119-hr4862

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4862 Introduced in House

    (IH) ]

<DOC>

119th CONGRESS
 1st Session
 H. R. 4862

 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

 August 1, 2025

Mr. Scott of Virginia (for himself, Mr. Subramanyam, Ms. Underwood, Ms. 
 Moore of Wisconsin, and Mr. Thanedar) introduced the following bill; 
which was referred to the Committee on Education and Workforce, 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.

 This Act may be cited as the ``Lowering Obstacles to Achievement 
Now Act'' or the ``LOAN Act''.

SEC. 2. REPEAL.

 Subtitles A through F of title VIII of Public Law 119-21 are 
repealed. The provisions of the Higher Education Act of 1965 (20 U.S.C. 
1001 et seq.) amended by such subtitles are restored and revived as if 
such subtitles had not been enacted.

SEC. 3. TABLE OF CONTENTS.

 The table of contents of this Act is as follows:

Sec. 1. Short title.

Sec. 2. Repeal.

Sec. 3. 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--General Terms and Conditions

Sec. 201. Subsidized loans for graduate and professional students.

Sec. 202. Repeal of origination fees.

Sec. 203. Prepayment amounts.

Sec. 204. Default requirements.
 Part B--One Income-Contingent Repayment Plan and One Fixed Repayment 
 Plan

Sec. 211. Notification to borrowers.

Sec. 212. New repayment plans.

Sec. 213. Maximum repayment period for income-contingent repayment and 
 income-based repayment.

Sec. 214. Borrowers ineligible for loans.
 Part C--Automatic Enrollment in the Income-Driven Repayment Plan for 
 Certain Borrowers

Sec. 221. Notification and automatic enrollment procedures for 
 borrowers who are delinquent on loans.

Sec. 222. Notification and automatic enrollment procedures for 
 borrowers who are rehabilitating defaulted 
 loans.

Sec. 223. Covered loan and non-covered loan defined.

Sec. 224. Automatic recertification of income for income-driven 
 repayment plans.

Sec. 225. Procedure and requirement for requesting tax return 
 information from the IRS.
 Part D--Streamlining Public Service Loan Forgiveness

Sec. 231. Amendments to terms and conditions of public service loan 
 forgiveness.

Sec. 232. Terms and conditions of employment.

Sec. 233. Online portal and database of public service jobs.

Sec. 234. Treatment of consolidated and refinanced loans.

Sec. 235. Loan forgiveness for teachers.

Sec. 236. GAO study on data matching agreements for public service loan 
 forgiveness.
 Part E--Support for Borrowers in Default

Sec. 241. Removal of record of default.

Sec. 242. Removal of record of default from credit history upon loan 
 consolidation.

Sec. 243. Default reduction program.
 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, 2026.

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) 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) Total maximum federal pell grant.--
 ``
        (A) Award year 2026-2027.--For award year 2026-
 2027, the total maximum Federal Pell Grant award shall 
 be $10,000.
 ``
        (B) Award year 2027-2028.--For award year 2027-
 2028, the total maximum Federal Pell Grant award shall 
 be $11,000.
 ``
            (C) Award year 2028-2029.--For award year 2028-
 2029, the total maximum Federal Pell Grant award shall 
 be $12,000.
 ``
            (D) Award year 2029-2030.--For award year 2029-
 2030, the total maximum Federal Pell Grant award shall 
 be $13,000.
 ``
        (E) Award year 2030-2031.--For award year 2030-
 2031, the total maximum Federal Pell Grant award shall 
 be $14,000.
 ``
        (F) Award year 2031-2032 and subsequent years.--
 For award year 2031-2032, and each subsequent award 
 year, the total maximum Federal Pell Grant award shall 
 be $14,000--
 ``
            (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 2026 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, 2026.
            (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 101 of this Act, 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) 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) 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 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) 
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--GENERAL TERMS AND CONDITIONS

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.--
 ``
            (i) In general.--Beginning on or after 
 July 1, 2026, a graduate or professional 
 student shall be eligible to receive a Federal 
 Direct Stafford loan under this part for a 
 graduate or professional program at a covered 
 institution of higher education.
 ``
            (ii) Covered institution of higher 
 education.--In this subparagraph, the term 
 `covered institution of higher education'--
 ``
            (I) means an institution of 
 higher education defined in 

section 101 
 or 

section 102

    (a)

    (1)
            (C) ; and
 ``
            (II) does not include 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) .''.

SEC. 202. 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, 
 2026.''.

SEC. 203. PREPAYMENT AMOUNTS.

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

``

SEC. 494A. PREPAYMENT AMOUNTS.

 ``

    (a) Prepayments Authorized.--A borrower may pay, without penalty, 
an amount in excess of the amount due on an outstanding loan made under 
part B or D, and such excess amount shall be referred to as a 
`prepayment amount' for purposes of this subsection. Except as provided 
in subsection

    (b) a prepayment amount shall be applied first toward the 
fees (including any collection costs and authorized late charges) owed 
by the borrower on such loan, next on outstanding principal, and then 
on outstanding interest. If the prepayment amount exceeds the monthly 
payment amount owed on such loan, the due date of the next payment 
shall be advanced, unless the borrower requests otherwise, and the 
Secretary shall notify the borrower of such revised due date for the 
next payment.
 ``

    (b) Application of Prepayment Amounts.--
 ``

    (1) Borrowers without fee balances.--
 ``
        (A) In general.--Subject to subparagraph
        (B) , 
 with respect to a borrower who does not owe an 
 outstanding balance of fees (including collection costs 
 and authorized late charges) on any loan made under 
 part B or D, and who makes a prepayment on 2 or more 
 loans made under this part--
 ``
            (i) if such loans have different 
 applicable rates of interest, the holder of 
 such loans shall apply the borrower's 
 prepayment amount, first toward the outstanding 
 balance of principal due on the loan with the 
 highest applicable rate of interest among such 
 loans, next on any fees owed on such loan, and 
 then on outstanding interest owed on such loan; 
 or
 ``
            (ii) if such loans have the same 
 applicable rates of interest, the holder of 
 such loans shall apply the borrower's 
 prepayment amount, first toward the outstanding 
 balance of principal due on the loan with the 
 highest principal balance among such loans, 
 next on any fees on such loan, and then on 
 outstanding interest owed on such loan.
 ``
        (B) Written exception.--A borrower described in 
 subparagraph
        (A) who does not want prepayment amounts 
 applied in the manner described in clause
            (i) or
            (ii) of such subparagraph shall provide to the Secretary, a 
 written request for a different application of 
 prepayment amounts.
 ``

    (2) Borrowers with fee balances.--With respect to a 
 borrower who owes fees (which may include collection costs and 
 authorized late charges) on a loan made under part B or part D, 
 a prepayment amount made by the borrower shall be applied first 
 toward the fees (including any collection costs and authorized 
 late charges) owed by the borrower on such loan, next on 
 outstanding principal, and then on outstanding interest.''.

SEC. 204. DEFAULT REQUIREMENTS.

 Part G of title IV of the Higher Education Act of 1965 (20 U.S.C. 
1088), as amended by the preceding section, is further amended by 
adding at the end the following:

``

SEC. 494B. DEFAULT REQUIREMENTS.

 ``

    (a) In General.--If a borrower defaults on a loan made under part 
B or D--
 ``

    (1) the entire unpaid balance and accrued interest shall 
 be immediately due and payable; and
 ``

    (2) the Secretary shall assess collection charges.
 ``

    (b) Collection of a Defaulted Loan.--The Secretary may, with 
respect to a borrower who defaults on a loan made under part B or D--
 ``

    (1) take any action authorized by law to collect such 
 loan, including filing a lawsuit against the borrower, 
 reporting the default to nationwide consumer reporting 
 agencies, requesting the Internal Revenue Service to offset the 
 borrower's Federal income tax refund, and garnishing the 
 borrower's wages; and
 ``

    (2) may designate the Income-Driven Repayment Plan under 
 

section 455A
            (c) for the borrower.''.

 PART B--ONE INCOME-CONTINGENT REPAYMENT PLAN AND ONE FIXED REPAYMENT 
 PLAN

SEC. 211. NOTIFICATION TO BORROWERS.

    (a) In General.--Beginning on the date of enactment of this Act, 
the Secretary of Education, in coordination with the Director of the 
Consumer Financial Protection Bureau, shall undertake a campaign to 
alert all borrowers of loans made under part D of title IV of the 
Higher Education Act of 1965 that they are eligible to change repayment 
plans and to enroll in one of the following repayment plans:

    (1) The fixed repayment plan under 

section 455A

    (b) of the 
 Higher Education Act of 1965, as added by 

section 212.

    (2) The Income-Driven Repayment plan under 

section 455A
            (c) of the Higher Education Act of 1965, as added by 

section 212.

    (b) Campaign Activities.--The campaign shall include the following 
activities:

    (1) Developing consumer information materials about the 
 opportunity to change repayment plans and to enroll in one of 
 the repayment plans described in paragraphs

    (1) and

    (2) of 
 subsection

    (a) .

    (2) Requiring servicers of loans made under part D of title 
 IV of the Higher Education Act of 1965 to provide such consumer 
 information to borrowers in a manner determined appropriate by 
 the Secretary.

SEC. 212. NEW REPAYMENT PLANS.

    (a) Sunset of Repayment Plans Available Before July 1, 2026.--

Section 455
            (d) (1) of the Higher Education Act of 1965 (20 U.S.C. 
1087e
            (d) (1) ) is amended, in the matter preceding subparagraph
        (A) , by 
inserting ``, before July 1, 2026'' after ``may choose''.

    (b) Repayment Plans Available on and After July 1, 2026.--Part D of 
title IV of the Higher Education Act of 1965 (20 U.S.C. 1087a et seq.) 
is amended by inserting after 

section 455 the following:

``

SEC. 455A. REPAYMENT PLANS AVAILABLE ON AND AFTER JULY 1, 2026.

 ``

    (a) Repayment Plans for Loans Made on or After July 1, 2026.--
 ``

    (1) Sunset of repayment plans available before july 1, 
 2026.--Paragraphs

    (1) through

    (5) of 

section 455
            (d) shall only 
 apply to loans made under this part before July 1, 2026.
 ``

    (2) Prohibitions.--The Secretary may not, for any loan 
 made under this part on or after July 1, 2026--
 ``
        (A) authorize a borrower of such a loan to repay 
 such loan pursuant to a repayment plan that is not 
 described in paragraph

    (3) ; or
 ``
        (B) carry out or modify a repayment plan that is 
 not described in such paragraph.
 ``

    (3) Design and selection.--Notwithstanding 

section 455
            (d) , beginning on July 1, 2026, the Secretary shall offer a 
 borrower of a loan made under this part on or after such date 
 (including a Federal Direct Stafford Loan, a Federal Direct 
 PLUS Loan (including such a loan made on behalf of a dependent 
 student), a Federal Direct Consolidation Loan (including such a 
 loan that discharged the liability on a Federal Direct PLUS 
 Loan made on behalf of a dependent student), and a Federal 
 Direct Unsubsidized Stafford Loan) two plans for repayment of 
 such loan in accordance with subsection
            (d) , including 
 principal and interest on the loan. The borrower shall be 
 entitled to accelerate, without penalty, repayment on the 
 borrower's loan under this part. The borrower may choose--
 ``
        (A) a fixed repayment plan under subsection

    (b) ; 
 or
 ``
        (B) the Income-Driven Repayment Plan under 
 subsection
            (c) .
 ``

    (4) Selection by secretary.--If a borrower of a loan made 
 under this part on or after July 1, 2026, does not select a 
 repayment plan described in paragraph

    (3) , the Secretary shall 
 provide the borrower with the fixed repayment plan described in 
 subsection

    (b) .
 ``

    (5) Selection available for each new loan.--Each time a 
 borrower receives a new loan made under this part on or after 
 July 1, 2026, the borrower may select either the fixed 
 repayment plan under subsection

    (b) or the Income-Driven 
 Repayment Plan under subsection
            (c) , which shall apply to all 
 such loans of the borrower in accordance with paragraph

    (6) .
 ``

    (6) Same repayment plan required.--
 ``
        (A) Loans made on or after july 1, 2026.--All 
 loans made to a borrower under this part on or after 
 July 1, 2026, must be repaid together under the same 
 repayment plan.
 ``
        (B) Loans made before and on or after july 1, 
 2026.--A borrower with a loan made under this part 
 before July 1, 2026, and with a loan made on or after 
 July 1, 2026, (including a Federal Direct PLUS loan 
 made on behalf of a dependent student made before, on, 
 or after such date) may repay such loans on different 
 repayment plans, provided that--
 ``
            (i) all such loans made on or after July 
 1, 2026, are repaid under the same repayment 
 plan in accordance with subparagraph
        (A) ; and
 ``
            (ii) all such loans made before July 1, 
 2026, are repaid under the repayment plan that 
 the borrower was enrolled in with respect to 
 each such loan on June 30, 2026.
 ``

    (7) Permissible changes of repayment plan.--
 ``
        (A) Change from fixed repayment plan.--A borrower 
 may change the borrower's selection of a fixed 
 repayment plan under subsection

    (b) , or the Secretary's 
 selection of such plan for the borrower under paragraph

    (4) , as applicable, to the Income-Driven Repayment Plan 
 under subsection
            (c) at any time.
 ``
        (B) Change from the income-driven repayment 
 plan.--A borrower may change the borrower's selection 
 of the Income-Driven Repayment Plan under subsection
            (c) to a fixed repayment plan under subsection

    (b) , 
 provided that the required fixed monthly payment amount 
 of the borrower under such plan is determined based 
 on--
 ``
            (i) the total amount of the outstanding 
 principal and interest and fees on the loans of 
 the borrower to be repaid under such fixed 
 plan, as of the date on which the borrower's 
 change in selection takes effect;
 ``
            (ii) the interest rates on such loans; 
 and
 ``
            (iii) the applicable repayment period 
 determined under subsection

    (b)

    (2) .
 ``

    (8) Treatment of borrowers with loans made before july 1, 
 2026.--With respect to an outstanding loan made under this part 
 (including a Federal Direct PLUS loan made on behalf of a 
 dependent student) before July 1, 2026, a borrower with such a 
 loan--
 ``
        (A) shall not be eligible to change the 
 borrower's selection of a repayment plan under 
 paragraph

    (1) of 

section 455
            (d) , or the Secretary's 
 selection of a plan for the borrower under paragraph

    (2) of such section, as applicable, to another 
 repayment plan under such paragraph

    (1) on or after 
 July 1, 2026;
 ``
        (B) may, at any time, change the borrower's 
 selection of a repayment plan to a repayment plan 
 described in paragraph

    (3) ; and
 ``
            (C) upon changing the borrower's selection of a 
 repayment plan in accordance with subparagraph
        (B) , 
 shall make any such subsequent change in selection in 
 accordance with paragraphs

    (6) and

    (7) .
 ``

    (b) Fixed Repayment Plan.--
 ``

    (1) In general.--The fixed repayment plan made available 
 to borrowers in accordance with this section shall be a 
 repayment plan consistent with subsection

    (a)

    (1) of 

section 455 
 and 

section 428

    (b)

    (9)
        (A)
            (i) , except as expressly provided in 
 this subsection, with a fixed annual repayment amount paid over 
 a fixed period of time. Except as provided in paragraph

    (3) , 
 the required fixed monthly payment amount of a borrower shall 
 be determined based on the total amount of the outstanding 
 principal and interest of the Federal Direct Loans of the 
 borrower to be repaid pursuant to such plan, the interest rates 
 on such loans, and the applicable repayment period determined 
 under this subsection.
 ``

    (2) Applicable repayment period.--
 ``
        (A) Direct loans other than consolidation 
 loans.--The applicable repayment period of a Federal 
 Direct loan under this part, other than a Federal 
 Direct Consolidation Loan, shall be 10 years.
 ``
        (B) Direct consolidation loans.--The applicable 
 repayment period for a Federal Direct Consolidation 
 loan made on or after July 1, 2026, repaid pursuant to 
 a fixed repayment plan with a total outstanding amount 
 of principal and interest on all of the borrower's 
 Federal Direct Loans, including such Consolidation loan 
 (as of the day before entering repayment on such 
 Consolidation loan) is--
 ``
            (i) less than $7,500, shall be 10 years;
 ``
            (ii) equal to or greater than $7,500 but 
 less than $10,000, shall be 12 years;
 ``
            (iii) equal to or greater than $10,000 
 but less than $20,000, shall be 15 years;
 ``
            (iv) equal to or greater than $20,000 but 
 less than $40,000, shall be 20 years;
 ``
            (v) equal to or greater than $40,000 but 
 less than $60,000, shall be 25 years; and
 ``
            (vi) equal to or greater than $60,000, 
 shall be 30 years.
 ``
            (C) Minimum period.--No fixed repayment plan may 
 require a borrower to repay a loan in less than 10 
 years unless the borrower, during the 6 months 
 immediately preceding the start of the repayment 
 period, specifically requests that repayment be made 
 over a shorter period.
 ``

    (3) Minimum monthly payment.--The minimum monthly payment 
 amount of a borrower under a fixed repayment plan shall be $50 
 per month, except that the final payment of the borrower 
 pursuant to such plan may be less than $50.
 ``

    (4) Periods of deferment and forbearance.--The fixed 
 repayment plan period applicable to a borrower shall not 
 include periods when the borrower is in authorized deferment or 
 forbearance.
 ``

    (5) Adjustments for variable interest rates.--The number 
 of payments or the fixed monthly repayment amount may be 
 adjusted to reflect changes in the variable interest rate 
 identified in 

section 685.202

    (a) of title 34, Code of Federal 
 Regulations (as in effect on July 1, 2026).
 ``
            (c) Income-Driven Repayment Plan.--
 ``

    (1) Terms and conditions.--Notwithstanding any other 
 provision of this Act, beginning on July 1, 2026, the Secretary 
 shall carry out an income-contingent repayment plan, to be 
 known as the `Income-Driven Repayment Plan', that shall have 
 the following terms and conditions:
 ``
        (A) A borrower of any loan made under this part 
 may elect to have the borrower's total monthly payment 
 amount owed for all of the loans of the borrower made 
 under this part that are repaid under the Income-Driven 
 Repayment Plan not exceed the applicable monthly 
 payment of the borrower.
 ``
        (B) The Secretary shall apply the borrower's 
 applicable monthly payment first towards principal due, 
 next toward any fees due on the loan, and then toward 
 the interest due on the loan.
 ``
            (C) In the case of an applicable monthly payment 
 that does not fully cover the amount of interest that 
 has accrued on the borrower's loans for the month to 
 which such applicable monthly payment applies, the 
 Secretary shall not charge such remaining interest to 
 the borrower and such remaining interest shall not be 
 capitalized.
 ``
            (D) The Secretary shall have the discretion to 
 determine--
 ``
            (i) how a borrower's applicable monthly 
 payment is applied to each outstanding loan of 
 the borrower repayed under the Income-Driven 
 Repayment Plan; and
 ``
            (ii) the amount of principal, fees, and 
 interest due on each outstanding loan of the 
 borrower repayed under the Income-Driven 
 Repayment Plan.
 ``
        (E) The Secretary shall cancel any outstanding 
 balance of principal and interest due on all loans of 
 the borrower repaid under the Income-Driven Repayment 
 Plan by a borrower, without the need for an application 
 or other documentation from the borrower, on the 
 earlier of--
 ``
            (i) in the case of a borrower who does 
 not have at least one outstanding loan under 
 this part attributable to a graduate or 
 professional course of study, the date that the 
 borrower has made 240 qualifying payments over 
 a period of at least 20 years;
 ``
            (ii) in the case of a borrower who has at 
 least one outstanding loan under this part 
 attributable to a graduate or professional 
 course of study, the date that the borrower has 
 made 300 qualifying payments over a period of 
 at least 25 years; or
 ``
            (iii) the date that the borrower has 
 made--
 ``
            (I) in the case of a borrower 
 with a total original balance of 
 principal due on all such loans that is 
 equal to or less than $12,000, 120 
 qualifying payments over a period of at 
 least 10 years; or
 ``
            (II) in the case of a borrower 
 with a total original balance of 
 principal due on all such loans that is 
 greater than $12,000--
 ``

    (aa) 120 qualifying 
 payments over a period of at 
 least 10 years; plus
 ``

    (bb) for each increment 
 of $1 to $1,000 above $12,499 
 of such total original 
 principal balance, 12 
 additional qualifying payments 
 over a period of at least 1 
 year.
 ``

    (2) Annual income verification.--
 ``
        (A) In general.--The procedures established by 
 the Secretary under 

section 455

    (e)

    (8) shall apply for 
 annually determining the borrower's eligibility for the 
 Income-Driven Repayment Plan, including verification of 
 a borrower's annual income and the annual amount due on 
 the total amount of loans eligible to be repaid under 
 this subsection, and such other procedures as are 
 necessary to effectively implement the Income-Driven 
 Repayment Plan. With respect to carrying out 

section 494

    (a)

    (2) for the Income-Driven Repayment Plan, an 
 individual may elect to opt out of the disclosures 
 required under 

section 494

    (a)

    (2)
        (A)
            (ii) in accordance 
 with the procedures established under 455

    (e)

    (8) .
 ``
        (B) Additional procedures.--In addition to 
 carrying out the procedures described in subparagraph
        (A) , the Secretary shall establish and implement--
 ``
            (i) in the case that the Secretary 
 receives the return information disclosed under 
 

section 6103
            (l) (13) of the Internal Revenue 
 Code of 1986, pursuant to approval provided 
 under 

section 494, to determine the repayment 
 obligation of the borrower but is unable to 
 determine the repayment obligation of the 
 borrower, procedures to require the borrower to 
 provide such information as the Secretary may 
 require to determine such repayment obligation 
 under the Income-Driven Repayment Plan; and
 ``
            (ii) such other procedures as are 
 necessary to implement effectively the Income- 
 Driven Repayment Plan.
 ``
            (C) Reconsideration.--
 ``
            (i) In general.--In the case that a 
 borrower believes that the annual repayment 
 obligation of the borrower determined pursuant 
 to this paragraph is not reflective of the 
 borrower's income or family size, the borrower 
 may request that the Secretary recalculate such 
 annual repayment obligation. Such request shall 
 include documentation of income or family size 
 not based on tax information to account for a 
 decrease in income since the borrower last 
 filed a tax return, the borrower's separation 
 from a spouse with whom the borrower had 
 previously filed a joint tax return, the birth 
 or impending birth of a child, or other 
 comparable circumstances.
 ``
            (ii) Adjustment to repayment 
 obligation.--If the Secretary determines that 
 the annual repayment obligation of the borrower 
 determined pursuant to this paragraph is not 
 reflective of the borrower's income or family 
 size based on a request described in clause
            (i) , the Secretary shall adjust the annual 
 repayment obligation of the borrower as 
 determined appropriate by the Secretary and in 
 a manner consistent with this subsection.
 ``
            (D) Forbearance.--In the case that a borrower 
 provides information or documentation pursuant to 
 subparagraph
        (B)
            (i) or subparagraph
            (C) 
            (i) , the 
 Secretary shall grant the borrower administrative 
 forbearance for a period of up to 60 days in order for 
 the Secretary to collect and process such information 
 or documentation.
 ``

    (3) Repayment disclosure.--After the Secretary obtains 
 sufficient information to calculate a borrower's annual 
 repayment obligation under the Income-Driven Repayment Plan 
 pursuant to paragraph

    (2) and not later than 3 months before 
 any payments in accordance with such annual repayment 
 obligation are due, the Secretary shall provide to the borrower 
 a repayment disclosure that--
 ``
        (A) specifies the borrower's applicable monthly 
 payment amount;
 ``
        (B) explains how such applicable monthly payment 
 amount was calculated;
 ``
            (C) informs the borrower of the terms and 
 conditions of the Income-Driven Repayment Plan; and
 ``
            (D) informs the borrower of how to contact the 
 Secretary if the calculated applicable monthly payment 
 amount is not reflective of the borrower's current 
 income or family size.
 ``

    (4) Failure to provide information.--In the case that the 
 Secretary requires information from the borrower to determine 
 the annual repayment obligation of the borrower and the 
 borrower does not provide the necessary information to the 
 Secretary in accordance with the procedures described in 
 paragraph

    (2) , the Secretary shall remove the borrower from the 
 Income-Driven Repayment Plan and provide the borrower with the 
 fixed repayment plan described in subsection

    (b) .
 ``

    (5) Treatment of consolidation loans.--With respect to 
 cancelling any outstanding balance of principal and interest 
 due on all loans of the borrower repaid under the Income-Driven 
 Repayment Plan pursuant to paragraph

    (1)
        (E) , the Secretary 
 shall--
 ``
        (A) for a borrower with an outstanding Federal 
 Direct Consolidation Loan that discharges the liability 
 on loans with more than one period of qualifying 
 payments, determine the number of qualifying payments 
 made towards such Direct Consolidation Loan based on 
 the weighted average of the number of qualifying 
 payments made on each such discharged loan.
 ``
        (B) for a borrower with an outstanding joint 
 consolidation loan that is separated into individual 
 Federal Direct Consolidation Loans, determine the 
 number of qualifying payments made towards each such 
 separated loan based on the number of qualifying 
 payments that the borrower made prior to the 
 separation.
 ``

    (6) === Definitions. ===
-In this subsection:
 ``
        (A) Applicable monthly payment.--
 ``
            (i) In general.--The term `applicable 
 monthly payment' means, when used with respect 
 to a borrower and except as provided in clause
            (ii) , the amount equal to--
 ``
            (I) $0 for the portion of the 
 borrower's income (and the borrower's 
 spouse's income, if applicable) that is 
 less than or equal to 225 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) )); plus
 ``
            (II) in the case of a borrower 
 with an outstanding loan made under 
 this part for an undergraduate program 
 of study, 5 percent of the portion of 
 the borrower's income (and the 
 borrower's spouse's income, if 
 applicable) that is greater than 225 
 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) )), prorated by the 
 percentage that is the result of 
 dividing--
 ``

    (aa) the borrower's total 
 outstanding balance of loans 
 that is attributable to loans 
 made under this part for an 
 undergraduate program of study, 
 determined at the time the 
 borrower enters into repayment 
 for such loans; by
 ``

    (bb) the result of 
 dividing--

 ``

    (AA) the 
 borrower's total 
 outstanding balance of 
 loans made under this 
 part, determined at the 
 time the borrower 
 enters into repayment 
 for such loans; by

 ``

    (BB) 12; plus

 ``
            (III) in the case of a borrower 
 with an outstanding loan made under 
 this part not described in subclause
            (II) , 10 percent of the portion of the 
 borrower's income (and the borrower's 
 spouse's income, if applicable) that is 
 greater than 225 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) )), prorated by the percentage 
 that is the result of dividing--
 ``

    (aa) the difference 
 between--

 ``

    (AA) the 
 borrower's total 
 outstanding balance of 
 loans made under this 
 part, determined at the 
 time the borrower 
 enters into repayment 
 for such loans; and

 ``

    (BB) the balance 
 of loans subject to 
 subclause
            (II) ; by

 ``

    (bb) the result of 
 dividing--

 ``

    (AA) the 
 borrower's total 
 outstanding balance of 
 loans made under this 
 part, determined at the 
 time the borrower 
 enters into repayment 
 for such loans; by

 ``

    (BB) 12.

 ``
            (ii) Adjustments to applicable monthly 
 payment.--Notwithstanding clause
            (i) , the 
 applicable monthly payment of a borrower shall 
 be--
 ``
            (I) in the case that the amount 
 calculated for such borrower pursuant 
 to clause
            (i) is less than $5, $0;
 ``
            (II) in the case that the amount 
 calculated for such borrower pursuant 
 to clause
            (i) is greater than $5 but 
 less than $10, $10; or
 ``
            (III) in the case of a married 
 borrower who is not an exempted 
 borrower, the amount resulting by 
 multiplying--
 ``

    (aa) the amount 
 calculated for such borrower 
 pursuant to clause
            (i) ; by
 ``

    (bb) the result of 
 dividing--

 ``

    (AA) the 
 outstanding balance of 
 principal and interest 
 due on all loans of the 
 borrower made under 
 this part; by

 ``

    (BB) the sum of 
 the amount described in 
 subitem

    (AA) plus the 
 outstanding balance of 
 principal and interest 
 due on all loans of the 
 borrower's spouse made 
 under this part.

 ``
        (B) Income.--The term `income', when used with 
 respect to a borrower, means--
 ``
            (i) the borrower's (and the borrower's 
 spouse, if applicable) adjusted gross income as 
 reported to the Internal Revenue Service; or
 ``
            (ii) the amount calculated based on 
 alternative documentation of all forms of 
 taxable income received by the borrower (and 
 the borrower's spouse, if applicable) and 
 provided to the Secretary.
 ``
            (C) Adjusted gross income.--The term `adjusted 
 gross income', when used with respect to a borrower, 
 means--
 ``
            (i) in the case of an exempted borrower, 
 the borrower's adjusted gross income (as such 
 term is defined in 

section 62 of the Internal 
 Revenue Code of 1986) of such borrower for the 
 most recent taxable year; and
 ``
            (ii) in the case of a married borrower 
 who is not an exempted borrower, the sum of the 
 adjusted gross income (as such term is defined 
 in 

section 62 of the Internal Revenue Code of 
 1986) of the borrower and of the borrower's 
 spouse for the most recent taxable year.
 ``
            (D) Exempted borrower.--The term `exempted 
 borrower' means a borrower--
 ``
            (i) who is unmarried;
 ``
            (ii) who is married and files a Federal 
 income tax return separately from the 
 borrower's spouse; or
 ``
            (iii) who is married, files a Federal 
 income tax return jointly with the borrower's 
 spouse, and certifies at the time the borrower 
 applies for a repayment plan or submits 
 information for annual income verification 
 that--
 ``
            (I) the borrower is separated 
 from the borrower's spouse; or
 ``
            (II) the borrower is unable to 
 reasonably assess the income of the 
 borrower's spouse.
 ``
        (E) Qualifying payment.--The term `qualifying 
 payment', when used with respect to a borrower, means 
 any of the following:
 ``
            (i) An applicable monthly payment.
 ``
            (ii) A monthly payment made under the 
 fixed repayment plan described in subsection

    (b) .
 ``
            (iii) A monthly payment made under a 
 repayment plan described in paragraph

    (1) of 
 

section 455
            (d) .
 ``
            (iv) A payment under a repayment plan 
 with payments that are as least as much as they 
 would have been under a standard repayment plan 
 for a term of 10 years consistent with 
 subsection

    (a)

    (1) of 

section 455 and 

section 428

    (b)

    (9)
        (A)
            (i) , except that, in the case of a 
 borrower who was moved by the Secretary to such 
 a repayment plan due to the borrower's failure 
 to submit information for annual income 
 verification or their failure to provide other 
 necessary information, no more than 12 payments 
 made under such a repayment plan may be counted 
 as qualifying payments.
 ``
            (v) A forbearance or deferment of an 
 applicable monthly payment otherwise due under 
 the Income-Driven Repayment Plan pursuant to 
 any of the following:
 ``
            (I) Cancer treatment deferment 
 under 

section 455

    (f)

    (3) , 

section 428

    (b)

    (1)
            (M) 
            (v) , or 

section 427

    (a)

    (2)
            (C) 
            (iv) .
 ``
            (II) Rehabilitation training 
 program deferment under 

section 455

    (f)

    (2)
        (A)
            (ii) , 

section 428

    (b)

    (1)
            (M) 
            (i) 
            (II) , or 

section 427

    (a)

    (2)
            (C) 
            (i) 
            (II) .
 ``
            (III) Deferment relating to a 
 period of unemployment under 

section 455

    (f)

    (2)
        (B) or 

section 428

    (b)

    (1)
            (M) 
            (ii) .
 ``
            (IV) Deferment due to an economic 
 hardship described in 

section 435

    (o) , 
 

section 428

    (b)

    (1)
            (M) 
            (iv) , or 

section 427

    (a)

    (2)
            (C) 
            (iii) .
 ``
            (V) Deferment provided in 
 connection with services in the Peace 
 Corps.
 ``
            (VI) Military service deferment 
 under 

section 455

    (f)

    (2)
            (C) or 

section 428

    (b)

    (1)
            (M) 
            (iii) .
 ``
            (VII) Post-active-duty student 
 deferment under 

section 493D.
 ``
            (VIII) Forbearance provided under 
 

section 428
            (c) (3)
        (A)
            (i) 
            (III) on or 
 after July 1, 2024, because the 
 borrower is serving in a national 
 service position for which the borrower 
 receives a national service educational 
 award under the National and Community 
 Service Trust Act of 1993 (42 U.S.C. 
 12501 et seq.).
 ``
            (IX) National Guard Duty 
 forbearance under 

section 682.211

    (h)

    (2)
            (iii) or 

section 685.205

    (a)

    (7) of title 34, Code of 
 Federal Regulations (or successor 
 regulations), on or after July 1, 2024.
 ``
            (X) Department of Defense student 
 loan repayment program forbearance 
 under 

section 428
            (c) (3)
        (A)
            (i) 
            (IV) on or 
 after July 1, 2024.
 ``
            (XI) Administrative forbearance 
 or mandatory administrative forbearance 
 under 

section 428
            (c) (3)
            (D) or 

section 428H

    (e)

    (7) on or after July 1, 2024.
 ``
            (XII) Forbearance granted by the 
 Secretary while the Secretary 
 determines whether the borrower is 
 eligible for the Secretary to discharge 
 the borrower's liability on a loan due 
 to the borrower's bankruptcy.
 ``
            (vi) A payment for any month in which the 
 borrower was in a period of deferment or 
 forbearance not described in clause
            (iv) (other 
 than an in-school deferment) if such payment--
 ``
            (I) is made not later than 3 
 years after such period of deferment or 
 forbearance ended; and
 ``
            (II) is equal to or greater than 
 the applicable monthly payment of the 
 borrower.''.

SEC. 213. MAXIMUM REPAYMENT PERIOD FOR INCOME-CONTINGENT REPAYMENT AND 
 INCOME-BASED REPAYMENT.

    (a) ICR.--

Section 455

    (e)

    (7)
        (B) of the Higher Education Act of 1965 
(20 U.S.C. 1087e

    (e)

    (7)
        (B) ) is further amended--

    (1) by striking ``or'' at the end of clause
            (iv) ;

    (2) by striking the period at the end of clause
            (v) and 
 inserting a semicolon; and

    (3) by adding at the end the following:
 ``
            (vi) makes payments under the Income-
 Driven Repayment Plan under 

section 455A
            (c) ; or
 ``
            (vii) makes payments under the fixed 
 repayment plan under 

section 455A

    (b) ;''.

    (b) IBR.--

Section 493C

    (b)

    (7)
        (B) of the Higher Education Act of 1965 
(20 U.S.C. 1098e

    (b)

    (7)
        (B) ) is amended--

    (1) in clause
            (iv) , by striking ``or'';

    (2) in clause
            (v) , by adding ``or'' at the end; and

    (3) by adding at the end the following:
 ``
            (vi) makes payments under the Income-
 Driven Repayment Plan under 

section 455A
            (c) ; or
 ``
            (vii) makes payments under the fixed 
 repayment plan under 455A

    (b) ;''.

SEC. 214. BORROWERS INELIGIBLE FOR LOANS.

    (a) Ineligible Borrowers.--

Section 484 of the Higher Education Act 
of 1965 (20 U.S.C. 1091) is amended--

    (1) in subsection

    (a)

    (6) , by striking ``if the'' and 
 inserting ``if, in accordance with subsection

    (u) , the''; and

    (2) by adding at the end the following:
 ``

    (u) Ineligible Borrowers.--
 ``

    (1) In general.--The Secretary determines that a borrower 
 is ineligible pursuant to subsection

    (a)

    (6) if, at the time the 
 loan was made and without the knowledge of the institution of 
 higher education or the Secretary, the borrower (or the student 
 on whose behalf a parent borrowed) provided false or erroneous 
 information, has been convicted of, or has pled nolo contendere 
 or guilty to, a crime involving fraud in obtaining funds under 
 this title, or took actions that caused the borrower or 
 student--
 ``
        (A) to receive a loan for which the borrower is 
 wholly or partially ineligible;
 ``
        (B) to receive interest benefits for which the 
 borrower was ineligible; or
 ``
            (C) to receive loan proceeds for a period of 
 enrollment for which the borrower was not eligible.
 ``

    (2) Demand letter.--
 ``
        (A) In general.--If the Secretary makes the 
 determination described in paragraph

    (1) , the Secretary 
 shall send an ineligible borrower a demand letter that 
 requires that, within 30 days from the date the letter 
 is mailed, the borrower repay any principal amount for 
 which the borrower is ineligible and any accrued 
 interest, including interest subsidized by the 
 Secretary, through the previous quarter.
 ``
        (B) Default.--If a borrower fails to comply with 
 the demand letter described in paragraph

    (2) , the 
 borrower shall be in default on the entire loan.
 ``

    (3) Prohibition on consolidation.--A borrower may not 
 consolidate a loan under this part for which the borrower is 
 wholly or partially ineligible.''.

 PART C--AUTOMATIC ENROLLMENT IN THE INCOME-DRIVEN REPAYMENT PLAN FOR 
 CERTAIN BORROWERS

SEC. 221. 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:
 ``

    (6) 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 loan made under this part who is not 
 repaying such loan pursuant to the Income-Driven 
 Repayment Plan under 

section 455A
            (c) , 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 loan 
 made under this part, 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 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 loans made 
 under this part and has not selected 
 the Income-Driven Repayment Plan under 
 

section 455A
            (c) for borrower's loans 
 made under this part; and
 ``
            (II) in the case of such a 
 borrower whose existing repayment plan 
 for the borrower's loans made under 
 this part is not such Income-Driven 
 Repayment Plan, the monthly payments 
 under such existing repayment plan are 
 higher than such monthly payments would 
 be under such Income-Driven Repayment 
 Plan.
 ``
            (vi) 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)
            (v) who has not selected the Income-Driven Repayment 
 Plan under 

section 455A
            (c) for the borrower's loans 
 made under this part that are delinquent and who is at 
 least 80 days delinquent on such a loan, the Secretary 
 shall, as soon as practicable--
 ``
            (i) enroll the borrower in such Income-
 Driven Repayment Plan; and
 ``
            (ii) authorize the borrower to change the 
 Secretary's selection of the Income-Driven 
 Repayment Plan to the fixed-repayment plan 
 under 

section 455A

    (b) , as long as such 
 selection is made in accordance with paragraphs

    (6) and

    (7) of 

section 455A

    (a) .''.

SEC. 222. 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:
 ``

    (7) 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 loan made under 
 this part pursuant to 

section 428F
            (d) , 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 loan pursuant to 

section 428F
            (d) , 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 loan pursuant to 

section 428F
            (d) , the Secretary 
 shall, as soon as practicable after such payment, carry 
 out the procedures described in paragraph

    (6)
            (C) with 
 respect to such loan.''.

SEC. 223. COVERED LOAN 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:
 ``

    (8) === 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) Noncovered loan.--The term `noncovered loan' 
 means a loan made, insured, or guaranteed under this 
 title that is not a covered loan.''.

SEC. 224. 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) (8) )''.

SEC. 225. 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) (8) ''; and
        (B) in subparagraph
        (B) , by striking ``a loan under 
 part D'' and inserting ``a covered loan (as defined in 
 

section 455
            (d) (8) )''; 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 loan made under 
 this part 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) (6) , 
 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) (6)
        (A)
            (ii) ; or
 ``
            (II) provide such information as 
 the Secretary may require to carry out 
 the procedures under 

section 455
            (d) (6) 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 loan made under this part 
 pursuant to 

section 428F
            (d) , 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) (7)
        (A)
            (ii) ; or
 ``
            (II) provide such information as 
 the Secretary may require to carry out 
 the procedures under 

section 455
            (d) (7) with respect to such individual.''.

 PART D--STREAMLINING PUBLIC SERVICE LOAN FORGIVENESS

SEC. 231. AMENDMENTS TO TERMS AND CONDITIONS OF PUBLIC SERVICE LOAN 
 FORGIVENESS.

    (a) Number of Monthly Payments.--Paragraph

    (1) of 

section 455
            (m) of 
the Higher Education Act of 1965 (20 U.S.C. 1087e
            (m) ) is amended--

    (1) in the matter preceding subparagraph
        (A) , by striking 
 ``a borrower who'' and inserting ``a borrower'';

    (2) by amending subparagraph
        (A) to read as follows:
 ``
        (A) who--
 ``
            (i) has made 96 qualifying monthly 
 payments on the eligible Federal Direct Loan 
 after October 1, 2007; and
 ``
            (ii) has been employed in a public 
 service job during the period in which the 
 borrower makes each of the 96 qualifying 
 monthly payments; and''; and

    (3) by amending subparagraph
        (B) to read as follows:
 ``
        (B) without regard to the employment status of 
 the borrower at the time of such cancellation.''.

    (b) Redesignations.--

Section 455
            (m) of the Higher Education Act of 
1965 (20 U.S.C. 1087e
            (m) ) is further amended by redesignating 
paragraphs

    (2) ,

    (3) , and

    (4) , as paragraphs

    (3) ,

    (6) , and

    (7) , 
respectively.
            (c) Monthly Payments.--

Section 455
            (m) of the Higher Education Act 
of 1965 (20 U.S.C. 1087e
            (m) ) is further amended--

    (1) by inserting after paragraph

    (1) , as so amended, the 
 following:
 ``

    (2) Monthly payments.--
 ``
        (A) Qualifying monthly payments.--For the purpose 
 of determining under paragraph

    (1) the number of 
 qualifying monthly payments made by a borrower on an 
 eligible Federal Direct Loan, the Secretary shall 
 consider the borrower to have made a qualifying monthly 
 payment for each month that--
 ``
            (i) the borrower pays (as a lump sum or 
 in multiple installments) an amount that is not 
 less than the monthly payment amount due on the 
 eligible Federal Direct Loan pursuant to any 
 one or a combination of the following--
 ``
            (I) payments under an income-
 based repayment plan under 

section 493C;
 ``
            (II) payments under a standard 
 repayment plan under subsection
            (d) (1)
        (A) , based on a 10-year repayment 
 period;
 ``
            (III) monthly payments under a 
 repayment plan under subsection
            (d) (1) or

    (g) of not less than the monthly 
 amount calculated under subsection
            (d) (1)
        (A) , based on a 10-year repayment 
 period;
 ``
            (IV) payments under an income 
 contingent repayment plan under 
 subsection
            (d) (1)
            (D) ;
 ``
            (V) payments under the Income-
 Driven Repayment Plan under 

section 455A
            (c) ; or
 ``
            (VI) payments under the fixed 
 repayment plan under 

section 455A

    (b) ; 
 or
 ``
            (ii) in lieu of a payment described in 
 clause
            (i) , the borrower is in one of the 
 following periods of deferment or forbearance--
 ``
            (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) 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) .
 ``
        (B) Prepayments.--
 ``
            (i) In general.--Subject to clause
            (ii) , 
 if, for any month, a borrower makes a 
 qualifying monthly payment on an eligible 
 Federal Direct Loan in an amount that exceeds 
 the monthly payment amount due on such loan for 
 such month, the Secretary shall--
 ``
            (I) if the excess amount is less 
 than the monthly payment amount due for 
 the subsequent month on such loan, 
 apply the excess amount toward the 
 monthly payment amount due for such 
 subsequent month;
 ``
            (II) if the excess amount is 
 equal to the monthly payment amount due 
 for the subsequent month on such loan, 
 treat the excess amount as the monthly 
 payment for such subsequent month;
 ``
            (III) if the excess amount is 
 greater than the monthly payment amount 
 due for the subsequent month on such 
 loan, but less than the total monthly 
 payment amounts due for the 2 
 subsequent months on such loan--
 ``

    (aa) treat the portion of 
 the excess amount that covers 
 the monthly payment amount due 
 for the subsequent month as the 
 monthly payment for such 
 subsequent month; and
 ``

    (bb) apply the remainder 
 of the excess amount toward the 
 monthly payment amount due for 
 the second subsequent month;
 ``
            (IV) if the excess amount is 
 equal to or greater than the monthly 
 payment amount due for the 2 subsequent 
 months on such loan, but less than the 
 total monthly payment amounts due for 
 the 3 subsequent months on such loan--
 ``

    (aa) treat the portion of 
 the excess amount that covers 
 the monthly payment amounts due 
 for the subsequent month and 
 the second subsequent month as 
 the monthly payments for such 
 months; and
 ``

    (bb) apply any remainder 
 of such excess amount toward 
 the monthly payment amount due 
 for the third subsequent month;
 ``
            (V) if the excess amount is equal 
 to the monthly payment amounts due for 
 the 3 subsequent months on such loan, 
 treat the excess amount as the monthly 
 payments for such months;
 ``
            (VI) if the excess amount is 
 greater than the monthly payment 
 amounts due for the 3 subsequent months 
 on such loan--
 ``

    (aa) treat the portion of 
 the excess amount that covers 
 the monthly payment amounts due 
 for the 3 subsequent months as 
 the monthly payments for such 
 months; and
 ``

    (bb) apply any remainder 
 of such excess amount to the 
 principal balance of the 
 eligible Federal Direct loan; 
 and
 ``
            (VII) notwithstanding subclauses
            (I) through
            (VI) , if the borrower has a 
 monthly payment amount due on such loan 
 for such month that is equal to $0, 
 apply any excess amount for such month 
 to the principal balance of the 
 eligible Federal Direct loan.
 ``
            (ii) Alternative application.--Prior to 
 or at the time of making a payment that exceeds 
 the monthly payment amount due on an eligible 
 Federal Direct Loan for such month, a borrower 
 may request that any excess amount for such 
 month be applied to the principal balance of an 
 eligible Federal Direct loan in lieu of such 
 excess amount being applied in accordance with 
 clause
            (i) .
 ``
            (C) Buyback payment process.--
 ``
            (i) In general.--The Secretary shall 
 establish a buyback payment process under which 
 a qualified borrower of an eligible Federal 
 Direct Loan may make a buyback payment in order 
 to have eligible months of the borrower's 
 public service employment period during which 
 the borrower did not make a qualifying monthly 
 payment on such loan be treated as if the 
 borrower had made a qualifying monthly payment 
 on such loan.
 ``
            (ii) Qualified borrower.--A borrower is a 
 qualified borrower for the purposes of making a 
 buyback payment in accordance with this 
 subparagraph if the borrower--
 ``
            (I) has an eligible Federal 
 Direct Loan that is not in default;
 ``
            (II) has been employed in a 
 public service job for not less than a 
 96 month employment period, but during 
 such employment period has made fewer 
 than 96 qualifying monthly payments on 
 an eligible Federal Direct Loan; and
 ``
            (III) requests to make a buyback 
 payment in accordance with this 
 subparagraph.
 ``
            (iii) Eligible month.--For the purposes 
 of this subparagraph, an eligible month means a 
 month during which a qualified borrower was 
 employed in a public service job, was not in an 
 in-school deferment or grace period, and did 
 not make a qualifying monthly payment on an 
 eligible Federal Direct Loan for such month--
 ``
            (I) because the borrower made a 
 monthly payment on such eligible 
 Federal Direct Loan pursuant to a 
 repayment plan that is not a qualifying 
 repayment plan;
 ``
            (II) because the borrower was in 
 a period of deferment or forbearance 
 other than a period described in clause
            (ii) of subparagraph
        (A) ; or
 ``
            (III) for another reason 
 determined appropriate by the 
 Secretary.
 ``
            (iv) Buyback payment requirements.--A 
 buyback payment made in accordance with this 
 subparagraph--
 ``
            (I) shall be made by a qualified 
 borrower as a lump sum payment amount, 
 and in an amount that equals the total 
 amount the borrower would have paid in 
 qualifying monthly payments on the 
 eligible Federal Direct Loan for all 
 eligible months the borrower is 
 requesting to buyback, pursuant to a 
 qualifying repayment plan applicable to 
 the borrower, in accordance with 
 

section 685.219

    (g)

    (6) of title 34, Code 
 of Federal Regulations (as such section 
 is in effect on the date of enactment 
 of this paragraph) or any other 
 relevant regulations in effect on such 
 date;
 ``
            (II) may not be made with respect 
 to an eligible Federal Direct Loan that 
 has been paid off, discharged, or 
 cancelled; and
 ``
            (III) with respect to an eligible 
 Federal Direct Loan that is a 
 consolidation loan, may not be used to 
 buyback eligible months that occurred 
 before the date of the consolidation of 
 such loan.
 ``
            (D) Hold harmless against retroactive 
 determinations.--For purposes of determining under 
 paragraph

    (1) the number of qualifying monthly payments 
 made by a borrower, any payment or period of deferment 
 or forbearance that is determined to be a qualifying 
 monthly payment may not, at a later time, be determined 
 not to be a qualifying monthly payment.''; and

    (2) in paragraph

    (6) , as redesignated by subsection

    (b) , by 
 adding at the end the following:
 ``
            (C) Qualifying repayment plan.--The term 
 `qualifying repayment plan' means any of the repayment 
 plans listed in clause
            (i) of paragraph

    (2)
        (A) .''.
            (d) Loan Cancellation.--Paragraph

    (3) of 

section 455
            (m) of the 
Higher Education Act of 1965 (20 U.S.C. 1087e
            (m) ), as redesignated by 
subsection

    (b) , is amended to read as follows:
 ``

    (3) Loan cancellation amount.--Upon certification by a 
 borrower of completion of 96 qualifying monthly payments by the 
 borrower, the Secretary shall determine whether the borrower 
 meets each of the requirements of paragraph

    (1) , and--
 ``
        (A) if the Secretary determines that the borrower 
 does meet such requirements, cancel the obligation to 
 repay the balance of principal and interest due as of 
 the time of such cancellation on the eligible Federal 
 Direct Loans made to the borrower under this part, 
 without further action by the borrower; or
 ``
        (B) if the Secretary determines that the borrower 
 does not meet such requirements, notify the borrower of 
 such determination in accordance with paragraph

    (4) .''.

    (e) Reconsideration Process.--

Section 455
            (m) of the Higher 
Education Act of 1965 (20 U.S.C. 1087e
            (m) ), as redesignated by 
subsection

    (b) , is further amended by inserting after paragraph

    (3) , as 
so amended, the following:
 ``

    (4) Initial determination of ineligibility for loan 
 cancellation.--In a case in which the Secretary determines that 
 a borrower has not met the requirements of paragraph

    (1) , the 
 Secretary shall--
 ``
        (A) notify the borrower that--
 ``
            (i) the borrower's application has been 
 denied, including the basis for such denial;
 ``
            (ii) the borrower is in a 90-day 
 forbearance period described in subparagraph
        (B) ; and
 ``
            (iii) the Secretary will resume 
 collection of the eligible Federal Direct Loans 
 for which the borrower was seeking loan 
 cancellation under this subsection after such 
 90-day forbearance period, unless the borrower 
 opts to extend such forbearance period under 
 paragraph

    (5)
        (A)
            (ii) ; and
 ``
        (B) grant the borrower a 90-day forbearance 
 period, beginning on the date of the notice described 
 in subparagraph
        (A) provided to the borrower, and 
 during which--
 ``
            (i) payments of principal and interest 
 need not be made on the eligible Federal Direct 
 Loans for which the borrower was seeking loan 
 cancellation under this subsection; and
 ``
            (ii) any interest accrued and not paid 
 may not be capitalized.
 ``

    (5) Reconsideration process.--
 ``
        (A) Request for reconsideration.--Not later than 
 90 days after the date of the notice described in 
 paragraph

    (4)
        (A) provided to the borrower--
 ``
            (i) the borrower may request, on a form 
 approved by the Secretary, that the Secretary 
 reconsider the basis for the Secretary's denial 
 under paragraph

    (4)
        (A)
            (i) ; and
 ``
            (ii) if the Secretary grants the 
 borrower's reconsideration request, offer the 
 borrower an extension of the 90-day forbearance 
 period described in paragraph

    (4)
        (B) , which 
 shall--
 ``
            (I) begin on the date of the 
 borrower's reconsideration request 
 under this subparagraph; and
 ``
            (II) end on the date of the 
 notice provided to the borrower under 
 subparagraph
            (C) 
            (i) 
            (I) of the 
 Secretary's reconsideration decision.
 ``
        (B) Consideration of reconsideration request.--In 
 evaluating a reconsideration request from a borrower, 
 the Secretary shall consider any relevant evidence or 
 supporting documentation that may assist the Secretary 
 in determining whether the borrower meets each of the 
 requirements of paragraph

    (1) to qualify for loan 
 cancellation under this subsection.
 ``
            (C) Decision by the secretary.--
 ``
            (i) In general.--Not later than 6 months 
 after receipt of a borrower's reconsideration 
 request, the Secretary shall--
 ``
            (I) notify the borrower of the 
 reconsideration decision and the reason 
 for the Secretary's determination;
 ``
            (II) in a case in which the 
 reconsideration request is granted, 
 adjust the borrower's number of 
 qualifying monthly payments under 
 paragraph

    (1) or cancel the loan under 
 paragraph

    (3) ; and
 ``
            (III) in a case in which the 
 Secretary denies the reconsideration 
 request, with respect to a borrower who 
 agrees to the forbearance extension 
 described in subparagraph
        (A)
            (ii) , 
 include in the notice provided to the 
 borrower under subclause
            (I) , a 
 reminder that the Secretary will resume 
 collection of the eligible Federal 
 Direct Loans for which the borrower was 
 seeking loan cancellation under this 
 subsection as of the date of such 
 notice.
 ``
            (ii) Final decision.--After the Secretary 
 makes a decision on the borrower's 
 reconsideration request, the Secretary's 
 decision is final, and the borrower will not 
 receive additional reconsideration.''.

SEC. 232. TERMS AND CONDITIONS OF EMPLOYMENT.

    (a) Independent Contractors.--

Section 455
            (m) is further amended by 
adding at the end the following:
 ``

    (8) Treatment of independent contractors.--For purposes 
 of this subsection, each reference to `employment' and 
 `employed' shall be treated as including work as an independent 
 contractor.''.

    (b) 

=== Definitions. ===
-Paragraph

    (6) of 

section 455
            (m) of the Higher 
Education Act of 1965 (20 U.S.C. 1087e
            (m) ), as redesignated by 

section 231

    (b) , is further amended by adding at the end the following:
 ``
            (D) Full-time.--The term `full-time' means, with 
 respect to a public service job, working 1 or more such 
 jobs--
 ``
            (i) a minimum average of 30 hours per 
 week during the period being certified;
 ``
            (ii) a minimum of 30 hours per week 
 throughout a contractual or employment period 
 of at least 8 months in a 12-month period; and
 ``
            (iii) with respect to an individual who 
 is in nontenure track employment at an 
 institution of higher education, the equivalent 
 of 30 hours per week as determined by 
 multiplying each credit or contact hour taught 
 by such individual per week by a number to be 
 determined by the Secretary.
 ``
        (E) Independent contractor.--The term 
 `independent contractor' means an individual who is not 
 an employee and who is working in a public service job 
 in a position or providing services which, under 
 applicable State law, cannot be filled or provided by 
 an employee of the public service job.''.

SEC. 233. ONLINE PORTAL AND DATABASE OF PUBLIC SERVICE JOBS.

 

Section 455
            (m) of the Higher Education Act of 1965 is further 
amended by adding at the end the following:
 ``

    (9) Online portal and database of public service jobs.--
 ``
        (A) Online portal.--
 ``
            (i) Borrowers.--The Secretary shall 
 establish an online portal that provides to 
 borrowers of eligible Federal Direct Loans the 
 following information:
 ``
            (I) Instructions on how to access 
 the database established under 
 subparagraph
        (B) 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, and an 
 identification of the qualifying 
 repayment plans for which such eligible 
 Federal Direct Loans qualify.
 ``
            (III) With respect to each such 
 eligible Federal Direct Loan--
 ``

    (aa) the number of 
 qualifying monthly payments the 
 borrower has made in accordance 
 with paragraph

    (1) ; and
 ``

    (bb) the estimated number 
 of qualifying monthly payments 
 under such paragraph 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 paragraph

    (3) of 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 a case in which a 
 borrower submits to the Secretary an 
 application for loan cancellation under 
 this subsection that is denied by the 
 Secretary--
 ``

    (aa) a notice of such 
 denial that meets each of the 
 requirements of paragraph

    (4)
        (A) , including an 
 explanation of the 90-day 
 forbearance period;
 ``

    (bb) a form that meets 
 each of the requirements of 
 paragraph

    (5)
        (A) , which the 
 borrower may use to request 
 reconsideration of such denial, 
 including accepting an 
 extension of the 90-day 
 forbearance period; and
 ``
            (cc) a notice of the 
 Secretary's reconsideration 
 decision, which meets each of 
 the requirements of paragraph

    (5)
            (C) .
 ``
            (VII) An explanation of the 
 buyback payment process described in 
 paragraph

    (2)
            (C) , and a form to request 
 such a buyback, including the eligible 
 months for which the borrower may 
 request a buyback, and the amount that 
 the borrower would be required to pay 
 for such buyback.
 ``
            (VIII) An explanation of how 
 consolidating one or more Direct Loans 
 into a Direct Consolidation Loan, 
 including a Direct PLUS Loan made to a 
 parent borrower, will affect the number 
 of qualifying monthly payments 
 attributed to the borrower.
 ``
            (ii) Appropriate contacts.--The Secretary 
 shall ensure that an appropriate contact for a 
 public service job of a borrower has the option 
 to electronically sign and submit any forms 
 associated with loan cancellation under 
 paragraph

    (3) of this subsection.
 ``
            (iii) Information.--The Secretary shall 
 ensure that any information provided through 
 the online portal described in this 
 subparagraph contains up-to-date information.
 ``
        (B) Database of public service jobs.--
 ``
            (i) In general.--The Secretary, in 
 consultation with the Secretary of Labor, shall 
 establish and regularly update a database that 
 lists public service jobs.
 ``
            (ii) Public availability.--The database 
 established under clause
            (i) shall be made 
 available on a publicly accessible website of 
 the Department of Education in an easily 
 searchable format.''.

SEC. 234. TREATMENT OF CONSOLIDATED AND REFINANCED LOANS.

 

Section 455
            (m) (2) of the Higher Education Act of 1965 (20 U.S.C. 
1087e
            (m) (2) ), as amended by the preceding provisions of this Act, is 
further amended by inserting after subparagraph
            (D) the following:
 ``
        (E) Determination of number of qualifying monthly 
 payments for consolidation loans.--With respect to 
 determining the number of qualifying monthly payments 
 for a borrower seeking loan forgiveness under this 
 subsection who consolidates one or more Direct Loans 
 into a Direct Consolidation Loan, including a Direct 
 PLUS Loan made to a parent borrower, the Secretary 
 shall use the weighted average of the payments the 
 borrower made on the Direct Loans prior to 
 consolidating that met the criteria under this 
 subsection.''.

SEC. 235. LOAN FORGIVENESS FOR TEACHERS.

    (a) In General.--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) .

    (b) Conforming Amendment.--

Section 455
            (m) (7) of the Higher 
Education Act of 1965, as redesignated by 

section 231

    (b) of this Act, 
is amended by striking ``

section 428J, 428K, 428L, or 460'' and 
inserting ``

section 428K or 428L''.

SEC. 236. GAO STUDY ON DATA MATCHING AGREEMENTS FOR PUBLIC SERVICE LOAN 
 FORGIVENESS.

    (a) In General.--The Comptroller General of the United States shall 
conduct a study on the feasibility of establishing data matching 
agreements for public service loan forgiveness under 

section 455
            (m) of 
the Higher Education Act of 1965 (20 U.S.C. 1087e
            (m) ) that would allow 
a borrower to forego requesting certification of employment from the 
appropriate contact for the public service job of the borrower. The 
study shall include an examination of the Department of Education and 
the Department of Defense's progress towards automatic data matching 
for military and veteran borrowers.

    (b) Report.--Not later than 1 year after the date of enactment of 
this Act, the Comptroller General shall submit a report to the 
Committee on Education and Workforce of the House of Representatives 
and the Committee on Health, Education, Labor, and Pensions of the 
Senate containing the findings and recommendations resulting from the 
study required under subsection

    (a) .
            (c) Cooperation.--The head of each relevant Federal agency, 
including the Secretary of Education, Secretary of Defense, and 
Commissioner of Internal Revenue, shall cooperate with the Comptroller 
General to facilitate the completion of the study required under 
subsection

    (a) .

 PART E--SUPPORT FOR BORROWERS IN DEFAULT

SEC. 241. REMOVAL OF RECORD OF DEFAULT.

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

``

SEC. 494C. REMOVAL OF RECORD OF DEFAULT.

 ``Upon repaying in full the amount due on a defaulted loan made, 
insured, or guaranteed under this title, the Secretary, guaranty 
agency, or other holder of the loan shall request any consumer 
reporting agency to which the Secretary, guaranty agency, or holder, as 
applicable, reported the default of the loan, to remove any adverse 
item of information relating to such loan from the borrower's credit 
history.''.

SEC. 242. REMOVAL OF RECORD OF DEFAULT FROM CREDIT HISTORY UPON LOAN 
 CONSOLIDATION.

 

Section 455

    (g) of the Higher Education Act of 1965 (20 U.S.C. 
1087e

    (g) ) is amended by adding at the end the following:
 ``

    (3) Consumer reporting agencies.--Upon obtaining a 
 Federal Direct Consolidation Loan that discharges the liability 
 on a defaulted loan made, insured, or guaranteed under this 
 title, the Secretary, guaranty agency, or other holder of the 
 loan shall request any consumer reporting agency to which the 
 Secretary, guaranty agency or holder, as applicable, reported 
 the default of the loan, to remove any adverse item of 
 information relating to such loan from the borrower's credit 
 history.''.

SEC. 243. DEFAULT REDUCTION PROGRAM.

 

Section 428F of the Higher Education Act of 1965 (20 U.S.C. 1078-
6

    (a) ) is amended by adding at the end the following:
 ``
            (d) Default Reduction Program.--Notwithstanding subsection

    (a) , 
beginning on July 1, 2026, with respect to a defaulted loan made, 
insured, or guaranteed under this part or part D, the following shall 
apply:
 ``

    (1) Rehabilitation authorized.--
 ``
        (A) In general.--Such a defaulted loan (other 
 than a loan described in subparagraph
        (B) ) shall be 
 rehabilitated if the borrower makes 9 voluntary, 
 reasonable and affordable monthly payments within 20 
 days of the due date during 10 consecutive months. The 
 Secretary determines the amount of a borrower's 
 reasonable and affordable payment on the basis of a 
 borrower's total financial circumstances.
 ``
        (B) Ineligible loans.--A defaulted loan may not 
 be eligible for rehabilitation under this subsection 
 if--
 ``
            (i) a judgment has been obtained on such 
 loan; or
 ``
            (ii) such loan has been obtained by fraud 
 for which the borrower has been convicted of, 
 or has pled nolo contendere or guilty to, a 
 crime involving fraud in obtaining financial 
 assistance under this title.
 ``
            (C) Limitation on borrower.--A borrower may 
 obtain the benefits available under this subsection 
 with respect to rehabilitating a loan not more than two 
 times per loan.
 ``
            (D) Limitation on the secretary.--During the 
 rehabilitation period described in this paragraph, the 
 Secretary shall limit contact with the borrower on the 
 loan being rehabilitated to collection activities that 
 are required by law or regulation and to communications 
 that support the rehabilitation.
 ``

    (2) Determination of reasonable and affordable payment.--
 ``
        (A) In general.--Subject to subparagraphs
        (A) through
        (H) , the Secretary shall consider the 
 borrower's reasonable and affordable payment amount to 
 be an amount equal to the minimum payment required 
 under the Income-Driven Repayment Plan, except that if 
 such amount is less than $5, the borrower's monthly 
 payment shall be $5.
 ``
        (B) Documentation requirement.--The Secretary may 
 calculate the payment amount based on information 
 provided orally by the borrower or the borrower's 
 representative and provide the borrower with a 
 rehabilitation agreement using that amount. The 
 Secretary requires the borrower to provide 
 documentation to confirm the borrower's adjusted gross 
 income and family size. If the borrower does not 
 provide the Secretary with any documentation requested 
 by the Secretary to calculate or confirm the reasonable 
 and affordable payment amount within a reasonable time 
 deadline set by the Secretary, the rehabilitation 
 agreement provided is null and void. A borrower may 
 request that the monthly payment amount be adjusted due 
 to a change in the borrower's total financial 
 circumstances only upon providing the documentation 
 specified in paragraph

    (3) .
 ``
            (C) Prohibitions.--For purposes of subparagraph
        (A) , a reasonable and affordable payment amount shall 
 not--
 ``
            (i) be a required minimum loan payment 
 amount if the Secretary determines that a 
 smaller amount is reasonable and affordable;
 ``
            (ii) a percentage of the borrower's total 
 loan balance; or
 ``
            (iii) based on other criteria unrelated 
 to the borrower's total financial 
 circumstances.
 ``
            (D) Rehabilitation payment agreement.--
 ``
            (i) In general.--Not later than 15 
 business days of the Secretary's determination 
 of the borrower's loan rehabilitation payment 
 amount, the Secretary shall provide the 
 borrower with a written rehabilitation 
 agreement which shall include--
 ``
            (I) the borrower's reasonable and 
 affordable payment amount, a prominent 
 statement that the borrower may object 
 orally or in writing to the reasonable 
 and affordable payment amount with the 
 method and timeframe for raising such 
 an objection;
 ``
            (II) a statement that the 
 rehabilitation is null and void if the 
 borrower does not provide the 
 documentation required to calculate the 
 reasonable and affordable payment 
 amount;
 ``
            (III) an explanation of any other 
 terms and conditions applicable to the 
 required series of payments that must 
 be made; and
 ``
            (IV) information on the effects 
 of having the loans rehabilitated.
 ``
            (ii) Acceptance by the borrower.--To 
 accept the agreement, the borrower shall sign 
 and return the agreement or accept the 
 agreement electronically under a process 
 provided by the Secretary.
 ``
            (iii) Prohibition.--The Secretary may not 
 impose any other conditions unrelated to the 
 amount or timing of the rehabilitation payments 
 in the rehabilitation agreement.
 ``
        (E) Statement confirming reasonable and 
 affordable payment amount.--The Secretary shall provide 
 the borrower with a written statement that--
 ``
            (i) confirms the borrower's reasonable 
 and affordable payment amount, as determined by 
 the Secretary;
 ``
            (ii) explains any other terms and 
 conditions applicable to the required series of 
 payments that shall be made before the 
 borrower's account can be rehabilitated;
 ``
            (iii) informs the borrower that the 
 borrower may object to the terms and conditions 
 of the rehabilitation agreement; and
 ``
            (iv) explains the method and timeframe 
 for objecting to the terms and conditions of 
 the rehabilitation agreement.
 ``
        (F) Objection by borrower.--If the borrower 
 objects to the monthly payment amount described in the 
 statement under subparagraph
        (E) , the Secretary shall 
 recalculate the payment based solely on information 
 provided on a form approved by the Secretary and, if 
 requested, supporting documentation from the borrower 
 and other sources, and shall consider each of the 
 following:
 ``
            (i) The borrower's, and if applicable, 
 the spouse's current disposable income, 
 including public assistance payments, and other 
 income received by the borrower and the spouse, 
 such as welfare benefits, Social Security 
 benefits, Supplemental Security Income, and 
 workers' compensation. Spousal income is not 
 considered if the spouse does not contribute to 
 the borrower's household income.
 ``
            (ii) Family size.
 ``
            (iii) Reasonable and necessary expenses, 
 which shall include--
 ``
            (I) Food.
 ``
            (II) Housing.
 ``
            (III) Utilities.
 ``
            (IV) Basic communication 
 expenses.
 ``
            (V) Necessary medical and dental 
 costs.
 ``
            (VI) Necessary insurance costs.
 ``
            (VII) Transportation costs.
 ``
            (VIII) Dependent care and other 
 work-related expenses.
 ``
            (IX) Legally required child and 
 spousal support.
 ``
            (X) Other student loan payments 
 for loans made, insured, or guaranteed 
 under this title, or any other Federal 
 law.
 ``
            (XI) Other expenses approved by 
 the Secretary.
 ``
        (G) New rehabilitation agreement.--The Secretary 
 shall provide the borrower with a new written 
 rehabilitation agreement confirming the borrower's 
 recalculated reasonable and affordable payment amount. 
 To accept the agreement, the borrower must sign and 
 return the agreement or accept the agreement 
 electronically under a process provided by the 
 Secretary.
 ``
        (H) Change in circumstances.--A borrower may 
 request that the monthly payment amount be adjusted due 
 to a change in the borrower's total financial 
 circumstances only upon providing the documentation 
 specified in subparagraph
        (F) .
 ``

    (3) Administrative wage garnishment.--
 ``
        (A) In general.--If a borrower's loan is being 
 collected by administrative wage garnishment while the 
 borrower is also making monthly payments on the same 
 loan under a loan rehabilitation agreement, the 
 Secretary shall continue collecting the loan by 
 administrative wage garnishment until the borrower 
 makes five qualifying monthly payments under the 
 rehabilitation agreement, unless the Secretary is 
 otherwise precluded from doing so.
 ``
        (B) Suspension.--After the borrower makes the 
 fifth qualifying monthly payment, the Secretary, unless 
 otherwise directed by the borrower, suspends the 
 garnishment order issued to the borrower's employer.
 ``
            (C) Limitation.--A borrower may only obtain the 
 benefit of a suspension of administrative wage 
 garnishment while also attempting to rehabilitate a 
 defaulted loan once.
 ``

    (4) Instruction to consumer reporting agency.--If a 
 defaulted loan is rehabilitated, the Secretary shall instruct 
 any consumer reporting agency to which the default was reported 
 to remove the default, and any adverse item of information 
 relating to such loan, from the borrower's credit history.
 ``

    (e) Removal From Default.--Beginning on July 1, 2026, the 
Secretary shall not consider a borrower in default on a loan if--
 ``

    (1) the borrower provides information necessary to 
 calculate a payment under an income-contingent or income-based 
 repayment plan under this part or;
 ``

    (2) the payment calculated pursuant to such a repayment 
 plan is $0; and
 ``

    (3) the income information used to calculate such payment 
 covers the date on which the loan defaulted.''.

 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, 2026.

 

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, 2026'' before the period; and
        (B) by inserting ``and before July 1, 2026,'' 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, 2026.--
 ``
        (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, 2026, 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, 2026, 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, 2026, 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 455A

    (a) .
 ``

    (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, 2026; 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.), as amended by 

section 402, is further 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, 
 2026; 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 Workforce 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.''.
 <all>