Making College More Affordable Act
Bill: H.R.8457 | Sponsor: Rep. Cicilline, David N. (D-RI)
Policy area: Education

Summary:
Making College More Affordable Act
This bill creates federal interest-free education loans for undergraduate students. The loans must generally have the same terms and conditions and benefits to borrowers as Federal Direct Stafford Loans. Interest on these loans may only accrue during periods when a borrower is earning taxable income, is in repayment on such loans, and is not making payments under a repayment plan.
The Department of Education (ED) must carry out a repayment plan program for the interest-free loans under which loan payments are automatically withheld from the wages of the borrower.
ED must cancel any outstanding balance of principal or interest due on those interest-free loans made to a borrower who has made 360 monthly payments.
The bill also allows for a tax deduction for amounts paid on these loans.

To carry out an income-contingent repayment program for Federal Direct 
Interest-Free Education Loans for undergraduate students, 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 ``Making College More Affordable 
Act''.

SEC. 2. FEDERAL DIRECT INTEREST-FREE LOANS FOR UNDERGRADUATE STUDENTS 
              AND REPAYMENT PLAN.

    (a) Interest Rates.--Section 455(a) of the Higher Education Act of 
1965 (20 U.S.C. 1087e(a)) is amended by adding at the end the 
following:
            ``(4) Federal direct interest-free education loans for 
        undergraduate education.--
                    ``(A) New borrowers.--Notwithstanding any other 
                provision of this Act and subject to subparagraphs (C) 
                and (D), an undergraduate student who is a new borrower 
                on or after July 1, 2023, shall only be eligible to 
                receive Federal Direct Interest-Free Education Loans 
                under this part.
                    ``(B) Existing borrowers.--Beginning on July 1, 
                2023, the Secretary shall cancel the obligation of a 
                borrower, if the borrower submits an application to the 
                Secretary under this subparagraph, to repay any loan 
                made under this part for the borrower's undergraduate 
                education and for which the first disbursement was 
                made, or the application for the consolidation loan was 
                received, on or before June 30, 2023, and issue to such 
                borrower a Federal Direct Interest-Free Education Loan 
                in an amount equal to the sum of the unpaid principal, 
                accrued unpaid interest, and late charges of the 
                original loan.
                    ``(C) Parent plus loans for undergraduate 
                education.--Nothing in this section shall be construed 
                to prohibit a parent from borrowing a Federal Direct 
                PLUS Loan on behalf of a dependent, undergraduate 
                student on or after July 1, 2023.
                    ``(D) Federal direct consolidation loans.--A 
                borrower of a Federal Direct Interest-Free Education 
                Loan and any other loan made under this part (such as a 
                Federal Direct PLUS Loan or a Federal Direct 
                Unsubsidized Stafford Loan for graduate or professional 
                education) may consolidate such loans into a Federal 
                Direct Consolidation Loan.
                    ``(E) Terms, conditions, and benefits.--A Federal 
                Direct Interest-Free Education Loan shall have the same 
                terms and conditions, and benefits to borrowers as a 
                Federal Direct Stafford Loan with respect to 
                undergraduate borrowers, except that such a loan--
                            ``(i) shall have an applicable rate of 
                        interest of 3.73 percent for the term of the 
                        loan;
                            ``(ii) the aggregate maximum amount that 
                        may be awarded to a borrower shall be $90,000, 
                        for not more than a 4-year academic period;
                            ``(iii) may only be repaid under the 
                        income-contingent repayment plan under 
                        subsection (r) or a standard repayment plan 
                        under subsection (d)(1)(A);
                            ``(iv) interest on such loan shall only 
                        accrue during periods when a borrower is 
                        earning taxable income, is in repayment on such 
                        loan, and not making payments under a repayment 
                        plan described in clause (iii); and
                            ``(v) may include other terms and 
                        conditions, and benefits to borrowers of such 
                        loan, as determined by the Secretary.''.
    (b) Income-Contingent Repayment Plan for Undergraduate Loans.--
Section 455 of the Higher Education Act of 1965 (20 U.S.C. 1087e) is 
further amended by adding at the end the following:
    ``(r) Income-Contingent Repayment Plan for Undergraduate Loans.--
Notwithstanding any other provision of this Act, the Secretary shall 
carry out a program under which--
            ``(1) a borrower of a Federal Direct Interest-Free 
        Education Loan--
                    ``(A) shall have an aggregate monthly payment for 
                the outstanding balance of principal and interest due 
                on all such loans automatically withheld from the wages 
                (as such term is defined in section 3401(a) of the 
                Internal Revenue Code of 1986) of the borrower by the 
                employer of the borrower in a manner which--
                            ``(i) prohibits employers from using any 
                        information about an employee's outstanding 
                        balance or principal and interest due on such 
                        loans for any purpose of use as an advantage 
                        against the employee;
                            ``(ii) is determined by the Secretary, in 
                        coordination with the heads of other 
                        appropriate Federal agencies (including the 
                        Secretary of the Treasury and the Commissioner 
                        of the Social Security Administration); and
                            ``(iii) is an amount equal to--
                                    ``(I) if the borrower's gross 
                                income is less than 337 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)), $0;
                                    ``(II) if the borrower's gross 
                                income is equal to or greater than 337 
                                percent, but not more than 841 percent 
                                of such poverty line, 4 percent of the 
                                borrower's gross income;
                                    ``(III) if the borrower's gross 
                                income is equal to or greater than 842 
                                percent, but not more than 925 percent 
                                of such poverty line, 5 percent of the 
                                borrower's gross income;
                                    ``(IV) if the borrower's gross 
                                income is equal to or greater than 926 
                                percent, but not more than 1,010 
                                percent of such poverty line, 6 percent 
                                of the borrower's gross income;
                                    ``(V) if the borrower's gross 
                                income is equal to or greater than 
                                1,011 percent, but not more than 1,094 
                                percent of such poverty line, 7 percent 
                                of the borrower's gross income;
                                    ``(VI) if the borrower's gross 
                                income is equal to or greater than 
                                1,095 percent, but not more than 1,178 
                                percent of such poverty line, 8 percent 
                                of the borrower's gross income;
                                    ``(VII) if the borrower's gross 
                                income is equal to or greater than 
                                1,179 percent, and 1,262 percent of 
                                such poverty line, 9 percent of the 
                                borrower's gross income; and
                                    ``(VIII) if the borrower's gross 
                                income is equal to or greater than 
                                1,263 percent of such poverty line, 10 
                                percent of the borrower's gross income; 
                                and
                    ``(B) may elect to have any payments made under 
                subparagraph (A) that exceed the amount owed by the 
                borrower on such loans for a calendar year be refunded 
                to the borrower or applied to the amount owed by the 
                borrower on such loans for the succeeding calendar 
                year;
            ``(2) the Secretary shall cancel any outstanding balance of 
        principal or interest due on all Federal Direct Interest-Free 
        Education Loans made to a borrower who has made 360 monthly 
        payments under this subsection; and
            ``(3) the amount cancelled under paragraph (2) shall not be 
        includible in the gross income of the borrower.''.

SEC. 3. FEDERAL DIRECT INTEREST-FREE EDUCATION LOAN PAYMENTS 
              DEDUCTIBLE.

    (a) In General.--Part VII of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by redesignating section 224 
as section 225 and by inserting after section 223 the following new 
section:

``SEC. 224. FEDERAL DIRECT INTEREST-FREE EDUCATION LOANS.

    ``(a) In General.--In the case of an individual, there shall be 
allowed as a deduction for the taxable year an amount equal to the 
amounts paid by the taxpayer during the taxable year on any Federal 
Direct Interest-Free Education Loan described in section 455(a)(4) of 
the Higher Education Act of 1965.
    ``(b) Definitions and Special Rules.--For purposes of this 
section--
            ``(1) Denial of double benefit.--No deduction shall be 
        allowed under this section for any amount for which a deduction 
        is allowable under any other provision of this chapter, or for 
        which an exclusion is allowable under section 127 to the 
        taxpayer by reason of the payment by the taxpayer's employer of 
        any indebtedness on a qualified education loan of the taxpayer.
            ``(2) Dependents not eligible for deduction.--No deduction 
        shall be allowed by this section to an individual for the 
        taxable year if a deduction under section 151 with respect to 
        such individual is allowed to another taxpayer for the taxable 
        year beginning in the calendar year in which such individual's 
        taxable year begins.
            ``(3) Married couples must file joint return.--If the 
        taxpayer is married at the close of the taxable year, the 
        deduction shall be allowed under subsection (a) only if the 
        taxpayer and the taxpayer's spouse file a joint return for the 
        taxable year.
            ``(4) Marital status.--Marital status shall be determined 
        in accordance with section 7703.''.
    (b) Deduction Allowed Whether or Not Taxpayer Itemizes.--Section 
62(a) of such Code is amended by inserting after paragraph (21) the 
following new paragraph:
            ``(22) Student loan principal payments.--The deduction 
        allowed by section 224.''.
    (c) Clerical Amendment.--The table of sections for part VII of 
subchapter B of chapter 1 of such Code is amended by striking the item 
relating to section 224 and inserting the following:

``Sec. 224. Federal Direct Interest-Free Education Loans.
``Sec. 225. Cross-reference.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.
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