Title: State Workforce Incentive Act
Policy area: Education

Summary:
State Workforce Incentive Act
This bill establishes a state-directed program of loan repayment credits to replace the public service loan forgiveness program.
Specifically, the bill provides each state with an annual allotment of loan repayment credits, and it tasks states with determining the occupations for which a borrower shall be able to receive such credits (i.e., occupations that fill state-specific workforce and public service needs). Upon a determination that a borrower has met certain requirements, the Department of Education shall cancel an amount of the borrower's outstanding balance on their federal student loans that is equal to the amount of credits allocated to the borrower by their state under this program.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4851 Introduced in House (IH)]

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116th CONGRESS
  1st Session
                                H. R. 4851

    To amend the Higher Education Act of 1965 to carry out a State 
                      workforce incentive program.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            October 23, 2019

  Ms. Stefanik (for herself and Mr. Keller) introduced the following 
    bill; which was referred to the Committee on Education and Labor

_______________________________________________________________________

                                 A BILL


 
    To amend the Higher Education Act of 1965 to carry out a State 
                      workforce incentive program.

    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 ``State Workforce Incentive Act''.

SEC. 2. STATE WORKFORCE INCENTIVE PROGRAM.

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

``SEC. 493E. STATE WORKFORCE INCENTIVE PROGRAM.

    ``(a) Purpose.--The purpose of this section is to support the 
workforce in State-determined high-need or public-service occupations, 
and to encourage individuals to pursue and maintain employment in such 
occupations through annual incentive payments towards their eligible 
Federal loans.
    ``(b) Allotment and Allocations of Credits for Reducing Federal 
Loan Debt.--
            ``(1) In general.--From the amount appropriated under 
        subsection (e), the Secretary shall annually allot, in 
        accordance with paragraph (2), loan repayment credits to each 
        State with an approved State implementation plan, which may be 
        allocated to eligible borrowers in such State for the purpose 
        of reducing the amount owed on the eligible Federal loans of 
        such borrowers.
            ``(2) Allotment of loan repayment credits to states.--
                    ``(A) In general.--Each State with an approved 
                State implementation plan shall receive an allotment of 
                loan repayment credits on July 1 of each year, as 
                follows:
                            ``(i) 0.50 of the amount appropriated under 
                        subsection (e) shall be allotted on the basis 
                        of the relative population of the State, 
                        compared to the total population in all States 
                        with an approved State implementation plan.
                            ``(ii) 0.25 of the amount appropriated 
                        under subsection (e) shall be allotted on the 
                        basis of the relative amount of individuals in 
                        poverty in the State, compared to the total 
                        amount of individuals in poverty in all States 
                        with an approved State implementation plan.
                            ``(iii) 0.25 of the amount appropriated 
                        under subsection (e) shall be allotted on the 
                        basis of the relative excess number of 
                        individuals in poverty in the State, compared 
                        to total excess number of individuals in 
                        poverty in all States with an approved State 
                        implementation plan.
                    ``(B) Definitions.--For purposes of this paragraph:
                            ``(i) Individuals in poverty.--The term 
                        `individuals in poverty' means the number of 
                        individuals who are living below 100 percent of 
                        the poverty line.
                            ``(ii) Excess number.--The term `excess 
                        number', when used with respect to the excess 
                        number of individuals in poverty in a State, 
                        means the number that represents the number of 
                        individuals in poverty in the State in excess 
                        of 8 percent of the total number of individuals 
                        in the State for whom the poverty status is 
                        determined.
                    ``(C) Carryover of loan repayment credits.--Any 
                loan repayment credits allotted to a State and not 
                obligated to a borrower during the award year during 
                which such credits were allotted shall--
                            ``(i) be retained by the State during the 
                        period covered by the State plan; and
                            ``(ii) may be allocated by the State to a 
                        borrower at any point during such period.
            ``(3) Mandatory funds for fiscal year 2021.--For fiscal 
        year 2021, there shall be available to the Secretary, from 
        funds not otherwise appropriated, funds to be obligated to 
        States receiving an allotment under this section for 
        administrative costs under this section not to exceed 
        $50,000,000.
    ``(c) State Implementation Plan.--
            ``(1) In general.--To be eligible for an allotment of loan 
        repayment credits under this section, a State shall submit to 
        the Secretary a State implementation plan every 5 years.
            ``(2) Contents.--Each State implementation plan shall cover 
        a period of 5 award years and include the following:
                    ``(A) The State entity responsible for 
                administering the program under this section.
                    ``(B) A description of how the State will identify 
                the workforce and public service needs (as defined by 
                the State) to be addressed through the program, 
                including descriptions of how the State--
                            ``(i) will use State, regional, or local 
                        labor market data to determine workforce needs;
                            ``(ii) will consider particular occupations 
                        that support the economic development of rural 
                        and underserved communities (which may include 
                        farmers), as determined by the State;
                            ``(iii) will determine the occupations for 
                        which borrowers shall be eligible to receive 
                        loan repayment credits;
                            ``(iv) will determine the amount of loan 
                        repayment credits to be annually allocated to 
                        borrowers in each occupation determined under 
                        clause (iii); and
                            ``(v) will project the total amount of loan 
                        repayment credits to be awarded annually to 
                        borrowers eligible for such credits, and use 
                        this projection to ensure the State has been 
                        allotted sufficient loan repayment credits to 
                        meet the State's obligations under clauses 
                        (iii) and (iv).
                    ``(C) A description of how the State will 
                administer the program under this section, including 
                descriptions of--
                            ``(i) how the State will promote such 
                        program, and publicly announce to the general 
                        public in the State the list of eligible 
                        occupations and the annual amount of loan 
                        repayment credits to be awarded for such 
                        occupations during the period covered by the 
                        plan;
                            ``(ii) the borrower-friendly application 
                        process for borrowers to apply to the State for 
                        loan repayment credits;
                            ``(iii) the process the State will use to 
                        verify the State-determined eligibility factors 
                        of each applicant and how such application will 
                        be seamlessly submitted under subsection 
                        (d)(1)(C) to the Secretary for Federal 
                        verification of the State's determination of 
                        the amount of loan repayment credits to be 
                        allocated; and
                            ``(iv) how the State will determine if the 
                        State has sufficient loan repayment credits to 
                        add occupations to the list of eligible 
                        occupations or increase the amount of loan 
                        repayment credits to be awarded to borrowers in 
                        eligible occupations, and how the State will 
                        inform the general public in the State of such 
                        changes.
                    ``(D) An assurance that following the public 
                release of the State determined eligible occupations 
                and loan repayment credit amounts, such occupations and 
                credit amounts will not be reduced or become 
                unavailable for allocation to borrowers eligible for 
                such credits in the State for the period covered by the 
                plan.
                    ``(E) An assurance that the State will comply with 
                subsection (d)(2)(C) to use non-Federal funds to 
                provide the full State-determined amount of loan 
                repayment credits in accordance with such subsection.
                    ``(F) An assurance that no borrower will receive 
                more than $10,000 in loan repayment credits for an 
                award year.
            ``(3) Plan approval.--The Secretary shall approve a plan 
        submitted under this section that meets the requirements of 
        paragraph (2).
    ``(d) Borrower Application Process.--
            ``(1) State requirements.--Each State receiving an 
        allotment of loan repayment credits under this section shall--
                    ``(A) upon receipt of approval of the State's plan 
                under subsection (c)(3), carry out the announcement and 
                promotion requirements described in subsection 
                (c)(2)(C)(i);
                    ``(B) require each borrower seeking such credits to 
                submit an application to the State at such time, in 
                such manner, and containing such information as may be 
                required by such State; and
                    ``(C) upon State verification of eligibility of a 
                borrower for an allocation of loan repayment credits 
                (including employment in an eligible occupation and the 
                application requirements under subparagraph (B)), the 
                State shall submit to the Secretary--
                            ``(i) the application of the borrower; and
                            ``(ii) a determination of the number of 
                        such credits that should be allocated to the 
                        borrower.
            ``(2) Secretary approval.--
                    ``(A) Full amount.--
                            ``(i) In general.--Subject to subparagraphs 
                        (B) and (C), upon a determination that a 
                        borrower meets the requirements of clause (ii), 
                        the Secretary shall cancel an amount equal to 
                        the amount of credits allocated to the borrower 
                        under paragraph (1)(C)(ii) of the outstanding 
                        balance of principal or interest on the 
                        eligible Federal loans of such borrower.
                            ``(ii) Borrower requirements.--A borrower 
                        meets the requirements of this clause if the 
                        borrower--
                                    ``(I) has entered repayment on any 
                                eligible Federal loan and such loans 
                                are less than 90 days delinquent;
                                    ``(II) whose total number of loan 
                                repayment credits under this section 
                                has resulted in the cancellation of 
                                less than $50,000 on the borrower's 
                                eligible Federal loans; and
                                    ``(III) earned an adjusted gross 
                                income of less than $120,000 during the 
                                prior calendar year.
                    ``(B) Partial amount.--
                            ``(i) In general.--In the case of a 
                        borrower whose allocation amount under 
                        subparagraph (A) would result in the borrower 
                        receiving greater than a total of $50,000 in 
                        loan repayment credits under the program under 
                        this section, the Secretary shall cancel an 
                        amount described in clause (ii) of the 
                        outstanding balance on the eligible Federal 
                        loans of the borrower.
                            ``(ii) Amount.--The amount described in 
                        this clause is an amount that would result in 
                        the borrower receiving a total of $50,000 in 
                        loan cancellation under this section.
                    ``(C) Insufficient credits.--In the case of a State 
                that does not have a sufficient allotment of loan 
                repayment credits to allocate the number of credits to 
                a borrower in an amount determined under paragraph 
                (1)(C)(ii) for such borrower, the Secretary shall, with 
                respect to the outstanding balance of the borrower's 
                eligible Federal loans--
                            ``(i) cancel an amount equal to the amount 
                        of such credits that are remaining in the 
                        State's allotment; and
                            ``(ii) notify the State of its obligation 
                        to use non-Federal funds to cancel an amount 
                        equal to the difference between the allocation 
                        amount determined for the borrower and the 
                        amount cancelled under clause (i).
    ``(e) Funding.--There are authorized to be appropriated, and there 
are appropriated to carry out this section (in addition to any other 
amounts appropriated to carry out this section and out of any money in 
the Treasury not otherwise appropriated)--
            ``(1) for each of the first and second award years that 
        begin on or after the date of enactment of the State Workforce 
        Incentive Act, an amount equal to 0.01 of the loans made under 
        part D and first disbursed during the preceding award year;
            ``(2) for each of the third and fourth award years that 
        begin after the date of enactment of the State Workforce 
        Incentive Act, an amount equal to 0.02 of the loans made under 
        part D and first disbursed during the preceding award year;
            ``(3) for each of the fifth and sixth award years that 
        begin after the date of enactment of the State Workforce 
        Incentive Act, an amount equal to 0.03 of the loans made under 
        part D and first disbursed during the preceding award year; and
            ``(4) for the seventh award year that begins after the date 
        of enactment of the State Workforce Incentive Act and each 
        succeeding award year, an amount equal to 0.04 of the loans 
        made under part D and first disbursed during the preceding 
        award year.
    ``(f) Definitions.--In this section:
            ``(1) Loan repayment credit.--The term `loan repayment 
        credit' means a credit for the outstanding balance of principal 
        or interest on eligible Federal loans that shall be cancelled 
        on such loans, at the rate of 1 credit equals $1 of such 
        principal or interest.
            ``(2) Eligible federal loan.--The term `eligible Federal 
        loan' means a loan made under part D, other than--
                    ``(A) a Federal Direct PLUS Loan made on behalf of 
                a dependent student; or
                    ``(B) a Federal Consolidation Loan, if the proceeds 
                of such loan were used to discharge the liability on a 
                loan described in subparagraph (A).''.

SEC. 3. SUNSET OF PUBLIC SERVICE LOAN FORGIVENESS.

    Section 455(m) of the Higher Education Act of 1965 (20 U.S.C. 
1087e(m)) is amended by adding at the end the following:
            ``(5) Sunset.--The Secretary shall not have the authority 
        to cancel under this subsection the obligation to repay the 
        balance of principal and interest due on the eligible Federal 
        Direct Loans made under this part to a new borrower on or after 
        July 1, 2020.''.
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