<enum>I</enum><header>System for Making Income-Dependent Education Assistance Loans</header> <section id="HDBE4602DB0094AD0ACB665C31580E7A6"><enum>101.</enum><header>Program authority</header> <subsection id="HDE64D57FA8FA406FA955A2E46D6044A6"><enum>(a)</enum><header>In general</header><text>The Secretary of the Education shall, in accordance with the provisions of this title, establish a program to provide the borrowers of Federal student loans with the option of converting their loans to income contingent repayment by providing direct loans for the discharge of such loans. Such income contingent repayment loans are hereinafter in this title referred to as <quote>direct IDEA loans</quote>.</text> </subsection><subsection id="HC0D36ACC63654E96A4FB54DD00040691"><enum>(b)</enum><header>Duration of program authority</header> <paragraph id="HF4FC72DE44DB4DCA944CC5D2CEF62D7"><enum>(1)</enum><header>Duration</header><text>The authority to conduct the program authorized by subsection (a) is effective on July 1, 2007, and expires on July 1, 2013.</text> </paragraph><paragraph id="HD6A6114D9D4E406CAAA7CE458D1333E3"><enum>(2)</enum><header>Authority to prepare for program</header><text>Notwithstanding paragraph (1), the Secretary may, before July 1, 2007—</text> <subparagraph id="H59D4061EB666486394C85071B71B26C7"><enum>(A)</enum><text>prescribe regulations to carry out this title; and</text> </subparagraph><subparagraph id="H73072EEA8CF74F79B43E44BE63331371"><enum>(B)</enum><text>expend funds appropriated pursuant to this title to carry out activities necessary to the implementation of the programs authorized by subsection (a).</text> </subparagraph></paragraph><paragraph id="H699AB92A2920451DA3614B2741232829"><enum>(3)</enum><header>Lapse of authority not to affect obligations</header><text>The expiration of authority under paragraph (1) shall not affect the obligations of any party to any insurance or loan agreement under this title entered into before such expiration.</text> </paragraph></subsection></section><section id="HEE15CE9C02CF4E7F974B2276B9BE8ECF"><enum>102.</enum><header>Loan amounts, terms, and conditions</header> <subsection id="H20F6ACFD05C5444F87F7F79086EE5BB"><enum>(a)</enum><header>Parallel terms, conditions, and benefits</header><text>Unless otherwise specified in this title or <external-xref legal-doc="usc" parsable-cite="usc/26/6307">section 6307</external-xref> of the Internal Revenue Code of 1986, loans made to borrowers under this title shall have the same terms, conditions, and benefits, as loans made to borrowers under section 428 of the <act-name parsable-cite="HEA65">Higher Education Act of 1965</act-name>.</text> </subsection><subsection id="H022647CFC9BC48299E9BF141C264F617"><enum>(b)</enum><header>Form of Note: Collection by IRS</header><text>The Secretary shall, by regulation, prescribe the form of the note or other evidence of indebtedness for direct IDEA loans consistent with the requirements of this title. Such note or other evidence shall—</text> <paragraph id="HD98199C97FAC4D959E15A38104F99DD"><enum>(1)</enum><text>provide that the loan shall be collectible on an income contingent basis in accordance with <external-xref legal-doc="usc" parsable-cite="usc/26/6307">section 6307</external-xref> of the Internal Revenue Code of 1986;</text> </paragraph><paragraph id="H6C354F6AA91A4C2C831FEFD467C1E3BE"><enum>(2)</enum><text>provide that the borrower agrees that—</text> <subparagraph id="H06946247E67147EA963B153379E49F5F"><enum>(A)</enum><text>any payment owed with respect to such loan shall be considered as an income tax, and shall be subject to collection by the Internal Revenue Service in the same manner, and subject to the same penalties, as a tax due;</text> </subparagraph><subparagraph id="H38E101100A46437F9ED066CC15BCF98"><enum>(B)</enum><text>the borrower’s taxpayer identification number may be used for the purposes of identifying the borrower’s IDEA account;</text> </subparagraph><subparagraph id="H9108FD9582C04B9688B2534BEBB79843"><enum>(C)</enum><text>the borrower will make payments on such loan using the income tax withholding system and will make appropriate adjustments to his or her withholding or estimated tax payments for such purposes; and</text> </subparagraph><subparagraph id="HF9CA9442D0404A8BAE9515F0EF10B7A0"><enum>(D)</enum><text>if the borrower files for relief under title 11, United States Code, the borrower’s repayment obligations on the IDEA loan will be treated the same as Federal income tax obligations; and</text> </subparagraph></paragraph><paragraph id="H9611CFEF5BD64202B87E00A90E30517"><enum>(3)</enum><text>contains such additional terms and conditions as the Secretary of the Treasury may prescribe by regulation.</text> </paragraph></subsection><subsection display-inline="no-display-inline" id="H181F4386DF444E90A1841540C37164AE"><enum>(c)</enum><header>Notice of Conversion in Federal Student Loan Notes</header><text>The Secretary shall, by regulation, require that any note or other evidence of indebtedness for any Federal student loan, disbursed on or after July 1, 2007, shall—</text> <paragraph id="H0DB8A187F1324FEC92CE3DBA8795FB56"><enum>(1)</enum><text>provide that, if the borrower defaults on repayment, the loan shall be collectible on an income contingent basis in accordance with section 6307 of the Internal Revenue Code of 1986;</text> </paragraph><paragraph id="H475DBD6BA38F496D9448F900B79F7CFC"><enum>(2)</enum><text>provide that, if the loan is collectible on an income contingent basis, the borrower agrees to the provisions described in subparagraphs (A) through (D) of subsection (b)(2); and</text> </paragraph><paragraph id="H4930C9FE801D4ED5A2C8EEF11DD5BD80"><enum>(3)</enum><text>contains such additional terms and conditions as the Secretary of the Treasury may prescribe by regulation.</text> </paragraph></subsection><subsection commented="no" id="H005B2203A9594CC9A7B593899000C500"><enum>(d)</enum><header>Origination fees and insurance premiums prohibited</header><text>An eligible student shall not be required to pay any origination fee, insurance premium, or other fee or charge to obtain a loan under this title.</text> </subsection></section><section id="HD75C1897D6FF4EC0B803E15CB0F1DE8C"><enum>103.</enum><header>Conversion to income contingent repayment</header> <subsection id="HC080E193B32A4980AD9FB5269000BE6"><enum>(a)</enum><header>Conversion at the election of the borrower</header> <paragraph id="HADEABE0BBADC480B9F70001B34730026"><enum>(1)</enum><header>Election</header><text>The borrower of a Federal student loan may elect to convert such loan to, and to consolidate such loan and any other Federal student loans of such borrower that are selected by the borrower for consolidation in, a direct IDEA loan for collection under <external-xref legal-doc="usc" parsable-cite="usc/26/6307">section 6307</external-xref> of the Internal Revenue Code of 1986 by filing with the lender and the Secretary a notice in such form and containing such information as the Secretary may require by regulation. Such election shall be made—</text> <subparagraph id="HAF9A450CD17C4D528EE751D983C9B00"><enum>(A)</enum><text>in the case of Federal student loans that enter repayment on or after July 1, 2007—</text> <clause id="HE882E6AE7D084DABAD2F9F94A2C515C9"><enum>(i)</enum><text>at any time within 180 days before, and within one year after, the beginning of the repayment period of such loan; or</text> </clause><clause id="H18F06AA6836B497CA77429E0257878BF"><enum>(ii)</enum><text display-inline="yes-display-inline">in the case of multiple Federal student loans selected for consolidation, by the date by which an election must be made under <internal-xref idref="HE882E6AE7D084DABAD2F9F94A2C515C9" legis-path="103.(b)(1)(A)(i)">clause (i)</internal-xref> for the selected loan that is the last to enter repayment; and</text> </clause></subparagraph><subparagraph id="H7891BA1463774A10811642D0167FE6EB"><enum>(B)</enum><text display-inline="yes-display-inline">in the case of Federal student loans that entered repayment before July 1, 2007, within 180 days after the later of such date or the date of enactment of this Act.</text> </subparagraph></paragraph><paragraph id="H4847ED6DAF83427781AD32F06E9DE3C5"><enum>(2)</enum><header>Discharge of Federal student loan</header><text>Upon receipt of a notice of election under paragraph (1) with respect to any loan, and agreement by the borrower to repay the amount of the obligation in a direct IDEA loan, the Secretary shall—</text> <subparagraph id="H816238DE441F41C2B8388C71CAAC97C0"><enum>(A)</enum><text>in the case of a Federal student loan described in <internal-xref idref="HC85BEDCBC0F64D0100ABE82B21912B1C" legis-path="104.(2)(A)">section 104(2)(A)</internal-xref>, pay to the holder of the loan the principal and accrued interest owing on the loan; and</text> </subparagraph><subparagraph id="HC0305BB2BEAF4B119BB9E4D834467981"><enum>(B)</enum><text>in the case of a Federal student loan described in <internal-xref idref="H47E4DC952D3248F9847C1602F59F92EC" legis-path="104.(2)(B)">section 104(2)(B)</internal-xref>, discharge the obligation of the borrower on such loan.</text> </subparagraph></paragraph></subsection><subsection id="HADF41D0EFE95412CB02E568D871033CF"><enum>(b)</enum><header>Conversion Following Default</header> <paragraph id="H6514C084D0364AF3B70030474DD7D46D"><enum>(1)</enum><header>Authority to convert</header> <subparagraph id="H2056F71B63C546F5ABCB505FC07EECEA"><enum>(A)</enum><header>Conversion by payment to lender</header><text display-inline="yes-display-inline">Upon default by the student borrower on any Federal student loan described in <internal-xref idref="HC85BEDCBC0F64D0100ABE82B21912B1C" legis-path="104.(2)(A)">section 104(2)(A)</internal-xref>, and prior to the commencement of suit or other enforcement proceedings upon security for that loan, the insurance beneficiary shall promptly notify the Secretary, and the Secretary shall if requested (at that time or after further collection efforts) by the beneficiary, or may on the Secretary’s own motion, if insurance is still in effect, pay to the beneficiary the amount of the loss sustained by the insured upon that loan as soon as that amount has been determined. Such beneficiary shall be required to meet the standards of due diligence in the collection of the loan and shall be required to submit proof that reasonable attempts were made to locate the borrower (when the location of the borrower is unknown) and proof that contact was made with the borrower (when the location is known). The Secretary shall make the determination required to carry out the provisions of this subparagraph not later than 90 days after the notification by the insurance beneficiary and shall make payment in full on the amount of the beneficiary’s loss pending completion of the due diligence investigation.</text> </subparagraph><subparagraph id="H934B1EA3142B49FA9D75590861C9B4A9"><enum>(B)</enum><header>Conversion by cancellation</header><text display-inline="yes-display-inline">Upon default by the student borrower on any Federal student loan described in <internal-xref idref="H47E4DC952D3248F9847C1602F59F92EC" legis-path="104.(2)(B)">section 104(2)(B)</internal-xref>, the Secretary may, within 90 days after such default—</text> <clause id="HF6BB65C9059143CBA062401D8DF56FD"><enum>(i)</enum><text>determine the amount of the loss on such loan; and</text> </clause><clause id="H27BFA7FB51184220BD2BBADD7E56CE11"><enum>(ii)</enum><text>notify the borrower of the conversion of the obligation on the loan to the obligation to repay a direct IDEA loan.</text> </clause></subparagraph></paragraph><paragraph id="HFCBB28DB6C384EA8A0C7AEA32E8E7ED5"><enum>(2)</enum><header>Amount of the loss</header><text>The <quote>amount of the loss</quote> on any loan shall be deemed to be an amount equal to the sum—</text> <subparagraph id="HF34A9F38050D4706B7228B95366E7906"><enum>(A)</enum><text>the unpaid balance of the principal amount and accrued interest, including interest accruing during the period from the date of the default to the date on which payment is authorized by the Secretary under <internal-xref idref="H2056F71B63C546F5ABCB505FC07EECEA" legis-path="103.(b)(1)(A)">paragraph (1)(A)</internal-xref> or notice is sent under <internal-xref idref="H934B1EA3142B49FA9D75590861C9B4A9" legis-path="103.(b)(1)(B)">paragraph (1)(B)</internal-xref>, except that such period shall not exceed 180 days; and</text> </subparagraph><subparagraph id="H44FA2BA1C2C24D55801E47E5C8C7516"><enum>(B)</enum><text>unpaid penalties and costs of collection incurred on the loan prior to the date of the default.</text> </subparagraph></paragraph><paragraph id="H0E4E3F3A459E49319780BD09A8590C9"><enum>(3)</enum><header>Effect of payment of loss</header><text>Upon payment of the amount of the loss pursuant to <internal-xref idref="H2056F71B63C546F5ABCB505FC07EECEA" legis-path="103.(b)(1)(A)">paragraph (1)(A)</internal-xref>, the United States shall be subrogated for all of the rights of the holder of the obligation upon the Federal student loan and shall be entitled to an assignment of the note or other evidence of the loan.</text> </paragraph><paragraph id="H6AFE30925FED4E87A900F63FB7878730"><enum>(4)</enum><header>Forbearance not precluded</header><text>Nothing in this section or in this title shall be construed to preclude any forbearance for the benefit of the student borrower which may be agreed upon by the parties to a student loan described in <internal-xref idref="HC85BEDCBC0F64D0100ABE82B21912B1C" legis-path="104.(2)(A)">section 104(2)(A)</internal-xref> and approved by the Secretary, or to preclude forbearance by the Secretary in the enforcement of the obligation after conversion under <internal-xref idref="H6514C084D0364AF3B70030474DD7D46D" legis-path="103.(b)(1)">paragraph (1)</internal-xref>. Any forbearance which is approved by the Secretary under this paragraph with respect to the repayment of a loan, including a forbearance during default, shall not be considered as indicating that a holder of a Federal student loan has failed to exercise reasonable care and due diligence in the collection of the loan.</text> </paragraph><paragraph id="H9DD1EF2A51B6438080D8D5B5FEFA1547"><enum>(5)</enum><header>Conversion</header><text>Any loan which is repaid or cancelled by the Secretary under <internal-xref idref="H6514C084D0364AF3B70030474DD7D46D" legis-path="103.(b)(1)">paragraph (1)</internal-xref> shall, after the date of such repayment or cancellation, be treated as a direct IDEA loan for purposes of collection under <external-xref legal-doc="usc" parsable-cite="usc/26/6307">section 6307</external-xref> of the Internal Revenue Code of 1986.</text> </paragraph></subsection><subsection id="H4EB0246F789D4088A7E85CB466541C08"><enum>(c)</enum><header>Notice to Secretary of the Treasury</header><text>The Secretary shall notify the Secretary of the Treasury of the loans that are converted to direct IDEA loans under this section. Such notice shall contain—</text> <paragraph id="H23E53DEB312C4BC2996E59D9A7CA7DE3"><enum>(1)</enum><text>the name, address, and taxpayer identification number of the borrower;</text> </paragraph><paragraph id="HB5590A48C10A40F5BB5E7927696695C3"><enum>(2)</enum><text>the amount owed by the borrower on any loan or loans that are converted under this section to an obligation under a direct IDEA loan;</text> </paragraph><paragraph id="HF2BA63F5B2C744DB916C9BB3A4512F17"><enum>(3)</enum><text>such other information as the Secretary and the Secretary of the Treasury may require.</text> </paragraph></subsection></section><section id="H12B11F47411C4AA086A230B73D834D00"><enum>104.</enum><header>Definitions</header><text display-inline="no-display-inline">As used in this title:</text> <paragraph id="H14BA3E54C7824CEF9535E619AF381974"><enum>(1)</enum><header>Secretary</header><text>The term <term>Secretary</term> means the Secretary of Education.</text> </paragraph><paragraph id="H09A6A04D435240CCAAB2F1B8E9000DE"><enum>(2)</enum><header>Federal student loans</header><text>The term <term>Federal student loans</term> means—</text> <subparagraph id="HC85BEDCBC0F64D0100ABE82B21912B1C"><enum>(A)</enum><text>any loan made under part B of title IV of the Higher Education Act of 1965 (20 U.S.C. 1071 et seq.), other than a loan made under section 428B of such Act to the parent of a dependent student; and</text> </subparagraph><subparagraph id="H47E4DC952D3248F9847C1602F59F92EC"><enum>(B)</enum><text>any loan made under part D of such title, other than a Federal Direct Plus Loan to the parent of a dependent student.</text> </subparagraph></paragraph><paragraph id="H80224758484B474FB6B09F3EFEFA0080"><enum>(3)</enum><header>Eligible lender</header><text>The term <term>eligible lender</term> has the meaning provided by section 435(b) of such Act (<external-xref legal-doc="usc" parsable-cite="usc/20/1085">20 U.S.C. 1085(d)</external-xref>).</text> </paragraph><paragraph id="HC5A43EA0C9364A2D00F9EB69419EFBCD"><enum>(4)</enum><header>Eligible student</header><text>The term <term>eligible student</term> means any student that is an eligible student under section 484 of such Act (20 U.S.C. 1091).</text> </paragraph></section>

109 HR 6084 IH: Income-Dependent U.S. House of Representatives 2006-09-14 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.

Short title

This Act may be cited as the

Income-Dependent Education Assistance Act of 2006

<enum>I</enum><header>System for Making Income-Dependent Education Assistance Loans</header> <section id="HDBE4602DB0094AD0ACB665C31580E7A6"><enum>101.</enum><header>Program authority</header> <subsection id="HDE64D57FA8FA406FA955A2E46D6044A6"><enum>(a)</enum><header>In general</header><text>The Secretary of the Education shall, in accordance with the provisions of this title, establish a program to provide the borrowers of Federal student loans with the option of converting their loans to income contingent repayment by providing direct loans for the discharge of such loans. Such income contingent repayment loans are hereinafter in this title referred to as <quote>direct IDEA loans</quote>.</text> </subsection><subsection id="HC0D36ACC63654E96A4FB54DD00040691"><enum>(b)</enum><header>Duration of program authority</header> <paragraph id="HF4FC72DE44DB4DCA944CC5D2CEF62D7"><enum>(1)</enum><header>Duration</header><text>The authority to conduct the program authorized by subsection (a) is effective on July 1, 2007, and expires on July 1, 2013.</text> </paragraph><paragraph id="HD6A6114D9D4E406CAAA7CE458D1333E3"><enum>(2)</enum><header>Authority to prepare for program</header><text>Notwithstanding paragraph (1), the Secretary may, before July 1, 2007—</text> <subparagraph id="H59D4061EB666486394C85071B71B26C7"><enum>(A)</enum><text>prescribe regulations to carry out this title; and</text> </subparagraph><subparagraph id="H73072EEA8CF74F79B43E44BE63331371"><enum>(B)</enum><text>expend funds appropriated pursuant to this title to carry out activities necessary to the implementation of the programs authorized by subsection (a).</text> </subparagraph></paragraph><paragraph id="H699AB92A2920451DA3614B2741232829"><enum>(3)</enum><header>Lapse of authority not to affect obligations</header><text>The expiration of authority under paragraph (1) shall not affect the obligations of any party to any insurance or loan agreement under this title entered into before such expiration.</text> </paragraph></subsection></section><section id="HEE15CE9C02CF4E7F974B2276B9BE8ECF"><enum>102.</enum><header>Loan amounts, terms, and conditions</header> <subsection id="H20F6ACFD05C5444F87F7F79086EE5BB"><enum>(a)</enum><header>Parallel terms, conditions, and benefits</header><text>Unless otherwise specified in this title or <external-xref legal-doc="usc" parsable-cite="usc/26/6307">section 6307</external-xref> of the Internal Revenue Code of 1986, loans made to borrowers under this title shall have the same terms, conditions, and benefits, as loans made to borrowers under section 428 of the <act-name parsable-cite="HEA65">Higher Education Act of 1965</act-name>.</text> </subsection><subsection id="H022647CFC9BC48299E9BF141C264F617"><enum>(b)</enum><header>Form of Note: Collection by IRS</header><text>The Secretary shall, by regulation, prescribe the form of the note or other evidence of indebtedness for direct IDEA loans consistent with the requirements of this title. Such note or other evidence shall—</text> <paragraph id="HD98199C97FAC4D959E15A38104F99DD"><enum>(1)</enum><text>provide that the loan shall be collectible on an income contingent basis in accordance with <external-xref legal-doc="usc" parsable-cite="usc/26/6307">section 6307</external-xref> of the Internal Revenue Code of 1986;</text> </paragraph><paragraph id="H6C354F6AA91A4C2C831FEFD467C1E3BE"><enum>(2)</enum><text>provide that the borrower agrees that—</text> <subparagraph id="H06946247E67147EA963B153379E49F5F"><enum>(A)</enum><text>any payment owed with respect to such loan shall be considered as an income tax, and shall be subject to collection by the Internal Revenue Service in the same manner, and subject to the same penalties, as a tax due;</text> </subparagraph><subparagraph id="H38E101100A46437F9ED066CC15BCF98"><enum>(B)</enum><text>the borrower’s taxpayer identification number may be used for the purposes of identifying the borrower’s IDEA account;</text> </subparagraph><subparagraph id="H9108FD9582C04B9688B2534BEBB79843"><enum>(C)</enum><text>the borrower will make payments on such loan using the income tax withholding system and will make appropriate adjustments to his or her withholding or estimated tax payments for such purposes; and</text> </subparagraph><subparagraph id="HF9CA9442D0404A8BAE9515F0EF10B7A0"><enum>(D)</enum><text>if the borrower files for relief under title 11, United States Code, the borrower’s repayment obligations on the IDEA loan will be treated the same as Federal income tax obligations; and</text> </subparagraph></paragraph><paragraph id="H9611CFEF5BD64202B87E00A90E30517"><enum>(3)</enum><text>contains such additional terms and conditions as the Secretary of the Treasury may prescribe by regulation.</text> </paragraph></subsection><subsection display-inline="no-display-inline" id="H181F4386DF444E90A1841540C37164AE"><enum>(c)</enum><header>Notice of Conversion in Federal Student Loan Notes</header><text>The Secretary shall, by regulation, require that any note or other evidence of indebtedness for any Federal student loan, disbursed on or after July 1, 2007, shall—</text> <paragraph id="H0DB8A187F1324FEC92CE3DBA8795FB56"><enum>(1)</enum><text>provide that, if the borrower defaults on repayment, the loan shall be collectible on an income contingent basis in accordance with section 6307 of the Internal Revenue Code of 1986;</text> </paragraph><paragraph id="H475DBD6BA38F496D9448F900B79F7CFC"><enum>(2)</enum><text>provide that, if the loan is collectible on an income contingent basis, the borrower agrees to the provisions described in subparagraphs (A) through (D) of subsection (b)(2); and</text> </paragraph><paragraph id="H4930C9FE801D4ED5A2C8EEF11DD5BD80"><enum>(3)</enum><text>contains such additional terms and conditions as the Secretary of the Treasury may prescribe by regulation.</text> </paragraph></subsection><subsection commented="no" id="H005B2203A9594CC9A7B593899000C500"><enum>(d)</enum><header>Origination fees and insurance premiums prohibited</header><text>An eligible student shall not be required to pay any origination fee, insurance premium, or other fee or charge to obtain a loan under this title.</text> </subsection></section><section id="HD75C1897D6FF4EC0B803E15CB0F1DE8C"><enum>103.</enum><header>Conversion to income contingent repayment</header> <subsection id="HC080E193B32A4980AD9FB5269000BE6"><enum>(a)</enum><header>Conversion at the election of the borrower</header> <paragraph id="HADEABE0BBADC480B9F70001B34730026"><enum>(1)</enum><header>Election</header><text>The borrower of a Federal student loan may elect to convert such loan to, and to consolidate such loan and any other Federal student loans of such borrower that are selected by the borrower for consolidation in, a direct IDEA loan for collection under <external-xref legal-doc="usc" parsable-cite="usc/26/6307">section 6307</external-xref> of the Internal Revenue Code of 1986 by filing with the lender and the Secretary a notice in such form and containing such information as the Secretary may require by regulation. Such election shall be made—</text> <subparagraph id="HAF9A450CD17C4D528EE751D983C9B00"><enum>(A)</enum><text>in the case of Federal student loans that enter repayment on or after July 1, 2007—</text> <clause id="HE882E6AE7D084DABAD2F9F94A2C515C9"><enum>(i)</enum><text>at any time within 180 days before, and within one year after, the beginning of the repayment period of such loan; or</text> </clause><clause id="H18F06AA6836B497CA77429E0257878BF"><enum>(ii)</enum><text display-inline="yes-display-inline">in the case of multiple Federal student loans selected for consolidation, by the date by which an election must be made under <internal-xref idref="HE882E6AE7D084DABAD2F9F94A2C515C9" legis-path="103.(b)(1)(A)(i)">clause (i)</internal-xref> for the selected loan that is the last to enter repayment; and</text> </clause></subparagraph><subparagraph id="H7891BA1463774A10811642D0167FE6EB"><enum>(B)</enum><text display-inline="yes-display-inline">in the case of Federal student loans that entered repayment before July 1, 2007, within 180 days after the later of such date or the date of enactment of this Act.</text> </subparagraph></paragraph><paragraph id="H4847ED6DAF83427781AD32F06E9DE3C5"><enum>(2)</enum><header>Discharge of Federal student loan</header><text>Upon receipt of a notice of election under paragraph (1) with respect to any loan, and agreement by the borrower to repay the amount of the obligation in a direct IDEA loan, the Secretary shall—</text> <subparagraph id="H816238DE441F41C2B8388C71CAAC97C0"><enum>(A)</enum><text>in the case of a Federal student loan described in <internal-xref idref="HC85BEDCBC0F64D0100ABE82B21912B1C" legis-path="104.(2)(A)">section 104(2)(A)</internal-xref>, pay to the holder of the loan the principal and accrued interest owing on the loan; and</text> </subparagraph><subparagraph id="HC0305BB2BEAF4B119BB9E4D834467981"><enum>(B)</enum><text>in the case of a Federal student loan described in <internal-xref idref="H47E4DC952D3248F9847C1602F59F92EC" legis-path="104.(2)(B)">section 104(2)(B)</internal-xref>, discharge the obligation of the borrower on such loan.</text> </subparagraph></paragraph></subsection><subsection id="HADF41D0EFE95412CB02E568D871033CF"><enum>(b)</enum><header>Conversion Following Default</header> <paragraph id="H6514C084D0364AF3B70030474DD7D46D"><enum>(1)</enum><header>Authority to convert</header> <subparagraph id="H2056F71B63C546F5ABCB505FC07EECEA"><enum>(A)</enum><header>Conversion by payment to lender</header><text display-inline="yes-display-inline">Upon default by the student borrower on any Federal student loan described in <internal-xref idref="HC85BEDCBC0F64D0100ABE82B21912B1C" legis-path="104.(2)(A)">section 104(2)(A)</internal-xref>, and prior to the commencement of suit or other enforcement proceedings upon security for that loan, the insurance beneficiary shall promptly notify the Secretary, and the Secretary shall if requested (at that time or after further collection efforts) by the beneficiary, or may on the Secretary’s own motion, if insurance is still in effect, pay to the beneficiary the amount of the loss sustained by the insured upon that loan as soon as that amount has been determined. Such beneficiary shall be required to meet the standards of due diligence in the collection of the loan and shall be required to submit proof that reasonable attempts were made to locate the borrower (when the location of the borrower is unknown) and proof that contact was made with the borrower (when the location is known). The Secretary shall make the determination required to carry out the provisions of this subparagraph not later than 90 days after the notification by the insurance beneficiary and shall make payment in full on the amount of the beneficiary’s loss pending completion of the due diligence investigation.</text> </subparagraph><subparagraph id="H934B1EA3142B49FA9D75590861C9B4A9"><enum>(B)</enum><header>Conversion by cancellation</header><text display-inline="yes-display-inline">Upon default by the student borrower on any Federal student loan described in <internal-xref idref="H47E4DC952D3248F9847C1602F59F92EC" legis-path="104.(2)(B)">section 104(2)(B)</internal-xref>, the Secretary may, within 90 days after such default—</text> <clause id="HF6BB65C9059143CBA062401D8DF56FD"><enum>(i)</enum><text>determine the amount of the loss on such loan; and</text> </clause><clause id="H27BFA7FB51184220BD2BBADD7E56CE11"><enum>(ii)</enum><text>notify the borrower of the conversion of the obligation on the loan to the obligation to repay a direct IDEA loan.</text> </clause></subparagraph></paragraph><paragraph id="HFCBB28DB6C384EA8A0C7AEA32E8E7ED5"><enum>(2)</enum><header>Amount of the loss</header><text>The <quote>amount of the loss</quote> on any loan shall be deemed to be an amount equal to the sum—</text> <subparagraph id="HF34A9F38050D4706B7228B95366E7906"><enum>(A)</enum><text>the unpaid balance of the principal amount and accrued interest, including interest accruing during the period from the date of the default to the date on which payment is authorized by the Secretary under <internal-xref idref="H2056F71B63C546F5ABCB505FC07EECEA" legis-path="103.(b)(1)(A)">paragraph (1)(A)</internal-xref> or notice is sent under <internal-xref idref="H934B1EA3142B49FA9D75590861C9B4A9" legis-path="103.(b)(1)(B)">paragraph (1)(B)</internal-xref>, except that such period shall not exceed 180 days; and</text> </subparagraph><subparagraph id="H44FA2BA1C2C24D55801E47E5C8C7516"><enum>(B)</enum><text>unpaid penalties and costs of collection incurred on the loan prior to the date of the default.</text> </subparagraph></paragraph><paragraph id="H0E4E3F3A459E49319780BD09A8590C9"><enum>(3)</enum><header>Effect of payment of loss</header><text>Upon payment of the amount of the loss pursuant to <internal-xref idref="H2056F71B63C546F5ABCB505FC07EECEA" legis-path="103.(b)(1)(A)">paragraph (1)(A)</internal-xref>, the United States shall be subrogated for all of the rights of the holder of the obligation upon the Federal student loan and shall be entitled to an assignment of the note or other evidence of the loan.</text> </paragraph><paragraph id="H6AFE30925FED4E87A900F63FB7878730"><enum>(4)</enum><header>Forbearance not precluded</header><text>Nothing in this section or in this title shall be construed to preclude any forbearance for the benefit of the student borrower which may be agreed upon by the parties to a student loan described in <internal-xref idref="HC85BEDCBC0F64D0100ABE82B21912B1C" legis-path="104.(2)(A)">section 104(2)(A)</internal-xref> and approved by the Secretary, or to preclude forbearance by the Secretary in the enforcement of the obligation after conversion under <internal-xref idref="H6514C084D0364AF3B70030474DD7D46D" legis-path="103.(b)(1)">paragraph (1)</internal-xref>. Any forbearance which is approved by the Secretary under this paragraph with respect to the repayment of a loan, including a forbearance during default, shall not be considered as indicating that a holder of a Federal student loan has failed to exercise reasonable care and due diligence in the collection of the loan.</text> </paragraph><paragraph id="H9DD1EF2A51B6438080D8D5B5FEFA1547"><enum>(5)</enum><header>Conversion</header><text>Any loan which is repaid or cancelled by the Secretary under <internal-xref idref="H6514C084D0364AF3B70030474DD7D46D" legis-path="103.(b)(1)">paragraph (1)</internal-xref> shall, after the date of such repayment or cancellation, be treated as a direct IDEA loan for purposes of collection under <external-xref legal-doc="usc" parsable-cite="usc/26/6307">section 6307</external-xref> of the Internal Revenue Code of 1986.</text> </paragraph></subsection><subsection id="H4EB0246F789D4088A7E85CB466541C08"><enum>(c)</enum><header>Notice to Secretary of the Treasury</header><text>The Secretary shall notify the Secretary of the Treasury of the loans that are converted to direct IDEA loans under this section. Such notice shall contain—</text> <paragraph id="H23E53DEB312C4BC2996E59D9A7CA7DE3"><enum>(1)</enum><text>the name, address, and taxpayer identification number of the borrower;</text> </paragraph><paragraph id="HB5590A48C10A40F5BB5E7927696695C3"><enum>(2)</enum><text>the amount owed by the borrower on any loan or loans that are converted under this section to an obligation under a direct IDEA loan;</text> </paragraph><paragraph id="HF2BA63F5B2C744DB916C9BB3A4512F17"><enum>(3)</enum><text>such other information as the Secretary and the Secretary of the Treasury may require.</text> </paragraph></subsection></section><section id="H12B11F47411C4AA086A230B73D834D00"><enum>104.</enum><header>Definitions</header><text display-inline="no-display-inline">As used in this title:</text> <paragraph id="H14BA3E54C7824CEF9535E619AF381974"><enum>(1)</enum><header>Secretary</header><text>The term <term>Secretary</term> means the Secretary of Education.</text> </paragraph><paragraph id="H09A6A04D435240CCAAB2F1B8E9000DE"><enum>(2)</enum><header>Federal student loans</header><text>The term <term>Federal student loans</term> means—</text> <subparagraph id="HC85BEDCBC0F64D0100ABE82B21912B1C"><enum>(A)</enum><text>any loan made under part B of title IV of the Higher Education Act of 1965 (20 U.S.C. 1071 et seq.), other than a loan made under section 428B of such Act to the parent of a dependent student; and</text> </subparagraph><subparagraph id="H47E4DC952D3248F9847C1602F59F92EC"><enum>(B)</enum><text>any loan made under part D of such title, other than a Federal Direct Plus Loan to the parent of a dependent student.</text> </subparagraph></paragraph><paragraph id="H80224758484B474FB6B09F3EFEFA0080"><enum>(3)</enum><header>Eligible lender</header><text>The term <term>eligible lender</term> has the meaning provided by section 435(b) of such Act (<external-xref legal-doc="usc" parsable-cite="usc/20/1085">20 U.S.C. 1085(d)</external-xref>).</text> </paragraph><paragraph id="HC5A43EA0C9364A2D00F9EB69419EFBCD"><enum>(4)</enum><header>Eligible student</header><text>The term <term>eligible student</term> means any student that is an eligible student under section 484 of such Act (20 U.S.C. 1091).</text> </paragraph></section><enum>II</enum><header>Collection of Income-Dependent education assistance loans</header> <section id="HDB8D48ED855D49B99F647CD2EF9659CF"><enum>201.</enum><header>Repayments using income tax collection system</header> <subsection id="HABC77A16310A4A1FA71CF399213898CF"><enum>(a)</enum><header>In general</header><text>Subchapter A of chapter 64 of the Internal Revenue Code of 1986 (relating to collection) is amended by adding at the end the following new section:</text> <quoted-block id="HC75F6383DE894010B59055E6E10071D7"> <section id="H7D69CD390EEB4E57A8C30205E61EC99"><enum>6307.</enum><header>Collection of direct income-dependent education assistance loans</header> <subsection id="HE0E3407ED1BA48A7BF615F37C7B545B"><enum>(a)</enum><header>Repayment obligation</header> <paragraph id="H39828E0161AA487181FC5C912D94C6CB"><enum>(1)</enum><header>In general</header><text>If an individual is furnished a notice under paragraph (2) for a calendar year that such individual is in repayment status for such year with respect to any direct IDEA loan, such individual shall make a payment under this section for the taxable year beginning in such calendar year.</text> </paragraph><paragraph id="H9C75DA2F828E45F5ACAD6C973F7F8200"><enum>(2)</enum><header>Notice to borrower</header> <subparagraph id="H8D4425FC0C3D4805A87700F7713B8C93"><enum>(A)</enum><header>In general</header><text>During January of each calendar year, the Secretary of Education shall furnish to each borrower of a direct IDEA loan a notice as to—</text> <clause id="HE37F72850E66451C97E9226B15BAF58F"><enum>(i)</enum><text>whether the records of the Secretary indicate that such borrower is in repayment status for the taxable year beginning in the preceding calendar year,</text> </clause><clause id="H676EE7CF9DDA4FD6A6FD0612DF7BBBAE"><enum>(ii)</enum><text>the maximum account balance of such borrower,</text> </clause><clause id="H002D3D78403442848243671528084110"><enum>(iii)</enum><text>the current account balance of such borrower as of the close of the preceding calendar year, and</text> </clause><clause id="H058F4EA3FD164466809200E8DB848B9C"><enum>(iv)</enum><text>the procedure for computing the amount of repayment owing for the taxable year beginning in the preceding calendar year.</text> </clause></subparagraph><subparagraph id="H8142BF3DE8E045F493B7C4BA2FA7D17E"><enum>(B)</enum><header>Form, etc</header><text>The notice under subparagraph (A)—</text> <clause id="HB76306F1B8F84931A1E92DA5BA5FCBE1"><enum>(i)</enum><text>shall be in such form as the Secretary may by regulations prescribe, and</text> </clause><clause id="H99D816D204394924B5893744636DA68D"><enum>(ii)</enum><text>shall be treated as furnished if sent by mail to the individual’s last known address or left at the dwelling or usual place of business of such individual.</text> </clause></subparagraph></paragraph></subsection><subsection id="H851F97F6C2264395BC66003B53214EE8"><enum>(b)</enum><header>Computation of annual repayment amount</header> <paragraph id="HD60613936EEC4598ADE87FD098F5AF30"><enum>(1)</enum><header>In general</header><text>The annual amount payable under this section by the taxpayer for any taxable year shall be the lesser of—</text> <subparagraph id="H8605265EC76E4EC0A076BF744EDDA03B"><enum>(A)</enum><text>the product of—</text> <clause id="H7D7A1584B97B465DA770420021EF757D"><enum>(i)</enum><text>the base amortization amount, and</text> </clause><clause id="HDC56B74EF4664F0A8070CFADDEF00F9"><enum>(ii)</enum><text>the progressivity factor for the taxpayer for such taxable year, or</text> </clause></subparagraph><subparagraph id="H7D07A1ED66DB4B28A3CBC1DDBFF9037"><enum>(B)</enum><text>15 percent of the excess of—</text> <clause id="H78A022ED16FE40A2AED44BD644F49B8E"><enum>(i)</enum><text>the modified adjusted gross income of the taxpayer for such taxable year, over</text> </clause><clause id="H66875315D6BF477DB29F38A0FA35B26F"><enum>(ii)</enum><text>the base income amount.</text> </clause></subparagraph></paragraph><paragraph id="HFE726171B5B1486486EB18004DB3565C"><enum>(2)</enum><header>Base amortization amount</header> <subparagraph id="H9DD791FB3D22419F8DED54498792C054"><enum>(A)</enum><header>In general</header><text>For purposes of this section, the term <term>base amortization amount</term> means the amount which, if paid at the close of each year for a period of 12 consecutive years, would fully repay (with interest) at the close of such period the maximum account balance of the borrower.</text> </subparagraph><subparagraph id="H01278AD67CE64875BE5251720977EAE2"><enum>(B)</enum><header>Interest</header><text>For purposes of subparagraph (A)—</text> <clause id="H73DF3217CA5E4225B26295FD6E208C44"><enum>(i)</enum><header>Annual rate</header><text>With respect to a direct IDEA loan that was made on any date by conversion of a Federal student loan (at the election of the borrower or at the direction of the Secretary of Education) under title I of the <short-title>Income-Dependent Education Assistance Act of 2006</short-title>, the interest rate on such direct IDEA loan shall be assumed to be equal to the interest rate applicable to a consolidation loan made under section 428C of the Higher Education Act of 1965 (<external-xref legal-doc="usc" parsable-cite="usc/20/1078-3">20 U.S.C. 1078–3</external-xref>) on that same date.</text> </clause><clause id="H180D6FC5D678404CBBDC736B83A3CA19"><enum>(ii)</enum><header>Limitation</header><text>The aggregate amount of interest shall not exceed 110 percent of the amount determined under subparagraph (A) without regard to interest.</text> </clause></subparagraph><subparagraph id="HEEFD67CCD9F44769A9E6B44C4674B245"><enum>(C)</enum><header>Joint returns</header><text>In the case of a joint return where each spouse has an account balance and is in repayment status, the amount determined under subparagraph (A) shall be the sum of the base amortization amounts of each spouse.</text> </subparagraph></paragraph><paragraph id="H0D23D9107C0648A3BED7F86FB5788200"><enum>(3)</enum><header>Progressivity factor</header> <subparagraph id="H67B2E5E9F08B43909E90D0879C5428A7"><enum>(A)</enum><header>In general</header><text display-inline="yes-display-inline">For purposes of this section, the progressivity factor with respect to a calendar year shall be determined under the following table on the basis of the ratio of the taxpayer’s modified adjusted gross income bears to the median State income of the State in which the taxpayer is resident on the last day of the taxable year ending in or with the calendar year:</text> <table align-to-level="paragraph" blank-lines-before="1" frame="none" line-rules="hor-ver" rule-weights="0.4.0.4.0.0" subformat="S6211" table-type="2-General"> <tgroup cols="2" fnote-size="0" grid-typeface="1.1" offset-from-left="48" thead-tbody-ldg-size="10.10.10" ttitle-size="0"><colspec coldef="txt" colname="col1" colsep="1" colwidth="156.00pt" min-data-value="50"></colspec><colspec coldef="fig" colname="col2" colsep="1" colwidth="183.75pt" min-data-value="10"></colspec> <thead> <row><entry align="center" colname="col1" rowsep="1"><bold>Ratio of modified adjusted gross income to median State income is:</bold></entry><entry align="center" colname="col2" rowsep="1"><bold>Progressivity Factor is:</bold></entry> </row> </thead> <tbody> <row><entry align="left" colname="col1" rowsep="0" stub-definition="txt-ldr" stub-hierarchy="1">Less than or equal to 0.25</entry><entry align="right" colname="col2" leader-modify="force-ldr" rowsep="0">0.5052</entry> </row> <row><entry align="left" colname="col1" rowsep="0" stub-definition="txt-ldr" stub-hierarchy="1">Greater than 0.25 and less than or equal to 0.35</entry><entry align="right" colname="col2" leader-modify="force-ldr" rowsep="0">0.5668</entry> </row> <row><entry align="left" colname="col1" rowsep="0" stub-definition="txt-ldr" stub-hierarchy="1">Greater than 0.35 and less than or equal to 0.50</entry><entry align="right" colname="col2" leader-modify="force-ldr" rowsep="0">0.6283</entry> </row> <row><entry align="left" colname="col1" rowsep="0" stub-definition="txt-ldr" stub-hierarchy="1">Greater than 0.50 and less than or equal to 0.65</entry><entry align="right" colname="col2" leader-modify="force-ldr" rowsep="0">0.6907</entry> </row> <row><entry align="left" colname="col1" rowsep="0" stub-definition="txt-ldr" stub-hierarchy="1">Greater than 0.65 and less than or equal to 0.75</entry><entry align="right" colname="col2" leader-modify="force-ldr" rowsep="0">0.8146</entry> </row> <row><entry align="left" colname="col1" rowsep="0" stub-definition="txt-ldr" stub-hierarchy="1">Greater than 0.75 and less than or equal to 1.00</entry><entry align="right" colname="col2" leader-modify="force-ldr" rowsep="0">0.9073</entry> </row> <row><entry align="left" colname="col1" rowsep="0" stub-definition="txt-ldr" stub-hierarchy="1">Greater than 1.00 and less than or equal to 1.25</entry><entry align="right" colname="col2" leader-modify="force-ldr" rowsep="0">1.0000</entry> </row> <row><entry align="left" colname="col1" rowsep="0" stub-definition="txt-ldr" stub-hierarchy="1">Greater than 1.25 and less than or equal to 1.50</entry><entry align="right" colname="col2" leader-modify="force-ldr" rowsep="0">1.0000</entry> </row> <row><entry align="left" colname="col1" rowsep="0" stub-definition="txt-ldr" stub-hierarchy="1">Greater than 1.50 and less than or equal to 1.75</entry><entry align="right" colname="col2" leader-modify="force-ldr" rowsep="0">1.1520</entry> </row> <row><entry align="left" colname="col1" rowsep="0" stub-definition="txt-ldr" stub-hierarchy="1">Greater than 1.75 and less than or equal to 2.00</entry><entry align="right" colname="col2" leader-modify="force-ldr" rowsep="0">1.2700</entry> </row> <row><entry align="left" colname="col1" rowsep="0" stub-definition="txt-ldr" stub-hierarchy="1">Greater than 2.00 and less than or equal to 2.50</entry><entry align="right" colname="col2" leader-modify="force-ldr" rowsep="0">1.3640</entry> </row> <row><entry align="left" colname="col1" rowsep="0" stub-definition="txt-ldr" stub-hierarchy="1">Greater than 2.50 and less than or equal to 3.00</entry><entry align="right" colname="col2" leader-modify="force-ldr" rowsep="0">1.4850</entry> </row> <row><entry align="left" colname="col1" rowsep="0" stub-definition="txt-ldr" stub-hierarchy="1">Greater than 3.00 and less than or equal to 3.50</entry><entry align="right" colname="col2" leader-modify="force-ldr" rowsep="0">1.6000</entry> </row> <row><entry align="left" colname="col1" rowsep="0" stub-definition="txt-ldr" stub-hierarchy="1">Greater than 3.50</entry><entry align="right" colname="col2" leader-modify="force-ldr" rowsep="0">2.0000</entry> </row> </tbody> </tgroup> </table> </subparagraph><subparagraph id="HD3E066849A3C46758BF7A8F14B265571"><enum>(B)</enum><header>Median State income</header><text display-inline="yes-display-inline">For purposes of subparagraph (A), the median State income shall be the most recent census estimate of the median income of such State released by the Bureau of Census before the beginning of such calendar year.</text> </subparagraph></paragraph><paragraph id="H824BBDAC13E74D79B51ED25D1FF8F1AC"><enum>(4)</enum><header>Modified adjusted gross income</header><text>For purposes of this subsection, the term <term>modified adjusted gross income</term> means adjusted gross income for the taxable year—</text> <subparagraph id="HB886DE815A344546866EEFDA7F41B2FD"><enum>(A)</enum><text>determined without regard to—</text> <clause id="H7D7D76CBAC2A4D9480153DE1582D64FE"><enum>(i)</enum><text>sections 135, 911, 931, and 933,</text> </clause><clause id="HB9E8592FBF614996A791F09FF6A4C651"><enum>(ii)</enum><text>the deductions from gross income allowable under section 62(a) by reason of—</text> <subclause id="H1144881EFA994400A95807D139BE97F"><enum>(I)</enum><text>paragraph (6) thereof (relating to profit-sharing, annuities, and bond-purchase plans of self-employed individuals),</text> </subclause><subclause id="H86EC04805BC2417DA02CF96B2C111835"><enum>(II)</enum><text>paragraph (7) thereof (relating to retirement savings), and</text> </subclause><subclause id="H57BE759105764989BF00C82D796A08E"><enum>(III)</enum><text>paragraph (17) (relating to interest on education loans), and</text> </subclause></clause></subparagraph><subparagraph id="H74C2161E975D48918EC001F3A588B751"><enum>(B)</enum><text>increased by the amount of interest received or accrued by the taxpayer during the taxable year which is exempt from tax.</text> </subparagraph></paragraph><paragraph id="H94B912DE563B4689BA18F6CAEDFAE3AE"><enum>(5)</enum><header>Base income amount</header><text>For purposes of this subsection, the term <term>base income amount</term> means—</text> <subparagraph id="H897CB473117F4A84865076002B9EECD6"><enum>(A)</enum><text>in the case of a joint return, the sum of the standard deduction applicable to such return and twice the exemption amount for the taxable year, and</text> </subparagraph><subparagraph id="H31C51CB957024BC8BB34160955D321D8"><enum>(B)</enum><text>in any other case, the sum of the standard deduction applicable to such individual and the exemption amount for the taxable year.</text> </subparagraph><continuation-text continuation-text-level="paragraph">For purposes of this paragraph, the term <term>standard deduction</term> has the meaning given such term by section 63(c), and the term <term>exemption amount</term> has the meaning given such term by section 151(d).</continuation-text></paragraph></subsection><subsection id="H03C9898D937D477198DD8E8E0900DFA7"><enum>(c)</enum><header>Termination of borrower’s repayment obligation</header> <paragraph id="HF2869E7A71624EAEA529FDD700A3BFB6"><enum>(1)</enum><header>In general</header><text>All direct IDEA loans of a borrower shall be canceled as of the close of the first taxable year for which the current account balance of such borrower is not greater than zero.</text> </paragraph><paragraph id="H0146B6D910CF42E7B85CD5704DD0F41E"><enum>(2)</enum><header>Determination of current account balance</header> <subparagraph id="HFDCA90B1523446D685FDE8CC09090066"><enum>(A)</enum><header>In general</header><text>For purposes of determining the current account balance of the borrower for any taxable year after the 12th taxable year that the borrower is in repayment status under this section, the current account balance shall be the amount which would be such balance if—</text> <clause id="H4845EDF270CE435D9372034C68AF2C08"><enum>(i)</enum><text>the initial account balance of the borrower equaled 90 percent of such initial account balance (determined without regard to this clause), and</text> </clause><clause id="HF9CDCCC23F3A46198FBEE7F2EFC4823E"><enum>(ii)</enum><text>clause (ii) of section 102(d)(3)(C) of the <short-title>Income-Dependent Education Assistance Act of 2006</short-title> had been applied for all prior periods of repayment status under this section by substituting <quote>2 percent</quote> for <quote>3 percent</quote>.</text> </clause><continuation-text continuation-text-level="subparagraph">In the case of any taxable year after the 16th taxable year that the borrower is in repayment status under this section, clause (ii) shall be applied by substituting <quote>1 percent</quote> for <quote>2 percent</quote>.</continuation-text></subparagraph><subparagraph id="H765D0FB4BD724820B9035B7E443D0001"><enum>(B)</enum><header>Initial account balance</header><text display-inline="yes-display-inline">For purposes of subparagraph (A), the term <term>initial account balance</term> means, with respect to any borrower, the sum of the amounts owed by the borrower on any direct IDEA loan, as contained in notices furnished under subsection (a)(2) to the Secretary.</text> </subparagraph></paragraph><paragraph id="HA3F5F732FB594D07B1E4C534E24BB62B"><enum>(3)</enum><header>No repayment required after 25 years in repayment status</header><text>The borrower has no repayment obligation under this section any taxable year after the 25th taxable year for which the borrower is in repayment status under this section.</text> </paragraph><paragraph id="H60EB04AB87FE4E27A2C0989822C31EE7"><enum>(4)</enum><header>Determination of years in repayment status</header><text>For purposes of paragraphs (2) and (3), the number of taxable years in which a borrower is in repayment status under this section shall be determined without regard to any taxable year before the most recent taxable year in which the borrower received a direct IDEA loan.</text> </paragraph><paragraph id="HBFA6B8AAEBB8424495FA09A947435F09"><enum>(5)</enum><header>Extension of repayment years for medical interns</header><text>The number of years specified in paragraphs (2) and (3) shall be increased by 1 year for each calendar year during any 5 months of which the individual is an intern in medicine, dentistry, veterinary medicine, or osteopathic medicine.</text> </paragraph></subsection><subsection id="H8849EEC1F9594152B7FBA7C6F596D000"><enum>(d)</enum><header>Definitions</header><text>For purposes of this section—</text> <paragraph id="HD0749555993343EC9098A440F5042D86"><enum>(1)</enum><header>Maximum account balance</header><text>The term <term>maximum account balance</term> means the highest amount (as of the close of any calendar year) of unpaid principal and unpaid accrued interest on all direct IDEA loan obligations of a borrower.</text> </paragraph><paragraph id="H885FD61941EB493582E3D9471375AE3"><enum>(2)</enum><header>Current account balance</header><text>The term <term>current account balance</term> means the amount (as of the close of a calendar year) of unpaid principal and unpaid accrued interest on all IDEA loans of a borrower.</text> </paragraph><paragraph id="H824B88742B3341F0A6DB074EFAE4ED7"><enum>(3)</enum><header>Repayment status</header><text>A borrower is in repayment status for any taxable year unless—</text> <subparagraph id="H7BFBFA563C2747658037EDF2578945EC"><enum>(A)</enum><text>such borrower was, during at least 7 months of such year, an eligible student, as that term is defined in section 104(4) of the <short-title>Income-Dependent Education Assistance Act of 2006</short-title>; or</text> </subparagraph><subparagraph id="HBA8E755ADD1A422188A73F51C143FC3F"><enum>(B)</enum><text>such taxable year was the first year in which the borrower was such an eligible student and the borrower was such an eligible student during any of the last 6 months of such taxable year.</text> </subparagraph></paragraph><paragraph id="H815464E4512040FF8F00893F097B7D02"><enum>(4)</enum><header>Direct IDEA loan</header><text>The term <term>direct IDEA loan</term> has the meaning given such term by title I of the <short-title>Income-Dependent Education Assistance Act of 2006</short-title>. Such term includes any loan which is treated as such under section 103 of such title.</text> </paragraph></subsection><subsection id="HA57B1729E40F4E6E873782F1B74FED06"><enum>(e)</enum><header>Payment of amount owing</header><text>Any amount to be collected from an individual under this section shall be paid—</text> <paragraph id="H5590023D55E34341BCB6C77EF2C148C"><enum>(1)</enum><text>not later than the last date (determined without regard to extensions) prescribed for filing his return of tax imposed by chapter 1 for the taxable year ending before the date the notice under subsection (a) is sent, and</text> </paragraph><paragraph id="HB2714D52056D4A0D9551416FEC1C8418"><enum>(2)</enum><subparagraph commented="no" display-inline="yes-display-inline" id="H6BC9394A3F914F57B9B0088353AAA841"><enum>(A)</enum><text>if such return is filed not later than such date, with such return, or</text> </subparagraph><subparagraph id="H5FC20A74002C4B44908DB807C7E732AB" indent="up1"><enum>(B)</enum><text>in any case not described in subparagraph (A), in such manner as the Secretary may by regulations prescribe.</text> </subparagraph></paragraph></subsection><subsection id="H8B5AFA223EF042958434A5BFCA00BF97"><enum>(f)</enum><header>Failure to pay amount owing</header><text>If an individual fails to pay the full amount required to be paid on or before the last date described in subsection (e)(1), the Secretary shall assess and collect the unpaid amount in the same manner, with the same powers, and subject to the same limitations applicable to a tax imposed by subtitle C the collection of which would be jeopardized by delay.</text> </subsection><subsection id="H65FEBDB390934728A1BEB8A339F7992D"><enum>(g)</enum><header>Loans of deceased and permanently disabled borrowers; discharge by Secretary</header> <paragraph id="H37C24E5D1A914CB6A9D2006E5DB6B34E"><enum>(1)</enum><header>Discharge in the event of death</header><text>If a borrower of a direct IDEA loan dies or becomes permanently and totally disabled (as determined in accordance with regulations of the Secretary), then the Secretary shall discharge the borrower’s liability on the loan.</text> </paragraph><paragraph id="HA2D5BEEC885042B594C45A03B56BF6F"><enum>(2)</enum><header>Limitation on discharge</header><text>The discharge of the liability of an individual under this subsection shall not discharge the liability of any spouse with respect to any direct IDEA loan made to such spouse.</text> </paragraph></subsection><subsection id="HAB4CB02985334B25A6528CB64EE1F54D"><enum>(h)</enum><header>Crediting of collections</header> <paragraph id="H16B7C69CA5224A36BA400688FE6E739E"><enum>(1)</enum><header>In general</header><text>For purposes of determining whether there is an underpayment or overpayment of tax imposed by subtitle A for any taxable year by an individual who is required to pay an amount under this section, amounts withheld under chapter 24 and amounts paid under section 6654 shall be treated as payments of the amount required to be paid under this section to the extent thereof.</text> </paragraph><paragraph id="H343AC6BEC58E47BA92ED0030F738766F"><enum>(2)</enum><header>Crediting of amounts paid on a joint return</header><text>Amounts collected under this section on a joint return from a husband and wife both of whom are in repayment status shall be credited to the accounts of such spouses in the following order:</text> <subparagraph id="H4088A616CA45432994C0ADE0D6003EB"><enum>(A)</enum><text>First, to repayment of interest added to each account at the end of the preceding calendar year in proportion to the interest so added to the respective accounts of the spouses.</text> </subparagraph><subparagraph id="HD07E46FEBAD44C9294B124CAE37419D0"><enum>(B)</enum><text>Then, to repayment of unpaid principal, and unpaid interest accrued before such preceding calendar year, in proportion to the respective maximum account balances of the spouses.</text> <clause id="H4F52BB3BF911486C86FD2396263B9C12" indent="up3"><enum>(i)</enum><header>Special rules</header> </clause></subparagraph></paragraph><paragraph id="HCA4B8EACE79B43AB8D5E1B8858DE36E3"><enum>(1)</enum><header>Exclusion from income for loans discharged</header><text>No amount shall be includible in gross income by reason of the discharge under this section of any loan.</text> </paragraph><paragraph id="HF2F9ADD0B01F4840B61897DBB6003452"><enum>(2)</enum><header>Computation of alternative annual payment for individuals who have attained age 55</header><text>In the case of an individual who attains age 55 before the close of the calendar year ending in the taxable year, or of an individual filing a joint return whose spouse attains age 55 before the close of such calendar year, the progressivity factor applicable to the base amortization amount of such individual for such taxable year shall not be less than 1.0.</text> </paragraph><paragraph id="H8FEE92B35965482DAA2802AD00A982E8"><enum>(3)</enum><header>Finality of assessment and collection</header><text>The first sentence of subsection (b) of section 6305 shall apply to assessments and collections under subsection (f) of this section.</text> </paragraph><paragraph id="H699A9B257A07452FABF3AD008D362B54"><enum>(4)</enum><header>Information to be furnished to Secretary</header><text>The borrower of any direct IDEA loan shall furnish to the Secretary such information as the Secretary determines to be necessary to carry out this section with respect to such loan.</text> </paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block> </subsection><subsection id="H3CECD5A61D8146D6B9AA98F2101D1EB2"><enum>(b)</enum><header>Application of estimated tax</header><text>Subsection (f) of section 6654 of such Code (relating to failure by individual to pay estimated income tax) is amended by striking <quote>minus</quote> at the end of paragraph (2) and inserting <quote>plus</quote>, by redesignating paragraph (3) as paragraph (4), and by inserting after paragraph (2) the following new paragraph:</text> <quoted-block id="HE530C1C34C1F4D239716BDD168178546"> <paragraph id="H4DD0C2E00B7445818CB9D25C7525A477"><enum>(3)</enum><text>the amount required to be repaid under section 6307 (relating to collection of income-dependent education assistance loans), minus</text> </paragraph><after-quoted-block>.</after-quoted-block></quoted-block> </subsection><subsection id="H9A5AB31D8D0046E0807B871EC4771F5C"><enum>(c)</enum><header>Filing requirement</header><text>Subsection (a) of section 6012 of such Code (relating to persons required to make returns of income) is amended by inserting after paragraph (9) the following new paragraph:</text> <quoted-block id="H0550685532014D92A3BD487F5732E64B"> <paragraph id="H66B23AB0C8E645029218B7CAFB2B65E"><enum>(10)</enum><text>Every individual required to make a payment for the taxable year under section 6307 (relating to collection of income-dependent education assistance loans).</text> </paragraph><after-quoted-block>.</after-quoted-block></quoted-block> </subsection><subsection id="H034A3AFECF3946B4B56C2D7E255FDD53"><enum>(d)</enum><header>Clerical amendment</header><text>The table of sections for subchapter A of chapter 64 of such Code is amended by adding at the end the following new item:</text> <quoted-block id="H6A769B936CC74A2B9917D5BC09C9EBBB" style="OLC"> <toc regeneration="no-regeneration"> <toc-entry level="section">Sec. 6307. Collection of direct income-dependent education assistance loans.</toc-entry> </toc> <after-quoted-block>.</after-quoted-block></quoted-block> </subsection></section>