[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[S. 1948 Introduced in Senate (IS)]

114th CONGRESS
  1st Session
                                S. 1948

    To increase awareness of the Federal student loan income-based 
                repayment plan, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             August 5, 2015

  Mr. Merkley introduced the following bill; which was read twice and 
  referred to the Committee on Health, Education, Labor, and Pensions

_______________________________________________________________________

                                 A BILL


 
    To increase awareness of the Federal student loan income-based 
                repayment plan, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Access to Fair Financial Options for 
Repaying Debt Act of 2015'' or the ``AFFORD Act''.

SEC. 2. NOTICE OF REPAYMENT PLAN OPTIONS AT THE TIME OF ENTRANCE 
              COUNSELING.

    Section 485(l)(2) of the Higher Education Act of 1965 (20 U.S.C. 
1092(l)(2)) is amended by adding at the end the following:
                    ``(L) Information on the 2 repayment options that 
                the borrower of a loan made on or after July 1, 2016, 
                will have for repaying the loan, including--
                            ``(i) an income-based repayment plan, as 
                        described under section 493C(f); and
                            ``(ii) a fixed repayment plan described in 
                        section 493E.''.

SEC. 3. ANNUAL LOAN COUNSELING.

    Section 485 of the Higher Education Act of 1965 (20 U.S.C. 1092) is 
amended by adding at the end the following:
    ``(n) Annual Loan Counseling.--
            ``(1) Invitation.--Each institution of higher education 
        participating in any program under this title shall annually 
        provide each student described in paragraph (3) with a written 
        notification (which may be in electronic form) inviting the 
        student to attend financial counseling described in paragraph 
        (2).
            ``(2) Contents of annual loan counseling.--The counseling 
        described in paragraph (1) may be provided in person or via 
        telephone or electronic form, and shall include each of the 
        following:
                    ``(A) Information on each student loan that the 
                institution is aware that the student has borrowed, 
                including Federal loans, private loans, and loans from 
                the institution.
                    ``(B) The total amount of the cumulative student 
                loan debt from the loans described in subparagraph (A).
                    ``(C) The student's estimated monthly repayment 
                amount for Federal loans, which shall include--
                            ``(i) estimates based on each applicable 
                        debt bracket for the fixed repayment plan 
                        described under section 493E; and
                            ``(ii) an additional estimate based on the 
                        income-based repayment plan described under 
                        section 493C(f), calculated on the basis of a 
                        hypothetical income and a family size of 1.
                    ``(D) A statement that the monthly amount described 
                in subparagraph (C) does not include any amounts that 
                the student may be required to repay for private or 
                institutional loans.
                    ``(E) For each Federal loan described in 
                subparagraph (A), the interest rate for the loan, as of 
                the date of the counseling, and a statement that the 
                interest rate on student loans may vary based on when 
                the loan was borrowed and other factors.
                    ``(F) A notification that some students may qualify 
                for a Federal Pell Grant.
                    ``(G) The percentage of the total aggregate 
                borrowing limit that the student has reached, as of the 
                date of the counseling, for Federal Direct Stafford 
                Loans and Federal Direct Unsubsidized Stafford Loans, 
                and a statement that such aggregate borrowing limit may 
                change based on the borrower's student status (whether 
                undergraduate or graduate) or if there is a change in 
                the borrower's dependency status.
                    ``(H) Any information, including financial planning 
                resources, that the institution determines is 
                appropriate to include in the counseling.
                    ``(I) A statement that the information provided 
                through the counseling contains only estimates and 
                information relevant to the student to the best of the 
                institution's knowledge.
            ``(3) Students receiving notification.--The notification 
        described in paragraph (1) shall be provided to each student--
                    ``(A) who is enrolled in the institution; and
                    ``(B) who is a student for which the institution 
                has knowledge that the student has 1 or more student 
                loans, including any such loans from another 
                institution that a student may have transferred from or 
                been previously enrolled in.''.

SEC. 4. INCOME-BASED REPAYMENT PLAN.

    Section 493C of the Higher Education Act of 1965 (20 U.S.C. 1098e) 
is amended--
            (1) in subsection (b)--
                    (A) in paragraph (8), by striking ``and'' after the 
                semicolon;
                    (B) in paragraph (9), by striking the period at the 
                end and inserting ``; and''; and
                    (C) by adding at the end the following:
            ``(10) a borrower who is repaying a loan made under part B 
        or D pursuant to this section may repay such loan in full at 
        any time without penalty.''; and
            (2) by adding at the end the following:
    ``(f) Income-Based Repayment for New Loans on and After July 1, 
2016, and for Borrowers Who Enter IBR After July 1, 2016.--
            ``(1) In general.--The income-based repayment plan shall be 
        carried out in accordance with this section, except as 
        otherwise specified in this subsection (including through the 
        special terms described in paragraph (2))--
                    ``(A) with respect to any loan issued on or after 
                July 1, 2016, if such borrower elects the income-based 
                repayment plan for that loan; and
                    ``(B) with respect to any borrower who is repaying 
                a loan made, insured, or guaranteed under part B or D, 
                if such borrower elects to repay the loan under the 
                income-based repayment plan on or after July 1, 2016.
            ``(2) Special terms.--Notwithstanding any other provision 
        of this section, with respect to a loan described under 
        paragraph (1), the following terms shall apply to the income-
        based repayment plan:
                    ``(A)(i) Notwithstanding subsection (a)(3)(B), the 
                repayment amount under this subsection shall be an 
                amount equal to 10 percent of the result obtained by 
                calculating, on at least an annual basis, the amount by 
                which--
                            ``(I) the borrower's, and the borrower's 
                        spouse's (if applicable), adjusted gross 
                        income; exceeds
                            ``(II) the applicable percentage of the 
                        poverty line in accordance with clause (ii) 
                        that is applicable to the borrower's family 
                        size as determined under section 673(2) of the 
                        Community Services Block Grant Act (42 U.S.C. 
                        9902(2)).
                    ``(ii) For purposes of clause (i), the term 
                `applicable percentage' means 150 percent reduced by 1 
                percentage point for each $1,000 by which the 
                borrower's adjusted gross income exceeds $100,000.
                    ``(B) Subsection (b)(7)(B) shall be applied by 
                substituting `20 years' for `25 years'.
                    ``(C) A borrower of such a loan shall not be 
                required to have a partial financial hardship and may 
                elect, and remain enrolled in, the income-based 
                repayment plan under this subsection regardless of 
                income level.
                    ``(D) Subparagraph (A) of subsection (b)(6) shall 
                not apply and a borrower's monthly payment shall be 
                determined in accordance with subparagraph (A) divided 
                by 12, which may exceed the monthly repayment amount 
                under a standard 10-year repayment plan or a fixed 
                repayment plan described in section 493E.
                    ``(E) Subparagraph (B) of subsection (b)(3) shall 
                not apply.
            ``(3) Additional special terms for certain borrowers.--A 
        borrower described in paragraph (1)(B)--
                    ``(A) may choose to retain the repayment plan in 
                which the borrower is enrolled on June 30, 2016;
                    ``(B) may elect to--
                            ``(i) leave the repayment plan described in 
                        subparagraph (A) and enter the income-based 
                        repayment plan under this subsection;
                            ``(ii) leave the repayment plan described 
                        in subparagraph (A) and enter a fixed repayment 
                        plan described in section 493E; or
                            ``(iii) not more than once per calendar 
                        year, switch between the repayment plans 
                        described in clauses (i) and (ii);
                    ``(C) after electing to leave a repayment plan 
                other than an income-based repayment plan described 
                under this subsection or the fixed repayment plan 
                described in section 493E, shall not be permitted to 
                re-elect a repayment plan that is not an income-based 
                repayment plan under this subsection or a fixed 
                repayment plan described in section 493E; and
                    ``(D) shall retain, for purposes of repayment or 
                cancellation of any outstanding balance of principal 
                and interest due on a loan (as described in subsection 
                (b)(7)) any years of repayment under another income-
                based or income contingent repayment plan under this 
                title.
            ``(4) Cap on interest accrual.--Notwithstanding any other 
        provision of this Act, the total amount of interest that 
        accrues during a borrower's grace period and the time that a 
        borrower is in repayment under this subsection shall not exceed 
        50 percent of the original principal amount of the loan.''.

SEC. 5. FIXED REPAYMENT PLAN.

    Part G of title IV of the Higher Education Act of 1965 (20 U.S.C. 
1088 et seq.) is amended by adding at the end the following:

``SEC. 493E. FIXED REPAYMENT PLAN.

    ``(a) In General.--A borrower of a loan made under this part on or 
after July 1, 2016, and a borrower who is in repayment on a loan made 
under part B or part D before July 1, 2016, may elect to repay such 
loan under the fixed repayment plan described in this section.
    ``(b) Fixed Repayment Plan.--Under the fixed repayment plan, a 
borrower with a total Federal student loan debt amount that--
            ``(1) is equal to or less than $10,000, shall repay each 
        loan described in subsection (a) with a fixed monthly repayment 
        amount paid over a period of 10 years;
            ``(2) is more than $10,000 and less than $20,000, shall 
        repay each loan described in subsection (a) with a fixed 
        monthly repayment amount paid over a period of--
                    ``(A) 15 years; or
                    ``(B) the period described in paragraph (1), if the 
                borrower chooses;
            ``(3) is equal to or greater than $20,000, and less than 
        $30,000, shall repay each loan described in subsection (a) with 
        a fixed monthly repayment amount paid over a period of--
                    ``(A) 20 years; or
                    ``(B) the period described in paragraph (1) or (2), 
                if the borrower chooses; and
            ``(4) is equal to or greater than $30,000, shall repay each 
        loan described in subsection (a) with a fixed monthly repayment 
        amount paid over a period of--
                    ``(A) 25 years; or
                    ``(B) the period described in any of paragraphs (1) 
                through (3), if the borrower chooses.''.

SEC. 6. COUNSELING FOR BORROWERS.

    Section 485 of the Higher Education Act of 1965 (20 U.S.C. 1092) is 
amended--
            (1) in subsection (b)(1)(A)--
                    (A) in clause (iii), by inserting ``on an annual 
                basis, in accordance with section 428(b)(1)(D)(ii) or 
                paragraph (2) or (7) of section 455(d) (as 
                applicable)'' after ``repayment plans''; and
                    (B) in clause (vii)(III), by inserting ``on an 
                annual basis, in accordance with section 
                428(b)(1)(D)(ii) or paragraph (2) or (7) of section 
                455(d) (as applicable)'' after ``repayment plans''; and
            (2) in subsection (d)(1), by striking ``including income-
        sensitive'' and all that follows through ``part D'' and 
        inserting ``including, beginning on July 1, 2016, income-based 
        repayment plans described in section 493C(f) and fixed 
        repayment plans under section 493E''.

SEC. 7. TERMINATION OF CERTAIN REPAYMENT PLAN OPTIONS.

    (a) Effective Date; Rulemaking Regarding Termination of Certain 
Repayment Plans.--
            (1) Effective date.--This Act, and the amendments made by 
        this Act, shall take effect on July 1, 2016.
            (2) Regulations.--Before the effective date described in 
        paragraph (1), the Secretary of Education shall carry out a 
        plan to end all eligibility for repayment plans other than a 
        fixed repayment plan described in section 493E and an income-
        based repayment plan described under section 493C(f) for loans 
        made under part B or D of title IV of the Higher Education Act 
        of 1965, unless the borrower is enrolled in another repayment 
        plan before such effective date, in accordance with the 
        amendments made by this Act.
    (b) Changes to Current Law.--
            (1) Section 428(b) of the Higher Education Act of 1965 (20 
        U.S.C. 1078(b)) is amended--
                    (A) in paragraph (1)--
                            (i) in subparagraph (D)--
                                    (I) in clause (ii), by striking 
                                ``may annually change the selection of 
                                a repayment plan under this part,'' and 
                                inserting ``may at any time after July 
                                1, 2016, and not more frequently than 
                                once per calendar year thereafter, 
                                change the selection of a repayment 
                                plan under this part to one of the 2 
                                repayment plans described in paragraph 
                                (9)(C),''; and
                                    (II) in clause (iii), by striking 
                                ``be subject to income contingent 
                                repayment in accordance with subsection 
                                (m);'' and inserting ``be subject to 
                                income-based repayment in accordance 
                                with section 493C(f);''; and
                            (ii) in subparagraph (E)(i), by striking 
                        ``the option of repaying the loan in accordance 
                        with a standard, graduated, income-sensitive, 
                        or extended repayment schedule (as described in 
                        paragraph (9)) established by the lender in 
                        accordance with regulations of the Secretary; 
                        and'' and inserting ``the option of repaying 
                        the loan in accordance with a repayment plan 
                        described in paragraph (9)(C) established by 
                        the lender in accordance with regulations of 
                        the Secretary; and''; and
                    (B) in paragraph (9), by adding at the end the 
                following:
                    ``(C) Selection of repayment plans on and after 
                july 1, 2016.--
                            ``(i) Opportunity to change repayment 
                        plans.--Notwithstanding any other provision of 
                        this paragraph, or any other provision of law, 
                        and in accordance with regulations, beginning 
                        on July 1, 2016, the lender shall offer a 
                        borrower of a loan made, insured, or guaranteed 
                        under this part the opportunity to change 
                        repayment plans not more than once per calendar 
                        year, and to enroll in one of the following 
                        repayment plans:
                                    ``(I) A fixed repayment plan 
                                described in section 493E.
                                    ``(II) The income-based repayment 
                                plan under section 493C(f).''; and
            (2) in section 455(d)--
                    (A) by redesignating paragraphs (2) through (5) as 
                paragraphs (3) through (6), respectively; and
                    (B) by inserting after paragraph (1), the 
                following:
            ``(2) Design and selection on and after july 1, 2016.--
                    ``(A) In general.--Notwithstanding paragraph (1), 
                for the borrower of a loan made on or after July 1, 
                2016, and for other borrowers subject to paragraph (7), 
                the Secretary shall offer a borrower of a loan made 
                under this part 2 plans for repayment of such loan, 
                including principal and interest on the loan. The 
                borrower shall be entitled to accelerate, without 
                penalty, repayment on the borrower's loans under this 
                part. The borrower may choose--
                            ``(i) a fixed repayment plan described in 
                        section 493E; or
                            ``(ii) the income-based repayment plan 
                        under section 493C(f).
                    ``(B) Selection by the secretary.--If a borrower of 
                a loan made under this part on or after July 1, 2016, 
                does not select a repayment plan described in 
                subparagraph (A), the Secretary may provide the 
                borrower with a fixed repayment plan described in 
                section 493E.
                    ``(C) Changes in selections.--Beginning on July 1, 
                2016, a borrower of a loan made under this part may 
                change the borrower's selection of a repayment plan in 
                accordance with paragraph (7) and under such terms and 
                conditions as may be established by the Secretary.
                    ``(D) Borrower in default.--Beginning on July 1, 
                2016, the Secretary may require any borrower who has 
                defaulted on a loan made under this part to--
                            ``(i) pay all reasonable collection costs 
                        associated with such loan; and
                            ``(ii) repay the loan pursuant to an 
                        income-based repayment plan under section 
                        493C(f).''; and
            (3) by adding at the end the following:
            ``(7) Borrowers of loans made before july 1, 2016.--A 
        borrower who is in repayment on a loan made under part B or 
        part D before July 1, 2016--
                    ``(A) may choose to retain the repayment plan that 
                the borrower was enrolled in on the day before such 
                date;
                    ``(B) may elect to--
                            ``(i) enter the income-based repayment plan 
                        under section 493C(f);
                            ``(ii) enter a fixed repayment plan 
                        described in section 493E; or
                            ``(iii) switch between the repayment plans 
                        described in clauses (i) and (ii) not more than 
                        once during a calendar year;
                    ``(C) after electing to leave a repayment plan 
                other than an income-based repayment plan described 
                under this subsection or a fixed repayment plan 
                described in section 493E, shall not be permitted to 
                re-elect a repayment plan that is not an income-based 
                repayment plan under this subsection or a fixed 
                repayment plan described in section 493E; and
                    ``(D) shall retain, for purposes of repayment or 
                cancellation of any outstanding balance of principal 
                and interest due on a loan (as described in section 
                493C(b)(7)) any years of repayment under another 
                income-based or income contingent repayment plan under 
                this title.''.
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