‘‘(i) a standard repayment plan, with
a fixed annual repayment amount paid
over a fixed period of time, not to exceed
10 years;
‘‘(ii) an extended repayment plan,
with a fixed annual repayment amount
paid over an extended period of time, not
to exceed 30 years, except that the bor-
rower shall repay annually a minimum
amount determined in accordance with
paragraph (3);
‘‘(iii) a graduated repayment plan,
with annual repayment amounts estab-
lished at 2 or more graduated levels and
paid over an extended period of time, not
to exceed 30 years, except that the borrow-
er’s scheduled payments shall not be less
than 50 percent, nor more than 150 per-
cent, of what the amortized payment on
the amount owed would be if the loan were
repaid under the standard repayment plan;
and
‘‘(iv) an income-sensitive repayment
plan, 
with 
income-sensitive 
repayment
amounts paid over a fixed period of time
by the Secretary, not to exceed 25 years,
at the end of which any remaining obliga-
tion of the borrower shall be discharged
under section 437(e).
‘‘(B) LENDER SELECTION OF OPTION IF
BORROWER DOES NOT SELECT.—If a borrower
of a loan made under this section does not se-
lect a repayment plan described in subpara-
graph (A), the lender shall provide the borrower
with a repayment plan described in subpara-
graph (A)(i).
‘‘(C) CHANGES IN SELECTIONS.—The bor-
rower of a loan made under this section may
change the borrower’s selection of a repayment
plan under subparagraph (A), or the lender’s
selection of a plan for the borrower under sub-
paragraph (B), as the case may be, under such
conditions as may be prescribed by the Sec-
retary in regulation.’’.
(d) DIRECT LOANS.—Section 455(d) (20 U.S.C.
1087e) is amended—
(1) in paragraph (1)—
(A) in subparagraph (B), by inserting after
‘‘an extended period of time,’’ the following:
‘‘not to exceed 30 years,’’;
(B) in subparagraph (C), by striking ‘‘a
fixed or extended period of time,’’ and inserting
the following: ‘‘an extended period of time, not
to exceed 30 years,’’; and
(C) in subparagraph (D), by inserting ‘‘at
the end of which any remaining obligation of
the borrower shall be discharged,’’ after ‘‘25
years,’’; and
(2) in paragraph (2), by striking ‘‘subpara-
graph (A), (B), or (C) of paragraph (1).’’ and in-
serting ‘‘paragraph (1)(A).’’.
(e) DISCHARGE OF INCOME-SENSITIVE BORROWER
OBLIGATIONS.—Section 437 (20 U.S.C. 1087) is amended
by adding at the end the following new subsection:
‘‘(e) PAYMENT AFTER 25 YEARS ON INCOME-SEN-
SITIVE LOANS.—The Secretary shall discharge a borrow-
er’s liability by repaying to the holder of a loan that is
subject to an income-sensitive repayment plan the amount
of the principal and interest that remains unpaid after the
borrower has completed 25 years of payment in accord-
ance with the plan.’’.
SEC. 7. NEGATIVE AMORTIZATION WAIVER.
Section 437A(b) (20 U.S.C. 1087–0(b)) is amended
by adding at the end the following new paragraph:
‘‘(3) NEGATIVE
AMORTIZATION
WAIVER.—No
loan shall be considered in default for any purpose
under this paragraph if the borrower is making reg-
ularly scheduled payments towards the repayment of
the borrower’s loan obligation in the amount re-
quired by the borrower’s repayment plan, even if
those payments are not sufficient to pay the interest
accruing on a monthly or quarterly basis.’’.
SEC. 8. EQUITY IN LOAN CONSOLIDATION.
Section 428C (1078–3) is amended—
(1) in subsection (a)(3)—
(A) in subparagraph (A), by inserting ‘‘in
an in-school period,’’ after ‘‘for a consolidation
loan is’’; and
(B) in subparagraph (B), by amending
clause (i) to read as follows:
‘‘(i) Eligible student loans received by
the eligible borrower may be added to a
consolidation loan during the 180-day pe-
riod following the making of such consoli-
dation loan.’’;
(2) in subsection (b)(4)(C), by amending clause
(ii) to read as follows:
‘‘(ii) provides that interest shall accrue and
be paid—
‘‘(I) by the Secretary, in the case of
a consolidation loan made before October
1, 1997, that consolidated only Federal
Stafford Loans for which the student bor-
rower received an interest subsidy under
section 428;
‘‘(II) by the Secretary, in the case of
a consolidation loan made on or after Oc-
tober 1, 1997, except that the Secretary
shall pay such interest only on that portion
of the loan that repays Federal Stafford
Loans for which the student borrower re-
ceived an interest subsidy under section
428; and
‘‘(III) by the borrower, or capitalized,
in the case of a consolidation loan, or por-
tion thereof, other than one described in
subclause (I) or (II);’’; and
(3) in subsection (c)—
(A) in paragraph (1)—
(i) in subparagraph (A), by striking
‘‘subparagraph (B) or (C).’’ and inserting
‘‘subparagraph (B), (C), (D), or (E), and
subject to subparagraph (F).’’;
(ii) in subparagraph (C), by striking
‘‘after July 1, 1994,’’ and inserting ‘‘after
July 1, 1994 and before October 1,
1997,’’; and
(iii) by adding after subparagraph (C)
the following new subparagraphs:
‘‘(D) A consolidation loan made on or after Oc-
tober 1, 1997, that repays loans made under section
428 of 428H, or a combination thereof, shall bear
interest at an annual rate on the unpaid principal
balance of the loan that is equal to—
‘‘(i) the rate specified in section 427A(g),
in the case of a borrower in an in-school or
grace period; or
‘‘(ii) 
the 
rate 
specified 
in 
section
427A(h)(1) in all other cases.
‘‘(E) A consolidation loan made on or after Oc-
tober 1, 1997, that repays loans made under section
428B shall bear interest at an annual rate on the
unpaid principal balance of the loan that is equal to
the rate specified in section 427A(h)(2).
‘‘(F) Notwithstanding any other provision of
this section, the Secretary may prescribe in regula-
tion such procedures as may be necessary to ensure
that—
‘‘(i) a borrower of a consolidation loan that
repays a combination of loans eligible to be con-
solidated under this section, shall continue to
receive, after consolidation, any interest subsidy
benefits associated with a loan, without extend-
ing such benefits to any other loans consoli-
dated that do not have interest subsidy benefits;
‘‘(ii) in the case of a consolidation loan
that repays a combination of loans described in
subparagraphs (D) and (E), the interest rate
on such consolidation loan shall be calculated in
a manner that reflects the interest rate applica-
ble to loans made under each such subpara-
graph; and
‘‘(iii) in the case of a consolidation loan
that repays a loan eligible to be consolidated
under this section other than those described in
subparagraphs (D) and (E), the interest rate
applicable to such other loan shall be the inter-
est rate described in subparagraph (D) if such
other loan is considered by the Secretary to be
subsidized, and the interest rate described in
subparagraph (E) if such other loan is consid-
ered by the Secretary to be unsubsidized.’’; and
(B) in paragraph (4)—
(i) by striking ‘‘Repayment’’ and in-
serting ‘‘(A) Except as provided in sub-
paragraph (B), repayment’’; and
(ii) by adding after subparagraph (A)
(as redesignated by clause (i)) the follow-
ing new subparagraph:
‘‘(B) In the case of a consolidation loan that re-
pays a loan made under this part for which the bor-
rower is in an in-school period at the time the con-
solidation application is received, the repayment pe-
riod for such consolidation loan shall commence
after the completion of a grace period, as described
in section 428(b)(7)(i).’’.
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