Lowering rates for borrowers with Federal family education loans

(a)

Temporary program of Federal subsidy payments To defray borrower interest costs on Federal family education loans

Notwithstanding any other provision of the Higher Education Act of 1965 (20 U.S.C. 1071 et seq.), the Secretary of Education shall carry out a temporary program concerning the novel coronavirus virus disease (COVID–19) outbreak to provide payment relief to borrowers with loans made under part B of the Higher Education Act of 1965 (20 U.S.C. 1071 et seq.), that are not held by the Federal Government. (1)Under the program, the Secretary is directed to enter into agreements expeditiously with eligible lenders and guaranty agencies to reduce interest rates to 0.00 percent on such loans and shall make payments, as set forth below, to such eligible lenders and guaranty agencies to offset the cost of the reduced interest rates. Under such agreements, the Secretary shall—(A)make Federal interest subsidy payments on behalf of each borrower whose loans are held by such eligible lender or guaranty agency equal to the total amount of the interest on the unpaid principal amount of the loans, calculated at the borrower interest rates established under section 427A of the Higher Education Act of 1965 (20 U.S.C. 1077a); and(B)make these Federal interest subsidy payments to an eligible lender or guaranty agency on a monthly basis, beginning as of March 13, 2020.(2)Under the program and effective as of March 13, 2020, all eligible lenders and guaranty agencies who have entered agreements with the Secretary under this subsection shall—(A)temporarily waive interest, effectively reducing the interest rates charged to borrowers on loans made under this part to 0.00 percent;(B)provide a report to the Secretary no later than 30 days from the date of such agreement confirming that such interest rates have been reduced to 0.00 percent effective as of March 13, 2020; and(C)continue such reduction in interest rates through September 30, 2020.(3)For purposes of this paragraph, an eligible lender includes the holder of the loan or, if the holder acts as eligible lender trustee for the beneficial owner of the loan, the beneficial owner of the loan.(4)Nothing in this paragraph shall affect payment calculations under section 438 of the Higher Education Act of 1965 (20 U.S.C. 1087).(b)

Temporary postponement of part b loan payments

Notwithstanding any other provision of the Higher Education Act of 1965 (20 U.S.C. 1071 et seq.), the Secretary shall require eligible lenders and guaranty agencies with agreements with the Secretary under subsection (a) to suspend all payments due from borrowers through September 30, 2020.(1)

Consideration of payments

Notwithstanding any other provision of the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.), the Secretary shall deem each month for which a loan payment was suspended under this subsection as if the borrower of the loan had made a qualified payment for the purpose of any loan forgiveness program and loan rehabilitation program authorized under the Higher Education Act of 1965 (20 U.S.C. 1071 et seq.).(2)

Reporting to consumer reporting agencies

During the period in which the borrower payments on a loan are suspended under this subsection, the Secretary shall ensure that, for the purpose of reporting information about the loan to a consumer reporting agency, any payment that has been suspended is treated as if it were a regularly scheduled payment made by a borrower.(c)

Suspending involuntary collection

Notwithstanding any other provision of the Higher Education Act of 1965 (20 U.S.C. 1071 et seq.), the Secretary shall require guaranty agencies with agreements with the Secretary under subsection (a) to suspend all involuntary collection related to the loan, through September 30, 2020. Such efforts shall include—(1)a wage garnishment authorized under section 488A of the Higher Education Act of 1965 (20 U.S.C. 1095a) or section 3720D of title 31, United States Code;(2)a reduction of tax refund by amount of debt authorized under section 3720A of title 31, United States Code, or section 6402(d) of the Internal Revenue Code of 1986;(3)a reduction of any other Federal benefit payment by administrative offset authorized under section 3716 of title 31, United States Code (including a benefit payment due to an individual under the Social Security Act or any other provision described in subsection (c)(3)(A)(i) of such section); and(4)any other involuntary collection activity by the Secretary.(d)

Notice to borrowers and transition period

To inform borrowers of the actions taken in accordance with this section and ensure an effective transition, the Secretary shall require eligible lenders and guaranty agencies with agreements under subsection (a) to—(1)not later than 15 days after entering into such agreement, notify borrowers—(A)of the actions taken in accordance with this section for whom payments have been suspended and interest waived;(B)of the actions taken in accordance with subsection (c) for whom collections have been suspended;(C)of the option to continue making payments toward principal; and(D)that the program under this section is a temporary program; and(2)beginning on August 1, 2020, carry out a program to provide not less than 6 notices by postal mail, telephone, or electronic communication to borrowers indicating—(A)when the borrower’s normal payment obligations will resume; and(B)that the borrower has the option to apply for income-driven repayment or other repayment or forgiveness programs, including a brief description of such options.(e)

Waivers

In carrying out this section, 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 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), except that the notices shall be published not later than 180 days after the date of enactment of this Act.