HR 4170 IH
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 ‘Student Loan Forgiveness Act of 2012’.
SEC. 2. FINDINGS.
Congress finds the following:
(1) A well-educated citizenry is critical to our Nation’s ability to compete in the global economy.
(2) The Federal Government has a vested interest in ensuring access to higher education.
(3) Higher education should be viewed as a public good benefitting our country rather than as a commodity solely benefitting individual students.
(4) Total outstanding student loan debt officially surpassed total credit card debt in the United States in 2010, and is on track to exceed $1,000,000,000,000 during 2012.
(5) Excessive student loan debt is impeding economic growth in the United States. Faced with excessive repayment burdens, many individuals are unable to start businesses, invest, or buy homes. Relieving student loan debt would give these individuals greater control over their earnings and would increase entrepreneurship and demand for goods and services.
(6) Because of soaring tuition costs, students often have no choice but to amass significant debt to obtain an education that is widely considered a prerequisite for earning a living wage.
(7) Amidst rising tuition rates and stagnant grant funding, many students are forced to supplement Federal loans with private loans, which frequently feature higher interest rates with fewer consumer protections.
(8) A borrower who experiences an extended hardship for whatever reason, or a borrower who experiences a series of separate hardships over a longer period of time, will often have no choice but to default on his or her private student loans. Opportunities to put such private loans into forbearance are limited.
(9) During the period of forbearance on private student loans, interest continues to accrue and is capitalized, and once the borrower comes out of forbearance, he or she owes significantly more on the principal of the loan than before the hardship period began.
SEC. 3. 10/10 LOAN REPAYMENT AND FORGIVENESS.
Part G of title IV of the Higher Education Act of 1965 is amended by adding at the end the following:
‘SEC. 493E. 10/10 LOAN REPAYMENT AND FORGIVENESS.
‘(a) 10/10 Loan Repayment Plan-
‘(1) 10/10 LOAN REPAYMENT PLAN AUTHORIZED- Notwithstanding any other provision of this Act, the Secretary shall carry out a program (to be known as the ‘10/10 Loan Repayment Plan’) under which–
‘(A) a borrower of an eligible loan who is eligible under paragraph (3) may elect to have the borrower’s aggregate monthly payment for all such loans not exceed the monthly payment amount described in paragraph (2);
‘(B) the holder of such an eligible loan shall apply the borrower’s monthly payment under this subsection first toward interest due on the loan, next toward any fees due on the loan, and then toward the principal of the loan;
‘(C) any interest due and not paid under subparagraph (B) shall continue to accrue but shall not be capitalized, and–
‘(i) shall not be capitalized if the borrower ends the election to make 10/10 Loan Repayment under this subsection; or
‘(ii) shall be forgiven in accordance with subsection (b) if the borrower meets the requirements for forgiveness under such subsection;
‘(D) any principal due and not paid under subparagraph (B) shall be deferred, and shall be forgiven in accordance with subsection (b) if the borrower meets the requirements for forgiveness under such subsection;
‘(E) the amount of time the borrower makes monthly payments under this subsection may exceed 10 years;
‘(F) a borrower who is repaying an eligible loan pursuant to 10/10 Loan Repayment under this subsection may elect, at any time, to terminate repayment pursuant to 10/10 Loan Repayment and repay such loan under the standard repayment plan, in which case the amount of time the borrower is permitted to repay such loans may exceed 10 years; and
‘(G) the special allowance payment to a lender calculated under section 438(b)(2)(I), when calculated for a loan in repayment under this section, shall be calculated on the principal balance of the loan and on any accrued interest unpaid by the borrower in accordance with this section.
‘(2) 10/10 LOAN REPAYMENT MONTHLY PAYMENT FORMULA- A borrower who has elected to participate in the 10/10 Loan Repayment Plan under this subsection shall, during each month the borrower is participating in such Plan, make a monthly payment in an amount equal to–
‘(A) one-twelfth of the amount that is 10 percent of the result obtained by calculating, on at least an annual basis, the amount by which–
‘(i) the borrower’s, and the borrower’s spouse’s (if applicable), adjusted gross income; exceeds
‘(ii) 150 percent of the poverty line applicable to the borrower’s family size as determined under section 673(2) of the Community Services Block Grant Act (42 U.S.C. 9902(2));
‘(B) in the case of a borrower who is in deferment due to an economic hardship described in section 435(o), $0; or
‘(C) in the case of a borrower for whom the payment calculated under subparagraph (A) is $0, but who is not in deferment due to an economic hardship described in section 435(o), an amount determined by the Secretary, on a case-by-case basis and not less than annually, based on criteria established by the Secretary that shall take into consideration–
‘(i) the specific financial and other relevant circumstances of a borrower, and the borrower’s spouse (if applicable), including income, assets, total amount of eligible loans, other debt, family size, employment status, and the period of time the borrower has been subject to this subparagraph;
‘(ii) the need to prevent abuse of the relief provided under the 10/10 Loan Repayment Plan under this subsection and the 10/10 Forgiveness Program under subsection (b); and
‘(iii) any other factors the Secretary considers to be appropriate to such determination.
‘(A) ELIGIBILITY DETERMINATIONS- The Secretary shall establish procedures for annually determining the borrower’s eligibility for 10/10 Loan Repayment, including verification of a borrower’s annual adjusted gross income and the annual amount due on the total amount of eligible loans, and such other procedures as are necessary to effectively implement 10/10 Loan Repayment under this subsection. The Secretary shall consider, but is not limited to, the procedures established in accordance with section 455(e)(1) or in connection with income sensitive repayment schedules under section 428(b)(9)(A)(iii) or 428C(b)(1)(E).
‘(B) AUTO-DEBIT REQUIREMENT- To be eligible to participate in the 10/10 Loan Repayment Plan under this subsection, a borrower shall agree to have all eligible loan payments that are made on or after the date that the borrower elects to participate in such repayment plan automatically electronically debited from a bank account.
‘(4) SPECIAL RULE FOR MARRIED BORROWERS FILING SEPARATELY- In the case of a married borrower who files a separate Federal income tax return, the Secretary shall calculate the amount of the borrower’s 10/10 Loan Repayment under this subsection solely on the basis of the borrower’s student loan debt and adjusted gross income.
‘(b) 10/10 Loan Forgiveness-
‘(1) IN GENERAL- The Secretary shall carry out a program (to be known as the ‘10/10 Loan Forgiveness Program’) to forgive a qualified loan amount, in accordance with paragraph (3), on an eligible loan for a borrower who, after the date that is 10 years prior to the date of enactment of the Student Loan Forgiveness Act of 2012, has made 120 monthly payments on the eligible loan pursuant to any one or a combination of the following:
‘(A) Monthly payment under the 10/10 Loan Repayment Plan under subsection (a).
‘(B) Monthly payment under any other repayment plan authorized under part B or D of an amount that, for a given month, is not less than the monthly payment amount calculated under subsection (a) that the borrower would have owed in the year in which such payment was made, based on the borrower’s adjusted gross income and eligible loan balance for such year.
‘(C) For any month after such date during which the borrower is in deferment due to an economic hardship described in section 435(o), monthly payment of $0.
‘(2) METHOD OF LOAN FORGIVENESS- To provide loan forgiveness under paragraph (1), the Secretary is authorized to carry out a program–
‘(A) through the holder of the loan, to assume the obligation to repay a qualified loan amount for a loan made, insured, or guaranteed under part B of this title; and
‘(B) to cancel a qualified loan amount for a loan made under part D of this title.
‘(3) QUALIFIED LOAN AMOUNT- After the borrower has made 120 monthly payments described in paragraph (1), the Secretary shall forgive–
‘(A) with respect to new borrowers on or after the date of enactment of the Student Loan Forgiveness Act of 2012, the sum of–
‘(i) the balance of principal and fees due on the borrower’s eligible loans as of the time of such forgiveness, not to exceed $45,520; and
‘(ii) the amount of interest that has accrued on the balance described in clause (i) as of the time of such forgiveness; or
‘(B) with respect to any other eligible borrower, the balance of principal, interest, and fees due on the borrower’s eligible loans as of the time of such forgiveness.
‘(4) EXCLUSION FROM TAXABLE INCOME- The amount of a borrower’s eligible loans forgiven under this section shall not be included in gross income of the borrower for purposes of the Internal Revenue Code of 1986.
‘(c) Supporting Documentation Required- A borrower who has elected to participate in the 10/10 Loan Repayment Plan under subsection (a), or who is requesting forgiveness under the 10/10 Loan Forgiveness Program under subsection (b), shall provide to the Secretary such information and documentation as the Secretary determines, by regulation, to be necessary to verify the borrower’s adjusted gross income and payment amounts made on eligible loans of the borrower for the purposes of such Plan or Program.
‘(d) Definition of Eligible Loan- In this section the term ‘eligible loan’ means any loan made, insured, or guaranteed under part B or D (including loans described in clauses (i) through (iii) of section 428L(b)(2)(B) and loans under paragraph (2) of section 455(g)).’.
SEC. 4. CAPPING INTEREST RATES FOR ALL FEDERAL DIRECT LOANS.
Section 455(b) of the Higher Education Act of 1965 (20 U.S.C. 1087e(b)) is amended–
(1) by redesignating paragraphs (8) and (9) as paragraphs (9) and (10), respectively; and
(2) by inserting after paragraph (7) the following:
‘(8) RATE OF INTEREST FOR ALL NEW FEDERAL DIRECT LOANS- Notwithstanding any other provision of this Act, with respect to a loan under this part for which the first disbursement of principal is made (or in the case of a Federal Direct Consolidation Loan, for which the application is received) on or after July 1, 2012, or the date of enactment of the Student Loan Forgiveness Act of 2012, whichever is later, the applicable rate of interest shall not exceed 3.4 percent.’.
SEC. 5. IMPROVING AND EXPANDING PUBLIC SERVICE LOAN FORGIVENESS.
Section 455(m) of the Higher Education Act of 1965 (20 U.S.C. 1087e(m)) is amended–
(1) in paragraph (1), by striking ‘120’ and inserting ‘60’ each place it appears; and
(2) in paragraph (3)(B)–
(A) in clause (i), by striking ‘or’ after the semicolon;
(B) in clause (ii), by striking the period and inserting ‘; or’; and
(C) by adding at the end the following:
‘(iii) a full-time job as a primary care physician in an area or population designated as a Medically Underserved Area or Population by the Health Resource and Services Administration.’.
SEC. 6. REFINANCING PRIVATE EDUCATION LOANS FOR CERTAIN BORROWERS.
(a) Consolidation for Certain Borrowers- Section 455(g) of the Higher Education Act of 1965 (20 U.S.C. 1087e(g)) is amended–
(1) by striking ‘A borrower’ and inserting the following:
‘(1) IN GENERAL- A borrower’;
(2) by inserting ‘, and any loan described in paragraph (2)’ after ‘July 1, 2010’; and
(3) by adding at the end the following new paragraph:
‘(2) CONSOLIDATION OF PRIVATE EDUCATION LOANS AS A FEDERAL DIRECT CONSOLIDATION LOAN FOR CERTAIN BORROWERS-
‘(A) IN GENERAL- Notwithstanding any other provision of law, a borrower who meets the eligibility criteria described in subparagraph (B) shall be eligible to obtain a Federal Direct Consolidation loan under this paragraph that–
‘(i) shall include an eligible private education loan; and
‘(ii) may include a loan described in section 428C(a)(4).
‘(B) ELIGIBLE BORROWER- A borrower of an eligible private education loan is eligible to obtain a Federal Direct Consolidation Loan under this paragraph if the borrower–
‘(i) was eligible to borrow a loan under section 428H, a Federal Direct Unsubsidized Stafford Loan, a loan under section 428B, or a Federal Direct PLUS loan for a period of enrollment at an institution of higher education, or, with respect to a borrower who was enrolled at an institution of higher education on less than a half-time basis, would have been eligible to borrow such a loan for such period of enrollment if the borrower had been enrolled on at least a half-time basis;
‘(ii) borrowed at least one eligible private education loan for a period of enrollment described in clause (i); and
‘(iii) has an average adjusted gross income (based on the borrower’s adjusted gross income from the 3 most recent calendar years before application for consolidation under this section) that is equal to or less than the borrower’s total education debt (determined by calculating the sum of the borrower’s loans described in section 428C(a)(4) and eligible private education loans) at the time of such application.
‘(C) DEFINITION OF ELIGIBLE PRIVATE EDUCATION LOAN- For purposes of this paragraph, the term ‘eligible private education loan’ means a private education loan (as such term is defined in section 140 of the Truth in Lending Act (15 U.S.C. 1650)) made on or before the date of enactment of the Student Loan Forgiveness Act of 2012, including the amount of outstanding principal, accrued interest, and related fees and costs (as determined by the Secretary) owed by a borrower on such a loan.
‘(D) PAYMENT TO THE HOLDER-
‘(i) SECRETARY- For each eligible private education loan that a borrower is consolidating under this paragraph, the Secretary shall make a payment to the holder of such loan in an amount equal to the amount consolidated under this paragraph with respect to such loan.
‘(ii) HOLDER- Upon receipt of a payment described in clause (i), a holder shall discharge the liability on the loan consolidated under this paragraph in the amount of such payment.
‘(E) TERMS AND RATE OF INTEREST- A Federal Direct Consolidation Loan made under this paragraph shall have the same terms and conditions as a Federal Direct Consolidation loan under paragraph (1), except that the applicable rate of interest for a Federal Direct Consolidation loan made under this paragraph shall not exceed 3.4 percent.
‘(F) NOTIFICATION OF ELIGIBLE BORROWERS- The Secretary shall take such steps as may be necessary to notify eligible borrowers of the availability of consolidation under this paragraph no later than 60 days after the date of enactment of the Student Loan Forgiveness Act of 2012, including notifying such borrowers of the deadline to apply for such a loan under subparagraph (G).
‘(G) APPLICATION DEADLINE FOR LOANS UNDER THIS PARAGRAPH- A borrower may apply for loans under this paragraph during the 1-year period beginning on the date of enactment of the Student Loan Forgiveness Act of 2012. The Secretary shall not make a Federal Direct Consolidation Loan under this paragraph to any borrower who has not submitted an application for such a loan to the Secretary before the end of such period.
‘(H) AUTHORIZATION AND APPROPRIATION- There are authorized to be appropriated, and there are appropriated, such sums as may be necessary to carry out this paragraph.’.
(b) Conforming Amendment- Section 428C(a)(3)(B)(i)(V) of the Higher Education Act of 1965 (20 U.S.C. 1078-3(a)(3)(B)(i)(V)) is amended–
(1) by striking ‘or’ at the end of item (bb);
(2) by striking the period at the end of item (cc) and inserting ‘; or’; and
(3) by adding at the end the following:
‘(dd) for the purpose of consolidating an eligible private education loan under section 455(g)(2), whether such loan is consolidated alone, with other eligible private education loans, or with loans described in paragraph (4).’.
SEC. 7. OFFSET.
Funds appropriated or otherwise made available for a fiscal year to carry out this Act and the amendments made by this Act shall be made available from the funds available for Overseas Contingency Operations.
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Student Debt Relief Loan Refinancing Advertiser Disclosure
College Ave: College Ave Student Loans products are made available through either Firstrust Bank, member FDIC or M.Y. Safra Bank, FSB, member FDIC. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.
College Ave Refi Education loans are not currently available to residents of Maine.
1 – The 0.25% auto-pay interest rate reduction applies as long as the borrower or cosigner, if applicable, enrolls in auto-pay and authorizes our loan servicer to automatically deduct your monthly payments from a valid bank account via Automated Clearing House (“ACH”). The rate reduction applies for as long as the monthly payment amount is successfully deducted from the designated bank account and is suspended during periods of forbearance and certain deferments. Variable rates may increase after consummation.
2 – $5,000 is the minimum requirement to refinance. The maximum loan amount is $300,000 for those with medical, dental, pharmacy or veterinary doctorate degrees, and $150,000 for all other undergraduate or graduate degrees. Information advertised valid as of 04/26/2019. Variable interest rates may increase after consummation.
3 – This informational repayment example uses typical loan terms for a refi borrower with a Full Principal & Interest Repayment and a 10-year repayment term, has a $40,000 loan and a 5.5% Annual Percentage Rate (“APR”): 120 monthly payments of $434.11 while in the repayment period, for a total amount of payments of $52,092.61. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.
ELFI: Subject to credit approval. Terms and conditions apply. To qualify for refinancing or student loans consolidation through ELFI, you must have at least $15,000 in student loan debt and must have earned a bachelor’s degree or higher from an approved post-secondary institution.
LendKey: Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
CommonBond: Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate.
Splash Financial: Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval.com
Earnest: To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest’s fixed-rate loan rates range from 3.89% APR (with autopay) to 7.89% APR (with autopay). Variable rate loan rates range from 2.50% APR (with autopay) to 7.27% APR (with autopay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms of 10 years or less. For loan terms of 10 to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 0.26% and 5.03% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of April 23, 2019 and are subject to change based on market conditions and borrower eligibility.
Auto Pay Discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 04/23/19. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice.
Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 303 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, e-mail us at firstname.lastname@example.org, or call 888-601-2801 for more information on our student loan refinance product.