (b) Revised income-Based plan Notwithstanding any other provision of this Act, the Secretary shall carry out a program for new borrowers and any borrowers of covered Federal Direct Loans made on or after July 1, 2018, that meets the following requirements: (1) Monthly payment amount Except as otherwise provided in this subsection, a new borrower of any covered Federal Direct Loan, or any borrower of any covered Federal Direct Loan, may elect to have the borrower’s aggregate monthly payment for all such loans not to exceed the result of the income-based calculation divided by 12. (2) Application of payment The Secretary shall apply the borrower's monthly payment under this subsection on such a loan first toward interest due on the loan, next toward any fees due on the loan, and then toward the principal of the loan. (3) Interest (A) In general Subject to subparagraph (B), if the borrower's monthly payment amount under paragraph (1) is not sufficient to pay the accrued interest on the borrower’s loan, such interest shall be paid by the borrower or be capitalized. (B) No accrual of interest after 10 years Notwithstanding section 455(b)(8) or any other provision of this title, interest shall cease accruing on a loan being repaid under this subsection, after the borrower has made payments under this subsection on such loan in an amount equal to— (i) the amount the borrower would have repaid under 455(d)(1)(A) on such loan, based on a 10-year repayment period, when the borrower first made the election described in this subsection, plus (ii) the amount of any interest that accrued (or was capitalized) during a forbearance or deferment period or any similar period, on the portion of the loan that was being repaid in accordance with clause (i). (4) Selection of different repayment plan A borrower who no longer wishes to repay under the plan under this section may change to a standard repayment plan in accordance with section 455(d)(3). (c) Eligibility determinations The Secretary shall establish procedures for annually determining the borrower's eligibility for income-based repayment, including verification of a borrower's annual income and the annual amount due on the total amount of covered Federal Direct Loans, and such other procedures as are necessary to effectively implement income-based repayment under this section. The Secretary shall consider, but is not limited to, the procedures established in accordance with section 455(e)(1) or section 493C, or in connection with income sensitive repayment schedules under section 428(b)(9)(A)(iii) or 428C(b)(1)(E). (d) Special rule for married borrowers filing separately In the case of a married borrower who files a separate Federal income tax return, the Secretary shall calculate the amount of the borrower's income-based repayment under this section solely on the basis of the borrower's student loan debt and adjusted gross income. .

Summary: Help Students Repay Act This bill directs the Department of Education to consolidate student loan repayment options for new borrowers of William D. Ford Federal Direct Loans into one simplified income-driven repayment plan.