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Amends section 455(d)(1)(E) (codified at 20 U.S.C. 1087e(d)(1)(E)) by striking the identified text.
Replaces subsection (a) of 20 U.S.C. 1098e with a new definition provision (defining the term 'partial financial hardship' in relation to the annual amount due under the standard 10-year repayment plan and 15 percent of income over 150 percent of the poverty line). Also strikes specified text in subsection (b) (paragraphs (1), (6)(A), and (7)) and subsection (c) (paragraphs (1) and (2)(B)).
Changes how income-driven student loan payments are calculated for certain parent borrowers. It sets a new definition of “partial financial hardship” that uses the borrower’s (and spouse’s) adjusted gross income, family size poverty threshold, and the standard 10‑year payment amount. It updates Direct Loan and income-contingent repayment provisions to align with this new formula. The changes take effect upon enactment and apply to borrowers who have Parent PLUS loans (or consolidation loans that paid off Parent PLUS) and who are repaying under income-contingent or income-based repayment plans. This may alter who qualifies and how much they pay each month.
Amend Section 455 by striking text in subsection (d)(1)(D). The excerpt indicates a removal but does not show the exact words or punctuation to be removed.
Amend Section 455 by inserting specified text at the end of subsection (e)(1). The excerpt indicates an insertion but does not include the exact text to be inserted.
Amend Section 455(d)(1)(E) of the Higher Education Act (20 U.S.C. 1087e(d)(1)(E)) by striking specified text (text to be struck is not shown in this section).
Replace subsection (a) of Section 493C (20 U.S.C. 1098e) to define “partial financial hardship” for a borrower. Under the new definition: (1) compute the annual amount due on the borrower’s loans made, insured, or guaranteed under part B or D using the standard repayment plan under section 428(b)(9)(A)(i) or 455(d)(1)(A) based on a 10-year repayment period; (2) compute, at least annually, the borrower’s (and spouse’s, if applicable) adjusted gross income minus 150 percent of the poverty line for the borrower’s family size (as determined under section 673(2) of the Community Services Block Grant Act, 42 U.S.C. 9902(2)); (3) if the annual amount due (from step 1) exceeds 15 percent of the result from step 2, the borrower has a “partial financial hardship.”
Amend subsection (b) of Section 493C by striking specified text in paragraph (1), paragraph (6)(A), and paragraph (7). The exact text being removed is not shown in this section.
Primary impact falls on parents with Parent PLUS loans (and those who consolidated them) who are in, or will enter, IBR or ICR. A clearer, formula-based definition of partial financial hardship may newly qualify some borrowers, disqualify others, or change monthly payment amounts. Households could see budget relief or higher payments depending on income, family size, and the standard 10‑year amount. Loan servicers and the Department of Education will need to update systems, forms, and guidance to implement the new formula and communicate changes. Other federal student loan borrowers are generally unaffected unless they have the specified Parent PLUS or related consolidation loans.
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Referred to the House Committee on Education and Workforce.
Introduced February 27, 2025 by Maxine Waters · Last progress February 27, 2025
Referred to the House Committee on Education and Workforce.
Introduced in House