Title: End Capitalization for Struggling Borrowers Act
Policy area: Education

Summary:
End Capitalization for Struggling Borrowers Act
This bill prohibits the capitalization of interest on a student loan balance after forbearance or certain deferment periods. Capitalization occurs when the interest accrued on a student loan during a period of deferment or forbearance is added to the principal amount of the loan at the expiration of such period.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4590 Introduced in House (IH)]

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116th CONGRESS
  1st Session
                                H. R. 4590

 To amend the Higher Education Act of 1965 to terminate capitalization 
      of interest after forbearance and certain deferment periods.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            October 1, 2019

 Mr. Danny K. Davis of Illinois (for himself, Mr. Casten of Illinois, 
 and Ms. Spanberger) 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 terminate capitalization 
      of interest after forbearance and certain deferment periods.

    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 ``End Capitalization for Struggling 
Borrowers Act''.

SEC. 2. TERMINATION OF CAPITALIZATION OF INTEREST AFTER DEFERMENT OR 
              FORBEARANCE.

    (a) Part B Amendments.--
            (1) Subsidized loans.--Section 428(c)(3)(C) of the Higher 
        Education Act of 1965 (20 U.S.C. 1078(c)(3)(C)) is amended--
                    (A) in clause (iii), by inserting before the 
                semicolon the following: ``, and with respect to a 
                forbearance granted to a borrower on or after the date 
                of enactment of the End Capitalization for Struggling 
                Borrowers Act on a loan made, insured or guaranteed 
                under this section or on a Federal Direct Stafford 
                Loan, provide information to the borrower to assist the 
                borrower in understanding that interest shall accrue on 
                the loan but not be capitalized at the expiration of 
                such period of forbearance''; and
                    (B) in clause (iv)--
                            (i) in subclause (III), by inserting before 
                        the semicolon at the end the following: ``, 
                        except that this subclause shall not apply with 
                        respect to any period of forbearance beginning 
                        on or after the date of enactment of the End 
                        Capitalization for Struggling Borrowers Act''; 
                        and
                            (ii) in subclause (IV), by inserting before 
                        the semicolon at the end the following: 
                        ``except that this subclause shall not apply 
                        with respect to any period of forbearance 
                        beginning on or after the date of enactment of 
                        the End Capitalization for Struggling Borrowers 
                        Act''.
            (2) Unsubsidized loans.--Section 428H(e)(2)(A)(ii)(III) of 
        the Higher Education Act of 1965 (20 U.S.C. 1078-
        8(e)(2)(A)(ii)(III)) is amended by inserting before the 
        semicolon the following: ``, except that with respect to a 
        deferment during a period described in clauses (ii) through 
        (iv) of section 427(a)(2)(C) or clauses (ii) through (v) of 
        section 428(b)(1)(M), or any period of forbearance beginning on 
        or after the date of enactment of the End Capitalization for 
        Struggling Borrowers Act, on a loan made, insured, or 
        guaranteed under this section or on a Federal Direct 
        Unsubsidized Stafford Loan, interest shall not be added to the 
        principal amount of the loan at the expiration of such 
        period''.
    (b) Part D Amendments.--Subparagraph (B) of section 455(f)(1) of 
the Higher Education Act of 1965 (20 U.S.C. 1087e(f)(1)) is amended to 
read as follows:
                    ``(B) in the case of a Federal Direct PLUS Loan, a 
                Federal Direct Unsubsidized Stafford Loan, or a Federal 
                Direct Consolidation Loan not described in subparagraph 
                (A)(ii)--
                            ``(i) for a deferment during a period 
                        described in paragraph (2)(A), shall accrue and 
                        be capitalized or paid by the borrower; and
                            ``(ii) for a deferment during a period 
                        described in subparagraphs (B) through (D) of 
                        paragraph (2), shall accrue but not be 
                        capitalized.''.
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