Parent PLUS Loan Fairness and Responsibility Act
Bill: H.R.7982 | Sponsor: Rep. Foster, Bill (D-IL)
Policy area: Education

Summary:
Parent PLUS Loan Fairness and Responsibility Act
This bill allows parent borrowers to transfer their parent PLUS loans to their child under certain circumstances. Among other requirements for a transfer, the child must demonstrate the ability to repay the loan, as determined by the Department of Education. Additionally, the bill makes these transferred loans eligible for income-driven repayment plans.

To amend the Higher Education Act of 1965 to allow certain Federal 
student loans to be transferred from a parent to a child, 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 ``Parent PLUS Loan Fairness and 
Responsibility Act''.

SEC. 2. TRANSFER OF FEDERAL STUDENT LOANS FROM PARENT TO CHILD.

    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. TRANSFER OF FEDERAL STUDENT LOANS FROM PARENT TO CHILD.

    ``(a) In General.--A covered parent loan may be transferred from 
the original borrower of the loan to a child of such borrower in 
accordance with this section.
    ``(b) Transfer Requirements.--A covered parent loan may be 
transferred to a child under subsection (a) only if--
            ``(1) the loan is in good standing, as determined by the 
        Secretary;
            ``(2) the loan was used to pay the educational expenses of 
        the child to whom the loan is to be transferred;
            ``(3) the child to whom the loan is to be transferred--
                    ``(A) has attained the age of 18 years; and
                    ``(B) demonstrates the ability to repay the loan, 
                as determined by the Secretary in accordance with 
                subsection (c);
            ``(4) the child, the parent, and the lender agree, in 
        writing, to the transfer of the loan;
            ``(5) the agreement described in paragraph (4) notifies the 
        child to whom the loan is transferred of the effect of the 
        transfer on the eligibility of the loan for forgiveness under 
        section 455(m); and
            ``(6) a period of 180 days has elapsed during which the 
        child was not pursuing--
                    ``(A) at least a half-time course of study as 
                determined by an institution of higher education; or
                    ``(B) a course of study pursuant to a graduate 
                fellowship program approved by the Secretary, or 
                pursuant to a rehabilitation training program for 
                disabled individuals approved by the Secretary.
    ``(c) Determination of Ability To Repay Loan.--In determining the 
ability of a child to repay a covered parent loan under subsection 
(b)(3)(B), the Secretary shall consider the following:
            ``(1) The child's employment status, income level, and 
        credit history.
            ``(2) The total dollar amount of the loans proposed to be 
        transferred to the child.
            ``(3) The debt-to-income ratio of the child before such 
        transfer.
            ``(4) The projected debt-to-income ratio of the child after 
        such transfer.
            ``(5) Any other factors the Secretary determines to be 
        relevant to the ability of the child to repay the loan.
    ``(d) Treatment of Transferred Loan.--A covered parent loan 
transferred to a child under subsection (a) shall have the same terms, 
conditions, and benefits applicable to the loan before the date of such 
transfer except that--
            ``(1) the child to whom the loan is transferred shall be 
        treated as the original borrower of the loan; and
            ``(2) the parent who transferred the loan to the child 
        shall not be responsible for paying--
                    ``(A) the outstanding balance of principal or 
                interest on the loan; or
                    ``(B) any other costs associated with the loan, 
                including fees.
    ``(e) Effect on Loan Limits.--Notwithstanding any other provision 
of this Act, a covered parent loan transferred to a child under 
subsection (a) shall not be counted toward the child's annual or 
aggregate maximum loan limits under this title.
    ``(f) Covered Parent Loan Defined.--In this section, the term 
`covered parent loan' means--
            ``(1) a loan made to a parent on behalf of a dependent 
        student under section 428B;
            ``(2) a Federal Direct PLUS Loan made to the parent of a 
        dependent student; or
            ``(3) a loan made under section 428C or 455(g), to the 
        extent that such loan was used to repay--
                    ``(A) a loan made to the parent of a dependent 
                student under section 428B; or
                    ``(B) a Federal Direct PLUS Loan made to the parent 
                of a dependent student.''.

SEC. 3. TREATMENT OF COVERED PARENTS LOANS UNDER INCOME-DRIVEN 
              REPAYMENT PLANS.

    (a) Repayment Plans.--Section 455(d)(1) of the Higher Education Act 
of 1965 (20 U.S.C. 1087e(d)(1)) is amended--
            (1) in subparagraph (D), by inserting before the semicolon 
        at the end the following: ``, and the plan described in this 
        subparagraph shall be available to the transferee of a covered 
        parent loan that is transferred under section 493E''; and
            (2) in subparagraph (E), by inserting before the period the 
        following: ``, and the plan described in this subparagraph 
        shall be available to the transferee of a covered parent loan 
        that is transferred under section 493E''.
    (b) Income-Based Repayment.--Section 493C(a) of the Higher 
Education Act of 1965 (20 U.S.C. 1098e(a)) is amended--
            (1) in paragraph (1), by inserting before the period at the 
        end the following: ``, except that such term does not include a 
        covered parent loan that is transferred under section 493E''; 
        and
            (2) in paragraph (2), by inserting before the period at the 
        end the following: ``, except that such term does not include a 
        covered parent loan that is transferred under section 493E''.
                                 <all>