I 
115TH CONGRESS 
1ST SESSION H. R. 1127 
To increase purchasing power, strengthen economic recovery, and restore 
fairness in financing higher education in the United States through 
student loan forgiveness, caps on interest rates on Federal student loans, 
and refinancing opportunities for private borrowers, and for other pur-
poses. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 16, 2017 
Ms. BASS introduced the following bill; which was referred to the Committee 
on Education and the Workforce, and in addition to the Committees on 
Financial Services, and Ways and Means, for a period to be subsequently 
determined by the Speaker, in each case for consideration of such provi-
sions as fall within the jurisdiction of the committee concerned 
A BILL 
To increase purchasing power, strengthen economic recovery, 
and restore fairness in financing higher education in 
the United States through student loan forgiveness, caps 
on interest rates on Federal student loans, and refi-
nancing opportunities for private borrowers, and for 
other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Student Loan Fairness 
Act’’. 
SEC. 2. FINDINGS. 
Congress finds the following: 
(1) A well-educated citizenry is critical to our 
Nation’s ability to compete in the global economy. 
(2) The Federal Government has a vested inter-
est in ensuring access to higher education. 
(3) Higher education should be viewed as a 
public good benefitting our country rather than as a 
commodity solely benefitting individual students. 
(4) Recently, total outstanding student loan 
debt officially surpassed total credit card debt in the 
United States in 2015, and is on track to exceed 
$1,230,000,000,000. 
(5) Excessive student loan debt is impeding eco-
nomic growth in the United States. Faced with ex-
cessive repayment burdens, many individuals are un-
able to start businesses, invest, or buy homes. Re-
lieving student loan debt would give these individuals 
greater control over their earnings and would in-
crease entrepreneurship and demand for goods and 
services. 
(6) Because of soaring tuition costs, students 
often have no choice but to amass significant debt 
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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) any interest due and not paid under 
a monthly payment under this subsection— 
‘‘(i) shall continue to accrue; and 
‘‘(ii) shall be capitalized up to an 
amount equal to 10 percent of the original 
principal amount of all the eligible loans 
that the borrower is repaying under this 
subsection; 
‘‘(C) any principal due and not paid under 
a monthly payment under this subsection shall 
be deferred, and shall be forgiven in accordance 
with subsection (b) if the borrower meets the 
requirements for forgiveness under such sub-
section; 
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‘‘(D) the amount of time the borrower 
makes monthly payments under this subsection 
may exceed 10 years; 
‘‘(E) a borrower who is repaying an eligi-
ble loan pursuant to 10/10 Loan Repayment 
under this subsection may elect, at any time, to 
terminate repayment pursuant to 10/10 Loan 
Repayment 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 
‘‘(F) 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 
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— 
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‘‘(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)); or 
‘‘(B) in the case of a borrower who is in 
deferment due to an economic hardship de-
scribed in section 435(o), $0. 
‘‘(3) ELIGIBILITY.—The Secretary shall estab-
lish procedures for annually determining the bor-
rower’s eligibility for 10/10 Loan Repayment, includ-
ing verification of a borrower’s annual adjusted 
gross income and the annual amount due on the 
total amount of eligible loans, and such other proce-
dures as are necessary to effectively implement 10/ 
10 Loan Repayment under this subsection. 
‘‘(4) SPECIAL RULE FOR MARRIED BORROWERS 
FILING SEPARATELY.—In the case of a married bor-
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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.— 
‘‘(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 Fairness Act, has made 120 monthly pay-
ments 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 
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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. 
‘‘(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 Fairness Act, 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 
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‘‘(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 
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 the gross 
income 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.’’. 
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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 (9) and (10) 
as paragraphs (10) and (11), respectively; and 
(2) by inserting after paragraph (8) 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 October 1, 2018, or the date of 
enactment of the Student Loan Fairness Act, which-
ever is later, the applicable rate of interest shall not 
exceed 3.4 percent.’’. 
SEC. 5. 10/10 LOAN REPAYMENT PLAN AS PLAN SELECTED 
BY THE SECRETARY. 
(a) FFEL LOANS.— 
(1) IN
GENERAL.—Section 428(b)(9) of the 
Higher 
Education 
Act 
of 
1965 
(20 
U.S.C. 
1078(b)(9)) is amended— 
(A) in subparagraph (A)— 
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(i) by striking ‘‘and’’ at the end of 
clause (iv); 
(ii) in clause (v), by striking the pe-
riod at the end and inserting ‘‘; and’’; and 
(iii) by adding at the end the fol-
lowing new clause: 
‘‘(vi) beginning October 1, 2018, a 
10/10 Loan Repayment Plan, with varying 
annual repayment amounts based on the 
discretionary income of the borrower, in 
accordance with section 493E.’’; and 
(B) in subparagraph (B), by striking 
‘‘(A)(i)’’ and inserting ‘‘(A)(vi)’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1)(B) shall be effective beginning Oc-
tober 1, 2018. 
(b) DIRECT LOANS.— 
(1) IN GENERAL.—Section 455(d) of the High-
er Education Act of 1965 (20 U.S.C. 1087e(d)) is 
amended— 
(A) in paragraph (1)— 
(i) by striking ‘‘and’’ at the end of 
subparagraph (D); 
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(ii) in subparagraph (E), by striking 
the period at the end and inserting ‘‘; 
and’’; and 
(iii) by adding at the end the fol-
lowing new subparagraph: 
‘‘(F) beginning on October 1, 2018, a 10/ 
10 Loan Repayment Plan, with varying annual 
repayment amounts based on the discretionary 
income of the borrower, in accordance with sec-
tion 493E.’’; and 
(B) in paragraph (2)— 
(i) by striking ‘‘may’’ and inserting 
‘‘shall’’; and 
(ii) by striking ‘‘(A), (B), or (C)’’ and 
inserting ‘‘(F)’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1)(B) shall be effective beginning Oc-
tober 1, 2018. 
SEC. 6. 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. 7. 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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‘‘(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 
Fairness Act, including the amount of out-
standing principal, accrued interest, and related 
fees and costs (as determined by the Secretary) 
owed by a borrower on such a loan. 
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‘‘(D) PURCHASE OF LOAN.—For each eli-
gible private education loan that a borrower is 
consolidating under this paragraph, the Sec-
retary shall notify the holder that the Secretary 
is purchasing the loan, and the Secretary shall 
then purchase such loan, as described under 
section 140A of the Truth in Lending Act. 
‘‘(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 
of enactment of the Student Loan Fairness Act, 
including notifying such borrowers of the dead-
line to apply for such a loan under subpara-
graph (G). 
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‘‘(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 Fairness Act. The 
Secretary shall not make a Federal Direct Con-
solidation Loan under this paragraph 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) SALE OF PRIVATE EDUCATION LOANS TO THE 
GOVERNMENT.—Chapter 2 of the Truth in Lending Act 
(15 U.S.C. 1631 et seq.) is amended— 
(1) by redesignating section 140A as section 
140B; 
(2) by inserting after section 140 the following: 
‘‘§ 140A. Sale of private education loans to the Gov-
ernment 
‘‘(a) IN GENERAL.—The Bureau shall issue regula-
tions to require a private education lender to sell an eligi-
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ble private education loan to the Secretary of Education, 
upon request of the Secretary, for purposes of consoli-
dating such loan, as described under section 455(g)(2) of 
the Higher Education Act of 1965. 
‘‘(b) DETERMINATION OF PRICE.—The price paid for 
a private education loan under subsection (a) shall— 
‘‘(1) include the amount of outstanding prin-
cipal on the loan, the amount of accrued interest on 
the loan, and any fees or other costs owed by the 
consumer on the loan; and 
‘‘(2) be adjusted to account for the time value 
of such amount. 
‘‘(c) DEFINITIONS.—For purposes of this section: 
‘‘(1) ELIGIBLE PRIVATE EDUCATION LOAN.— 
The term ‘eligible private education loan’ means a 
private education loan, as defined under section 
140(a), made on or before the date of enactment of 
the Student Loan Fairness Act. 
‘‘(2) PRIVATE EDUCATION LENDER.—The term 
‘private education lender’ has the meaning given 
such term under section 140(a).’’; and 
(3) in the table of contents for such chapter— 
(A) by redesignating the item relating to 
section 140A as item 140B; and 
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(B) by inserting after the item relating to 
section 140 the following: 
‘‘140A. Sale of private education loans to the Government.’’. 
(c) 
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 
(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. 8. INTEREST-FREE DEFERMENT OF UNSUBSIDIZED 
LOANS DURING PERIODS OF UNEMPLOY-
MENT. 
(a) FFEL UNSUBSIDIZED LOAN DEFERMENT.— 
(1) Section 428H(e)(2) of the Higher Edu-
cation Act of 1965 (20 U.S.C. 1078–8(e)(2)) is 
amended— 
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(A) in subparagraph (A), by striking ‘‘In-
terest on’’ and inserting ‘‘Except as provided in 
subparagraph (C), interest on’’; and 
(B) by adding at the end the following: 
‘‘(C) Interest on loans made under this section 
for which payments are deferred under clause (ii) of 
section 428(b)(1)(M), for a period of deferment 
granted to a borrower on or after the date of enact-
ment of the Student Loan Fairness Act, shall accrue 
and be paid by the Secretary during any period dur-
ing which loans are so deferred, not in excess of 3 
years.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
428(b)(1)(Y)(iii) of the Higher Education Act of 
1965 (20 U.S.C. 1078(b)(1)(Y)(iii)) is amended by 
inserting ‘‘(other than a deferment under clause (ii) 
of such subparagraph on or after the date of enact-
ment of the Student Loan Fairness Act)’’ after ‘‘of 
this paragraph’’. 
(b) DIRECT UNSUBSIDIZED LOAN DEFERMENT.— 
Section 455(f)(1) of the Higher Education Act of 1965 
(20 U.S.C. 1087e(f)(1)) is amended— 
(1) in subparagraph (A)— 
(A) by striking ‘‘or’’ at the end of clause 
(i); and 
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(B) by adding at the end the following: 
‘‘(iii) a Federal Direct Unsubsidized 
Stafford Loan, with respect to a period of 
deferment described in subparagraph (B) 
of paragraph (2) granted to a borrower on 
or after the date of enactment of the Stu-
dent Loan Fairness Act; or’’; and 
(2) in subparagraph (B), by inserting ‘‘not de-
scribed in subparagraph (A)(iii)’’ after ‘‘Unsub-
sidized Stafford Loan’’. 
(c) TREATMENT OF CONSOLIDATION LOANS.—Sec-
tion 428C(b)(4)(C)(ii) of the Higher Education Act of 
1965 (20 U.S.C. 1078–3(b)(4)(C)(ii)) is amended— 
(1) by striking ‘‘or’’ at the end of subclause 
(II); 
(2) by redesignating subclause (III) as sub-
clause (IV); 
(3) by inserting after subclause (II) the fol-
lowing: 
‘‘(III) by the Secretary, in the 
case of a consolidation loan for which 
the application is received on or after 
the date of enactment of the Student 
Loan Fairness Act, except that the 
Secretary shall pay such interest only 
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for a period not in excess of 3 years 
for which the borrower would be eligi-
ble for a deferral under clause (ii) of 
section 428(b)(1)(M); or’’; and 
(4) in subclause (IV) (as redesignated by para-
graph (2)), by striking ‘‘(I) or (II)’’ and inserting 
‘‘(I), (II), or (III)’’. 
(d) INCOME-BASED REPAYMENT.—Section 493C(b) 
of the Higher Education Act of 1965 (20 U.S.C. 
10983(b))— 
(1) in paragraph (3)— 
(A) in subparagraph (A), by striking 
‘‘and’’ after the semicolon; 
(B) by redesignating subparagraph (B) as 
subparagraph (C); 
(C) by inserting after subparagraph (A) 
the following: 
‘‘(B) shall, on subsidized and unsubsidized 
loans, be paid by the Secretary for a period of 
not more than 3 years during which the bor-
rower is eligible for a deferment due to unem-
ployment described in section 455(f)(2)(B) (re-
gardless of whether the student is in such a 
deferment), except that— 
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‘‘(i) this subparagraph shall only 
apply to periods during which the borrower 
is eligible for such a deferment on or after 
the date of enactment of the Student Loan 
Fairness Act; and 
‘‘(ii) in the case of a subsidized loan, 
such period shall not include any period 
described in subparagraph (A) or any pe-
riod during which the borrower is in 
deferment due to an economic hardship de-
scribed in section 435(o); and’’; and 
(D) in subparagraph (C) (as so redesig-
nated by subparagraph (B))— 
(i) in clause (i), by striking ‘‘subpara-
graph (A)’’ and inserting ‘‘subparagraphs 
(A) and (B)’’; and 
(ii) in clause (ii), by inserting ‘‘, sub-
ject to subparagraph (B),’’ after ‘‘unsub-
sidized loan’’; and 
(2) by striking ‘‘and’’ at the end of paragraph 
(8); 
(3) by striking the period at the end of para-
graph (9) and inserting ‘‘; and’’; and 
(4) by adding at the end the following new 
paragraph: 
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‘‘(10) the amount of the principal and interest 
on a borrower’s loans repaid or canceled under para-
graph (7) shall not be included in the gross income 
of the borrower for purposes of the Internal Revenue 
Code of 1986.’’. 
SEC. 9. EXCLUDING LOANS FORGIVEN UNDER CERTAIN RE-
PAYMENT PROGRAMS FROM GROSS INCOME. 
Section 455(e)(2) of the Higher Education Act of 
1965 (20 U.S.C. 1087e(e)(2)) is amended— 
(1) in the paragraph heading, by inserting 
‘‘AND FORGIVENESS’’ after ‘‘REPAYMENT’’; and 
(2) by adding at the end the following: ‘‘The 
amount of the principal and interest on a borrower’s 
loans forgiven pursuant to income contingent repay-
ment shall not be included in the gross income of 
the borrower for purposes of the Internal Revenue 
Code of 1986.’’. 
Æ 
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