Simplifying Student Loans Act
Bill: H.R.8700 | Sponsor: Rep. Wild, Susan (D-PA)
Policy area: Education

Summary:
Simplifying Student Loans Act
This bill phases out existing repayment plans for federal student loans and replaces them with one fixed repayment plan and one income-based repayment plan.
The Department of Education must offer all borrowers a choice between the two new plans and allow borrowers of loans made prior to July 1, 2023, the option of continuing repayment under their original plan or electing to repay under one of the new plans.
The bill also establishes a 1% interest rate on federal student loans made to borrowers on or after July 1, 2023.

To amend the Higher Education Act of 1965 to establish an income-based 
 repayment for new loans on and after July 1, 2023, and for borrowers 
  who enter income-based repayment after June 30, 2023, 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 ``Simplifying Student Loans Act''.

SEC. 2. TERMINATION OF CERTAIN REPAYMENT PLAN OPTIONS AND OPPORTUNITY 
              TO CHANGE REPAYMENT PLANS.

    (a) Selection of Repayment Plans.--Section 428(b) of the Higher 
Education Act of 1965 (20 U.S.C. 1078(b)) is amended--
            (1) in paragraph (1)--
                    (A) in subparagraph (D)--
                            (i) in clause (ii), by striking ``may 
                        annually change the selection of a repayment 
                        plan under this part,'' and inserting ``may at 
                        any time after July 1, 2023, change the 
                        selection of a repayment plan under this part 
                        to one of the 2 repayment plans described in 
                        paragraph (9)(C),''; and
                            (ii) in clause (iii), by striking ``be 
                        subject to income contingent repayment in 
                        accordance with subsection (m);'' and inserting 
                        ``be subject to income-based repayment in 
                        accordance with section 493C(f);''; and
                    (B) in subparagraph (E)(i), by striking ``the 
                option of repaying the loan in accordance with a 
                standard, graduated, income-sensitive, or extended 
                repayment schedule (as described in paragraph (9)) 
                established by the lender in accordance with 
                regulations of the Secretary; and'' and inserting ``the 
                option of repaying the loan in accordance with a 
                repayment plan described in paragraph (9)(C) 
                established by the lender in accordance with 
                regulations of the Secretary; and''; and
            (2) in paragraph (9), by adding at the end the following:
                    ``(C) Selection of repayment plans on and after 
                july 1, 2023; opportunity to change repayment plans.--
                Notwithstanding any other provision of this paragraph, 
                or any other provision of law, and in accordance with 
                regulations, beginning on July 1, 2023, the lender 
                shall offer a borrower of a loan made, insured, or 
                guaranteed under this part the opportunity to change 
                repayment plans, and to enroll in one of the following 
                repayment plans:
                            ``(i) A fixed repayment plan described in 
                        section 493E.
                            ``(ii) The income-based repayment plan 
                        under section 493C(f).''.

SEC. 3. AMENDMENTS TO TERMS AND CONDITIONS OF LOANS AND REPAYMENT 
              PLANS.

    (a) Rulemaking Regarding Termination of Certain Repayment Plans.--
Before July 1, 2023, the Secretary of Education shall carry out a plan 
to end all eligibility for repayment plans other than a fixed repayment 
plan described in section 493E of the Higher Education Act of 1965 (20 
U.S.C. 1001 et seq.), as added by this Act, and an income-based 
repayment plan described under section 493C(f) of the Higher Education 
Act of 1965 (20 U.S.C. 1001 et seq.), as added by this Act, for loans 
made under part B or D of title IV of the Higher Education Act of 1965 
(20 U.S.C. 1070 et seq.), unless the borrower is enrolled in another 
repayment plan before July 1, 2023, in accordance with the amendments 
made by this Act.
    (b) Interest Rates.--Section 455(b)(8) of the Higher Education Act 
of 1965 (20 U.S.C. 20 U.S.C. 1087e(b)) is amended--
            (1) in subparagraph (A), by inserting ``and before July 1, 
        2023,'' after ``July 1, 2013,'';
            (2) in subparagraph (B), by inserting ``and before July 1, 
        2023,'' after ``July 1, 2013,'';
            (3) in subparagraph (C), by inserting ``and before July 1, 
        2023,'' after ``July 1, 2013,'';
            (4) in subparagraph (D), by inserting ``and before July 1, 
        2023,'' after ``July 1, 2013,'';
            (5) by redesignating subparagraph (F) as subparagraph (G); 
        and
            (6) by inserting after subparagraph (E) the following:
                    ``(F) New loans on or after july 1, 2023.--
                Notwithstanding the preceding subparagraphs of this 
                paragraph, for any loans made under this part for which 
                the first disbursement is made, or for which the 
                application is received, on or after July 1, 2023, the 
                applicable rate of interest shall be 1.0 percent.''.
    (c) Repayment Plans.--Section 455(d) of the Higher Education Act of 
1965 (20 U.S.C. 1087e(d)) is amended--
            (1) by redesignating paragraphs (2) through (5) as 
        paragraphs (3) through (6), respectively;
            (2) by inserting after paragraph (1), the following:
            ``(2) Design and selection on and after july 1, 2023.--
                    ``(A) In general.--Notwithstanding paragraph (1), 
                for the borrower of a loan made on or after July 1, 
                2023, and for other borrowers subject to paragraph (7), 
                the Secretary shall offer a borrower of a loan made 
                under this part 2 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--
                            ``(i) a fixed repayment plan described in 
                        section 493E; or
                            ``(ii) the income-based repayment plan 
                        under section 493C(f).
                    ``(B) Selection by the secretary.--If a borrower of 
                a loan made under this part on or after July 1, 2023, 
                does not select a repayment plan described in 
                subparagraph (A), the Secretary may provide the 
                borrower with a fixed repayment plan described in 
                section 493E.
                    ``(C) Changes in selections.--Beginning on July 1, 
                2023, a borrower of a loan made under this part may 
                change the borrower's selection of a repayment plan in 
                accordance with paragraph (7) and under such terms and 
                conditions as may be established by the Secretary.'';
            (3) in paragraph (6)(B), as redesignated, by striking ``an 
        income contingent repayment plan.'' and inserting ``the income-
        based repayment plan under section 493C(f).''; and
            (4) by adding at the end the following:
            ``(7) Borrowers of loans made before july 1, 2023.--A 
        borrower who is in repayment on a loan made under part B or 
        part D before July 1, 2023--
                    ``(A) may choose to retain the repayment plan that 
                the borrower was enrolled in on the day before such 
                date;
                    ``(B) may elect to--
                            ``(i) enter the income-based repayment plan 
                        under section 493C(f); or
                            ``(ii) enter a fixed repayment plan 
                        described in section 493E;
                    ``(C) after electing to leave a repayment plan 
                other than an income-based repayment plan described 
                under this subsection or a fixed repayment plan 
                described in section 493E, shall not be permitted to 
                re-elect a repayment plan that is not an income-based 
                repayment plan under this subsection or a fixed 
                repayment plan described in section 493E; and
                    ``(D) shall retain, for purposes of repayment or 
                cancellation of any outstanding balance of principal 
                and interest due on a loan as described in section 
                493C(b)(7) any years of repayment under another income-
                based or income contingent repayment plan under this 
                title.''.
    (d) Maximum Repayment Period for Income-Contingent Repayment.--
Section 455(e) of the Higher Education Act of 1965 (20 U.S.C. 1087e(e)) 
is further amended--
            (1) in paragraph (7)(B)--
                    (A) by striking ``or'' at the end of clause (iv);
                    (B) by striking the period at the end of clause (v) 
                and inserting a semicolon; and
                    (C) by adding at the end the following:
                            ``(vi) makes payments under the income-
                        based repayment plan under section 493C(f); or
                            ``(vii) makes payments under the fixed 
                        repayment plan described in section 493E.
            ``(8) Additional qualifying repayment plans.--A borrower 
        repaying a loan pursuant to income-contingent repayment under 
        this subsection may elect at any time to terminate repayment 
        under such repayment plan and repay such loan under the income-
        based repayment plan under section 493C(f) or the fixed 
        repayment plan described in section 493E.''.

SEC. 4. INCOME-BASED REPAYMENT PLAN.

    (a) Options To Enter Into the New Fixed Repayment Plan and Income-
Based Repayment Plan.--Section 493C(b) of the Higher Education Act of 
1965 (20 U.S.C. 1098e) is amended--
            (1) in paragraph (7)(B)--
                    (A) by striking ``or'' at the end of clause (iv); 
                and
                    (B) by adding at the end the following:
                            ``(vi) has made payments under the income-
                        based repayment plan under section 493C(f); or
                            ``(vii) has made payments under the fixed 
                        repayment plan described in section 493E;'';
            (2) by amending paragraph (8) to read as follows:
            ``(8) a borrower who is repaying a loan made under part B 
        or D pursuant to income-based repayment may elect, at any time, 
        to terminate repayment pursuant to income-based repayment and 
        repay such loan under the income-based repayment plan under 
        section 493C(f) or the fixed repayment plan described in 
        section 493E;'';
            (3) in paragraph (9), by striking the period at the end and 
        inserting ``; and''; and
            (4) by adding at the end the following:
            ``(10) a borrower who is repaying a loan made, insured, or 
        guaranteed under part B or D pursuant to this section may repay 
        such loan in full at any time without penalty.''.
    (b) Income-Based Repayment.--Section 493C of the Higher Education 
Act of 1965 (20 U.S.C. 1098e) is amended by adding at the end the 
following:
    ``(f) Income-Based Repayment for New Loans on and After July 1, 
2023, and for Borrowers Who Enter Income-Based Repayment After June 30, 
2023.--
            ``(1) In general.--The income-based repayment plan under 
        this subsection shall be carried out in accordance with this 
        section, except as otherwise specified in this subsection--
                    ``(A) with respect to any loan made under part D on 
                or after July 1, 2023, if such borrower elects such 
                income-based repayment plan for the loan; and
                    ``(B) with respect to any loan made, insured, or 
                guaranteed under part B or D on or before June 30, 
                2023, if such borrower elects to repay the loan under 
                such income-based repayment plan on or after July 1, 
                2023.
            ``(2) Special terms.--Notwithstanding any other provision 
        of this section, with respect to a loan described under 
        paragraph (1), the following terms shall apply to the income-
        based repayment plan under this subsection:
                    ``(A)(i) Notwithstanding subsection (a)(3)(B), the 
                repayment amount under this subsection shall be an 
                amount equal to 10 percent of the result obtained by 
                calculating, on at least an annual basis, the amount by 
                which the adjusted gross income of the borrower 
                (subject to clause (ii)) exceeds the applicable 
                percentage of the poverty line in accordance with 
                clause (iii).
                    ``(ii)(I) Subject to subclause (II), in the case of 
                a married borrower (regardless of tax filing status), 
                clause (i) shall be applied by substituting `the 
                adjusted gross income of the borrower and the 
                borrower's spouse' for `the adjusted gross income of 
                the borrower'.
                    ``(II) Subclause (I) shall not be applicable to any 
                borrower who is married and who certifies to the 
                Secretary through a form approved by the Secretary that 
                the borrower is--
                            ``(aa) separated from the spouse of the 
                        borrower; or
                            ``(bb) unable to reasonably access the 
                        income information the spouse of such borrower.
                    ``(iii) For purposes of clause (i), the term 
                `applicable percentage' means 250 percent of the 
                poverty line applicable to the borrower's family size 
                (as determined under section 673(2) of the Community 
                Services Block Grant Act (42 U.S.C. 9902(2))) reduced 
                by 5 percentage points for each $1,000 by which the 
                borrower's adjusted gross income exceeds--
                            ``(I) in the case of a single borrower, 
                        $80,000; and
                            ``(II) in the case of a married borrower 
                        (regardless of tax filing status), $160,000.
                    ``(B) Subsection (b)(7)(B) shall apply by 
                substituting `20 years' for `25 years'.
                    ``(C) A borrower of such a loan may elect, and 
                remain enrolled in, the income-based repayment plan 
                under this subsection regardless of--
                            ``(i) whether such borrower has a partial 
                        financial hardship; and
                            ``(ii) the income level of the borrower.
                    ``(D) Notwithstanding subparagraph (A) of 
                subsection (b)(6), a borrower's monthly payment--
                            ``(i) shall be equal to the repayment 
                        amount determined under subparagraph (A) 
                        divided by 12; and
                            ``(ii) may exceed the monthly repayment 
                        amount under a standard 10-year repayment plan 
                        or a fixed repayment plan described in section 
                        493E.
                    ``(E) Subparagraph (B) of subsection (b)(3) shall 
                not apply.
                    ``(F) Subsection (d) shall not apply.
                    ``(G) In the case of a consolidation loan made 
                under part B or D on or after the date of enactment of 
                the `Simplifying Student Loans Act' that is being 
                repaid under this subsection, any monthly payment made 
                pursuant to any repayment plan listed in subsection 
                (b)(7)(B) on a loan for which the liability has been 
                discharged by the proceeds of such consolidation loan 
                shall be treated as a monthly payment under this 
                subsection on the portion of such consolidation loan 
                that is attributable to such discharged loan, except 
                that in the case of a subsequent consolidation loan, 
                any monthly payment on a loan for which the liability 
                has been discharged by the first consolidation loan 
                shall not be applicable for the purposes of this 
                subparagraph.
            ``(3) Additional special terms for certain borrowers.--A 
        borrower described in paragraph (1)(B)--
                    ``(A) may--
                            ``(i) choose to continue repayment pursuant 
                        to the repayment plan in which the borrower is 
                        enrolled on June 30, 2023; or
                            ``(ii) make a one-time election to--
                                    ``(I) terminate repayment pursuant 
                                to the repayment plan described in 
                                clause (i) and enter the income-based 
                                repayment plan under this subsection; 
                                or
                                    ``(II) terminate repayment pursuant 
                                to the repayment plan described in 
                                clause (i) and enter a fixed repayment 
                                plan described in section 493E; and
                    ``(B) who makes an election under subparagraph 
                (A)(ii), shall not repay a loan described in paragraph 
                (1)(B) under a repayment plan that is not an income-
                based repayment plan under this subsection or a fixed 
                repayment plan described in section 493E.''.

SEC. 5. FIXED REPAYMENT PLAN.

    Part G of title IV of the Higher Education Act of 1965 (20 U.S.C. 
1088 et seq.) is further amended by adding at the end the following:

``SEC. 493E. FIXED REPAYMENT PLAN.

    ``(a) In General.--A borrower of a loan made under this part on or 
after July 1, 2023, and a borrower who is in repayment on a loan made, 
insured, or guaranteed under part B or part D before July 1, 2023, may 
elect to repay such loan under the fixed repayment plan described in 
this section.
    ``(b) Fixed Repayment Plan.--Under the fixed repayment plan, a 
borrower whose total outstanding amount of principal and interest on 
such a loan (as of the day before entering repayment on such loan)--
            ``(1) is equal to or less than $20,000, shall repay such 
        loan with a fixed monthly repayment amount paid over a period 
        of 10 years;
            ``(2) is more than $20,000 and less than $30,000, shall 
        repay such loan with a fixed monthly repayment amount paid over 
        a period of--
                    ``(A) 15 years; or
                    ``(B) the period described in paragraph (1), if the 
                borrower elects such period;
            ``(3) is equal to or greater than $30,000, and less than 
        $40,000, shall repay such loan with a fixed monthly repayment 
        amount paid over a period of--
                    ``(A) 20 years; or
                    ``(B) the period described in paragraph (1) or (2), 
                if the borrower elects such period; and
            ``(4) is equal to or greater than $40,000, shall repay such 
        loan with a fixed monthly repayment amount paid over a period 
        of--
                    ``(A) 25 years; or
                    ``(B) the period described in any of paragraphs (1) 
                through (3), if the borrower elects such period.
    ``(c) Treatment of Certain Consolidation Loans.--In the case of a 
consolidation loan made under part B or D on or after the date of 
enactment of the `Simplifying Student Loans Act' that is being repaid 
under this section, any monthly payment made pursuant to any repayment 
plan listed in section 493C(b)(7)(B) on a loan for which the liability 
has been discharged by the proceeds of such consolidation loan shall be 
treated as a monthly payment under this section on the portion of such 
consolidation loan that is attributable to such discharged loan, except 
that in the case of a subsequent consolidation loan, any monthly 
payment on a loan for which the liability has been discharged by the 
first consolidation loan shall not be applicable for the purposes of 
this subsection.''.
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