1391 
‘‘(I) NATIONAL U–5 MEASURE OF 
LABOR
UNDERUTILIZATION.—The 
term ‘national U–5 measure of labor 
underutilization’ means the season-
ally-adjusted, monthly U–5 measure 
of labor underutilization published by 
the Bureau of Labor Statistics. 
‘‘(II) INITIAL SIGNS OF RECOV-
ERY.—The term ‘initial signs of recov-
ery’ means that the average national 
U–5 measure of labor underutilization 
for months in the most recent 3-con-
secutive-month period for which data 
are available— 
‘‘(aa) is lower than the high-
est value of the average national 
U–5 measure of labor under-
utilization for a 3-consecutive- 
month period during the period 
beginning in March 2020 and the 
most recent month for which 
data from the Bureau of Labor 
Statistics are available by an 
amount that is equal to or great-
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1392 
er than one-third of the dif-
ference between— 
‘‘(AA) the highest value 
of the average national U–5 
measure of labor under-
utilization for a 3-consecu-
tive-month 
period 
during 
such period; and 
‘‘(BB) the value of the 
average national U–5 meas-
ure of labor underutilization 
for the 3-consecutive-month 
period ending in February 
2020; and 
‘‘(bb) has decreased for each 
month during the most recent 2 
consecutive months for which 
data from the Bureau of Labor 
Statistics are available. 
‘‘(E) OTHER DEFINITIONS.—In this para-
graph: 
‘‘(i) DEFAULT.—The term ‘default’— 
‘‘(I) in the case of a Federal stu-
dent loan made, insured, or guaran-
teed under part B or D of the Higher 
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1393 
Education Act of 1965, has the mean-
ing given such term in section 435(l) 
of the Higher Education Act of 1965 
(20 U.S.C. 1085); 
‘‘(II) in the case of a Federal 
student loan made under part E of 
the Higher Education Act of 1965, 
has the meaning given such term in 
section 674.2 of title 34, Code of Fed-
eral Regulations (or successor regula-
tions); or 
‘‘(III) in the case of a Federal 
student 
loan 
defined 
in 
section 
3502(a)(2)(C), has the meaning given 
such term in section 721 or 835 of 
the Public Health Service Act (42 
U.S.C. 292q, 297a), as applicable. 
‘‘(ii) 
GRACE
PERIOD.—The 
term 
‘grace period’ means— 
‘‘(I) in the case of a Federal stu-
dent loan made, insured, or guaran-
teed under part B or D of the Higher 
Education Act of 1965, the 6-month 
period after the date the student 
ceases to carry at least one-half the 
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1394 
normal full-time academic workload, 
as described in section 428(b)(7) of 
the Higher Education Act of 1965 (20 
U.S.C. 1078(b)(7)); 
‘‘(II) in the case of a Federal 
student loan made under part E of 
the Higher Education Act of 1965, 
the 9-month period after the date on 
which a student ceases to carry at 
least one-half the normal full-time 
academic workload, as described in 
section 464(c)(1)(A) of the Higher 
Education Act of 1965 (20 U.S.C. 
1087dd(c)(1)(A)); and 
‘‘(III) in the case of a Federal 
student 
loan 
defined 
in 
section 
3502(a)(2)(C), the 1-year period de-
scribed in section 722(c) of the Public 
Health 
Service 
Act 
(42 
U.S.C. 
292r(c)) or the 9-month period de-
scribed in section 836(b)(2) of such 
Act (42 U.S.C. 297b(b)(2)), as appli-
cable. 
‘‘(iii) 
REPAYMENT
PERIOD.—The 
term ‘repayment period’ means— 
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1395 
‘‘(I) in the case of a Federal stu-
dent loan made, insured, or guaran-
teed under part B or D of the Higher 
Education Act of 1965, the repayment 
period described in section 428(b)(7) 
of the Higher Education Act of 1965 
(20 U.S.C. 1078(b)(7)); 
‘‘(II) in the case of a Federal 
student loan made under part E of 
the Higher Education Act of 1965, 
the repayment period described in sec-
tion 464(c)(4) of the Higher Edu-
cation Act of 1965 (20 U.S.C. 
1087dd(c)(4)); or 
‘‘(III) in the case of a Federal 
student 
loan 
defined 
in 
section 
3502(2)(C), the repayment period de-
scribed in section 722(c) or 836(b)(2) 
of the Public Health Service Act (42 
U.S.C. 292r(c), 297b(b)(2)), as appli-
cable. 
‘‘(2) INTEREST REFUND IN LIEU OF RETRO-
ACTIVE APPLICABILITY.—By not later than 60 days 
after the date of enactment of the HEROES Act, 
the Secretary or, as applicable, the Secretary of 
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1396 
Health and Human Services, shall, for each Federal 
student loan defined in subparagraph (B) or (C) of 
section 3502(a)(2)— 
‘‘(A) determine the amount of interest due 
(or that would have been due in the absence of 
being voluntarily paid by the holder of such 
loan) on such loan during the period beginning 
March 13, 2020, and ending on such date of 
enactment; and 
‘‘(B) refund the amount of interest cal-
culated under clause (i), by— 
‘‘(i) paying the holder of the loan the 
amount of the interest calculated under 
subparagraph (A), to be applied to the 
loan balance for the borrower of such loan; 
or 
‘‘(ii) if there is no outstanding balance 
or payment due on the loan as of the date 
on which the refund is to be provided, pro-
viding a payment in the amount of the in-
terest calculated under clause (i) directly 
to the borrower. 
‘‘(3) SUSPENSION
OF
INTEREST
CAPITALIZA-
TION.— 
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‘‘(A) IN GENERAL.—With respect to any 
Federal student loan, interest that accrued but 
had not been paid prior to March 13, 2020, and 
had not been capitalized as of such date, shall 
not be capitalized. 
‘‘(B) TRANSITION.—The Secretary or, as 
applicable, the Secretary of Health and Human 
Services, shall ensure that any interest on a 
Federal student loan that had been capitalized 
in violation of subparagraph (A) is corrected 
and the balance of principal and interest due 
for the Federal student loan is adjusted accord-
ingly.’’. 
NOTICE TO BORROWERS 
SEC. 150116. 
Section 3513(g) of division A of the Coronavirus Aid, 
Relief, and Economic Security Act (Public Law 116–136) 
is amended— 
(1) in the matter preceding paragraph (1), by 
striking ‘‘the Secretary’’ and inserting ‘‘the Sec-
retary or, as applicable, the Secretary of Health and 
Human Services,’’; 
(2) in paragraph (1)(D), by striking the period 
and inserting a semicolon; 
(3) in paragraph (2)— 
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(A) in the matter preceding subparagraph 
(A), by striking ‘‘August 1, 2020’’ and insert-
ing ‘‘August 1, 2021’’; and 
(B) by amending subparagraph (B) to read 
as follows: 
‘‘(B) that— 
‘‘(i) a borrower of a Federal student 
loan made, insured, or guaranteed under 
part B or D of title IV of the Higher Edu-
cation Act of 1965 may be eligible to enroll 
in an income-contingent repayment plan 
under section 455(d)(1)(D) of the Higher 
Education 
Act 
of 
1965 
(20 
U.S.C. 
1087e(d)(1)(D)) or an income-based repay-
ment plan under section 493C of such Act 
(20 U.S.C. 1098e), including a brief de-
scription of such repayment plans; and 
‘‘(ii) in the case of a borrower of a 
Federal student loan defined in section 
3502(a)(2)(C) or made under part E of 
title IV of the Higher Education of 1965, 
the borrower may be eligible to enroll in 
such a repayment plan if the borrower con-
solidates such loan with a loan described in 
clause (i) of this subparagraph, and re-
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1399 
ceives a Federal Direct Consolidation Loan 
under part D of the Higher Education of 
1965 (20 U.S.C. 1087a et seq.); and’’; and 
(C) by adding at the end the following: 
‘‘(3) in a case in which the accrual of interest 
on Federal student loans is suspended under sub-
section (b)(1) beyond September 30, 2021, during 
the 2-month period beginning on the date on which 
the national U–5 measure of labor underutilization 
shows initial signs of recovery (as such terms are de-
fined in subsection (b)(1)(D)) carry out a program 
to provide not less than 6 notices by postal mail, 
telephone, or electronic communication to bor-
rowers— 
‘‘(A) indicating when the interest on Fed-
eral student loans of the borrower will resume 
accrual and capitalization; and 
‘‘(B) the information described in para-
graph (2)(B).’’. 
WRITING DOWN BALANCES FOR FEDERAL STUDENT LOAN 
BORROWERS 
SEC. 150117. 
Section 3513 of division A of the Coronavirus Aid, 
Relief, and Economic Security Act (Public Law 116–136), 
as amended by this part, is further amended by adding 
at the end the following: 
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1400 
‘‘(h) WRITING DOWN BALANCES FOR FEDERAL STU-
DENT LOAN BORROWERS.— 
‘‘(1) IN
GENERAL.—Not later than 30 days 
after the date of enactment of the HEROES Act, 
the Secretary shall cancel or repay an amount on 
the outstanding balance due (including the unpaid 
principal amount, any accrued interest, and any fees 
or charges) on the Federal student loans defined in 
subparagraphs (A) and (B) of section 3502(a)(2) of 
a borrower that is equal to the lesser of— 
‘‘(A) $10,000; or 
‘‘(B) the total outstanding balance due on 
such loans of the borrower. 
‘‘(2) 
APPLICATION.—Unless 
otherwise 
re-
quested by the borrower in writing, a cancellation or 
repayment under paragraph (1) shall be applied — 
‘‘(A) in the case of a borrower whose loans 
have different applicable rates of interest, first 
toward the outstanding balance due on the loan 
with the highest applicable rate of interest 
among such loans; and 
‘‘(B) in the case of a borrower of loans 
that have the same applicable rates of interest, 
first toward the outstanding balance of prin-
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cipal due on the loan with the highest principal 
balance among such loans. 
‘‘(3) DATA TO IMPLEMENT.—Contractors of the 
Secretary, and holders of Federal student loans, 
shall report, to the satisfaction of the Secretary the 
information necessary to carry out this subsection. 
‘‘(4) TAXATION.—For purposes of the Internal 
Revenue Code of 1986, in the case of any cancella-
tion or repayment of indebtedness under this sub-
section with respect to any borrower: 
‘‘(A) EXCLUSION FROM GROSS INCOME.— 
No amount shall be included in the gross in-
come of such borrower by reason of such can-
cellation or repayment. 
‘‘(B) WAIVER OF INFORMATION REPORT-
ING REQUIREMENTS.—Amounts excluded from 
gross income under subparagraph (A) shall not 
be required to be reported (and shall not be 
taken into account in determining whether any 
reporting requirement applies) under chapter 
61 of such Code.’’. 
IMPLEMENTATION 
SEC. 150118. 
Section 3513 of division A of the Coronavirus Aid, 
Relief, and Economic Security Act (Public Law 116–136), 
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1402 
as amended by this part, is further amended by adding 
at the end the following: 
‘‘(i) IMPLEMENTATION.— 
‘‘(1) INFORMATION VERIFICATION.— 
‘‘(A) IN
GENERAL.—To facilitate imple-
mentation of this section, information for the 
purposes described in subparagraph (B), shall 
be reported— 
‘‘(i) by the holders of Federal student 
loans defined in section 3502(a)(2)(B) to 
the satisfaction of the Secretary; and 
‘‘(ii) by the holders of Federal student 
loans defined in section 3502(a)(2)(C) to 
the satisfaction of the Secretary of Health 
and Human Services. 
‘‘(B) PURPOSES.—The purposes of the in-
formation reported under subparagraph (A) are 
to— 
‘‘(i) verify, at the borrower level, the 
payments that are provided or suspended 
under this section; and 
‘‘(ii) calculate the amount of any in-
terest due to the holder for reimbursement 
of interest under subsection (b). 
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‘‘(2) COORDINATION.—The Secretary shall co-
ordinate with the Secretary of Health and Human 
Services to carry out the provisions of this section 
with respect to Federal student loans defined in sec-
tion 3502(a)(2)(C).’’. 
EFFECTIVE DATE 
SEC. 150119. 
This part, and the amendments made by this part, 
shall take effect as if enacted as part of the Coronavirus 
Aid, Relief, and Economic Security Act (Public Law 116– 
136). 
PART B—CONSOLIDATION LOANS AND PUBLIC 
SERVICE LOAN FORGIVENESS 
SPECIAL RULES RELATING TO FEDERAL DIRECT 
CONSOLIDATION LOANS 
SEC. 150120. 
(a) SPECIAL RULES RELATING TO FEDERAL DIRECT 
CONSOLIDATION LOANS AND PSLF.— 
(1) PUBLIC SERVICE LOAN FORGIVENESS OP-
TION ON CONSOLIDATION APPLICATION.— 
(A) IN GENERAL.—During the period de-
scribed in subsection (e), the Secretary shall— 
(i) include, in any application for a 
Federal Direct Consolidation Loan under 
part D of title IV of the Higher Education 
Act of 1965 (20 U.S.C. 1087a et seq,), an 
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