HR-10220-119
Referred to the Committee on Education and Workforce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
Sponsored by Suzanne Bonamici (D-OR)
What it does
This bill would require the Department of Education to use IRS tax return data to automatically determine income for federal student loan borrowers who become delinquent (31+ days late) or who are rehabilitating a defaulted loan, and to notify them of income-driven repayment options. If a delinquent borrower does not choose a new plan within 75 days, the Secretary would automatically enroll them in the income-driven repayment plan with the lowest monthly payment, with the borrower retaining the right to change plans. Borrowers could opt out of automatic IRS data sharing at any time and provide income documentation manually instead.
Who benefits
Delinquent federal student loan borrowers, especially those unaware of income-driven repayment options, who would be automatically moved to lower-cost plans and avoid default; borrowers rehabilitating defaulted loans who would get similar automatic plan matching; loan servicers who may see reduced default-related administrative burden; low-income borrowers eligible for $0 monthly payments who would avoid extra paperwork.
Who is hurt
Borrowers who prefer not to share tax return data with the Department of Education, though they retain an opt-out; taxpayers, who may bear costs if more borrowers shift to lower-payment income-driven plans that extend repayment timelines and increase loan forgiveness amounts; the Department of Education and IRS, which would bear new administrative and data-system costs to implement automatic income verification and enrollment.
Supporters argue
Supporters argue that many delinquent borrowers default not because they cannot afford any payment but because they are unaware of income-driven repayment plans or find enrollment paperwork burdensome, and that automatic use of already-filed tax data would prevent avoidable defaults that damage credit and can lead to wage garnishment. They contend this mirrors existing IRS data-sharing authority already used for income-driven repayment applications, simply making the safety net operate automatically rather than requiring borrowers to navigate it themselves.
Opponents argue
Opponents argue that automatically sharing tax return information and enrolling borrowers in specific repayment plans without their affirmative choice raises privacy concerns and could place borrowers into plans that are not actually best suited to their long-term financial situation. They contend that expanding IRS data disclosure for this purpose, even with an opt-out, sets a precedent for using tax information for non-tax administrative purposes and that the added compliance costs for the Department of Education and IRS have not been fully quantified.
Constitutional context
Congress has broad authority under the Spending Clause (Art. I, §8, cl. 1) to structure repayment terms for federal student loan programs it funds, and the IRS data-sharing provisions implicate taxpayer privacy protections under Internal Revenue Code §6103, though the bill preserves borrower consent through an opt-out mechanism rather than compelled disclosure.
Checks and balances
Congress directs the Secretary of Education to establish specific automatic-enrollment procedures, narrowing agency discretion, while borrowers retain a statutory right to opt out of data sharing or switch plans, providing an individual check on executive implementation.
Historical precedent
The bill builds on existing data-sharing authority under Higher Education Act section 494 and IRC section 6103(l)(13), which Congress already established via the FUTURE Act (2019) to allow IRS-Education Department income data transfers for income-driven repayment applications.