Income-Driven Student Loan Forgiveness Act
Bill: H.R.2034 | Sponsor: Rep. Lawson, Al, Jr. (D-FL)
Policy area: Education

Summary:
Income-Driven Student Loan Forgiveness Act
This bill requires the Department of Education (ED) to forgive the outstanding balance of principal, interest, and fees due on federal student loans for eligible borrowers who meet certain income requirements.
Eligible borrower refers to an individual who (1) has an eligible federal student loan in repayment, (2) filed a federal income tax return for the most recent tax year, (3) is employed or was employed during the three-year period immediately preceding March 1, 2020, and (4) meets income requirements (e.g., an adjusted gross income of $100,000 or less for a borrower who is not married). Further, the borrower must submit an application to ED for loan forgiveness.
The bill prohibits borrowers from receiving refunds for any previously made payments.
Further, the bill specifies the notification requirements related to the availability of loan forgiveness.
The bill also excludes discharged student loan debt from an individual's gross income for tax purposes.

To direct the Secretary of Education to forgive the Federal student 
 loans of borrowers meeting certain income requirements, 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 ``Income-Driven Student Loan 
Forgiveness Act''.

SEC. 2. FEDERAL STUDENT LOAN FORGIVENESS FOR BORROWERS MEETING CERTAIN 
              INCOME REQUIREMENTS.

    (a) Forgiveness Required.--Notwithstanding any other provision of 
law, the Secretary of Education shall forgive the outstanding balance 
of principal, interest, and fees due on the eligible Federal student 
loans of borrowers who meet the requirements of subsection (b).
    (b) Eligibility.--
            (1) In general.--A borrower is eligible to receive 
        forgiveness under this section if, at the time of application 
        for forgiveness, such borrower--
                    (A) has an eligible Federal student loan in 
                repayment;
                    (B) filed a Federal income tax return for the most 
                recently ended tax year;
                    (C)(i) is employed; or
                    (ii) if not employed, was employed during the 
                period of three years immediately preceding March 1, 
                2020; and
                    (D) meets the income requirements specified in 
                paragraph (2).
            (2) Income requirements.--The income requirements specified 
        in this subsection are the following:
                    (A) In the case of borrower who is not married, the 
                adjusted gross income of the borrower does not exceed 
                $100,000.
                    (B) In the case of a borrower who is married and 
                files a Federal income tax return jointly with the 
                borrower's spouse, the adjusted gross income of the 
                borrower and the borrower's spouse does not exceed 
                $200,000.
                    (C) In the case of a borrower who is married and 
                files a Federal income tax return separately from the 
                borrower's spouse, the adjusted gross income of the 
                borrower does not exceed $100,000. The income of a 
                borrower's spouse shall not be considered in making the 
                determination under this subparagraph.
            (3) Return information.--The determinations under paragraph 
        (2) shall be based on the Federal income tax return filed by 
        the borrower for the most recent tax year ending before the 
        date of the borrower's application for forgiveness under this 
        section.
    (c) Method of Loan Forgiveness.--As soon as practicable after the 
Secretary of Education confirms that an applicant meets the 
requirements of subsection (b), the Secretary of Education shall--
            (1) for each eligible Federal student loan of the borrower 
        that is held by the Department of Education, cancel the 
        outstanding balance of principal, interest, and fees due on the 
        loan; and
            (2) for each eligible Federal student loan of the borrower 
        that is not held by the Department of Education--
                    (A) through the holder of a loan, assume the 
                obligation to repay the outstanding balance of 
                principal, interest, and fees due on the loan; and
                    (B) upon assuming such obligation, cancel the 
                outstanding balance of such principal, interest, and 
                fees.
    (d) Application.--To be eligible to receive forgiveness under this 
section a borrower shall submit to the Secretary of Education an 
application at such time, in such manner, and containing such 
information as the Secretary may require.
    (e) Repayment Refunds Prohibited.--Nothing in this section shall be 
construed to authorize the refund of any payments made by a borrower on 
an eligible Federal student before the date on which the borrower's 
loans are forgiven in accordance with this section.
    (f) Exclusion From Taxable Income.--The amount of a borrower's 
eligible Federal student loans forgiven under this section shall not be 
included in the gross income of the borrower for purposes of the 
Internal Revenue Code of 1986.
    (g) Determination of Ineligibility.--If the Secretary of Education 
denies a borrower's application for forgiveness under this section, the 
Secretary shall notify the borrower that the borrower's application was 
denied and indicate the specific reasons for such denial.

SEC. 3. NOTICE TO THE PUBLIC.

    Not later than 15 days after the date of enactment of this Act, the 
Secretary of Education, in consultation with institutions of higher 
education and lenders and holders of Federal student loans, shall take 
such actions as may be necessary to ensure that borrowers who have 
outstanding eligible Federal student loans are aware of the loan 
forgiveness program authorized by this Act. Such information shall--
            (1) be presented in a form that is widely available to the 
        public, especially to borrowers with eligible Federal student 
        loans;
            (2) be easily understandable; and
            (3) clearly notify borrowers that to be considered for loan 
        forgiveness under this Act, borrowers must submit an 
        application to the Secretary of Education.

SEC. 4. DEFINITIONS.

    In this Act:
            (1) Adjusted gross income.--The term ``adjusted gross 
        income'' has the meaning given that term in section 62 of the 
        Internal Revenue Code of 1986 (26 U.S.C. 62).
            (2) Eligible federal student loan.--The term ``eligible 
        Federal student loan'' means a loan--
                    (A) received by a borrower before the date of 
                enactment of this Act;
                    (B) used to pay for--
                            (i) the undergraduate education of the 
                        borrower; or
                            (ii) in the case of a loan made to a parent 
                        on behalf a dependent student, the 
                        undergraduate education of such dependent 
                        student; and
                    (C) made, insured, or guaranteed under--
                            (i) part B, part D, or part E of title IV 
                        of the Higher Education Act of 1965 (20 U.S.C. 
                        1070 et seq.), including a consolidation loan 
                        (to the extent that such consolidation loan was 
                        used to repay loans for undergraduate 
                        education); or
                            (ii) part E of title VIII of the Public 
                        Health Service Act.
            (3) Fees.--The term ``fees'' means any amounts owed by a 
        borrower, other than principal and interest, on an eligible 
        Federal student loan, including the amounts of any outstanding 
        administrative fees, late charges, and collection costs.
            (4) Institution of higher education.--The term 
        ``institution of higher education'' has the meaning given that 
        term in section 102 of the Higher Education Act of 1965 (20 
        U.S.C. 1002).
            (5) Undergraduate education.--The term ``undergraduate 
        education'' means a postsecondary program of study at an 
        institution of higher education that leads to an associate or 
        baccalaureate degree.
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