119-s1220

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 1220 Introduced in Senate

    (IS) ]

<DOC>

119th CONGRESS
 1st Session
 S. 1220

 To amend the Higher Education Act of 1965 to provide for a Savings 
 Opportunity and Affordable Repayment plan as an income contingent 
 repayment plan.

_______________________________________________________________________

 IN THE SENATE OF THE UNITED STATES

 April 1 (legislative day, March 31), 2025

 Mr. Merkley (for himself, Mr. Kaine, Mr. Schumer, Ms. Hirono, Mr. 
 Blumenthal, Ms. Warren, Mr. Welch, Mrs. Gillibrand, Mr. Padilla, Mr. 
 Booker, Ms. Smith, Mr. Sanders, Mr. Wyden, Mr. Kim, and Mr. Markey) 
introduced the following bill; which was read twice and referred to the 
 Committee on Health, Education, Labor, and Pensions

_______________________________________________________________________

 A BILL

 To amend the Higher Education Act of 1965 to provide for a Savings 
 Opportunity and Affordable Repayment plan as an income contingent 
 repayment plan.

 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 ``Savings Opportunity and Affordable 
Repayment Act''.

SEC. 2. SAVINGS OPPORTUNITY AND AFFORDABLE REPAYMENT PLAN.

    (a) Amendments to the Higher Education Act of 1965.--The Higher 
Education Act of 1965 (20 U.S.C. 1001 et seq.) is amended--

    (1) in 

section 428

    (b)

    (9)
        (A) --
        (A) in clause
            (iv) , by striking ``and'' after the 
 semicolon;
        (B) in clause
            (v) , by striking the period at the 
 end and inserting ``; and''; and
            (C) by adding at the end the following:
 ``
            (vi) beginning on the date that is 180 
 days after the date of enactment of the Savings 
 Opportunity and Affordable Repayment Act, an 
 income contingent repayment plan known as the 
 `Savings Opportunity and Affordable Repayment 
 plan', consistent with 

section 493E.'';

    (2) in 

section 428C
            (c) (2)
        (A) --
        (A) in the first sentence, by striking ``or income-
 based'' and inserting ``income-based, or income 
 contingent Savings Opportunity and Affordable Repayment 
 (consistent with 

section 493E)''; and
        (B) in the second sentence, by striking ``or 
 income-based'' and inserting ``income-based, or income 
 contingent Savings Opportunity and Affordable 
 Repayment'';

    (3) in 

section 455
            (d) --
        (A) in paragraph

    (1) , by striking subparagraph
            (D) and inserting the following:
 ``
            (D) except as provided in paragraph

    (6) , an 
 income contingent repayment plan--
 ``
            (i) with varying annual repayment amounts 
 based on the income of the borrower, paid over 
 an extended period of time prescribed by the 
 Secretary, not to exceed 25 years, except that 
 the plan described in this clause shall not be 
 available to the borrower of a Federal Direct 
 PLUS loan made on behalf of a dependent 
 student; and
 ``
            (ii) which, beginning on the date that is 
 180 days after the date of enactment of the 
 Savings Opportunity and Affordable Repayment 
 Act, shall include the `Savings Opportunity and 
 Affordable Repayment plan', consistent with 
 

section 493E; and''; and
        (B) by adding at the end the following:
 ``

    (6) Phase outs.--
 ``
        (A) PAYE repayment plan.--
 ``
            (i) In general.--A borrower may choose 
 the Pay As You Earn Repayment Plan, as 
 described in 

section 685.209 of title 34, Code 
 of Federal Regulations (as in effect on January 
 19, 2025), as an income contingent repayment 
 plan pursuant to paragraph

    (1)
            (D) --
 ``
            (I) before the date that is 2 
 years after the date of enactment of 
 the Savings Opportunity and Affordable 
 Repayment Act, only if the borrower--
 ``

    (aa) has loans eligible 
 for repayment under such plan, 
 as described in such section as 
 in effect on such date; and
 ``

    (bb) has a partial 
 financial hardship when the 
 borrower initially enters such 
 plan, as described in such 
 section as in effect on such 
 date; and
 ``
            (II) on or after the date that is 
 2 years after the date of enactment of 
 the Savings Opportunity and Affordable 
 Repayment Act, only if the borrower 
 meets the conditions described in 
 subclause
            (I) and was repaying a loan 
 under such plan before such date that 
 is 2 years after the date of enactment 
 of the Savings Opportunity and 
 Affordable Repayment Act.
 ``
            (ii) Prohibition against re-enrollment.--
 Beginning on the date that is 2 years after the 
 date of enactment of the Savings Opportunity 
 and Affordable Repayment Act, a borrower who 
 was repaying a loan under the Pay As You Earn 
 Repayment Plan, as described in clause
            (i) , and 
 changes to a different repayment plan may not 
 re-enroll in the Pay As You Earn Repayment 
 Plan.
 ``
        (B) Income contingent repayment plan.--
 ``
            (i) In general.--A borrower may choose 
 the ICR plan, as described in 

section 685.209 
 of title 34, Code of Federal Regulations (as in 
 effect on January 19, 2025), as an income 
 contingent repayment plan pursuant to paragraph

    (1)
            (D) --
 ``
            (I) before the date that is 2 
 years after the date of enactment of 
 the Savings Opportunity and Affordable 
 Repayment Act, only if the borrower has 
 loans eligible for repayment under such 
 plan, as described in such section as 
 in effect on such date, except as 
 provided in clause
            (iii) ; and
 ``
            (II) on or after the date that is 
 2 years after the date of enactment of 
 the Savings Opportunity and Affordable 
 Repayment Act, only if the borrower has 
 loans eligible for repayment under such 
 plan, as described in such section as 
 in effect on such date, except as 
 provided in clause
            (iii) , and was 
 repaying a loan under such plan before 
 such date that is 2 years after the 
 date of enactment of the Savings 
 Opportunity and Affordable Repayment 
 Act.
 ``
            (ii) Prohibition against re-enrollment.--
 Beginning on the date that is 2 years after the 
 date of enactment of the Savings Opportunity 
 and Affordable Repayment Act, a borrower who 
 was repaying a loan under the ICR plan, as 
 described in clause
            (i) , and changes to a 
 different repayment plan may not re-enroll in 
 the ICR plan.
 ``
            (iii) Eligible loans for purposes of icr 
 repayment.--In addition to the loans eligible 
 for repayment under the ICR plan as described 
 in 

section 685.209 of title 34, Code of Federal 
 Regulations (as in effect on January 19, 2025), 
 an eligible loan for purposes of repayment 
 under the ICR plan may include--
 ``
            (I) a Federal Direct PLUS Loan 
 made on behalf of a dependent student;
 ``
            (II) a Federal Direct 
 Consolidation Loan for which the 
 proceeds were used to discharge the 
 liability on a Federal Direct PLUS Loan 
 or a loan under 

section 428B made on 
 behalf of a dependent student;
 ``
            (III) a loan under 

section 428B 
 made on behalf of a dependent student; 
 or
 ``
            (IV) a loan under 

section 428C 
 for which the proceeds were used to 
 discharge the liability on a Federal 
 Direct PLUS Loan or a loan under 
 

section 428B made on behalf of a 
 dependent student.'';

    (4) by inserting after 

section 493D the following:

``

SEC. 493E. SAVINGS OPPORTUNITY AND AFFORDABLE REPAYMENT PLAN.

 ``

    (a) 

=== Definitions. ===
-In this section:
 ``

    (1) Eligible loan.-- The term `eligible loan' means a 
 loan made, insured, or guaranteed under part B or D.
 ``

    (2) Monthly payment obligation.--
 ``
        (A) In general.--The term `monthly payment 
 obligation', when used with respect to a borrower, 
 means that for such borrower the monthly payment amount 
 due on the total amount of eligible loans made to such 
 borrower that is equal to, except as provided in 
 subparagraph
        (B) --
 ``
            (i) $0 for the portion of the borrower's, 
 and the borrower's spouse's (if applicable), 
 adjusted gross income (as defined in 

section 62 
 of the Internal Revenue Code of 1986) that is 
 less than or equal to 250 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) 5 percent of the portion of the 
 borrower's, and the borrower's spouse's (if 
 applicable), adjusted gross income (as defined 
 in 

section 62 of the Internal Revenue Code of 
 1986) that is greater than 250 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 the borrower's 
 original total loan balance attributable to 
 eligible loans received for the borrower's 
 undergraduate study by the original total loan 
 balance attributable to all eligible loans, 
 divided by 12; plus
 ``
            (iii) for loans not subject to clause
            (ii) , 10 percent of the portion of the 
 borrower's, and the borrower's spouse's (if 
 applicable), adjusted gross income (as defined 
 in 

section 62 of the Internal Revenue Code of 
 1986) that is greater than 250 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 the borrower's 
 original total loan balance minus the original 
 total loan balance of loans subject to clause
            (ii) by the borrower's original total loan 
 balance attributable to all eligible loans, 
 divided by 12.
 ``
        (B) Minimal payment obligation.--If the 
 calculation of the monthly payment amount due under 
 subparagraph
        (A) for a borrower is--
 ``
            (i) less than $5, then the monthly 
 payment obligation for such borrower is equal 
 to $0; and
 ``
            (ii) equal to or greater than $5 but less 
 than $10, then the monthly payment obligation 
 for such borrower is equal to $10.
 ``

    (b) Savings Opportunity and Affordable Repayment Authorized.--
Notwithstanding any other provision of this Act, the Secretary shall 
carry out a Savings Opportunity and Affordable Repayment plan program 
that complies with the following:
 ``

    (1) A borrower of any eligible loan may elect to have the 
 borrower's aggregate monthly payment for all such loans not 
 exceed the monthly payment obligation of such borrower.
 ``

    (2) The holder of such eligible loan shall apply--
 ``
        (A) 50 percent of the borrower's monthly payment 
 under this subsection toward outstanding principal; and
 ``
        (B) 50 percent of the borrower's monthly payment 
 under this subsection--
 ``
            (i) first toward accrued charges and 
 collection costs on the loan;
 ``
            (ii) then toward outstanding interest; 
 and
 ``
            (iii) then toward outstanding principal.
 ``

    (3) During all periods of repayment on all loans being 
 repaid under the Savings Opportunity and Affordable Repayment 
 plan, the Secretary shall not charge the borrower's account any 
 accrued interest that is not covered by the borrower's monthly 
 payment obligation.
 ``

    (4) Any principal due and not paid under paragraph

    (2) shall be deferred.
 ``

    (5) In the case of a borrower repaying under the Savings 
 Opportunity and Affordable Repayment plan, the Secretary shall 
 cancel the remaining balance due on all eligible loans for a 
 borrower in the case the borrower--
 ``
        (A) is repaying only eligible loans received for 
 undergraduate study, or a consolidation loan that 
 repaid only loans received for such study, for which 
 the borrower's attendance in such undergraduate study 
 was not more than 2 years, after the borrower has 
 satisfied 120 monthly payments or the equivalent (as 
 described in paragraph

    (6) ), over a period of at least 
 10 years; and
 ``
        (B) is repaying at least one eligible loan not 
 described in subparagraph
        (A) , after the borrower has 
 satisfied 180 monthly payments or the equivalent (as 
 described in paragraph

    (6) ), over a period of at least 
 15 years.
 ``

    (6) A monthly payment or the equivalent shall be 
 satisfied by any of the following:
 ``
        (A) A month in which the borrower--
 ``
            (i) makes a monthly payment that is equal 
 to not less than the monthly payment obligation 
 of the borrower; or
 ``
            (ii) has a monthly payment obligation of 
 $0.
 ``
        (B) A month in which the borrower receives a 
 deferment or forbearance of repayment under any of the 
 following:
 ``
            (i) A cancer treatment deferment under 
 

section 455

    (f)

    (3) .
 ``
            (ii) A rehabilitation training program 
 deferment.
 ``
            (iii) An unemployment deferment.
 ``
            (iv) An economic hardship deferment, 
 which includes volunteer service in the Peace 
 Corps as an economic hardship condition.
 ``
            (v) A military service deferment.
 ``
            (vi) A post active-duty student 
 deferment.
 ``
            (vii) A national service forbearance.
 ``
            (viii) A national guard duty forbearance.
 ``
            (ix) A Department of Defense Student Loan 
 Repayment forbearance.
 ``
            (x) An administrative forbearance under a 
 period--
 ``
            (I) during which the Secretary 
 has authorized forbearance due to a 
 national military mobilization or other 
 local or national emergency;
 ``
            (II) necessary for the Secretary 
 to collect and process documentation 
 supporting the borrower's request for a 
 deferment, forbearance, change in 
 repayment plan, or consolidation loan; 
 or
 ``
            (III) determined necessary by the 
 Secretary.
 ``
            (xi) A bankruptcy forbearance if the 
 borrower made the required payments on a 
 confirmed bankruptcy plan.
 ``
            (C) A month in which the borrower receives a 
 deferment or forbearance of repayment not described in 
 subparagraph
        (B) , but for which the borrower makes an 
 additional payment equal to or greater than their 
 monthly payment obligation (including a monthly payment 
 obligation of $0), for a deferment or forbearance that 
 ended within 3 years of the date of such additional 
 payment and occurred on or after the date that is 180 
 days after the date of enactment of the Savings 
 Opportunity and Affordable Repayment Act.
 ``
            (D) A month in which the borrower--
 ``
            (i) makes a payment pursuant to a 
 repayment plan under 

section 493C or 

section 455
            (d) (1)
        (E) , or another income continent 
 repayment plan under 

section 455
            (d) (1)
            (D) , or 
 had a monthly payment obligation under such a 
 plan of $0;
 ``
            (ii) makes a payment under the standard 
 repayment plan, as described in 

section 428

    (b)

    (9)
        (A)
            (i) ; or
 ``
            (iii) makes a payment under a repayment 
 plan with payments that are as least as much as 
 they would have been under the standard 
 repayment plan, as described in 

section 428

    (b)

    (9)
        (A)
            (i) .
 ``

    (7) A borrower who is repaying an eligible loan pursuant 
 to this section may elect, at any time, to terminate repayment 
 pursuant to this section and repay such loan under any other 
 repayment plan for which the borrower is eligible.
 ``

    (8) A borrower who is repaying an eligible loan pursuant 
 to this section may--
 ``
        (A) pay in multiple installments that equal the 
 full scheduled monthly payment obligation of such 
 borrower; or
 ``
        (B) pay a lump sum or monthly payment amount that 
 is equal to or greater than the full scheduled monthly 
 payment obligation of such borrower in advance of the 
 borrower's scheduled payment due date for a period of 
 months not to exceed the period from the Secretary's 
 receipt of the payment until the borrower's next annual 
 repayment plan recertification date.
 ``
            (c) Eligibility Determinations.--
 ``

    (1) In general.--The Secretary shall establish procedures 
 for annually determining the borrower's eligibility for 
 repayment under this section, including verification of a 
 borrower's annual income and the annual amount due on the total 
 amount of eligible loans, and such other procedures as are 
 necessary to effectively implement repayment under this 
 section.
 ``

    (2) Procedures for eligibility.--The Secretary shall--
 ``
        (A) consider, but is not limited to, the 
 procedures established in accordance with 

section 455

    (e)

    (1) ; and
 ``
        (B) carry out, with respect to borrowers of any 
 eligible loan, procedures for repayment plans that are 
 equivalent to the procedures carried out under 

section 455

    (e)

    (8) with respect to other income contingent 
 repayment plans.
 ``

    (3) Failure to timely certify information.--If the 
 Secretary requires information from the borrower to recalculate 
 the borrower's monthly payment obligation under this section, 
 and the borrower does not provide the necessary documentation 
 to the Secretary by the time the Secretary requires such 
 documentation, the Secretary shall remove the borrower from the 
 Savings Opportunity and Affordable Repayment plan under this 
 section and place the borrower on an alternative repayment plan 
 under which the borrower's required monthly payment is the 
 amount the borrower would have paid on a 10-year standard 
 repayment plan based on the current eligible loan balances and 
 interest rates on the eligible loans at the time the borrower 
 is removed from the plan under this section.
 ``

    (4) Procedures.--
 ``
        (A) Approval for the disclosure of tax 
 information.--A borrower shall provide approval for the 
 disclosure of applicable tax information to the 
 Secretary to initially enter repayment, or recertify 
 the borrower's intent to repay, under this section 
 either as part of the process of completing a Direct 
 Loan Master Promissory Note or a Direct Consolidation 
 Loan Application and Promissory Note in accordance with 
 sections 455

    (e)

    (8) and 493C
            (c) (2) or on an application 
 form approved by the Secretary.
 ``
        (B) Failure to provide approval.--If a borrower 
 does not provide approval for the disclosure of 
 applicable tax information pursuant to subparagraph
        (A) , the borrower shall provide documentation of the 
 borrower's income and family size to the Secretary.
 ``
            (C) Inability to obtain information from the 
 irs.--If the Secretary has received approval for 
 disclosure of applicable tax information pursuant to 
 subparagraph
        (A) , but cannot obtain the borrower's 
 income and family size from the Internal Revenue 
 Service, the borrower and, if applicable, the 
 borrower's spouse, shall provide documentation of 
 income and family size to the Secretary.
 ``
            (D) Calculation of payment amount.--After the 
 Secretary obtains sufficient information to calculate 
 the borrower's monthly payment obligation, the 
 Secretary shall--
 ``
            (i) calculate the borrower's monthly 
 payment obligation; and
 ``
            (ii) establish the 12-month period during 
 which the borrower will be obligated to make 
 payments in the amount of the monthly payment 
 obligation.
 ``
        (E) Repayment disclosure.--The Secretary shall 
 send to each borrower a repayment disclosure that--
 ``
            (i) specifies the borrower's calculated 
 monthly payment obligation;
 ``
            (ii) explains how the payment was 
 calculated;
 ``
            (iii) informs the borrower of the terms 
 and conditions of repayment under this section; 
 and
 ``
            (iv) informs the borrower of how to 
 contact the Secretary if the calculated monthly 
 payment obligation amount is not reflective of 
 the borrower's current income or family size.
 ``
        (F) Request for recalculation.--
 ``
            (i) In general.--If a borrower believes 
 that the calculated monthly payment obligation 
 amount is not reflective of the borrower's 
 current income or family size, the borrower may 
 request that the Secretary recalculate the 
 monthly payment obligation amount.
 ``
            (ii) Alternative documentation.--To 
 support a request under clause
            (i) , the 
 borrower shall submit alternative documentation 
 of income or family size not based on tax 
 information to account for circumstances such 
 as 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.
 ``
        (G) Forbearance.--If a borrower provides 
 alternative documentation under subparagraph
        (F) or if 
 the Secretary receives documentation from the borrower 
 or the borrower's spouse under subparagraph
            (C) , the 
 Secretary shall grant forbearance to provide time for 
 the Secretary to recalculate the borrower's monthly 
 payment obligation based on the documentation.
 ``
        (H) 3 monthly payments remaining.--Once a 
 borrower has 3 monthly payments remaining under a 12-
 month period specified under subparagraph
            (D) , the 
 Secretary shall follow the procedures described in 
 subparagraphs
            (C) through
        (G) .
 ``
            (I) Resetting of 12-month period.--At any point 
 during a 12-month period specified under subparagraph
            (D) , a borrower may request that the Secretary 
 recalculate the borrower's monthly payment obligation 
 earlier than would have otherwise been the case to 
 account for a change in the borrower's circumstances, 
 such as a loss of income or employment or divorce. In 
 such a case, the 12-month period specified under 
 subparagraph
            (D) shall be reset based on the borrower's 
 new information.
 ``
        (J) Tracking forgiveness.--The Secretary shall 
 track a borrower's progress toward eligibility for loan 
 cancellation under subsection

    (b)

    (5) and cancel loans 
 that meet the criteria under such subsection without 
 the need for an application or documentation from the 
 borrower.
 ``
            (d) Married Borrowers.--
 ``

    (1) Calculation based solely on borrower's information.--
 In the case of a married borrower, the Secretary shall 
 calculate the amount of the borrower's monthly payment 
 obligation under this section solely on the basis of the 
 borrower's eligible loan debt and adjusted gross income (as 
 defined in 

section 62 of the Internal Revenue Code of 1986) 
 if--
 ``
        (A) the borrower files a separate Federal income 
 tax return; or
 ``
        (B) the borrower files a joint Federal income tax 
 return and certifies that the borrower is currently 
 separated from the borrower's spouse or is currently 
 unable to reasonably access the spouse's income.
 ``

    (2) Calculation including spouse's information.--In the 
 case of a married borrower not described in subparagraph
        (A) or
        (B) , the Secretary shall--
 ``
        (A) include the spouse's income in the 
 calculation of the borrower's monthly payment 
 obligation under this section; and
 ``
        (B) if the spouse has eligible loan debt, adjust 
 the borrower's monthly payment obligation under this 
 section by--
 ``
            (i) dividing the outstanding principal 
 and interest balance of the borrower's eligible 
 loans by the couple's combined outstanding 
 principal and interest balance on eligible 
 loans; and
 ``
            (ii) multiplying the borrower's payment 
 amount as calculated under subsection

    (a)

    (5) by 
 the percentage determined under clause
            (i) .''; 
 and

    (5) in 

section 494

    (a)

    (2)
        (A) --
        (A) in the matter preceding clause
            (i) , by 
 inserting ``or a Savings Opportunity and Affordable 
 Repayment plan for a loan under part B'' after ``part 
 D''; and
        (B) in clause
            (ii) 
            (I) , by inserting ``or 

section 493E
            (c) (2)
        (B) '' after ``

section 493C
            (c) (2)
        (B) ''.
 <all>