Loan forgiveness for principals in high needs schools

Part D of title IV of the Higher Education Act of 1965 (20 U.S.C. 1087a et seq.) is amended by adding at the end the following:

460A.

Loan forgiveness for principals in high needs schools

(a)

Loan forgiveness authorized

The Secretary shall carry out a program of canceling the obligation to repay a qualified loan amount in accordance with subsection (b) for loans made under this part, which were first disbursed on or after July 1, 2010, to any borrower who— (1)has graduated from a high-quality program, as determined by the appropriate State agency for higher education, in consultation with the Secretary; (2)has been employed as a full-time principal, as defined by, for not less than 1 complete school year in a school or location that qualifies under section 465(a)(2)(A) for loan cancellation for Perkins loan recipients who teach in such schools or locations; and (3)is not in default on a loan for which the borrower seeks forgiveness. (b)

Qualified loan amounts

(1)

In general

(A)

First 4 years

Subject to paragraph (2), after the completion of service as a principal as described in subsection (a)(2) for a complete school year for any school year after the first complete school year of such service through the fourth complete school year of such service, the Secretary shall cancel— (i)15 percent of the loan obligation on a loan made under this part, which was first disbursed on or after July 1, 2010; and (ii)the total amount of interest that accrued during such school year. (B)

Succeeding years

Subject to paragraph (2), after the completion of service as a principal as described in subsection (a)(2) for a complete school year for any school year after the fourth complete school year of such service through the seventh complete school year of such service, the Secretary shall cancel— (i)20 percent of the loan obligation on a loan made under this part, which was first disbursed on or after July 1, 2010; and (ii)the total amount of interest that accrued during such school year. (2)

Limitations

To be eligible for loan cancellation under subparagraph (A) or (B) of paragraph (1) for any school year after the first complete school year of service, a principal— (A)shall be serving as a principal in the school or location in which the principal served for such first year, except that a principal may serve as a principal in a different school or location described in subsection (a)(2) for a school year after such first year if the local educational agency involved places the principal in such different school or location; and (B)may stop serving as a principal for not more than 1 complete school year after such first year. (3)

Treatment of consolidation loans

A loan amount for a Federal Direct Consolidation Loan, which was first disbursed on or after July 1, 2010, may be a qualified loan amount for the purposes of this subsection only to the extent that such loan amount was used to repay a Federal Direct Stafford Loan, a Federal Direct Unsubsidized Stafford Loan, a Federal Direct PLUS Loan for enrollment in a graduate or professional program or a loan made under section 428, 428H, or 428B for enrollment in a graduate or professional program, for a borrower who meets the requirements of subsection (a), as determined in accordance with regulations prescribed by the Secretary. (c)

List

If the list of schools in which a high need principal may perform service pursuant to subsection (a)(2) is not available before May 1 of any year, the Secretary may use the list for the year preceding the year for which the determination is made to make such service determination. (d)

Continuing eligibility

Any principal who performs service as in a school that— (1)meets the requirements of subsection (a)(2) in any year during such service; and (2)in a subsequent year fails to meet the requirements of such subsection, may continue to serve as a principal in such school and shall be eligible for loan cancellation pursuant to subsection (a). (e)

Forgiveness not considered income

The amount of a loan, and interest on a loan, which is canceled under this section shall not be considered income for purposes of the Internal Revenue Code of 1986. (f)

Construction

Nothing in this subsection shall be construed to authorize refunding of any refunding of any canceled loan. (g)

No double benefit

No borrower may, for the same service, receive a benefit under both this section and subtitle D of title I of the National and Community Service Act of 1990 (42 U.S.C. 12601 et seq.). (h)

Regulations

The Secretary is authorized to issue such regulations as may be necessary to carry out this section. (i)

Definitions

For the purpose of this section: (1)

Principal

The term principal has the meaning given such term in section 2102 of the Elementary and Secondary Education Act of 1965 (20 U.S.C. 6602). (2)

Year

The term year where applied to service as a teacher means an academic year as defined by the Secretary.