Title: Student Loan Borrowers’ Bill of Rights Act of 2019
Policy area: Education

Summary:
Student Loan Borrowers' Bill of Rights Act of 2019
This bill permits a borrower to discharge a student loan in a bankruptcy case and establishes requirements concerning (1) student loan debt collection, (2) student loan forgiveness, (3) options for student loan payments, (4) the exclusion of discharged student loan debt from an individual's gross income, and (5) loan defaults.
Specifically, the bill allows federal or private student loans to be discharged in bankruptcy cases and reinstates the six-year statute of limitations for certain student loans.
The Department of Education must cancel 50% of the balance of the interest and principal due on student loans for borrowers who make 60 monthly payments on such loans after October 1, 2019, and work at a public service job for 5 years during the repayment period.
In addition, the bill protects borrowers from efforts to collect student loan debt from (1) offsets of Social Security, railroad retirement, or black lung benefits; (2) wage garnishment; or (3) offsets of tax refunds.
The bill amends the Internal Revenue Code to (1) exclude discharged student loan debt from an individual's gross income, and (2) allow distributions from qualified tuition programs (known as 529 plans) to be used for student loan payments.
The bill makes parent PLUS loans eligible for income-based repayment plans.
Finally, the bill prohibits evidence of an individual's default on a federal student loan from being used (1) in proceedings involving the individual's professional or vocational license, or (2) to prohibit the individual from accessing transcripts and degrees.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3027 Introduced in House (IH)]

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116th CONGRESS
  1st Session
                                H. R. 3027

     To establish student loan borrowers' rights to basic consumer 
   protections, reasonable and flexible repayment options, access to 
  earned credentials, and effective loan cancellation in exchange for 
                public service, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                              May 24, 2019

Ms. Wilson of Florida introduced the following bill; which was referred 
    to the Committee on Education and Labor, and in addition to the 
Committees on Ways and Means, the Judiciary, and Oversight and Reform, 
for a period to be subsequently determined by the Speaker, in each case 
for consideration of such provisions as fall within the jurisdiction of 
                        the committee concerned

_______________________________________________________________________

                                 A BILL


 
     To establish student loan borrowers' rights to basic consumer 
   protections, reasonable and flexible repayment options, access to 
  earned credentials, and effective loan cancellation in exchange for 
                public service, 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 ``Student Loan Borrowers' Bill of 
Rights Act of 2019''.

        TITLE I--BORROWERS' RIGHT TO BASIC CONSUMER PROTECTIONS

SEC. 101. DISCHARGEABILITY OF STUDENT LOANS IN BANKRUPTCY CASES.

    Section 523(a) of title 11 of the United States Code is amended by 
striking paragraph (8).

SEC. 102. REINSTATEMENT OF THE 6-YEAR STATUTE OF LIMITATIONS FOR 
              STUDENT LOANS.

    Subsection (a) of section 484A of the Higher Education Act of 1965 
(20 U.S.C. 1091a(a)) is amended to read as follows:
    ``(a) Statute of Limitations.--Notwithstanding any Federal or State 
statutory, regulatory, or administrative limitation on the period 
within which debts may be enforced--
            ``(1) an institution that receives funds under this title 
        may file a suit or initiate or take another action for 
        collection of a refund due from a student on a grant made, or 
        work assistance awarded, under this title, during the 6-year 
        period beginning on the day after the refund first became due 
        (exclusive of the period during which the State statute of 
        limitations otherwise applicable to a suit under this paragraph 
        would be tolled under State law);
            ``(2) a guaranty agency that has an agreement with the 
        Secretary under section 428(c) may file a suit or initiate or 
        take another action for collection of the amount due from a 
        borrower on a loan made under part B during the 6-year period 
        beginning on the day after such guaranty agency reimburses the 
        previous holder of the loan for its loss on account of the 
        default of the borrower (exclusive of the period during which 
        the State statute of limitations otherwise applicable to a suit 
        under this paragraph would be tolled under State law);
            ``(3) an institution that has an agreement with the 
        Secretary pursuant to section 487 may file a suit or initiate 
        or take another action for collection of the amount due from a 
        borrower on a loan made under part D or E after the default of 
        the borrower on such loan during the 6-year period beginning on 
        the day after the date of the default of the borrower with 
        respect to such amount (exclusive of the period during which 
        the State statute of limitations otherwise applicable to a suit 
        under this paragraph would be tolled under State law); or
            ``(4) the Secretary, the Attorney General, or the 
        administrative head of another Federal agency, as the case may 
        be, may file a suit or initiate or take another action for 
        collection of a refund due from a student on a grant made under 
        this title, or for the repayment of the amount due from a 
        borrower on a loan made under this title that has been assigned 
        to the Secretary under this title, during the 6-year period 
        beginning on the day after the refund or the amount first 
        became due.''.

SEC. 103. PROHIBITION OF COLLECTION OF STUDENT LOANS THROUGH CERTAIN 
              OFFSETS OR THROUGH WAGE GARNISHMENT.

    (a) Prohibition on Offset of Social Security Benefits.--Section 
3716(c)(3)(A) of title 31, United States Code, is amended--
            (1) in clause (i), by striking ``except as provided in 
        clause (ii)'' and inserting ``except as provided in clauses 
        (ii) and (iii)''; and
            (2) by adding at the end the following new clause:
    ``(iii) Notwithstanding clause (i), any payments due to an 
individual under Federal benefits programs cited under clause (i) shall 
not be subject to offset under this subsection if the offset is for 
payments certified by the Department of Education under a program 
administered by the Secretary of Education under title IV of the Higher 
Education Act of 1965 (20 U.S.C. 1070 et seq.).''.
    (b) Prohibition on Offset of Tax Refund.--Section 3720A(a) of title 
31, United States Code, is amended--
            (1) by striking ``Any Federal agency'' and inserting ``(1) 
        Except as provided in paragraph (2), any Federal agency''; and
            (2) by adding at the end the following new paragraph:
    ``(2) Any past-due legally enforceable debt owed by an individual 
to the Department of Education under a program administered by the 
Secretary of Education under title IV of the Higher Education Act of 
1965 (20 U.S.C. 1070 et seq.) shall not be subject to notification 
under paragraph (1), and any refund of Federal taxes paid by the 
individual shall not be subject to reduction under subsection (c) for 
such debt.''.
    (c) Prohibition on Wage Garnishment.--Section 3720D(a) of title 31, 
United States Code, is amended--
            (1) by striking ``Notwithstanding'' and inserting: ``(1) 
        Except as provided in paragraph (2) and notwithstanding''; and
            (2) by adding at the end the following new paragraph:
    ``(2) Any delinquent nontax debt owed by an individual to the 
Department of Education under a program administered by the Secretary 
of Education under title IV of the Higher Education Act of 1965 (20 
U.S.C. 1070 et seq.) shall not be subject to collection under this 
section through garnishment of disposable pay of the individual.''.

TITLE II--BORROWER'S RIGHT TO REASONABLE AND FLEXIBLE REPAYMENT OPTIONS

SEC. 201. EXCLUSION FROM GROSS INCOME FOR DISCHARGE OF STUDENT LOAN 
              INDEBTEDNESS.

    (a) In General.--Section 108(f)(1) of the Internal Revenue Code of 
1986 is amended by striking ``if such discharge'' and all that follows 
and inserting a period.
    (b) Student Loans.--Section 108(f)(2) of such Code is amended by 
striking ``made by--'' and all that follows and inserting the 
following: ``. Such term includes indebtedness used to refinance 
indebtedness which qualifies as a student loan under the preceding 
sentence.''.
    (c) Conforming Amendments.--Section 108(f) of such Code is amended 
by striking paragraphs (3) and (4).
    (d) Effective Date.--The amendments made by this section shall 
apply to discharges of indebtedness after the date of the enactment of 
this Act.

SEC. 202. 529 PLAN DISTRIBUTION FOR STUDENT LOAN PAYMENTS.

    (a) In General.--Section 529(e)(3)(A) is amended by striking clause 
(iii) and inserting the following new clause:
                            ``(iii) interest or principal paid with 
                        respect to a qualified education loan (as 
                        defined in section 221) with respect to a 
                        designated beneficiary.''.
    (b) Conforming Amendments.--
            (1) Section 529(e)(3)(A) of such Code is amended by 
        striking the second sentence.
            (2) Section 72(t)(7)(A) of such Code is amended by 
        inserting ``, determined without regard to subparagraph 
        (A)(iii) thereof'' after ``section 529(e)(3)''.
            (3) Section 530(b)(2)(A)(i) of such Code is amended by 
        inserting ``, determined without regard to subparagraph 
        (A)(iii) thereof'' after ``section 529(e)(3)''.
    (c) Effective Date.--The amendments made by this section shall 
apply to distributions made after the date of the enactment of this 
Act.

SEC. 203. INCLUSION OF PARENT PLUS LOANS IN REPAYMENT PROGRAMS.

    (a) Income Contingent Repayment Plan.--Section 455(d)(1)(D) of the 
Higher Education Act of 1965 (20 U.S.C. 1087e(d)(1)(D)) is amended by 
striking ``, except that the plan described in this subparagraph shall 
not be available to the borrower of a Federal Direct PLUS loan made on 
behalf of a dependent student;''.
    (b) Income-Based Repayment.--
            (1) Part b loans.--
                    (A) Repayment plans.--Section 428(b)(9)(A)(v) of 
                the Higher Education Act of 1965 (20 U.S.C. 
                1078(b)(9)(A)(v)) is amended by striking ``, except 
                that the plan described in this clause shall not be 
                available to a borrower for a loan under section 428B 
                made on behalf of a dependent student or for a 
                consolidation loan under section 428C, if the proceeds 
                of such loan were used to discharge the liability of a 
                loan under section 428B made on behalf of a dependent 
                student''.
                    (B) Consolidation loans.--Section 428C(c)(3) of 
                such Act (20 U.S.C. 1078-3(c)(3)) is amended--
                            (i) in subparagraph (A), by inserting 
                        ``and'' at the end;
                            (ii) in subparagraph (B), by striking 
                        ``and'' at the end and inserting a period; and
                            (iii) by striking subparagraph (C).
            (2) Part d loans.--Section 455(d)(1)(E) of such Act (20 
        U.S.C. 1087e(d)(1)(D)) is amended by striking ``, except that 
        the plan described in this subparagraph shall not be available 
        to the borrower of a Federal Direct PLUS Loan made on behalf of 
        a dependent student or a Federal Direct Consolidation Loan, if 
        the proceeds of such loan were used to discharge the liability 
        on such Federal Direct PLUS Loan or a loan under section 428B 
        made on behalf of a dependent student''.
            (3) IBR.--Section 493C of such Act (20 U.S.C. 1098e) is 
        amended--
                    (A) in subsection (a)--
                            (i) by striking ``this section'' and all 
                        that follows through ``hardship'' and inserting 
                        ``In this section, the term `partial financial 
                        hardship'''; and
                            (ii) by striking, ``(other than an excepted 
                        PLUS loan or excepted consolidation loan)'';
                    (B) in subsection (b)--
                            (i) in paragraph (1), by striking ``(other 
                        than an excepted PLUS loan or excepted 
                        consolidation loan)'';
                            (ii) in paragraph (6)(A), by striking 
                        ``(other than an excepted PLUS loan or excepted 
                        consolidation loan)''; and
                            (iii) in paragraph (7), by striking ``other 
                        than a loan under section 428B or a Federal 
                        Direct PLUS Loan''; and
                    (C) in subsection (c), by striking ``(other than an 
                excepted PLUS loan or excepted consolidation loan),''.
    (c) Loan Forgiveness for Service in Areas of National Need.--
Section 428K(a)(2) of such Act (20 U.S.C. 1078-11(a)(2)) is amended--
            (1) in subparagraph (A), by striking ``(other than an 
        excepted PLUS loan or an excepted consolidation loan (as such 
        terms are defined in section 493C(a)))''; and
            (2) in subparagraph (B), by striking ``(other than an 
        excepted PLUS loan or an excepted consolidation loan)''.
    (d) Other Repayment Plans.--Any plan for the repayment of loans 
made under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 
et seq.), which is finalized by the Secretary of Education on or after 
the date of enactment of this Act, shall include the repayment of a 
loan under section 428B of the Higher Education Act of 1965, or a 
Federal Direct PLUS Loan under part D of title IV of such Act, that is 
made, insured, or guaranteed on behalf of a dependent student.

SEC. 204. DETERMINATION OF ADVERSE CREDIT HISTORY.

    Section 428B(a) of the Higher Education Act of 1965 (20 U.S.C. 
1078-2(a)) is amended in paragraph (1)(A), by striking ``regulations 
promulgated by the Secretary'' and inserting ``section 685.200(c) of 
title 34, Code of Federal Regulations (as in effect on September 30, 
2011)''.

           TITLE III--BORROWERS' RIGHT TO A MEANINGFUL DEGREE

SEC. 301. PROHIBITION ON SUSPENSIONS OF PROFESSIONAL LICENSES FOR LOAN 
              DEFAULT.

    No evidence of an individual's default on the repayment of a loan 
made, insured, or guaranteed under title IV of the Higher Education Act 
of 1965 (20 U.S.C. 1070 et seq.) may be admitted into evidence in a 
Federal or State proceeding involving the individual's professional or 
vocational license.

SEC. 302. PROHIBITION ON LOSS OF ACCESS TO TRANSCRIPTS FOR LOAN 
              DEFAULT.

    Section 487(a) of the Higher Education Act of 1965 (20 U.S.C. 
1094(a)) (as amended by section 301) is further amended by adding at 
the end the following new paragraph:
            ``(30)(A) The institution will not prohibit a student from 
        accessing the student's transcripts, degree scrolls, or other 
        certifications of coursework or educational attainments at the 
        institution because the student is in default on the repayment 
        of a loan made, insured, or guaranteed under this title.
            ``(B) For purposes of this paragraph, the term `student' 
        includes former students.''.

TITLE IV--RIGHT TO EFFECTIVE LOAN CANCELLATION FOR BORROWERS ENGAGED IN 
                         PUBLIC SERVICE CAREERS

SEC. 401. EXTENSION OF LOAN CANCELLATION FOR BORROWERS EMPLOYED IN 
              PUBLIC SERVICE JOBS FOR 5 YEARS.

    Section 455(m) of the Higher Education Act of 1965 (20 U.S.C. 
1087e) is amended by adding at the end the following new paragraph:
            ``(5) Loan cancellation after 5 years.--The Secretary shall 
        also cancel 50 percent of the balance of interest and principal 
        due on any eligible Federal Direct Loan not in default for any 
        borrower employed in a public service job for 5 years during 
        the repayment of such loans--
                    ``(A) by applying paragraph (1)(A)--
                            ``(i) by substituting `60' for `120' each 
                        place it appears; and
                            ``(ii) by substituting `October 1, 2007' 
                        for `October 1, 2019'; and
                    ``(B) by applying paragraph (2), by substituting 
                `50 percent of the balance' with `the balance'.''.
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