‘‘(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). 
VerDate Sep 11 2014 
02:55 Jun 16, 2016
Jkt 059200
PO 00000
Frm 00016
Fmt 6652
Sfmt 6201
E:\BILLS\H5487.IH
H5487
smartinez on DSK3GLQ082PROD with BILLS
‘‘(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-
VerDate Sep 11 2014 
02:55 Jun 16, 2016
Jkt 059200
PO 00000
Frm 00017
Fmt 6652
Sfmt 6201
E:\BILLS\H5487.IH
H5487
smartinez on DSK3GLQ082PROD with BILLS
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 
VerDate Sep 11 2014 
02:55 Jun 16, 2016
Jkt 059200
PO 00000
Frm 00018
Fmt 6652
Sfmt 6201
E:\BILLS\H5487.IH
H5487
smartinez on DSK3GLQ082PROD with BILLS
(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— 
VerDate Sep 11 2014 
02:55 Jun 16, 2016
Jkt 059200
PO 00000
Frm 00019
Fmt 6652
Sfmt 6201
E:\BILLS\H5487.IH
H5487
smartinez on DSK3GLQ082PROD with BILLS
(A) in subparagraph (A), by inserting ‘‘Ex-
cept as provided in subparagraph (C),’’ before 
‘‘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 
VerDate Sep 11 2014 
02:55 Jun 16, 2016
Jkt 059200
PO 00000
Frm 00020
Fmt 6652
Sfmt 6201
E:\BILLS\H5487.IH
H5487
smartinez on DSK3GLQ082PROD with BILLS
(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 
VerDate Sep 11 2014 
02:55 Jun 16, 2016
Jkt 059200
PO 00000
Frm 00021
Fmt 6652
Sfmt 6201
E:\BILLS\H5487.IH
H5487
smartinez on DSK3GLQ082PROD with BILLS
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 so redesignated by 
this subsection), by striking ‘‘(I) or (II)’’ and insert-
ing ‘‘(I), (II), or (III)’’. 
(d) INCOME-BASED REPAYMENT.—Section 493C(b) 
of the Higher Education Act of 1965 (20 U.S.C. 
10983(b)) is amended— 
(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— 
VerDate Sep 11 2014 
04:00 Jun 16, 2016
Jkt 059200
PO 00000
Frm 00022
Fmt 6652
Sfmt 6201
E:\BILLS\H5487.IH
H5487
smartinez on DSK3GLQ082PROD with BILLS
‘‘(i) this subparagraph shall only 
apply to periods during which the borrower 
is eligible for a such 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’’; 
(D) in subparagraph (C) (as so redesig-
nated by paragraph (2))— 
(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’’; 
(E) by striking ‘‘and’’ at the end of para-
graph (8); 
(F) by striking the period at the end of 
paragraph (9) and inserting a semicolon; and 
(G) by adding at the end the following new 
paragraph: 
VerDate Sep 11 2014 
04:00 Jun 16, 2016
Jkt 059200
PO 00000
Frm 00023
Fmt 6652
Sfmt 6201
E:\BILLS\H5487.IH
H5487
smartinez on DSK3GLQ082PROD with BILLS
‘‘(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. 
(a) 
INCOME-CONTINGENT
REPAYMENT.—Section 
455(e)(2) of the Higher Education Act of 1965 (20 U.S.C. 
1087e(e)(2)) is amended— 
(1) in the subsection 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.’’. 
(b) PAY AS YOU EARN REPAYMENT; REVISE PAY AS 
YOU EARN REPAYMENT.—The amount of the principal 
and interest on a borrower’s loans forgiven pursuant to 
the income-contingent repayment plan based on the Pay 
As You Earn repayment plan described in section 685.209 
of title 34, Code of Federal Regulations (or the successor 
regulations), or the income-contingent repayment based on 
VerDate Sep 11 2014 
04:00 Jun 16, 2016
Jkt 059200
PO 00000
Frm 00024
Fmt 6652
Sfmt 6201
E:\BILLS\H5487.IH
H5487
smartinez on DSK3GLQ082PROD with BILLS
the Revised Pay As You Earn repayment plan described 
in sections 685.208 and 685.209 of title 34, Code of Fed-
eral Regulations, as amended the final regulations pub-
lished by the Department of Education in the Federal 
Register on October 30, 2015 (80 Fed. Reg. 67203 et 
seq.), shall not be included in the gross income of the bor-
rower for purposes of the Internal Revenue Code of 1986. 
Æ 
VerDate Sep 11 2014 
04:00 Jun 16, 2016
Jkt 059200
PO 00000
Frm 00025
Fmt 6652
Sfmt 6301
E:\BILLS\H5487.IH
H5487
smartinez on DSK3GLQ082PROD with BILLS