Drafting Of Congressional Bill

119 Congress — 1st Session
H. R. ____
IN THE HOUSE OF REPRESENTATIVES
July 4, 2025
Introduced by Mr. William D. Orona Sr., Owner of Zeno Tax Relief
Referred to the Committee on Education and Labor

A BILL

Title: Student Loan Relief and Equity Act (SLREA)
Purpose: To create a hardship-based federal program allowing student loan borrowers to settle their debt for less than they owe, modeled on the IRS Offer in Compromise program.

SHORT TITLE

This Act may be cited as the “Student Loan Relief and Equity Act” (SLREA).

FINDINGS AND PURPOSE

Findings:

1. The IRS offers financial relief to taxpayers through Offer in Compromise (OIC) programs.
2. No similar relief exists for federal student loan borrowers.
3. Many borrowers face default or long-term hardship despite trying to repay.
4. A system based on IRS practices can help borrowers and improve loan recovery.

Purpose:

To establish a federal student loan settlement program—OIC-SL—based on a borrower’s financial capacity.

DEFINITIONS

1. Federal student loan: Loans under Title IV of the Higher Education Act of 1965.
2. Borrower: Any individual with one or more federal student loans.
3. OIC-SL: An agreement allowing a borrower to settle student loan debt for less than the full amount due to financial hardship.

PROGRAM ESTABLISHMENT

(a) Creation:
The Department of Education must launch the OIC-SL program within 12 months of enactment.

(b) Eligibility Requirements:
Borrowers must:

1. Show serious financial hardship.
2. Submit financial documents (income, expenses, assets, household size).
3. Not be involved in fraudulent loan activities.

(c) Priority Cases:

1. Borrowers in default for over 12 months.
2. Borrowers in extended forbearance or deferment due to hardship.

SETTLEMENT TERMS

(a) Acceptance Criteria:
The Department may accept offers if:

1. Full repayment is unlikely.

2. The offer reflects the borrower’s ability to pay, following IRS guidelines.

(b) Payment Options:

1. Lump-sum settlement.

2. Payment plans of up to 24 months.

BORROWER RIGHTS

(a) Suspension of Collection:
All collection actions (wage garnishment, tax refund offsets) must stop once an OIC-SL application is submitted, until a final decision is made.
(b) Right to Appeal:
Applicants denied settlement can request an independent review.
(c) Non-Retaliation:
Borrowers who apply will not be penalized or denied future student aid if otherwise eligible.

ADMINISTRATION

(a) New Division:
A Student Debt Relief Division (SDRD) will be created within the Department of Education.
(b) SDRD Responsibilities:

1. Handle OIC-SL applications.
2. Make decisions within 90 days.
3. Publish an annual report on program results.

FUNDING & IMPLEMENTATION

• Funding: Congress will allocate necessary funds to run the program.
• Regulations: The Secretary must issue rules within 180 days of the Act’s passage.

EFFECTIVE DATE

The Act takes effect immediately upon enactment and must be fully operational within 12 months.