Title: Supporting America’s Young Entrepreneurs Act of 2019
Policy area: Education

Summary:
Supporting America's Young Entrepreneurs Act of 2019
This bill makes eligible for deferment and cancelation of student loan debt a recent graduate of a four-year institution of higher education (IHE) who works at certain small business start-ups in distressed areas.
Specifically, it makes a student loan borrower who is an employee and founder of a start-up eligible for deferment and cancellation of student loans. In addition, the bill makes a full-time employee of a start-up eligible for cancelation of student loan debt.
It also excludes from an individual's gross income, for income tax purposes, the amount of such canceled student loan debt.
Finally, it establishes a young entrepreneurs business center within the Small Business Administration to certify small business start-ups, identify distressed areas, and approve loan cancellations. To be certified by the center, a start-up must (1) have a founder who is a recent graduate of a four-year IHE, and (2) employ a certain number of recent graduates.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 231 Introduced in House (IH)]

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116th CONGRESS
  1st Session
                                H. R. 231

To amend the Higher Education Act of 1965 to provide loan deferment and 
 loan cancellation for founders and employees of small business start-
                      ups, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 3, 2019

 Ms. Velazquez (for herself and Mr. Serrano) introduced the following 
 bill; which was referred to the Committee on Education and Labor, and 
 in addition to the Committees on Ways and Means, and Small Business, 
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 amend the Higher Education Act of 1965 to provide loan deferment and 
 loan cancellation for founders and employees of small business start-
                      ups, 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 ``Supporting America's Young 
Entrepreneurs Act of 2019''.

SEC. 2. SMALL BUSINESS START-UP EMPLOYEE LOAN DEFERMENT AND 
              CANCELLATION.

    (a) Deferment.--Section 455(f) of the Higher Education Act of 1965 
(20 U.S.C. 1087e(f)) is amended--
            (1) in paragraph (1), by striking ``A borrower of a loan'' 
        and inserting ``Except as provided in paragraph (5), a borrower 
        of a loan''; and
            (2) by adding at the end the following:
            ``(5) No interest deferment eligibility for founders of 
        small business start-ups.--A borrower of a loan made under this 
        part shall be eligible for a deferment, during which periodic 
        installments of principal and interest need not be paid, during 
        any period not in excess of 3 years during which the borrower 
        is employed as a founder of a small business start-up (as 
        defined in subsection (r)(3)).''.
    (b) Loan Cancellation.--Section 455 of the Higher Education Act of 
1965 (20 U.S.C. 1087e) is amended by adding at the end the following:
    ``(r) Loan Cancellation for Certain Small Business Start-Up 
Employees.--
            ``(1) Founder of a small business start-up in a distressed 
        area.--
                    ``(A) In general.--The Secretary shall cancel 
                $20,000 of the balance of interest and principal due, 
                in accordance with subparagraph (B), on any eligible 
                Federal Direct Loan not in default for a borrower who--
                            ``(i) has made 24 monthly payments on the 
                        eligible Federal Direct Loan after the date of 
                        the enactment of this subsection pursuant to 
                        any one or a combination of payments under a 
                        repayment plan under subsection (d)(1) or (g);
                            ``(ii) has been employed as a founder of a 
                        small business start-up in a distressed area 
                        during the period in which the borrower makes 
                        each of the 24 payments;
                            ``(iii) is employed as a founder of a small 
                        business start-up in a distressed area at the 
                        time of such cancellation; and
                            ``(iv) is approved for loan cancellation by 
                        the young entrepreneurs business center under 
                        section 47 of the Small Business Act (16 U.S.C. 
                        631 et seq.).
                    ``(B) Loan cancellation amount.--
                            ``(i) In general.--After the conclusion of 
                        the employment period described in subparagraph 
                        (A), the Secretary shall cancel the obligation 
                        to repay $20,000 of the balance of interest and 
                        principal due as of the time of such 
                        cancellation, on the eligible Federal Direct 
                        Loans made to the borrower under this part.
                            ``(ii) Limitation.--A borrower may not 
                        receive an aggregate amount of more than 
                        $20,000 under this subparagraph.
                    ``(C) Ineligibility for double benefits.--No 
                borrower may, for the same service, receive a reduction 
                of loan obligations under both this paragraph and--
                            ``(i) paragraph (2);
                            ``(ii) subsection (m); or
                            ``(iii) section 428J, 428K, 428L, or 460.
            ``(2) Employee of a small business start-up.--
                    ``(A) In general.--The Secretary shall cancel 
                $3,000 of the balance of interest and principal due, in 
                accordance with subparagraph (B), on any eligible 
                Federal Direct Loan not in default for a borrower who--
                            ``(i) has made 12 monthly payments on the 
                        eligible Federal Direct Loan after the date of 
                        the enactment of this subsection pursuant to 
                        any one or a combination of payments under a 
                        repayment plan under subsection (d)(1) or (g);
                            ``(ii) has been employed in a small 
                        business start-up job during the period in 
                        which the borrower makes each of the 12 
                        payments; and
                            ``(iii) is employed in a small business 
                        start-up job at the time of such cancellation.
                    ``(B) Loan cancellation amount.--
                            ``(i) In general.--After the conclusion of 
                        the employment period described in subparagraph 
                        (A), the Secretary shall cancel the obligation 
                        to repay $3,000 of the balance of interest and 
                        principal due as of the time of such 
                        cancellation, on the eligible Federal Direct 
                        Loans made to the borrower under this part.
                            ``(ii) Limitation.--A borrower may not 
                        receive an aggregate amount of more than 
                        $15,000 under this subparagraph.
                    ``(C) Ineligibility for double benefits.--No 
                borrower may, for the same service, receive a reduction 
                of loan obligations under both this paragraph and--
                            ``(i) paragraph (1);
                            ``(ii) subsection (m); or
                            ``(iii) section 428J, 428K, 428L, or 460.
            ``(3) Definitions.--In this subsection:
                    ``(A) Distressed area.--The term `distressed area' 
                means an area identified under section 49 of the Small 
                Business Act.
                    ``(B) Eligible federal direct loan.--The term 
                `eligible Federal Direct Loan' means a Federal Direct 
                Stafford Loan, Federal Direct PLUS Loan, or Federal 
                Direct Unsubsidized Stafford Loan, or a Federal Direct 
                Consolidation Loan.
                    ``(C) Founder.--The term `founder' shall have the 
                meaning given such term by the Administrator of the 
                Small Business Administration under this paragraph.
                    ``(D) Small business start-up.--The term `small 
                business start-up' means a business that is certified 
                by the young entrepreneurs business center under 
                section 49 of the Small Business Act.
                    ``(E) Small business start-up job.--The term `small 
                business start-up job' means a full-time job as an 
                employee of a small business start-up.''.

SEC. 3. YOUNG ENTREPRENEURS BUSINESS CENTER.

    The Small Business Act (15 U.S.C. 631 et seq.) is amended--
            (1) by redesignating section 49 as section 50; and
            (2) by inserting after section 48 the following new 
        section:

``SEC. 49. YOUNG ENTREPRENEURS BUSINESS CENTER.

    ``(a) Establishment.--There is established within the 
Administration a young entrepreneurs business center that shall, for 
purposes of loan cancellation for start-up employees established under 
subsection (r) of section 455 of the Higher Education Act of 1965--
            ``(1) certify small business start-ups under subsection 
        (b);
            ``(2) identify distressed areas under subsection (c); and
            ``(3) approve loan cancellation for founders of small 
        business start-ups in distressed areas under subsection (d).
    ``(b) Certification.--
            ``(1) Application.--To be certified by the young 
        entrepreneurs business center, a small business start-up shall 
        submit an application to the Administrator that includes--
                    ``(A) a 5-year business plan for such small 
                business start-up; and
                    ``(B) the number of employees the small business 
                start-up intends to employ on a yearly basis.
            ``(2) Requirements.--The young entrepreneurs business 
        center may not certify a small business start-up unless such 
        small business start-up, on the date the application is 
        submitted under paragraph (1)--
                    ``(A) has a founder who is a recent graduate of a 
                4-year institution of higher education;
                    ``(B) is a start-up for which at least 50 percent 
                of the employees of the start-up are recent graduates 
                of such an institution.
    ``(c) Distressed Area.--
            ``(1) In general.--Not less than once every 3 years after 
        the date of the enactment of this section, the young 
        entrepreneurs business center shall identify and make 
        publically available on the website of the Administration a 
        list of distressed areas.
            ``(2) Requirements.--A distressed area identified under 
        paragraph (1) shall be a county or equivalent division of local 
        government of a State in which the small business concern is 
        located--
                    ``(A) that has, for the most recent 24-month period 
                for which statistics are available--
                            ``(i) a per capita income of 80 percent or 
                        less of the national average; or
                            ``(ii) an unemployment rate that is 1 
                        percent greater than the national average; and
                    ``(B) for which the young entrepreneurs business 
                center determines would economically benefit from 
                having small business start-ups established in such 
                area.
    ``(d) Loan Cancellation for Founders of a Small Business Start-Up 
in a Distressed Area.--For purposes of loan cancellation under 
subsection (r)(1) of section 455 of the Higher Education Act of 1965, 
the young entrepreneurs business center shall approve a founder of a 
small business start-up in a distressed area if such founder--
            ``(1) established a small business start-up that--
                    ``(A) on the date such small business start-up was 
                established, was located in a distressed area 
                identified by the young entrepreneurs business center 
                under subsection (c) not more than 3 years before such 
                date of establishment;
                    ``(B) was certified under subsection (b); and
                    ``(C) on the date of approval under this 
                subsection, has been operating continuously for not 
                less than 5 years; and
            ``(2) was employed as a founder of a small business start-
        up in a distressed area during the period in which such founder 
        made the 24 payments described in subsection (r)(1)(A) of such 
        section 455.
    ``(e) Definitions.--In this section:
            ``(1) Institution of higher education.--The term 
        `institution of higher education' has the meaning given such 
        term in section 102 of the Higher Education Act (20 U.S.C. 
        1002).
            ``(2) Small business start-up.--The term `small business 
        start-up' means a small business concern that--
                    ``(A) is not yet in existence; or
                    ``(B) has been in existence for not more than 3 
                years.''.

SEC. 4. TREATMENT OF LOAN CANCELLATION.

    (a) In General.--Section 108(f) of the Internal Revenue Code of 
1986 is amended by adding at the end the following new paragraph:
            ``(5) Cancellation of certain federal student loans.--In 
        the case of an individual, gross income shall not include the 
        discharge (in whole or in part) of any student loan pursuant to 
        the cancellation (in whole or in part) of such loan by the 
        Secretary of Education under subsection (r) of section 455 of 
        the Higher Education Act of 1965 (20 U.S.C. 1087e).''.
    (b) Effective Date.--The amendment made by this section shall apply 
to discharges of indebtedness occurring after the date of the enactment 
of this Act.
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