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H.R. 1716 (113th): Earnings Contingent Education Loans Act of 2013


The text of the bill below is as of Apr 24, 2013 (Introduced). The bill was not enacted into law.

Summary of this bill

6/17/2013: In what could become an annual occurrence, Congress yet again faces a looming deadline to resolve the problem of student loan interest rates. Without Congressional action, the rate on federally backed Stafford loans is set to double from 3.4 percent to 6.8 percent on July 1.

The Senate in early June failed to advance two bills meant to prevent this imminent increase in rates. A bill backed by Democrats would extend the current interest rate for two years, and offset the cost by ending three tax breaks. A GOP bill would peg all newly issued student loans to the U.S. Treasury 10-year borrowing rate plus 3 percentage points. Given …


I

113th CONGRESS

1st Session

H. R. 1716

IN THE HOUSE OF REPRESENTATIVES

April 24, 2013

(for himself andMr. Polis) introduced the following bill; which was referred to theCommittee on Education and the Workforce, and in addition to the Committee onWays and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

A BILL

To simplify and improve the Federal student loan program through income-contingent repayment to provide stronger protections for borrowers, encourage responsible borrowing, and save money for taxpayers.

1.

Short title

This Act may be cited as the Earnings Contingent Education Loans Act of 2013 or theExCEL Act of 2013.

2.

Termination of authority to make Federal Direct Stafford Loans, Federal Direct Unsubsidized Stafford Loans, and Federal Direct PLUS Loans to students under the William D. Ford Federal Direct Loan Program

Section 455(a) of the Higher Education Act of 1965( 20 U.S.C. 1087e(a) )is amended by adding at the end the following:

(4)

Termination of authority to make Federal Direct Stafford Loans, Federal Direct Unsubsidized Stafford Loans, and Federal Direct PLUS Loans to students under this part

(A)

In general

Notwithstanding any provision of this part orpart B, for any period of instruction beginning on or after July 1, 2014—

(i)

a student shall not be eligible to receive a Federal Direct Stafford Loan under this part; and

(ii)

a student shall not be eligible to receive a Federal Direct Unsubsidized Stafford Loan or Federal Direct PLUS Loan under this part, except as provided in subparagraph (B) .

(B)

Exceptions

Subparagraph (A)(ii) shall not be applicable with respect to the following:

(i)

Existing student borrowers

A student who, as of July 1, 2014, has an outstanding balance of principal or interest owing on any loan made, insured, or guaranteed underpart Bor this part may continue to be eligible to borrow a loan under this part, except for a Federal Direct Stafford Loan, in accordance with subparagraph (C) until June 30, 2019.

(ii)

Parent PLUS Loans

An excepted PLUS loan or excepted consolidation loan (as such terms are defined insection 493C(a)) under this part that is made to a parent on behalf of an undergraduate dependent student.

(iii)

Federal Direct Consolidation Loans

A Federal Direct Consolidation Loan under this part.

(C)

Maximum annual amounts of Federal Direct Unsubsidized Stafford Loans

The maximum annual amount of Federal Direct Unsubsidized Stafford Loans a student described in subparagraph (B)(i) may borrow in an academic year (as defined insection 481(a)(2)) or its equivalent shall be the maximum annual amount for such student determined undersection 428H, plus an amount equal to the amount of Federal Direct Stafford Loans the student would have received in the absence of subparagraph (A)(i) .

.

3.

Establishment of the Income Dependent Education Assistance Loan Program and the IDEA Loan Repayment Program

Title IV of the Higher Education Act of 1965( 20 U.S.C. 1070a et seq. )is amended by adding at the end the following new part:

J

Income Dependent Education Assistance Loans

1

IDEA Loans

499A.

Program authority and agreements

(a)

Program authority

(1)

In general

There are hereby made available, in accordance with the provisions of this part, such sums as may be necessary to make loans to all eligible students in attendance at participating institutions of higher education selected by theSecretary, to enable such students to pursue their courses of study at such institutions during the period beginning July 1, 2014. Loans made under this part shall be made by participating institutions, or consortia thereof, that have agreements with theSecretaryto originate loans, or by alternative originators designated by theSecretaryto make loans for students in attendance at participating institutions.

(2)

Designation

The program established under this subpart shall be referred to as theIncome Dependent Education Assistance Loan Program, or theIDEA Loan Program.

(b)

Funds for the origination of IDEA Loans

TheSecretaryshall provide funds for student loans under this part in the same manner as theSecretaryprovides funds for the origination of Federal Direct Student Loans underpart Din accordance withsection 452. The requirements, rights, and limitations undersection 452with respect to theSecretaryand institutions for funds provided for loans underpart Dshall apply with respect to theSecretaryand institutions for funds provided for loans under this part, except that funds under this part shall not be provided for parent loans.

(c)

Selection of institutions for participation and origination, and agreements with institutions

(1)

Selection of institutions for participation and origination

TheSecretaryshall enter into agreements with institutions of higher education to participate in the IDEA Loan Program under this part and agreements with institutions of higher education, or consortia thereof, to originate loans in such program for academic years beginning on or after July 1, 2014. The provisions ofsection 453shall apply with respect to agreements under this section. TheSecretaryshall provide alternative origination services for loans under this part, as appropriate, in a manner consistent with the provisions ofsections 453and456related to alternative origination services for loans underpart D.

(2)

Participation and origination agreements with institutions

An agreement with any institution of higher education for participation in the IDEA Loan Program under this part, and an agreement with any institution of higher education, or consortia thereof, to originate loans in such program, shall have the same terms as the terms required undersection 454for agreements with an institution for participation or origination, respectively, in the student loan program underpart D, except that agreements for participation or origination under this part shall not apply to parent loans.

(3)

Withdrawal and Termination Procedures

TheSecretaryshall establish procedures by which institutions or consortia may withdraw or be terminated from the program under this part.

499B.

Terms and conditions of IDEA Loans

(a)

Parallel terms, conditions, benefits, and amounts

Unless otherwise specified in this part, Income Dependent Education Assistance Loans (hereinafter referred to asIDEA Loans) made to borrowers under this part shall have the same terms, conditions, and benefits, and be available in the same amounts, as Federal Direct Unsubsidized Stafford Loans made to borrowers underpart D, and first disbursed on the day before the date of enactment of the Earnings Contingent Education Loans Act of 2013 .

(b)

Eligible borrowers

(1)

In general

In addition to the requirements ofsection 484, to be eligible to receive a loan (other than an IDEA Consolidation Loan) under this part, a borrower—

(A)

shall be an individual who, on the date of application for such loan, has no outstanding balance of principal or interest owing on any loan made, insured, or guaranteed underpart BorD(other than an excepted PLUS loan or an excepted consolidation loan (as such terms are defined insection 493C(a)); or

(B)

in the case of an individual with an outstanding balance of principal or interest owing on any loan described in subparagraph (A) , shall consolidate all such existing loans into an IDEA Consolidation Loan undersection 499C.

(2)

Only student borrowers eligible

For purposes of this part, the termborrowershall not include a parent borrower.

(c)

Annual and Aggregate Limits

(1)

In general

Subject to paragraph (2) , the maximum annual amount of IDEA Loans in any academic year (as defined insection 481(a)(2)) or its equivalent, and the maximum aggregate amount of IDEA Loans that a student may borrow, shall be the maximum annual amounts and maximum aggregate amounts, respectively, of Federal Direct Unsubsidized Stafford Loans underpart Dthat such student would have been eligible to borrow in the absence ofsection 455(a)(4), as added by Earnings Contingent Education Loans Act of 2013 .

(2)

Graduate and professional students

In the case of a graduate or professional student who would have been eligible to borrow a Federal Direct PLUS Loan underpart Din the absence ofsection 455(a)(4), as added by Earnings Contingent Education Loans Act of 2013 , the maximum annual amounts and maximum aggregate amounts, respectively, of IDEA Loans that the student may borrow as determined under paragraph (1) for any academic year (as defined insection 481(a)(2)) or its equivalent, may be increased to an amount equal to the maximum annual amounts and maximum aggregate amounts, respectively, of Federal Direct PLUS Loans that such student would have been eligible to borrow in the absence of suchsection 455(a)(4).

(d)

Loan Fee

TheSecretaryshall charge the borrower of a loan (other than an IDEA Consolidation Loan) made under this part an origination fee. Such fee shall be the sum of—

(1)

for the portion of the principal amount of the loan that is equal to (or less than) the maximum annual amount a student may borrow under subsection (c)(1) , 1.0 percent of such portion of the principal amount of the loan; plus

(2)

for the portion of the principal amount of the loan that exceeds the maximum annual amount a student may borrow under subsection (c)(1) , as authorized by subsection (c)(2) , 4.0 percent of such portion of the principal amount of the loan.

(e)

Interest rates

(1)

In general

Except as provided in paragraph (2) , for IDEA Loans for which the first disbursement is made on or after July 1, 2014, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to—

(A)

the bond equivalent rate of 10-year Treasury bills auctioned at the final auction held prior to such June 1; plus

(B)

3.0 percent.

(2)

Certain graduate and professional students

Notwithstanding paragraph (1) , with respect to graduate or professional students who have increased maximum annual and aggregate loan limits under subsection (c)(2) , for IDEA Loans for which the first disbursement is made on or after July 1, 2014, the applicable rate of interest shall be the weighted average of—

(A)

the rate determined under paragraph (1) for the portion of the principal amount of the loan that is equal to (or less than) the maximum annual amount a student may borrow under subsection (c)(1) ; and

(B)

the rate determined under paragraph (1) , except that4.1 percentshall be substituted for3.0 percentin such determination, for the portion of the principal amount of the loan that exceeds the maximum annual amount a student may borrow under subsection (c)(1) , as authorized by subsection (c)(2) .

(3)

Consultation

TheSecretaryshall determine the applicable rate of interest under paragraph (1) after consultation with theSecretary of the Treasuryand shall publish such rate in the Federal Register as soon as practicable after the date of determination.

(4)

Application of interest rate during the life of the loan

(A)

Fixed rate until cap

The applicable rate of interest determined under paragraph (1) or (2) for an IDEA Loan shall be fixed for the life of the loan, except that interest shall cease to accrue when the total amount of interest (both paid and unpaid) that has accrued during the borrower’s grace and repayment periods equals 50 percent of the total amount of the loan (equal to the sum of the unpaid principal, interest, penalties, and fees due on the loan) as of first day of the borrower’s grace period.

(B)

In-school deferment period

Interest shall accrue and be capitalized or paid by the borrower (but periodic installments of principal need not be paid) during the in-school deferment period with respect to an IDEA Loan. For the purposes of this part, the in-school deferment period with respect to an IDEA Loan is the first period during which the borrower is pursuing at least one-half the normal full-time academic workload (as determined by the institution) in the course of study for which the borrower received such loan and ending on the first day of the first month that begins after the borrower ceases to carry at least one-half the normal full-time academic workload (as determined by the institution) in the course of study.

(C)

Grace and repayment periods

Interest that accrues during the borrower’s grace period (for the purposes of this title, defined as the period between the borrower’s in-school deferment period and the borrower’s repayment period) and during the borrower’s repayment period shall not be capitalized.

(f)

Armed Forces Student Loan Interest Payment Program

Using funds received by transfer to theSecretaryunder section 2174of title 10, United States Code, for the payment of interest on a loan made under this part to a member of the Armed Forces, theSecretaryshall pay the interest on the loan as due for a period not in excess of 36 consecutive months. TheSecretarymay not pay interest on such a loan out of any funds other than funds that have been so transferred.

(g)

No Accrual of Interest for Active Duty Service Members

(1)

In general

Notwithstanding any other provision of this part and in accordance withparagraphs (2)and(4), interest shall not accrue for an eligible military borrower on a loan made under this part for which the first disbursement is made on or after July 1, 2014.

(2)

IDEA Consolidation loans

In the case of any IDEA Consolidation loan made under this part that is disbursed on or after July 1, 2014, interest shall not accrue pursuant to this subsection only on such portion of such loan as was used to repay a loan made underpart Dfor which the first disbursement is made on or after October 1, 2008.

(3)

Eligible military borrower

In this subsection, the term eligible military borrower means an individual who—

(A)
(i)

is serving on active duty during a war or other military operation or national emergency; or

(ii)

is performing qualifying National Guard duty during a war or other military operation or national emergency; and

(B)

is serving in an area of hostilities in which service qualifies for special pay undersection 310 of title 37, United States Code.

(4)

Limitation

An individual who qualifies as an eligible military borrower under this subsection may receive the benefit of this subsection for not more than 60 months.

(h)

Loan cancellation and discharge

TheSecretaryshall discharge a borrower's liability on a loan made under this part in accordance withsubsections (a)and(c) of section 437.

(i)

No public service loan forgiveness

A loan made under this part shall not be eligible for the public service loan forgiveness program undersection 455(m).

499C.

IDEA Consolidation Loans

(a)

IDEA Consolidation Loans

(1)

In general

Except as provided in this section, an IDEA Consolidation Loan under this section shall have the same terms, conditions, and benefits, as IDEA Loans under this part.

(2)

Borrower and loan eligibility

To be eligible to receive an IDEA Consolidation Loan under this section, a borrower—

(A)

shall—

(i)

meet the criteria described insection 428C(a)(3)(A); and

(ii)

in the case of a borrower described insection 499B(b)(1)(B), agree to consolidate into an IDEA Consolidation Loan all loans made to the borrower that are described insubparagraphs (A)and(C) of section 428C(a)(4)(other than an excepted PLUS loan or an excepted consolidation loan (as such terms are defined insection 493C(a));

(B)

may consolidate the loans described insubparagraphs (B),(D), and(E) of section 428C(a)(4)into such IDEA Consolidation Loan; and

(C)

may not consolidate an IDEA Loan undersection 499Binto such IDEA Consolidation Loan.

(3)

Requirements for the Secretary

In making IDEA Consolidation Loans under this section, theSecretary

(A)

shall ensure that—

(i)

each IDEA Consolidation Loan will be made, notwithstanding any other provision of this title limiting the annual or aggregate principal amount for all loans made to the borrower, in an amount which is equal to the sum of the unpaid principal, interest, penalties, and fees of all loans received by the borrower which are selected by the borrower for consolidation under this section; and

(ii)

the proceeds of each IDEA Consolidation Loan will be paid by theSecretaryto the holder or holders of the loans being consolidated to discharge the liability on such loans;

(B)

shall not discriminate against any borrower seeking such an IDEA Consolidation Loan—

(i)

based on the number or type of loans the borrower seeks to consolidate;

(ii)

based on the interest rate to be charged to the borrower with respect to the consolidation loan; or

(iii)

based on the type or category of institution of higher education that the borrower attends or attended; and

(C)

shall disclose to a prospective borrower, in simple and understandable terms, at the time theSecretaryprovides an application for an IDEA Consolidation Loan—

(i)

whether consolidation would result in a loss of loan benefits underpart Borpart D, including loan forgiveness, cancellation, and deferment;

(ii)

with respect to Federal Perkins Loans underpart E

(I)

that if a borrower includes a Federal Perkins Loan underpart Ein the consolidation loan, the borrower will lose all interest-free periods that would have been available for the Federal Perkins Loan, including—

(aa)

the periods during which no interest accrues on such loan while the borrower is enrolled in school at least half-time;

(bb)

the grace period undersection 464(c)(1)(A); and

(cc)

the periods during which the borrower’s student loan repayments are deferred undersection 464(c)(2);

(II)

that if a borrower includes a Federal Perkins Loan in the consolidation loan, the borrower will no longer be eligible for cancellation of part or all of the Federal Perkins Loan undersection 465(a); and

(III)

the occupations listed insection 465that qualify for Federal Perkins Loan cancellation undersection 465(a);

(iii)

the options of the borrower to prepay the IDEA Consolidation Loan;

(iv)

the consequences of default on the IDEA Consolidation Loan; and

(v)

that by applying for an IDEA Consolidation Loan, the borrower is not obligated to agree to take the consolidation loan.

(b)

Interest rate

(1)

In general

Notwithstandingsection 499B(e), an IDEA Consolidation Loan for which the application is received on or after July 1, 2014, shall bear interest at an annual rate on the unpaid principal balance of the loan that is equal to the weighted average of the interest rates on the loans consolidated, rounded to the nearest higher one-eighth of one percent. Interest that accrues on such an IDEA Consolidation Loan shall not be capitalized.

(2)

Application of interest rate during the life of the loan

The applicable rate of interest determined under paragraph (1) shall be fixed for the life of the IDEA Consolidation Loan, except that interest shall cease to accrue when the total amount of interest (both paid and unpaid) that has accrued on such Loan equals 50 percent of the total amount of the loans consolidated (as calculated on the date such Consolidation Loan is made, and equal to the sum of the unpaid principal, interest, penalties, and fees of all loans received by the borrower which are selected by the borrower for consolidation under this section).

2

IDEA Loan Repayment Program

1

Establishment of the IDEA Loan Repayment Program

499D.

Duties of the Secretary of the Treasury

(a)

In general

TheSecretary of the Treasury, in consultation with theSecretary of Education, shall establish a program (hereinafter referred to as theIDEA Loan Repayment Program) that provides for—

(1)

repaying loans under this part through voluntary wage withholding and quarterly estimated payments as provided in subsection (b) ); and

(2)

transmitting to theSecretary of Education

(A)

an account of the amounts collected under subsection (b) with respect to each individual for whom a loan made under this part is in repayment status; and

(B)

such tax return information of each such individual as is necessary to determine the individual’s income-based repayment obligation as provided in subsection (c) .

(b)

Wage withholding and estimated payments

(1)

In general

TheSecretary of the Treasuryshall, under rules similar to the rules ofchapter 24 of the Internal Revenue Code of 1986, provide for employers making payment of wages to deduct and withhold upon such wages amounts determined in accordance with tables or computational procedures prescribed by theSecretarywith respect to an employee who elects withholding under this subsection with respect to a loan made under this part that is in repayment status and, if so elected, with respect to any such loans of the employee’s spouse.

(2)

Withholding requirements

The tables, procedures, and guidance prescribed under paragraph (1) shall provide—

(A)

for the election to have amounts withheld as provided under this subsection,

(B)

procedures and forms for an employee to indicate—

(i)

whether the employee (and, in the case of a married individual, whether the employee’s spouse) has a loan made under this part that is in repayment status;

(ii)

in the case of a married individual, whether the employee anticipates filing jointly (and accompanying guidance explaining that if filing status for the taxable year is uncertain the employee should indicate filing jointly to avoid underwithholding);

(iii)

whether the exemption amount to which the employee is entitled under this section should be taken into account in determining withholding (and accompanying guidance explaining that, in order to avoid underwithholding, the employee should only take into account the exemption in the case of the employee’s primary employer, unless total wages from more than one place of employment will not exceed the exemption amount);

(iv)

in the case of a married individual, whether the exemption amount to which the employee’s spouse is entitled under this section should be taken into account in determining withholding from the wages of the employee (and accompanying guidance explaining that, in order to avoid underwithholding, the employee should only take into account such exemption if such spouse is not employed, or if the total wages from the employee’s job and the spouse’s employment will not exceed the exemption amount;

(v)

the number of dependents of the employee with respect to whom the employee is entitled to a deduction undersection 151(c) of the Internal Revenue Code of 1986, and, if a different number, in the case of a married employee, the number of dependents of the employee’s spouse with respect to whom such spouse is entitled to such deduction; and

(vi)

an election to have additional amounts withheld; and

(C)

for withholding with respect to any employee in an amount equal to the sum of—

(i)

in the case of an employee who has a loan made under this part in repayment status, the percentage of so much of the employee’s wages that would count towards the employee’s income-based repayment obligation provided insubsection (c)as exceeds any exemption amount taken into account with respect to the employee undersubparagraph (A)(iii)(prorated to the payroll period), plus

(ii)

in the case of an employee who indicates that the employee’s spouse has a loan made under this part in repayment status, the percentage of so much of the employee’s wages that would count towards the employee’s spouse’s income-based repayment obligation (as provided insubsection (c)) as exceeds any exemption amount taken into account with respect to the employee’s spouse undersubparagraph (A)(iv)(prorated to the payroll period).

(3)

Quarterly estimated tax payments

In the case of taxpayers who make quarterly estimated tax return payments undersection 6654 of the Internal Revenue Code of 1986and who have a loan made under this part in repayment status, theSecretaryshall provide similar tables and procedures for making voluntary repayments of loans made under this part concurrently with such quarterly payments.

(4)

Collection and payment

The amounts required to be deducted and withheld underparagraph (1), and amounts required to be paid underparagraph (3), shall be collected by theSecretary of the Treasuryand shall be paid into the general fund of the Treasury of the United States.

(c)

Determination of income-based repayment obligation

(1)

In general

As soon as practicable after an individual for whom a loan made under this part is in repayment status during the taxable year files an income tax return for such taxable year, theSecretary of the Treasuryshall transmit to theSecretary of Educationsuch tax information as is necessary to determine—

(A)

the amount deducted and withheld undersubsection (b)(1), and the amount paid undersubsection (b)(3), for the taxable year with respect to such individual, and

(B)

the income-based repayment obligation for the taxable year for such individual.

(2)

Income-based repayment obligation

For purposes of this section:

(A)

In general

The income-based repayment obligation with respect to an individual for any taxable year is an amount equal to 15 percent of the excess of—

(i)

the sum of—

(I)

the wages, salaries, tips, and other employee compensation of the taxpayer, but only if such amounts are includible in gross income for the taxable year (determined without regard tosection 911,931,933),

(II)

the amount of the taxpayer’s net earnings from self-employment for the taxable year (within the meaning ofsection 1402(a)), determined with regard to the deduction allowed to the taxpayer bysection 164(f), plus

(III)

any other amount included in total income of the taxpayer for the taxable year but not described insubclause (I)or(II), over

(ii)

the sum of—

(I)

the exemption amount with respect to such individual, plus

(II)

the lesser of the amount determined with respect to the taxpayer undersubclauses (II)and(III) of clause (i), or $3,000.

(B)

Special rules for married individuals

(i)

Each spouse with loan

Except as provided inclause (ii), in the case of a joint return of two individuals who each have a loan made under this part in repayment status, the income-based repayment obligation with respect to each spouse shall be an amount determined undersubparagraph (A)by apportioning½of the total income on such return to each spouse.

(ii)

Special rule for first year of marriage

In the case of the first taxable year for which any two individuals make a joint return, the income-based repayment obligation with respect to such an individual shall be an amount equal to the lesser of—

(I)

the amount determined with respect to such individual under this paragraph (determined without regard to this clause), or

(II)

the amount determined with respect to such individual under this paragraph (determined by allocating to each spouse the amounts described insubclause (I)and(II) of subparagraph (A)(i)in proportion to the amounts attributable to each spouse, by allocating½of the amount described insubparagraph (A)(i)(III)to each spouse, and without regard toclause (i)).

(C)

Exclusion of certain amounts paid on behalf of individual

Any amount paid on the borrower’s behalf undersection 499E(5)shall not be taken into account in determining such borrower’s income-based repayment obligation.

(3)

Exemption amount

For purposes of this section:

(A)

In general

Except as provided insubparagraph (B), the exemption amount with respect to an individual shall be an amount equal to 150 percent of the poverty line for the individual’s household size (as determined under section 673(2) of the Community Services Block Grant Act( 42 U.S.C. 9902(2) )) for the calendar year in which the taxable year ends.

(B)

Special rule for married individuals who both have loans made under this part

If for any taxable year an individual is married, files a joint return, and has a spouse with a loan made under this part in repayment status, then the exemption amount with respect to such individual shall be an amount equal to the sum of—

(i)

150 percent of the poverty line for a household size of one (as determined under section 673(2) of the Community Services Block Grant Act( 42 U.S.C. 9902(2) )) for the calendar year in which the taxable year ends, and

(ii)

½of the excess of—

(I)

150 percent of the poverty line for the individual’s household size minus 1 (as determined under section 673(2) of the Community Services Block Grant Act( 42 U.S.C. 9902(2) )) for the calendar year in which the taxable year ends, over

(II)

the amount determined underclause (i).

(C)

Household size

For purposes of this paragraph, an individual’s household size shall be determined by reference to the individual, the number of dependents of the taxpayer with respect to whom the taxpayer is entitled to a deduction under section 151(c)of the Internal Revenue Code of 1986, and, if married and filing jointly, such individual’s spouse.

(4)

Individuals not filing a return

(A)

Individuals not required to file

The income-based repayment obligation with respect to an individual not required to file a return undersection 6012(a)(1) of the Internal Revenue Code of 1986shall be treated as zero.

(B)

Failure to file

In the case of an individual who makes an election undersubsection (b)with respect to a loan made under this part in repayment status and fails to file a return undersection 6012(a)(1), theSecretary of the Treasuryshall transmit to theSecretary of Educationany such tax information of the individual as may be necessary to determine whether such individual is in default under the terms of such loan.

(5)

Subsequent transmission of employer information reporting

As soon as practicable after receiving from an employer information reporting with respect to withholding undersubsection (b)(1)of an individual, theSecretary of the Treasuryshall transmit to theSecretary of Educationsuch information as may be useful in verifying the information with respect to withholding transmitted underparagraph (1).

(d)

Additional program requirements

TheSecretary of the Treasuryshall establish such other policies, procedures, and guidance as may be necessary to carry out the purposes of this section, including measures to prevent underwithholding, under-reporting, and evasion of repayment or filing. Amounts shall be deducted and withheld under this section as the Secretary determines to be most appropriate to carry out the purposes of the IDEA Loan Repayment Program and to reflect, as accurately as is practicable, an individual’s income-based repayment obligation.

499E.

Duties of the Secretary of Education

TheSecretaryshall carry out the following activities as part of the IDEA Loan Repayment Program established under this chapter:

(1)

Calculation of annual repayment amounts

TheSecretaryshall calculate the annual repayment amounts under499F(b)for borrowers with 1 or more loans made under this part in repayment status, including the income-based repayment obligations of such borrowers in accordance withsection 499D(c)(2).

(2)

Communication with the Secretary of the Treasury

TheSecretaryshall transmit to theSecretary of the Treasurysuch information as is necessary for theSecretary of the Treasuryto carry outsection 499D.

(3)

Annual statements

Upon calculating the annual repayment amounts under paragraph (1) for a taxable year, theSecretaryshall provide a statement, on an annual basis, to each borrower with a loan made under this part, which lists the following:

(A)

Total payments made on the borrower’s annual repayment amount for such taxable year.

(B)

The borrower’s annual repayment amount for such taxable year.

(C)

In the case of a borrower who, according tosection 499F(f), has underpaid such annual repayment amount, the amount of such underpayment and the process for paying such underpayment undersection 499F(f)(2).

(D)

In the case of a borrower with an overpayment on such annual repayment amount, the amount of such overpayment and the process for requesting a refund of such amount undersection 499F(g), if applicable.

(E)

The outstanding balances on all the loans made to the borrower under this part.

(F)

A description of how the borrower’s annual repayment amount was calculated underparagraph (1)or(2) of section 499F(b).

(4)

Direct payment

TheSecretaryshall enable a borrower to make direct payments on the borrower’s annual repayment amount for the taxable year to theSecretarythroughout the year, including by providing a process for the borrower to make such payments automatically, on a periodic basis, and in an amount specified by the borrower.

(5)

Payments on a taxpayer’s behalf

TheSecretaryshall—

(A)

provide a mechanism for other individuals or entities to make payments on the annual repayment amount of a borrower for a taxable year; and

(B)

notify the borrower that any payments made undersubparagraph (A)for the taxable year that exceed the annual repayment amount for the year shall not be refunded to the borrower.

(6)

Calculating interest accrued

TheSecretaryshall calculate the interest accrued for the taxable year as if the borrower’s payments under wage withholding or quarterly estimated payments undersection 499D(b)for the taxable year were made in 12 equal increments throughout the year.

(7)

Managing loans

TheSecretaryshall provide, through the Internet, a tool that has an interface that is consistent for all borrowers with a loan under this part, which enables each such borrower to—

(A)

view the outstanding balances on the borrower’s loans made under this part;

(B)

make a direct payment on the borrower’s annual repayment amount or indicate that any overpayment should be refunded or applied to such loans as a prepayment amount;

(C)

view prior annual statements for such loans provided under paragraph (3);

(D)

view a history of payments made on such loans (including the method and source of each payment, such as tax withholding, estimated taxes, direct payment, or payments made on the borrower’s behalf);

(E)

view the borrower’s annual repayment amount for that year, the amount already paid on such annual repayment amount, and any amount owed by the borrower or due to be refunded to the borrower;

(F)

view the borrower’s loans made under this part that have been paid off;

(G)

enable the borrower to initiate an appeal process under paragraph (8) ; and

(H)

easily determine whether benefits under the Servicemembers Civil Relief Act(50 U.S.C. App. 501 et seq.), if applicable, have been applied to the borrower’s loans made under this part.

(8)

Appeals process

TheSecretaryshall make available a process through which a borrower can appeal the calculation of the borrower’s annual repayment amount, including a worksheet that enables a borrower to calculate the borrower’s annual repayment amount.

(9)

Default for failure to file a return

In a case in which theSecretaryreceives information from theSecretary of the Treasuryundersection 499D(c)(4)that a borrower with a loan made under this part in repayment status has failed to file a return undersection 6012(a)(1) of the Internal Revenue Code of 1986and such borrower was required to file such a return, theSecretaryshall—

(A)

notify the borrower of the borrower’s failure to file such a return; and

(B)

if the borrower fails to file such a return within 90 days of receipt of the notice described insubparagraph (A), consider the borrower’s loans made under this part in repayment status to be in default.

(10)

National Directory of New Hires

TheSecretaryshall send notices to borrowers under paragraph (5) of section 435(i) of the Social Security Act( 42 U.S.C. 653(i) ), as added bysection 5 of theEarnings Contingent Education Loans Act of 2013 .

2

Borrower repayment of IDEA Loans and IDEA Consolidation Loans

499F.

Borrower repayment

(a)

Repayment period

The repayment period of a loan made under this part shall—

(1)

begin on the first day of the first taxable year that begins after the borrower’s in-school deferment period, or in the case of an IDEA Consolidation Loan, on the first day of the first taxable year that begins after such Consolidation Loan is disbursed; and

(2)

continue until the loan is paid in full, except that theSecretarymay grant a borrower forbearance of the borrower’s annual repayment amount—

(A)

for a period not to exceed 60 days, due to administrative or technical reasons;

(B)

for a period not to exceed 3 months, due to unusual circumstances that disrupt the borrower’s ability to make timely payments on the loan; or

(C)

renewable at 12-month intervals for a period not to exceed 3 years, due to documented extreme economic hardship on the part of a borrower.

(b)

Annual repayment amount

The annual repayment amount under this part for a taxable year for a borrower with 1 or more loans made under this part in repayment status shall be equal to the lesser of—

(1)

the income-based repayment obligation for such borrower for such year, as calculated undersection 499E(1); or

(2)

an amount equal to the sum of the outstanding balances (equal to the sum of the unpaid principal, interest, penalties, and fees) that the borrower owes on such loans.

(c)

Methods of repayment

In repaying an annual repayment amount owed by a borrower for a taxable year, a borrower may—

(1)

with respect to any wages earned by the borrower that are subject to Federal income tax withholding, have amounts withheld upon such wages undersection 499D(b)(2);

(2)

in the case of a borrower who makes quarterly estimated tax return payments undersection 6654 of the Internal Revenue Code of 1986for the year, pay such annual repayment amount concurrently with such quarterly payments undersection 499D(b)(3);

(3)

make direct payments undersection 499E(4)on such amount to theSecretarythroughout the year; or

(4)

have other individuals or entities make payments undersection 499E(5)on the borrower’s annual repayment amount for the year.

(d)

Order of crediting

Payments on loans made under this part shall be applied, without regard to the method of such payments, first toward penalties due on the loans, next toward any fees due on the loans, then toward any interest due on the loans, and finally toward the principal due on the loan with the highest applicable rate of interest among such loans.

(e)

Prepayment authorized

A borrower shall have the right to prepay all or part of such loan, at any time and without penalty. Any such prepayment amount will be applied to loans made under this part in the same order as described in subsection (d) .

(f)

Underpayments

(1)

Penalties for underpayments

(A)

In general

Subject to subparagraph (C) , if, as of the last day of a taxable year, a borrower has not paid at least 90 percent of the borrower’s annual repayment amount for such year, the borrower shall be charged a penalty in an amount equal to 10 percent of the difference between—

(i)

an amount equal to 90 percent of the borrower’s annual repayment amount for such year; and

(ii)

the amount paid on such annual repayment amount as of such day.

(B)

Increase of annual repayment amount

A borrower’s annual repayment amount calculated under subsection (b) for such year shall be increased by the amount of such penalty, but such penalty shall not be treated as a principal or interest amount for a loan made under this part.

(C)

Exception

A borrower who has paid 100 percent of the borrower’s annual repayment amount for the taxable year preceding the taxable year described in subparagraph (A) shall not be subject to the penalty under this paragraph for the taxable year described in subparagraph (A) .

(2)

Reconciling underpayments

(A)

In general

If, as of the last day of a taxable year, the sum of the payments made on a borrower’s annual repayment amount for such year is less than the total amount of the borrower’s annual repayment amount for such year, the borrower—

(i)

in the case of the first year that the borrower has a difference between such amounts—

(I)

may request, in such manner as theSecretaryshall require, that theSecretaryreduce the borrower’s annual repayment amount for such year to the sum of—

(aa)

the payments made, as of such day, on the borrower’s annual repayment amount for such year; and

(bb)

any penalties calculated underparagraph (1)resulting from such underpayment; and

(II)

if the borrower qualifies for the reduction requested undersubclause (I), shall pay the sum calculated under such subclause at such time and in such manner as required by theSecretary;

(ii)

if the borrower does not qualify for a reduction underclause (i)or does not request such a reduction, shall pay to theSecretaryan amount equal to the difference between such amounts within the 30-day period beginning on the date of receipt by the borrower of the borrower’s annual statement described insection 499E(3)for such year; or

(iii)

if the borrower fails to pay the amount owed by the borrower as calculated underclause (ii)within the 30-day period, shall be charged a penalty equal to 2 percent of such amount for each month (prorated based on the percentage of a month such penalty is charged) that such amount is owed or until the borrower defaults on the loan for which such amount is owed, whichever occurs first.

(B)

Default

A loan for which an amount is owed undersubparagraph (A)and that is not paid within 360 days after the date of receipt by the borrower of the borrower’s annual statement described insubparagraph (A)shall be considered to be default.

(g)

Overpayments

If, as of the last day of a taxable year, the sum of the payments made on a borrower’s annual repayment amount for such year is greater than the total amount of the borrower’s annual repayment amount for such year, theSecretaryshall—

(1)

refund the overpayment amount, if the borrower notifies theSecretary, within the 90-day period beginning on the date of receipt of the borrower’s annual statement described insection 499E(3)for such year and in a manner prescribed by theSecretary, that the borrower desires to have the overpayment amount refunded; or

(2)

if a borrower fails to notify theSecretaryof the borrower’s desire for a refund of such amount within such 90-day period, apply such amount as a prepayment to the borrower’s loans made under this part in the same manner as a prepayment authorized under subsection (e) .

(h)

Employer failure To withhold payments

In the case of a borrower whose employer fails to withhold amounts undersection 499D(b)(2)upon any wages earned by the borrower that are subject to Federal income tax withholding and with respect to which the borrower made an election to have amounts withheld undersection 499(b)(2), theSecretaryshall—

(1)

reduce the borrower’s annual repayment to an amount equal to the borrower’s annual repayment amount had wages from such employer been excluded when calculating the borrower's annual repayment amount; and

(2)

reduce any penalties for underpayments calculated undersubsection (f)(1)and refund any overpayments on such annual repayment amount, accordingly.

.

4.

Conforming changes to the Higher Education Act of 1965

(a)

Loan forgiveness and cancellation for teachers

(1)

Loan forgiveness for teachers

Section 428J of the Higher Education Act of 1965(20 U.S.C. 1078–10)is amended—

(A)

insubsection (b), by insertingor for an IDEA loan made underpart J,afteror 428H,; and

(B)

insubsection (c)

(i)

inparagraph (1), by insertingor an IDEA loan made underpart J afteror 428H; or

(ii)

inparagraph (2)

(I)

by strikingA loanand inserting the following:

(A)

Loans made under section 428C

A loan

; and

(II)

by adding at the end the following new subparagraph:

(B)

IDEA Consolidation Loan

A loan amount for an IDEA Consolidation Loan may be a qualified loan amount for purposes of this subsection only to the extent that such loan amount was used to repay a Federal Direct Stafford Loan, a Federal Direct Consolidation Loan, a Federal Direct Unsubsidized Stafford Loan, or a loan made undersection 428,428C, or428H.

.

(2)

Loan cancellation for teachers

Section 460 of such Act(20 U.S.C. 1087j)is amended—

(A)

insubsection (b), by insertingor for an IDEA loan made underpart J afterunder this part;

(B)

insubsection (c)

(i)

inparagraph (1), by strikingor a Federal Direct Unsubsidized Stafford Loanand inserting, a Federal Direct Unsubsidized Stafford Loan, or an IDEA loan made underpart J ; and

(ii)

inparagraph (2)

(I)

by strikingA loanand inserting the following:

(A)

Federal Direct Consolidation Loan

A loan

; and

(II)

by adding at the end the following new subparagraph:

(B)

IDEA Consolidation Loan

A loan amount for an IDEA Consolidation Loan may be a qualified loan amount for purposes of this subsection only to the extent that such loan amount was used to repay a Federal Direct Stafford Loan, a Federal Direct Consolidation Loan, a Federal Direct Unsubsidized Stafford Loan, or a loan made undersection 428,428C, or428H.

.

(b)

Loan forgiveness for service in areas of national need

Section 428K(a)(2) of such Act(20 U.S.C. 1078–11(a)(2))is amended—

(1)

by strikingandat the end ofsubparagraph (A);

(2)

by striking the period at the end ofsubparagraph (B)and inserting; and; and

(3)

by adding at the end the following new subparagraph:

(C)

to cancel the qualified loan amount for a loan made underpart Jof this title.

.

(c)

Loan repayment for civil legal assistance attorneys

Section 428L(b)(2)(A) of such Act(20 U.S.C. 1078–12(b)(2)(A))is amended—

(1)

inclause (1), by strikingor part Eand inserting,part E, orpart J ; and

(2)

inclause (ii)

(A)

in the matter precedingsubclause (I), by strikingor 455(g)and inserting,455(g), or499C ;

(B)

by strikingorat the end ofsubclause (II);

(C)

by redesignatingsubclause (III)assubclause (IV); and

(D)

by inserting aftersubclause (II)the following:

(III)

a Federal Direct Consolidation loan or a loan made undersection 428C, in the case of a loan made undersection 499C; or

.

(d)

Master promissory note

Section 432(m)(1)(D) of such Act( 20 U.S.C. 1082(m)(1)(D) )is amended—

(1)

by strikingthis part and part Deach place it appears and by insertingthis part,part D, andpart J ; and

(2)

by strikingthis part or part Deach place it appears and by insertingthis part,part D, orpart J .

(e)

Contracts

Section 456 of such Act(20 U.S.C. 1087f)is amended—

(1)

insubsection (a)

(A)

inparagraph (2), by strikingthis parteach place it appears and insertingthis part orpart J ; and

(B)

inparagraph (4), by insertingorpart J afterthis part; and

(2)

insubsection (b)

(A)

inparagraph (1), by insertingor the program underpart J after(or their parents);

(B)

inparagraph (2), by insertingorpart J afterthis part;

(C)

inparagraph (3), by insertingorpart J afterthis part; and

(D)

inparagraph (4), by insertingor the IDEA Loan Programafterloan program.

(f)

Funds for administrative expenses

Section 458(a)(3) of such Act(20 U.S.C. 1087h(a)(3))is amended—

(1)

by strikingthis part and part Band insertingthis part,part B, andpart J ; and

(2)

by inserting before the period at the end the following:andpart J .

(g)

Student eligibility

Section 484 of such Act(20 U.S.C. 1091)is amended—

(1)

insubsection (b)

(A)

inparagraph (3), by strikingor Dand inserting, D, or E; and

(B)

inparagraph (4)(B), by strikingor Eand insertingE, or J;

(2)

insubsection (d), by strikingand Eand insertingE, and J;

(3)

insubsection (f), by strikingor part Eeach place it appears and inserting part E, orpart J ; and

(4)

insubsection (m), by strikingand Eand insertingE, and J.

(h)

Institutional and financial assistance information for students

Section 485 of such Act(20 U.S.C. 1092)is amended—

(1)

insubsection (a)

(A)

inparagraph (1)(M), by strikingand Eand insertingE, and J; and

(B)

inparagraph (7)(A)(i), by strikingLoan)each place it appears and insertingLoan) orpart J ;

(2)

insubsection (b)

(A)

inparagraph (1)(A)

(i)

in the matter precedingclause (i), by insertingor made underpart J afterpart E; and

(ii)

inclause (vii)

(I)

by insertingor an IDEA Consolidation LoanafterFederal Direct Consolidation Loan; and

(II)

by strikingand Eand insertingE, andJ ; and

(B)

inparagraph (2)(A), by strikingor Eand insertingE, orJ ; and

(3)

insubsection (l)(1)

(A)

insubparagraph (A), in the matter precedingclause (i), by insertingor made underpart J afterstudent); and

(B)

insubparagraph (B), by strikingor Dand inserting, D, or J.

5.

National Directory of New Hires

Section 435(i) of the Social Security Act( 42 U.S.C. 653(i) )is amended by adding at the end the following new paragraph:

(5)

Sending notice to borrowers of certain student loans

TheSecretary of Educationshall have access to the information in the National Directory of New Hires for purposes of, on at least a monthly basis—

(A)

determining when individuals with an IDEA Loan or IDEA Consolidation loan made underpart J of title IV of the Higher Education Act of 1965in repayment status are hired by employers who are making payments of wages to such individuals; and

(B)

sending a notice to each such individual to remind such individual that—

(i)

the individual has 1 or more loan described insubparagraph (A)in repayment status;

(ii)

the individual is responsible for providing accurate information to the individual’s employer to ensure that the employer will deduct and withhold upon such wages amounts to repay such loans in accordance withsection 499D(b) of theEarnings Contingent Education Loans Act of 2013 ; and

(iii)

failure to provide such accurate information will likely result in significant penalties, default, or collections proceedings.

6.

Withheld amounts included on W–2

(a)

In general

Subsection (a) ofsection 6051of the Internal Revenue Code of 1986is amended by strikingandat the end ofparagraph (13), by striking the period at the end ofparagraph (14)and inserting, and, and by inserting afterparagraph (14)the following new paragraph:

(15)

the total amount deducted and withheld under the IDEA Loan Repayment Program established underchapter 1 of subpart 2 of part J of title IV of the Higher Education Act of 1965.

.

(b)

Effective date

The amendments made by this section shall apply to amounts deducted and withheld after the date of the enactment of this Act.

7.

Disclosure of return information for purposes of IDEA Loan Repayment Program

(a)

In general

Subsection (l) of section 6103 of the Internal Revenue Code of 1986is amended by adding at the end the following new paragraph:

(23)

Disclosure of return information to Department of Education for purposes of administering IDEA Loan Repayment Program

(A)

In general

TheSecretaryshall, upon written request, disclose to theDepartment of Educationsuch return information as is necessary for purposes of carrying out the IDEA Loan Repayment Program established undersubpart 2 of part J of the Higher Education Act of 1965.

(B)

Restriction on disclosure

Return information disclosed under subparagraph (A) may be used by officers, employees, and contractors of theDepartment of Educationonly for purposes of, and to the extent necessary in—

(i)

determining income-based repayment obligations under the IDEA Loan Repayment Program, and

(ii)

determining amounts deducted and withheld, and amounts paid concurrently with quarterly estimated taxes, under the IDEA Loan Repayment Program.

.

(b)

Effective date

The amendments made by this section shall take effect on the date of the enactment of this Act.

8.

Sense of Congress

It is the sense ofCongressthat any loan repayment or forgiveness program available under a Federal law outside of the Higher Education Act of 1965(20 U.S.C. 1001 et seq.)to students with loans made under part D of title IV of the Higher Education Act of 1965( 20 U.S.C. 1087a et seq. )should be available to students with loans made underpart J of such title of such Act.