Reigniting Opportunity for Innovators Act

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Reigniting Opportunity for 
Innovators Act''.

SEC. 2. SMALL BUSINESS STARTUP FOUNDER AND EMPLOYEE LOAN DEFERMENT AND 
              CANCELLATION.

    (a) Deferment Without Interest Accrual for Small Business Startup 
Founders and Employees.--Section 455(f) of the Higher Education Act of 
1965 (20 U.S.C. 1087e(f)) is amended by adding at the end the 
following:
            ``(5) Deferment without interest accrual for small business 
        startup founders and employees.--
                    ``(A) In general.--Subject to subparagraph (B), a 
                qualifying small business startup borrower shall be 
                eligible for a deferment, during which periodic 
                installments of principal need not be paid and interest 
                shall not accrue, during any period while the borrower 
                is employed as a founder or full-time employee of a 
                small business startup.
                    ``(B) Limitations.--A qualifying small business 
                startup borrower shall not receive a deferment under 
                this paragraph for any period--
                            ``(i) in excess of 3 years; or
                            ``(ii) that begins more than 5 years, or 
                        ends more than 8 years, after the date the 
                        small business startup was established (as 
                        determined by the small business development 
                        center that approved such borrower under 
                        section 21(o)(5) of the Small Business Act (15 
                        U.S.C. 648(o)(5))).
                    ``(C) Definitions.--In this paragraph--
                            ``(i) the terms `founder', `full-time 
                        employee', and `small business startup' have 
                        the meanings given the terms in subsection 
                        (r)(2); and
                            ``(ii) the term `qualifying small business 
                        startup borrower' means a borrower of a loan 
                        made under this part whose employment as a 
                        small business startup founder or full-time 
                        employee is approved by a small business 
                        development center under section 21(o)(5) of 
                        the Small Business Act (15 U.S.C. 
                        648(o)(5)).''.
    (b) Loan Cancellation.--Section 455 of the Higher Education Act of 
1965 (20 U.S.C. 1087e) is amended by adding at the end the following:
    ``(r) Loan Cancellation for Founders and Employees of Small 
Business Startups in Distressed Areas.--
            ``(1) Loan cancellation.--
                    ``(A) In general.--The Secretary shall cancel the 
                balance of interest and principal due, subject to 
                subparagraph (B), on any eligible Federal Direct Loan 
                not in default for a borrower who--
                            ``(i) at the time of such cancellation, is 
                        employed as a founder or full-time employee of 
                        a small business startup in a distressed area 
                        who--
                                    ``(I) has been approved for loan 
                                cancellation by a small business 
                                development center under section 
                                21(o)(6) of the Small Business Act (15 
                                U.S.C. 648(o)(6)); and
                                    ``(II) began such employment during 
                                the 5-year period beginning on the date 
                                that the small business startup was 
                                established (as determined by such 
                                small business development center); and
                            ``(ii) during the time period for which the 
                        borrower has been approved by the small 
                        business development center, which in no case 
                        shall be more than 10 years after the date on 
                        which the small business startup was 
                        established, has made 24 monthly payments on 
                        the eligible Federal Direct Loan pursuant to 
                        any repayment plan under subsection (d)(1) or a 
                        combination of such plans while so employed.
                    ``(B) Loan cancellation maximum.--The Secretary 
                shall cancel under this subsection not more than an 
                aggregate of $20,000 of the loan obligation on the 
                eligible Federal Direct Loans of a borrower.
                    ``(C) Timing requirements.--Each of the 24 monthly 
                payments required under this subsection shall be made 
                after the date of enactment of this subsection.
                    ``(D) Ineligibility for double benefits.--No 
                borrower may, for the same service, receive a reduction 
                of loan obligations under both this subsection and--
                            ``(i) subsection (m); or
                            ``(ii) section 428J, 428K, 428L, or 460.
            ``(2) Definitions.--In this subsection:
                    ``(A) Distressed area.--The term `distressed area' 
                has the meaning given the term in section 21(o)(1) of 
                the Small Business Act (15 U.S.C. 648(o)(1)).
                    ``(B) Eligible federal direct loan.--The term 
                `eligible Federal Direct Loan' means a Federal Direct 
                Stafford Loan, Federal Direct PLUS Loan, Federal Direct 
                Unsubsidized Stafford Loan, or a Federal Direct 
                Consolidation Loan.
                    ``(C) Founder; full-time employee.--The terms 
                `founder' and `full-time employee' have the meanings 
                given the terms in section 21(o)(1) of the Small 
                Business Act (15 U.S.C. 648(o)(1)).
                    ``(D) Small business startup.--The term `small 
                business startup' means a business that is certified by 
                a small business development center under section 
                21(o)(3) of the Small Business Act (15 U.S.C. 
                648(o)(3)).''.
    (c) Conforming Amendments.--Title IV of the Higher Education Act of 
1965 (20 U.S.C. 1070a et seq.) is further amended--
            (1) in section 428J(g)(2), by striking ``section 455(m)'' 
        and inserting ``subsection (m) or (r) of section 455'';
            (2) in section 428K(f)--
                    (A) by inserting ``subsection (m) or (r) of section 
                455 or'' before ``section 428J''; and
                    (B) by striking ``455(m)'';
            (3) in section 428L(g), by striking ``455(m)'' and 
        inserting ``subsection (m) or (r) of section 455'';
            (4) in section 455(m)(4), by inserting ``subsection (r) 
        or'' before ``section 428J''; and
            (5) in section 460(g)(2)(B), by striking ``section 455(m)'' 
        and inserting ``subsection (m) or (r) of section 455''.

SEC. 3. SMALL BUSINESS DEVELOPMENT CENTERS.

    Section 21 of the Small Business Act (15 U.S.C. 648) is amended--
            (1) in subsection (c)(3)--
                    (A) in subparagraph (S), by striking ``and'' at the 
                end;
                    (B) in subparagraph (T), by striking the period at 
                the end and inserting a semicolon; and
                    (C) by adding at the end the following:
            ``(U) certifying small business startups under subsection 
        (o)(3); and
            ``(V) approving loan deferment or cancellation under 
        paragraph (5) or (6) of subsection (o) for founders and full-
        time employees of certain small business startups.''; and
            (2) by adding at the end the following:
    ``(o) Deferment or Cancellation of Certain Loans.--
            ``(1) Definitions.--In this subsection--
                    ``(A) the term `distressed area' has the meaning 
                given the term `low-income community' in section 45D(e) 
                of the Internal Revenue Code of 1986;
                    ``(B) the term `eligible Federal Direct Loan' has 
                the meaning given the term in section 455(r)(2) of the 
                Higher Education Act of 1965;
                    ``(C) the terms `founder' and `full-time employee', 
                with respect to a small business startup, have the 
                meanings given the terms by the Administrator; and
                    ``(D) the term `small business startup' means a 
                small business concern that, as of the date that the 
                small business concern submits an application under 
                paragraph (3), has been in existence for not more than 
                3 years.
            ``(2) Role of small business development centers.--Any 
        small business development center may, for purposes of eligible 
        Federal Direct Loan deferment or cancellation under subsection 
        (f)(5) or (r) of section 455 of the Higher Education Act of 
        1965 (20 U.S.C. 1087e)--
                    ``(A) certify a small business startup under 
                paragraph (3); and
                    ``(B) approve eligible Federal Direct Loan 
                deferment or cancellation for a founder or full-time 
                employee of a qualifying small business startup under 
                paragraph (5) or (6).
            ``(3) Certification.--In order to be certified by a small 
        business development center, a small business startup shall 
        submit to the small business development center an application 
        that includes--
                    ``(A) a 5-year business plan for the small business 
                startup;
                    ``(B) the number of employees that the small 
                business startup intends to employ on an annual basis; 
                and
                    ``(C) information that demonstrates that the small 
                business startup has the potential for success.
            ``(4) Publication of distressed areas.--The Administrator 
        shall identify and make publicly available on the website of 
        the Administration a list of distressed areas.
            ``(5) Loan deferment for founders and full-time employees 
        of a small business startup.--
                    ``(A) Application.--In order to be approved by a 
                small business development center for eligible Federal 
                Direct Loan deferment under subsection (f)(5) of 
                section 455 of the Higher Education Act of 1965 (20 
                U.S.C. 1087e), a borrower of an eligible Federal Direct 
                Loan shall submit to the small business development 
                center an application that includes such information as 
                the Administrator may require.
                    ``(B) Requirements.--A small business development 
                center shall approve a borrower who applies under 
                subparagraph (A) for eligible Federal Direct Loan 
                deferment if the small business development center 
                determines that--
                            ``(i) the borrower is, as of the date of 
                        the application, a founder or full-time 
                        employee of a small business startup that is 
                        certified under paragraph (3); and
                            ``(ii) the employment of the borrower with 
                        the small business startup began during the 5-
                        year period beginning on the date on which the 
                        small business startup was established.
            ``(6) Loan cancellation for founders and full-time 
        employees of a small business startup in a distressed area.--
                    ``(A) Application.--In order to be approved by a 
                small business development center for eligible Federal 
                Direct Loan cancellation under subsection (r) of 
                section 455 of the Higher Education Act of 1965 (20 
                U.S.C. 1087e), a borrower of an eligible Federal Direct 
                Loan shall submit to the small business development 
                center an application that includes such information as 
                the Administrator may require, including an 
                identification of the time period during which the 
                borrower has made 24 monthly payments on the eligible 
                Federal Direct Loan, as required under subparagraphs 
                (A)(ii) and (C) of paragraph (1) of such subsection 
                (r).
                    ``(B) Requirements.--A small business development 
                center shall approve a borrower who applies under 
                subparagraph (A) for eligible Federal Direct Loan 
                cancellation if the small business development center 
                determines that the borrower--
                            ``(i) as of the date of the application, is 
                        employed as a founder or full-time employee of 
                        a small business startup that--
                                    ``(I) is located in an area that 
                                was a distressed area when the small 
                                business startup was established;
                                    ``(II) is certified under paragraph 
                                (3) by the small business development 
                                center; and
                                    ``(III) as of the date that the 
                                small business development center 
                                approves the borrower under this 
                                paragraph, has been operating 
                                continuously for not less than 5 years 
                                and not more than 10 years; and
                            ``(ii) was employed as a founder or a full-
                        time employee by a small business startup 
                        described in clause (i) during a period 
                        beginning not more than 5 years after the date 
                        on which the small business startup was 
                        established, as identified by the borrower 
                        under subparagraph (A).''.

Summary: Reigniting Opportunity for Innovators Act This bill amends title IV (Student Assistance) of the Higher Education Act of 1965 to make qualified founders and full-time employees of small business start-ups eligible for deferring for up to three years their loans under the federal Direct Loan program. If the start-up is located in an economically distressed area, qualified founders and employees are also eligible for loan cancellation of up to $20,000 under that program.