[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8872 Introduced in House (IH)]
<DOC>
117th CONGRESS
2d Session
H. R. 8872
To amend the Higher Education Act of 1965 to double the Pell Grant
award amount, improve the Public Service Loan Forgiveness program, and
reduce interest rates, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 15, 2022
Ms. Wilson of Florida (for herself, Mr. Scott of Virginia, Ms. Adams,
Mr. Sablan, Ms. Bonamici, Ms. Manning, Ms. Norton, Mrs. Hayes, Mr.
Takano, Mr. Danny K. Davis of Illinois, Mrs. McBath, Mr. Thompson of
Mississippi, Mr. Soto, Mr. DeSaulnier, Mr. Grijalva, Ms. Barragan, Mr.
Correa, Mr. Evans, Mrs. Cherfilus-McCormick, Mr. Carbajal, Mr. Torres
of New York, Ms. Clarke of New York, Mrs. Lawrence, Mr. Sarbanes, Ms.
Lee of California, Ms. Brown of Ohio, Mr. Lawson of Florida, Mr. Carter
of Louisiana, Mr. Bowman, Mr. Carson, Mr. Espaillat, and Mr. Castro of
Texas) introduced the following bill; which was referred to the
Committee on Education and Labor, and in addition to the Committee on
the Budget, for a period to be subsequently determined by the Speaker,
in each case for consideration of such provisions as fall within the
jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To amend the Higher Education Act of 1965 to double the Pell Grant
award amount, improve the Public Service Loan Forgiveness program, and
reduce interest rates, 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; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Lowering Obstacles
to Achievement Now Act'' or the ``LOAN Act''.
(b) Table of Contents.--The table of contents of this Act is as
follows:
Sec. 1. Short title; table of contents.
TITLE I--FEDERAL PELL GRANTS
Sec. 101. Doubling Federal Pell Grants and providing all Federal Pell
Grants through mandatory funding.
Sec. 102. Providing increased Federal Pell Grants and other assistance
for recipients of means-tested benefits.
Sec. 103. Federal aid eligibility for dreamer students.
Sec. 104. Restoring the total semesters of Federal Pell Grant
eligibility.
Sec. 105. Reducing financial aid penalties from satisfactory academic
progress determinations.
Sec. 106. Federal Pell Grants for graduate students.
TITLE II--AMENDMENTS TO TERMS AND CONDITIONS OF LOANS AND REPAYMENT
PLANS
Part A--Direct Loans
Sec. 201. Subsidized loans for graduate and professional students.
Sec. 202. Interest rate on subsidized loans for graduate and
professional students.
Sec. 203. Repeal of origination fees.
Sec. 204. Prepayment amounts.
Part B--Automatic Enrollment in Income-Driven Repayment for Certain
Borrowers
Sec. 211. Notification and automatic enrollment procedures for
borrowers who are delinquent on loans.
Sec. 212. Notification and automatic enrollment procedures for
borrowers who are rehabilitating defaulted
loans.
Sec. 213. Covered loan, income-driven repayment plan, and non-covered
loan defined.
Sec. 214. Automatic recertification of income for income-driven
repayment plans.
Sec. 215. Procedure and requirement for requesting tax return
information from the IRS.
Part C--Amendments to Certain Loan Forgiveness Programs
Sec. 221. Amendments to terms and conditions of Public Service Loan
Forgiveness.
Sec. 222. Loan forgiveness for teachers.
TITLE III--INTEREST CAPITALIZATION
Sec. 301. Elimination of interest capitalization.
Sec. 302. Elimination of disclosure requirements relating to
capitalization.
TITLE IV--INTEREST RATES
Sec. 401. Interest rate provisions for new Federal student loans on or
after July 1, 2023.
Sec. 402. Refinancing FFEL and Federal Direct Loans.
Sec. 403. Refinancing private student loans.
TITLE I--FEDERAL PELL GRANTS
SEC. 101. DOUBLING FEDERAL PELL GRANTS AND PROVIDING ALL FEDERAL PELL
GRANTS THROUGH MANDATORY FUNDING.
(a) Amount of Minimum Federal Pell Grants.--Section 401 of the
Higher Education Act of 1965 (20 U.S.C. 1070a), as amended by title VII
of division FF of the FAFSA Simplification Act (Public Law 116-260), is
amended--
(1) in subsection (a)(2)(F), by striking ``10 percent'' and
inserting ``5 percent'';
(2) in subsection (b)--
(A) in paragraph (1)(B)(i), by striking ``paragraph
(5)(A)'' and inserting ``paragraph (5)'';
(B) by striking paragraph (5) and inserting the
following:
``(5) Maximum federal pell grant.--
``(A) Award year 2024-2025.--For award year 2024-
2025, the total maximum Federal Pell Grant award shall
be $9,000.
``(B) Award year 2025-2026.--For award year 2025-
2026, the total maximum Federal Pell Grant award shall
be $10,000.
``(C) Award year 2026-2027.--For award year 2026-
2027, the total maximum Federal Pell Grant award shall
be $11,000.
``(D) Award year 2027-2028.--For award year 2027-
2028, the total maximum Federal Pell Grant award shall
be $12,000.
``(E) Award year 2028-2029.--For award year 2028-
2029, the total maximum Federal Pell Grant award shall
be $13,000.
``(F) Award year 2029-2030 and subsequent years.--
For award year 2029-2030, and each subsequent award
year, the total maximum Federal Pell Grant award shall
be $13,000--
``(i) increased by the adjustment
percentage for the award year for which the
amount under this subparagraph is being
determined; and
``(ii) rounded to the nearest $50.
``(G) Definition of adjustment percentage.--In this
paragraph, the term `adjustment percentage,' as applied
to an award year, is equal to the percentage increase
in the Consumer Price Index, as defined in section
478(f), for the most recent calendar year ending prior
to the beginning of the award year.'';
(C) by striking paragraphs (6) and (7) and
inserting the following:
``(6) Appropriation of funds.--There are authorized to be
appropriated, and there are appropriated, out of any money in
the Treasury not otherwise appropriated, such sums as may be
necessary for fiscal year 2024 and each subsequent fiscal year
to provide the total maximum Federal Pell Grant for which a
student shall be eligible under this section during an award
year.''; and
(D) by redesignating paragraphs (8) and (9) as
paragraphs (7) and (8), respectively;
(3) in subsection (d)(5)(B)(ii)--
(A) in subclause (I)(bb), by striking ``or'' after
the semicolon;
(B) in subclause (II)(bb)(CC), by striking the
period and inserting ``; or''; and
(C) by adding at the end the following:
``(III) during a period for which
the student did not receive a loan
under this title but for which, if the
student had received such a loan, such
loan would have been discharged under
the circumstances described in
subclause (II)(bb)(CC).'';
(4) by striking subsections (g) and (h); and
(5) by redesignating subsections (i) and (j) as subsections
(g) and (h), respectively.
(b) Repeal of Scoring Requirement.--
(1) In general.--Section 406 of H. Con. Res. 95 (109th
Congress) is amended--
(A) by striking subsection (b); and
(B) by striking ``(a) In General.--Upon'' and
inserting the following: ``Upon''.
(2) Effective date.--The amendments made by paragraph (1)
shall take effect beginning on July 1, 2024.
(c) Student Support Services.--Section 402D(d)(1) of the Higher
Education Act of 1965 (20 U.S.C. 1070a-14(d)(1)) is amended by striking
``the minimum'' and inserting ``10 percent of the maximum''.
(d) Scholarship Component.--Section 404E(d) of the Higher Education
Act of 1965 (20 U.S.C. 1070a-25(d)) is amended by striking ``less than
the minimum'' and inserting ``less than 10 percent of the maximum''.
SEC. 102. PROVIDING INCREASED FEDERAL PELL GRANTS AND OTHER ASSISTANCE
FOR RECIPIENTS OF MEANS-TESTED BENEFITS.
(a) Increased Amount of Maximum Federal Pell Grants for Students
With Negative Student Aid Indexes.--Section 401(b)(1) of the Higher
Education Act of 1965 (20 U.S.C. 1070a(b)(1)), as amended by section 2
and section 703 of the FAFSA Simplification Act (Public Law 116-260),
is amended--
(1) in subparagraph (A)--
(A) in the matter preceding clause (i), by striking
``A student'' and inserting ``Except in the case of a
student with a student aid index of less than zero, a
student'';
(B) by striking clause (i); and
(C) by redesignating clauses (ii) and (iii) as
clauses (i) and (ii), respectively;
(2) by redesignating subparagraphs (B) through (E) as
subparagraphs (C) through (F), respectively;
(3) by inserting after subparagraph (A) the following:
``(B) A student with a student aid index of less
than zero shall be eligible for a Federal Pell Grant
award that exceeds the total maximum Federal Pell Grant
by an amount equal to the amount by which the student's
student aid index is less than zero.'';
(4) in subparagraph (C), as redesignated by paragraph (2)--
(A) in the matter preceding clause (i), by striking
``subparagraph (A) for an academic year,'' and
inserting ``subparagraph (A), or an increased Federal
Pell Grant under subparagraph (B), for an academic
year,''; and
(B) in clause (ii), by striking ``, except that a
student aid index of less than zero shall be considered
to be zero for the purposes of this clause'';
(5) in subparagraph (D), as redesignated by paragraph (2),
by striking ``(A) or (B)'' and inserting ``(A), (B), or (C)'';
(6) in subparagraph (E), as redesignated by paragraph (2),
by inserting ``or an increased Federal Pell Grant under
subparagraph (B)'' after ``subparagraph (A)''; or
(7) in subparagraph (F), as redesignated by paragraph (2),
by striking ``or a minimum Federal Pell Grant under
subparagraph (C)'' and inserting ``an increased Federal Pell
Grant under subparagraph (B), or a minimum Federal Pell Grant
under subparagraph (D)''.
(b) Special Student Aid Index Rule for Recipients of Means-Tested
Benefits.--Section 473 of the Higher Education Act of 1965 (20 U.S.C.
1087mm), as amended by section 702(b) of the FAFSA Simplification Act
(Public Law 116-260), is amended by adding at the end the following:
``(d) Special Rule for Means-Tested Benefit Recipients.--
Notwithstanding subsection (b), for an applicant (or, as applicable, an
applicant and spouse, or an applicant's parents) who, at any time
during the previous 24-month period, received a benefit under a means-
tested Federal benefit program (or whose parent or spouse received such
a benefit, as applicable), the Secretary shall for the purposes of this
title consider the student aid index as equal to -$1,500 for the
applicant.''.
SEC. 103. FEDERAL AID ELIGIBILITY FOR DREAMER STUDENTS.
Section 484 of the Higher Education Act of 1965 (20 U.S.C. 1091),
as amended by section 702(n) of the FAFSA Simplification Act (Public
Law 116-260), is amended--
(1) in subsection (a)(5), by inserting ``, or be a Dreamer
student, as defined in subsection (u)'' after ``becoming a
citizen or permanent resident''; and
(2) by adding at the end the following:
``(u) Dreamer Students.--
``(1) In general.--In this section, the term `Dreamer
student' means an individual who--
``(A)(i) is not a citizen or national of the United
States; and
``(ii) is inadmissible or deportable under the
Immigration and Nationality Act (8 U.S.C. 1101 et
seq.)); and
``(B)(i) in the case of such an individual who was
younger than 18 years of age on the date on which the
individual initially entered the United States--
``(I) has earned a high school diploma, the
recognized equivalent of such diploma from a
secondary school, or a high school equivalency
diploma recognized by State law, or is
scheduled to complete the requirements for such
a diploma or equivalent before the next
academic year begins;
``(II) is enrolled at an institution of
higher education pursuant to subsection (d);
``(III) has served in the uniformed
services (as such term is defined in section
101 of title 10, United States Code) for not
less than 2 years and, if discharged, received
an honorable discharge;
``(IV) has acquired a degree, certificate,
or recognized postsecondary credential from an
institution of higher education or area career
and technical education school (as such term is
defined in section 3 of the Carl D. Perkins
Career and Technical Education Act of 2006 (20
U.S.C. 2302)); or
``(V) has completed not less than 2 years
in a postsecondary program at an institution of
higher education, or area career and technical
education school, in the United States and has
made satisfactory academic progress, as defined
in subsection (c), during such time period; or
``(ii)(I) is, or at any time was, eligible for a
grant of deferred action pursuant to--
``(aa) the memorandum of the Department of
Homeland Security entitled `Exercising
Prosecutorial Discretion with Respect to
Individuals Who Came to the United States as
Children' issued on June 15, 2012; or
``(bb) the memorandum of the Department of
Homeland Security entitled `Exercising
Prosecutorial Discretion with Respect to
Individuals Who Came to the United States as
Children and with Respect to Certain
Individuals Who Are the Parents of U.S.
Citizens or Permanent Residents' issued on
November 20, 2014; or
``(II) would have been eligible for such a grant of
deferred action if the applicable memorandum described
in subclause (I) had been fully in effect since the
date on which it was issued.
``(2) Hardship exception.--The Secretary shall issue
regulations that direct when the Department shall waive the age
requirement of paragraph (1)(B)(i) for an individual to qualify
as a Dreamer student under such paragraph, if the individual
demonstrates compelling circumstances, such as economic
hardship (as defined in section 435(o)).''.
SEC. 104. RESTORING THE TOTAL SEMESTERS OF FEDERAL PELL GRANT
ELIGIBILITY.
Section 401(d)(5)(A) of the Higher Education Act of 1965, as added
by section 703 of the FAFSA Simplification Act (Public Law 116-260), is
amended by striking ``12'' each place the term appears and inserting
``18''.
SEC. 105. REDUCING FINANCIAL AID PENALTIES FROM SATISFACTORY ACADEMIC
PROGRESS DETERMINATIONS.
Section 484(c) of the Higher Education Act of 1965 (20 U.S.C.
1091(c)) is amended to read as follows:
``(c) Satisfactory Progress.--
``(1) Definitions.--In this subsection:
``(A) Appeal.--The term `appeal' means a process by
which a student who is not meeting the institution's
satisfactory academic progress standards petitions the
institution for reconsideration of the student's
eligibility for assistance under this title.
``(B) Financial aid probation.--The term `financial
aid probation' means a status assigned by an
institution to a student who fails to make satisfactory
academic progress and who has appealed and has had
eligibility for aid reinstated.
``(C) Financial aid warning.--The term `financial
aid warning' means a status assigned to a student who
fails to make satisfactory academic progress at the end
of the semester or equivalent period in which the
student first fails to make such progress.
``(D) Payment period.--The term `payment period'
means the applicable payment period described in
section 668.4 of title 34, Code of Federal Regulations,
or any successor regulation.
``(2) Satisfactory academic progress policy.--An
institution shall establish a reasonable satisfactory academic
progress policy for determining whether an otherwise eligible
student is making satisfactory academic progress in the
student's educational program and may receive assistance under
this title. The Secretary shall consider the institution's
policy to be reasonable if--
``(A) the policy is at least as strict as the
policy the institution applies to a student who is not
receiving assistance under this title;
``(B) the policy provides for consistent
application of standards to all students, including
full-time, part-time, undergraduate, and graduate
students, and all educational programs established by
the institution;
``(C)(i) the policy specifies the grade point
average that a student must achieve at each evaluation,
or if a grade point average is not an appropriate
qualitative measure, a comparable assessment measured
against a norm; and
``(ii) if a student is enrolled in an educational
program of more than 2 academic years, the policy
specifies that at the end of the second academic year,
the student must have a grade point average of at least
a `C' or its equivalent, or have academic standing
consistent with the institution's requirements for
graduation;
``(D) the policy provides for measurement of the
student's progress at each evaluation;
``(E) the policy describes--
``(i) how a student's grade point average
and the pace at which the student progresses
toward completion are affected by course
incompletes, withdrawals, or repetitions, or
transfers of credit from other institutions,
including that credit hours from another
institution that are accepted toward the
student's educational program are counted as
both attempted and completed hours; and
``(ii) how after a student reenrolls after
the student's satisfactory academic progress
was reset pursuant to paragraph (3)(B), the
student may have any credits that were earned
before the student was determined not to be
making satisfactory academic progress counted
for purposes of determining progress when the
student reenrolls, but any attempted hours that
were not earned by the student (including
incompletes, withdrawn courses, and failed
courses) before the student was determined not
to be making satisfactory academic progress
will not negatively impact the determination of
whether the student made satisfactory academic
progress after such reset;
``(F) the policy provides that, except as provided
in subparagraph (G) with respect to a student placed on
financial aid warning or financial aid probation and
paragraph (3), a student is no longer eligible to
receive assistance under this title if the student has
not achieved the required grade point average or who is
not making progress toward completion in the student's
educational program--
``(i) at the time of each evaluation with
respect to a student who is in an educational
program of 2 academic years or less in length;
or
``(ii) at the end of the second academic
year with respect to a student who is in an
educational program of more than 2 academic
years in length;
``(G) the policy describes when students will be
placed on financial aid warning or financial aid
probation, in accordance with paragraph (4), and
provides that--
``(i) a student on financial aid warning--
``(I) shall receive assistance
under this title for one payment period
despite a determination that the
student is not making satisfactory
academic progress; and
``(II) may be assigned such status
without an appeal or other action by
the student; and
``(ii)(I) a student on financial aid
probation may receive assistance under this
title for one payment period and the
institution may require the student to fulfill
specific terms and conditions, such as taking a
reduced course load or enrolling in specific
courses; and
``(II) at the end of such one payment
period, the student is required to meet the
institution's satisfactory academic progress
standards, or meet the requirements of the
academic plan developed by the institution and
the student, in order to qualify for continued
assistance under this title;
``(H) if the institution permits a student to
appeal a determination by the institution that the
student is not making satisfactory academic progress,
the policy describes--
``(i) how the student may reestablish the
student's eligibility to receive assistance
under this title;
``(ii) the basis on which the student may
file an appeal, including because of the death
of a relative, an injury or illness of the
student, or another special circumstance; and
``(iii) information the student is required
to submit regarding why the student failed to
make satisfactory academic progress, and what
has changed in the student's situation that
will allow the student to demonstrate
satisfactory academic progress at the next
evaluation;
``(I) if the institution does not permit a student
to appeal a determination by the institution that the
student is not making satisfactory academic progress,
the policy describes how the student may reestablish
the student's eligibility to receive assistance under
this title;
``(J) the policy provides for notification to
students of the results of an evaluation that impacts
the student's eligibility for assistance under this
title; and
``(K) the policy does not impose satisfactory
progress limitations on need-based institutional aid
that are more stringent than the standard applied under
this subsection without demonstrating to the Secretary
the effectiveness of such limitations on improving
student persistence in, and completion of,
postsecondary study.
``(3) Regaining eligibility.--
``(A) Students who remain in school.--Whenever a
student fails to meet the eligibility requirements of
subsection (a)(2) as a result of the application of
this subsection and, subsequent to that failure, the
student has academic standing for any grading period
consistent with the requirements for staying on track
to graduate within 150 percent of the published length
of the educational program, as determined by the
institution, the student shall again be eligible under
subsection (a)(2) for a grant, loan, or work assistance
under this title, as long as the student maintains
satisfactory academic progress under paragraph (2)
beginning on and after the date that the student
regains eligibility.
``(B) Students who leave school.--
``(i) In general.--If a student has not
been enrolled in any institution of higher
education for the immediately preceding 2
years, any previous failure to meet the
eligibility requirements of subsection (a)(2)
shall not be used in any determination of
eligibility of such student under such
subsection. Such student shall, on the date of
enrollment subsequent to such 2-year period,
have the student's eligibility for a grant,
loan, or work assistance under this title reset
and be deemed as meeting the requirements
described in paragraph (2). Beginning on and
after such date, the student's satisfactory
academic progress shall be determined in
accordance with paragraph (2)(E)(ii).
``(ii) Maximum number of resets.--A student
shall be eligible for a reset of eligibility
pursuant to this subparagraph not more than 2
times.
``(C) Duties of the secretary.--The Secretary
shall--
``(i) send, to each student who failed to
meet the eligibility requirements of subsection
(a)(2) and who has not regained eligibility for
a grant, loan, or work assistance under
subparagraph (A), a notice, two years after
such failure, that includes--
``(I) a notification that, if the
student has not been enrolled in any
institution of higher education for the
preceding two years and has not
received two resets of eligibility
under subparagraph (B), the student may
use grant, loan, or work assistance
under this title for enrollment at any
eligible institution, including an
institution other than the institution
in which the student was previously
enrolled;
``(II) a notification that, if the
student has remained enrolled, or
resumed enrollment, at an institution
of higher education, the student may be
eligible for a grant, loan, or work
assistance under this title subject to
the requirements of subparagraph (A);
``(III) information on how many
semesters of eligibility for a grant,
loan, or work assistance under this
title to which the student still has
access; and
``(IV) a notification that the
student should ask any prospective
eligible institution how many of the
student's previously completed credits
the student would be able to transfer;
and
``(ii) submit an annual report to Congress
on the outcomes of students who have received a
reset of eligibility pursuant to this
paragraph, including--
``(I) the number of students who
reenroll in an eligible institution
after such reset, disaggregated by race
or ethnicity, sex, age, socioeconomic
status, and disability status;
``(II) the 250 eligible
institutions with the highest numbers
of enrolled students receiving grant,
loan, or work assistance under this
title after such a reset;
``(III) the 250 eligible
institutions with the highest share of
enrolled students receiving grant,
loan, or work assistance under this
title after such a reset; and
``(IV) the average completion rate
and time to completion for students who
reenroll in an eligible institution
after such reset, disaggregated by
institution.
``(4) Evaluation of academic progress.--
``(A) In general.--An institution that determines
that a student is not making satisfactory academic
progress under its policy may disburse funds provided
through student financial assistance programs under
this title (including work-study programs under
subtitle C) to the student in accordance with
subparagraphs (B), (C), and (D).
``(B) Payment period following not making
satisfactory academic progress.--For the payment period
following the payment period in which a student did not
make satisfactory academic progress, the institution
shall place the student on financial aid warning and
disburse funds under this title to the student.
``(C) Payment period following financial aid
warning.--For the payment period following a payment
period during which a student was on financial aid
warning, the institution may place the student on
financial aid probation, and disburse funds under this
title to the student if--
``(i) the institution evaluates the
student's progress and determines that student
did not make satisfactory academic progress
during the payment period the student was on
financial aid warning;
``(ii) the student appeals the
determination; and
``(iii)(I) the institution determines that
the student should be able to meet the
institution's satisfactory academic progress
standards by the end of the subsequent payment
period; or
``(II) the institution develops an academic
plan for the student that, if followed, will
ensure that the student is able to meet the
institution's satisfactory academic progress
standards by a specific point in time.
``(D) Payment period following financial aid
probation.--A student on financial aid probation for a
payment period may not receive funds under this title
for the subsequent payment period unless the student
makes satisfactory academic progress or the institution
determines that the student met the requirements
specified by the institution in the academic plan for
the student developed under subparagraph (C)(iii)(II).
``(E) Frequency of academic progress evaluation and
communication.--
``(i) In general.--Subject to clause (ii),
for the purpose of determining whether
presently enrolled students are maintaining
satisfactory progress, each institution of
higher education that enrolls students who
receive any grant, loan, or work assistance
under this title shall review the progress of
such students at the end of each payment
period.
``(ii) Shorter payment periods.--For each
institution described in clause (i) that has
payment periods that are shorter than on the
semester system basis (such as on a quarterly
or trimester system basis or by clock hour
program or non-term program), such institution
shall review the progress of presently enrolled
students at the end of each semester or
equivalent period of 12 to 18 weeks.
``(iii) Financial aid warning.--At the end
of each payment period (or, in the case of an
institution described in clause (ii), at the
end of each semester or equivalent period),
each institution shall send a financial aid
warning to presently enrolled students that do
not meet the grade point average requirement
described in paragraph (2), or its equivalent
or academic standing consistent with the
requirements for graduation, as determined by
the institution, that informs the students of
their risk of being determined to not be
maintaining satisfactory progress and therefore
losing eligibility for grant, loan, or work
assistance under this title and provides
information on--
``(I) the specific criteria of the
institution's academic requirements
that the student is not meeting and the
specific improvements needed to meet
the requirements; and
``(II) how to meet with the
student's academic advisor to get the
academic support the student needs.
``(5) Detailing requirements to students.--Each institution
of higher education that enrolls students who receive any
grant, loan, or work assistance under this title shall detail
the institution's requirements regarding students maintaining
satisfactory academic progress--
``(A) to such students before the students begin
classes at the institution through a detailed
communication that may be separate from a financial aid
offer; and
``(B) on the financial aid webpage of the website
of the institution.
``(6) Consumer testing.--The Secretary--
``(A) shall conduct consumer testing to develop
exemplary practices and templates--
``(i) to support institutions of higher
education in carrying out paragraph (5); and
``(ii) which shall be available as
resources for institutions of higher education;
and
``(B) shall not require the use of such practices
and templates by institutions of higher education.''.
SEC. 106. FEDERAL PELL GRANTS FOR GRADUATE STUDENTS.
Section 401 of the Higher Education Act of 1965 (20 U.S.C. 1070a),
as amended by title VII of division FF of the FAFSA Simplification Act
(Public Law 116-260), is amended--
(1) in subsection (b)(8)(A), by inserting ``or as a
postbaccalaureate student in accordance with subsection
(d)(1)'' after ``as an undergraduate''; and
(2) in subsection (d)--
(A) by amending paragraph (1) to read as follows:
``(1) In general.--The period during which a student may
receive Federal Pell Grants shall be the period required for
the completion of the first undergraduate baccalaureate course
of study being pursued by that student at the institution at
which the student is in attendance except that--
``(A) any 1-year period during which the student is
enrolled in a noncredit or remedial course of study as
defined in paragraph (2) shall not be counted for the
purpose of this paragraph; and
``(B) the period during which a student may receive
Federal Pell Grants shall also include the period
required for the completion of the first
postbaccalaureate course of study in a case in which--
``(i) the student received a Federal Pell
Grant during the period required for the
completion of the student's first undergraduate
baccalaureate course of study for at least 1
but fewer than 18 semesters, or the equivalent
of at least 1 but fewer than 18 semesters, as
determined under paragraph (5);
``(ii) the student would otherwise be
eligible for a Federal Pell Grant, but for the
completion of such baccalaureate course of
study; and
``(iii) the period during which the student
receives Federal Pell Grants does not exceed
the student's duration limits under paragraph
(5).''; and
(B) in paragraph (2), by striking ``or
certificate'' and inserting ``, certificate, or first
postbaccalaureate degree''.
TITLE II--AMENDMENTS TO TERMS AND CONDITIONS OF LOANS AND REPAYMENT
PLANS
PART A--DIRECT LOANS
SEC. 201. SUBSIDIZED LOANS FOR GRADUATE AND PROFESSIONAL STUDENTS.
Section 455(a)(3) of the Higher Education Act of 1965 (20 U.S.C.
1087e(a)(3)) is amended--
(1) in subparagraph (A), in the matter preceding clause
(i), by striking ``subparagraph (B)'' and inserting
``subparagraphs (B) and (C)''; and
(2) by adding at the end the following:
``(C) Authority to make interest subsidized loans
to graduate and professional students.--For any period
of instruction at an institution of higher education
(as defined in section 101 or section 102(a)(1)(C),
except that a graduate medical school, nursing school,
or a veterinary school, located outside the United
States that does not meet the requirements of section
101(a)(4) shall be excluded) beginning on or after July
1, 2023, a graduate or professional student shall be
eligible to receive a Federal Direct Stafford loan
under this part.''.
SEC. 202. INTEREST RATE ON SUBSIDIZED LOANS FOR GRADUATE AND
PROFESSIONAL STUDENTS.
Section 455(b)(8)(B) of the Higher Education Act of 1965 (20 U.S.C.
1087e(b)(8)(B)) is amended--
(1) in the heading for subparagraph (B), by striking
``fdusl'' and inserting ``fdsl and fdusl''; and
(2) by inserting ``and Federal Direct Stafford Loans''
after ``Federal Direct Unsubsidized Stafford Loans''.
SEC. 203. REPEAL OF ORIGINATION FEES.
Section 455(c)(2) of the Higher Education Act of 1965 (20 U.S.C.
1087e(c)(2)) is amended--
(1) by striking ``and'' at the end of subparagraph (D); and
(2) by adding at the end the following:
``(E) by substituting `0.0 percent' for `4.0
percent' with respect to loans for which the first
disbursement of principal is made on or after July 1,
2023.''.
SEC. 204. PREPAYMENT AMOUNTS.
Section 455(d) of the Higher Education Act of 1965 (20 U.S.C.
1087e(d)) is amended by adding at the end the following:
``(6) Application of prepayment amounts.--
``(A) Requirement for eligible borrowers.--
``(i) In general.--Notwithstanding any
other provision of this subsection or any other
provision of law--
``(I) with respect to loans made to
an eligible borrower under this part or
part B, which are held by the same
holder and which have different
applicable rates of interest, the
holder of such loans shall, unless
otherwise requested by the borrower in
writing, apply the borrower's
prepayment amount (within the meaning
of section 682.209(b) of title 34, Code
of Federal Regulations, or a successor
regulation) for one or more of such
loans, first toward the outstanding
balance of principal due on the loan
with the highest applicable rate of
interest among such loans; and
``(II) except as provided in
subclause (I), with respect to loans
made to an eligible borrower under this
part or part B, which are held by the
same holder and which have the same
applicable rates of interest, the
holder of such loans shall, unless
otherwise requested by the borrower in
writing, apply the borrower's
prepayment amount (within the meaning
of section 682.209(b) of title 34, Code
of Federal Regulations, or a successor
regulation) for one or more of such
loans, first toward the outstanding
balance of principal due on the loan
with the highest principal balance
among such loans.
``(ii) Eligible borrower defined.--For
purposes of this paragraph, the term `eligible
borrower' means a borrower with no outstanding
balance of fees, including collection costs and
authorized late charges, due on any loan made
under this part or part B.
``(B) Requirement for other borrowers.--A
prepayment amount (as described in subparagraph (A)(i))
made by a borrower who is not an eligible borrower to a
holder shall be applied first toward the borrower's
outstanding balance of fees, including collection costs
and authorized late charges, due on any loan made under
this part or part B held by such holder.''.
PART B--AUTOMATIC ENROLLMENT IN INCOME-DRIVEN REPAYMENT FOR CERTAIN
BORROWERS
SEC. 211. NOTIFICATION AND AUTOMATIC ENROLLMENT PROCEDURES FOR
BORROWERS WHO ARE DELINQUENT ON LOANS.
Section 455(d) of the Higher Education Act of 1965 (20 U.S.C.
1087e(d)), as amended by this Act, is further amended by adding at the
end the following:
``(9) Notification and automatic enrollment procedures for
borrowers who are delinquent on loans.--
``(A) Authority to obtain income information.--The
Secretary shall establish and implement, with respect
to any borrower described in subparagraph (B),
procedures to--
``(i) use return information of the
borrower (and the borrower's spouse, if
applicable) disclosed under section 6103(l)(13)
of the Internal Revenue Code of 1986, pursuant
to approval provided under section 494, to
determine the income and family size of the
borrower (and the borrower's spouse, if
applicable) without further action by the
borrower;
``(ii) allow the borrower (or the spouse of
the borrower), at any time, to opt out of
disclosure under such section 6103(l)(13) and
instead provide such information as the
Secretary may require to determine the income
and family size of the borrower (and the
borrower's spouse, if applicable); and
``(iii) provide the borrower with an
opportunity to update the return information so
disclosed before the determination of the
income and family size of the borrower for
purposes of this paragraph.
``(B) Borrower notification.--With respect to each
borrower of a covered loan who is at least 31 days
delinquent on such loan and who has not been subject to
the procedures under this paragraph for such loan in
the preceding 62 days, the Secretary shall, as soon as
practicable after such 31-day delinquency, provide to
the borrower the following:
``(i) Notification that the borrower is at
least 31 days delinquent on at least 1 covered
loan, and a description of all delinquent
covered loans, nondelinquent covered loans, and
noncovered loans of the borrower.
``(ii) A brief description of the repayment
plans for which the borrower is eligible and
the covered loans and noncovered loans of the
borrower that may be eligible for such plans,
based on information available to the
Secretary.
``(iii) The amount of monthly payments for
the covered and noncovered loans under each
repayment plan identified under clause (ii),
based on information available to the
Secretary, including, if the income information
of the borrower is available to the Secretary
under subparagraph (A), the income, family
size, tax filing status, and tax year
information on which each such monthly payment
is based.
``(iv) Clear and simple instructions on how
to select the repayment plans.
``(v) An explanation that, in the case of a
borrower for whom adjusted gross income is
unavailable--
``(I) if the borrower selects to
repay the covered loans of such
borrower pursuant to an income-driven
repayment plan that defines
discretionary income in such a manner
that an individual not required under
section 6012(a)(1) of the Internal
Revenue Code of 1986 to file a return
with respect to income taxes imposed by
subtitle A of such Code may have a
calculated monthly payment greater than
$0, the borrower will be required to
provide the Secretary with other
documentation of income satisfactory to
the Secretary, which documentation the
Secretary may use to determine an
appropriate repayment schedule; and
``(II) if the borrower selects to
repay such loans pursuant to an income-
driven repayment plan that is not
described in subclause (I), the
borrower will not be required to
provide the Secretary with such other
documentation of income, and the
borrower will have a calculated monthly
payment of $0.
``(vi) An explanation that the Secretary
shall take the actions under subparagraph (C)
with respect to such borrower, if--
``(I) the borrower is 80 days
delinquent on 1 or more covered loans
and has not selected a new repayment
plan for the covered loans of the
borrower; and
``(II) in the case of such a
borrower whose existing repayment plan
for the covered loans of the borrower
is not an income-driven repayment plan,
the monthly payments under such
existing repayment plan are higher than
such monthly payments would be under an
income-driven repayment plan.
``(vii) Instructions on updating the
information of the borrower obtained under
subparagraph (A).
``(C) Secretary's selection of a plan.--With
respect to each borrower described in subparagraph (B)
whose existing repayment plan for the covered loans of
the borrower is described in clause (vi)(II) of
subparagraph (B), and who has not selected a new
repayment plan for such loans in accordance with the
notice received under such subparagraph and who is at
least 80 days delinquent on such a loan, the Secretary
shall, as soon as practicable--
``(i) in a case in which any of the
borrower's covered loans are eligible for an
income-driven repayment plan--
``(I)(aa) provide the borrower with
the income-driven repayment plan that
requires the lowest monthly payment
amount for each covered loan of the
borrower, compared to any other such
plan for which the borrower is
eligible; or
``(bb) if more than one income-
driven repayment plan would offer the
borrower the same lowest monthly
payment amount, provide the borrower
with the income-driven repayment plan
that has the most favorable terms for
the borrower;
``(II) if the plan selected under
subclause (I) is not the income-driven
repayment plan that would have the
lowest monthly payment amount if the
borrower were eligible for such plan
for the borrower's covered loans and
noncovered loans, notify the borrower
of the actions, if any, the borrower
may take to become eligible for such
income-driven repayment plan; and
``(III) authorize the borrower to
change the Secretary's selection of a
plan under this clause to any plan
described in paragraph (1) for which
the borrower is eligible; and
``(ii) in a case in which none of the
borrower's covered loans are eligible for an
income-driven repayment plan, notify the
borrower of the actions, if any, the borrower
may take for such loans to become eligible for
such a plan.''.
SEC. 212. NOTIFICATION AND AUTOMATIC ENROLLMENT PROCEDURES FOR
BORROWERS WHO ARE REHABILITATING DEFAULTED LOANS.
Section 455(d) of the Higher Education Act of 1965 (20 U.S.C.
1087e(d)), as amended by this Act, is further amended by adding at the
end the following:
``(10) Notification and automatic enrollment procedures for
borrowers who are rehabilitating defaulted loans.--
``(A) Authority to obtain income information.--The
Secretary shall establish and implement, with respect
to any borrower who is rehabilitating a covered loan
pursuant to section 428F(a), procedures to--
``(i) use return information of the
borrower (and the borrower's spouse, if
applicable) disclosed section 6103(l)(13) of
the Internal Revenue Code of 1986, pursuant to
approval provided under section 494, to obtain
such information as is reasonably necessary
regarding the income and family size of the
borrower (and the borrower's spouse, if
applicable);
``(ii) allow the borrower (or the spouse of
the borrower), at any time, to opt out of
disclosure under such section 6103(l)(13) and
instead provide such information as the
Secretary may require to obtain such
information; and
``(iii) provide the borrower with an
opportunity to update the return information so
disclosed before the determination of income
and family size of the borrower (and the
borrower's spouse, if applicable) for purposes
of this paragraph.
``(B) Borrower notification.--Not later than 30
days after a borrower makes the 6th payment required on
such covered loan for the loan rehabilitation described
in subparagraph (A), the Secretary shall notify the
borrower of the process under subparagraph (C) with
respect to such loan.
``(C) Secretary's selection of plan.--With respect
to each borrower who has made the 9th payment required
on such covered loan for the loan rehabilitation
described in subparagraph (A), the Secretary shall, as
soon as practicable after such payment, carry out the
procedures described in clauses (i) and (ii) of
paragraph (9)(C) with respect to such loan.''.
SEC. 213. COVERED LOAN, INCOME-DRIVEN REPAYMENT PLAN, AND NON-COVERED
LOAN DEFINED.
Section 455(d) of the Higher Education Act of 1965 (20 U.S.C.
1087e(d)), as amended by this Act, is further amended by adding at the
end the following:
``(11) Definitions.--In this subsection:
``(A) Covered loan.--The term `covered loan'
means--
``(i) a loan made under this part;
``(ii) a loan purchased under section 459A;
or
``(iii) a loan that has been assigned to
the Secretary under subsection (c)(8) or
(j)(3)(B) of section 428, or subsection
(a)(1)(A)(ii) or (a)(1)(G) of section 428F.
``(B) Income-driven repayment plan.--The term
`income-driven repayment plan' means a repayment plan
described in subparagraph (D) or (E) of paragraph (1).
``(C) Noncovered loan.--The term `noncovered loan'
means a loan made, insured, or guaranteed under this
title that is not a covered loan.''.
SEC. 214. AUTOMATIC RECERTIFICATION OF INCOME FOR INCOME-DRIVEN
REPAYMENT PLANS.
(a) Income-Contingent Repayment Plans.--Section 455(e)(8)(A) of the
Higher Education Act of 1965 (20 U.S.C. 1087e(e)(8)(A)) is amended--
(1) by striking ``and'' at the end of clause (ii);
(2) by redesignating clause (iii) as clause (iv);
(3) in clause (iv) (as so redesignated), by striking the
period at the end and inserting ``; and''; and
(4) by inserting after clause (ii), the following:
``(iii) in the case of a borrower who has
selected to repay a loan made under this part
pursuant to an income contingent repayment plan
that defines discretionary income in such a
manner that the borrower would have a
calculated monthly payment equal to $0, not
require the borrower to provide the Secretary
the information described in clause (i) or
(ii), and ensure that the borrower will have a
calculated monthly payment of $0; and''.
(b) Income-Based Repayment Plans.--Section 493C(c)(2)(B) of the
Higher Education Act of 1965 (20 U.S.C. 1098e(c)(2)(B)) is amended by
striking ``any loan made under part D (other than an excepted PLUS loan
or excepted consolidation loan)'' and inserting ``any covered loan (as
defined in section 455(d)(11))''.
SEC. 215. PROCEDURE AND REQUIREMENT FOR REQUESTING TAX RETURN
INFORMATION FROM THE IRS.
Section 494(a) of the Higher Education Act of 1965 (20 U.S.C.
1098h(a)) is amended--
(1) in paragraph (2)--
(A) in subparagraph (A), in the matter preceding
clause (i), by striking ``a loan under part D'' and
inserting ``a covered loan (as defined in section
455(d)(11))''; and
(B) in subparagraph (B), by striking ``a loan under
part D'' and inserting ``a covered loan (as defined in
section 455(d)(11))''; and
(2) by adding at the end the following:
``(4) Loan delinquency and rehabilitation.--
``(A) Borrowers delinquent on loans.--In the case
of an individual who is a borrower of a covered loan
and who is at least 31 days delinquent on such loan,
the Secretary, with respect to such individual and any
spouse of such individual, shall--
``(i) provide to such individuals the
notification described in paragraph (1)(A)(i);
and
``(ii) require, as a condition of
eligibility for the notification and automatic
enrollment procedures under section 455(d)(9),
that such individuals--
``(I) affirmatively approve the
disclosure described in paragraph
(1)(A)(i) and agree that such approval
shall serve as an ongoing approval of
such disclosure until the date on which
the individual elects to opt out of
such disclosure under section
455(d)(9)(A)(ii); or
``(II) provide such information as
the Secretary may require to carry out
the procedures under section 455(d)(9)
with respect to such individual.
``(B) Loan rehabilitation.--In the case of any
written or electronic application by an individual for
the rehabilitation of a covered loan pursuant to
section 428F(a), the Secretary, with respect to such
individual and any spouse of such individual, shall--
``(i) provide to such individuals the
notification described in paragraph (1)(A)(i);
and
``(ii) require, as a condition of
eligibility for loan rehabilitation pursuant to
section 428F(a), that such individuals--
``(I) affirmatively approve the
disclosure described in paragraph
(1)(A)(i) and agree that such approval
shall serve as an ongoing approval of
such disclosure until the date on which
the individual elects to opt out of
such disclosure under section
455(d)(10)(A)(ii); or
``(II) provide such information as
the Secretary may require to carry out
the procedures under section 455(d)(10)
with respect to such individual.
``(C) Covered loan defined.--In this paragraph, the
term `covered loan' has the meaning given the term in
section 455(d)(11).''.
PART C--AMENDMENTS TO CERTAIN LOAN FORGIVENESS PROGRAMS
SEC. 221. AMENDMENTS TO TERMS AND CONDITIONS OF PUBLIC SERVICE LOAN
FORGIVENESS.
(a) Number of Monthly Payments; Repayment Plans.--Paragraph (1) of
section 455(m) of the Higher Education Act of 1965 (20 U.S.C. 1087e(m))
is amended--
(1) in subparagraph (A)--
(A) in the matter preceding clause (i), by striking
``120'' and inserting ``96'';
(B) by striking ``or'' at the end of clause (iii);
(C) in clause (iv), by striking ``and'' and
inserting ``or''; and
(D) by adding at the end the following:
``(v) in lieu of such a payment, has been
in--
``(I) cancer treatment deferment
under section 427(a)(2)(C)(iv),
428(b)(1)(M)(v), or 455(f)(3);
``(II) rehabilitation training
program deferment under section
427(a)(2)(C)(i)(II),
428(b)(1)(M)(i)(II), or
455(f)(2)(A)(ii);
``(III) military service deferment
under section 428(b)(1)(M)(iii) or
455(f)(2)(C);
``(IV) unemployment deferment under
section 427(a)(2)(C)(ii),
428(b)(1)(M)(ii), 428B(d)(1)(A)(i), or
455(f)(2)(B);
``(V) deferment due to an economic
hardship described in section
427(a)(2)(C)(iii), section
428(b)(1)(M)(iv), section
428B(d)(1)(A)(i), section 435(o), or
section 455(f)(2)(D);
``(VI) Peace Corps service
deferment under section
682.210(b)(2)(ii) or 682.210(k) of
title 34, Code of Federal Regulations
(or successor regulations), as made
applicable to Direct Loan borrowers
under section 685.204(j) of such title
34;
``(VII) has been in post-active-
duty student deferment under section
493D;
``(VIII) AmeriCorps forbearance
under section 428(c)(3)(A)(i)(III);
``(IX) National Guard Duty
forbearance under section
682.211(h)(2)(iii) or 685.205(a)(7) of
title 34, Code of Federal Regulations
(or successor regulations);
``(X) Department of Defense student
loan repayment program forbearance
under section 428(c)(3)(A)(i)(IV);
``(XI) Administrative forbearance
or mandatory administrative forbearance
under section 428(c)(3)(D) or
428H(e)(7); or
``(XII) Student loan debt burden
forbearance under section
428(c)(3)(A)(i)(II); and''; and
(2) in subparagraph (B), by striking ``(i) is employed''
and all that follows through ``has been'' and inserting ``has
been''.
(b) Automatic Cancellation.--Paragraph (2) of section 455(m) of the
Higher Education Act of 1965 (20 U.S.C. 1087e(m)(2)) is amended by
adding at the end the following: ``In the case of a borrower who meets
the requirements under paragraph (1) for such cancellation, such
cancellation shall occur without further action by the borrower.''.
(c) Treatment of Refinanced Loans; On-Line Portal; Database of
Public Service Jobs.--Section 455(m) of such Act (20 U.S.C. 1087e(m))
is further amended--
(1) by redesignating paragraphs (3) and (4) as paragraphs
(6) and (7), respectively; and
(2) by inserting after paragraph (2) the following:
``(3) Treatment of loans refinanced under sections 460a.--
In the case of an eligible refinanced Federal Direct Loan under
section 460A, any monthly payment pursuant to any repayment
plan listed in paragraph (1)(A) (including a period of
deferment or forbearance described in paragraph (1)(A)(v)) made
on a loan, for which the liability has been discharged by such
refinanced loan and without regard to whether such loan is an
eligible Federal Direct Loan, shall be treated as a monthly
payment under paragraph (1)(A) on the portion of such
refinanced loan that is attributable to such discharged loan.
``(4) On-line portal.--
``(A) Borrowers.--The Secretary shall ensure that
borrowers have access to an on-line portal that
provides each borrower who signs on to such portal with
the following:
``(i) Instructions on how to access the
database under paragraph (5) so that the
borrower can determine whether the borrower is
employed in a public service job.
``(ii) An identification of the loans of
the borrower that are eligible Federal Direct
Loans.
``(iii) With respect to each such eligible
Federal Direct Loan, the number of monthly
payments on such loan that qualify as a monthly
payment under paragraph (1)(A), and the
estimated number of monthly payments under
paragraph (1)(A) remaining on such loan before
the borrower may be eligible for loan
cancellation under this subsection.
``(iv) With respect to each loan of the
borrower that is not eligible for loan
cancellation under this subsection, an
explanation of why the loan is not so eligible
and instructions on how what, if anything, the
borrower may do to make the loan so eligible.
``(v) Instructions for the submission of
any forms associated with such loan
cancellation, and an ability for the borrower
to use the portal to electronically sign and
submit such forms.
``(vi) In the case of a borrower who
disputes a determination of the Secretary
relating to the entitlement of the borrower to
loan cancellation under paragraph (2)--
``(I) an ability for the borrower
to file a claim with the Secretary to
dispute such determination through the
portal; and
``(II) in the case of such a claim
that has been filed, the status of such
claim, for which updates shall be
provided not fewer than once every 90
days.
``(B) Employers.--The Secretary shall ensure that
an employer of a borrower has the option to
electronically sign and submit any forms associated
with loan cancellation under this subsection.
``(C) Information.--The Secretary shall ensure that
any information provided through the on-line portal
described in this paragraph is up-to-date information.
``(5) Database of public service jobs.--
``(A) In general.--The Secretary, in consultation
with the Secretary of Labor, shall establish and
regularly update a database that lists public service
jobs.
``(B) Public availability.--The database
established under subparagraph (A) shall be made
available on a publicly accessible website of the
Department in an easily searchable format.''.
(d) Definitions.--Section 455(m) of such Act is further amended in
paragraph (6)(A) (as so redesignated by subsection (c))--
(1) by inserting before the period at the end the
following: ``(including any Federal Direct Stafford Loan,
Federal Direct PLUS Loan, Federal Direct Unsubsidized Stafford
Loan, or Federal Direct Consolidation Loan refinanced under
section 460A)'';
(2) by striking ``The term'' and inserting the following:
``(i) In general.--The term''; and
(3) by adding at the end the following:
``(ii) Treatment of certain consolidation
loan payments.--In the case of an eligible
Federal Direct Loan that is a Federal Direct
Consolidation Loan made on or after the date of
enactment of the LOAN Act, any monthly payment
pursuant to any repayment plan listed in
paragraph (1)(A) (including a period of
deferment or forbearance described in paragraph
(1)(A)(v)) made on a loan, for which the
liability has been discharged by the proceeds
of such Federal Direct Consolidation Loan and
without regard to whether the loan is an
eligible Federal Direct Loan, shall be treated
as a monthly payment under paragraph (1)(A) on
the portion of such Federal Direct
Consolidation Loan that is attributable to such
discharged loan, except that in a case of a
borrower who previously received a Federal
Direct Consolidation Loan, any monthly payment
made on a loan for which the liability has been
discharged by such previous consolidation loan
shall not be treated as a monthly payment on a
portion of the subsequent Federal Direct
Consolidation Loan made on or after such date
of enactment.''.
(e) Treatment of Double Benefits.--Section 455(m) of such Act is
further amended in paragraph (7) (as so redesignated by subsection (c))
by striking ``both this subsection and section 428J, 428K, 428L, or
460'' and inserting ``both this subsection and section 428K or 428L''.
SEC. 222. LOAN FORGIVENESS FOR TEACHERS.
The Higher Education Act of 1965 (20 U.S.C. 1001 et seq.) is
further amended--
(1) in section 428J(g)(2) (20 U.S.C. 1078-10(g)(2))--
(A) in subparagraph (A), by inserting ``or'' after
the semicolon at the end;
(B) by striking subparagraph (B); and
(C) by redesignating subparagraph (C) as
subparagraph (B); and
(2) in section 460(g)(2) (20 U.S.C. 1087j(g)(2))--
(A) in subparagraph (A), by inserting ``or'' after
the semicolon at the end;
(B) by striking subparagraph (B); and
(C) by redesignating subparagraph (C) as
subparagraph (B).
TITLE III--INTEREST CAPITALIZATION
SEC. 301. ELIMINATION OF INTEREST CAPITALIZATION.
(a) Federal PLUS Loans.--Section 428B(d)(2) of the Higher Education
Act of 1965 (20 U.S.C. 1078-2(d)(2)) is amended to read as follows:
``(2) No capitalization of interest.--Interest on loans
made under this section for which payments of principal are
deferred pursuant to paragraph (1) shall be paid by the
borrower and shall not be capitalized.''.
(b) Federal Consolidation Loans Deferrals.--Section
428C(b)(4)(C)(ii)(III) of the Higher Education Act of 1965 (20 U.S.C.
1078-3(b)(4)(C)(III)) is amended by striking ``or capitalized,''.
(c) Default Reduction Program.--Section 428F(a)(1)(E) of such Act
of 1965 (20 U.S.C. 1078-6(a)(1)(E)) is amended to read as follows:
``(E) Duties upon assignment.--With respect to a
loan assigned under subparagraph (A)(ii)--
``(i) the guaranty agency shall add to the
principal and interest outstanding at the time
of the assignment of such loan an amount equal
to the amount described in subparagraph
(D)(i)(II)(aa);
``(ii) the Secretary shall pay the guaranty
agency, for deposit in the agency's Operating
Fund established pursuant to section 422B, an
amount equal to the amount added to the
principal and interest outstanding at the time
of the assignment in accordance with clause
(i);
``(iii) for a loan assigned on or after the
date of enactment of the LOAN Act, the interest
outstanding at the time of the assignment of
such loan, and any interest accruing after such
time, shall not be capitalized; and
``(iv) beginning on the date of enactment
of LOAN Act, interest shall only accrue on the
percentage of such a loan that is equal to--
``(I) the amount of the outstanding
principal on the original loan on the
date it was assigned; divided by
``(II) the total amount of such
assigned loan, including interest
outstanding at the time of the
assignment of such loan and the amount
added by the guaranty agency in
accordance with clause (i), on the date
such loan was assigned.''.
(d) Loan Limits for Unsubsidized Stafford Loans.--Section
428H(d)(5) of the Higher Education Act of 1965 (20 U.S.C. 1078-8(d)(5))
is amended by inserting ``before the date of enactment of the LOAN
Act'' after ``Interest capitalized''.
(e) Unsubsidized Stafford Loans for Middle Income Borrowers.--
Section 428H(e)(2) of the Higher Education Act of 1965 (20 U.S.C. 1078-
8(e)(2)) is amended--
(1) in the header, by striking ``Capitalization'' and
inserting ``No capitalization'';
(2) in subparagraph (A), in the matter before clause (i),
by striking ``, if agreed upon by the borrower and the lender''
and all that follows through clause (ii)(IV) and inserting ``be
paid by the borrower and shall not be capitalized.'';
(3) by striking subparagraph (B); and
(4) by redesignating subparagraph (C) as subparagraph (B).
(f) Income Contingent Repayment.--Section 455(e)(5) of the Higher
Education Act of 1965 (20 U.S.C. 1087e(e)(5)) is amended by striking
the last sentence and inserting ``No interest may be capitalized on
such loan on or after the date of the enactment of the LOAN Act, and
the Secretary shall promulgate regulations with respect to the
treatment of accrued interest that is not capitalized''.
(g) Deferment and Forbearance.--
(1) In general.--Section 455(f) of the Higher Education Act
of 1965 (20 U.S.C. 1087e(f)) is amended--
(A) in the subsection heading, by inserting at the
end the following: ``and Forbearance'';
(B) in subparagraph (B), by striking ``capitalized
or''; and
(C) by adding at the end the following:
``(6) Forbearance.--At the expiration of a period of
forbearance, interest shall not be capitalized on any loans
made under this part.''.
(2) Application of amendment.--The amendments made by
paragraph (1) shall apply to any deferment or forbearance
period in effect on the date of enactment of this Act, or any
deferment or forbearance period beginning on or after such date
of enactment.
(h) Income-Based Repayment Program.--Section 493C(b)(3) of the
Higher Education Act of 1965 (20 U.S.C. 1098e(b)(3)) is amended to read
as follows:
``(3) on subsidized loans, any interest due and not paid
under paragraph (2) shall be paid by the Secretary for a period
of not more than 3 years after the date of the borrower's
election under paragraph (1), except that such period shall not
include any period during which the borrower is in deferment
due to an economic hardship described in section 435(o);''.
(i) Notes and Insurance Certificates in Combined Payment Plans.--
Section 485A(f) of the Higher Education Act of 1965 (20 U.S.C.
1092a(f)) is amended by adding at the end the following new paragraph:
``(3) Treatment of interest.--Not withstanding paragraphs
(1) and (2), beginning on the date of enactment of the LOAN
Act, interest on a loan reissued under subsection (e) shall not
be capitalized, and interest shall only accrue on the
percentage of such reissued loan that is equal to--
``(A) the amount of the outstanding principal on
the original loan on the date it was reissued; divided
by
``(B) the total amount of such reissued loan on the
date such loan was reissued.''.
SEC. 302. ELIMINATION OF DISCLOSURE REQUIREMENTS RELATING TO
CAPITALIZATION.
(a) Insurance Program Agreements To Qualify Loans for Interest
Subsidies.--Section 428(b)(1)(Y) of the Higher Education Act of 1965
(20 U.S.C. 1078(b)(1)(Y)) is amended--
(1) in clause (i)(IV), by inserting ``and'' after the
semicolon;
(2) in clause (ii), by striking ``; and'' and inserting a
period; and
(3) by striking clause (iii).
(b) Forbearance.--Section 428(c)(3)(C) of such Act of 1965 (20
U.S.C. 1078(c)(3)(C)) is amended--
(1) in clause (ii), by inserting ``and'' after the
semicolon; and
(2) by striking clauses (iii) and (iv) and inserting the
following:
``(iii) the lender shall contact the
borrower not less often than once every 180
days during the period of forbearance to inform
the borrower of--
``(I) the amount of unpaid
principal and the amount of interest
that has accrued since the last
statement of such amounts provided to
the borrower by the lender;
``(II) the fact that interest will
accrue on the loan for the period of
forbearance;
``(III) the responsibility of the
borrower to pay the interest that has
accrued; and
``(IV) the borrower's option to
discontinue the forbearance at any
time; and''.
(c) Required Disclosure Before Disbursement.--Section 433(a) of the
Higher Education Act of 1965 (20 U.S.C. 1083(a)) is amended--
(1) by amending paragraph (6) to read as follows:
``(6) for loans made under section 428H or to a student
borrower under section 428B, an explanation that the borrower
has the option to pay the interest that accrues on the loan
while the borrower is a student at an institution of higher
education;''; and
(2) in paragraph (7)--
(A) in subparagraph (A), by inserting ``and'' after
the semicolon;
(B) by striking subparagraph (B); and
(C) by redesignating subparagraph (C) as
subparagraph (B).
(d) Required Disclosure Before Repayment.--Section 433(b)(3) of the
Higher Education Act of 1965 (20 U.S.C. 1083(b)(3)) is amended by
striking ``(including, if applicable, the estimated amount of interest
to be capitalized)''.
(e) Special Disclosure Rules on PLUS Loans and Unsubsidized
Loans.--Section 433(d) of the Higher Education Act of 1965 (20 U.S.C.
1083(d)) is amended--
(1) in the matter preceding paragraph (1)--
(A) by striking ``resulting from capitalization of
interest''; and
(B) by striking ``borrower of--'' and inserting
``borrower of paying the interest as the interest
accrues.''; and
(2) by striking paragraphs (1) and (2).
(f) Disclosure Required Prior to Perkins Repayment.--Section
463A(b)(3) of the Higher Education Act of 1965 (20 U.S.C. 1087cc-
1(b)(3)) is amended by striking ``(including, if applicable, the
estimated amount of interest to be capitalized)''.
(g) Departmental Publication of Descriptions of Assistance
Programs.--Section 485(d)(1) of the Higher Education Act of 1965 (20
U.S.C. 1092(d)(1)) is amended by striking ``, including the increase in
debt that results from capitalization of interest''.
(h) Information To Be Provided During Entrance Counseling for
Borrowers.--Section 485(l)(2)(C) of the Higher Education Act of 1965
(20 U.S.C. 1092(l)(2)) is amended by striking ``and is capitalized''.
TITLE IV--INTEREST RATES
SEC. 401. INTEREST RATE PROVISIONS FOR NEW FEDERAL STUDENT LOANS ON OR
AFTER JULY 1, 2023.
Section 455(b) of the Higher Education Act of 1965 (20 U.S.C.
1087e(b)) is amended--
(1) in paragraph (8)--
(A) in the paragraph heading, by inserting ``and
before july 1, 2023''; and
(B) by inserting ``and before July 1, 2023,'' after
``July 1, 2013,'' each place it appears;
(2) by redesignating paragraphs (9) and (10) as paragraphs
(10) and (11), respectively; and
(3) by inserting after paragraph (8) the following new
paragraph:
``(9) Interest rate provisions for new loans on or after
july 1, 2023.--
``(A) Rate for fdsl, fdusl, and plus loans.--
Notwithstanding the preceding paragraphs of this
subsection, for Federal Direct Stafford Loans, Federal
Direct Unsubsidized Stafford Loans, and Federal Direct
PLUS Loans, for which the first disbursement is made on
or after July 1, 2023, the applicable rate of interest
shall, for loans disbursed during any 12-month period
beginning on July 1 and ending on June 30, be
determined on the preceding June 1 and be equal to the
lesser of--
``(i) a rate equal to the high yield of the
10-year Treasury note auctioned at the final
auction held prior to such June 1; or
``(ii) 5.0 percent.
``(B) Consolidation loans.--Notwithstanding the
preceding paragraphs of this subsection, any Federal
Direct Consolidation Loan for which the application is
received on or after July 1, 2023, shall--
``(i) bear interest at an annual rate on
the unpaid principal balance of the loan that
is equal to the lesser of--
``(I) the weighted average of the
interest rates on the loans
consolidated, rounded to the nearest
higher one-eighth of one percent; or
``(II) 5.0 percent; and
``(ii) only accrue interest on the
percentage of such Federal Direct Consolidation
Loan that is equal to--
``(I) the amount of the sum of the
unpaid principal on the loans
consolidated; divided by
``(II) the total amount of such
Federal Direct Consolidation Loan.
``(C) Consultation.--The Secretary shall determine
the applicable rate of interest under this paragraph
after consultation with the Secretary of the Treasury
and shall publish such rate in the Federal Register as
soon as practicable after the date of determination.
``(D) Fixed rate.--The applicable rate of interest
determined under this paragraph for a Federal Direct
Stafford Loan, a Federal Direct Unsubsidized Stafford
Loan, a Federal Direct PLUS Loan, or a Federal Direct
Consolidation Loan shall be fixed for the period of the
loan.''.
SEC. 402. REFINANCING FFEL AND FEDERAL DIRECT LOANS.
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:
``SEC. 460A. REFINANCING FFEL AND FEDERAL DIRECT LOANS.
``(a) In General.--The Secretary shall establish a program under
which the Secretary, upon the receipt of an application from a
qualified borrower, makes a loan under this part, in accordance with
the provisions of this section, in order to permit the borrower to
obtain the interest rate provided under subsection (c).
``(b) Refinancing Direct Loans.--
``(1) Federal direct loans.--Upon application of a
qualified borrower, the Secretary shall repay a Federal Direct
Stafford Loan, a Federal Direct Unsubsidized Stafford Loan, a
Federal Direct PLUS Loan, or a Federal Direct Consolidation
Loan of the qualified borrower, for which the first
disbursement was made, or the application for the consolidation
loan was received, before July 1, 2023, with the proceeds of a
refinanced Federal Direct Stafford Loan, a Federal Direct
Unsubsidized Stafford Loan, a Federal Direct PLUS Loan, or a
Federal Direct Consolidation Loan, respectively, issued to the
borrower in an amount equal to the sum of the unpaid principal,
accrued unpaid interest, and late charges of the original loan.
``(2) Refinancing ffel program loans as refinanced federal
direct loans.--Upon application of a qualified borrower for any
loan that was made, insured, or guaranteed under part B and for
which the first disbursement was made, or the application for
the consolidation loan was received, before July 1, 2010, the
Secretary shall make a loan under this part, in an amount equal
to the sum of the unpaid principal, accrued unpaid interest,
and late charges of the original loan to the borrower in
accordance with the following:
``(A) The Secretary shall pay the proceeds of such
loan to the eligible lender of the loan made, insured,
or guaranteed under part B, in order to discharge the
borrower from any remaining obligation to the lender
with respect to the original loan.
``(B) A loan made under this section that was
originally--
``(i) a loan originally made, insured, or
guaranteed under section 428 shall be a Federal
Direct Stafford Loan;
``(ii) a loan originally made, insured, or
guaranteed under section 428B shall be a
Federal Direct PLUS Loan;
``(iii) a loan originally made, insured, or
guaranteed under section 428H shall be a
Federal Direct Unsubsidized Stafford Loan; and
``(iv) a loan originally made, insured, or
guaranteed under section 428C shall be a
Federal Direct Consolidation Loan.
``(C) The interest rate for each loan made by the
Secretary under this paragraph shall be the rate
provided under subsection (c).
``(c) Interest Rates.--
``(1) In general.--The interest rate for the refinanced
Federal Direct Stafford Loans, Federal Direct Unsubsidized
Stafford Loans, Federal Direct PLUS Loans, and Federal Direct
Consolidation Loans, shall be a rate equal to--
``(A) in any case where the original loan was a
loan under section 428, 428B, 428H, a Federal Direct
Stafford loan, a Federal Direct Unsubsidized Stafford
Loan, or a Federal Direct PLUS Loan, a rate equal to
the interest rate determined under section 455(b)(9)(A)
for the date on which the refinanced loan is made; and
``(B) in any case where the original loan was a
loan under section 428C or a Federal Direct
Consolidation Loan, a rate calculated in accordance
with paragraph (2).
``(2) Interest rates for consolidation loans.--
``(A) Method of calculation.--In order to determine
the interest rate for any refinanced Federal Direct
Consolidation Loan under paragraph (1)(B), the
Secretary shall--
``(i) determine each of the component loans
that were originally consolidated in the loan
under section 428C or the Federal Direct
Consolidation Loan, and calculate the
proportion of the unpaid principal balance of
the loan under section 428C or the Federal
Direct Consolidation Loan that each component
loan represents;
``(ii) use the proportions determined in
accordance with clause (i) and the interest
rate applicable for each component loan, as
determined under subparagraph (B), to calculate
the weighted average of the interest rates on
the loans consolidated into the loan under
section 428C or the Federal Direct
Consolidation Loan; and
``(iii) make the applicable interest rate
for the refinanced Federal Direct Consolidation
Loan the lesser of--
``(I) the weighted average
calculated under clause (ii); or
``(II) 5.0 percent.
``(B) Interest rates for component loans.--The
interest rates for the component loans of a loan made
under section 428C or a Federal Direct Consolidation
Loan shall be the following:
``(i) The interest rate for any loan under
section 428, 428B, 428H, Federal Direct
Stafford Loan, Federal Direct Unsubsidized
Stafford Loan, or Federal Direct PLUS Loan
shall be a rate equal to the lesser of--
``(I) the interest rate determined
under section 455(b)(9)(A) for the date
on which the component loan is made; or
``(II) the original interest rate
of the component loan.
``(ii) The interest rate for any component
loan that is a loan under section 428C or a
Federal Direct Consolidation Loan shall be the
lesser of--
``(I) the weighted average of the
interest rates that would apply under
this subparagraph for each loan
comprising the component consolidation
loan; or
``(II) 5 percent.
``(iii) The interest rate for any eligible
loan that is a component of a loan made under
section 428C or a Federal Direct Consolidation
Loan and is not described in clauses (i) or
(ii) shall be the lesser of--
``(I) the interest rate on the
original component loan; or
``(II) 5 percent.
``(3) Fixed rate.--The applicable rate of interest
determined under paragraph (1) for a refinanced loan under this
section shall be fixed for the period of the loan.
``(4) Capitalized interest and fees excluded.--With respect
to a refinanced loan under this section, interest shall only
accrue on the percentage of such refinanced loan that is equal
to--
``(A) the amount of the unpaid principal of the
original loan, or in the case of a refinanced Federal
Direct Consolidation Loan, the sum of the unpaid
principal of all the component loans, comprising the
refinanced loan; divided by
``(B) the total amount of such refinanced loan.
``(d) Terms and Conditions of Loans.--
``(1) In general.--A loan that is refinanced under this
section shall have the same terms and conditions as the
original loan, except as otherwise provided in this section.
``(2) No automatic extension of repayment period.--
Refinancing a loan under this section shall not result in the
extension of the duration of the repayment period of the loan,
and the borrower shall retain the same repayment term that was
in effect on the original loan. Nothing in this paragraph shall
be construed to prevent a borrower from electing a different
repayment plan at any time in accordance with section
455(d)(4).
``(e) Definition of Qualified Borrower.--For purposes of this
section, the term `qualified borrower' means a borrower--
``(1) of a loan under this part or part B for which the
first disbursement was made, or the application for a
consolidation loan was received, before July 1, 2023; and
``(2) who has one or more loans described in paragraph (1)
or (2) of subsection (b) with an interest rate that exceeds 5
percent.
``(f) Notification to Borrowers.--The Secretary, in coordination
with the Director of the Bureau of Consumer Financial Protection, shall
undertake a campaign to alert borrowers of loans that are eligible for
refinancing under this section that the borrowers are eligible to apply
for such refinancing. The campaign shall include the following
activities:
``(1) Developing consumer information materials about the
availability of Federal student loan refinancing.
``(2) Requiring servicers of loans under this part or part
B to provide such consumer information to borrowers in a manner
determined appropriate by the Secretary, in consultation with
the Director of the Bureau of Consumer Financial Protection.''.
SEC. 403. REFINANCING PRIVATE STUDENT LOANS.
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:
``SEC. 460B. FEDERAL DIRECT REFINANCED PRIVATE LOAN PROGRAM.
``(a) Definitions.--In this section:
``(1) Eligible private education loan.--The term `eligible
private education loan' means a private education loan, as
defined in section 140(a) of the Truth in Lending Act (15
U.S.C. 1650(a)), that--
``(A) was disbursed to the borrower before July 1,
2023; and
``(B) was for the borrower's own postsecondary
educational expenses for an eligible program at an
institution of higher education participating in the
loan program under this part, as of the date that the
loan was disbursed.
``(2) Federal direct refinanced private loan.--The term
`Federal Direct Refinanced Private Loan' means a loan issued
under subsection (b)(1).
``(3) Private educational lender.--The term `private
educational lender' has the meaning given the term in section
140(a) of the Truth in Lending Act (15 U.S.C. 1650(a)).
``(4) Qualified borrower.--The term `qualified borrower'
means an individual who--
``(A) has an eligible private education loan;
``(B) has been current on payments on the eligible
private education loan for the 6 months prior to the
date of the qualified borrower's application for
refinancing under this section, and is in good standing
on the loan at the time of such application;
``(C) is not in default on the eligible private
education loan or on any loan made, insured, or
guaranteed under this part or part B or E; and
``(D) meets the eligibility requirements described
in subsection (b)(2).
``(b) Program Authorized.--
``(1) In general.--The Secretary, in consultation with the
Secretary of the Treasury, shall carry out a program under
which the Secretary, upon application by a qualified borrower
who has an eligible private education loan, shall issue such
borrower a loan under this part in accordance with the
following:
``(A) The loan issued under this program shall be
in an amount equal to the sum of the unpaid principal,
accrued unpaid interest, and late charges of the
private education loan.
``(B) The Secretary shall pay the proceeds of the
loan issued under this program to the private
educational lender of the private education loan, in
order to discharge the qualified borrower from any
remaining obligation to the lender with respect to the
original loan.
``(C) The Secretary shall require that the
qualified borrower undergo loan counseling that
provides all of the relevant information and counseling
required under section 485(l)(2) before the loan is
refinanced in accordance with this section, and before
the proceeds of such loan are paid to the private
educational lender.
``(D) The Secretary shall issue the loan as a
Federal Direct Refinanced Private Loan, which shall
have the same terms, conditions, and benefits as a
Federal Direct Unsubsidized Stafford Loan, except as
otherwise provided in this section.
``(E) The interest rate for each loan made by the
Secretary under this section shall be the rate provided
under subsection (c).
``(2) Borrower eligibility.--The Secretary, in consultation
with the Secretary of the Treasury and the Director of the
Consumer Financial Protection Bureau, shall establish
eligibility requirements--
``(A) to ensure eligibility only for borrowers in
good standing;
``(B) to minimize inequities between Federal Direct
Refinanced Private Loans and other Federal student
loans;
``(C) to preclude windfall profits for private
educational lenders; and
``(D) to ensure full access to the program
authorized in this subsection for borrowers with
private loans who otherwise meet the criteria
established in accordance with subparagraph (A).
``(c) Interest Rate.--
``(1) In general.--The interest rate for a Federal Direct
Refinanced Private Loan is a rate equal to the interest rate
determined under section 455(b)(9)(A) for the date on which the
refinanced private loan is made.
``(2) Fixed rate.--The interest rate determined under this
subsection for a Federal Direct Refinanced Private Loan shall
be fixed for the period of the loan.
``(3) Capitalized interest and fees excluded.--With respect
to a Federal Direct Refinanced Private Loan under this section,
interest shall only accrue on the percentage of such Refinanced
Private Loan that is equal to--
``(A) the amount of the unpaid principal of the
original loan comprising the Refinanced Private Loan on
the date such original loan was refinanced; divided by
``(B) the total amount of such Refinanced Private
Loan.
``(d) No Inclusion in Aggregate Limits.--The amount of a Federal
Direct Refinanced Private Loan, or a Federal Direct Consolidated Loan
to the extent such loan was used to repay a Federal Direct Refinanced
Private Loan, shall not be included in calculating a borrower's annual
or aggregate loan limits under section 428 or 428H.
``(e) No Eligibility for Service-Related Repayment.--A Federal
Direct Refinanced Private Loan, or any Federal Direct Consolidation
Loan to the extent such loan was used to repay a Federal Direct
Refinanced Private Loan, shall not be eligible for any loan repayment
or loan forgiveness program under section 428K, 428L, or 460 or for the
loan cancellation repayment plan for public service employees under
section 455(m).
``(f) Private Educational Lender Reporting Requirement.--
``(1) Reporting required.--The Secretary, in consultation
with the Secretary of the Treasury and the Director of the
Bureau of Consumer Financial Protection, shall establish a
requirement that, in order to allow for an assessment of the
private education loan market, private educational lenders
report the data described in paragraph (2) to--
``(A) the Secretary;
``(B) the Secretary of the Treasury;
``(C) the Director of the Consumer Financial
Protection Bureau;
``(D) the Committee on Education and Labor of the
House of Representatives;
``(E) the Committee on Financial Services of the
House of Representatives;
``(F) the Senate Committee on Health, Education,
Labor, and Pensions; and
``(G) the Senate Committee on Banking, Housing, and
Urban Affairs.
``(2) Contents of reporting.--The data that private
educational lenders shall report in accordance with paragraph
(1) shall include each of the following about private education
loans (as defined in section 140(a) of the Truth in Lending Act
(15 U.S.C. 1650(a))):
``(A) The total amount of private education loan
debt the lender holds.
``(B) The total number of private education loan
borrowers the lender serves.
``(C) The average interest rate on the outstanding
private education loan debt held by the lender.
``(D) The proportion of private education loan
borrowers who are in default on a loan held by the
lender.
``(E) The proportion of the outstanding private
education loan volume held by the lender that is in
default.
``(F) The proportions of outstanding private
education loan borrowers who are 30, 60, and 90 days
delinquent.
``(G) The proportions of outstanding private
education loan volume that is 30, 60, and 90 days
delinquent.
``(g) Notification to Borrowers.--The Secretary, in coordination
with the Secretary of the Treasury and the Director of the Consumer
Financial Protection Bureau, shall undertake a campaign to alert
borrowers about the availability of private student loan refinancing
under this section.''.
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