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purposes described in section 455(e)(1),
and the lender shall determine the re-
payment obligation on the loan, in ac-
cordance with the procedures developed
by the Secretary;
‘‘(III) in lieu of the requirements
of section 455(e)(3), in the case of a
borrower who chooses to repay a loan
made, insured, or guaranteed under
this part pursuant to income-based re-
payment and for whom the adjusted
gross income is unavailable or does not
reasonably reflect the borrower’s cur-
rent income, the borrower shall provide
the lender with other documentation of
income that the Secretary has deter-
mined is satisfactory for similar bor-
rowers of loans made under part D;
‘‘(IV) the Secretary shall pay any
interest due and not paid for under the
repayment schedule described in sec-
tion 455(e)(4) for a loan made, in-
sured, or guaranteed under this part
in the same manner as the Secretary
pays any such interest under section
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455(e)(6) for a Federal Direct Stafford
Loan;
‘‘(V) the Secretary shall assume
the obligation to repay an outstanding
balance of principal and interest due
on all loans made, insured, or guaran-
teed under this part (other than an ex-
cepted PLUS Loan or a loan under
section 428C that includes an excepted
PLUS loan), for a borrower who satis-
fies the requirements of subparagraphs
(A) and (B) of section 455(e)(7), in the
same manner as the Secretary cancels
such outstanding balance under section
455(e)(7); and
‘‘(VI) in lieu of the notification
requirements under section 455(e)(8),
the lender shall notify a borrower of a
loan made, insured, or guaranteed
under this part who chooses to repay
such loan pursuant to income-based re-
payment of the terms and conditions of
such plan, in accordance with the pro-
cedures established by the Secretary,
including notification that—
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‘‘(aa) the borrower shall be
responsible for providing the lend-
er with the information necessary
for documentation of the bor-
rower’s income, including income
information for the borrower’s
spouse (as applicable); and
‘‘(bb) if the borrower con-
siders that special circumstances
warrant an adjustment, as de-
scribed in section 455(e)(8)(B),
the borrower may contact the
lender, and the lender shall deter-
mine whether such adjustment is
appropriate, in accordance with
the criteria established by the Sec-
retary; and’’;
(2) in subsection (e)—
(A) in the subsection heading, by striking
‘‘INCOME-SENSITIVE’’ and inserting ‘‘INCOME-
BASED’’;
(B) in paragraph (1)—
(i) by striking ‘‘income-sensitive repay-
ment’’ and inserting ‘‘income-based repay-
ment’’; and
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(ii) by inserting ‘‘and for the public
service loan forgiveness program under sec-
tion 455(m), in accordance with section
428C(b)(5)’’ before the semicolon; and
(C) in paragraphs (2) and (3), by striking
‘‘income-sensitive’’ each place the term occurs
and inserting ‘‘income-based’’; and
(3) in subsection (m)—
(A) in the subsection heading, by striking
‘‘INCOME CONTINGENT’’ and inserting ‘‘INCOME-
BASED’’;
(B) in paragraph (1), by striking ‘‘income
contingent repayment plan’’ and all that follows
through the period at the end and inserting ‘‘in-
come-based repayment plan as described in sub-
section (b)(9)(A)(iii) and section 455(d)(1)(D).’’;
and
(C) in the paragraph heading of paragraph
(2), by striking ‘‘INCOME CONTINGENT’’ and in-
serting ‘‘INCOME-BASED’’.
(b) CONSOLIDATION LOANS.—Section 428C (20 U.S.C.
1078–3) is amended—
(1) in subsection (a)(3)(B)(i)(V), by striking ‘‘for
the purposes of obtaining an income contingent re-
payment plan,’’ and inserting ‘‘for the purpose of
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using the public service loan forgiveness program
under section 455(m),’’;
(2) in subsection (b)(5)—
(A) in the first sentence, by striking ‘‘, or
is unable to obtain a consolidation loan with in-
come-sensitive repayment terms acceptable to the
borrower from such a lender,’’ and inserting ‘‘,
or chooses to obtain a consolidation loan for the
purposes of using the public service loan forgive-
ness program offered under section 455(m),’’;
and
(B) in the second sentence, by striking ‘‘in-
come contingent repayment under part D of this
title’’ and inserting ‘‘income-based repayment’’;
and
(3) in subsection (c)—
(A) in paragraph (2)(A)—
(i) in the first sentence, by striking ‘‘of
graduated or income-sensitive repayment
schedules, established by the lender in ac-
cordance with the regulations of the Sec-
retary.’’ and inserting ‘‘of graduated repay-
ment schedules, established by the lender in
accordance with the regulations of the Sec-
retary, and income-based repayment sched-
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ules, established pursuant to regulations by
the Secretary.’’; and
(ii) in the second sentence, by striking
‘‘Except as required’’ and all that follows
through ‘‘subsection (b)(5),’’ and inserting
‘‘Except as required by such income-based
repayment schedules,’’; and
(B) in paragraph (3)(B), by striking ‘‘in-
come contingent repayment offered by the Sec-
retary under subsection (b)(5)’’ and inserting
‘‘income-based repayment’’.
(c) DIRECT LOANS.—Section 455 (as amended by sec-
tions 201(c) and 202(b)) (20 U.S.C. 1087e) is further
amended—
(1) in subsection (d)—
(A) in paragraph (1)(D)—
(i) by striking ‘‘income contingent re-
payment plan’’ and inserting ‘‘income-
based repayment plan’’; and
(ii) by striking ‘‘a Federal Direct
PLUS loan’’ and inserting ‘‘an excepted
PLUS loan or any Federal Direct Consoli-
dation Loan that includes an excepted
PLUS loan (as defined in subsection
(e)(10))’’; and
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(B) in paragraph (5)(B), by striking ‘‘in-
come contingent’’ and inserting ‘‘income-based’’;
and
(2) in subsection (e)—
(A) in the subsection heading, by striking
‘‘INCOME CONTINGENT’’ and inserting ‘‘INCOME-
BASED’’;
(B) in paragraphs (1), (2), and (3), by
striking ‘‘income contingent’’ each place the term
appears and inserting ‘‘income-based’’;
(C) in paragraph (4)—
(i) by striking ‘‘Income contingent’’
and inserting ‘‘Income-based’’; and
(ii) by striking ‘‘Secretary.’’ and in-
serting ‘‘Secretary, except that the monthly
required payment under such schedule shall
not exceed 15 percent of the result obtained
by calculating the amount by which—
‘‘(A) the borrower’s adjusted gross income;
exceeds
‘‘(B) 150 percent of the poverty line appli-
cable to the borrower’s family size, as determined
under section 673(2) of the Community Service
Block Grant Act,
divided by 12.’’;
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(D) in paragraph (5), by striking ‘‘income
contingent’’ and inserting ‘‘income-based’’;
(E) by redesignating paragraph (6) as
paragraph (8);
(F) by inserting after paragraph (5) the fol-
lowing:
‘‘(6) TREATMENT OF INTEREST.—In the case of
a Federal Direct Stafford Loan, any interest due and
not paid for under paragraph (2) shall be paid by the
Secretary.
‘‘(7) LOAN FORGIVENESS.—The Secretary shall
cancel the obligation to repay an outstanding balance
of principal and interest due on all loans made under
this part, or assume the obligation to repay an out-
standing balance of principal and interest due on all
loans made, insured, or guaranteed under part B,
(other than an excepted PLUS Loan, or any Federal
Direct Consolidation Loan or loan under section
428C that includes an excepted PLUS loan) to a bor-
rower who—
‘‘(A) makes the election under this sub-
section or under section 428(b)(9)(A)(iii); and
‘‘(B) for a period of time prescribed by the
Secretary not to exceed 25 years (including any
period during which the borrower is in
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deferment due to an economic hardship described
in section 435(o)), meets 1 of the following re-
quirements with respect to each payment made
during such period:
‘‘(i) Has made the payment under this
subsection or section 428(b)(9)(A)(iii).
‘‘(ii) Has made the payment under a
standard repayment plan under section
428(b)(9)(A)(i) or 455(d)(1)(A).
‘‘(iii) Has made a payment that
counted toward the maximum repayment
period under income-sensitive repayment
under section 428(b)(9)(A)(iii) or income
contingent 
repayment 
under 
section
455(d)(1)(D), as each such section was in
effect on June 30, 2008.
‘‘(iv) Has made a reduced payment of
not less than the amount required under
subsection (e), pursuant to a forbearance
agreement under section 428(c)(3)(A)(i) for
a 
borrower 
described 
in
428(c)(3)(A)(i)(II).’’;
(G) in the matter preceding subparagraph
(A) of paragraph (8) (as redesignated by sub-
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paragraph (E)), by striking ‘‘income contingent’’
and inserting ‘‘income-based’’; and
(H) by adding at the end the following:
‘‘(9) RETURN
TO
STANDARD
REPAYMENT.—A
borrower who is repaying a loan made under this
part pursuant to income-based repayment may
choose, at any time, to terminate repayment pursuant
to income-based repayment and repay such loan
under the standard repayment plan.
‘‘(10) DEFINITION OF EXCEPTED PLUS LOAN.—
In this subsection, the term ‘excepted PLUS loan’
means a Federal Direct PLUS loan or a loan under
section 428B that is made, insured, or guaranteed on
behalf of a dependent student.’’.
(d) CONFORMING AMENDMENTS AND TECHNICAL COR-
RECTIONS.—The Act (20 U.S.C. 1001 et seq.) is further
amended—
(1) 
in 
section 
427(a)(2)(H) 
(20 
U.S.C.
1077(a)(2)(H))—
(A) by striking ‘‘or income-sensitive’’; and
(B) by inserting ‘‘or income-based repay-
ment schedule established pursuant to regula-
tions by the Secretary’’ before the semicolon at
the end; and
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(2) 
in 
section 
455(d)(1)(C) 
(20 
U.S.C.
1087e(d)(1)(C)), by striking ‘‘428(b)(9)(A)(v)’’ and
inserting ‘‘428(b)(9)(A)(iv)’’.
(e) TRANSITION PROVISION.—A student who, as of
June 30, 2008, elects to repay a loan under part B or part
D of the Higher Education Act of 1965 (20 U.S.C. 1071
et seq., 1087a et seq.) through an income-sensitive repay-
ment plan under section 428(b)(9)(A)(iii) of such Act (20
U.S.C. 1078(b)(9)(A)(iii)) or an income contingent repay-
ment plan under section 455(d)(1)(D) of such Act (20
U.S.C. 1087e(d)(1)(D)) (as each such section was in effect
on the day before the date of enactment of this Act) shall
have the option to continue repayment under such section
(as such section was in effect on such day), or may elect,
beginning on July 1, 2008, to use the income-based repay-
ment plan under section 428(b)(9)(A)(iii) or 455(d)(1)(D)
(as applicable) of the Higher Education Act of 1965, as
amended by this section.
(f) EFFECTIVE
DATE
AND
APPLICABILITY.—The
amendments made by this section shall take effect on July
1, 2008, and shall only apply with respect to a borrower
of a loan under title IV of the Higher Education Act of
1965 who obtained the borrower’s first loan under such title
prior to October 1, 2012.
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HR 2669 EAS
TITLE III—FEDERAL FAMILY
EDUCATION LOAN PROGRAM
SEC. 301. REDUCTION OF LENDER INSURANCE PERCENT-
AGE.
(a) AMENDMENT.—Section 428(b)(1)(G) (20 U.S.C.
1078(b)(1)(G)) is amended—
(1) in the matter preceding clause (i), by strik-
ing ‘‘insures 98 percent’’ and inserting ‘‘insures 97
percent’’;
(2) in clause (i), by inserting ‘‘and’’ after the
semicolon;
(3) by striking clause (ii); and
(4) by redesignating clause (iii) as clause (ii).
(b) EFFECTIVE DATE.—The amendment made by sub-
section (a) shall take effect with respect to loans made on
or after October 1, 2007.
SEC. 302. GUARANTY AGENCY COLLECTION RETENTION.
Clause (ii) of section 428(c)(6)(A) (20 U.S.C.
1078(c)(6)(A)(ii)) is amended to read as follows:
‘‘(ii) an amount equal to 24 percent of such
payments for use in accordance with section
422B, except that—
‘‘(I) beginning October 1, 2003 and
ending September 30, 2007, this subpara-
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graph shall be applied by substituting ‘23
percent’ for ‘24 percent’; and
‘‘(II) beginning October 1, 2007, this
subparagraph shall be applied by sub-
stituting ‘16 percent’ for ‘24 percent’.’’.
SEC. 303. ELIMINATION OF EXCEPTIONAL PERFORMER STA-
TUS FOR LENDERS.
(a) ELIMINATION OF STATUS.—Part B of title IV (20
U.S.C. 1071 et seq.) is amended by striking section 428I
(20 U.S.C. 1078–9).
(b) CONFORMING AMENDMENTS.—Part B of title IV is
further amended—
(1) in section 428(c)(1) (20 U.S.C. 1078(c)(1))—
(A) by striking subparagraph (D); and
(B) by redesignating subparagraphs (E)
through (H) as subparagraphs (D) through (G),
respectively; and
(2) in section 438(b)(5) (20 U.S.C. 1087–
1(b)(5)), by striking the matter following subpara-
graph (B).
(c) EFFECTIVE DATE.—The amendments made by sub-
sections (a) and (b) shall take effect on October 1, 2007,
except that section 428I of the Higher Education Act of
1965 (as in effect on the day before the date of enactment
of this Act) shall apply to eligible lenders that received a
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designation under subsection (a) of such section prior to
October 1, 2007, for the remainder of the year for which
the designation was made.
SEC. 304. DEFINITIONS.
(a) AMENDMENTS.—Section 435 (20 U.S.C. 1085) is
amended—
(1) in subsection (o)(1)—
(A) in subparagraph (A)(ii), by striking
‘‘100 percent of the poverty line for a family of
2’’ and inserting ‘‘150 percent of the poverty line
applicable to the borrower’s family size’’; and
(B) in subparagraph (B)(ii), by striking
‘‘to a family of two’’ and inserting ‘‘to the bor-
rower’s family size’’; and
(2) by adding at the end the following:
‘‘(p) ELIGIBLE NOT-FOR-PROFIT HOLDER.—
‘‘(1) DEFINITION OF ELIGIBLE NOT-FOR-PROFIT
HOLDER.—The term ‘eligible not-for-profit holder’
means an eligible lender under subsection (d) (except
for an eligible lender described in subsection
(d)(1)(E)) that requests a special allowance payment
under section 438(b)(2)(I)(vi)(II) and that is—
‘‘(A) a State of the United States, or a po-
litical subdivision thereof, or an authority, agen-
cy, or other instrumentality thereof (including
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such entities that are eligible to issue bonds de-
scribed in section 1.103–1 of title 26, Code of
Federal Regulations, or section 144(b) of the In-
ternal Revenue Code of 1986);
‘‘(B) 
an 
entity 
described 
in 
section
150(d)(2) of such Code that has not made the
election described in section 150(d)(3) of such
Code;
‘‘(C) 
an 
entity 
described 
in 
section
501(c)(3) of such Code; or
‘‘(D) a trustee acting as an eligible lender
on behalf of an entity described in subparagraph
(A), (B), or (C),
except that no entity described in subparagraph (A),
(B), or (C) shall be owned or controlled in whole or
in part by a for-profit entity.
‘‘(2) PROHIBITION.—In the case of a loan for
which the special allowance payment is calculated
under section 438(b)(2)(I)(vi)(II) and that is sold by
the eligible not-for-profit holder holding the loan to a
for-profit entity or to an entity that is not an eligible
not-for-profit holder, the special allowance payment
for such loan shall, beginning on the date of the sale,
no 
longer 
be 
calculated 
under 
section
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438(b)(2)(I)(vi)(II) and shall be calculated under sec-
tion 438(b)(2)(I)(vi)(I) instead.
‘‘(3) REGULATIONS.—Not later than 1 year after
the date of enactment of the Higher Education Access
Act of 2007, the Secretary shall promulgate regula-
tions in accordance with the provisions of this sub-
section.’’.
(b) APPLICABILITY.—The amendment made by sub-
section (a)(1) shall only apply with respect to any borrower
of a loan under title IV of the Higher Education Act of
1965 who obtained the borrower’s first loan under such title
prior to October 1, 2012.
SEC. 305. SPECIAL ALLOWANCES.
(a) REDUCTION
OF LENDER SPECIAL ALLOWANCE
PAYMENTS.—Section 
438(b)(2)(I) 
(20 
U.S.C. 
1087–
1(b)(2)(I)) is amended—
(1) in clause (i), by striking ‘‘(iii), and (iv)’’
and inserting ‘‘(iii), (iv), and (vi)’’; and
(2) by adding at the end the following:
‘‘(vi) REDUCTION
FOR
LOANS
DIS-
BURSED ON OR AFTER OCTOBER 1, 2007.—
With respect to a loan on which the appli-
cable interest rate is determined under sec-
tion 427A(l) and for which the first dis-
bursement of principal is made on or after