H.R. 10220: Streamlining Income-driven, Manageable Payments on Loans for Education Act

This bill would change how the Department of Education handles certain federal student loans when borrowers fall behind on payments or are trying to get a defaulted loan back on track.

What the bill would do

• It would require the Education Secretary to use tax return information, when available and properly authorized, to automatically determine a borrower’s income and family size for loan repayment purposes.
• Borrowers would be able to opt out of having tax information used and provide their own income information instead.
• Borrowers would also be allowed to update the tax information before it is used to calculate their repayment amount.

When a borrower is delinquent

If a borrower is at least 31 days late on a covered federal student loan, the Department would have to send a notice that explains:

• which of the borrower’s loans are delinquent and which are not,
• which repayment plans the borrower may qualify for,
• how to choose a plan,
• the estimated monthly payment under each available plan, and
• for income-driven plans, the income and family information used to estimate the payment.

If the borrower has been delinquent for 75 days and has not picked a new plan, the Department would automatically place the borrower into the income-driven repayment plan with the lowest monthly payment that the borrower qualifies for, or into the most favorable available income-driven plan if multiple plans have the same payment.

The borrower would still be allowed to switch to another eligible repayment plan.

When a borrower is rehabilitating a defaulted loan

For borrowers working to rehabilitate a defaulted federal student loan, the Department would have to send a notice after the borrower makes the sixth required rehabilitation payment. After the ninth required payment, it would automatically enroll the borrower in the income-driven plan with the lowest payment, if one is available, or the most favorable comparable plan.

Income information and tax data sharing

The bill would expand the rules that let the Education Department request certain tax return information from the IRS, but only for the purpose of carrying out these notification and automatic enrollment procedures.

Other repayment rule changes

• It would update some loan definitions so that the new procedures apply to a broader set of federal student loans, not just one specific category.
• It would make clear that borrowers can leave income-based repayment and move to another eligible repayment plan at any time.
• It would also change how some borrowers with no calculated income-based payment are treated, so they would not have to provide extra income documentation in certain cases and would have a $0 calculated monthly payment under certain repayment plans.

When the changes would take effect

• The automatic enrollment and related notification changes would generally begin on July 1, 2028, for the 2028–2029 award year and later.
• The change allowing borrowers to switch plans at any time would take effect immediately upon enactment.
• The tax-information disclosure changes would apply to disclosures made after enactment.

Relevant Companies

None found.