I 
116TH CONGRESS 
1ST SESSION H. R. 4603 
To amend the Higher Education Act of 1965 to provide for Federal student 
loan reform. 
IN THE HOUSE OF REPRESENTATIVES 
OCTOBER 4, 2019 
Mr. CARBAJAL (for himself and Ms. JACKSON LEE) introduced the following 
bill; which was referred to the Committee on Education and Labor, and 
in addition to the Committee on Ways and Means, for a period to be sub-
sequently determined by the Speaker, in each case for consideration of 
such provisions as fall within the jurisdiction of the committee concerned 
A BILL 
To amend the Higher Education Act of 1965 to provide 
for Federal student loan reform. 
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 ‘‘Leveraging Opportuni-
ties for Americans Now Act of 2019’’ or the ‘‘LOAN Act 
of 2019’’. 
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SEC. 2. ELIMINATION OF INTEREST AND REPLACEMENT 
WITH FINANCING FEES. 
Section 455 of the Higher Education Act of 1965 (20 
U.S.C. 1087e) is amended by adding at the end the fol-
lowing: 
‘‘(r) ELIMINATION OF INTEREST AND REPLACEMENT 
WITH FINANCING FEES.— 
‘‘(1) IN GENERAL.— 
‘‘(A) IN
GENERAL.—Except as provided 
under subparagraph (B), beginning on July 1, 
2021, the Secretary shall make loans under this 
part in accordance with this subsection. 
‘‘(B) EXCEPTION.—Beginning on July 1, 
2021, the Secretary shall make loans under this 
part in accordance with the provisions of this 
part other than this subsection to a borrower 
who— 
‘‘(i) was enrolled in an institution of 
higher education on June 30, 2021; and 
‘‘(ii) elects to borrow a loan under 
this part in accordance with the provisions 
of this part other than this subsection. 
‘‘(2) ELIMINATION
OF
INTEREST.—For loans 
made under this part in accordance with this sub-
section for which the first disbursement is made on 
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or after July 1, 2021, the applicable rate of interest 
shall be equal to 0 percent. 
‘‘(3) FINANCING FEES.— 
‘‘(A) IN GENERAL.—Beginning on July 1, 
2021, the Secretary shall charge the borrower 
of a loan made under this part in accordance 
with this subsection a financing fee determined 
in accordance with this paragraph and issued 
on the date the loan is dispersed. 
‘‘(B) DETERMINATION
OF
FEE.—The fi-
nancing fee for a borrower of a loan made 
under this part— 
‘‘(i) that is used for enrollment in an 
undergraduate course of study (except a 
Federal Direct PLUS Loan made on be-
half of a dependent student), shall be equal 
to, from the principal amount of the loan, 
25 percent of the amount of such loan; 
‘‘(ii) that is used for enrollment in a 
course of study necessary for enrollment in 
a program leading to a degree or certifi-
cate, shall be equal to, from the principal 
amount of the loan, 25 percent of the 
amount of such loan; 
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‘‘(iii) that is used for enrollment in a 
program that is necessary for a profes-
sional credential or certification from a 
State that is required for employment as a 
teacher in an elementary or secondary 
school in that State, shall be equal to, 
from the principal amount of the loan, 25 
percent of the amount of such loan; and 
‘‘(iv) that is a Federal Direct PLUS 
Loan made on behalf of a dependent stu-
dent or used for enrollment in a graduate 
or professional course of study, shall be 
equal to, from the principal amount of the 
loan, 38 percent of the amount of such 
loan. 
‘‘(C) REDUCTION DUE TO PREPAYMENT.— 
‘‘(i) IN GENERAL.—In order to pro-
vide an incentive to borrowers to pay the 
balance of a loan made under this part 
earlier than required under the applicable 
repayment plan, the Secretary may credit 
or refund any such borrowers for an 
amount of the financing fee charged under 
this subsection. 
‘‘(ii) REGULATIONS.— 
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‘‘(I) IN
GENERAL.—Not later 
than 9 months after the date of enact-
ment of the LOAN Act of 2019, the 
Secretary shall promulgate regulations 
establishing the methodology for cred-
iting or refunding a financing fee 
charged under this subsection pursu-
ant to clause (i). Such credit or re-
fund shall not reduce the financing 
fee by more than— 
‘‘(aa) with respect to a bor-
rower whose income, as deter-
mined under subclause (II), was 
not more than $45,000 in the 
taxable year in which the bor-
rower paid an amount from the 
balance of a loan made under 
this part earlier than required 
under the applicable repayment 
plan, 15 percentage points of 
such amount; 
‘‘(bb) with respect to a bor-
rower whose income, as deter-
mined under subclause (II), was 
more than $45,000 but not more 
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than $95,000 in the taxable year 
in which the borrower paid an 
amount from the balance of a 
loan made under this part earlier 
than required under the applica-
ble repayment plan, 10 percent-
age points of such amount; and 
‘‘(cc) with respect to a bor-
rower whose income, as deter-
mined under subclause (II), was 
more than $95,000 in the taxable 
year in which the borrower paid 
an amount from the balance of a 
loan made under this part earlier 
than required under the applica-
ble repayment plan, 5 percentage 
points of such amount. 
‘‘(II) 
INCOME
DETERMINA-
TION.—For purposes of subclause (I), 
a borrower’s income is equal to the 
amount of the gross income of the 
borrower for the taxable year that ex-
ceeds $10,000 (adjusted each year to 
reflect changes in the Consumer Price 
Index for All Urban Consumers pub-
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lished by the Bureau of Labor Statis-
tics for the Department of Labor for 
the most recent 12-month period for 
which such data are available). 
‘‘(D) METHODOLOGY OF PAYMENT.—The 
Secretary shall establish an amortization sched-
ule for the repayment of financing fees charged 
under this subsection. 
‘‘(4) RULEMAKING FOR CONSOLIDATION.—Not 
later than 18 months after the date of enactment of 
the LOAN Act of 2019, the Secretary shall promul-
gate rules regarding Federal Direct Consolidation 
Loans made under this part in accordance with this 
subsection, including a rule that the financing fee 
for such a Federal Direct Consolidation Loan deter-
mined in accordance with this subsection shall not 
exceed the sum of the financing fees applicable to 
the consolidated loans.’’. 
SEC. 3. INCOME DEPENDENT EDUCATION ASSISTANCE RE-
PAYMENT PLAN. 
Part D of title IV of the Higher Education Act of 
1965 (20 U.S.C. 1087a et seq.) is amended by adding at 
the end the following: 
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‘‘(3) RULE
OF
CONSTRUCTION.—Nothing in 
this section shall be construed to eliminate or other-
wise affect the loan forgiveness or loan cancellation 
options available under this part to a borrower. 
‘‘(b) DUTIES OF THE SECRETARY OF THE TREAS-
URY.— 
‘‘(1) IN
GENERAL.—The Secretary of the 
Treasury shall, with respect to each individual for 
whom a loan made under this part after the date of 
enactment of the LOAN Act of 2019 is in repay-
ment status, transmit to the Secretary of Edu-
cation— 
‘‘(A) in the case of such an individual who 
files an income tax return for such taxable year, 
such tax information as is necessary to deter-
mine the individual’s repayment obligation and 
financing fee adjustments, as determined by the 
Secretary under this part; and 
‘‘(B) in the case of any such individual 
who does not file a return for such taxable year, 
any available tax information of the individual 
as may be necessary to determine such obliga-
tion and whether such individual is delinquent 
under the terms of such loan for not so filing. 
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‘‘(2) ADDITIONAL PROGRAM REQUIREMENTS.— 
The Secretary of the Treasury shall establish such 
other policies, procedures, and guidance as may be 
necessary to carry out the purposes of this section, 
including measures to prevent underreporting and 
evasion of repayment or filing. 
‘‘(c) DUTIES OF THE SECRETARY OF EDUCATION.— 
‘‘(1) IN GENERAL.—The Secretary shall carry 
out, as part of the loan repayment plan established 
under this section, the following activities: 
‘‘(A) CALCULATION
OF
ANNUAL
REPAY-
MENT AMOUNTS.—The Secretary shall calculate 
the annual repayment amount under this sec-
tion for borrowers with one or more loans made 
under this part after the date of enactment of 
the LOAN Act of 2019 in repayment status for 
one or more months in the taxable year for 
which the amount is determined regardless of 
which repayment plan the borrower is in, in-
cluding the repayment obligations of such bor-
rowers in accordance with subsection (d)(3). 
‘‘(B) COMMUNICATION
WITH
THE
SEC-
RETARY
OF
THE
TREASURY.—The Secretary 
shall transmit to the Secretary of the Treasury 
such information as is necessary for the Sec-
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retary of the Treasury to carry out subsection 
(d)(3). 
‘‘(C) ANNUAL STATEMENTS.—Upon calcu-
lating the annual repayment amounts under 
subparagraph (A) for a taxable year, the Sec-
retary shall provide a statement, on an annual 
basis, to each borrower with a loan made under 
this part after the date of enactment of the 
LOAN Act of 2019 regardless of which repay-
ment plan the borrower is in, which lists the 
following: 
‘‘(i) Total payments made on the bor-
rower’s annual repayment amount for such 
taxable year. 
‘‘(ii) The borrower’s annual repay-
ment amount for such taxable year. 
‘‘(iii) The outstanding balances on all 
the loans made to the borrower under this 
part after the date of enactment of the 
LOAN Act of 2019 and any other out-
standing balances on loans of the borrower 
that were made, insured, or guaranteed 
under this title. 
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‘‘(iv) A description of how the bor-
rower’s annual repayment amount was cal-
culated. 
‘‘(D) PAYMENTS ON A BORROWER’S BE-
HALF.—The Secretary shall— 
‘‘(i) provide a mechanism for other in-
dividuals or entities to make payments on 
the annual repayment amount of a bor-
rower for a taxable year; and 
‘‘(ii) notify the borrower that any pay-
ments made under clause (i) for the tax-
able year that exceed the annual repay-
ment amount for the year shall not be re-
funded to the borrower. 
‘‘(E) APPEALS PROCESS.— 
‘‘(i) IN
GENERAL.—The Secretary 
shall make available a process through 
which a borrower can appeal the calcula-
tion of the borrower’s annual repayment 
amount, including a worksheet that en-
ables a borrower to calculate the bor-
rower’s annual repayment amount. 
‘‘(ii) GOOD
STANDING.—A borrower 
who makes an appeal under clause (i) with 
respect to a loan shall be considered in 
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good standing on such loan during the du-
ration of the appeal. 
‘‘(iii) REGULATIONS.—The Secretary 
shall issue regulations outlining such proc-
ess not later than 18 months after the date 
of enactment of the LOAN Act of 2019. 
‘‘(F) DELINQUENT FOR FAILURE TO FILE 
A RETURN.— 
‘‘(i) IN GENERAL.—In a case in which 
the Secretary receives information from 
the Secretary of the Treasury under sub-
section (b) that a borrower with a loan 
made under this part after the date of en-
actment of the LOAN Act of 2019 in re-
payment status in the repayment plan 
under this section, has failed to file a re-
turn under section 6012(a)(1) of the Inter-
nal Revenue Code of 1986 and such bor-
rower was required to file such a return, 
the Secretary shall— 
‘‘(I) notify the borrower of the 
borrower’s failure to file such a re-
turn; and 
‘‘(II) if the borrower fails to file 
such a return within 90 days of re-
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ceipt of the notice described in sub-
clause (I), consider the borrower’s 
loans made under this part after the 
date of enactment of the LOAN Act 
of 2019 in repayment status in the re-
payment plan under this section to be 
delinquent. 
‘‘(ii) APPEALS
PROCESS.—The Sec-
retary shall make available a process 
through which a borrower can appeal a de-
termination under clause (i) that the bor-
rower has failed to file a return under sec-
tion 6012(a)(1) of the Internal Revenue 
Code of 1986 and such borrower was re-
quired to file such a return. The Secretary 
shall issue regulations outlining such proc-
ess not later than 18 months after the date 
of enactment of the LOAN Act of 2019. 
‘‘(G) MONTHLY PAYMENTS PROCESS.—The 
Secretary shall— 
‘‘(i) establish a monthly payments 
process described in paragraph (2); and 
‘‘(ii) issue regulations establishing 
penalties for default on such monthly pay-
ments. 
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