Making College More Affordable Act
This bill creates federal interest-free education loans for undergraduate students. The loans must generally have the same terms and conditions and benefits to borrowers as Federal Direct Stafford Loans. Interest on these loans may only accrue during periods when a borrower is earning taxable income, is in repayment on such loans, and is not making payments under a repayment plan.
The Department of Education (ED) must carry out a repayment plan program for the interest-free loans under which loan payments are automatically withheld from the wages of the borrower.
ED must cancel any outstanding balance of principal or interest due on those interest-free loans made to a borrower who has made 360 monthly payments.
The bill also allows for a tax deduction for amounts paid on these loans.
[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8457 Introduced in House (IH)]
<DOC>
117th CONGRESS
2d Session
H. R. 8457
To carry out an income-contingent repayment program for Federal Direct
Interest-Free Education Loans for undergraduate students, and for other
purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 21, 2022
Mr. Cicilline introduced the following bill; which was referred to the
Committee on Ways and Means, and in addition to the Committee on
Education and Labor, 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 carry out an income-contingent repayment program for Federal Direct
Interest-Free Education Loans for undergraduate students, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Making College More Affordable
Act''.
SEC. 2. FEDERAL DIRECT INTEREST-FREE LOANS FOR UNDERGRADUATE STUDENTS
AND REPAYMENT PLAN.
(a) Interest Rates.--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) Federal direct interest-free education loans for
undergraduate education.--
``(A) New borrowers.--Notwithstanding any other
provision of this Act and subject to subparagraphs (C)
and (D), an undergraduate student who is a new borrower
on or after July 1, 2023, shall only be eligible to
receive Federal Direct Interest-Free Education Loans
under this part.
``(B) Existing borrowers.--Beginning on July 1,
2023, the Secretary shall cancel the obligation of a
borrower, if the borrower submits an application to the
Secretary under this subparagraph, to repay any loan
made under this part for the borrower's undergraduate
education and for which the first disbursement was
made, or the application for the consolidation loan was
received, on or before June 30, 2023, and issue to such
borrower a Federal Direct Interest-Free Education Loan
in an amount equal to the sum of the unpaid principal,
accrued unpaid interest, and late charges of the
original loan.
``(C) Parent plus loans for undergraduate
education.--Nothing in this section shall be construed
to prohibit a parent from borrowing a Federal Direct
PLUS Loan on behalf of a dependent, undergraduate
student on or after July 1, 2023.
``(D) Federal direct consolidation loans.--A
borrower of a Federal Direct Interest-Free Education
Loan and any other loan made under this part (such as a
Federal Direct PLUS Loan or a Federal Direct
Unsubsidized Stafford Loan for graduate or professional
education) may consolidate such loans into a Federal
Direct Consolidation Loan.
``(E) Terms, conditions, and benefits.--A Federal
Direct Interest-Free Education Loan shall have the same
terms and conditions, and benefits to borrowers as a
Federal Direct Stafford Loan with respect to
undergraduate borrowers, except that such a loan--
``(i) shall have an applicable rate of
interest of 3.73 percent for the term of the
loan;
``(ii) the aggregate maximum amount that
may be awarded to a borrower shall be $90,000,
for not more than a 4-year academic period;
``(iii) may only be repaid under the
income-contingent repayment plan under
subsection (r) or a standard repayment plan
under subsection (d)(1)(A);
``(iv) interest on such loan shall only
accrue during periods when a borrower is
earning taxable income, is in repayment on such
loan, and not making payments under a repayment
plan described in clause (iii); and
``(v) may include other terms and
conditions, and benefits to borrowers of such
loan, as determined by the Secretary.''.
(b) Income-Contingent Repayment Plan for Undergraduate Loans.--
Section 455 of the Higher Education Act of 1965 (20 U.S.C. 1087e) is
further amended by adding at the end the following:
``(r) Income-Contingent Repayment Plan for Undergraduate Loans.--
Notwithstanding any other provision of this Act, the Secretary shall
carry out a program under which--
``(1) a borrower of a Federal Direct Interest-Free
Education Loan--
``(A) shall have an aggregate monthly payment for
the outstanding balance of principal and interest due
on all such loans automatically withheld from the wages
(as such term is defined in section 3401(a) of the
Internal Revenue Code of 1986) of the borrower by the
employer of the borrower in a manner which--
``(i) prohibits employers from using any
information about an employee's outstanding
balance or principal and interest due on such
loans for any purpose of use as an advantage
against the employee;
``(ii) is determined by the Secretary, in
coordination with the heads of other
appropriate Federal agencies (including the
Secretary of the Treasury and the Commissioner
of the Social Security Administration); and
``(iii) is an amount equal to--
``(I) if the borrower's gross
income is less than 337 percent of the
poverty line applicable to the
borrower's family size as determined
under section 673(2) of the Community
Services Block Grant Act (42 U.S.C.
9902(2)), $0;
``(II) if the borrower's gross
income is equal to or greater than 337
percent, but not more than 841 percent
of such poverty line, 4 percent of the
borrower's gross income;
``(III) if the borrower's gross
income is equal to or greater than 842
percent, but not more than 925 percent
of such poverty line, 5 percent of the
borrower's gross income;
``(IV) if the borrower's gross
income is equal to or greater than 926
percent, but not more than 1,010
percent of such poverty line, 6 percent
of the borrower's gross income;
``(V) if the borrower's gross
income is equal to or greater than
1,011 percent, but not more than 1,094
percent of such poverty line, 7 percent
of the borrower's gross income;
``(VI) if the borrower's gross
income is equal to or greater than
1,095 percent, but not more than 1,178
percent of such poverty line, 8 percent
of the borrower's gross income;
``(VII) if the borrower's gross
income is equal to or greater than
1,179 percent, and 1,262 percent of
such poverty line, 9 percent of the
borrower's gross income; and
``(VIII) if the borrower's gross
income is equal to or greater than
1,263 percent of such poverty line, 10
percent of the borrower's gross income;
and
``(B) may elect to have any payments made under
subparagraph (A) that exceed the amount owed by the
borrower on such loans for a calendar year be refunded
to the borrower or applied to the amount owed by the
borrower on such loans for the succeeding calendar
year;
``(2) the Secretary shall cancel any outstanding balance of
principal or interest due on all Federal Direct Interest-Free
Education Loans made to a borrower who has made 360 monthly
payments under this subsection; and
``(3) the amount cancelled under paragraph (2) shall not be
includible in the gross income of the borrower.''.
SEC. 3. FEDERAL DIRECT INTEREST-FREE EDUCATION LOAN PAYMENTS
DEDUCTIBLE.
(a) In General.--Part VII of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 is amended by redesignating section 224
as section 225 and by inserting after section 223 the following new
section:
``SEC. 224. FEDERAL DIRECT INTEREST-FREE EDUCATION LOANS.
``(a) In General.--In the case of an individual, there shall be
allowed as a deduction for the taxable year an amount equal to the
amounts paid by the taxpayer during the taxable year on any Federal
Direct Interest-Free Education Loan described in section 455(a)(4) of
the Higher Education Act of 1965.
``(b) Definitions and Special Rules.--For purposes of this
section--
``(1) Denial of double benefit.--No deduction shall be
allowed under this section for any amount for which a deduction
is allowable under any other provision of this chapter, or for
which an exclusion is allowable under section 127 to the
taxpayer by reason of the payment by the taxpayer's employer of
any indebtedness on a qualified education loan of the taxpayer.
``(2) Dependents not eligible for deduction.--No deduction
shall be allowed by this section to an individual for the
taxable year if a deduction under section 151 with respect to
such individual is allowed to another taxpayer for the taxable
year beginning in the calendar year in which such individual's
taxable year begins.
``(3) Married couples must file joint return.--If the
taxpayer is married at the close of the taxable year, the
deduction shall be allowed under subsection (a) only if the
taxpayer and the taxpayer's spouse file a joint return for the
taxable year.
``(4) Marital status.--Marital status shall be determined
in accordance with section 7703.''.
(b) Deduction Allowed Whether or Not Taxpayer Itemizes.--Section
62(a) of such Code is amended by inserting after paragraph (21) the
following new paragraph:
``(22) Student loan principal payments.--The deduction
allowed by section 224.''.
(c) Clerical Amendment.--The table of sections for part VII of
subchapter B of chapter 1 of such Code is amended by striking the item
relating to section 224 and inserting the following:
``Sec. 224. Federal Direct Interest-Free Education Loans.
``Sec. 225. Cross-reference.''.
(d) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after the date of the enactment of
this Act.
<all>
Introduced in House
Introduced in House
Referred to the Committee on Ways and Means, and in addition to the Committee on Education and Labor, 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 Ways and Means, and in addition to the Committee on Education and Labor, 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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