to obtain an education that is widely considered a 
prerequisite for earning a living wage. 
(7) Amidst rising tuition rates and stagnant 
grant funding, many students are forced to supple-
ment Federal loans with private loans, which fre-
quently feature higher interest rates with fewer con-
sumer protections. 
(8) A borrower who experiences an extended 
hardship for whatever reason, or a borrower who ex-
periences a series of separate hardships over a 
longer period of time, will often have no choice but 
to default on his or her private student loans. Op-
portunities to put such private loans into forbear-
ance are limited. 
(9) During the period of forbearance on private 
student loans, interest continues to accrue and is 
capitalized, and once the borrower comes out of for-
bearance, he or she owes significantly more on the 
principal of the loan than before the hardship period 
began. 
SEC. 3. 10/10 LOAN REPAYMENT AND FORGIVENESS. 
Part G of title IV of the Higher Education Act of 
1965 is amended by adding at the end the following: 
‘‘SEC. 493E. 10/10 LOAN REPAYMENT AND FORGIVENESS. 
‘‘(a) 10/10 LOAN REPAYMENT PLAN.— 
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‘‘(1) 10/10 LOAN REPAYMENT PLAN AUTHOR-
IZED.—Notwithstanding any other provision of this 
Act, the Secretary shall carry out a program (to be 
known as the ‘10/10 Loan Repayment Plan’) under 
which— 
‘‘(A) a borrower of an eligible loan who is 
eligible under paragraph (3) may elect to have 
the borrower’s aggregate monthly payment for 
all such loans not exceed the monthly payment 
amount described in paragraph (2); 
‘‘(B) the holder of such an eligible loan 
shall apply the borrower’s monthly payment 
under this subsection first toward interest due 
on the loan, next toward any fees due on the 
loan, and then toward the principal of the loan; 
‘‘(C) any interest due and not paid under 
subparagraph (B) shall continue to accrue but 
shall not be capitalized, and— 
‘‘(i) shall not be capitalized if the bor-
rower ends the election to make 10/10 
Loan Repayment under this subsection; or 
‘‘(ii) shall be forgiven in accordance 
with subsection (b) if the borrower meets 
the requirements for forgiveness under 
such subsection; 
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‘‘(D) any principal due and not paid under 
subparagraph (B) shall be deferred, and shall 
be forgiven in accordance with subsection (b) if 
the borrower meets the requirements for for-
giveness under such subsection; 
‘‘(E) the amount of time the borrower 
makes monthly payments under this subsection 
may exceed 10 years; 
‘‘(F) a borrower who is repaying an eligible 
loan pursuant to 10/10 Loan Repayment under 
this subsection may elect, at any time, to termi-
nate repayment pursuant to 10/10 Loan Repay-
ment and repay such loan under the standard 
repayment plan, in which case the amount of 
time the borrower is permitted to repay such 
loans may exceed 10 years; and 
‘‘(G) the special allowance payment to a 
lender calculated under section 438(b)(2)(I), 
when calculated for a loan in repayment under 
this section, shall be calculated on the principal 
balance of the loan and on any accrued interest 
unpaid by the borrower in accordance with this 
section. 
‘‘(2) 10/10 LOAN REPAYMENT MONTHLY PAY-
MENT FORMULA.—A borrower who has elected to 
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participate in the 10/10 Loan Repayment Plan 
under this subsection shall, during each month the 
borrower is participating in such Plan, make a 
monthly payment in an amount equal to— 
‘‘(A) one-twelfth of the amount that is 10 
percent of the result obtained by calculating, on 
at least an annual basis, the amount by 
which— 
‘‘(i) the borrower’s, and the bor-
rower’s spouse’s (if applicable), adjusted 
gross income; exceeds 
‘‘(ii) 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) in the case of a borrower who is in 
deferment due to an economic hardship de-
scribed in section 435(o), $0; or 
‘‘(C) in the case of a borrower for whom 
the payment calculated under subparagraph (A) 
is $0, but who is not in deferment due to an 
economic hardship described in section 435(o), 
an amount determined by the Secretary, on a 
case-by-case basis and not less than annually, 
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based on criteria established by the Secretary 
that shall take into consideration— 
‘‘(i) the specific financial and other 
relevant circumstances of a borrower, and 
the borrower’s spouse (if applicable), in-
cluding income, assets, total amount of eli-
gible loans, other debt, family size, employ-
ment status, and the period of time the 
borrower has been subject to this subpara-
graph; 
‘‘(ii) the need to prevent abuse of the 
relief provided under the 10/10 Loan Re-
payment Plan under this subsection and 
the 10/10 Forgiveness Program under sub-
section (b); and 
‘‘(iii) any other factors the Secretary 
considers to be appropriate to such deter-
mination. 
‘‘(3) ELIGIBILITY.— 
‘‘(A) ELIGIBILITY DETERMINATIONS.—The 
Secretary shall establish procedures for annu-
ally determining the borrower’s eligibility for 
10/10 Loan Repayment, including verification 
of a borrower’s annual adjusted gross income 
and the annual amount due on the total 
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amount of eligible loans, and such other proce-
dures as are necessary to effectively implement 
10/10 Loan Repayment under this subsection. 
The Secretary shall consider, but is not limited 
to, the procedures established in accordance 
with section 455(e)(1) or in connection with in-
come sensitive repayment schedules under sec-
tion 428(b)(9)(A)(iii) or 428C(b)(1)(E). 
‘‘(B) AUTO-DEBIT REQUIREMENT.—To be 
eligible to participate in the 10/10 Loan Repay-
ment Plan under this subsection, a borrower 
shall agree to have all eligible loan payments 
that are made on or after the date that the bor-
rower elects to participate in such repayment 
plan automatically electronically debited from a 
bank account. 
‘‘(4) SPECIAL RULE FOR MARRIED BORROWERS 
FILING SEPARATELY.—In the case of a married bor-
rower who files a separate Federal income tax re-
turn, the Secretary shall calculate the amount of the 
borrower’s 10/10 Loan Repayment under this sub-
section solely on the basis of the borrower’s student 
loan debt and adjusted gross income. 
‘‘(b) 10/10 LOAN FORGIVENESS.— 
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‘‘(1) IN GENERAL.—The Secretary shall carry 
out a program (to be known as the ‘10/10 Loan 
Forgiveness Program’) to forgive a qualified loan 
amount, in accordance with paragraph (3), on an eli-
gible loan for a borrower who, after the date that is 
10 years prior to the date of enactment of the Stu-
dent Loan Forgiveness Act of 2012, has made 120 
monthly payments on the eligible loan pursuant to 
any one or a combination of the following: 
‘‘(A) Monthly payment under the 10/10 
Loan Repayment Plan under subsection (a). 
‘‘(B) Monthly payment under any other re-
payment plan authorized under part B or D of 
an amount that, for a given month, is not less 
than the monthly payment amount calculated 
under subsection (a) that the borrower would 
have owed in the year in which such payment 
was made, based on the borrower’s adjusted 
gross income and eligible loan balance for such 
year. 
‘‘(C) For any month after such date dur-
ing which the borrower is in deferment due to 
an economic hardship described in section 
435(o), monthly payment of $0. 
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‘‘(2) METHOD
OF
LOAN
FORGIVENESS.—To 
provide loan forgiveness under paragraph (1), the 
Secretary is authorized to carry out a program— 
‘‘(A) through the holder of the loan, to as-
sume the obligation to repay a qualified loan 
amount for a loan made, insured, or guaranteed 
under part B of this title; and 
‘‘(B) to cancel a qualified loan amount for 
a loan made under part D of this title. 
‘‘(3) QUALIFIED
LOAN
AMOUNT.—After the 
borrower has made 120 monthly payments described 
in paragraph (1), the Secretary shall forgive— 
‘‘(A) with respect to new borrowers on or 
after the date of enactment of the Student 
Loan Forgiveness Act of 2012, the sum of— 
‘‘(i) the balance of principal and fees 
due on the borrower’s eligible loans as of 
the time of such forgiveness, not to exceed 
$45,520; and 
‘‘(ii) the amount of interest that has 
accrued on the balance described in clause 
(i) as of the time of such forgiveness; or 
‘‘(B) with respect to any other eligible bor-
rower, the balance of principal, interest, and 
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fees due on the borrower’s eligible loans as of 
the time of such forgiveness. 
‘‘(4) EXCLUSION
FROM
TAXABLE
INCOME.— 
The amount of a borrower’s eligible loans forgiven 
under this section shall not be included in gross in-
come of the borrower for purposes of the Internal 
Revenue Code of 1986. 
‘‘(c) SUPPORTING DOCUMENTATION REQUIRED.—A 
borrower who has elected to participate in the 10/10 Loan 
Repayment Plan under subsection (a), or who is request-
ing forgiveness under the 10/10 Loan Forgiveness Pro-
gram under subsection (b), shall provide to the Secretary 
such information and documentation as the Secretary de-
termines, by regulation, to be necessary to verify the bor-
rower’s adjusted gross income and payment amounts 
made on eligible loans of the borrower for the purposes 
of such Plan or Program. 
‘‘(d) DEFINITION OF ELIGIBLE LOAN.—In this sec-
tion the term ‘eligible loan’ means any loan made, insured, 
or guaranteed under part B or D (including loans de-
scribed 
in 
clauses 
(i) 
through 
(iii) 
of 
section 
428L(b)(2)(B) and loans under paragraph (2) of section 
455(g)).’’. 
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SEC. 4. CAPPING INTEREST RATES FOR ALL FEDERAL DI-
RECT LOANS. 
Section 455(b) of the Higher Education Act of 1965 
(20 U.S.C. 1087e(b)) is amended— 
(1) by redesignating paragraphs (8) and (9) as 
paragraphs (9) and (10), respectively; and 
(2) by inserting after paragraph (7) the fol-
lowing: 
‘‘(8) RATE OF INTEREST FOR ALL NEW FED-
ERAL DIRECT LOANS.—Notwithstanding any other 
provision of this Act, with respect to a loan under 
this part for which the first disbursement of prin-
cipal is made (or in the case of a Federal Direct 
Consolidation Loan, for which the application is re-
ceived) on or after July 1, 2012, or the date of en-
actment of the Student Loan Forgiveness Act of 
2012, whichever is later, the applicable rate of inter-
est shall not exceed 3.4 percent.’’. 
SEC. 5. IMPROVING AND EXPANDING PUBLIC SERVICE 
LOAN FORGIVENESS. 
Section 455(m) of the Higher Education Act of 1965 
(20 U.S.C. 1087e(m)) is amended— 
(1) in paragraph (1), by striking ‘‘120’’ and in-
serting ‘‘60’’ each place it appears; and 
(2) in paragraph (3)(B)— 
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(A) in clause (i), by striking ‘‘or’’ after the 
semicolon; 
(B) in clause (ii), by striking the period 
and inserting ‘‘; or’’; and 
(C) by adding at the end the following: 
‘‘(iii) a full-time job as a primary care 
physician in an area or population des-
ignated as a Medically Underserved Area 
or Population by the Health Resource and 
Services Administration.’’. 
SEC. 6. REFINANCING PRIVATE EDUCATION LOANS FOR 
CERTAIN BORROWERS. 
(a) CONSOLIDATION FOR CERTAIN BORROWERS.— 
Section 455(g) of the Higher Education Act of 1965 (20 
U.S.C. 1087e(g)) is amended— 
(1) by striking ‘‘A borrower’’ and inserting the 
following: 
‘‘(1) IN GENERAL.—A borrower’’; 
(2) by inserting ‘‘, and any loan described in 
paragraph (2)’’ after ‘‘July 1, 2010’’; and 
(3) by adding at the end the following new 
paragraph: 
‘‘(2) CONSOLIDATION OF PRIVATE EDUCATION 
LOANS AS A FEDERAL DIRECT CONSOLIDATION LOAN 
FOR CERTAIN BORROWERS.— 
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‘‘(A) IN GENERAL.—Notwithstanding any 
other provision of law, a borrower who meets 
the eligibility criteria described in subparagraph 
(B) shall be eligible to obtain a Federal Direct 
Consolidation loan under this paragraph that— 
‘‘(i) shall include an eligible private 
education loan; and 
‘‘(ii) may include a loan described in 
section 428C(a)(4). 
‘‘(B) ELIGIBLE
BORROWER.—A borrower 
of an eligible private education loan is eligible 
to obtain a Federal Direct Consolidation Loan 
under this paragraph if the borrower— 
‘‘(i) was eligible to borrow a loan 
under section 428H, a Federal Direct Un-
subsidized Stafford Loan, a loan under 
section 428B, or a Federal Direct PLUS 
loan for a period of enrollment at an insti-
tution of higher education, or, with respect 
to a borrower who was enrolled at an insti-
tution of higher education on less than a 
half-time basis, would have been eligible to 
borrow such a loan for such period of en-
rollment if the borrower had been enrolled 
on at least a half-time basis; 
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‘‘(ii) borrowed at least one eligible pri-
vate education loan for a period of enroll-
ment described in clause (i); and 
‘‘(iii) has an average adjusted gross 
income (based on the borrower’s adjusted 
gross income from the 3 most recent cal-
endar years before application for consoli-
dation under this section) that is equal to 
or less than the borrower’s total education 
debt (determined by calculating the sum of 
the borrower’s loans described in section 
428C(a)(4) and eligible private education 
loans) at the time of such application. 
‘‘(C) DEFINITION
OF
ELIGIBLE
PRIVATE 
EDUCATION LOAN.—For purposes of this para-
graph, the term ‘eligible private education loan’ 
means a private education loan (as such term 
is defined in section 140 of the Truth in Lend-
ing Act (15 U.S.C. 1650)) made on or before 
the date of enactment of the Student Loan For-
giveness Act of 2012, including the amount of 
outstanding principal, accrued interest, and re-
lated fees and costs (as determined by the Sec-
retary) owed by a borrower on such a loan. 
‘‘(D) PAYMENT TO THE HOLDER.— 
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‘‘(i) SECRETARY.—For each eligible 
private education loan that a borrower is 
consolidating under this paragraph, the 
Secretary shall make a payment to the 
holder of such loan in an amount equal to 
the amount consolidated under this para-
graph with respect to such loan. 
‘‘(ii) HOLDER.—Upon receipt of a 
payment described in clause (i), a holder 
shall discharge the liability on the loan 
consolidated under this paragraph in the 
amount of such payment. 
‘‘(E) TERMS AND RATE OF INTEREST.—A 
Federal Direct Consolidation Loan made under 
this paragraph shall have the same terms and 
conditions as a Federal Direct Consolidation 
loan under paragraph (1), except that the appli-
cable rate of interest for a Federal Direct Con-
solidation loan made under this paragraph shall 
not exceed 3.4 percent. 
‘‘(F) NOTIFICATION
OF
ELIGIBLE
BOR-
ROWERS.—The Secretary shall take such steps 
as may be necessary to notify eligible borrowers 
of the availability of consolidation under this 
paragraph no later than 60 days after the date 
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of enactment of the Student Loan Forgiveness 
Act of 2012, including notifying such borrowers 
of the deadline to apply for such a loan under 
subparagraph (G). 
‘‘(G) APPLICATION DEADLINE FOR LOANS 
UNDER
THIS
PARAGRAPH.—A borrower may 
apply for loans under this paragraph during the 
1-year period beginning on the date of enact-
ment of the Student Loan Forgiveness Act of 
2012. The Secretary shall not make a Federal 
Direct Consolidation Loan under this para-
graph to any borrower who has not submitted 
an application for such a loan to the Secretary 
before the end of such period. 
‘‘(H) AUTHORIZATION
AND
APPROPRIA-
TION.—There are authorized to be appro-
priated, and there are appropriated, such sums 
as may be necessary to carry out this para-
graph.’’. 
(b) 
CONFORMING
AMENDMENT.—Section 
428C(a)(3)(B)(i)(V) of the Higher Education Act of 1965 
(20 U.S.C. 1078–3(a)(3)(B)(i)(V)) is amended— 
(1) by striking ‘‘or’’ at the end of item (bb); 
(2) by striking the period at the end of item 
(cc) and inserting ‘‘; or’’; and 
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(3) by adding at the end the following: 
‘‘(dd) for the purpose of 
consolidating an eligible private 
education 
loan 
under 
section 
455(g)(2), whether such loan is 
consolidated alone, with other eli-
gible private education loans, or 
with loans described in para-
graph (4).’’. 
SEC. 7. OFFSET. 
Funds appropriated or otherwise made available for 
a fiscal year to carry out this Act and the amendments 
made by this Act shall be made available from the funds 
available for Overseas Contingency Operations. 
Æ 
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