H.R. 10477

[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 10477 Introduced in House (IH)]

<DOC>

118th CONGRESS
2d Session
H. R. 10477

To amend the Higher Education Act of 1965 to improve the Public Service 
Loan Forgiveness program and reduce interest rates.

_______________________________________________________________________

IN THE HOUSE OF REPRESENTATIVES

December 18, 2024

Mr. Courtney (for himself, Mr. Sarbanes, and Mr. DeSaulnier) introduced 
the following bill; which was referred to the Committee on Education 
and the Workforce

_______________________________________________________________________

A BILL

To amend the Higher Education Act of 1965 to improve the Public Service 
Loan Forgiveness program and reduce interest rates.

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 ``Strengthening Efforts for Relief and 
Vital Incentives for Community Service and Engagement Act'' or the 
``SERVICE Act''.

SEC. 2. 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 subparagraph (A), by striking ``120 monthly 
payments'' and all that follows and inserting ``96 qualifying 
monthly payments on the eligible Federal Direct Loan after 
October 1, 2007; and''; and
(2) by amending subparagraph (B) to read as follows:
``(B) has been employed in a public service job 
during the period in which the borrower makes each of 
the 96 qualifying monthly payments.''.
(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), and 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; or
``(IV) payments under an income 
contingent repayment plan under 
subsection (d)(1)(D); 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 section 2(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. 3. 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 
2(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. 4. 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. 5. TREATMENT OF PERIODS OF DEFERMENT AND FORBEARANCE.

(a) In General.--Section 455(f) of the Higher Education Act of 1965 
(20 U.S.C. 1087e(f)) is amended--
(1) in the subsection heading, by inserting ``and 
Forbearance'' at the end;
(2) in paragraph (1)(B), by striking ``capitalized or''; 
and
(3) by adding at the end the following:
``(7) Forbearance.--With respect to a loan that is in a 
period of forbearance, interest on such loan may not be 
capitalized after the conclusion of such period.''.
(b) Application of Amendment.--The amendments made by subsection 
(a) shall apply to any period of deferment or forbearance in effect as 
of the date of the enactment of this Act, and any period of deferment 
or forbearance beginning on or after such date of enactment.

SEC. 6. 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. 7. 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 2(b) of this Act, is 
amended by striking ``section 428J, 428K, 428L, or 460'' and inserting 
``section 428K or 428L''.

SEC. 8. 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 the 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).
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