(2) by adding at the end the following new 
paragraph: 
‘‘(2) Any delinquent nontax debt owed by an indi-
vidual 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 
et seq.) shall not be subject to collection under this section 
through garnishment of disposable pay of the individual.’’. 
TITLE 
II—BORROWER’S 
RIGHT 
TO REASONABLE AND FLEXI-
BLE REPAYMENT OPTIONS 
SEC. 201. EXCLUSION FROM GROSS INCOME FOR DIS-
CHARGE OF STUDENT LOAN INDEBTEDNESS. 
(a) IN GENERAL.—Paragraph (1) of section 108(f) 
of the Internal Revenue Code of 1986 is amended by strik-
ing ‘‘if such discharge’’ and all that follows and inserting 
a period. 
(b) STUDENT LOANS.—Paragraph (2) of section 
108(f) of such Code is amended by striking ‘‘made by— 
’’ and all that follows and inserting the following: ‘‘. Such 
term includes indebtedness used to refinance indebtedness 
which qualifies as a student loan under the preceding sen-
tence.’’. 
(c) CONFORMING AMENDMENTS.—Section 108(f) of 
such Code is amended by striking paragraphs (3) and (4). 
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(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to discharges of indebtedness after 
the date of the enactment of this Act. 
SEC. 202. 529 PLAN DISTRIBUTION FOR STUDENT LOAN 
PAYMENTS. 
(a) IN GENERAL.—Subparagraph (A) of section 
529(e)(3) 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 amend-
ed by inserting ‘‘determined without regard to sub-
paragraph 
(A)(iii) 
thereof’’ 
after 
‘‘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’’ 
after 
‘‘section 
529(e)(3)’’. 
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(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to distributions made after the 
date of the enactment of this Act. 
SEC. 203. INCLUSION OF PARENT PLUS LOANS IN REPAY-
MENT PROGRAMS. 
(a) INCOME CONTINGENT REPAYMENT PLAN.—Sec-
tion 455(d)(1)(D) of the Higher Education Act of 1965 
(20 U.S.C. 1087e(d)(1)(D)) is amended by striking ‘‘, ex-
cept 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) SECTION 493C.—Section 493C of the High-
er Education Act of 1965 (20 U.S.C. 1098e) is 
amended— 
(A) in subsection (a)— 
(i) by striking ‘‘this section’’ and all 
that follows through ‘‘hardship’’ and in-
serting ‘‘In this section, the term ‘partial 
financial hardship’ ’’; and 
(ii) by striking, ‘‘(other than an ex-
cepted PLUS loan or excepted consolida-
tion loan)’’; 
(B) in subsection (b)— 
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(i) in paragraph (1), by striking 
‘‘(other than an excepted PLUS loan or 
excepted consolidation loan)’’; and 
(ii) in paragraph (6)(A), by striking 
‘‘(other than an excepted PLUS loan or 
excepted consolidation loan)’’; and 
(C) in subsection (c), by striking ‘‘(other 
than an excepted PLUS loan or excepted con-
solidation loan),’’. 
(2) 
SECTION
455(d)(1)(E).—Section 
455(d)(1)(E) 
of 
such 
Act 
(20 
U.S.C. 
1087e(d)(1)(D)) is amended by striking ‘‘, 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 pro-
ceeds of such loan were used to discharge the liabil-
ity on such Federal Direct PLUS Loan or a loan 
under section 428B made on behalf of a dependent 
student’’. 
(c) PAY AS YOU EARN.—The income-contingent re-
payment plan (based on the President’s ‘‘Pay As You 
Earn’’ repayment initiative) implemented in parts 674, 
682, and 685 of title 34, Code of Federal Regulations, 
as amended by the final regulations published by the De-
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partment of Education in the Federal Register on Novem-
ber 1, 2012 (77 Fed. Reg. 66088 et seq.), shall be avail-
able to borrowers of— 
(1) a Federal Direct PLUS loan made on be-
half of a dependent student; and 
(2) a Federal Direct Consolidation Loan, the 
proceeds of which were used to discharge the liabil-
ity on a Federal Direct PLUS Loan or a loan under 
section 428B made on behalf of a dependent stu-
dent. 
(d) LOAN FORGIVENESS FOR SERVICE IN AREAS OF 
NATIONAL NEED.—Section 428K(a)(2) of such Act (20 
U.S.C. 1078–11(a)(2)) is amended— 
(1) in subparagraph (A), by striking ‘‘(other 
than an excepted PLUS loan or an excepted consoli-
dation loan (as such terms are defined in section 
493C(a)))’’; and 
(2) in subparagraph (B), by striking ‘‘(other 
than an excepted PLUS loan or an excepted consoli-
dation loan)’’. 
SEC. 204. DETERMINATION OF ADVERSE CREDIT HISTORY. 
Section 428B(a)(1)(A) of the Higher Education Act 
of 1965 (20 U.S.C. 1078–2(a)(1)(A)) is amended by strik-
ing ‘‘regulations promulgated by the Secretary’’ and in-
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serting ‘‘section 685.200(c) of title 34, Code of Federal 
Regulations (as in effect on September 30, 2011)’’. 
TITLE III—BORROWERS’ RIGHT 
TO A MEANINGFUL DEGREE 
SEC. 301. PROHIBITION ON SUSPENSIONS OF PROFES-
SIONAL LICENSES FOR LOAN DEFAULT. 
No evidence of an individual’s default on the repay-
ment of a loan made, insured, or guaranteed under title 
IV of the Higher Education Act of 1965 (20 U.S.C. 1070 
et seq.) may be admitted into evidence in a Federal or 
State proceeding involving the individual’s professional or 
vocational license. 
SEC. 302. PROHIBITION ON LOSS OF ACCESS TO TRAN-
SCRIPTS FOR LOAN DEFAULT. 
Section 487(a) of the Higher Education Act of 1965 
(20 U.S.C. 1094(a)) (as amended by section 301) is fur-
ther amended by adding at the end the following new para-
graph: 
‘‘(31)(A) The institution will not prohibit a stu-
dent from accessing the student’s transcripts, degree 
scrolls, or other certifications of coursework or edu-
cational attainments at the institution because the 
student is in default on the repayment of a loan 
made, insured, or guaranteed under this title. 
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‘‘(B) For purposes of this paragraph, the term 
‘student’ includes former students.’’. 
TITLE IV—RIGHT TO EFFECTIVE 
LOAN 
CANCELLATION 
FOR 
BORROWERS 
ENGAGED 
IN 
PUBLIC SERVICE CAREERS 
SEC. 401. EXTENSION OF LOAN CANCELLATION FOR BOR-
ROWERS EMPLOYED IN PUBLIC SERVICE 
JOBS FOR 5 YEARS. 
Section 455(m) of the Higher Education Act of 1965 
(20 U.S.C. 1087e) is amended by adding at the end the 
following new paragraph: 
‘‘(5) LOAN CANCELLATION AFTER 5 YEARS.— 
Beginning fiscal year 2016, 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 borrowers 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’ for ‘120’ each 
place it appears; and 
‘‘(ii) by substituting ‘October 1, 2007’ 
for ‘October 1, 2015’; and 
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‘‘(B) by applying paragraph (2), by sub-
stituting ‘50 percent of the balance’ with ‘the 
balance’.’’. 
Æ 
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