I 
114TH CONGRESS 
2D SESSION 
H. R. 6197 
To amend the Higher Education Act of 1965 to provide loan deferment 
and loan cancellation for founders and employees of small business start- 
ups, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
SEPTEMBER 28, 2016 
Ms. VELA´ZQUEZ introduced the following bill; which was referred to the Com-
mittee on Education and the Workforce, and in addition to the Commit-
tees on Financial Services, Ways and Means, and Small Business, for a 
period to be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the com-
mittee concerned 
A BILL 
To amend the Higher Education Act of 1965 to provide 
loan deferment and loan cancellation for founders and 
employees of small business start-ups, and for other pur-
poses. 
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 ‘‘Supporting America’s 
Young Entrepreneurs Act of 2016’’. 
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SEC. 2. SMALL BUSINESS START-UP EMPLOYEE LOAN 
DEFERMENT AND CANCELLATION. 
(a) DEFERMENT.—Section 455(f) of the Higher Edu-
cation Act of 1965 (20 U.S.C. 1087e(f)) is amended— 
(1) in paragraph (1), by striking ‘‘A borrower 
of a loan’’ and inserting ‘‘Except as provided in 
paragraph (5), a borrower of a loan’’; and 
(2) by adding at the end the following: 
‘‘(5) NO
INTEREST
DEFERMENT
ELIGIBILITY 
FOR FOUNDERS OF SMALL BUSINESS START-UPS.— 
A borrower of a loan made under this part shall be 
eligible for a deferment, during which periodic in-
stallments of principal and interest need not be paid, 
during any period not in excess of 3 years during 
which the borrower is employed as a founder of a 
small business start-up (as defined in subsection 
(r)(3)).’’. 
(b) LOAN CANCELLATION.—Section 455 of the High-
er Education Act of 1965 (20 U.S.C. 1087e) is amended 
by adding at the end the following: 
‘‘(r) LOAN CANCELLATION
FOR CERTAIN SMALL 
BUSINESS START-UP EMPLOYEES.— 
‘‘(1) FOUNDER OF A SMALL BUSINESS START- 
UP IN A DISTRESSED AREA.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
cancel $20,000 of the balance of interest and 
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principal due, in accordance with subparagraph 
(B), on any eligible Federal Direct Loan not in 
default for a borrower who— 
‘‘(i) has made 24 monthly payments 
on the eligible Federal Direct Loan after 
the date of the enactment of this sub-
section pursuant to any one or a combina-
tion of payments under a repayment plan 
under subsection (d)(1) or (g); 
‘‘(ii) has been employed as a founder 
of a small business start-up in a distressed 
area during the period in which the bor-
rower makes each of the 24 payments; 
‘‘(iii) is employed as a founder of a 
small business start-up in a distressed area 
at the time of such cancellation; and 
‘‘(iv) is approved for loan cancellation 
by the young entrepreneurs business center 
under section 47 of the Small Business Act 
(16 U.S.C. 631 et seq.). 
‘‘(B) LOAN CANCELLATION AMOUNT.— 
‘‘(i) IN GENERAL.—After the conclu-
sion of the employment period described in 
subparagraph (A), the Secretary shall can-
cel the obligation to repay $20,000 of the 
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balance of interest and principal due as of 
the time of such cancellation, on the eligi-
ble Federal Direct Loans made to the bor-
rower under this part. 
‘‘(ii) LIMITATION.—A borrower may 
not receive an aggregate amount of more 
than $20,000 under this subparagraph. 
‘‘(C) INELIGIBILITY
FOR
DOUBLE
BENE-
FITS.—No borrower may, for the same service, 
receive a reduction of loan obligations under 
both this paragraph and— 
‘‘(i) paragraph (2); 
‘‘(ii) subsection (m); or 
‘‘(iii) section 428J, 428K, 428L, or 
460. 
‘‘(2) EMPLOYEE OF A SMALL BUSINESS START- 
UP.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
cancel $3,000 of the balance of interest and 
principal due, in accordance with subparagraph 
(B), on any eligible Federal Direct Loan not in 
default for a borrower who— 
‘‘(i) has made 12 monthly payments 
on the eligible Federal Direct Loan after 
the date of the enactment of this sub-
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section pursuant to any one or a combina-
tion of payments under a repayment plan 
under subsection (d)(1) or (g); 
‘‘(ii) has been employed in a small 
business start-up job during the period in 
which the borrower makes each of the 12 
payments; and 
‘‘(iii) is employed in a small business 
start-up job at the time of such cancella-
tion. 
‘‘(B) LOAN CANCELLATION AMOUNT.— 
‘‘(i) IN GENERAL.—After the conclu-
sion of the employment period described in 
subparagraph (A), the Secretary shall can-
cel the obligation to repay $3,000 of the 
balance of interest and principal due as of 
the time of such cancellation, on the eligi-
ble Federal Direct Loans made to the bor-
rower under this part. 
‘‘(ii) LIMITATION.—A borrower may 
not receive an aggregate amount of more 
than $15,000 under this subparagraph. 
‘‘(C) INELIGIBILITY
FOR
DOUBLE
BENE-
FITS.—No borrower may, for the same service, 
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receive a reduction of loan obligations under 
both this paragraph and— 
‘‘(i) paragraph (1); 
‘‘(ii) subsection (m); or 
‘‘(iii) section 428J, 428K, 428L, or 
460. 
‘‘(3) DEFINITIONS.—In this subsection: 
‘‘(A) DISTRESSED AREA.—The term ‘dis-
tressed area’ means an area identified under 
section 47 of the Small Business Act (16 
U.S.C. 631 et seq.). 
‘‘(B) ELIGIBLE FEDERAL DIRECT LOAN.— 
The term ‘eligible Federal Direct Loan’ means 
a Federal Direct Stafford Loan, Federal Direct 
PLUS Loan, or Federal Direct Unsubsidized 
Stafford Loan, or a Federal Direct Consolida-
tion Loan. 
‘‘(C) FOUNDER.—The term ‘founder’ shall 
have the meaning given such term by the Ad-
ministrator of the Small Business Administra-
tion under this paragraph. 
‘‘(D) SMALL
BUSINESS
START-UP.—The 
term ‘small business start-up’ means a business 
that is certified by the young entrepreneurs 
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business center under section 47 of the Small 
Business Act (16 U.S.C. 631 et seq.). 
‘‘(E) SMALL BUSINESS START-UP JOB.— 
The term ‘small business start-up job’ means a 
full-time job as an employee of a small business 
start-up.’’. 
SEC. 3. LOAN REFINANCING. 
(a) IN GENERAL.—Part D of title IV of the Higher 
Education Act of 1965 is amended by adding at the end 
the following: 
‘‘SEC. 460. FEDERAL DIRECT REFINANCED PRIVATE LOAN 
PROGRAM. 
‘‘(a) DEFINITIONS.—In this section: 
‘‘(1) ELIGIBLE PRIVATE EDUCATION LOAN.— 
The term ‘eligible private education loan’ means a 
private education loan, as defined in section 140(a) 
of the Truth in Lending Act (15 U.S.C. 1650(a)), 
that was for the borrower’s own postsecondary edu-
cational expenses for an eligible program at an insti-
tution of higher education participating in the loan 
program under this part, as of the date that the 
loan was disbursed. 
‘‘(2) FEDERAL DIRECT REFINANCED PRIVATE 
LOAN.—The term ‘Federal Direct Refinanced Pri-
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vate Loan’ means a loan issued under subsection 
(b)(1). 
‘‘(3) PRIVATE
EDUCATIONAL
LENDER.—The 
term ‘private educational lender’ has the meaning 
given the term in section 140(a) of the Truth in 
Lending Act (15 U.S.C. 1650(a)). 
‘‘(4) QUALIFIED BORROWER.—The term ‘quali-
fied borrower’ means an individual who— 
‘‘(A) has an eligible private education loan; 
‘‘(B) has been current on payments on the 
eligible private education loan for the 6 months 
prior to the date of the qualified borrower’s ap-
plication for refinancing under this section, and 
is in good standing on the loan at the time of 
such application; 
‘‘(C) is not in default on the eligible pri-
vate education loan or on any loan made, in-
sured, or guaranteed under this part or part B 
or E; and 
‘‘(D) meets the eligibility requirements de-
scribed in subsection (b)(2). 
‘‘(b) PROGRAM AUTHORIZED.— 
‘‘(1) IN GENERAL.—The Secretary, in consulta-
tion with the Secretary of the Treasury, shall carry 
out a program under which the Secretary, upon ap-
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plication by a qualified borrower who has an eligible 
private education loan, shall issue such borrower a 
loan under this part in accordance with the fol-
lowing: 
‘‘(A) The loan issued under this program 
shall be in an amount equal to the sum of the 
unpaid principal, accrued unpaid interest, and 
late charges of the private education loan. 
‘‘(B) The Secretary shall pay the proceeds 
of the loan issued under this program to the 
private educational lender of the private edu-
cation loan, in order to discharge the qualified 
borrower from any remaining obligation to the 
private educational lender with respect to the 
original private education loan. 
‘‘(C) The Secretary shall require that the 
qualified borrower undergo loan counseling that 
provides all of the information and counseling 
required under clauses (i) through (viii) of sec-
tion 485(b)(1)(A) before the loan is refinanced 
in accordance with this section, and before the 
proceeds of such loan are paid to the private 
educational lender. 
‘‘(D) The Secretary shall issue the loan as 
a Federal Direct Refinanced Private Loan, 
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which shall have the same terms, conditions, 
and benefits as a Federal Direct Subsidized 
Loan, except as otherwise provided in this sec-
tion. 
‘‘(2) BORROWER ELIGIBILITY.—Not later than 
180 days after the date of the enactment of this sec-
tion, the Secretary, in consultation with the Sec-
retary of the Treasury and the Director of the Bu-
reau of Consumer Financial Protection, shall estab-
lish eligibility requirements— 
‘‘(A) to ensure eligibility only for qualified 
borrowers in good standing; 
‘‘(B) to minimize inequities between Fed-
eral Direct Refinanced Private Loans and other 
Federal student loans; 
‘‘(C) to preclude windfall profits for pri-
vate educational lenders; and 
‘‘(D) to ensure full access to the program 
authorized in this subsection for borrowers with 
private loans who otherwise meet the criteria 
established in accordance with subparagraphs 
(A) and (B). 
‘‘(c) INTEREST RATE.— 
‘‘(1) IN
GENERAL.—The interest rate for a 
Federal Direct Refinanced Private Loan is, in the 
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case a private education loan originally issued for 
undergraduate, graduate, or professional degree 
postsecondary educational expenses, a rate equal to 
the rate for Federal Direct Subsidized Stafford 
Loans issued to undergraduate students for the 12- 
month period beginning on July 1, 2016, and ending 
on June 30, 2017. 
‘‘(2) FIXED RATE.—The applicable rate of in-
terest determined under this subsection for a Fed-
eral Direct Refinanced Private Loan shall be fixed 
for the period of the loan. 
‘‘(d) TREATMENT OF LOANS.—Nothing in this sec-
tion shall affect the ability of a borrower to qualify for 
loan repayment under a repayment plan under subsection 
(d)(1) or (g) of section 455.’’. 
(b) NOTICE OF POTENTIAL ELIGIBILITY.—Section 
128(e) of the Truth in Lending Act (15 U.S.C. 1638(e)) 
is amended by adding at the end the following new para-
graph: 
‘‘(12) NOTICE REQUIRED ALONG WITH BILLING 
STATEMENTS.—Along with each billing statement 
sent to the borrower, the private educational lender 
shall include a statement informing the borrower 
that the borrower may be eligible for the Federal Di-
rect Refinanced Private Loan program established 
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under section 460 of the Higher Education Act of 
1965.’’. 
SEC. 4. YOUNG ENTREPRENEURS BUSINESS CENTER. 
The Small Business Act (15 U.S.C. 631 et seq.) is 
amended— 
(1) by redesignating section 47 as section 48; 
and 
(2) by inserting after section 46 the following: 
‘‘SEC. 47. YOUNG ENTREPRENEURS BUSINESS CENTER. 
‘‘(a) ESTABLISHMENT.—There is established within 
the Administration a young entrepreneurs business center 
that shall, for purposes of loan cancellation for start-up 
employees established under subsection (r) of section 455 
of the Higher Education Act of 1965 (20 U.S.C. 1087e)— 
‘‘(1) certify small business start-ups under sub-
section (b); 
‘‘(2) identify distressed areas under subsection 
(c); and 
‘‘(3) approve loan cancellation for founders of 
small business start-ups in distressed areas under 
subsection (d). 
‘‘(b) CERTIFICATION.— 
‘‘(1) APPLICATION.—To be certified by the 
young entrepreneurs business center, a small busi-
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ness start-up shall submit an application to the Ad-
ministrator that includes— 
‘‘(A) a 5-year business plan for such small 
business start-up; and 
‘‘(B) the number of employees the small 
business start-up intends to employ on a yearly 
basis. 
‘‘(2) 
REQUIREMENTS.—The 
young 
entre-
preneurs business center may not certify a small 
business start-up unless such small business start- 
up, on the date the application is submitted under 
paragraph (1)— 
‘‘(A) has a founder who is a recent grad-
uate of a 4-year institution of higher education; 
‘‘(B) is a start-up for which at least 50 
percent of the employees of the start-up are re-
cent graduates of such an institution. 
‘‘(c) DISTRESSED AREA.— 
‘‘(1) IN GENERAL.—Not less than once every 3 
years after the date of the enactment of this section, 
the young entrepreneurs business center shall iden-
tify and make publically available on the website of 
the Administration a list of distressed areas. 
‘‘(2) REQUIREMENTS.—A distressed area iden-
tified under paragraph (1) shall be a county or 
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equivalent division of local government of a State in 
which the small business concern is located that— 
‘‘(A) has, for the most recent 24-month pe-
riod for which statistics are available— 
‘‘(i) a per capita income of 80 percent 
or less of the national average; or 
‘‘(ii) an unemployment rate that is 1 
percent greater than the national average; 
and 
‘‘(B) the young entrepreneurs business 
center determines would economically benefit 
from having small business start-ups estab-
lished in such area. 
‘‘(d) LOAN CANCELLATION FOR FOUNDERS OF A 
SMALL BUSINESS START-UP IN A DISTRESSED AREA.— 
For purposes of loan cancellation under subsection (r)(1) 
of section 455 of the Higher Education Act of 1965 (20 
U.S.C. 1087e) the young entrepreneurs business center 
shall approve a founder of a small business start-up in 
a distressed area if such founder— 
‘‘(1) established a small business start-up 
that— 
‘‘(A) on the date such small business start- 
up was established, was located in a distressed 
area identified by the young entrepreneurs busi-
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ness center under subsection (c) not more than 
3 years before such date of establishment; 
‘‘(B) was certified under subsection (b); 
and 
‘‘(C) on the date of approval under this 
subsection, has been operating continuously for 
not less than 5 years; and 
‘‘(2) was employed as a founder of a small busi-
ness start-up in a distressed area during the period 
in which such founder made the 24 payments de-
scribed in subsection (r)(1)(A) of such section 455. 
‘‘(e) DEFINITIONS.—In this section: 
‘‘(1) INSTITUTION OF HIGHER EDUCATION.— 
The term ‘institution of higher education’ has the 
meaning given such term in section 102 of the High-
er Education Act (20 U.S.C. 1002). 
‘‘(2) SMALL
BUSINESS
START-UP.—The term 
‘small business start-up’ means a small business 
concern that— 
‘‘(A) is not yet in existence; or 
‘‘(B) has been in existence for not more 
than 3 years.’’. 
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SEC. 5. TREATMENT OF LOAN CANCELLATION. 
(a) IN GENERAL.—Section 108(f) of the Internal 
Revenue Code of 1986 is amended by adding at the end 
the following new paragraph: 
‘‘(5) CANCELLATION
OF
CERTAIN
FEDERAL 
STUDENT
LOANS.—In the case of an individual, 
gross income shall not include the discharge (in 
whole or in part) of any student loan pursuant to 
the cancellation (in whole or in part) of such loan 
by the Secretary of Education under subsection (r) 
of section 455 of the Higher Education Act of 1965 
(20 U.S.C. 1087e).’’. 
(b) EFFECTIVE DATE.—The amendment made by 
this section shall apply to discharges of indebtedness oc-
curring after the date of the enactment of this Act. 
Æ 
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