Revenue Service in the same manner, and sub-
ject to the same penalties, as a tax due; 
(B) the borrower’s taxpayer identification 
number may be used for the purposes of identi-
fying the borrower’s IDEA account; 
(C) the borrower will make payments on 
such loan using the income tax withholding sys-
tem and will make appropriate adjustments to 
his or her withholding or estimated tax pay-
ments for such purposes; and 
(D) if the borrower files for relief under 
title 11, United States Code, the borrower’s re-
payment obligations on the IDEA loan will be 
treated the same as Federal income tax obliga-
tions; and 
(3) contains such additional terms and condi-
tions as the Secretary of the Treasury may prescribe 
by regulation. 
(c) NOTICE OF CONVERSION IN FEDERAL STUDENT 
LOAN NOTES.—The Secretary shall, by regulation, require 
that any note or other evidence of indebtedness for any 
Federal student loan, disbursed on or after July 1, 2008, 
shall— 
(1) provide that, if the borrower defaults on re-
payment, the loan shall be collectible on an income 
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contingent basis in accordance with section 6307 of 
the Internal Revenue Code of 1986; 
(2) provide that, if the loan is collectible on an 
income contingent basis, the borrower agrees to the 
provisions described in subparagraphs (A) through 
(D) of subsection (b)(2); and 
(3) contains such additional terms and condi-
tions as the Secretary of the Treasury may prescribe 
by regulation. 
(d) ORIGINATION FEES AND INSURANCE PREMIUMS 
PROHIBITED.—An eligible student shall not be required 
to pay any origination fee, insurance premium, or other 
fee or charge to obtain a loan under this title. 
SEC. 103. CONVERSION TO INCOME CONTINGENT REPAY-
MENT. 
(a) CONVERSION AT THE ELECTION OF THE BOR-
ROWER.— 
(1) ELECTION.—The borrower of a Federal stu-
dent loan may elect to convert such loan to, and to 
consolidate such loan and any other Federal student 
loans of such borrower that are selected by the bor-
rower for consolidation in, a direct IDEA loan for 
collection under section 6307 of the Internal Rev-
enue Code of 1986 by filing with the lender and the 
Secretary a notice in such form and containing such 
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information as the Secretary may require by regula-
tion. Such election shall be made— 
(A) in the case of Federal student loans 
that enter repayment on or after July 1, 
2008— 
(i) at any time within 180 days be-
fore, and within one year after, the begin-
ning of the repayment period of such loan; 
or 
(ii) in the case of multiple Federal 
student loans selected for consolidation, by 
the date by which an election must be 
made under clause (i) for the selected loan 
that is the last to enter repayment; and 
(B) in the case of Federal student loans 
that entered repayment before July 1, 2008, 
within 180 days after the later of such date or 
the date of enactment of this Act. 
(2) 
DISCHARGE
OF
FEDERAL
STUDENT 
LOAN.—Upon receipt of a notice of election under 
paragraph (1) with respect to any loan, and agree-
ment by the borrower to repay the amount of the ob-
ligation in a direct IDEA loan, the Secretary shall— 
(A) in the case of a Federal student loan 
described in section 104(2)(A), pay to the hold-
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er of the loan the principal and accrued interest 
owing on the loan; and 
(B) in the case of a Federal student loan 
described in section 104(2)(B), discharge the 
obligation of the borrower on such loan. 
(b) CONVERSION FOLLOWING DEFAULT.— 
(1) AUTHORITY TO CONVERT.— 
(A) CONVERSION BY PAYMENT TO LEND-
ER.—Upon default by the student borrower on 
any Federal student loan described in section 
104(2)(A), and prior to the commencement of 
suit or other enforcement proceedings upon se-
curity for that loan, the insurance beneficiary 
shall promptly notify the Secretary, and the 
Secretary shall if requested (at that time or 
after further collection efforts) by the bene-
ficiary, or may on the Secretary’s own motion, 
if insurance is still in effect, pay to the bene-
ficiary the amount of the loss sustained by the 
insured upon that loan as soon as that amount 
has been determined. Such beneficiary shall be 
required to meet the standards of due diligence 
in the collection of the loan and shall be re-
quired to submit proof that reasonable attempts 
were made to locate the borrower (when the lo-
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