II 117th CONGRESS 2d Session S. 3953 IN THE SENATE OF THE UNITED STATES March 30, 2022 Mr. Merkley (for himself, Ms. Hassan , Ms. Cortez Masto , Mr. Schatz , Mr. Wyden , Mr. Van Hollen , Ms. Baldwin , Mr. Blumenthal , Mr. Cardin , and Mr. Booker ) introduced the following bill; which was read twice and referred to the Committee on Health, Education, Labor, and Pensions A BILL To amend the Higher Education Act of 1965 in order to increase usage of the Federal student loan income-based repayment plan and improve repayment options for borrowers, and for other purposes.

1. Short title; table of contents (a) Short title This Act may be cited as the Affordable Loans for Any Student Act . (b) Table of contents The table of contents for this Act is as follows: Sec. 1. Short title; table of contents. Sec. 2. References in Act. TITLE I—Simplifying repayment plans Sec. 101. Income-based repayment plan. Sec. 102. Fixed repayment plan. Sec. 103. Termination of certain repayment plan options. Sec. 104. Providing incentives to switch into simplified repayment plans. Sec. 105. Study and procedures on determining family size. TITLE II—Ending interest capitalization and origination fees Sec. 201. Ending interest capitalization for Federal Direct Loans. Sec. 202. Elimination of origination fees for Federal Direct Loans. TITLE III—Providing assistance in situations of borrower distress Sec. 301. Limits on seizing income for debt. Sec. 302. Allowing for multiple loan rehabilitations. Sec. 303. Pause payment process. Sec. 304. Automatic enrollment into income-based repayment for borrowers who are delinquent on loans and for borrowers who rehabilitate defaulted loans. Sec. 305. Separating joint consolidation loans. Sec. 306. Removing the collection cost requirement. TITLE IV—Improving loan information and counseling Sec. 401. Student loan contract; simplifying loan disclosures. Sec. 402. Pre-loan information and counseling requirements. Sec. 403. Exit counseling. Sec. 404. Online counseling tools. Sec. 405. Private education loan certification and information. TITLE V—Effective date; transition; implementation Sec. 501. Effective date; rulemaking regarding termination of certain repayment termination of certain repayment plans; implementation. 2. References in Act Except as otherwise expressly provided in this Act, wherever an amendment or repeal is expressed in terms of an amendment to or repeal of a section or other provision, the reference shall be considered to be made to that section or other provision of the Higher Education Act of 1965 ( 20 U.S.C. 1001 et seq. ). I Simplifying repayment plans 101. Income-based repayment plan Section 493C ( 20 U.S.C. 1098e ) is amended to read as follows: 493C. Income-based repayment (a) Definitions In this section: (1) Excepted plus loan The term excepted PLUS loan means a loan under section 428B, or a Federal Direct PLUS Loan, that is made, insured, or guaranteed on behalf of a dependent student. (2) Excepted consolidation loan The term excepted consolidation loan means a consolidation loan under section 428C, or a Federal Direct Consolidation Loan, if the proceeds of such loan were used to the discharge the liability on an excepted PLUS loan. (3) Partial financial hardship The term partial financial hardship , when used with respect to a borrower, means that for such borrower— (A) the annual amount due on the total amount of loans made, insured, or guaranteed under part B or D (other than an excepted PLUS loan or excepted consolidation loan) to a borrower as calculated under the standard repayment plan under section 428(b)(9)(A)(i) or 455(d)(1)(A), based on a 10-year repayment period; exceeds (B) 15 percent of the result obtained by calculating, on at least an annual basis, the amount by which— (i) the borrower's, and the borrower's spouse's (if applicable), adjusted gross income; exceeds (ii) 150 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) ). (b) Income-Based repayment program for borrowers who enter income-Based repayment before July 1, 2022 Notwithstanding any other provision of this Act, the Secretary shall carry out a program under which— (1) a borrower of any loan made, insured, or guaranteed under part B or D (other than an excepted PLUS loan or excepted consolidation loan) who has a partial financial hardship (whether or not the borrower's loan has been submitted to a guaranty agency for default aversion or had been in default) may elect, during any period the borrower has the partial financial hardship, to have the borrower's aggregate monthly payment for all such loans not exceed the result described in subsection (a)(3)(B) divided by 12; (2) the holder of such a loan shall apply the borrower's monthly payment under this subsection first toward interest due on the loan, next toward any fees due on the loan, and then toward the principal of the loan; (3) any interest due and not paid under paragraph (2)— (A) shall, on subsidized loans, be paid by the Secretary for a period of not more than 3 years after the date of the borrower's election under paragraph (1); and (B) beginning on the effective date of the Affordable Loans for Any Student Act, for an eligible loan made, insured, or guaranteed under this title, shall not be capitalized and shall be added to the balance of interest due for the loan; (4) any principal due and not paid under paragraph (2) shall be deferred; (5) the amount of time the borrower makes monthly payments under paragraph (1) may exceed 10 years; (6) if the borrower no longer has a partial financial hardship or no longer wishes to continue the election under this subsection, then— (A) the maximum monthly payment required to be paid for all loans made to the borrower under part B or D (other than an excepted PLUS loan or excepted consolidation loan) shall not exceed the monthly amount calculated under section 428(b)(9)(A)(i) or 455(d)(1)(A), based on a 10-year repayment period, when the borrower first made the election described in this subsection; and (B) the amount of time the borrower is permitted to repay such loans may exceed 10 years; (7) the Secretary shall repay or cancel any outstanding balance of principal and interest due on all loans made under part B or D (other than a loan under section 428B or a Federal Direct PLUS Loan) to a borrower who— (A) at any time, elected to participate in income-based repayment under paragraph (1); and (B) for a period of time prescribed by the Secretary, not to exceed 25 years, meets 1 or more of the following requirements— (i) has made reduced monthly payments under paragraph (1) or paragraph (6); (ii) has made monthly payments of not less than the monthly amount calculated under section 428(b)(9)(A)(i) or 455(d)(1)(A), based on a 10-year repayment period, when the borrower first made the election described in this subsection; (iii) has made payments of not less than the payments required under a standard repayment plan under section 428(b)(9)(A)(i) or 455(d)(1)(A) with a repayment period of 10 years; (iv) has made payments under an income-contingent repayment plan under section 455(d)(1)(D); or (v) has been in deferment due to an economic hardship described in section 435(o); (8) a borrower who is repaying a loan made under part B or D pursuant to income-based repayment may elect, at any time, to terminate repayment pursuant to income-based repayment and repay such loan under the fixed repayment plan under section 493E; and (9) the special allowance payment to a lender calculated under section 438(b)(2)(I), when calculated for a loan in repayment under this section, shall be calculated on the principal balance of the loan and on any accrued interest unpaid by the borrower in accordance with this section. (c) Income-Based repayment program for borrowers who enter income-Based repayment on or after July 1, 2022 (1) In general Notwithstanding any other provision of this section, the provisions of this subsection shall apply— (A) with respect to any loan made, insured, or guaranteed under this title for which the borrower enters repayment on or after July 1, 2022, and for which the borrower elects the income-based repayment plan under this section; and (B) with respect to any loan made, insured, or guaranteed under this title for which the borrower enrolled in an income-based repayment plan before July 1, 2022, if such borrower elects to enter the income-based repayment plan under this subsection, in accordance with paragraph (3). (2) Special terms With respect to a loan described in paragraph (1), the following terms shall apply to the income-based repayment plan carried out under this section: (A) (i) Notwithstanding subsection (a)(3)(B), (b), or (e)— (I) the annual repayment amount under this subsection— (aa) with respect to a borrower whose (and whose spouse's, if applicable) adjusted gross income equals or exceeds 1,300 percent of the poverty line that is 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) ) shall be an amount equal to 10 percent of such adjusted gross income; (bb) with respect to a borrower whose (and whose spouse's, if applicable) adjusted gross income equals or exceeds 800 percent of the poverty line but is less than 1,300 percent of the poverty line that is 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) ) shall be equal to the amount determined under clause (ii)(I); (cc) with respect to a borrower whose (and whose spouse's, if applicable) adjusted gross income exceeds 250 percent of the poverty line but is less than 800 percent of the poverty line that is 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) ) shall be equal to the amount determined under clause (ii)(II); and (dd) with respect to a borrower whose (and whose spouse's, if applicable) adjusted gross income equals or is less than 250 percent of the poverty line that is 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) ) shall be an amount equal to 0 percent of such adjusted gross income; and (II) a borrower’s monthly payment shall be determined in accordance with subclause (I) divided by 12, which amount may exceed the monthly repayment amount under a standard 10-year repayment plan or a fixed repayment plan described in section 493E. (ii) (I) (aa) For purposes of clause (i)(I)(bb), the annual repayment amount for borrowers described in such clause shall be an amount equal to 10 percent of the result obtained by calculating, on at least an annual basis, the amount by which— (AA) the borrower's, and the borrower's spouse's (if applicable), adjusted gross income; exceeds (BB) the percent determined under item (bb) of the poverty line that is 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) ). (bb) The percent shall be determined under this item as follows: (AA) If the borrower's, and the borrower's spouse's (if applicable), adjusted gross income equals 800 percent of the poverty line that is 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) ), the percent shall be equal to 250 percent. (BB) If the borrower's, and the borrower's spouse's (if applicable), adjusted gross income exceeds 800 percent of the poverty line but is less than 1,300 percent of the poverty line that is 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) ), the percent shall be equal to 250 percent reduced by 0.5 percentage points for every 1 percentage point increase in the borrower's, and the borrower's spouse's (if applicable), adjusted gross income that is more than 800 percent. (II) For purposes of clause (i)(I)(cc), the annual repayment amount for borrowers described in such clause shall be an amount equal to 10 percent of the result obtained by calculating, on at least an annual basis, the amount by which— (aa) the borrower's, and the borrower's spouse's (if applicable), adjusted gross income; exceeds (bb) 250 percent of the poverty line that is 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) ). (B) Notwithstanding subsection (e)(2), subsection (b)(7)(B) shall be applied by substituting 20 years for 25 years . (C) Notwithstanding subparagraph (A) of subsection (b)(6), a borrower of such a loan shall not be required to have a partial financial hardship and may elect, and remain enrolled in, the income-based repayment plan under this section regardless of income level, with the repayment amount calculated under subparagraph (A). (D) Notwithstanding subsection (b), a borrower of an excepted PLUS loan or excepted consolidation loan may elect the income-based repayment plan under this subsection for the excepted PLUS loan or excepted consolidation loan, and the Secretary shall treat such loan, only for the purposes of the repayment terms, as a Federal Direct PLUS Loan issued to a student borrower. The Secretary may issue rules and regulations, as the Secretary determines necessary, regarding the treatment of excepted PLUS loans or excepted consolidation loans that are to be repaid under an income-based repayment plan under this subsection. (3) Rule for borrowers in income-based repayment before July 1, 2022 A borrower of a loan made, insured, or guaranteed under this title who enrolled in an income-based repayment plan before July 1, 2022, may choose to retain such repayment plan or elect to enter an income-based repayment plan under this subsection or a fixed repayment plan described in section 493E, as provided in section 428(b)(1)(D)(ii) or section 455(d)(7) (as applicable). (4) Interest accrual Notwithstanding any other provision of this Act, if a borrower’s monthly payment for a loan under an income-based repayment plan under this subsection is insufficient to pay the accrued interest on the borrower’s loan for such month, any interest due and not paid on the loan for that month shall be paid or forgiven by the Secretary. (5) Written, electronic, or verbal enrollment in income-based repayment (A) In general A borrower of a loan made under this part may elect to repay such loan under the income-based repayment plan under this subsection by providing written, electronic, or verbal notice to the Secretary of the borrower’s desire to make such election, subject to subparagraph (C). (B) Use of information (i) In general The estimated monthly payment amount under this section for a loan for a borrower who makes an election described in subparagraph (A) shall be immediately calculated using the income and family size information provided through the borrower’s written, electronic, or verbal statement. (ii) Verification The information described in clause (i) shall be verified by the Secretary not later than 90 days after the date the borrower states such income and family size information. If the Secretary is unable to verify the information by the end of the 90-day period, the borrower’s payment after such 90-day period will be the amount applicable under the fixed repayment plan under section 493E. (iii) Adjustment if necessary Upon verification by the Secretary under clause (ii), the Secretary shall adjust the estimated monthly payment described in clause (i) based on the verified income and family size information of the borrower, if necessary. Any adjusted monthly payment shall take effect beginning with the payment due not less than 60 days after the Secretary notifies the borrower of the adjusted amount. The Secretary shall consider any payments made prior to the adjusted monthly payment as having satisfied the amount due to qualify toward loan cancellation or forgiveness options under this title. (C) Limitation The Secretary shall permit a borrower to make an election of income-based repayment in the written, electronic, or verbal manner described in subparagraph (A) only in connection with the first instance of each of the following: (i) The borrower’s selection of a repayment plan during the grace period for such loan. (ii) The borrower changing from the fixed repayment plan under section 493E to income-based repayment. (iii) The borrower’s failure to complete the verification process described in subparagraph (B)(ii). (iv) The borrower’s failure to recertify enrollment in income-based repayment under this subsection. (d) Calculation of adjusted gross income for married borrowers The Secretary shall calculate the adjusted gross income of a married borrower under this section— (1) in the case of a married borrower and spouse who jointly file a Federal income tax return, based on the adjusted gross income of the borrower and spouse as reported on the Federal income tax return; and (2) in the case of a married borrower who files a Federal income tax return separately from the borrower’s spouse, based on the sum of the adjusted gross income of the borrower and the spouse, as reported on the applicable Federal income tax returns, unless the borrower certifies, on a form approved by the Secretary, that the borrower is— (A) separated from the borrower’s spouse; or (B) unable to reasonably access the income information of the borrower’s spouse. (e) Special terms for new borrowers on and after july 1, 2014 With respect to any loan made to a new borrower on or after July 1, 2014— (1) subsection (a)(3)(B) shall be applied by substituting 10 percent for 15 percent ; and (2) subsection (b)(7)(B) shall be applied by substituting 20 years for 25 years . (f) Eligibility determinations and automatic recertification (1) In general Beginning as soon as the Secretary determines practicable after the Secretary finalizes the procedures under section 105 of the Affordable Loans for Any Student Act, the Secretary shall establish and implement, with respect to any borrower described in paragraph (2), procedures to— (A) obtain (for each year of repayment and without further action by the borrower) such information as is reasonably necessary regarding the income of such borrower (and the borrower’s spouse, if applicable), for the purpose of determining the repayment obligation of the borrower for such year, including information with respect to the borrower’s family size in accordance with the procedures under such section 105, subject to subparagraph (B); (B) allow the borrower, at any time, to opt out of subparagraph (A) and prevent the Secretary from obtaining information under such subparagraph without further action by the borrower; (C) provide the borrower with an opportunity to update the information obtained under subparagraph (A) before the determination of the annual repayment obligation of the borrower; and (D) in the case of a borrower for whom adjusted gross income can be obtained under this subsection and meets the qualifications of a payment amount of $0, ensure that the borrower will not be required to provide the Secretary with other documentation of income and provide the borrower with a calculated monthly payment of $0. (2) Applicability (A) In general Paragraph (1) shall apply to each borrower of a loan made under this part who, on or after the date on which the Secretary establishes procedures under such paragraph— (i) selects, or for whom the Secretary selected under subparagraph (C) or (D) of paragraph (8), or paragraph (9), of subsection (d), or section 428(m)(1), an income-based repayment plan; or (ii) recertifies income and family size under such plan. (B) Eligibility exception A borrower for whom adjusted gross income is unavailable because the borrower has been granted an extension on filing the borrower’s income taxes or is undergoing an audit or examination by the Internal Revenue Service shall not automatically be eligible for the calculated monthly payment of $0 in accordance with paragraph (1)(D) during such period. When the extension, audit, or examination is completed, the Secretary shall resume consideration of the borrower for automatic recertification under the procedures described in paragraph (1), including subparagraph (D) of such paragraph (if applicable). (3) Availability of returns and return information Returns and return information (as defined in section 6103 of the Internal Revenue Code of 1986) may be obtained under paragraph (1)(A) only to the extent authorized by section 6103(l)(13) of such Code. . 102. Fixed repayment plan Part G of title IV ( 20 U.S.C. 1088 et seq. ) is amended by adding at the end the following: 493E. Fixed repayment plan (a) In general A borrower of a loan made under part D on or after July 1, 2022, and a borrower who is in repayment on a loan made, insured, or guaranteed under part B or D before July 1, 2022, may elect to repay such loan under the fixed repayment plan described in this section. (b) Fixed repayment plan Under the fixed repayment plan, a borrower shall repay each loan described in subsection (a) with a fixed monthly repayment amount paid over a period of 10 years, subject to subsection (c). (c) Special rules (1) Minimum If a borrower’s monthly payment under this section (except for the final payment on the loan) is less than $25, the Secretary shall establish the borrower’s monthly payment as $25. (2) Alternative minimum payments Notwithstanding paragraph (1), the Secretary may accept an alternative minimum payment amount, which may include an amount of less than $25, to account for a borrower’s exceptional circumstances. . 103. Termination of certain repayment plan options (a) FFEL program repayment plan options Section 428(b) ( 20 U.S.C. 1078(b) ) is amended— (1) in paragraph (1)— (A) in subparagraph (D)— (i) in clause (ii), by striking may annually change the selection of a repayment plan under this part, and inserting may at any time on or after July 1, 2022, change the selection of a repayment plan under this part or part G to one of the 2 repayment plans described in paragraph (9)(C), ; and (ii) in clause (iii), by inserting or, in the case of a default that occurs on or after July 1, 2022, be subject to income-based repayment in accordance with section 493C(c) before the semicolon at the end; (B) in subparagraph (E)(i), by striking the option of repaying the loan in accordance with a standard, graduated, income-sensitive, or extended repayment schedule (as described in paragraph (9)) established by the lender in accordance with regulations of the Secretary; and and inserting the option of repaying the loan in accordance with an applicable repayment plan described in paragraph (9)(C) ; and (C) by striking subparagraph (L); and (2) in paragraph (9)— (A) in subparagraph (A)— (i) in the subparagraph heading, by inserting before July 1, 2022 after Selection ; and (ii) in the matter preceding clause (i)— (I) by inserting or subparagraph (C), as applicable, after this subparagraph ; and (II) by striking The borrower and inserting Before July 1, 2022, the borrower ; (B) in subparagraph (B), by inserting before the period at the end or, for a borrower entering repayment on or after July 1, 2022, the lender shall provide the borrower with the fixed repayment plan described in section 493E ; and (C) by adding at the end the following: (C) Selection of repayment plans on and after July 1, 2022 Notwithstanding any other provision of law, and in accordance with regulations promulgated, beginning on July 1, 2022, a lender shall offer a borrower of a loan made, insured, or guaranteed under this part the opportunity to change repayment plans at any time on or after July 1, 2022, and then not more than once per calendar year thereafter. The borrower may choose between the following repayment plans: (i) A fixed repayment plan described in section 493E. (ii) The income-based repayment plan under section 493C(c). . (b) Federal direct loan program repayment plan options Section 455(d) ( 20 U.S.C. 1087e(d) ) is amended— (1) by redesignating paragraphs (2) through (5) as paragraphs (3) through (6), respectively; (2) in paragraph (1)— (A) in the paragraph heading, by inserting before July 1, 2022 after Selection ; and (B) in the matter preceding subparagraph (A), by inserting that enters repayment before July 1, 2022, before a variety ; (3) by inserting after paragraph (1) the following: (2) Design and selection beginning July 1, 2022 (A) In general Notwithstanding paragraph (1), for any borrower of a loan made under this part that enters repayment on or after July 1, 2022, and for any borrower subject to paragraph (7), the Secretary shall offer the borrower a choice between the following 2 plans for repayment of such loan, including principal and interest on the loan. The borrower may choose— (i) a fixed repayment plan described in section 493E; or (ii) an income-based repayment plan under section 493C(c). (B) Acceleration A borrower in repayment shall be entitled to accelerate, without penalty, repayment on the borrower’s loans under this part. (C) Selection by the secretary If a borrower of a loan made under this part that enters repayment on or after July 1, 2022, does not select a repayment plan described in subparagraph (A) before the first payment on such loan is due, the Secretary shall provide the borrower with a fixed repayment plan described in section 493E. (D) Changes in selections A borrower of a loan made under this part that enters repayment or on after July 1, 2022, may change the borrower’s selection of a repayment plan in accordance with subparagraphs (B) and (C) of paragraph (7). (E) Borrower in default Beginning on July 1, 2022, in lieu of the requirements of paragraph (6), the Secretary may require any borrower who has defaulted on a loan made under this part on or after July 1, 2022, to repay the loan pursuant to an income-based repayment plan under section 493C(c). ; and (4) by adding at the end the following: (7) Borrowers of loans made before July 1, 2022 A borrower who is in repayment on a loan made under this part before July 1, 2022— (A) may choose to retain the repayment plan that the borrower was enrolled in on the day before such date; (B) may elect to— (i) enter an income-based repayment plan under section 493C(c); (ii) enter a fixed repayment plan described in section 493E; or (iii) switch between the repayment plans described in clauses (i) and (ii); (C) after switching to a repayment plan described in clause (i) or (ii) of subparagraph (B), shall not be permitted to select a repayment plan not described in subparagraph (B) for the loan; and (D) shall retain, for purposes of repayment or cancellation of any outstanding balance of principal and interest due on a loan (as described in section 493C(b)(7)), any payments on such loan under another income-based or income contingent repayment plan under this title that would otherwise be qualifying. . (c) Conforming amendment Section 433(b)(7)(B) ( 20 U.S.C. 1083(b)(7)(B) ) is amended by striking on a standard repayment plan and inserting , in the case of a borrower who has not selected a repayment plan, on the repayment plan designated under subparagraph (B) of section 428(b)(9) . 104. Providing incentives to switch into simplified repayment plans (a) Enabling consolidation in order To simplify repayment Section 455(g) ( 20 U.S.C. 1087e(g) ) is amended— (1) by striking A borrower of and inserting the following: (1) In general A borrower of ; (2) by striking the second sentence; and (3) by adding at the end the following: (2) Eligibility To be eligible for a Federal Direct Consolidation Loan under this part, a borrower shall meet the eligibility criteria set forth in section 428C(a)(3), except that, notwithstanding section 428C(a)(3)(B), a borrower may obtain a Federal Direct Consolidation Loan if the borrower— (A) obtains the Federal Direct Consolidation Loan for the purpose of— (i) selecting the income-based repayment plan under section 493C(c) or fixed- income repayment plan under section 495E; or (ii) participating in the pause payment process under section 460B; and (B) meets the requirements of section 428C(a)(3)(A). . (b) Incentives for simplified repayment plans Part G of title IV ( 20 U.S.C. 1088 et seq. ), as amended by section 102, is further amended by adding at the end the following: 493F. Incentives for simplified repayment plans (a) In general To facilitate the transition of borrowers to simplified repayment plan options, the Secretary shall reduce the interest rate applicable under section 455(b) or 427A to a loan under part B or D held by a borrower as of July 1, 2022, by 100 basis points (or the equivalent), if the borrower of the loan, after the effective date of the Affordable Loans for Any Student Act— (1) changes from a repayment plan described in subparagraphs (A) through (E) of section 455(d)(1) for such loan to an income-based repayment plan under section 493C(c) or a fixed repayment plan under section 493E; or (2) consolidates 1 or more loans under this title, or described in section 428C(a)(4), that were under a repayment plan described in subparagraphs (A) through (E) of section 455(d)(1), or clauses (i) through (v) of section 428(b)(9), into a Federal Direct Consolidation Loan and selects an income-based repayment plan under section 493C(c) or a fixed repayment plan under section 493E for the loan. (b) Limitation The interest rate for a loan eligible for the incentive under subsection (a) may be reduced only once under this section. (c) Rules and waivers The Secretary shall promulgate rules carrying out the incentive program established under this section. In promulgating such rules, the Secretary may waive the application of— (1) subchapter I of chapter 35 of title 44, United States Code (commonly known as the Paperwork Reduction Act ); (2) the master calendar requirements under section 482; (3) negotiated rulemaking under section 492; and (4) the requirement to publish the notices related to the system of records of the agency before implementation required under paragraphs (4) and (11) of section 552a(e) of title 5, United States Code (commonly known as the Privacy Act of 1974 ), except that the notices shall be published not later than 180 days after the date of implementation of this Act. . 105. Study and procedures on determining family size (a) In general The Secretary of Education, acting jointly with the Secretary of the Treasury, shall— (1) not later than 1 year after the date of enactment of this Act, publish, in the Federal Register, notice of the Secretary’s intent to conduct a study on the effect of using data from the Internal Revenue Service such as personal exemptions, filing status, or child tax credits, as proxies for family size in an income-driven repayment plan, and invite public comment regarding the study; (2) after reviewing any public comments provided under paragraph (1), conduct the study and publish the results of the study in the Federal Register; (3) use the results of the study conducted under paragraph (1) to develop procedures for determining family size for the automatic recertification of income for an income-driven repayment plan in a manner that minimizes burdens and unintended harm to borrowers; (4) publish the procedures developed under paragraph (3) in the Federal Register; and (5) after a notice and comment period on such procedures, use such comments to finalize the procedures. (b) Specifications The study conducted under subsection (a) shall— (1) be completed, with the results published pursuant to subsection (a)(2), not later than 3 years after the date of enactment of this Act; (2) determine how closely personal exemptions, filing status, or child tax credits match the family size that borrowers report on their income-driven repayment plan request form; (3) compare the borrower’s actual monthly payment amount with the monthly payment amount borrowers would have using family size information derived from tax returns; (4) include data from tax year 2018 or later tax years; and (5) use data from more than one year, where possible, to analyze how much family size changes over time. (c) Definition The term income-driven repayment plan means any of the following authorized under the Higher Education Act of 1965 ( 20 U.S.C. 1001 et seq. ): (1) The income-contingent repayment plan. (2) The income-based repayment plan. (3) The PAYE repayment plan. (4) The REPAYE repayment plan. II Ending interest capitalization and origination fees 201. Ending interest capitalization for Federal Direct Loans Section 455 ( 20 U.S.C. 1087e ) is amended— (1) in subsection (b)— (A) in the subsection heading, by inserting and Practices after Rate ; and (B) by adding at the end the following: (11) Interest practices (A) In general Beginning on the effective date of the Affordable Loans for Any Student Act, interest on a loan made under this part shall accrue and only be added to the balance of interest due on the loan, and shall not ever be capitalized. (B) No capitalization of interest during in-school or grace periods (i) In general Beginning on the effective date of the Affordable Loans for Any Student Act, interest on loans made under this part for which payments of principal are not required during the in-school and grace periods or for which payments are deferred in accordance with sections 427(a)(2)(C) and 428(b)(1)(M) shall accrue and be added to the balance of interest due from the borrower when the loan enters repayment, but shall not ever be capitalized. (ii) Notice requirement The Secretary shall adjust any forbearance notice required in accordance with section 428(a)(3)(A)(iii) to reflect the availability of the pause payment process pursuant to section 460B and the treatment of interest under such section. (C) Limited retroactivity For a borrower of a loan made under this part on or before the effective date of the Affordable Loans for Any Student Act that is in a status, on the day before such effective date, that involves interest capitalization, such loan shall have capitalization pro-rated to the effective date of such Act, but shall not be subject to further capitalization after the effective date of such Act. ; and (2) in subsection (e)(5)— (A) by inserting “(which, beginning after the effective date of the Affordable Loans for Any Student Act, shall not be capitalized)” after accrued interest ; and (B) by striking the second sentence. 202. Elimination of origination fees for Federal Direct Loans (a) Repeal of origination fees Subsection (c) of section 455 ( 20 U.S.C. 1087e(c) ) is repealed. (b) Effective date The amendment made by subsection (a) shall apply with respect to loans made under part D of title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1087a et seq. ) for which the first disbursement of principal is made on or after July 1, 2022. III Providing assistance in situations of borrower distress 301. Limits on seizing income for debt Part D of title IV ( 20 U.S.C. 1087a et seq. ) is amended by adding at the end the following: 460A. Limits on seizing income for debt relating to Federal student loans (a) Definitions In this section— (1) the term adjusted gross income has the meaning given the term in section 62 of the Internal Revenue Code of 1986; and (2) the term poverty line means the poverty line (as defined by the Office of Management and Budget and revised annually in accordance with section 673(2) of the Community Services Block Grant Act ( 42 U.S.C. 9902(2) )) applicable to a family of the size involved. (b) Limitation on collection (1) In general Notwithstanding any other provision of law, any entity engaged in the collection of debts relating to loans made under this title may not take any action to cause, or seek to cause, the collection of such a debt that is taken from the wages, Federal benefits, or other amounts due to a borrower through garnishment, deduction, offset, or seizure in an amount on a monthly basis that is more than the amount described in paragraph (2). (2) Calculation The amount described in this paragraph is the amount obtained by calculating what the monthly repayment amount would be for loans made under this title, with respect to the borrower, under the income-based repayment plan under section 493C(c). (3) Presumption For purposes of this section, if an entity described in paragraph (1) is unable to determine the family size of a borrower after taking reasonable steps to collect the information necessary to do so, that person shall presume that the family size of the borrower is 1 individual. (c) Communications Any communication by an entity described in subsection (b)(1) that is for the purpose of seizing income of a consumer for debt that relates to a loan made under this title shall— (1) be considered— (A) an attempt to collect a debt; and (B) conduct in connection with the collection of a debt for the purposes of this title; and (2) contain a notice to the borrower that, consistent with the procedures for rehabilitating a loan pursuant to section 428F(a) or consolidating loans out of default as described in section 428C(a)(3)(B)(i)(V), the borrower may exit default and reenter current repayment status (as defined in section 428(l)(2)(C)) with a similar monthly payment amount on an income-based repayment plan under section 493C(c) and thereby obtain the full flexibility and benefits of such status, including the ability to adjust family size and make qualifying payments for purposes of repayment or cancellation of any outstanding balance of principal and interest due on a loan (as described in section 493C(b)(7)). (d) Remedies (1) First tier The Secretary may impose a civil penalty on an entity for a violation of this section not to exceed $5,000 for each day during which such violation continues. (2) Second tier Notwithstanding paragraph (1), the Secretary may impose a civil penalty on an entity that recklessly engages in a violation of this section not to exceed $25,000 for each day during which such violation continues. (3) Third tier Notwithstanding paragraphs (1) and (2), the Secretary may impose a civil penalty on an entity that knowingly violates this section not to exceed $1,000,000 for each day during which such violation continues. (4) No exemplary or punitive damages Nothing in this subsection shall be construed as authorizing the imposition of exemplary or punitive damages. (5) Entities subject to penalty An entity subject to a penalty under this subsection may include a contractor or agent of the Department. . 302. Allowing for multiple loan rehabilitations (a) FFEL loans Section 428F(a)(5) ( 20 U.S.C. 1078–6(a)(5) ) is amended by striking one time per loan and inserting 2 times per loan . (b) Direct loans Section 455(d) ( 20 U.S.C. 1087e(d) ), as amended by section 103, is further amended by adding at the end the following: (8) Loan rehabilitation In carrying out the process for loan rehabilitation described in section 428F(a)(5) with respect to loans made under this part and in accordance with subsection (a), the Secretary shall allow a borrower to obtain the benefits available under such section not more than 2 times per loan. . 303. Pause payment process (a) Establishment of pause payment process Part D of title IV ( 20 U.S.C. 1087a et seq. ), as amended by section 301, is further amended by adding at the end the following: 460B. Pause payment process (a) In general The Secretary shall establish a single, streamlined pause payment process available in a single application with respect to loans made under this part that replaces the deferment and forbearance options and their respective applications that are available to borrowers before the effective date of the Affordable Loans for Any Student Act and provides temporary relief from repayment of such loans in accordance with this section. (b) Application for relief Notwithstanding any other provision of this Act, a borrower of a loan made under this part that desires to receive temporary relief from repayment with respect to such loan shall request relief in accordance with the pause payment process established by the Secretary under subsection (a), which shall include the options to select a temporary cessation of payments and to make smaller payments than the monthly payments required under the borrower’s repayment plan. (c) Pause payment (1) In general A borrower of a loan made under this part who meets the requirements described in paragraph (2) shall be eligible for a pause payment, during which periodic installments of principal need not be paid, and interest— (A) shall not accrue, in the case of a— (i) Federal Direct Stafford Loan; or (ii) a Federal Direct Consolidation Loan that consolidated only Federal Direct Stafford Loans, or a combination of such loans and Federal Stafford Loans for which the student borrower received an interest subsidy under section 428; or (B) shall accrue and be added to the balance of interest due but not be capitalized, or be paid by the borrower, 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). (2) Eligibility A borrower of a loan made under this part shall be eligible for a pause payment during any period— (A) during which— (i) the borrower is carrying at least one-half the normal full-time work load for the course of study that the borrower is pursuing, as determined by the eligible institution (as such term is defined in section 435(a)) the student is attending; or (ii) in the case of a parent borrower, the borrower or the student on whose behalf the loan was borrowed is carrying at least one-half the normal full-time work load, in accordance with clause (i); (B) during which the borrower is pursuing a course of study pursuant to a graduate fellowship program approved by the Secretary; (C) during which the borrower is serving in a medical or dental internship or residency program; (D) during which the borrower is in a rehabilitation training program for individuals with disabilities approved by the Secretary; (E) during which the borrower— (i) is serving on active duty during a war or other military operation or national emergency and for the 180-day period following the demobilization date for the service; or (ii) qualifies for partial repayment of the borrower’s loans under a provision of chapter 109 or 1609 of title 10, United States Code; (F) during which the borrower is performing qualifying National Guard duty during a war or other military operation or national emergency and for the 180-day period following the demobilization date for the service; (G) during which the borrower is serving in— (i) an approved national service position (as defined in section 101 of the National and Community Service Act of 1990 ( 42 U.S.C. 12511 )) in an Americorps program (defined for purposes of this subparagraph as a program carried out under subtitle C or E of title I of the National and Community Service Act of 1990 ( 42 U.S.C. 12571 et seq. , 12611 et seq.) or title I of the Domestic Volunteer Service Act of 1973 ( 42 U.S.C. 4951 et seq. )); (ii) in the Peace Corps; or (iii) in a teaching position that would qualify for teacher loan forgiveness under section 428J or 460; (H) not in excess of a total period of 3 years of repayment of a loan during which the Secretary determines, in accordance with regulations prescribed under section 435(o), that the borrower has experienced or will experience an economic hardship, such as experiencing financial difficulties, having unexpected or significant medical expenses, or being unable to find full-time employment; (I) during which a borrower’s ability to make payments, as determined by the Secretary, has been adversely affected by— (i) any major disaster or emergency declared by the President under section 401 or 501, respectively, of the Robert T. Stafford Disaster Relief and Emergency 34 Assistance Act ( 42 U.S.C. 5170 , 5191); (ii) a local emergency, as declared by the appropriate government agency; or (iii) a military mobilization; (J) during which the borrower is awaiting a determination by the Secretary of the borrower’s request for a pause payment, change in repayment plan, loan forgiveness or cancellation, or consolidation loan; or (K) during which the borrower is experiencing other exceptional circumstances for which pause payment under this section is in the best interest of the borrower, as determined by the Secretary through regulation. . (b) Conforming amendments Section 455 ( 20 U.S.C. 1087e ) is amended— (1) in subsection (e)(7)(B)(i), by striking is in deferment and inserting is under pause payment pursuant to section 460B ; (2) by striking subsection (f) and inserting the following: (f) reserved ; and (3) in subsection (l)— (A) by striking Program.— and all that follows through Using funds and inserting the following: Program.—Using funds ; and (B) by striking paragraph (2). 304. Automatic enrollment into income-based repayment for borrowers who are delinquent on loans and for borrowers who rehabilitate defaulted loans (a) Notification and automatic enrollment procedures Section 455(d) ( 20 U.S.C. 1087e(d) ), as amended by sections 103 and 302, is further amended by adding at the end the following: (9) Notification and automatic enrollment procedures for borrowers who are delinquent on loans (A) Authority to obtain income information (i) In general In the case of any borrower who is at least 60 days delinquent on a loan made under this part, the Secretary may obtain such information as is reasonably necessary regarding the income and family size of the borrower (and the borrower’s spouse, if applicable). (ii) Availability of returns and return information Returns and return information (as defined in section 6103 of the Internal Revenue Code of may be obtained under this subparagraph only to the extent authorized by section 6103(l)(13) of such Code). (B) Borrower notification With respect to each borrower of a loan made under this part who is at least 60 days delinquent on such loan and who has not been subject to the procedures under this paragraph for such loan in the preceding 120 days, the Secretary shall, as soon as practicable after such 60-day delinquency, provide to the borrower the following: (i) Notification that the borrower is at least 60 days delinquent on at least 1 loan under this part, and a description of all delinquent loans under this part, and nondelinquent loans under this part, of the borrower. (ii) A brief description of the repayment plans for which the borrower is eligible and the borrower’s loans made under this part, and loans made, insured, or guaranteed under part B or E, that may be eligible for such plans, based on information available to the Secretary. (iii) Clear and simple instructions on how to select the repayment plans. (iv) The amount of monthly payments for the loans made under this part, and any loans made, insured, or guaranteed under part B or E, under the repayment plans for which the borrower is eligible, based on information available to the Secretary, including, if the income information of the borrower is available to the Secretary under subparagraph (A)— (I) the amount of the monthly payment under the income-based repayment plan under section 493C(c) for which the borrower is eligible for the borrower’s loans made under this part, based on such income information; and (II) the income, family size, tax filing status, and tax year information on which each the monthly payment is based. (v) An explanation that the Secretary shall take the actions under subparagraph (C) with respect to such borrower, if— (I) the borrower is 120 days delinquent on one or more loans under this part and has not selected a new repayment plan for the borrower’s loans under this part; and (II) in the case of such a borrower whose repayment plan for any loans made under this part is not an income-based repayment plan under section 493C(c), the monthly payments under such repayment plan are higher than such monthly payments would be under an income-based repayment plan for such loans. (vi) Instructions on updating the information of the borrower obtained under subparagraph (A). (C) Secretary’s initial selection of plan With respect to each borrower described in subparagraph (B) who has a repayment plan for loans made under this part that meets the requirements of clause (v)(II) of subparagraph (B), who has not selected a new repayment plan for such loans in accordance with the notice received under such subparagraph, and who is at least 120 days delinquent on such a loan, the Secretary shall, as soon as practicable— (i) in a case in which any of the borrower’s loans made under part B or E are eligible for an income-based repayment plan under section 493C(c), provide the borrower with the income-based repayment plan; and (ii) in a case in which none of the borrower’s loans made under part B or E are eligible for an income-based repayment plan under section 493C(c), notify the borrower of the actions, if any, the borrower may take for such loans to become eligible for such a plan. (D) Secretary’s additional selection of plan (i) In general With respect to each borrower of a loan made under this part who selects a new repayment plan in accordance with the notice received under subparagraph (B) and who continues to be delinquent on such loan for a period described in clause (ii), the Secretary shall, as soon as practicable after such period, carry out the procedures described in subparagraph (C) for the borrower’s loans made under this part, if such procedures would result in lower monthly repayment amounts on such loan. (ii) Description of period The duration of the period described in clause shall be the amount of time that the Secretary determines is sufficient to indicate that the borrower may benefit from repaying such loan under a new repayment plan, but in no case shall such period be less than 60 days. (E) Opt-out A borrower of a loan made under this part shall have the right to opt out of the procedures under this paragraph. (F) Procedures The Secretary shall establish procedures as are necessary to effectively implement this paragraph. (10) Notification and automatic enrollment procedures for borrowers who are rehabilitating defaulted loans (A) Authority to obtain income information (i) In general In the case of any borrower who is rehabilitating a loan made under this part pursuant to section 428F(a), the Secretary may obtain such information as is reasonably necessary regarding the income and family size of the borrower (and the borrower’s spouse, if applicable). (ii) Availability of returns and return information Returns and return information (as defined in section 6103 of the Internal Revenue Code of may be obtained under this subparagraph only to the extent authorized by section 6103(l)(13) of such Code). (B) Borrower notification Not later than 30 days after a borrower makes the 6th payment required for the loan rehabilitation described in subparagraph (A), the Secretary shall notify the borrower of the process under subparagraph (C) with respect to such loan. (C) Secretary’s automatic enrollment With respect to each borrower who has made the 9th payment required for the loan rehabilitation described in subparagraph (A) and is eligible for the income-based repayment plan under section 493C(c), the Secretary shall, as soon as practicable after such payment, provide the borrower with the income-based repayment plan. (D) Opt-out A borrower of a loan made under this part shall have the right to opt out of the procedures for enrollment in an income-based repayment plan under this paragraph. (E) Procedures The Secretary shall establish procedures as are necessary to effectively implement this paragraph. . (b) Effective date The amendments made by subsection (a) shall— (1) take effect as soon as the Secretary of Education determines practicable after the Secretary finalizes the procedures under section 105; and (2) apply to all borrowers of loans made under part D of title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1087a et seq. ). 305. Separating joint consolidation loans (a) In general Section 455(g) ( 20 U.S.C. 1087e(g) ), as amended by section 104, is further amended by adding at the end the following: (3) Separating joint consolidation loans (A) In general A married couple, or 2 individuals who were previously a married couple, and who received a joint consolidation loan as such married couple under subparagraph (C) of section 428C(a)(3) (as such subparagraph was in effect on or before June 30, 2006), may apply to the Secretary for each individual borrower in the married couple (or previously married couple) to receive a separate Federal Direct Consolidation Loan under this part— (i) that shall— (I) unless the Secretary receives notice of an agreement described in subclause (II)(aa), be equal to the sum of— (aa) the unpaid principal and accrued unpaid interest of the percentage of the joint consolidation loan that, as of the day before such joint consolidation loan was made, was attributable to the loans of the individual borrower for whom such separate consolidation loan is being made; and (bb) any other loans described in section 428C(a)(4) that such individual borrower selects for consolidation under this part; or (II) be equal to the sum of— (aa) the unpaid principal and accrued unpaid interest of the percentage of the joint consolidation loan that, as of the date of application under this paragraph, the married couple (or previously married couple) agrees shall be considered attributable to the loans of the individual borrower for whom such separate consolidation loan is being made; and (bb) any other loans described in section 428C(a)(4) that such individual borrower selects for consolidation under this part; (ii) the proceeds of which shall be paid by the Secretary to the holder or holders— (I) of the joint consolidation loan for the purpose of discharging the liability on the percentage of such joint consolidation loan described in subclause (I)(aa) or (II)(aa) of clause (i); and (II) of the loans selected for consolidation under subclause (I)(bb) or of clause (i) for the purpose of discharging the liability on such loans; (iii) except as otherwise provided in this paragraph, that has the same terms and conditions, and rate of interest as the joint consolidation loan, except if other loans are included in such Federal Direct Consolidation Loan after the date the Federal Direct Consolidation Loan is first made under this paragraph; (iv) for which any payment made under subsection (m)(1)(A) on the joint consolidation loan during a period in which the individual borrower for whom such separate consolidation loan is being made was employed in a public service job described in subsection (m)(1)(B) shall be treated as if such payment were made on such separate consolidation loan; and (v) for which any payment made under an income contingent repayment plan under subsection (d)(1)(D), or an income-based repayment plan under paragraph (1)(E) or (2)(A)(ii) of subsection (d), on the joint consolidation loan shall be treated as if such payment were made on such separate consolidation loan. (B) Application for separate direct consolidation loans (i) Joint application Except as provided in clause (ii), to receive separate consolidation loans under subparagraph (A), both individual borrowers in a married couple (or previously married couple) shall jointly apply under such subparagraph. (ii) Separate application An individual borrower in a married couple (or previously married couple) may apply for a separate consolidation loan under subparagraph (A) separately and without regard to whether or when the other individual borrower in the married couple (or previously married couple) applies under such subparagraph, and shall be relieved of any remaining liability for the joint consolidation loan, in a case in which— (I) the individual borrower has experienced from the other individual borrower— (aa) domestic violence (as defined in section 40002(a) of the Violence Against Women Act of 1994 ( 34 U.S.C. 12291(a) )); (bb) economic abuse (including behaviors that control such borrower’s ability to acquire, use, and maintain access to money, credit, or the joint financial obligations of both borrowers); or (cc) other exceptional circumstances, as determined by the Secretary; and (II) the Secretary determines that authorizing each individual borrower to apply separately under subparagraph (A) would be in the best fiscal interests of the Federal Government, including by reducing the risk of delinquency or default. (C) Borrower eligibility Notwithstanding section 428C(a)(3)(A), the Secretary shall provide a consolidation loan under this part to each borrower who— (i) applies for such loan under subparagraph (A); and (ii) meets the requirements of subparagraphs (A) and (B). . (b) Conforming amendment Section 428C(a)(3)(B)(i)(V) ( 20 U.S.C. 1078–3(3)(B)(i)(V) ) is amended— (1) by striking or at the end of item (bb); (2) by striking the period at the end of item (cc) and inserting ; or ; and (3) by adding at the end the following: (dd) for the purpose of separating a joint consolidation loan into 2 separate Federal Direct Consolidation Loans under section 455(g)(3). . 306. Removing the collection cost requirement (a) Removal of requirement Section 484A(b)(1) ( 20 U.S.C. 1091a(b)(1) ) is amended by striking shall be required to pay, in addition to other charges specified in this title, reasonable collection costs and inserting shall not be required to pay collection costs . (b) Repayment after default Section 455(d)(6) ( 20 U.S.C. 1087e(d)(6) ), as redesignated under section 103(b), is amended by striking to— and all that follows through the period at the end and inserting to repay the loan pursuant to an income-based repayment plan under section 493C(c). . IV Improving loan information and counseling 401. Student loan contract; simplifying loan disclosures (a) Student loan contract Section 455 ( 20 U.S.C. 1087e ), as amended by section 202, is further amended by inserting after subsection (b) the following: (c) Student loan contract; simplifying loan disclosures (1) Student loan contract (A) In general Any master promissory note form described in section 432(m)(1)(D) that is developed or used for covered loans shall be referred to as a student loan contract . (B) Clarification on use Notwithstanding section 432(m)(1)(D)(i), each student loan contract for a covered loan shall— (i) not be entered into by a student unless the student has completed all required counseling related to such loan, including counseling required under section 485(l); (ii) be signed by the student entering such student loan contract after completion of such counseling; (iii) be signed by the student during the first award year of such student’s enrollment at an institution; (iv) be valid for each award year after the award year described in clause (iii) in which the student remains enrolled at the same institution; and (v) include options for the student to enter both the student’s current contact information and permanent contact information that is likely to remain valid upon the student’s exit from the institution. (C) Covered loan (i) In general In this subsection, the term covered loan means a loan made under this part on or after the effective date of the Affordable Loans for Any Student Act, except with respect to a borrower described in clause (ii). (ii) Exception A borrower is described in this clause if the loan made under this part on or after the effective date of the Affordable Loans for Any Student Act with respect to such borrower is for the award year during which the Affordable Loans for Any Student Act is enacted and the borrower has already taken out a loan under this part (other than a Federal Direct Consolidation Loan) for such award year (including any such loan for attendance at another institution from which the student transferred or in which the student had previously enrolled). (2) Loan disclosures For loans made under this part for periods of enrollment beginning on or after the effective date of the Affordable Loans for Any Student Act, the Secretary shall take such steps as are necessary to streamline the student loan disclosure requirements under this Act. The Secretary shall ensure that information required to be disclosed to a student who is applying for, receiving, or preparing to repay a loan under this part shall be consumer-tested and delivered in a manner that— (A) reduces and simplifies the paperwork students are required to complete; (B) limits the number of times a student is presented with disclosures by incorporating the streamlined disclosures into required student loan counseling under section 485(l), the student loan contract under this subsection, or both; and (C) is effective in helping the student understand the student’s rights and obligations as a Federal student loan borrower. (3) Loan acceptance Prior to making the first disbursement of a covered loan (other than a Federal Direct Consolidation Loan) to a borrower, the eligible institution shall ensure that the borrower— (A) has completed the applicable counseling under paragraph (2) or (3) of section 485(l); and (B) after completing such counseling, accepts the loan by— (i) signing and returning to the institution the student loan contract described in section 455(c)(1) that affirmatively states that the borrower accepts the loan; or (ii) electronically signing an electronic version of such student loan contract, which may be done through the online counseling tool in accordance with section 485(n)(1)(B). . (b) Conforming amendment Section 487(a)(7) ( 20 U.S.C. 1094(a)(7) ) is amended by striking section 485 and inserting sections 455(c)(3) and 485 . 402. Pre-loan information and counseling requirements Section 485(l) ( 20 U.S.C. 1092(l) ) is amended to read as follows: (l) Student loan entrance counseling (1) Student loan entrance counseling requirement for institutions (A) In general Each eligible institution shall ensure that, prior to the date of the disbursement of a loan for a period of enrollment at such institution, each individual for whom the institution has knowledge that the individual has accepted, or will accept, 1 or more student loans under part D (including any such loans for attendance at another institution from which the student transferred or in which the student had previously enrolled, other than a Federal Direct Consolidation Loan) for such period of enrollment, receives comprehensive information on the terms and conditions of such loans and the responsibilities the individual has with respect to such loans. Such information shall be provided in a simple, understandable, and consumer-friendly manner during a counseling session conducted— (i) in person; (ii) online, with the individual acknowledging receipt of the information; or (iii) through the use of the online counseling tool described in subsection (n)(1)(B). (B) Use of interactive programs In the case of institutions not using the online counseling tool described in subsection (n)(1)(B), the Secretary shall require such institutions to carry out the requirements of subparagraph (A) through the use of interactive programs, during a counseling session that is in-person or online, that test the individual’s understanding of the terms and conditions of the loan awarded to the individual, using simple and understandable language and clear formatting. (2) Loan counseling for borrowers receiving loans made under part d (other than parent plus loans) The information to be provided under paragraph (1)(A) to a borrower of a loan made under part D (other than a Federal Direct PLUS Loan made on behalf of a dependent student) shall include the following: (A) A notification that some students may qualify for other financial aid that does not need to be repaid, and an explanation that the borrower should consider accepting any such grant, scholarship, military tuition assistance, veterans benefits, Federal or State work-study, or other programs for which the borrower is eligible, prior to accepting student loans. (B) An explanation of the use of the student loan contract referred to in section 455(c). (C) A recommendation to the borrower to exhaust the borrower’s Federal student loan options prior to taking out private education loans, an explanation that Federal student loans typically offer better terms and conditions than private education loans, an explanation that Federal student loans offer consumer protections typically not available in the private education loan market, an explanation of treatment of loans made under part D and private education loans in bankruptcy, and an explanation that if a borrower decides to take out a private education loan— (i) the borrower has the ability to select a private educational lender of the borrower’s choice; (ii) the proposed private education loan may impact the borrower’s potential eligibility for other financial assistance, including Federal financial assistance under this title; and (iii) the borrower has a right— (I) to accept the terms of the private education loan within 30 calendar days following the date on which the application for such loan is approved and the borrower receives the required disclosure documents, pursuant to section 128(e) of the Truth in Lending Act ( 15 U.S.C. 1638(e) ); and (II) to cancel such loan within 3 business days of the date on which the loan is consummated, pursuant to section 128(e)(7) of such Act ( 15 U.S.C. 1638(e)(7) ). (D) An explanation of the importance of contacting the appropriate offices at the institution of higher education if the student withdraws prior to completing a program of study so that the institution can provide exit counseling, including information regarding the borrower’s repayment options and loan consolidation. (E) A general description of the terms and conditions under which the student may obtain forgiveness or cancellation of any principal and interest of a loan issued under this title. (F) Information as to how the borrower can access their loan records and the contact information for inquiries regarding repaying the loan. (G) The contact information for the financial aid office, or other appropriate office, at the institution that the borrower may contact if the borrower has any questions about the borrower’s rights and responsibilities or the terms and conditions of the loan. (H) An explanation that the borrower has the right to annually request a copy of the credit report of the borrower from a consumer reporting agency pursuant to section 612(a) of the Fair Credit Reporting Act ( 15 U.S.C. 1681j(a) ). (I) An explanation that— (i) the borrower may be contacted during the repayment period by a third-party student debt relief company; (ii) the borrower should use caution when dealing with such a company; and (iii) the services that such a company typically provides are offered to borrowers free of charge through the Department or the borrower's servicer. (3) Borrowers receiving parent plus loans for dependent students The information to be provided under paragraph (1)(A) to a borrower of a Federal Direct PLUS Loan made on behalf of a dependent student shall include the following: (A) A notification that some students may qualify for other financial aid and an explanation that the student for whom the borrower is taking out the loan should consider accepting any such grant, scholarship, military tuition assistance, veterans benefits, Federal or State work-study jobs, or other programs for which the student for whom the borrower is taking out the loan is eligible, prior to borrowing any Federal Direct PLUS Loan on behalf of a dependent student. (B) The information described in subparagraphs (B) through (I) of paragraph (2), as applicable. (C) The circumstances under which a borrower of a Federal Direct PLUS Loan made on behalf of a dependent student may transfer such loan to the student for whom the loan was taken out. . 403. Exit counseling Section 485(b) ( 20 U.S.C. 1092(b) ) is amended to read as follows: (b) Student loan exit counseling (1) In general (A) Counseling included Each eligible institution shall provide counseling to borrowers of loans made under part D (including any such loans for attendance at another institution from which the student transferred or in which the student had previously enrolled, other than a Federal Direct Consolidation Loan) prior to the completion of the course of study for which the borrower enrolled at the institution or at the time of departure from such institution. The counseling required by this subsection shall be provided through the use of an interactive program, during an exit counseling session that is in-person or online, or through the use of the online counseling tool described in subsection (n)(1)(A), and shall include— (i) an explanation of the grace period preceding repayment and the expected date that the borrower will enter repayment; (ii) an explanation that the borrower has the option to pay any interest that has accrued while the borrower was in school or that may accrue during the grace period preceding repayment or during an authorized period of pause payment; (iii) the outstanding balance of principal and interest owed by the borrower at the time of such counseling on loans made, insured, or guaranteed to the borrower under this title; (iv) information on the repayment plans available, including a description of the different features of each plan and sample information showing the average anticipated monthly payments, and the difference in interest paid and total payments, under each plan; (v) a description of the borrower’s options for pause payment under section 460B; (vi) a description of the Federal tax benefits that may be available for repaying loans made under this title; (vii) a description of the terms and conditions under which the student may obtain forgiveness or cancellation of any principal and interest of a loan made under this title; (viii) an explanation that the borrower has the option to prepay each loan, pay each loan on a shorter schedule, and change repayment plans; (ix) the implications of, and options to get out of, default on a loan; (x) information as to how the student borrower can access their loan records; (xi) an explanation that— (I) the borrower may be contacted during the repayment period by a third-party student debt relief company; (II) the borrower should use caution when dealing with such a company; and (III) the services that such a company typically provides are offered to borrowers free of charge through the Department or the borrower’s servicer; and (xii) an explanation that the borrower has the right to annually request a copy of the credit report of the borrower from a consumer reporting agency pursuant to section 612(a) of the Fair Credit Reporting Act ( 15 U.S.C. 1681j(a) ). (B) Students leaving without prior notice to the institution In the case of borrower who leaves an institution without the prior knowledge of the institution, the institution shall attempt to provide the information described in subparagraph (A) to the borrower in online or in writing, except that in the case of an institution using the online counseling tool described in subsection (n)(1)(A), the Secretary shall attempt to provide such information to the borrower in the manner described in subsection (n)(3)(C). (2) Information to be submitted by borrower (A) In general Each eligible institution shall require that the borrower of a loan made under part D submit to the institution, during the exit counseling required by this subsection— (i) the borrower’s expected permanent address after leaving the institution; (ii) the borrower’s most recent contact information; and (iii) any corrections in the institution’s records relating the borrower’s name, social security number, and driver’s license number, as applicable. (B) Information to be provided to the secretary Each eligible institution shall, not later than 60 days after the date of collection of the information described in subparagraph (A), forward the information received from the borrower to the Secretary. (C) Rule of construction Nothing in this subsection shall be construed to prohibit an institution of higher education from utilizing electronic means to provide personalized exit counseling. . 404. Online counseling tools Section 485 ( 20 U.S.C. 1092 ), as amended by this Act, is further amended by adding at the end the following: (n) Online counseling tools (1) In general Beginning not later than 1 year after the date of enactment of the Affordable Loans for Any Student Act, the Secretary shall maintain— (A) an online counseling tool that provides the exit counseling required under subsection (b) and meets the applicable requirements of this subsection; and (B) an online counseling tool that provides the counseling required under subsection (l), enables a borrower to electronically sign and accept the borrower’s student loan contract, and meets the applicable requirements of this subsection. (2) Requirements of tools In maintaining the online counseling tools described in paragraph (1), the Secretary shall ensure that each such tool, and its underlying content— (A) are consumer tested, in consultation with other relevant Federal agencies, students, borrowers, institutions of higher education, secondary school and postsecondary counselors, and consumer advocacy organizations, to ensure that the tool is effective in helping individuals understand their rights and obligations with respect to borrowing a loan made under part D; (B) are understandable to borrowers of loans made under part D; (C) are freely available to all eligible institutions; and (D) integrate applicable loan data from the National Student Loan Data System or a successor system, including data regarding loans made, insured, or guaranteed under this title and data regarding private education loans, pursuant to section 485B(i). (3) Record of counseling completion The Secretary shall— (A) use each online counseling tool described in paragraph (1) to— (i) keep a record of which individuals have received counseling using the tool; and (ii) notify the applicable institutions of the individual’s completion of such counseling; (B) in the case of a borrower who receives counseling for a loan made under part D using the tool described in paragraph (1)(B)— (i) enable the borrower to accept and electronically sign the student loan contract as required under section 455(c)(3)(B)(ii), and notify the applicable institutions that the individual completed the counseling and electronically signed the contract; and (ii) if the borrower chooses not to sign the student loan contract through the online counseling tool— (I) inform the borrower, through the online counseling tool, of the date by when the borrower should accept and sign the student loan contract for which the borrower has received such counseling; and (II) notify the applicable institution that the borrower completed the counseling but did not sign the student loan contract; and (C) in the case of a borrower described in subsection (b)(1)(B) at an institution that uses the online counseling tool described in paragraph (1)(A) of this subsection, attempt to provide the information described in subsection (b)(1)(A) to the borrower through such tool. . 405. Private education loan certification and information (a) Amendments to the higher education act of 1965 (1) In general Section 487(a) ( 20 U.S.C. 1094(a) ) is amended by striking paragraph (28) and inserting the following: (28) (A) The institution shall— (i) upon the request of a private educational lender, acting in connection with an application initiated by a borrower for a private education loan in accordance with section 128(e)(3) of the Truth in Lending Act, provide certification to such private educational lender— (I) that the student who initiated the application for the private education loan, or on whose behalf the application was initiated, is enrolled or is scheduled to enroll at the institution; (II) of such student’s cost of attendance at the institution as determined under part F; and (III) of the difference between— (aa) the cost of attendance at the institution; and (bb) the student’s estimated financial assistance received under this title and other assistance known to the institution, as applicable; and (ii) provide the certification described in clause (i), or notify the private educational lender that the institution has received the request for certification and will need additional time to comply with the certification request— (I) within 15 business days of receipt of such certification request; and (II) only after the institution has completed the activities described in subparagraph (B). (B) The institution shall, upon receipt of a certification request described in subparagraph (A)(i), and prior to providing such certification— (i) determine whether the student who initiated the application for the private education loan, or on whose behalf the application was initiated, has applied for and exhausted the Federal financial assistance available to such student under this title and inform the student accordingly; and (ii) provide the borrower whose loan application has prompted the certification request by a private education lender, as described in subparagraph (A)(i), with the following information and disclosures: (I) If the borrower has not yet exhausted the financial assistance available to the borrower under this title, the amount of additional Federal student assistance for which the borrower is eligible and the potential advantages of Federal loans under this title, including disclosure of— (aa) the fixed interest rates and pause payment processes; (bb) the option for and terms of income-based repayment, loan forgiveness programs, and additional protections; and (cc) the higher student loan limits for dependent students whose parents are not eligible for a Federal Direct PLUS Loan. (II) The borrower’s ability to select a private educational lender of the borrower’s choice. (III) The impact of a proposed private education loan on the borrower’s potential eligibility for other financial assistance, including Federal financial assistance under this title. (IV) The borrower’s right to accept or reject a private education loan within the 30-day period following a private educational lender’s approval of a borrower’s application, and a borrower’s 3-day right to cancel period under section 128(e)(7) of the Truth in Lending Act ( 15 U.S.C. 1650(e)(7) ). (C) For purposes of this paragraph, the terms private educational lender and private education loan have the meanings given such terms in section 140 of the Truth in Lending Act ( 15 U.S.C. 1650 ). . (2) National student loan data system Section 485B ( 20 U.S.C. 1092b ) is amended— (A) in subsection (a), by striking and loans made under parts D and E and inserting , loans made under parts D and E, and private education loans (in accordance with subsection (i)) ; (B) in subsection (g), in the subsection heading, by inserting for Federal Loans after Data Reporting ; and (C) by adding at the end the following: (j) Private education loan reporting The Secretary shall include in the National Student Loan Data System the information regarding private education loans that the Director of the Consumer Financial Protection Bureau, in coordination with the Secretary, determines necessary to be included pursuant to section 128(e)(9)(B)(ii) of the Truth in Lending Act ( 15 U.S.C. 1638(e)(9)(B)(ii) ). . (3) Effective date The amendments made by paragraphs (1) and (2) shall take effect on the effective date of the regulations described in subsection (b)(3). (b) Amendments to the truth in lending act (1) In general Section 128(e) of the Truth in Lending Act ( 15 U.S.C. 1638(e) ) is amended— (A) by striking paragraph (3) and inserting the following: (3) Institutional certification required (A) In general Except as provided in subparagraph (B), before a private educational lender may issue any funds with respect to a private education loan, the private educational lender shall obtain, from the relevant institution of higher education where such loan is to be used for a student, a certification in accordance with section 485(a)(28)(A) of the Higher Education Act of 1965 ( 20 U.S.C. 1094(a)(28)(A) )— (i) confirming that the student is enrolled or is scheduled to be enrolled at the institution; and (ii) stating— (I) the student’s cost of attendance at the institution, as determined by the institution under part F of title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1087kk et seq. ); and (II) the difference between— (aa) such cost of attendance; and (bb) the student’s estimated financial assistance, including such assistance received under title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1070 et seq. ) and other financial assistance known to the institution, as applicable. (B) Timing Pursuant to section 485(a)(28)(A) of the Higher Education Act of 1965 ( 20 U.S.C. 1094(a)(28)(A) ), a private education lender shall receive the certification described in subparagraph (A) within 15 days of a request by the private education lender, unless the institution of higher education notifies the private educational lender pursuant to section 485(a)(28)(A)(ii) of such Act that additional time is needed. (C) Additional requirements Upon receiving the certification described in subparagraph (A) for a private education loan, the private educational lender— (i) may proceed to issue funds with respect to the private education loan; and (ii) after issuing the private education loan, shall— (I) notify the institution of higher education involved that the private education loan has been issued to the borrower, and the amount of such loan; and (II) provide the Director of the Consumer Financial Protection Bureau and the Secretary of Education with the information described in paragraph (9)(B). ; (B) by redesignating paragraphs (9), (10), and (11), as paragraphs (10), (11), and (12), respectively; and (C) by inserting after paragraph (8) the following: (9) Provision of information (A) Provision of information to borrowers (i) Loan statements A private educational lender that issues any funds with respect to a private education loan shall— (I) send loan statements, if the loan is to be used for a student, to borrowers of the funds not less than once every 3 months during the time that the student is enrolled at an institution of higher education; and (II) in the case of a private education loan that includes a cosigner, annually send a loan statement to the borrower’s cosigner, notifying the cosigner of the terms, conditions, and status of such private education loan. (ii) Contents of loan statement Each statement described in clause (i) shall— (I) report the borrower’s total remaining debt to the private educational lender, including accrued but unpaid interest and capitalized interest; (II) report any debt increases since the last statement; and (III) list the current interest rate for each loan. (B) Provision of information to federal agencies (i) Information from lender Each private educational lender shall— (I) submit to the Director of the Consumer Financial Protection Bureau and the Secretary of Education such information regarding a private education loan as may be determined necessary by the Director and the Secretary under clause (ii) for inclusion in the National Student Loan Data System under section 485B(i) of the Higher Education Act of 1965 ( 20 U.S.C. 1092b(i) ); and (II) prepare and submit an annual report to the Consumer Financial Protection Bureau regarding the private education loans issued by the private educational lender. (ii) Promulgation of regulations Not later than 1 year after the date of enactment of the Affordable Loans for Any Student Act , the Director of the Consumer Financial Protection Bureau, in coordination with the Secretary of Education, shall promulgate regulations regarding the private education loan information required to be submitted under clause (i), including the content, method, and format for submission. The information required for inclusion in the National Student Loan Data System shall include— (I) information identifying the borrower, including the borrower’s name and social security number; (II) the name of the institution of higher education that has certified the private education loan; (III) the name of the lender; (IV) the amount of the private education loan; (V) the term, or other enrollment period, for which the private education loan is issued; and (VI) whether a cosigner was required as a condition of the private education loan. . (2) Definition of private education loan Section 140(a)(8)(A) of the Truth in Lending Act ( 15 U.S.C. 1650(a)(8)(A) ) is amended— (A) by redesignating clause (ii) as clause (iii); (B) in clause (i), by striking and after the semicolon; and (C) by adding after clause (i) the following: (ii) is not made, insured, or guaranteed under title VII or title VIII of the Public Health Service Act ( 42 U.S.C. 292 et seq. and 296 et seq.); and . (3) Regulations (A) In general Not later than 1 year after the date of enactment of this Act, the Director of the Consumer Financial Protection Bureau, in coordination with the Secretary of Education, shall promulgate regulations to implement paragraphs (3) and (9) of section 128(e) of the Truth in Lending Act ( 15 U.S.C. 1638(e) ), as amended by paragraph (1) of this subsection. (B) Effective date The regulations promulgated under subparagraph (A) shall take effect on the date that is 180 days after the date on which the regulations are promulgated. V Effective date; transition; implementation 501. Effective date; rulemaking regarding termination of certain repayment plans; implementation (a) Effective date Except as otherwise specifically provided, this Act, and the amendments made by this Act, shall take effect on July 1, 2022. (b) Applicability with respect to forbearance and deferment for direct loan borrowers With respect to any borrower of a loan under part D of title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1087a et seq. ) that is, or has been, in forbearance or deferment as of the day before the effective date described in subsection (a), the Secretary shall take such steps as are necessary— (1) to transfer a borrower with a loan in forbearance or deferment as of such day automatically into relief provided under the pause payment process established under section 460B of such Act (as amended by this Act); and (2) to ensure that the period of time for which a borrower is eligible for pause payment under such section 460B for a loan is appropriately reduced to account for any time the loan was previously in forbearance or deferment. (c) Regulations Before the effective date described in subsection (a), the Secretary of Education shall carry out a plan to end all eligibility for repayment plans other than a fixed repayment plan described in section 493E of the Higher Education Act of 1965, as added by this Act, and an income-based repayment plan under section 493C(c) of such Act ( 20 U.S.C. 1098e(f) ) for loans made under part B or D of title IV of such Act, unless the borrower is enrolled in another repayment plan before such effective date, in accordance with the amendments made by this Act. (d) Implementation In carrying out the amendments made by this Act, or any regulations promulgated under this Act, the Secretary of Education may waive the application of— (1) subchapter I of chapter 35 of title 44, United States Code (commonly known as the Paperwork Reduction Act ); (2) the master calendar requirements under section 482 of the Higher Education Act of 1965 ( 20 U.S.C. 1089 ); (3) negotiated rulemaking under section 492 of the Higher Education Act of 1965 ( 20 U.S.C. 1098a ); and (4) the requirement to publish the notices related to the system of records of the agency before implementation required under paragraphs (4) and (11) of section 552a(e) of title 5, United States Code (commonly known as the Privacy Act of 1974 ).