Leveraging Opportunities for Americans Now Act of 2022 or the LOAN Act of 2022
This bill revises interest rates and repayment plans for federal student loans.
Specifically, the bill directs the Department of Education (ED) to set the interest rate on federal student loans made on or after July 1, 2022, at 0% and replace the interest with a one-time financing fee.
Further, the bill permits ED to credit or refund borrowers who pay the balance of their loan earlier than required by their repayment plan with the amount of the financing fee.
In addition, the bill establishes an income-dependent education assistance repayment plan as the default repayment plan for federal student loans. A borrower may select either this new plan or a 10-year fixed repayment plan.
ED must calculate annual repayment amounts and provide annual statements to borrowers.
The Department of the Treasury must transmit tax information to ED as necessary to determine a borrower's repayment obligations and financing fee adjustments.
[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8472 Introduced in House (IH)]
<DOC>
117th CONGRESS
2d Session
H. R. 8472
To amend the Higher Education Act of 1965 to provide for Federal
student loan reform.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 21, 2022
Mrs. Luria introduced the following bill; which was referred to the
Committee on Education and Labor, 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 amend the Higher Education Act of 1965 to provide for Federal
student loan reform.
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 ``Leveraging Opportunities for
Americans Now Act of 2022'' or the ``LOAN Act of 2022''.
SEC. 2. ELIMINATION OF INTEREST AND REPLACEMENT WITH FINANCING FEES.
Section 455 of the Higher Education Act of 1965 (20 U.S.C. 1087e)
is amended by adding at the end the following:
``(r) Elimination of Interest and Replacement With Financing
Fees.--
``(1) In general.--
``(A) In general.--Except as provided under
subparagraph (B), beginning on July 1, 2022, the
Secretary shall make loans under this part in
accordance with this subsection.
``(B) Exception.--Beginning on July 1, 2022, the
Secretary shall make loans under this part in
accordance with the provisions of this part other than
this subsection to a borrower who--
``(i) was enrolled in an institution of
higher education on June 30, 2022; and
``(ii) elects to borrow a loan under this
part in accordance with the provisions of this
part other than this subsection.
``(2) Elimination of interest.--For loans made under this
part in accordance with this subsection for which the first
disbursement is made on or after July 1, 2022, the applicable
rate of interest shall be equal to 0 percent.
``(3) Financing fees.--
``(A) In general.--Beginning on July 1, 2022, the
Secretary shall charge the borrower of a loan made
under this part in accordance with this subsection a
financing fee determined in accordance with this
paragraph and issued on the date the loan is dispersed.
``(B) Determination of fee.--The financing fee for
a borrower of a loan made under this part--
``(i) that is used for enrollment in an
undergraduate course of study (except a Federal
Direct PLUS Loan made on behalf of a dependent
student), shall be equal to, from the principal
amount of the loan, 20 percent of the amount of
such loan;
``(ii) that is used for enrollment in a
course of study necessary for enrollment in a
program leading to a degree or certificate,
shall be equal to, from the principal amount of
the loan, 20 percent of the amount of such
loan;
``(iii) that is used for enrollment in a
program that is necessary for a professional
credential or certification from a State that
is required for employment as a teacher in an
elementary or secondary school in that State,
shall be equal to, from the principal amount of
the loan, 20 percent of the amount of such
loan; and
``(iv) that is a Federal Direct PLUS Loan
made on behalf of a dependent student or used
for enrollment in a graduate or professional
course of study, shall be equal to, from the
principal amount of the loan, 35 percent of the
amount of such loan.
``(C) Reduction due to prepayment.--
``(i) In general.--In order to provide an
incentive to borrowers to pay the balance of a
loan made under this part earlier than required
under the applicable repayment plan, the
Secretary may credit or refund any such
borrowers for an amount of the financing fee
charged under this subsection.
``(ii) Regulations.--
``(I) In general.--Not later than 9
months after the date of enactment of
the LOAN Act of 2022, the Secretary
shall promulgate regulations
establishing the methodology for
crediting or refunding a financing fee
charged under this subsection pursuant
to clause (i). Such credit or refund
shall not reduce the financing fee by
more than--
``(aa) with respect to a
borrower whose income, as
determined under subclause
(II), was not more than $45,000
in the taxable year in which
the borrower paid an amount
from the balance of a loan made
under this part earlier than
required under the applicable
repayment plan, 15 percentage
points of such amount;
``(bb) with respect to a
borrower whose income, as
determined under subclause
(II), was more than $45,000 but
not more than $95,000 in the
taxable year in which the
borrower paid an amount from
the balance of a loan made
under this part earlier than
required under the applicable
repayment plan, 10 percentage
points of such amount; and
``(cc) with respect to a
borrower whose income, as
determined under subclause
(II), was more than $95,000 in
the taxable year in which the
borrower paid an amount from
the balance of a loan made
under this part earlier than
required under the applicable
repayment plan, 5 percentage
points of such amount.
``(II) Income determination.--For
purposes of subclause (I), a borrower's
income is equal to the amount by
which--
``(aa) the borrower's, and
the borrower's spouse's (if
applicable), adjusted gross
income; exceeds
``(bb) 150 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)).
``(D) Methodology of payment.--The Secretary shall
establish an amortization schedule for the repayment of
financing fees charged under this subsection.
``(4) Rulemaking for consolidation.--Not later than 18
months after the date of enactment of the LOAN Act of 2022, the
Secretary shall promulgate rules regarding Federal Direct
Consolidation Loans made under this part in accordance with
this subsection, including a rule that the financing fee for
such a Federal Direct Consolidation Loan determined in
accordance with this subsection shall not exceed the sum of the
financing fees applicable to the consolidated loans.''.
SEC. 3. INCOME DEPENDENT EDUCATION ASSISTANCE REPAYMENT PLAN.
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. INCOME DEPENDENT EDUCATION ASSISTANCE REPAYMENT PLAN.
``(a) In General.--
``(1) Applicability.--Notwithstanding any other provision
of this Act, with respect to any loan made under this part
after the date of enactment of the LOAN Act of 2022, the
repayment plan options are only a 10-year fixed repayment plan
and the repayment plan under this section. If the borrower of
the loan does not select a repayment plan, the repayment of
such loan shall be made in accordance with this section. A
borrower of a loan made under this part after the date of
enactment of the LOAN Act of 2022 may affirmatively select the
repayment plan under this section.
``(2) Regulations.--Not later than 18 months after the date
of enactment of the LOAN Act of 2022, the Secretary shall
promulgate rules--
``(A) outlining how the Department will implement
the income dependent education assistance repayment
plan requirements for borrowers under this section; and
``(B) regarding monthly repayment processes for
borrowers of loans made under this part before the date
of enactment of the LOAN Act of 2022.
``(3) Rule of construction.--Nothing in this section shall
be construed to eliminate or otherwise affect the loan
forgiveness or loan cancellation options available under this
part to a borrower.
``(b) Duties of the Secretary of the Treasury.--
``(1) In general.--The Secretary of the Treasury shall,
with respect to each individual for whom a loan made under this
part after the date of enactment of the LOAN Act of 2022 is in
repayment status, transmit to the Secretary of Education--
``(A) in the case of such an individual who files
an income tax return for such taxable year, such tax
information as is necessary to determine the
individual's repayment obligation and financing fee
adjustments, as determined by the Secretary under this
part; and
``(B) in the case of any such individual who does
not file a return for such taxable year, any available
tax information of the individual as may be necessary
to determine such obligation and whether such
individual is delinquent under the terms of such loan
for not so filing.
``(2) 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 underreporting and
evasion of repayment or filing.
``(c) Duties of the Secretary of Education.--
``(1) In general.--The Secretary shall carry out, as part
of the loan repayment plan established under this section, the
following activities:
``(A) Calculation of annual repayment amounts.--The
Secretary shall calculate the annual repayment amount
under this section for borrowers with 1 or more loans
made under this part after the date of enactment of the
LOAN Act of 2022 in repayment status for one or more
months in the taxable year for which the amount is
determined regardless of which repayment plan the
borrower is in, including the repayment obligations of
such borrowers in accordance with subsection (d)(3).
``(B) 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 subsection (d)(3).
``(C) Annual statements.--Upon calculating the
annual repayment amounts under subparagraph (A) for a
taxable year, the Secretary shall provide a statement,
on an annual basis, to each borrower with a loan made
under this part after the date of enactment of the LOAN
Act of 2022 regardless of which repayment plan the
borrower is in, which lists the following:
``(i) Total payments made on the borrower's
annual repayment amount for such taxable year.
``(ii) The borrower's annual repayment
amount for such taxable year.
``(iii) The outstanding balances on all the
loans made to the borrower under this part
after the date of enactment of the LOAN Act of
2022 and any other outstanding balances on
loans of the borrower that were made, insured,
or guaranteed under this title.
``(iv) A description of how the borrower's
annual repayment amount was calculated.
``(D) Payments on a borrower's behalf.--
``(i) In general.--The Secretary shall--
``(I) provide a mechanism for other
individuals or entities to make
payments on the annual repayment amount
of a borrower for a taxable year; and
``(II) notify the borrower that any
payments made under subclause (I) for
the taxable year that exceed the annual
repayment amount for the year shall not
be refunded to the borrower, except as
provided through the appeals process
described in clause (ii).
``(ii) Appeals process.--The Secretary
shall make available a process through which a
borrower can appeal for refund of payments made
under clause (i) that exceed the annual
repayment amount for the year if such payments
were made pursuant to improper wage
garnishment.
``(E) Appeals process.--
``(i) In general.--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.
``(ii) Good standing.--A borrower who makes
an appeal under clause (i) with respect to a
loan shall be considered in good standing on
such loan during the duration of the appeal.
``(iii) Regulations.--The Secretary shall
issue regulations outlining such process not
later than 18 months after the date of
enactment of the LOAN Act of 2022.
``(F) Delinquent for failure to file a return.--
``(i) In general.--In a case in which the
Secretary receives information from the
Secretary of the Treasury under subsection (b)
that a borrower with a loan made under this
part after the date of enactment of the LOAN
Act of 2022 in repayment status in the
repayment plan under this section, 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--
``(I) notify the borrower of the
borrower's failure to file such a
return; and
``(II) if the borrower fails to
file such a return within 90 days of
receipt of the notice described in
subclause (I), consider the borrower's
loans made under this part after the
date of enactment of the LOAN Act of
2022 in repayment status in the
repayment plan under this section to be
delinquent.
``(ii) Appeals process.--The Secretary
shall make available a process through which a
borrower can appeal a determination under
clause (i) that the borrower 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 issue regulations outlining
such process not later than 18 months after the
date of enactment of the LOAN Act of 2022.
``(G) Monthly payments process.--The Secretary
shall--
``(i) establish a monthly payments process
described in paragraph (2); and
``(ii) issue regulations establishing
penalties for default on such monthly payments.
``(H) Calculating loan forgiveness.--The Secretary
shall determine appropriate loan forgiveness options
for students who select the repayment plan under this
section.
``(I) Financial hardships.--
``(i) In general.--The Secretary shall
establish a process for providing an adjustment
in both the monthly payment and annual
repayment amount obligations on a loan for a
borrower experiencing extreme unforeseen
financial circumstances unrelated to a change
in annual income.
``(ii) Repayment status.--A borrower who
receives an adjustment under clause (i) for a
loan shall be deemed in repayment status with
respect to such loan.
``(2) Monthly payments process.--
``(A) In general.--The Secretary shall establish a
process under which a borrower, or one making payments
on behalf of a borrower under paragraph (1)(D), shall
make monthly payments towards the borrower's annual
repayment amount.
``(B) Information required.--The procedure for
initiating the monthly payments process under
subparagraph (A) shall include an income estimate based
on the income verification provided by the Secretary of
the Treasury under subsection (b).
``(C) Automatic continuation.--The monthly payments
process shall continue until the borrower's loans made
under this part after the date of enactment of the LOAN
Act of 2022 are repaid.
``(D) Updating payment amounts.--
``(i) Secretary.--The Secretary shall
automatically recalculate a borrower's monthly
payment amount--
``(I) at the beginning of a new
taxable year using the most recent
income estimate provided under
subsection (b)(1) by the Secretary of
the Treasury; and
``(II) not later than 30 days after
the date the borrower's income estimate
is adjusted after an appeal under
paragraph (1)(E).
``(ii) Borrower.--A borrower may request
that the Secretary update the borrower's income
estimate to adjust monthly payment amounts
pursuant to subparagraph (E) or (I) of
paragraph (1) at any time.
``(d) Borrower Repayment.--
``(1) Repayment period.--The repayment period of a loan in
the repayment plan under this section shall--
``(A) begin on the first day of the first taxable
year that begins after the borrower's in-school
deferment period; and
``(B) continue until the loan is paid in full,
except that the Secretary may grant a borrower
deferment of the borrower's annual repayment amount--
``(i) for a period not to exceed 60 days,
due to administrative or technical reasons;
``(ii) for a period not to exceed 3 months,
due to unusual circumstances that disrupt the
borrower's ability to make timely payments on
the loan; or
``(iii) renewable at 12-month intervals for
a period not to exceed 3 years, due to
documented extreme economic hardship on the
part of a borrower.
``(2) 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 shall be applied in
accordance with section 455(r)(3)(C).
``(3) Determination of income-based repayment obligation.--
``(A) In general.--The repayment obligation under
this section with respect to an individual for any
taxable year is an amount equal to 10 percent of the
amount by which--
``(i) the individual's, and the
individual's spouse's (if applicable), adjusted
gross income; exceeds
``(ii) 150 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)).
``(B) Exclusion of certain amounts paid on behalf
of individual.--Any amount paid on the borrower's
behalf under subsection (c)(1)(D) shall not be taken
into account in determining such borrower's income-
based repayment obligation.
``(C) Individuals not filing a return.--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.''.
<all>
Introduced in House
Introduced in House
Referred to the Committee on Education and Labor, 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 Labor, 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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