Earnings Contingent Education Loans Act of 2012 or the ExCEL Act of 2012 - Amends title IV (Student Assistance) of the Higher Education Act of 1965 to make students ineligible to receive Direct Loans (DLs) on or after July 1, 2014.
Makes certain exceptions for student borrowers who have an outstanding balance on their DLs or Federal Family Education Loans (FFELs), as of that date, and later apply for a Direct Unsubsidized, PLUS, or Consolidation Loan.
Establishes an Income Dependent Education Assistance (IDEA) Loan program, effective July 1, 2014, making federal funds available for loans to student borrowers.
Sets the interest rate on IDEA Loans at the bond equivalent rate of ten-year Treasury bills, plus 3%. Caps the total amount of interest that can accrue during a borrower's grace and repayment periods at 50% of the total amount of their IDEA Loan.
Blocks the accrual of interest on IDEA Loans for active duty military personnel.
Allows student borrowers to consolidate FFELs, DLs, and Perkins Loans into IDEA Consolidation Loans that bear interest at an annual rate that equals the weighted average of the interest rates on the loans consolidated.
Directs the Secretary of the Treasury to establish an IDEA Loan Repayment Program that: (1) repays IDEA loans through wage withholding and quarterly estimated tax payments, and (2) provides the Secretary of Education with the tax return information for each borrower that is necessary to determine the borrower's income-based repayment obligation.
Sets the annual repayment obligation for borrowers at an amount equal to 15% of the excess of their taxable income over the sum of: (1) an exemption amount equal to 150% of the federal poverty level for their household; and (2) the lesser $3,000 or specified income other than wages, salaries, tips and other employee compensation.
Sets the income-based repayment obligation of individuals who are not required to file a tax return at zero.
Directs the Secretary of Education to provide borrowers, through the Internet, with a tool that has an interface that enables them to manage their IDEA Loans.
Allows borrowers to prepay all or part of an IDEA Loan without penalty.
Penalizes borrowers who fail to pay their full repayment amount for a taxable year.
Amends the Social Security Act to give the Secretary of Education access to the information in the National Directory of New Hires to determine when IDEA borrowers in repayment status are hired and to inform them of their obligation to provide their employer with accurate loan information for wage withholding purposes.
Amends the Internal Revenue Code to include IDEA loan withholding information on W-2 forms and to require the Secretary of the Treasury to disclose borrowers' tax return information to the Department of Education for IDEA program purposes.
[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6674 Introduced in House (IH)]
112th CONGRESS
2d Session
H. R. 6674
To simplify and improve the Federal student loan program through
income-contingent repayment to provide stronger protections for
borrowers, encourage responsible borrowing, and save money for
taxpayers.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
December 17, 2012
Mr. Petri introduced the following bill; which was referred to the
Committee on Education and the Workforce, and in addition to the
Committee on Ways and Means, 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 simplify and improve the Federal student loan program through
income-contingent repayment to provide stronger protections for
borrowers, encourage responsible borrowing, and save money for
taxpayers.
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 ``Earnings Contingent Education Loans
Act of 2012'', or the ``ExCEL Act of 2012''.
SEC. 2. TERMINATION OF AUTHORITY TO MAKE FEDERAL DIRECT STAFFORD LOANS,
FEDERAL DIRECT UNSUBSIDIZED STAFFORD LOANS, AND FEDERAL
DIRECT PLUS LOANS TO STUDENTS UNDER THE WILLIAM D. FORD
FEDERAL DIRECT LOAN PROGRAM.
Section 455(a) of the Higher Education Act of 1965 (20 U.S.C.
1087e(a)) is amended by adding at the end the following:
``(4) Termination of authority to make federal direct
stafford loans, federal direct unsubsidized stafford loans, and
federal direct plus loans to students under this part.--
``(A) In general.--Notwithstanding any provision of
this part or part B, for any period of instruction
beginning on or after July 1, 2014--
``(i) a student shall not be eligible to
receive a Federal Direct Stafford Loan under
this part; and
``(ii) a student shall not be eligible to
receive a Federal Direct Unsubsidized Stafford
Loan or Federal Direct PLUS Loan under this
part, except as provided in subparagraph (B).
``(B) Exceptions.--Subparagraph (A)(ii) shall not
be applicable with respect to the following:
``(i) Existing student borrowers.--A
student who, as of July 1, 2014, has an
outstanding balance of principal or interest
owing on any loan made, insured, or guaranteed
under part B or this part may continue to be
eligible to borrow a loan under this part,
except for a Federal Direct Stafford Loan, in
accordance with subparagraph (C) until June 30,
2019.
``(ii) Parent plus loans.--An excepted PLUS
loan or excepted consolidation loan (as such
terms are defined in section 493C(a)) under
this part that is made to a parent on behalf of
an undergraduate dependent student.
``(iii) Federal direct consolidation
loans.--A Federal Direct Consolidation Loan
under this part.
``(C) Maximum annual amounts of federal direct
unsubsidized stafford loans.--The maximum annual amount
of Federal Direct Unsubsidized Stafford Loans a student
described in subparagraph (B)(i) may borrow in an
academic year (as defined in section 481(a)(2)) or its
equivalent shall be the maximum annual amount for such
student determined under section 428H, plus an amount
equal to the amount of Federal Direct Stafford Loans
the student would have received in the absence of
subparagraph (A)(i).''.
SEC. 3. ESTABLISHMENT OF THE INCOME DEPENDENT EDUCATION ASSISTANCE LOAN
PROGRAM AND THE IDEA LOAN REPAYMENT PROGRAM.
Title IV of the Higher Education Act of 1965 (20 U.S.C. 1070a et
seq.) is amended by adding at the end the following new part:
``PART J--INCOME DEPENDENT EDUCATION ASSISTANCE LOANS
``Subpart 1--IDEA Loans
``SEC. 499A. PROGRAM AUTHORITY AND AGREEMENTS.
``(a) Program Authority.--
``(1) In general.--There are hereby made available, in
accordance with the provisions of this part, such sums as may
be necessary to make loans to all eligible students in
attendance at participating institutions of higher education
selected by the Secretary, to enable such students to pursue
their courses of study at such institutions during the period
beginning July 1, 2014. Loans made under this part shall be
made by participating institutions, or consortia thereof, that
have agreements with the Secretary to originate loans, or by
alternative originators designated by the Secretary to make
loans for students in attendance at participating institutions.
``(2) Designation.--The program established under this
subpart shall be referred to as the `Income Dependent Education
Assistance Loan Program', or the `IDEA Loan Program'.
``(b) Funds for the Origination of IDEA Loans.--The Secretary shall
provide funds for student loans under this part in the same manner as
the Secretary provides funds for the origination of Federal Direct
Student Loans under part D in accordance with section 452. The
requirements, rights, and limitations under section 452 with respect to
the Secretary and institutions for funds provided for loans under part
D shall apply with respect to the Secretary and institutions for funds
provided for loans under this part, except that funds under this part
shall not be provided for parent loans.
``(c) Selection of Institutions for Participation and Origination,
and Agreements With Institutions.--
``(1) Selection of institutions for participation and
origination.--The Secretary shall enter into agreements with
institutions of higher education to participate in the IDEA
Loan Program under this part and agreements with institutions
of higher education, or consortia thereof, to originate loans
in such program for academic years beginning on or after July
1, 2014. The provisions of section 453 shall apply with respect
to agreements under this section. The Secretary shall provide
alternative origination services for loans under this part, as
appropriate, in a manner consistent with the provisions of
sections 453 and 456 related to alternative origination
services for loans under part D.
``(2) Participation and origination agreements with
institutions.--An agreement with any institution of higher
education for participation in the IDEA Loan Program under this
part, and an agreement with any institution of higher
education, or consortia thereof, to originate loans in such
program, shall have the same terms as the terms required under
section 454 for agreements with an institution for
participation or origination, respectively, in the student loan
program under part D, except that agreements for participation
or origination under this part shall not apply to parent loans.
``(3) Withdrawal and termination procedures.--The Secretary
shall establish procedures by which institutions or consortia
may withdraw or be terminated from the program under this part.
``SEC. 499B. TERMS AND CONDITIONS OF IDEA LOANS.
``(a) Parallel Terms, Conditions, Benefits, and Amounts.--Unless
otherwise specified in this part, Income Dependent Education Assistance
Loans (hereinafter referred to as `IDEA Loans') made to borrowers under
this part shall have the same terms, conditions, and benefits, and be
available in the same amounts, as Federal Direct Unsubsidized Stafford
Loans made to borrowers under part D, and first disbursed on the day
before the date of enactment of the Earnings Contingent Education Loans
Act of 2012.
``(b) Eligible Borrowers.--
``(1) In general.--In addition to the requirements of
section 484, to be eligible to receive a loan (other than an
IDEA Consolidation Loan) under this part, a borrower--
``(A) shall be an individual who, on the date of
application for such loan, has no outstanding balance
of principal or interest owing on any loan made,
insured, or guaranteed under part B or D (other than an
excepted PLUS loan or an excepted consolidation loan
(as such terms are defined in section 493C(a))); or
``(B) in the case of an individual with an
outstanding balance of principal or interest owing on
any loan described in subparagraph (A), shall
consolidate all such existing loans into an IDEA
Consolidation Loan under section 499C.
``(2) Only student borrowers eligible.--For purposes of
this part, the term `borrower' shall not include a parent
borrower.
``(c) Annual and Aggregate Limits.--
``(1) In general.--Subject to paragraph (2), the maximum
annual amount of IDEA Loans in any academic year (as defined in
section 481(a)(2)) or its equivalent, and the maximum aggregate
amount of IDEA Loans that a student may borrow, shall be the
maximum annual amounts and maximum aggregate amounts,
respectively, of Federal Direct Unsubsidized Stafford Loans
under part D that such student would have been eligible to
borrow in the absence of section 455(a)(4), as added by
Earnings Contingent Education Loans Act of 2012.
``(2) Graduate and professional students.--In the case of a
graduate or professional student who would have been eligible
to borrow a Federal Direct PLUS Loan under part D in the
absence of section 455(a)(4), as added by Earnings Contingent
Education Loans Act of 2012, the maximum annual amounts and
maximum aggregate amounts, respectively, of IDEA Loans that the
student may borrow as determined under paragraph (1) for any
academic year (as defined in section 481(a)(2)) or its
equivalent, may be increased to an amount equal to the maximum
annual amounts and maximum aggregate amounts, respectively, of
Federal Direct PLUS Loans that such student would have been
eligible to borrow in the absence of such section 455(a)(4).
``(d) Loan Fee.--The Secretary shall charge the borrower of a loan
(other than an IDEA Consolidation Loan) made under this part an
origination fee. Such fee shall be the sum of--
``(1) for the portion of the principal amount of the loan
that is equal to (or less than) the maximum annual amount a
student may borrow under subsection (c)(1), 1.0 percent of such
portion of the principal amount of the loan; plus
``(2) for the portion of the principal amount of the loan
that exceeds the maximum annual amount a student may borrow
under subsection (c)(1), as authorized by subsection (c)(2),
4.0 percent of such portion of the principal amount of the
loan.
``(e) Interest Rates.--
``(1) In general.--Except as provided in paragraph (2), for
IDEA Loans for which the first disbursement is made on or after
July 1, 2014, the applicable rate of interest shall, 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--
``(A) the bond equivalent rate of 10-year Treasury
bills auctioned at the final auction held prior to such
June 1; plus
``(B) 3.0 percent.
``(2) Certain graduate and professional students.--
Notwithstanding paragraph (1), with respect to graduate or
professional students who have increased maximum annual and
aggregate loan limits under subsection (c)(2), for IDEA Loans
for which the first disbursement is made on or after July 1,
2014, the applicable rate of interest shall be the weighted
average of--
``(A) the rate determined under paragraph (1) for
the portion of the principal amount of the loan that is
equal to (or less than) the maximum annual amount a
student may borrow under subsection (c)(1); and
``(B) the rate determined under paragraph (1),
except that `4.1 percent' shall be substituted for `3.0
percent' in such determination, for the portion of the
principal amount of the loan that exceeds the maximum
annual amount a student may borrow under subsection
(c)(1), as authorized by subsection (c)(2).
``(3) Consultation.--The Secretary shall determine the
applicable rate of interest under paragraph (1) 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.
``(4) Application of interest rate during the life of the
loan.--
``(A) Fixed rate until cap.--The applicable rate of
interest determined under paragraph (1) or (2) for an
IDEA Loan shall be fixed for the life of the loan,
except that interest shall cease to accrue when the
total amount of interest (both paid and unpaid) that
has accrued during the borrower's grace and repayment
periods equals 50 percent of the total amount of the
loan (equal to the sum of the unpaid principal,
interest, penalties, and fees due on the loan) as of
first day of the borrower's grace period.
``(B) In-school deferment period.--Interest shall
accrue and be capitalized or paid by the borrower (but
periodic installments of principal need not be paid)
during the in-school deferment period with respect to
an IDEA Loan. For the purposes of this part, the in-
school deferment period with respect to an IDEA Loan is
the first period during which the borrower is pursuing
at least one-half the normal full-time academic
workload (as determined by the institution) in the
course of study for which the borrower received such
loan and ending on the first day of the first month
that begins after the borrower ceases to carry at least
one-half the normal full-time academic workload (as
determined by the institution) in the course of study.
``(C) Grace and repayment periods.--Interest that
accrues during the borrower's grace period (for the
purposes of this title, defined as the period between
the borrower's in-school deferment period and the
borrower's repayment period) and during the borrower's
repayment period shall not be capitalized.
``(f) Armed Forces Student Loan Interest Payment Program.--Using
funds received by transfer to the Secretary under section 2174 of title
10, United States Code, for the payment of interest on a loan made
under this part to a member of the Armed Forces, the Secretary shall
pay the interest on the loan as due for a period not in excess of 36
consecutive months. The Secretary may not pay interest on such a loan
out of any funds other than funds that have been so transferred.
``(g) No Accrual of Interest for Active Duty Service Members.--
``(1) In general.--Notwithstanding any other provision of
this part and in accordance with paragraphs (2) and (4),
interest shall not accrue for an eligible military borrower on
a loan made under this part for which the first disbursement is
made on or after July 1, 2014.
``(2) IDEA consolidation loans.--In the case of any IDEA
Consolidation loan made under this part that is disbursed on or
after July 1, 2014, interest shall not accrue pursuant to this
subsection only on such portion of such loan as was used to
repay a loan made under part D for which the first disbursement
is made on or after October 1, 2008.
``(3) Eligible military borrower.--In this subsection, the
term eligible military borrower means an individual who--
``(A)(i) is serving on active duty during a war or
other military operation or national emergency; or
``(ii) is performing qualifying National Guard duty
during a war or other military operation or national
emergency; and
``(B) is serving in an area of hostilities in which
service qualifies for special pay under section 310 of
title 37, United States Code.
``(4) Limitation.--An individual who qualifies as an
eligible military borrower under this subsection may receive
the benefit of this subsection for not more than 60 months.
``(h) Loan Cancellation and Discharge.--The Secretary shall
discharge a borrower's liability on a loan made under this part in
accordance with subsections (a) and (c) of section 437.
``(i) No Public Service Loan Forgiveness.--A loan made under this
part shall not be eligible for the public service loan forgiveness
program under section 455(m).
``SEC. 499C. IDEA CONSOLIDATION LOANS.
``(a) IDEA Consolidation Loans.--
``(1) In general.--Except as provided in this section, an
IDEA Consolidation Loan under this section shall have the same
terms, conditions, and benefits, as IDEA Loans under this part.
``(2) Borrower and loan eligibility.--To be eligible to
receive an IDEA Consolidation Loan under this section, a
borrower--
``(A) shall--
``(i) meet the criteria described in
section 428C(a)(3)(A); and
``(ii) in the case of a borrower described
in section 499B(b)(1)(B), agree to consolidate
into an IDEA Consolidation Loan all loans made
to the borrower that are described in
subparagraphs (A) and (C) of section 428C(a)(4)
(other than an excepted PLUS loan or an
excepted consolidation loan (as such terms are
defined in section 493C(a)));
``(B) may consolidate the loans described in
subparagraphs (B), (D), and (E) of section 428C(a)(4)
into such IDEA Consolidation Loan; and
``(C) may not consolidate an IDEA Loan under
section 499B into such IDEA Consolidation Loan.
``(3) Requirements for the secretary.--In making IDEA
Consolidation Loans under this section, the Secretary--
``(A) shall ensure that--
``(i) each IDEA Consolidation Loan will be
made, notwithstanding any other provision of
this title limiting the annual or aggregate
principal amount for all loans made to the
borrower, in an amount which is equal to the
sum of the unpaid principal, interest,
penalties, and fees of all loans received by
the borrower which are selected by the borrower
for consolidation under this section; and
``(ii) the proceeds of each IDEA
Consolidation Loan will be paid by the
Secretary to the holder or holders of the loans
being consolidated to discharge the liability
on such loans;
``(B) shall not discriminate against any borrower
seeking such an IDEA Consolidation Loan--
``(i) based on the number or type of loans
the borrower seeks to consolidate;
``(ii) based on the interest rate to be
charged to the borrower with respect to the
consolidation loan; or
``(iii) based on the type or category of
institution of higher education that the
borrower attends or attended; and
``(C) shall disclose to a prospective borrower, in
simple and understandable terms, at the time the
Secretary provides an application for an IDEA
Consolidation Loan--
``(i) whether consolidation would result in
a loss of loan benefits under part B or part D,
including loan forgiveness, cancellation, and
deferment;
``(ii) with respect to Federal Perkins
Loans under part E--
``(I) that if a borrower includes a
Federal Perkins Loan under part E in
the consolidation loan, the borrower
will lose all interest-free periods
that would have been available for the
Federal Perkins Loan, including--
``(aa) the periods during
which no interest accrues on
such loan while the borrower is
enrolled in school at least
half-time;
``(bb) the grace period
under section 464(c)(1)(A); and
``(cc) the periods during
which the borrower's student
loan repayments are deferred
under section 464(c)(2);
``(II) that if a borrower includes
a Federal Perkins Loan in the
consolidation loan, the borrower will
no longer be eligible for cancellation
of part or all of the Federal Perkins
Loan under section 465(a); and
``(III) the occupations listed in
section 465 that qualify for Federal
Perkins Loan cancellation under section
465(a);
``(iii) the options of the borrower to
prepay the IDEA Consolidation Loan;
``(iv) the consequences of default on the
IDEA Consolidation Loan; and
``(v) that by applying for an IDEA
Consolidation Loan, the borrower is not
obligated to agree to take the consolidation
loan.
``(b) Interest Rate.--
``(1) In general.--Notwithstanding section 499B(e), an IDEA
Consolidation Loan for which the application is received on or
after July 1, 2014, shall bear interest at an annual rate on
the unpaid principal balance of the loan that is equal to the
weighted average of the interest rates on the loans
consolidated, rounded to the nearest higher one-eighth of one
percent. Interest that accrues on such an IDEA Consolidation
Loan shall not be capitalized.
``(2) Application of interest rate during the life of the
loan.--The applicable rate of interest determined under
paragraph (1) shall be fixed for the life of the IDEA
Consolidation Loan, except that interest shall cease to accrue
when the total amount of interest (both paid and unpaid) that
has accrued on such Loan equals 50 percent of the total amount
of the loans consolidated (as calculated on the date such
Consolidation Loan is made, and equal to the sum of the unpaid
principal, interest, penalties, and fees of all loans received
by the borrower which are selected by the borrower for
consolidation under this section).
``Subpart 2--IDEA Loan Repayment Program
``CHAPTER 1--ESTABLISHMENT OF THE IDEA LOAN REPAYMENT PROGRAM
``SEC. 499D. DUTIES OF THE SECRETARY OF THE TREASURY.
``(a) In General.--The Secretary of the Treasury, in consultation
with the Secretary of Education, shall establish a program (hereinafter
referred to as the `IDEA Loan Repayment Program') that provides for--
``(1) repaying loans under this part through wage
withholding and quarterly estimated payments as provided in
subsection (b); and
``(2) transmitting to the Secretary of Education--
``(A) an account of the amounts collected under
subsection (b) with respect to each individual for whom
a loan made under this part is in repayment status; and
``(B) such tax return information of each such
individual as is necessary to determine the
individual's income-based repayment obligation as
provided in subsection (c).
``(b) Wage Withholding and Estimated Payments.--
``(1) In general.--The Secretary of the Treasury shall,
under rules similar to the rules of chapter 24 of the Internal
Revenue Code of 1986, provide for every employer making payment
of wages to deduct and withhold upon such wages amounts
determined in accordance with tables or computational
procedures prescribed by the Secretary with respect to an
employee for whom a loan made under this part is in repayment
status and, if applicable under this section, with respect to
an employee whose spouse has a loan made under this part in
repayment status.
``(2) Withholding requirements.--The tables, procedures,
and guidance prescribed under paragraph (1) shall provide--
``(A) procedures and forms for an employee to
indicate--
``(i) whether the employee (and, in the
case of a married individual, whether the
employee's spouse) has a loan made under this
part that is in repayment status;
``(ii) in the case of a married individual,
whether the employee anticipates filing jointly
(and accompanying guidance explaining that if
filing status for the taxable year is uncertain
the employee should indicate filing jointly to
avoid underwithholding);
``(iii) whether the exemption amount to
which the employee is entitled under this
section should be taken into account in
determining withholding (and accompanying
guidance explaining that, in order to avoid
underwithholding, the employee should only take
into account the exemption in the case of the
employee's primary employer, unless total wages
from more than one place of employment will not
exceed the exemption amount);
``(iv) in the case of a married individual,
whether the exemption amount to which the
employee's spouse is entitled under this
section should be taken into account in
determining withholding from the wages of the
employee (and accompanying guidance explaining
that, in order to avoid underwithholding, the
employee should only take into account such
exemption if such spouse is not employed, or if
the total wages from the employee's job and the
spouse's employment will not exceed the
exemption amount);
``(v) the number of dependents of the
employee with respect to whom the employee is
entitled to a deduction under section 151(c) of
the Internal Revenue Code of 1986, and, if a
different number, in the case of a married
employee, the number of dependents of the
employee's spouse with respect to whom such
spouse is entitled to such deduction; and
``(vi) an election to have additional
amounts withheld; and
``(B) for withholding with respect to any employee
in an amount equal to the sum of--
``(i) in the case of an employee who has a
loan made under this part in repayment status,
the percentage of so much of the employee's
wages that would count towards the employee's
income-based repayment obligation provided in
subsection (c) as exceeds any exemption amount
taken into account with respect to the employee
under subparagraph (A)(iii) (prorated to the
payroll period), plus
``(ii) in the case of an employee who
indicates that the employee's spouse has a loan
made under this part in repayment status, the
percentage of so much of the employee's wages
that would count towards the employee's
spouse's income-based repayment obligation (as
provided in subsection (c)) as exceeds any
exemption amount taken into account with
respect to the employee's spouse under
subparagraph (A)(iv) (prorated to the payroll
period).
``(3) Quarterly estimated tax payments.--In the case of
taxpayers who make quarterly estimated tax return payments
under section 6654 of the Internal Revenue Code of 1986 and who
have a loan made under this part in repayment status, the
Secretary shall provide similar tables and procedures for
making repayments of loans made under this part concurrently
with such quarterly payments.
``(4) Collection and payment.--The amounts required to be
deducted and withheld under paragraph (1), and amounts required
to be paid under paragraph (3), shall be collected by the
Secretary of the Treasury and shall be paid into the general
fund of the Treasury of the United States.
``(c) Determination of Income-Based Repayment Obligation.--
``(1) In general.--As soon as practicable after an
individual for whom a loan made under this part is in repayment
status during the taxable year files an income tax return for
such taxable year, the Secretary of the Treasury shall transmit
to the Secretary of Education such tax information as is
necessary to determine--
``(A) the amount deducted and withheld under
subsection (b)(1), and the amount paid under subsection
(b)(3), for the taxable year with respect to such
individual, and
``(B) the income-based repayment obligation for the
taxable year for such individual.
``(2) Income-based repayment obligation.--For purposes of
this section:
``(A) In general.--The income-based repayment
obligation with respect to an individual for any
taxable year is an amount equal to 15 percent of the
excess of--
``(i) the sum of--
``(I) the wages, salaries, tips,
and other employee compensation of the
taxpayer, but only if such amounts are
includible in gross income for the
taxable year (determined without regard
to section 911, 931, 933),
``(II) the amount of the taxpayer's
net earnings from self-employment for
the taxable year (within the meaning of
section 1402(a)), determined with
regard to the deduction allowed to the
taxpayer by section 164(f), plus
``(III) any other amount included
in total income of the taxpayer for the
taxable year but not described in
subclause (I) or (II), over
``(ii) the sum of--
``(I) the exemption amount with
respect to such individual, plus
``(II) the lesser of the amount
determined with respect to the taxpayer
under subclauses (II) and (III) of
clause (i), or $3,000.
``(B) Special rules for married individuals.--
``(i) Each spouse with loan.--Except as
provided in clause (ii), in the case of a joint
return of two individuals who each have a loan
made under this part in repayment status, the
income-based repayment obligation with respect
to each spouse shall be an amount determined
under subparagraph (A) by apportioning \1/2\ of
the total income on such return to each spouse.
``(ii) Special rule for first year of
marriage.--In the case of the first taxable
year for which any two individuals make a joint
return, the income-based repayment obligation
with respect to such an individual shall be an
amount equal to the lesser of--
``(I) the amount determined with
respect to such individual under this
paragraph (determined without regard to
this clause), or
``(II) the amount determined with
respect to such individual under this
paragraph (determined by allocating to
each spouse the amounts described in
subclause (I) and (II) of subparagraph
(A)(i) in proportion to the amounts
attributable to each spouse, by
allocating \1/2\ of the amount
described in subparagraph (A)(i)(III)
to each spouse, and without regard to
clause (i)).
``(3) Exemption amount.--For purposes of this section:
``(A) In general.--Except as provided in
subparagraph (B), the exemption amount with respect to
an individual shall be an amount equal to 150 percent
of the poverty line for the individual's household size
(as determined under section 673(2) of the Community
Services Block Grant Act (42 U.S.C. 9902(2))) for the
calendar year in which the taxable year ends.
``(B) Special rule for married individuals who both
have loans made under this part.--If for any taxable
year an individual is married, files a joint return,
and has a spouse with a loan made under this part in
repayment status, then the exemption amount with
respect to such individual shall be an amount equal to
the sum of--
``(i) 150 percent of the poverty line for a
household size of one (as determined under
section 673(2) of the Community Services Block
Grant Act (42 U.S.C. 9902(2))) for the calendar
year in which the taxable year ends, and
``(ii) \1/2\ of the excess of--
``(I) 150 percent of the poverty
line for the individual's household
size minus 1 (as determined under
section 673(2) of the Community
Services Block Grant Act (42 U.S.C.
9902(2))) for the calendar year in
which the taxable year ends, over
``(II) the amount determined under
clause (i).
``(C) Household size.--For purposes of this
paragraph, an individual's household size shall be
determined by reference to the individual, the number
of dependents of the taxpayer with respect to whom the
taxpayer is entitled to a deduction under section
151(c) of the Internal Revenue Code of 1986, and, if
married and filing jointly, such individual's spouse.
``(4) Individuals not filing a return.--
``(A) Individuals not required to file.--The
income-based repayment obligation with respect to an
individual not required to file a return under section
6012(a)(1) of the Internal Revenue Code of 1986 shall
be treated as zero.
``(B) Failure to file.--In the case of an
individual who has a loan made under this part in
repayment status and fails to file a return under
section 6012(a)(1), the Secretary of the Treasury shall
transmit to the Secretary of Education any such tax
information of the individual as may be necessary to
determine whether such individual is in default under
the terms of such loan.
``(5) Subsequent transmission of employer information
reporting.--As soon as practicable after receiving from an
employer information reporting with respect to withholding
under subsection (b)(1) of an individual for whom an loan made
under this part is in repayment status, the Secretary of the
Treasury shall transmit to the Secretary of Education such
information as may be useful in verifying the information with
respect to withholding transmitted under paragraph (1).
``(d) Additional Program Requirements.--The Secretary of the
Treasury shall establish such other policies, procedures, and guidance
as may be necessary to carry out the purposes of this section,
including measures to prevent underwithholding, under-reporting, and
evasion of repayment or filing. Amounts shall be deducted and withheld
under this section as the Secretary determines to be most appropriate
to carry out the purposes of the IDEA Loan Repayment Program and to
reflect, as accurately as is practicable, an individual's income-based
repayment obligation.
``SEC. 499E. DUTIES OF THE SECRETARY OF EDUCATION.
``The Secretary shall carry out the following activities as part of
the IDEA Loan Repayment Program established under this chapter:
``(1) Calculation of annual repayment amounts.--The
Secretary shall calculate the annual repayment amounts under
499F(b) for borrowers with 1 or more loans made under this part
in repayment status, including the income-based repayment
obligations of such borrowers in accordance with section
499D(c)(2).
``(2) Communication with the secretary of the treasury.--
The Secretary shall transmit to the Secretary of the Treasury
such information as is necessary for the Secretary of the
Treasury to carry out section 499D.
``(3) Annual statements.--Upon calculating the annual
repayment amounts under paragraph (1) for a taxable year, the
Secretary shall provide a statement, on an annual basis, to
each borrower with a loan made under this part, which lists the
following:
``(A) Total payments made on the borrower's annual
repayment amount for such taxable year.
``(B) The borrower's annual repayment amount for
such taxable year.
``(C) In the case of a borrower who, according to
section 499F(f), has underpaid such annual repayment
amount, the amount of such underpayment and the process
for paying such underpayment under section 499F(f)(2).
``(D) In the case of a borrower with an overpayment
on such annual repayment amount, the amount of such
overpayment and the process for requesting a refund of
such amount under section 499F(g), if applicable.
``(E) The outstanding balances on all the loans
made to the borrower under this part.
``(F) A description of how the borrower's annual
repayment amount was calculated under paragraph (1) or
(2) of section 499F(b).
``(4) Direct payment.--The Secretary shall enable a
borrower to make direct payments on the borrower's annual
repayment amount for the taxable year to the Secretary
throughout the year, including by providing a process for the
borrower to make such payments automatically, on a periodic
basis, and in an amount specified by the borrower.
``(5) Payments on a taxpayer's behalf.--The Secretary
shall--
``(A) provide a mechanism for other individuals or
entities to make payments on the annual repayment
amount of a borrower for a taxable year; and
``(B) notify the borrower that any payments made
under subparagraph (A) for the taxable year that exceed
the annual repayment amount for the year shall not be
refunded to the borrower.
``(6) Calculating interest accrued.--The Secretary shall
calculate the interest accrued for the taxable year as if the
borrower's payments under wage withholding or quarterly
estimated payments under section 499D(b) for the taxable year
were made in 12 equal increments throughout the year.
``(7) Managing loans.--The Secretary shall provide, through
the Internet, a tool that has an interface that is consistent
for all borrowers with a loan under this part, which enables
each such borrower to--
``(A) view the outstanding balances on the
borrower's loans made under this part;
``(B) make a direct payment on the borrower's
annual repayment amount or indicate that any
overpayment should be refunded or applied to such loans
as a prepayment amount;
``(C) view prior annual statements for such loans
provided under paragraph (3);
``(D) view a history of payments made on such loans
(including the method and source of each payment, such
as tax withholding, estimated taxes, direct payment, or
payments made on the borrower's behalf);
``(E) view the borrower's annual repayment amount
for that year, the amount already paid on such annual
repayment amount, and any amount owed by the borrower
or due to be refunded to the borrower;
``(F) view the borrower's loans made under this
part that have been paid off; and
``(G) enable the borrower to initiate an appeal
process under paragraph (8).
``(8) Appeals process.--The Secretary shall make available
a process through which a borrower can appeal the calculation
of the borrower's annual repayment amount, including a
worksheet that enables a borrower to calculate the borrower's
annual repayment amount.
``(9) Default for failure to file a return.--In a case in
which the Secretary receives information from the Secretary of
the Treasury under section 499D(c)(4) that a borrower with a
loan made under this part in repayment status has failed to
file a return under section 6012(a)(1) of the Internal Revenue
Code of 1986 and such borrower was required to file such a
return, the Secretary shall--
``(A) notify the borrower of the borrower's failure
to file such a return; and
``(B) if the borrower fails to file such a return
within 90 days of receipt of the notice described in
subparagraph (A), consider the borrower's loans made
under this part in repayment status to be in default.
``(10) National directory of new hires.--The Secretary
shall send notices to borrowers under paragraph (5) of section
435(i) of the Social Security Act (42 U.S.C. 653(i)), as added
by section 5 of the Earnings Contingent Education Loans Act of
2012.
``CHAPTER 2--BORROWER REPAYMENT OF IDEA LOANS AND IDEA CONSOLIDATION
LOANS
``SEC. 499F. BORROWER REPAYMENT.
``(a) Repayment Period.--The repayment period of a loan made under
this part shall--
``(1) begin on the first day of the first taxable year that
begins after the borrower's in-school deferment period, or in
the case of an IDEA Consolidation Loan, on the first day of the
first taxable year that begins after such Consolidation Loan is
disbursed; and
``(2) continue until the loan is paid in full, except that
the Secretary may grant a borrower forbearance of the
borrower's annual repayment amount for administrative or
technical reasons, or as a result of unusual circumstances that
disrupt a borrower's ability to make timely payments on a loan
made under this part.
``(b) Annual Repayment Amount.--The annual repayment amount under
this part for a taxable year for a borrower with 1 or more loans made
under this part in repayment status shall be equal to the lesser of--
``(1) the income-based repayment obligation for such
borrower for such year, as calculated under section 499E(1); or
``(2) an amount equal to the sum of the outstanding
balances (equal to the sum of the unpaid principal, interest,
penalties, and fees) that the borrower owes on such loans.
``(c) Methods of Repayment.--In repaying an annual repayment amount
owed by a borrower for a taxable year, a borrower--
``(1) shall, with respect to any wages earned by the
borrower that are subject to Federal income tax withholding,
have amounts withheld upon such wages under section 499D(b)(2);
and
``(2) may--
``(A) in the case of a borrower who makes quarterly
estimated tax return payments under section 6654 of the
Internal Revenue Code of 1986 for the year, pay such
annual repayment amount concurrently with such
quarterly payments under section 499D(b)(3);
``(B) make direct payments under section 499E(4) on
such amount to the Secretary throughout the year; or
``(C) have other individuals or entities make
payments under section 499E(5) on the borrower's annual
repayment amount for the year.
``(d) Order of Crediting.--Payments on loans made under this part
shall be applied, without regard to the method of such payments, first
toward penalties due on the loans, next toward any fees due on the
loans, then toward any interest due on the loans, and finally toward
the principal due on the loan with the highest applicable rate of
interest among such loans.
``(e) Prepayment Authorized.--A borrower shall have the right to
prepay all or part of such loan, at any time and without penalty. Any
such prepayment amount will be applied to loans made under this part in
the same order as described in subsection (d).
``(f) Underpayments.--
``(1) Penalties for underpayments.--
``(A) In general.--Subject to subparagraph (C), if,
as of the last day of a taxable year, a borrower has
not paid at least 90 percent of the borrower's annual
repayment amount for such year, the borrower shall be
charged a penalty in an amount equal to 10 percent of
the difference between--
``(i) an amount equal to 90 percent of the
borrower's annual repayment amount for such
year; and
``(ii) the amount paid on such annual
repayment amount as of such day.
``(B) Increase of annual repayment amount.--A
borrower's annual repayment amount calculated under
subsection (b) for such year shall be increased by the
amount of such penalty, but such penalty shall not be
treated as a principal or interest amount for a loan
made under this part.
``(C) Exception.--A borrower who has paid 100
percent of the borrower's annual repayment amount for
the taxable year preceding the taxable year described
in subparagraph (A) shall not be subject to the penalty
under this paragraph for the taxable year described in
subparagraph (A).
``(2) Reconciling underpayments.--
``(A) In general.--If, as of the last day of a
taxable year, the sum of the payments made on a
borrower's annual repayment amount for such year is
less than the total amount of the borrower's annual
repayment amount for such year, the borrower shall--
``(i) within the 30-day period beginning on
the date of receipt by the borrower of the
borrower's annual statement described in
section 499E(3) for such year, pay to the
Secretary an amount equal to the difference
between such amounts; or
``(ii) if a borrower fails to pay the
amount owed by the borrower as calculated under
clause (i) within the 30-day period, be charged
a penalty equal to 2 percent of such amount for
each month (prorated based on the percentage of
a month such penalty is charged) that such
amount is owed or until the borrower defaults
on the loan for which such amount is owed,
whichever occurs first.
``(B) Default.--A loan for which an amount is owed
under subparagraph (A) and that is not paid within 360
days after the date of receipt by the borrower of the
borrower's annual statement described in subparagraph
(A) shall be considered to be default.
``(g) Overpayments.--If, as of the last day of a taxable year, the
sum of the payments made on a borrower's annual repayment amount for
such year is greater than the total amount of the borrower's annual
repayment amount for such year, the Secretary shall--
``(1) refund the overpayment amount, if the borrower
notifies the Secretary, within the 90-day period beginning on
the date of receipt of the borrower's annual statement
described in section 499E(3) for such year and in a manner
prescribed by the Secretary, that the borrower desires to have
the overpayment amount refunded; or
``(2) if a borrower fails to notify the Secretary of the
borrower's desire for a refund of such amount within such 90-
day period, apply such amount as a prepayment to the borrower's
loans made under this part in the same manner as a prepayment
authorized under subsection (e).''.
SEC. 4. CONFORMING CHANGES TO THE HIGHER EDUCATION ACT OF 1965.
(a) Loan Forgiveness and Cancellation for Teachers.--
(1) Loan forgiveness for teachers.--Section 428J of the
Higher Education Act of 1965 (20 U.S.C. 1078-10) is amended--
(A) in subsection (b), by inserting ``or for an
IDEA loan made under part J,'' after ``or 428H,''; and
(B) in subsection (c)--
(i) in paragraph (1), by inserting ``or an
IDEA loan made under part J'' after ``or
428H''; or
(ii) in paragraph (2)--
(I) by striking ``A loan'' and
inserting the following:
``(A) Loans made under section 428c.--A loan''; and
(II) by adding at the end the
following new subparagraph:
``(B) IDEA consolidation loan.--A loan amount for
an IDEA Consolidation Loan may be a qualified loan
amount for purposes of this subsection only to the
extent that such loan amount was used to repay a
Federal Direct Stafford Loan, a Federal Direct
Consolidation Loan, a Federal Direct Unsubsidized
Stafford Loan, or a loan made under section 428, 428C,
or 428H.''.
(2) Loan cancellation for teachers.--Section 460 of such
Act (20 U.S.C. 1087j) is amended--
(A) in subsection (b), by inserting ``or for an
IDEA loan made under part J'' after ``under this
part'';
(B) in subsection (c)--
(i) in paragraph (1), by striking ``or a
Federal Direct Unsubsidized Stafford Loan'' and
inserting ``, a Federal Direct Unsubsidized
Stafford Loan, or an IDEA loan made under part
J''; and
(ii) in paragraph (2)--
(I) by striking ``A loan'' and
inserting the following:
``(A) Federal direct consolidation loan.--A loan'';
and
(II) by adding at the end the
following new subparagraph:
``(B) IDEA consolidation loan.--A loan amount for
an IDEA Consolidation Loan may be a qualified loan
amount for purposes of this subsection only to the
extent that such loan amount was used to repay a
Federal Direct Stafford Loan, a Federal Direct
Consolidation Loan, a Federal Direct Unsubsidized
Stafford Loan, or a loan made under section 428, 428C,
or 428H.''.
(b) Loan Forgiveness for Service in Areas of National Need.--
Section 428K(a)(2) of such Act (20 U.S.C. 1078-11(a)(2)) is amended--
(1) by striking ``and'' at the end of subparagraph (A);
(2) by striking the period at the end of subparagraph (B)
and inserting ``; and''; and
(3) by adding at the end the following new subparagraph:
``(C) to cancel the qualified loan amount for a
loan made under part J of this title.''.
(c) Loan Repayment for Civil Legal Assistance Attorneys.--Section
428L(b)(2)(A) of such Act (20 U.S.C. 1078-12(b)(2)(A)) is amended--
(1) in clause (1), by striking ``or part E'' and inserting
``, part E, or part J''; and
(2) in clause (ii)--
(A) in the matter preceding subclause (I), by
striking ``or 455(g)'' and inserting ``, 455(g), or
499C'';
(B) by striking ``or'' at the end of subclause
(II);
(C) by redesignating subclause (III) as subclause
(IV); and
(D) by inserting after subclause (II) the
following:
``(III) a Federal Direct
Consolidation loan or a loan made under
section 428C, in the case of a loan
made under section 499C; or''.
(d) Master Promissory Note.--Section 432(m)(1)(D) of such Act (20
U.S.C. 1082(m)(1)(D)) is amended--
(1) by striking ``this part and part D'' each place it
appears and by inserting ``this part, part D, and part J''; and
(2) by striking ``this part or part D'' each place it
appears and by inserting ``this part, part D, or part J''.
(e) Contracts.--Section 456 of such Act (20 U.S.C. 1087f) is
amended--
(1) in subsection (a)--
(A) in paragraph (2), by striking ``this part''
each place it appears and inserting ``this part or part
J''; and
(B) in paragraph (4), by inserting ``or part J''
after ``this part''; and
(2) in subsection (b)--
(A) in paragraph (1), by inserting ``or the program
under part J'' after ``(or their parents)'';
(B) in paragraph (2), by inserting ``or part J''
after ``this part'';
(C) in paragraph (3), by inserting ``or part J''
after ``this part''; and
(D) in paragraph (4), by inserting ``or the IDEA
Loan Program'' after ``loan program''.
(f) Funds for Administrative Expenses.--Section 458(a)(3) of such
Act (20 U.S.C. 1087h(a)(3)) is amended--
(1) by striking ``this part and part B'' and inserting
``this part, part B, and part J''; and
(2) by inserting before the period at the end the
following: ``and part J''.
(g) Student Eligibility.--Section 484 of such Act (20 U.S.C. 1091)
is amended--
(1) in subsection (b)--
(A) in paragraph (3), by striking ``or D'' and
inserting ``, D, or E''; and
(B) in paragraph (4)(B), by striking ``or E'' and
inserting ``E, or J'';
(2) in subsection (d), by striking ``and E'' and inserting
``E, and J'';
(3) in subsection (f), by striking ``or part E'' each place
it appears and inserting ``part E, or part J''; and
(4) in subsection (m), by striking ``and E'' and inserting
``E, and J''.
(h) Institutional and Financial Assistance Information for
Students.--Section 485 of such Act (20 U.S.C. 1092) is amended--
(1) in subsection (a)--
(A) in paragraph (1)(M), by striking ``and E'' and
inserting ``E, and J''; and
(B) in paragraph (7)(A)(i), by striking ``Loan)''
each place it appears and inserting ``Loan) or part
J'';
(2) in subsection (b)--
(A) in paragraph (1)(A)--
(i) in the matter preceding clause (i), by
inserting ``or made under part J'' after ``part
E''; and
(ii) in clause (vii)--
(I) by inserting ``or an IDEA
Consolidation Loan'' after ``Federal
Direct Consolidation Loan''; and
(II) by striking ``and E'' and
inserting ``E, and J''; and
(B) in paragraph (2)(A), by striking ``or E'' and
inserting ``E, or J''; and
(3) in subsection (l)(1)--
(A) in subparagraph (A), in the matter preceding
clause (i), by inserting ``or made under part J'' after
``student)''; and
(B) in subparagraph (B), by striking ``or D'' and
inserting ``, D, or J''.
SEC. 5. NATIONAL DIRECTORY OF NEW HIRES.
Section 435(i) of the Social Security Act (42 U.S.C. 653(i)) is
amended by adding at the end the following new paragraph:
``(5) Sending notice to borrowers of certain student
loans.--The Secretary of Education shall have access to the
information in the National Directory of New Hires for purposes
of, on at least a monthly basis--
``(A) determining when individuals with an IDEA
Loan or IDEA Consolidation loan made under part J of
title IV of the Higher Education Act of 1965 in
repayment status are hired by employers who are making
payments of wages to such individuals; and
``(B) sending a notice to each such individual to
remind such individual that--
``(i) the individual has 1 or more loans
described in subparagraph (A) in repayment
status;
``(ii) the individual is responsible for
providing accurate information to the
individual's employer to ensure that the
employer will deduct and withhold upon such
wages amounts to repay such loans in accordance
with section 499D(b) of the Earnings Contingent
Education Loans Act of 2012; and
``(iii) failure to provide such accurate
information will likely result in significant
penalties, default, or collections
proceedings.''.
SEC. 6. WITHHELD AMOUNTS INCLUDED ON W-2.
(a) In General.--Subsection (a) of section 6051 of the Internal
Revenue Code of 1986 is amended by striking ``and'' at the end of
paragraph (13), by striking the period at the end of paragraph (14) and
inserting ``, and'', and by inserting after paragraph (14) the
following new paragraph:
``(15) the total amount deducted and withheld under the
IDEA Loan Repayment Program established under chapter 1 of
subpart 2 of part J of title IV of the Higher Education Act of
1965.''.
(b) Effective Date.--The amendments made by this section shall
apply to amounts deducted and withheld after the date of the enactment
of this Act.
SEC. 7. DISCLOSURE OF RETURN INFORMATION FOR PURPOSES OF IDEA LOAN
REPAYMENT PROGRAM.
(a) In General.--Subsection (l) of section 6103 of the Internal
Revenue Code of 1986 is amended by adding at the end the following new
paragraph:
``(23) Disclosure of return information to department of
education for purposes of administering idea loan repayment
program.--
``(A) In general.--The Secretary shall, upon
written request, disclose to the Department of
Education such return information as is necessary for
purposes of carrying out the IDEA Loan Repayment
Program established under subpart 2 of part J of the
Higher Education Act of 1965.
``(B) Restriction on disclosure.--Return
information disclosed under subparagraph (A) may be
used by officers, employees, and contractors of the
Department of Education only for purposes of, and to
the extent necessary in--
``(i) determining income-based repayment
obligations under the IDEA Loan Repayment
Program, and
``(ii) determining amounts deducted and
withheld, and amounts paid concurrently with
quarterly estimated taxes, under the IDEA Loan
Repayment Program.''.
(b) Effective Date.--The amendments made by this section shall take
effect on the date of the enactment of this Act.
<all>
Introduced in House
Introduced in House
Referred to the Committee on Education and the Workforce, and in addition to the Committee on Ways and Means, 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.
Referred to the Committee on Education and the Workforce, and in addition to the Committee on Ways and Means, 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.
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