I
103D CONGRESS
1ST SESSION
H. R. 2073
To establish a higher education loan program in which a borrower’s annual
repayment obligation is dependent upon both postschool income level
and borrowing history, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MAY 11, 1993
Mr. PETRI (for himself, Mr. GEJDENSON, Mr. ACKERMAN, Mr. GUNDERSON,
Mr. SUNDQUIST, Mr. TAYLOR of North Carolina, Mr. CUNNINGHAM, Mr.
INHOFE, and Mr. DURBIN) introduced the following bill; which was re-
ferred jointly to the Committees on Education and Labor and Ways and
Means
A BILL
To establish a higher education loan program in which a
borrower’s annual repayment obligation is dependent
upon both postschool income level and borrowing history,
and for other purposes.
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 ‘‘Income-Dependent
Education Assistance Act of 1993’’.
TITLE I—SYSTEM FOR MAKING INCOME-
DEPENDENT EDUCATION ASSISTANCE LOANS
SEC. 101. PROGRAM AUTHORITY.
The Secretary of the Treasury shall, in accordance
with the provisions of this title—
(1) make loans to eligible students in accord-
ance with this title, and
(2) establish an account for each borrower of
such a loan, and collect repayments on such loans,
in accordance with section 6306 of the Internal Rev-
enue Code of 1986.
SEC. 102. AGREEMENTS BY ELIGIBLE INSTITUTIONS.
(a) TERMS OF AGREEMENT.—In order to qualify its
students for loans under this title, an eligible institution
shall enter into an agreement with the Secretary of
Education which—
(1) provides that the institution will collect ap-
plications for loans under this title from its students
that are in such form and contain or are accom-
panied by such information as the Secretary of the
Treasury may require by regulation;
(2) contains assurances that the institution will,
on the basis of such applications, provide to the Sec-
retary of the Treasury the information required by
section 104 and will certify to the Secretary of the
Treasury—
(A) the cost of attendance determination
for each student; and
(B) the amount of any outstanding loans
to such student under title IV of the Higher
Education Act of 1965 or title VII of the Public
Health Service Act;
(3) provides that the institution will provide to
each student applying for a loan under this title a
notice provided by the Secretary of Education of the
student’s obligations and responsibilities under the
loan;
(4) provides that, if a student withdraws after
receiving a loan under this title and is owed a re-
fund—
(A) the institution will pay to the Sec-
retary of the Treasury a portion of such refund,
in accordance with regulations prescribed by the
Secretary of the Treasury to ensure receipt of
an amount which bears the same ratio to such
refund as such loan bore to the cost of attend-
ance of such student; and
(B) the Secretary of the Treasury will
credit
the
amount
of
such
refund
to
the
student’s account; and
(5) contains such additional terms and condi-
tions as the Secretary of the Treasury or Secretary
of Education prescribes by regulation to protect the
fiscal interest of the United States and to ensure ef-
fective administration of the program under this
Act.
(b) ENFORCEMENT OF AGREEMENT.—The Secretary
of Education may, after notice and opportunity for a hear-
ing to the institution concerned, suspend or revoke, in
whole or in part, the agreement of any eligible institution
if the Secretary of Education finds that such institution
has failed to comply with this title or any regulation pre-
scribed under this title or has failed to comply with any
term or condition of its agreement under subsection (a).
No funds shall be loaned under this title to any student
at any institution while its agreement is suspended or re-
voked, and the Secretary of Education may institute pro-
ceedings to recover any funds held by such an institution.
The Secretary of Education shall have the same authority
with respect to his functions under this Act as the Sec-
retary of Education has with respect to his functions
(B) $7,000 in the case of any student who
has not completed his or her second year of
undergraduate study;
(C) $10,000 in the case of any student
who has completed such second year but who
has not completed his or her course of under-
graduate study;
(D) $30,000 in the case of any student
who is enrolled in a graduate degree program in
medicine, dentistry, veterinary medicine, podia-
try, optometry, or osteopathic medicine; or
(E) $22,500 in the case of any student
who is enrolled in a graduate degree program in
pharmacy, chiropractic, public health, health
administration, clinical psychology, or allied
health fields, or in an undergraduate degree
program in pharmacy; or
(F) $18,500 in the case of any other
student.
(2) LIMITATION
ON
BORROWING
CAPACITY.—
No individual may receive any amount in an addi-
tional IDEA loan if the sum of the original principal
amounts of all IDEA loans to such individual (in-
cluding the pending additional loan) would equal or
exceed—
(A) $100,000, minus
(B) the product of (i) the number of years
by which the borrower’s age (as of the close of
the preceding calendar year) exceeds 35, and
(ii) one-twentieth of the amount specified in
subparagraph (A), as adjusted pursuant to
paragraph (3).
(3) EXCEPTIONS TO BORROWING CAPACITY LIM-
ITS
FOR
CERTAIN
GRADUATE
STUDENTS.—For a
student who is—
(A) a student described in paragraph
(1)(C), paragraph (2) shall be applied by sub-
stituting ‘‘$148,870’’ for ‘‘$100,000’’; or
(B) a student described in paragraph
(1)(D), paragraph (2) shall be applied by sub-
stituting ‘‘$120,270’’ for ‘‘$100,000’’.
(4) ADJUSTMENT OF LIMITS FOR INFLATION.—
Each of the dollar amounts specified in paragraphs
(1), (2), and (3) shall be adjusted for any academic
year after calendar year 1994 by the cost-of-living
adjustment for the calendar year preceding such
academic 
year 
determined 
under 
section
6306(h)(3)(C) of the Internal Revenue Code of
1986, rounded to the nearest multiple of $100 (or,
if such adjustment is a multiple of $50 and not a
multiple of $100, such adjustment shall be increased
to the next higher multiple of $100).
(5) COMPUTATION OF OUTSTANDING LOAN OB-
LIGATIONS.—For the purposes of this subsection,
any loan obligations of an individual under student
loan programs under title IV of the Higher Edu-
cation Act of 1965 or title VII of the Public Health
Service Act shall be counted toward IDEA annual
and aggregate borrowing capacity limits. For pur-
poses of annual and aggregate loan limits under any
such student loan program, IDEA loans shall be
counted as loans under such program.
(6) ADJUSTMENTS
OF
ANNUAL
LIMITS
FOR
LESS THAN FULL-TIME STUDENTS.—For any stu-
dent who is enrolled on a less than full-time basis,
loan amounts for which such student shall be eligible
for any academic year under this subsection shall be
reduced in accordance with regulations prescribed by
the Secretary of Education.
(b) DURATION OF ELIGIBILITY.—An eligible student
shall not be eligible to receive a loan under this title for
more than a total of the full-time equivalent of 9 academic
years, of which not more than the full-time equivalent of
5 academic years shall be as an undergraduate student
and not more than the full-time equivalent of 5 academic
years shall be as a graduate student.
(c) TERMS OF LOANS.—Each eligible student apply-
ing for a loan under this title shall sign a written agree-
ment which—
(1) is made without security and without en-
dorsement, except that if the borrower is a minor
and such note or other written agreement executed
by him would not, under the applicable law, create
a binding obligation, endorsement may be required;
(2) provides that such student will repay the
principal amount of the loan and any interest or ad-
ditional charges thereon in accordance with section
6306 of the Internal Revenue Code of 1954;
(3) provides that the interest on the loan will
accrue in accordance with section 105;
(4) certifies that the student has received and
read the notice required by section 102(a)(3); and
(5) contains such additional terms and condi-
tions as the Secretary of the Treasury may prescribe
by regulation.
(d) DISBURSEMENT OF PROCEEDS OF LOANS.—The
Secretary of the Treasury shall, by regulation, provide for
the distribution of loans to eligible students and for the
appropriate notification of eligible institutions of the
amounts of loans which are approved for any eligible stu-
dent, and for the allocation of the proceeds of such loan
by semester or other portion of an academic year. The
Secretary of the Treasury shall distribute the proceeds of
loans under this title by disbursing to the institution a
check or other instrument that is payable to and requires
the endorsement or other certification by the student.
Such proceeds shall be credited to any obligations of the
eligible student to the institution related to the cost of at-
tendance at such institution, with any excess being paid
to the student. The first installment of the proceeds of
any loan under this title that is made to a student bor-
rower who is entering the first year of a program of under-
graduate education, and who has not previously obtained
a loan under this title, shall not be presented by the insti-
tution to the student for endorsement until 30 days after
the borrower begins a course of study, but may be deliv-
ered to the eligible institution prior to the end of that 30-
day period.
SEC. 104. INFORMATION REQUIREMENTS FOR LOAN PRO-
GRAM.
(a) RESPONSIBILITIES
OF
ELIGIBLE
INSTITU-
TIONS.—Each eligible institution which receives funds
under this title shall—
(1) submit to the Secretary of the Treasury, at
such time and in such form as the Secretary may re-
quire by regulation, a machine-readable list of appli-
cants and the amounts for which they are qualified
under section 103;
(2) promptly notify the Secretary of the Treas-
ury, on request, of any change in enrollment status
of any recipient of a loan under this title; and
(3) submit to the Secretary of the Treasury, at
such time and in such forms as the Secretary of the
Treasury may require by regulation for use in deter-
mining the repayment status of borrowers, a ma-
chine-readable list of eligible students who have pre-
viously received loans under this title but who are
not
included as current applicants in the list
required by paragraph (1).
(b) RESPONSIBILITIES OF THE SECRETARY OF THE
TREASURY.—The Secretary of the Treasury shall, on the
basis of the lists received under subsection (a)(2), estab-
lish an obligation account, by name and taxpayer identi-
fication number, with respect to each recipient of a loan
under this title. The Secretary of the Treasury shall pro-
vide for the increase in the total amount stated for each
such account by any amounts subsequently loaned to that
recipient under this title and by the amount of any interest
charges imposed pursuant to section 105. The Secretary
of the Treasury shall, with the notice required by section
6306(a)(1) of the Internal Revenue Code of 1986, trans-
mit to each recipient of a loan under this title a statement
of the total amount of the obligation of such recipient as
of the close of the preceding calendar year.
SEC. 105. INTEREST CHARGES.
Interest charges on loans made under this title shall
be added to the recipient’s obligation account at the end
of each calendar year. Such interest charges shall be based
upon an interest rate equal to the lesser of—
(1) the sum of the average bond equivalent
rates of 91-day Treasury bills auctioned during that
calendar year, plus 2 percentage points, rounded to
the next higher one-eighth of 1 percent; or
(2) 9 percent.
SEC. 106. CONVERSION AND CONSOLIDATION OF OTHER
LOANS.
(a) IN GENERAL.—The Secretary of the Treasury
may, upon request of a borrower who has received a feder-
ally insured or guaranteed loan or loans under title IV
of the Higher Education Act of 1965 or under title VII
of the Public Health Service Act, make a new loan to such
borrower in an amount equal to the sum of the unpaid
principal on the title IV or title VII loans. The proceeds
of the new loan shall be used to discharge the liability on
such title IV or title VII loans. Except as provided in sub-
section (b), any loan made under this subsection shall be
made on the same terms and conditions as any other loan
under this Act and shall be considered a new IDEA loan
for purposes of this title and section 6306 of the Internal
Revenue Code of 1986.
(b) CONVERSION REGULATIONS.—The Secretary of
the Treasury shall prescribe regulations concerning the
methods and calculations required for conversion to IDEA
loans under subsection (a). Such regulations shall provide
appropriate adjustments in the determination of the prin-
cipal and interest owed on the IDEA loan in order to—
(1) secure payments to the Government com-
mensurate with the amounts the Government would
have received had the original loans been IDEA
loans;
(2) fairly credit the borrower for principal and
interest payments made on such original loans and
for origination fees deducted from such original
loans; and
(3) prevent borrowers from evading their obli-
gations or otherwise taking unfair advantage of the
conversion option provided under this section.
(c) MANDATORY
CONVERSION
OF
DEFAULTED
LOANS.—
(1) CONVERSION IN ACCORDANCE WITH REGU-
LATIONS.—Any loan which is—
(A) made, insured, or guaranteed under
title IV of the Higher Education Act of 1965
or title VII of the Public Health Service Act
after the date of enactment of this Act, and
(B) assigned to the Secretary of Education
or Health and Human Services for collection
after a default by the borrower in repayment of
such loan,
shall, in accordance with regulations prescribed by
the Secretaries of Education and Health and
Human Services, be treated for purposes of collec-
tion, under section 6306 of the Internal Revenue
Code of 1986, as if such loan had been converted to
an IDEA loan under subsections (a) and (b) of this
section.
(2) NOTICES.—The Secretaries of Education
and Health and Human Services shall notify—
(A) the Secretary of the Treasury of the
need to establish or adjust an account balance
of any borrower by reason of the provisions of
this subsection; and
(B) the borrower of the conversion of the
defaulted loans to an IDEA loan and of the
procedures for collection under section 6306 of
the Internal Revenue Code of 1986.
SEC. 107. TERMINATION OF OTHER STUDENT LOAN PRO-
GRAMS.
The authority to make additional loans under part
B of title IV of the Higher Education Act of 1965 (20
U.S.C. 1071), other than loans made pursuant to section
428B of such title, is terminated for any academic year
beginning after the date that regulations are prescribed
by the Secretaries of the Treasury and Education to carry
out this title. This section shall not affect the administra-
tion of such section and part with respect to loans made
prior to that date.
SEC. 108. AUTHORIZATION OF APPROPRIATIONS.
(a) LOAN FUNDS.—There are authorized to be ap-
propriated to make distributions of loan funds under
section 102 such sums as may be necessary.
(b) ADMINISTRATIVE EXPENSES.—There are author-
ized to be appropriated such sums as may be necessary
to administer and carry out this title.
SEC. 109. DEFINITIONS.
For purposes of this title—
(1) the term ‘‘eligible institution’’ has the
meaning given it by section 435(a) (1) or (2) of the
Higher Education Act of 1965;
(2) the term ‘‘eligible student’’ means a student
who is eligible for assistance under title IV of the
Higher Education Act of 1965 as required by sec-
tion 484 of such Act (relating to eligibility for stu-
dent assistance) and who is carrying at least one-
half the normal full-time academic workload (as de-
termined by the institution); and
(3) the term ‘‘IDEA loan’’ means a loan made
under this title.
TITLE II—COLLECTION OF INCOME-
DEPENDENT EDUCATION ASSISTANCE LOANS
SEC. 201. REPAYMENTS USING INCOME TAX COLLECTION
SYSTEM.
(a) IN GENERAL.—Subchapter A of chapter 64 of the
Internal Revenue Code of 1986 (relating to collection) is
amended by adding at the end thereof the following
new section:
‘‘SEC. 6306. COLLECTION OF INCOME-DEPENDENT EDU-
CATION ASSISTANCE LOANS.
‘‘(a) NOTICE TO BORROWER.—
‘‘(1) IN
GENERAL.—During January of each
calendar year, the Secretary shall furnish to each
borrower of an IDEA loan notice as to—
‘‘(A) whether the records of the Secretary
indicate that such borrower is in repayment
status,
‘‘(B) the maximum account balance of
such borrower,
‘‘(C) the current account balance of such
borrower as of the close of the preceding
calendar year, and
‘‘(D) the procedure for computing the
amount of repayment owing for the taxable year
beginning in the preceding calendar year.
‘‘(2) FORM, ETC.—The notice under paragraph
(1) shall be in such form as the Secretary may by
regulations prescribe and shall be sent by mail to the
individual’s last known address or shall be left at the
dwelling or usual place of business of such individ-
ual.
‘‘(b) 
COMPUTATION
OF
ANNUAL
REPAYMENT
AMOUNT.—
‘‘(1) IN GENERAL.—The annual amount pay-
able under this section by the taxpayer for any tax-
able year shall be the lesser of—