I 
114TH CONGRESS 
1ST SESSION H. R. 4256 
To simplify income-based repayment under the Federal student loan program, 
and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
DECEMBER 15, 2015 
Mr. MURPHY of Florida introduced the following bill; which was referred to 
the Committee on Education and the Workforce, and in addition to the 
Committee on Ways and Means, for a period to be subsequently deter-
mined by the Speaker, in each case for consideration of such provisions 
as fall within the jurisdiction of the committee concerned 
A BILL 
To simplify income-based repayment under the Federal 
student loan program, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Simple Income-Based 
Repayment Act’’. 
SEC. 2. REPAYMENT PLANS FOR BORROWERS. 
Section 455 of the Higher Education Act of 1965 (20 
U.S.C. 1087e) is amended— 
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(1) by striking subsection (d) and inserting the 
following: 
‘‘(d) REPAYMENT PLANS.— 
‘‘(1) DESIGN AND SELECTION FOR BORROWERS 
BEFORE JULY 1, 2017.—With respect to a borrower 
of a loan made under this part before July 1, 2017, 
and consistent with criteria established by the Sec-
retary, the Secretary shall offer such borrower a va-
riety of plans for repayment of such loan, including 
principal and interest on the loan. The borrower 
shall be entitled to accelerate, without penalty, re-
payment on the borrower’s loans under this part. 
The borrower may choose— 
‘‘(A) a standard repayment plan, con-
sistent with subsection (a)(1) of this section 
and with section 428(b)(9)(A)(i); 
‘‘(B) a graduated repayment plan, con-
sistent with section 428(b)(9)(A)(ii); 
‘‘(C) an extended repayment plan, con-
sistent with section 428(b)(9)(A)(iv), except 
that the borrower shall annually repay a min-
imum amount determined by the Secretary in 
accordance with section 428(b)(1)(L); 
‘‘(D) an income contingent repayment 
plan, with varying annual repayment amounts 
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SEC. 3. INCOME-BASED REPAYMENT PLAN. 
Title IV of the Higher Education Act of 1965 is 
amended by adding at the end the following: 
‘‘PART J—INCOME-BASED REPAYMENT PROGRAM 
‘‘Subpart 1—Establishment of Program 
‘‘SEC. 499A. DUTIES OF THE SECRETARY OF THE TREASURY. 
‘‘(a) IN GENERAL.—The Secretary of the Treasury, 
in consultation with the Secretary of Education, shall es-
tablish a program (hereinafter referred to as the ‘income- 
based repayment program’) that provides for— 
‘‘(1) repaying, through voluntary wage with-
holding and quarterly estimated payments as pro-
vided in subsection (b), loans made under part D 
(except that such program shall not be available to 
a 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); and 
‘‘(2) transmitting to the Secretary of Edu-
cation— 
‘‘(A) an account of the amounts collected 
under subsection (b) with respect to each indi-
vidual for whom a loan made under this part is 
in repayment status; and 
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‘‘(B) such tax return information of each 
such individual as is necessary to determine the 
individual’s income-based repayment obligation 
as provided in subsection (c). 
‘‘(b) WAGE WITHHOLDING AND ESTIMATED PAY-
MENTS.— 
‘‘(1) IN
GENERAL.—The Secretary of the 
Treasury shall, under rules similar to the rules of 
chapter 24 of the Internal Revenue Code of 1986, 
provide for employers making payment of wages to 
deduct and withhold upon such wages amounts de-
termined in accordance with tables or computational 
procedures prescribed by the Secretary with respect 
to an employee who elects withholding under this 
subsection with respect to a loan described in sub-
section (a)(1) that is in repayment status and, if so 
elected, with respect to any such loans of the em-
ployee’s spouse. 
‘‘(2) WITHHOLDING REQUIREMENTS.—The ta-
bles, procedures, and guidance prescribed under 
paragraph (1) shall provide— 
‘‘(A) for the election to have amounts with-
held as provided under this subsection; 
‘‘(B) procedures and forms for an em-
ployee to indicate— 
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‘‘(i) whether the employee (and, in the 
case of a married individual, whether the 
employee’s spouse) has a loan described in 
subsection (a)(1) that is in repayment sta-
tus; 
‘‘(ii) in the case of a married indi-
vidual, whether the employee anticipates 
filing jointly (and accompanying guidance 
explaining that if filing status for the tax-
able year is uncertain the employee should 
indicate filing jointly to avoid underwith-
holding); 
‘‘(iii) whether the exemption amount 
to which the employee is entitled under 
this section should be taken into account 
in determining withholding (and accom-
panying guidance explaining that, in order 
to avoid underwithholding, the employee 
should only take into account the exemp-
tion in the case of the employee’s primary 
employer, unless total wages from more 
than one place of employment will not ex-
ceed the exemption amount); 
‘‘(iv) in the case of a married indi-
vidual, whether the exemption amount to 
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which the employee’s spouse is entitled 
under this section should be taken into ac-
count in determining withholding from the 
wages of the employee (and accompanying 
guidance explaining that, in order to avoid 
underwithholding, the employee should 
only take into account such exemption if 
such spouse is not employed, or if the total 
wages from the employee’s job and the 
spouse’s employment will not exceed the 
exemption amount); 
‘‘(v) the number of dependents of the 
employee with respect to whom the em-
ployee is entitled to a deduction under sec-
tion 151(c) of the Internal Revenue Code 
of 1986, and, if a different number, in the 
case of a married employee, the number of 
dependents of the employee’s spouse with 
respect to whom such spouse is entitled to 
such deduction; and 
‘‘(vi) an election to have additional 
amounts withheld; and 
‘‘(C) for withholding with respect to any 
employee in an amount equal to the sum of— 
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‘‘(i) in the case of an employee who 
has a loan described in subsection (a)(1) in 
repayment status, the percentage of so 
much of the employee’s wages that would 
count towards the employee’s income-based 
repayment obligation provided in sub-
section (c) as exceeds any exemption 
amount taken into account with respect to 
the employee under subparagraph (A)(iii) 
(prorated to the payroll period), plus 
‘‘(ii) in the case of an employee who 
indicates that the employee’s spouse has a 
loan described in subsection (a)(1) in re-
payment status, the percentage of so much 
of the employee’s wages that would count 
towards the employee’s spouse’s income- 
based repayment obligation (as provided in 
subsection (c)) as exceeds any exemption 
amount taken into account with respect to 
the employee’s spouse under subparagraph 
(A)(iv) (prorated to the payroll period). 
‘‘(3) 
QUARTERLY
ESTIMATED
TAX
PAY-
MENTS.—In the case of taxpayers who make quar-
terly estimated tax return payments under section 
6654 of the Internal Revenue Code of 1986 and who 
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have a loan described in subsection (a)(1) in repay-
ment status, the Secretary shall provide similar ta-
bles and procedures for making voluntary repay-
ments of loans described in section 499A(a)(1) con-
currently with such quarterly payments. 
‘‘(4) 
COLLECTION
AND
PAYMENT.—The 
amounts required to be deducted and withheld under 
paragraph (1), and amounts required to be paid 
under paragraph (3), shall be collected by the Sec-
retary of the Treasury and shall be paid into the 
general fund of the Treasury of the United States. 
‘‘(c) DETERMINATION
OF INCOME-BASED REPAY-
MENT OBLIGATION.— 
‘‘(1) IN
GENERAL.—As soon as practicable 
after an individual for whom a loan described in 
subsection (a)(1) is in repayment status during the 
taxable year files an income tax return for such tax-
able year, the Secretary of the Treasury shall trans-
mit to the Secretary of Education such tax informa-
tion as is necessary to determine— 
‘‘(A) the amount deducted and withheld 
under subsection (b)(1), and the amount paid 
under subsection (b)(3), for the taxable year 
with respect to such individual, and 
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‘‘(B) the income-based repayment obliga-
tion for the taxable year for such individual. 
‘‘(2) 
INCOME-BASED
REPAYMENT
OBLIGA-
TION.—For purposes of this section: 
‘‘(A) IN GENERAL.—The income-based re-
payment obligation with respect to an individual 
for any taxable year is an amount equal to 10 
percent of the excess of— 
‘‘(i) the sum of— 
‘‘(I) the wages, salaries, tips, and 
other employee compensation of the 
taxpayer, but only if such amounts 
are includible in gross income for the 
taxable year (determined without re-
gard to sections 911, 931, and 933 of 
the Internal Revenue Code of 1986), 
‘‘(II) the amount of the tax-
payer’s net earnings from self-employ-
ment for the taxable year (within the 
meaning of section 1402(a) of such 
Code), determined with regard to the 
deduction allowed to the taxpayer by 
section 164(f) of such Code, plus 
‘‘(III) any other amount included 
in total income of the taxpayer for the 
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taxable year but not described in sub-
clause (I) or (II), over 
‘‘(ii) the sum of— 
‘‘(I) the exemption amount with 
respect to such individual, plus 
‘‘(II) the lesser of the amount de-
termined with respect to the taxpayer 
under subclauses (II) and (III) of 
clause (i), or $3,000. 
‘‘(B) SPECIAL RULES FOR MARRIED INDI-
VIDUALS.— 
‘‘(i) EACH SPOUSE WITH LOAN.—Ex-
cept as provided in clause (ii), in the case 
of a joint return of two individuals who 
each have a loan described in subsection 
(a)(1) in repayment status, the income- 
based repayment obligation with respect to 
each spouse shall be an amount determined 
under subparagraph (A) by apportioning 
1⁄2 of the total income on such return to 
each spouse. 
‘‘(ii) SPECIAL RULE FOR FIRST YEAR 
OF
MARRIAGE.—In the case of the first 
taxable year for which any two individuals 
make a joint return, the income-based re-
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payment obligation with respect to such an 
individual shall be an amount equal to the 
lesser of— 
‘‘(I) the amount determined with 
respect to such individual under this 
paragraph (determined without regard 
to this clause), or 
‘‘(II) the amount determined 
with respect to such individual under 
this paragraph (determined by allo-
cating to each spouse the amounts de-
scribed in subclauses (I) and (II) of 
subparagraph (A)(i) in proportion to 
the amounts attributable to each 
spouse, by allocating 1⁄2 of the amount 
described in subparagraph (A)(i)(III) 
to each spouse, and without regard to 
clause (i)). 
‘‘(C) EXCLUSION
OF
CERTAIN
AMOUNTS 
PAID
ON
BEHALF
OF
INDIVIDUAL.—Any 
amount paid on the borrower’s behalf under 
section 499B(5) shall not be taken into account 
in determining such borrower’s income-based 
repayment obligation. 
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‘‘(3) EXEMPTION
AMOUNT.—For purposes of 
this section: 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), the exemption amount with 
respect to an individual shall be an amount 
equal to 150 percent of the poverty line for the 
individual’s household size (as determined 
under section 673(2) of the Community Serv-
ices Block Grant Act (42 U.S.C. 9902(2))) for 
the calendar year in which the taxable year 
ends. 
‘‘(B) SPECIAL RULE FOR MARRIED INDI-
VIDUALS WHO BOTH HAVE LOANS.—If for any 
taxable year an individual is married, files a 
joint return, and has a spouse with a loan de-
scribed in subsection (a)(1) in repayment sta-
tus, then the exemption amount with respect to 
such individual shall be an amount equal to the 
sum of— 
‘‘(i) 150 percent of the poverty line 
for a household size of one (as determined 
under section 673(2) of the Community 
Services Block Grant Act (42 U.S.C. 
9902(2))) for the calendar year in which 
the taxable year ends, and 
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‘‘(ii) 1⁄2 of the excess of— 
‘‘(I) 150 percent of the poverty 
line for the individual’s household size 
minus 1 (as determined under section 
673(2) of the Community Services 
Block Grant Act (42 U.S.C. 9902(2))) 
for the calendar year in which the tax-
able year ends, over 
‘‘(II) the amount determined 
under clause (i). 
‘‘(C) HOUSEHOLD SIZE.—For purposes of 
this paragraph, an individual’s household size 
shall be determined by reference to the indi-
vidual, the number of dependents of the tax-
payer with respect to whom the taxpayer is en-
titled to a deduction under section 151(c) of the 
Internal Revenue Code of 1986, and, if married 
and filing jointly, such individual’s spouse. 
‘‘(4) INDIVIDUALS NOT FILING A RETURN.— 
‘‘(A) INDIVIDUALS
NOT
REQUIRED
TO 
FILE.—The income-based repayment obligation 
with respect to an individual not required to file 
a return under section 6012(a)(1) of the Inter-
nal Revenue Code of 1986 shall be treated as 
zero. 
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‘‘(B) FAILURE TO FILE.—In the case of an 
individual who makes an election under sub-
section (b) with respect to a loan described in 
subsection (a)(1) in repayment status and fails 
to file a return under section 6012(a)(1) of the 
Internal Revenue Code of 1986, the Secretary 
of the Treasury shall transmit to the Secretary 
of Education any such tax information of the 
individual as may be necessary to determine 
whether such individual is in default under the 
terms of such loan. 
‘‘(5) SUBSEQUENT
TRANSMISSION
OF
EM-
PLOYER
INFORMATION
REPORTING.—As soon as 
practicable after receiving from an employer infor-
mation reporting with respect to withholding under 
subsection (b)(1) of an individual, the Secretary of 
the Treasury shall transmit to the Secretary of Edu-
cation such information as may be useful in 
verifying the information with respect to withholding 
transmitted under paragraph (1). 
‘‘(d) ADDITIONAL PROGRAM REQUIREMENTS.—The 
Secretary of the Treasury shall establish such other poli-
cies, procedures, and guidance as may be necessary to 
carry out the purposes of this section, including measures 
to prevent underwithholding, under-reporting, and evasion 
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of repayment or filing. Amounts shall be deducted and 
withheld under this section as the Secretary determines 
to be most appropriate to carry out the purposes of the 
income-based repayment program and to reflect, as accu-
rately as is practicable, an individual’s income-based re-
payment obligation. 
‘‘SEC. 499B. DUTIES OF THE SECRETARY OF EDUCATION. 
‘‘The Secretary shall carry out the following activities 
as part of the income-based repayment program estab-
lished under this part: 
‘‘(1) CALCULATION
OF
ANNUAL
REPAYMENT 
AMOUNTS.—The Secretary shall calculate the annual 
repayment amounts under section 499C(b) for bor-
rowers with 1 or more loans described in section 
499A(a)(1) in repayment status, including the in-
come-based repayment obligations of such borrowers 
in accordance with section 499A(c)(2). 
‘‘(2) COMMUNICATION
WITH
THE
SECRETARY 
OF THE TREASURY.—The Secretary shall transmit 
to the Secretary of the Treasury such information as 
is necessary for the Secretary of the Treasury to 
carry out section 499A. 
‘‘(3) ANNUAL STATEMENTS.—Upon calculating 
the annual repayment amounts under paragraph (1) 
for a taxable year, the Secretary shall provide a 
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‘‘(4) DIRECT PAYMENT.—The Secretary shall 
enable a borrower to make direct payments on the 
borrower’s annual repayment amount for the taxable 
year to the Secretary throughout the year, including 
by providing a process for the borrower to make 
such payments automatically, on a periodic basis, 
and in an amount specified by the borrower. 
‘‘(5) PAYMENTS ON A TAXPAYER’S BEHALF.— 
The Secretary shall— 
‘‘(A) provide a mechanism for other indi-
viduals or entities to make payments on the an-
nual repayment amount of a borrower for a tax-
able year; and 
‘‘(B) notify the borrower that any pay-
ments made under subparagraph (A) for the 
taxable year that exceed the annual repayment 
amount for the year shall not be refunded to 
the borrower. 
‘‘(6) CALCULATING INTEREST ACCRUED.—The 
Secretary shall calculate the interest accrued for the 
taxable year as if the borrower’s payments under 
wage withholding or quarterly estimated payments 
under section 499A(b) for the taxable year were 
made in 12 equal increments throughout the year. 
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‘‘(7) MANAGING LOANS.—The Secretary shall 
provide, through the Internet, a tool that has an 
interface that is consistent for all borrowers with a 
loan described in section 499A(a)(1), which enables 
each such borrower to— 
‘‘(A) view the outstanding balances on the 
borrower’s 
loans 
described 
in 
section 
499A(a)(1); 
‘‘(B) make a direct payment on the bor-
rower’s annual repayment amount or indicate 
that any overpayment should be refunded or ap-
plied to such loans as a prepayment amount; 
‘‘(C) view prior annual statements for such 
loans provided under paragraph (3); 
‘‘(D) view a history of payments made on 
such loans (including the method and source of 
each payment, such as tax withholding, esti-
mated taxes, direct payment, or payments made 
on the borrower’s behalf); 
‘‘(E) view the borrower’s annual repay-
ment amount for that year, the amount already 
paid on such annual repayment amount, and 
any amount owed by the borrower or due to be 
refunded to the borrower; 
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‘‘(F) view the borrower’s loans described in 
section 499A(a)(1) that have been paid off; 
‘‘(G) enable the borrower to initiate an ap-
peal process under paragraph (8); and 
‘‘(H) easily determine whether benefits 
under the Servicemembers Civil Relief Act (50 
U.S.C. App. 501 et seq.), if applicable, have 
been applied to the borrower’s loans described 
in section 499A(a)(1). 
‘‘(8) APPEALS PROCESS.—The Secretary shall 
make available a process through which a borrower 
can appeal the calculation of the borrower’s annual 
repayment amount, including a worksheet that en-
ables a borrower to calculate the borrower’s annual 
repayment amount. 
‘‘(9) DEFAULT FOR FAILURE TO FILE A RE-
TURN.—In a case in which the Secretary receives in-
formation from the Secretary of the Treasury under 
section 499A(c)(4) that a borrower with a loan de-
scribed in section 499A(a)(1) in repayment status 
has failed to file a return under section 6012(a)(1) 
of the Internal Revenue Code of 1986 and such bor-
rower was required to file such a return, the Sec-
retary shall— 
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‘‘(A) notify the borrower of the borrower’s 
failure to file such a return; and 
‘‘(B) if the borrower fails to file such a re-
turn within 90 days of receipt of the notice de-
scribed in subparagraph (A), consider the bor-
rower’s loans described in section 499A(a)(1) to 
be in default. 
‘‘(10) LOAN
FORGIVENESS.—The Secretary 
shall cancel the balance of principal and interest due 
on any loan described in section 499A(a)(1) that is 
not in default for a borrower who has made 240 
payments on the loan using one or more methods de-
scribed in section 499C(c). 
‘‘Subpart 2—Borrower Repayment 
‘‘SEC. 499C. BORROWER REPAYMENT. 
‘‘(a) REPAYMENT PERIOD.—The repayment period of 
a loan described in section 499A(a)(1) shall— 
‘‘(1) begin on the first day of the first taxable 
year that begins after the borrower’s in-school 
deferment period, or in the case of a Federal Direct 
Consolidation Loan, on the first day of the first tax-
able year that begins after such Consolidation Loan 
is disbursed; and 
‘‘(2) continue until the loan is paid in full, ex-
cept that the Secretary may grant a borrower for-
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bearance of the borrower’s annual repayment 
amount— 
‘‘(A) for a period not to exceed 60 days, 
due to administrative or technical reasons; 
‘‘(B) for a period not to exceed 3 months, 
due to unusual circumstances that disrupt the 
borrower’s ability to make timely payments on 
the loan; or 
‘‘(C) renewable at 12-month intervals for a 
period not to exceed 3 years, due to docu-
mented extreme economic hardship on the part 
of a borrower. 
‘‘(b) ANNUAL REPAYMENT AMOUNT.—The annual 
repayment amount under this part for a taxable year for 
a borrower with 1 or more loans described in section 
499A(a)(1) in repayment status shall be equal to the less-
er of— 
‘‘(1) the income-based repayment obligation for 
such borrower for such year, as calculated under 
section 499B(1); or 
‘‘(2) an amount equal to the sum of the out-
standing balances (equal to the sum of the unpaid 
principal, interest, penalties, and fees) that the bor-
rower owes on such loans. 
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‘‘(c) METHODS OF REPAYMENT.—In repaying an an-
nual repayment amount owed by a borrower for a taxable 
year, a borrower may— 
‘‘(1) with respect to any wages earned by the 
borrower that are subject to Federal income tax 
withholding, have amounts withheld upon such 
wages under section 499A(b)(2); 
‘‘(2) in the case of a borrower who makes quar-
terly estimated tax return payments under section 
6654 of the Internal Revenue Code of 1986 for the 
year, pay such annual repayment amount concur-
rently with such quarterly payments under section 
499A(b)(3); 
‘‘(3) make direct payments under section 
499B(4) on such amount to the Secretary through-
out the year; 
‘‘(4) have other individuals or entities make 
payments under section 499B(5) on the borrower’s 
annual repayment amount for the year; or 
‘‘(5) another repayment plan authorized under 
section 455(d). 
‘‘(d) ORDER OF CREDITING.—Payments on loans de-
scribed in section 499A(a)(1) shall be applied, without re-
gard to the method of such payments, first toward pen-
alties due on the loans, next toward any fees due on the 
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loans, then toward any interest due on the loans, and fi-
nally toward the principal due on the loan with the highest 
applicable rate of interest among such loans. 
‘‘(e) PREPAYMENT AUTHORIZED.—A borrower shall 
have the right to prepay all or part of such loan, at any 
time and without penalty. Any such prepayment amount 
will be applied to loans described in section 499A(a)(1) 
in the same order as described in subsection (d). 
‘‘(f) UNDERPAYMENTS.— 
‘‘(1) PENALTIES FOR UNDERPAYMENTS.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (C), if, as of the last day of a taxable 
year, a borrower has not paid at least 90 per-
cent of the borrower’s annual repayment 
amount for such year, the borrower shall be 
charged a penalty in an amount equal to 10 
percent of the difference between— 
‘‘(i) an amount equal to 90 percent of 
the borrower’s annual repayment amount 
for such year; and 
‘‘(ii) the amount paid on such annual 
repayment amount as of such day. 
‘‘(B) INCREASE OF ANNUAL REPAYMENT 
AMOUNT.—A 
borrower’s 
annual 
repayment 
amount calculated under subsection (b) for such 
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year shall be increased by the amount of such 
penalty, but such penalty shall not be treated as 
a principal or interest amount for a loan de-
scribed in section 499A(a)(1). 
‘‘(C) EXCEPTION.—A borrower who has 
paid 100 percent of the borrower’s annual re-
payment amount for the taxable year preceding 
the taxable year described in subparagraph (A) 
shall not be subject to the penalty under this 
paragraph for the taxable year described in sub-
paragraph (A). 
‘‘(2) RECONCILING UNDERPAYMENTS.— 
‘‘(A) IN GENERAL.—If, as of the last day 
of a taxable year, the sum of the payments 
made on a borrower’s annual repayment 
amount for such year is less than the total 
amount of the borrower’s annual repayment 
amount for such year, the borrower— 
‘‘(i) in the case of the first year that 
the borrower has a difference between such 
amounts— 
‘‘(I) may request, in such manner 
as the Secretary shall require, that 
the Secretary reduce the borrower’s 
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annual repayment amount for such 
year to the sum of— 
‘‘(aa) the payments made, 
as of such day, on the borrower’s 
annual repayment amount for 
such year; and 
‘‘(bb) 
any 
penalties 
cal-
culated under paragraph (1) re-
sulting from such underpayment; 
and 
‘‘(II) if the borrower qualifies for 
the reduction requested under sub-
clause (I), shall pay the sum cal-
culated under such subclause at such 
time and in such manner as required 
by the Secretary; 
‘‘(ii) if the borrower does not qualify 
for a reduction under clause (i) or does not 
request such a reduction, shall pay to the 
Secretary an amount equal to the dif-
ference between such amounts within the 
30-day period beginning on the date of re-
ceipt by the borrower of the borrower’s an-
nual 
statement 
described 
in 
section 
499B(3) for such year; or 
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‘‘(iii) if the borrower fails to pay the 
amount owed by the borrower as calculated 
under clause (ii) within the 30-day period, 
shall be charged a penalty equal to 2 per-
cent of such amount for each month (pro-
rated based on the percentage of a month 
such penalty is charged) that such amount 
is owed or until the borrower defaults on 
the loan for which such amount is owed, 
whichever occurs first. 
‘‘(B) DEFAULT.—A loan for which an 
amount is owed under subparagraph (A) and 
that is not paid within 360 days after the date 
of receipt by the borrower of the borrower’s an-
nual statement described in subparagraph (A) 
shall be considered to be default. 
‘‘(g) OVERPAYMENTS.—If, as of the last day of a tax-
able year, the sum of the payments made on a borrower’s 
annual repayment amount for such year is greater than 
the total amount of the borrower’s annual repayment 
amount for such year, the Secretary shall— 
‘‘(1) refund the overpayment amount, if the 
borrower notifies the Secretary, within the 90-day 
period beginning on the date of receipt of the bor-
rower’s annual statement described in section 
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499B(3) for such year and in a manner prescribed 
by the Secretary, that the borrower desires to have 
the overpayment amount refunded; or 
‘‘(2) if a borrower fails to notify the Secretary 
of the borrower’s desire for a refund of such amount 
within such 90-day period, apply such amount as a 
prepayment to the borrower’s loans described in sec-
tion 499A(a)(1) in the same manner as a prepay-
ment authorized under subsection (e). 
‘‘(h) EMPLOYER
FAILURE
TO
WITHHOLD
PAY-
MENTS.—In the case of a borrower whose employer fails 
to withhold amounts under section 499A(b)(2) upon any 
wages earned by the borrower that are subject to Federal 
income tax withholding and with respect to which the bor-
rower made an election to have amounts withheld under 
section 499(b)(2), the Secretary shall— 
‘‘(1) reduce the borrower’s annual repayment to 
an amount equal to the borrower’s annual repay-
ment amount had wages from such employer been 
excluded when calculating the borrower’s annual re-
payment amount; and 
‘‘(2) reduce any penalties for underpayments 
calculated under subsection (f)(1) and refund any 
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overpayments on such annual repayment amount, 
accordingly.’’. 
Æ 
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