Repay Act of 2021
Bill: S.821 | Sponsor: Sen. Burr, Richard (R-NC)
Policy area: Education

Summary:
Repay Act of 2021
This bill directs the Department of Education (ED) to carry out a simplified income-driven repayment program for new borrowers of Federal Direct Loans. New borrower refers to a borrower who, as of July 1, 2022, has no outstanding balance on Federal Direct Loans.
Under current law, a borrower may choose from three traditional repayment plans, including a fixed 10-year repayment plan, and five income-driven plans. Under the bill, a new borrower may choose either the fixed 10-year repayment plan or a simplified income-driven repayment plan. ED must direct servicers of loans to notify borrowers of these repayment options. ED must cancel the outstanding loan balance after a borrower makes payments under the simplified income-driven repayment plan for 20 or 25 years, depending on the balance of the loan at the time the initial repayment period began.
Further, the bill allows payments made by a borrower under the simplified income-driven repayment plan to become qualifying payments under the Public Service Loan Forgiveness program.
Finally, the Government Accountability Office must study and provide recommendations for streamlining income and employment verification and administering income-based repayment programs.

To amend the Higher Education Act of 1965 to establish a simplified 
         income-driven repayment plan, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Repay Act of 2021''.

SEC. 2. SIMPLIFIED INCOME-DRIVEN REPAYMENT PLAN.

    Part G of title IV of the Higher Education Act of 1965 (20 U.S.C. 
1088 et seq.) is amended by inserting after section 493D the following:

``SEC. 493E. SIMPLIFIED INCOME-DRIVEN REPAYMENT PLAN.

    ``(a) Definitions.--In this section:
            ``(1) Covered federal direct loan.--The term `covered 
        Federal Direct Loan' means a Federal Direct Stafford Loan, a 
        Federal Direct Unsubsidized Stafford Loan, a Federal Direct 
        Consolidation Loan (other than a Federal Direct Consolidation 
        Loan whose proceeds were used to discharge the liability of a 
        Federal Direct PLUS loan made on behalf of a dependent student 
        or a loan under section 428B made on behalf of a dependent 
        student), or a Federal Direct PLUS Loan (other than a Federal 
        Direct PLUS Loan made on behalf of a dependent student) made 
        under part D.
            ``(2) Discretionary income.--The term `discretionary 
        income' means the amount by which a borrower's (and the 
        borrower's spouse, if applicable) annual adjusted gross income 
        exceeds 150 percent of the poverty line applicable to the 
        borrower's family size.
            ``(3) Discretionary income bend point.--The term 
        `discretionary income bend point' means $25,000, adjusted 
        annually for inflation as determined by the Consumer Price 
        Index (as such term is defined in section 478(f)) for the 
        previous calendar year.
            ``(4) Income-driven calculation.--
                    ``(A) In general.--The term `income-driven 
                calculation', when used with respect to a borrower, 
                means the annual amount due on the total amount of 
                covered Federal Direct Loans, which annual amount is 
                equivalent to--
                            ``(i) 10 percent of the borrower's 
                        discretionary income that is less than the 
                        discretionary income bend point, plus
                            ``(ii) 15 percent of the borrower's 
                        discretionary income that is equal to or 
                        greater than the discretionary income bend 
                        point.
                    ``(B) Annual calculation.--The calculation under 
                subparagraph (A) shall be determined on an annual basis 
                for the duration of the repayment period described in 
                subsection (b).
            ``(5) New borrower.--The term `new borrower' means a 
        borrower who--
                    ``(A) as of July 1, 2022, has no outstanding 
                balance on a student loan made, insured, or guaranteed 
                under part B or D; or
                    ``(B) has no outstanding balance on a student loan 
                made, insured, or guaranteed under part B or D on the 
                date the borrower receives a loan made under part D on 
                or after July 1, 2022.
    ``(b) Simplified Income-Driven Repayment Plan Authorized.--
            ``(1) In general.--The Secretary shall carry out a 
        simplified income-driven repayment program for new borrowers 
        that meets the following requirements:
                    ``(A) A new borrower of any covered Federal Direct 
                Loan may elect to have the borrower's aggregate monthly 
                payment for all such loans equal to the income-driven 
                calculation, divided by 12.
                    ``(B) The holder of such a loan shall apply the 
                borrower's monthly payment under this subsection first 
                toward interest due on the loan, next toward any fees 
                due on the loan, and then toward the principal of the 
                loan.
                    ``(C) Any interest due and not paid under 
                subparagraph (B)--
                            ``(i) shall, on Federal Direct Stafford 
                        Loans, be paid by the Secretary for a period of 
                        not more than 3 years after the date of the 
                        borrower's election under subparagraph (A), 
                        except that such period shall not include any 
                        period during which the borrower is in 
                        deferment due to an economic hardship described 
                        in section 435(o); and
                            ``(ii) shall be capitalized--
                                    ``(I) in the case of a Federal 
                                Direct Stafford Loan, subject to clause 
                                (i)--
                                            ``(aa) at the time the 
                                        borrower ends the election to 
                                        make simplified income-driven 
                                        repayment under this 
                                        subsection; or
                                            ``(bb) at the time the 
                                        borrower's monthly payment 
                                        calculation under subparagraph 
                                        (A) exceeds the monthly payment 
                                        calculation under the fixed 
                                        repayment plan, based on a 10-
                                        year repayment period, when the 
                                        borrower first made the 
                                        election under subparagraph 
                                        (A); and
                                    ``(II) in the case of a Federal 
                                Direct Unsubsidized Stafford Loan--
                                            ``(aa) at the time the 
                                        borrower ends the election to 
                                        make simplified income-driven 
                                        repayment under this 
                                        subsection; or
                                            ``(bb) at the time the 
                                        borrower's monthly payment 
                                        calculation under subparagraph 
                                        (A) exceeds the monthly payment 
                                        calculation under the fixed 
                                        repayment plan, based on a 10-
                                        year repayment period, when the 
                                        borrower first made the 
                                        election under subparagraph 
                                        (A).
                    ``(D) Any principal due and not paid under 
                subparagraph (B) shall be deferred.
                    ``(E) The amount of time a new borrower shall make 
                monthly payments under subparagraph (A) may exceed 10 
                years.
                    ``(F) If the borrower no longer wishes to continue 
                the election under this subsection, then--
                            ``(i) the maximum monthly payment required 
                        to be paid for all covered Federal Direct Loans 
                        shall be equal to the monthly amount calculated 
                        under section 428(b)(9)(A)(i) or 455(d)(1)(A), 
                        based on a 10-year repayment period, when the 
                        borrower first made the election described in 
                        this subsection; and
                            ``(ii) the amount of time the borrower is 
                        permitted to repay such loans may exceed 10 
                        years.
                    ``(G) The Secretary shall cancel the outstanding 
                balance of principal and interest due for a new 
                borrower whose balance of principal of covered Federal 
                Direct Loans did not exceed $57,500 on the date the 
                borrower's repayment period began, or whose balance of 
                principal of covered Federal Direct Loans did not 
                exceed the maximum aggregate amount of loans an 
                independent undergraduate student could borrow, 
                pursuant to section 428H(d)(4)(B), on the date the 
                borrower's final covered Federal Direct Loan was 
                disbursed, whichever amount is greater, if the 
                borrower--
                            ``(i) at any time, elected to participate 
                        under subparagraph (A); and
                            ``(ii) for 20 years--
                                    ``(I) made monthly payments 
                                pursuant to subparagraph (A); or
                                    ``(II) was in deferment due to an 
                                economic hardship described in section 
                                435(o).
                    ``(H) The Secretary shall cancel the outstanding 
                balance of principal and interest due for a new 
                borrower whose balance of principal of covered Federal 
                Direct Loans exceeded $57,500 on the date the 
                borrower's repayment period began, or whose balance of 
                principal of covered Federal Direct Loans exceeded the 
                maximum aggregate amount of loans an independent 
                undergraduate student could borrow, pursuant to section 
                428H(d)(4)(B), on the date the borrower's final covered 
                Federal Direct Loan was disbursed, whichever amount is 
                greater, if the borrower--
                            ``(i) at any time, elected to participate 
                        under subparagraph (A); and
                            ``(ii) for 25 years--
                                    ``(I) made monthly payments 
                                pursuant to subparagraph (A); or
                                    ``(II) was in deferment due to an 
                                economic hardship described in section 
                                435(o).
                    ``(I) A borrower may elect to discontinue repayment 
                pursuant to this subsection, at any time, and enter 
                into repayment pursuant to section 455(d)(2)(A).
            ``(2) Monthly payments.--Only monthly payments made 
        pursuant to paragraph (1)(A) shall be considered eligible 
        payments toward the forgiveness of outstanding loan principal 
        and interest under subparagraphs (G) and (H) of paragraph (1).
    ``(c) Eligibility Determinations.--The Secretary shall annually 
determine a borrower's eligibility for the simplified income-driven 
repayment plan under this section through--
            ``(1) verification of a borrower's annual adjusted gross 
        income;
            ``(2) the annual amount due on the total amount of covered 
        Federal Direct Loans; and
            ``(3) such other procedures as are necessary to effectively 
        implement the simplified income-driven repayment plan under 
        this section.
    ``(d) Special Rule for Married Borrowers Filing Separately.--In the 
case of a married borrower who files a separate Federal income tax 
return, the Secretary shall calculate the borrower's income-driven 
calculation on the basis of the borrower's total amount due on covered 
Federal Direct Loans and the married couple's combined adjusted gross 
income. In the case of a married couple in which both individuals repay 
their loans under this section, the Secretary shall calculate each 
borrower's income-driven calculation on the basis of each borrower's 
total amount due on covered Federal Direct Loans and the married 
couple's combined adjusted gross income divided by 2.
    ``(e) Annual Income Verification.--
            ``(1) In general.--A borrower who elects to participate in 
        the simplified income-driven repayment plan under this section 
        shall submit to the Secretary, on an annual basis, verification 
        of the borrower's annual adjusted gross income.
            ``(2) Consequence of failure to submit.--With respect to a 
        borrower who fails to submit to the Secretary verification of 
        the borrower's annual adjusted gross income as required under 
        paragraph (1), any monthly payments made during the period the 
        borrower is in violation of the requirement of paragraph (1) 
        shall not be considered eligible payments toward the 
        forgiveness of outstanding loan principal and interest under 
        subparagraphs (G) and (H) of subsection (b)(1).''.

SEC. 3. STREAMLINING REPAYMENT PLANS FOR NEW BORROWERS.

    Section 455 of the Higher Education Act of 1965 (20 U.S.C. 1087e) 
is amended--
            (1) by striking subsection (d) and inserting the following:
    ``(d) Repayment Plans.--
            ``(1) Design and selection for borrowers before july 1, 
        2022.--With respect to a borrower of a loan made under this 
        part before July 1, 2022, and consistent with criteria 
        established by the Secretary, the Secretary shall offer such 
        borrower a variety of plans for repayment of such loan, 
        including principal and interest on the loan. The borrower 
        shall be entitled to accelerate, without penalty, repayment on 
        the borrower's loans under this part. The borrower may choose--
                    ``(A) a fixed repayment plan, consistent with 
                subsection (a)(1) of this section and with section 
                428(b)(9)(A)(i);
                    ``(B) a graduated repayment plan, consistent with 
                section 428(b)(9)(A)(ii);
                    ``(C) an extended repayment plan, consistent with 
                section 428(b)(9)(A)(iv), except that the borrower 
                shall annually repay a minimum amount determined by the 
                Secretary in accordance with section 428(b)(1)(L);
                    ``(D) an income contingent repayment plan, with 
                varying annual repayment amounts based on the income of 
                the borrower, paid over an extended period of time 
                prescribed by the Secretary, not to exceed 25 years, 
                except that the plan described in this subparagraph 
                shall not be available to the borrower of a Federal 
                Direct PLUS loan made on behalf of a dependent student; 
                and
                    ``(E) an income-based repayment plan that enables 
                borrowers who have a partial financial hardship to make 
                a lower monthly payment in accordance with section 
                493C, except that the plan described in this 
                subparagraph shall not be available to the borrower of 
                a Federal Direct PLUS Loan made on behalf of a 
                dependent student or a Federal Direct Consolidation 
                Loan, if the proceeds of such loan were used to 
                discharge the liability on such Federal Direct PLUS 
                Loan or a loan under section 428B made on behalf of a 
                dependent student.
            ``(2) Design and selection for new borrowers on or after 
        july 1, 2022.--The Secretary shall offer a borrower of a loan 
        made under this part on or after July 1, 2022, the following 
        plans for repayment of such loan, including principal and 
        interest on the loan. The borrower shall be entitled to 
        accelerate, without penalty, repayment on the borrower's loans 
        under this part. The borrower may choose--
                    ``(A) a fixed repayment plan, consistent with 
                subsection (a)(1) of this section and with section 
                428(b)(9)(A)(i); or
                    ``(B) a simplified income-driven repayment plan, 
                consistent with section 493E, except the plan described 
                in this subparagraph shall not be available to a 
                borrower of a Federal Direct PLUS Loan made on behalf 
                of a dependent student, a Federal Direct Consolidation 
                Loan, if the proceeds of such loan were used to 
                discharge the liability on such Federal Direct PLUS 
                Loan or a loan under section 428B made on behalf of a 
                dependent student.
            ``(3) Borrower non-selection.--If a borrower of a loan made 
        under this part does not select a repayment plan described in 
        paragraph (1) or (2), the Secretary may provide the borrower 
        with a repayment plan described in subparagraph (A), (B), or 
        (C) of paragraph (1) for borrowers before July 1, 2022, or a 
        repayment plan described in paragraph (2)(A) for new borrowers 
        on or after July 1, 2022.
            ``(4) Changes in selections.--The borrower of a loan made 
        under this part may change the borrower's selection of a 
        repayment plan under paragraph (1) or (2), or the Secretary's 
        selection of a plan for the borrower under paragraph (3), as 
        the case may be, under such terms and conditions as may be 
        established by the Secretary.
            ``(5) Alternative repayment plans.--The Secretary may 
        provide, on a case-by-case basis, an alternative repayment plan 
        to a borrower of a loan made under this part on or after July 
        1, 2022, who demonstrates to the satisfaction of the Secretary 
        that the terms and conditions of the repayment plans available 
        under paragraph (2) are not adequate to accommodate the 
        borrower's exceptional circumstances. Upon request, the 
        Secretary shall make available for such borrower's repayment 
        plans described in subparagraphs (B) and (C) of paragraph (1). 
        In designing such alternative repayment plans, the Secretary 
        shall ensure that such plans do not exceed the cost to the 
        Federal Government, as determined on the basis of the present 
        value of future payments by such borrowers, of loans made using 
        the plans available under paragraph (2).
            ``(6) Repayment after default.--For any borrower who has 
        defaulted on a loan made under this part, the Secretary--
                    ``(A) may require the borrower to pay all 
                reasonable collection costs associated with such loan; 
                and
                    ``(B) if such loan was made--
                            ``(i) to any borrower who, before July 1, 
                        2022, had an outstanding balance on a student 
                        loan made, insured, or guaranteed under this 
                        part or part B, may require the borrower to 
                        repay the loan pursuant to an income contingent 
                        repayment plan, as described in paragraph 
                        (1)(D), or an income-based repayment plan, as 
                        described in paragraph (1)(E); or
                            ``(ii) to a new borrower (as defined in 
                        section 493E(a)(5)), may provide the borrower 
                        the option to enroll in the repayment plan 
                        described in paragraph (2)(B).
            ``(7) Applicability provision.--
                    ``(A) In general.--Except as provided in paragraph 
                (5) and subparagraph (B), the repayment plans under 
                subparagraphs (B), (C), (D), and (E) of paragraph (1) 
                are not available for a borrower who received the 
                borrower's first disbursement of a Federal Direct Loan 
                on or after July 1, 2022.
                    ``(B) Exception.--The repayment plans available to 
                a borrower of a Federal Direct PLUS Loan made on behalf 
                of a dependent student or a Federal Direct 
                Consolidation Loan whose proceeds were used to 
                discharge the liability of a Federal Direct PLUS Loan 
                made on behalf of a dependent student or a loan under 
                section 428B made on behalf of a dependent student on 
                or after July 1, 2022, shall be those described under 
                subparagraphs (A), (B), and (C) of paragraph (1).''; 
                and
            (2) in subsection (m)--
                    (A) in paragraph (1)--
                            (i) in the paragraph heading, by striking 
                        ``In general'' and inserting ``Borrowers before 
                        july 1, 2022''; and
                            (ii) in the matter preceding subparagraph 
                        (A), by striking ``The Secretary'' and 
                        inserting ``Except as provided in paragraph 
                        (5), the Secretary'';
                    (B) in paragraph (2), by inserting ``or (5)'' after 
                ``paragraph (1)''; and
                    (C) by adding at the end the following:
            ``(5) Simplified income-driven repayment for new borrowers 
        on or after july 1, 2022.--
                    ``(A) In general.--With respect to an eligible 
                Federal Direct Loan not in default made under this part 
                on or after July 1, 2022, the Secretary shall cancel 
                the balance of interest and principal due, after the 
                conclusion of the employment period described in 
                paragraph clause (iv), as of the time of such 
                cancellation, on any such loan for a borrower who--
                            ``(i) as of July 1, 2022, had no 
                        outstanding balance on a student loan made, 
                        insured, or guaranteed under this part or part 
                        B or had no outstanding balance on a student 
                        loan made, insured, or guaranteed under this 
                        part or part B on the date the borrower 
                        received the loan made under this part on or 
                        after July 1, 2022;
                            ``(ii) has made 120 monthly payments on the 
                        eligible Federal Direct Loan under a simplified 
                        income-driven repayment plan under subsection 
                        (d)(2)(B);
                            ``(iii) is employed in a public service job 
                        at the time of such forgiveness; and
                            ``(iv) has been employed in a public 
                        service job during the period in which the 
                        borrower makes each of the 120 payments 
                        described in clause (ii).
                    ``(B) Annual income verification.--With respect to 
                a borrower who fails to submit to the Secretary 
                verification of the borrower's annual adjusted gross 
                income as required under section 493E(e), any monthly 
                payments made during the period the borrower is in 
                violation of such requirement shall not be considered 
                eligible payments under subparagraph (A)(ii) toward the 
                cancellation pursuant to this paragraph of the balance 
                of interest and principal due on the borrower's 
                loan.''.

SEC. 4. FIXED REPAYMENT PLAN.

    The Higher Education Act of 1965 (20 U.S.C. 1001 et seq.) is 
amended--
            (1) in section 153(a)(1)(B)(iii)(V), by striking ``standard 
        repayment plan'' and inserting ``fixed repayment plan'';
            (2) in section 428(b)(9)(A)(i), by striking ``standard 
        repayment plan'' and inserting ``fixed repayment plan'';
            (3) in section 433(b)(7)(B), by striking ``standard 
        repayment plan'' and inserting ``fixed repayment plan'';
            (4) in section 455--
                    (A) in subsection (e)(7)(B)(iv), by striking 
                ``standard repayment plan'' and inserting ``fixed 
                repayment plan''; and
                    (B) in subsection (m)(1)(A)(ii), by striking 
                ``standard repayment plan'' and inserting ``fixed 
                repayment plan''; and
            (5) in section 493C--
                    (A) in subsection (a)(3)(A), by striking ``standard 
                repayment plan'' and inserting ``fixed repayment 
                plan''; and
                    (B) in subsection (b)--
                            (i) in paragraph (7)(B)(iii), by striking 
                        ``standard repayment plan'' and inserting 
                        ``fixed repayment plan''; and
                            (ii) in paragraph (8), by striking 
                        ``standard repayment plan'' and inserting 
                        ``fixed repayment plan''.

SEC. 5. NOTIFICATION TO BORROWERS ABOUT REPAYMENT OPTIONS AND 
              ALTERNATIVES TO DEFAULT.

    Not later than 1 year after the date of enactment of this Act, the 
Secretary of Education shall require servicers of loans made, insured, 
or guaranteed under part B or D of title IV of the Higher Education Act 
of 1965 (20 U.S.C. 1071 et seq. and 1087a et seq.) to--
            (1) notify borrowers, in writing and through electronic 
        format, about all repayment options for which the borrower may 
        qualify;
            (2) provide borrowers, in writing and through electronic 
        format, information about alternative repayment plans, 
        including the borrower's estimated monthly payment, expected 
        number of years to repay, expected amount of loan forgiveness, 
        expected total loan forgiveness, and expected total principal 
        and interest paid, associated with each repayment plan in a 
        format that permits the borrower to compare the current 
        repayment plan with alternative repayment plans; and
            (3) offer to enroll such borrowers in alternative plans, if 
        eligible.

SEC. 6. GAO STUDY ON IMPROVING ENROLLMENT AND VERIFICATION ASSOCIATED 
              WITH INCOME-DRIVEN REPAYMENT.

    Not later than 2 years after the date of enactment of this Act, the 
Comptroller General of the United States, in consultation with the 
Secretary of the Treasury, shall--
            (1) complete a study that--
                    (A) examines the feasibility of simplifying the 
                process for enrolling in, and verifying annual 
                eligibility for, the simplified income-driven repayment 
                program authorized under the amendments made by this 
                Act; and
                    (B) provides recommendations, including those 
                relating to streamlined income and employment 
                verification and simplified methods of repayment, for 
                efficient administration of income-based repayment 
                programs, including those authorized under the 
                amendments made by this Act; and
            (2) prepare and submit a report to the Committee on Health, 
        Education, Labor, and Pensions of the Senate and the Committee 
        on Education and the Workforce of the House of Representatives 
        setting forth the conclusions of the study described in 
        paragraph (1) in such a manner that the recommendations 
        included in the report can inform future reauthorizations of 
        the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.).
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