Supporting America’s Young Entrepreneurs Act of 2021
Bill: H.R.4293 | Sponsor: Rep. Velazquez, Nydia M. (D-NY)
Policy area: Education

Summary:
Supporting America's Young Entrepreneurs Act of 2021
This bill provides deferment and cancellation of federal student loans for certain founders and employees of small business start-ups. The bill also establishes a young entrepreneurs business center.
First, the bill allows a founder of a small business start-up to defer student loan payments for up to three years.
Next, the bill directs the Department of Education (ED) to cancel up to $20,000 in federal student loan debt for a borrower who (1) has made 24 monthly payments on the loan while employed as a founder of a small business start-up in a distressed area, (2) is approved for loan cancellation by the young entrepreneurs business center established by the bill, and (3) is not currently in default on the loan.
Further, ED must cancel up to $3,000 in federal student loan debt for a borrower who (1) has made 12 monthly payments on the loan while employed full-time by a small business start-up, and (2) is not currently in default on the loan.
The bill also excludes from an individual's gross income, for income tax purposes, the amount of such canceled student loan debt.
Finally, the bill establishes a young entrepreneurs business center within the Small Business Administration to certify small business start-ups, identify distressed areas, and approve loan cancellations. To be certified by the center, a start-up must have a founder who is a recent graduate of an institution of higher education.

To amend the Higher Education Act of 1965 to provide loan deferment and 
loan cancellation for certain founders and employees of small business 
    start-ups, to amend the Small Business Act to establish a young 
         entrepreneurs business center, 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 ``Supporting America's Young 
Entrepreneurs Act of 2021''.

SEC. 2. SMALL BUSINESS START-UP EMPLOYEE LOAN DEFERMENT AND 
              CANCELLATION.

    (a) Deferment.--Section 455(f) of the Higher Education Act of 1965 
(20 U.S.C. 1087e(f)) is amended--
            (1) in paragraph (1), by striking ``A borrower of a loan'' 
        and inserting ``Except as provided in paragraph (5), a borrower 
        of a loan''; and
            (2) by adding at the end the following:
            ``(5) No interest deferment eligibility for founders of 
        small business start-ups.--A borrower of a loan made under this 
        part shall be eligible for a deferment, during which periodic 
        installments of principal and interest need not be paid, during 
        any period not in excess of 3 years during which the borrower 
        is employed as a founder of a small business start-up (as 
        defined in subsection (r)(3)).''.
    (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 Certain Small Business Start-Up 
Founders and Employees.--
            ``(1) Founders of a small business start-up in a distressed 
        area.--
                    ``(A) In general.--The Secretary shall cancel 
                $20,000 of the balance of interest and principal due, 
                in accordance with subparagraph (B), on any eligible 
                Federal Direct Loan not in default for a borrower who--
                            ``(i) has made 24 monthly payments on the 
                        eligible Federal Direct Loan after the date of 
                        the enactment of this subsection pursuant to 
                        any one or a combination of payments under a 
                        repayment plan under subsection (d)(1) or (g);
                            ``(ii) has been employed as a founder of a 
                        small business start-up in a distressed area 
                        during the period in which the borrower makes 
                        each of the 24 payments;
                            ``(iii) is employed as a founder of a small 
                        business start-up in a distressed area at the 
                        time of such cancellation; and
                            ``(iv) is approved for loan cancellation by 
                        the young entrepreneurs business center under 
                        section 49 of the Small Business Act (16 U.S.C. 
                        631 et seq.).
                    ``(B) Loan cancellation amount.--
                            ``(i) In general.--After the conclusion of 
                        the employment period described in subparagraph 
                        (A), the Secretary shall cancel the obligation 
                        to repay $20,000 of the balance of interest and 
                        principal due as of the time of such 
                        cancellation, on the eligible Federal Direct 
                        Loans made to the borrower under this part.
                            ``(ii) Limitation.--A borrower may not 
                        receive an aggregate amount of more than 
                        $20,000 under this subparagraph.
                    ``(C) Ineligibility for double benefits.--No 
                borrower may, for the same service, receive a reduction 
                of loan obligations under both this paragraph and--
                            ``(i) paragraph (2);
                            ``(ii) subsection (m); or
                            ``(iii) section 428J, 428K, 428L, or 460.
            ``(2) Employees of a small business start-up.--
                    ``(A) In general.--The Secretary shall cancel 
                $3,000 of the balance of interest and principal due, in 
                accordance with subparagraph (B), on any eligible 
                Federal Direct Loan not in default for a borrower who--
                            ``(i) has made 12 monthly payments on the 
                        eligible Federal Direct Loan after the date of 
                        the enactment of this subsection pursuant to 
                        any one or a combination of payments under a 
                        repayment plan under subsection (d)(1) or (g);
                            ``(ii) has been employed in a small 
                        business start-up job during the period in 
                        which the borrower makes each of the 12 
                        payments; and
                            ``(iii) is employed in a small business 
                        start-up job at the time of such cancellation.
                    ``(B) Loan cancellation amount.--
                            ``(i) In general.--After the conclusion of 
                        the employment period described in subparagraph 
                        (A), the Secretary shall cancel the obligation 
                        to repay $3,000 of the balance of interest and 
                        principal due as of the time of such 
                        cancellation, on the eligible Federal Direct 
                        Loans made to the borrower under this part.
                            ``(ii) Limitation.--A borrower may not 
                        receive an aggregate amount of more than 
                        $15,000 under this subparagraph.
                    ``(C) Ineligibility for double benefits.--No 
                borrower may, for the same service, receive a reduction 
                of loan obligations under both this paragraph and--
                            ``(i) paragraph (1);
                            ``(ii) subsection (m); or
                            ``(iii) section 428J, 428K, 428L, or 460.
            ``(3) Definitions.--In this subsection:
                    ``(A) Distressed area.--The term `distressed area' 
                means an area identified under section 49 of the Small 
                Business Act.
                    ``(B) Eligible federal direct loan.--The term 
                `eligible Federal Direct Loan' means a Federal Direct 
                Stafford Loan, Federal Direct PLUS Loan, or Federal 
                Direct Unsubsidized Stafford Loan, or a Federal Direct 
                Consolidation Loan.
                    ``(C) Founder.--The term `founder' has the meaning 
                given under section 49 of the Small Business Act.
                    ``(D) Small business start-up.--The term `small 
                business start-up' means a business that is certified 
                by the young entrepreneurs business center under 
                section 49 of the Small Business Act.
                    ``(E) Small business start-up job.--The term `small 
                business start-up job' means a full-time job as an 
                employee of a small business start-up.''.

SEC. 3. YOUNG ENTREPRENEURS BUSINESS CENTER.

    The Small Business Act (15 U.S.C. 631 et seq.) is amended--
            (1) by redesignating section 49 as section 50; and
            (2) by inserting after section 48 the following new 
        section:

``SEC. 49. YOUNG ENTREPRENEURS BUSINESS CENTER.

    ``(a) Establishment.--There is established within the 
Administration a young entrepreneurs business center that shall, for 
purposes of determining eligibility for loan cancellation for a founder 
of small business start-up under section 455(r)(1) of the Higher 
Education Act of 1965--
            ``(1) certify small business start-ups under subsection 
        (b);
            ``(2) identify distressed areas under subsection (c); and
            ``(3) approve loan cancellation for any founder of a small 
        business start-up in a distressed area under subsection (d).
    ``(b) Certification.--
            ``(1) Application.--To be certified by the young 
        entrepreneurs business center, the founder of a small business 
        start-up shall submit an application to the Administrator that 
        includes--
                    ``(A) a 5-year business plan for such small 
                business start-up; and
                    ``(B) the number of employees the small business 
                start-up intends to employ on a yearly basis.
            ``(2) Requirements.--To be certified under this section, a 
        small business start-up shall have, on the date an application 
        is submitted under paragraph (1), a founder who is an employee 
        of such small business start-up and who is a recent graduate of 
        an institution of higher education.
    ``(c) Distressed Area.--
            ``(1) In general.--Not less than once every 3 years after 
        the date of the enactment of this section, the young 
        entrepreneurs business center shall identify and make 
        publically available on the website of the Administration a 
        list of distressed areas.
            ``(2) Requirements.--A distressed area identified under 
        paragraph (1) shall be a county or equivalent division of local 
        government of a State in which the small business concern is 
        located--
                    ``(A) that has, for the most recent 24-month period 
                for which statistics are available--
                            ``(i) a per capita income of 80 percent or 
                        less of the national average; or
                            ``(ii) an unemployment rate that is 1 
                        percent greater than the national average; and
                    ``(B) for which the young entrepreneurs business 
                center determines would economically benefit from 
                having small business start-ups established in such 
                area.
    ``(d) Loan Cancellation for Founders of Small Business Start-Ups in 
a Distressed Area.--For purposes of loan cancellation under section 
455(r)(1) of the Higher Education Act of 1965, the young entrepreneurs 
business center shall approve a founder of a small business start-up in 
a distressed area if such founder--
            ``(1) established a small business start-up that--
                    ``(A) was located in a distressed area (as 
                identified under subsection (c)) for not more than 3 
                years before the date on which such small business 
                start-up was established;
                    ``(B) was certified under subsection (b); and
                    ``(C) on the date of approval under this 
                subsection, has been operating continuously for not 
                less than 5 years; and
            ``(2) was a founder of a small business start-up in a 
        distressed area during the period in which such founder made 
        the 24 payments described in section 455(r)(1)(A) of such Act.
    ``(e) Definitions.--In this section:
            ``(1) Institution of higher education.--The term 
        `institution of higher education' has the meaning given such 
        term in section 102 of the Higher Education Act (20 U.S.C. 
        1002).
            ``(2) Small business start-up.--The term `small business 
        start-up' means a small business concern that, as of the date 
        of submission of an application under subsection (b)--
                    ``(A) does not exist; or
                    ``(B) has been in existence for not more than 3 
                years.''.

SEC. 4. TREATMENT OF LOAN CANCELLATION.

    (a) In General.--Section 108(f) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new paragraph:
            ``(6) Cancellation of certain federal student loans.--In 
        the case of an individual, gross income shall not include the 
        discharge (in whole or in part) of any student loan pursuant to 
        the cancellation (in whole or in part) of such loan by the 
        Secretary of Education under subsection (r) of section 455 of 
        the Higher Education Act of 1965 (20 U.S.C. 1087e).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to discharges of indebtedness occurring after the date of the enactment 
of this Act.
                                 <all>