text: SECTION 1. SHORT TITLE.
  
      This Act may be cited as the ``Reigniting Opportunity for 
  Innovators Act''.
  
  SEC. 2. SMALL BUSINESS STARTUP FOUNDER AND EMPLOYEE LOAN DEFERMENT AND 
                CANCELLATION.
  
      (a) Deferment Without Interest Accrual for Small Business Startup 
  Founders and Employees.--Section 455(f) of the Higher Education Act of 
  1965 (20 U.S.C. 1087e(f)) is amended by adding at the end the 
  following:
              ``(5) Deferment without interest accrual for small business 
          startup founders and employees.--
                      ``(A) In general.--Subject to subparagraph (B), a 
                  qualifying small business startup borrower shall be 
                  eligible for a deferment, during which periodic 
                  installments of principal need not be paid and interest 
                  shall not accrue, during any period while the borrower 
                  is employed as a founder or full-time employee of a 
                  small business startup.
                      ``(B) Limitations.--A qualifying small business 
                  startup borrower shall not receive a deferment under 
                  this paragraph for any period--
                              ``(i) in excess of 3 years; or
                              ``(ii) that begins more than 5 years, or 
                          ends more than 8 years, after the date the 
                          small business startup was established (as 
                          determined by the small business development 
                          center that approved such borrower under 
                          section 21(o)(5) of the Small Business Act (15 
                          U.S.C. 648(o)(5))).
                      ``(C) Definitions.--In this paragraph--
                              ``(i) the terms `founder', `full-time 
                          employee', and `small business startup' have 
                          the meanings given the terms in subsection 
                          (r)(2); and
                              ``(ii) the term `qualifying small business 
                          startup borrower' means a borrower of a loan 
                          made under this part whose employment as a 
                          small business startup founder or full-time 
                          employee is approved by a small business 
                          development center under section 21(o)(5) of 
                          the Small Business Act (15 U.S.C. 
                          648(o)(5)).''.
      (b) Loan Cancellation.--Section 455 of the Higher Education Act of 
  1965 (20 U.S.C. 1087e) is amended by adding at the end the following:
      ``(r) Loan Cancellation for Founders and Employees of Small 
  Business Startups in Distressed Areas.--
              ``(1) Loan cancellation.--
                      ``(A) In general.--The Secretary shall cancel the 
                  balance of interest and principal due, subject to 
                  subparagraph (B), on any eligible Federal Direct Loan 
                  not in default for a borrower who--
                              ``(i) at the time of such cancellation, is 
                          employed as a founder or full-time employee of 
                          a small business startup in a distressed area 
                          who--
                                      ``(I) has been approved for loan 
                                  cancellation by a small business 
                                  development center under section 
                                  21(o)(6) of the Small Business Act (15 
                                  U.S.C. 648(o)(6)); and
                                      ``(II) began such employment during 
                                  the 5-year period beginning on the date 
                                  that the small business startup was 
                                  established (as determined by such 
                                  small business development center); and
                              ``(ii) during the time period for which the 
                          borrower has been approved by the small 
                          business development center, which in no case 
                          shall be more than 10 years after the date on 
                          which the small business startup was 
                          established, has made 24 monthly payments on 
                          the eligible Federal Direct Loan pursuant to 
                          any repayment plan under subsection (d)(1) or a 
                          combination of such plans while so employed.
                      ``(B) Loan cancellation maximum.--The Secretary 
                  shall cancel under this subsection not more than an 
                  aggregate of $20,000 of the loan obligation on the 
                  eligible Federal Direct Loans of a borrower.
                      ``(C) Timing requirements.--Each of the 24 monthly 
                  payments required under this subsection shall be made 
                  after the date of enactment of this subsection.
                      ``(D) Ineligibility for double benefits.--No 
                  borrower may, for the same service, receive a reduction 
                  of loan obligations under both this subsection and--
                              ``(i) subsection (m); or
                              ``(ii) section 428J, 428K, 428L, or 460.
              ``(2) Definitions.--In this subsection:
                      ``(A) Distressed area.--The term `distressed area' 
                  has the meaning given the term in section 21(o)(1) of 
                  the Small Business Act (15 U.S.C. 648(o)(1)).
                      ``(B) Eligible federal direct loan.--The term 
                  `eligible Federal Direct Loan' means a Federal Direct 
                  Stafford Loan, Federal Direct PLUS Loan, Federal Direct 
                  Unsubsidized Stafford Loan, or a Federal Direct 
                  Consolidation Loan.
                      ``(C) Founder; full-time employee.--The terms 
                  `founder' and `full-time employee' have the meanings 
                  given the terms in section 21(o)(1) of the Small 
                  Business Act (15 U.S.C. 648(o)(1)).
                      ``(D) Small business startup.--The term `small 
                  business startup' means a business that is certified by 
                  a small business development center under section 
                  21(o)(3) of the Small Business Act (15 U.S.C. 
                  648(o)(3)).''.
      (c) Conforming Amendments.--Title IV of the Higher Education Act of 
  1965 (20 U.S.C. 1070a et seq.) is further amended--
              (1) in section 428J(g)(2), by striking ``section 455(m)'' 
          and inserting ``subsection (m) or (r) of section 455'';
              (2) in section 428K(f)--
                      (A) by inserting ``subsection (m) or (r) of section 
                  455 or'' before ``section 428J''; and
                      (B) by striking ``455(m)'';
              (3) in section 428L(g), by striking ``455(m)'' and 
          inserting ``subsection (m) or (r) of section 455'';
              (4) in section 455(m)(4), by inserting ``subsection (r) 
          or'' before ``section 428J''; and
              (5) in section 460(g)(2)(B), by striking ``section 455(m)'' 
          and inserting ``subsection (m) or (r) of section 455''.
  
  SEC. 3. SMALL BUSINESS DEVELOPMENT CENTERS.
  
      Section 21 of the Small Business Act (15 U.S.C. 648) is amended--
              (1) in subsection (c)(3)--
                      (A) in subparagraph (S), by striking ``and'' at the 
                  end;
                      (B) in subparagraph (T), by striking the period at 
                  the end and inserting a semicolon; and
                      (C) by adding at the end the following:
              ``(U) certifying small business startups under subsection 
          (o)(3); and
              ``(V) approving loan deferment or cancellation under 
          paragraph (5) or (6) of subsection (o) for founders and full-
          time employees of certain small business startups.''; and
              (2) by adding at the end the following:
      ``(o) Deferment or Cancellation of Certain Loans.--
              ``(1) Definitions.--In this subsection--
                      ``(A) the term `distressed area' has the meaning 
                  given the term `low-income community' in section 45D(e) 
                  of the Internal Revenue Code of 1986;
                      ``(B) the term `eligible Federal Direct Loan' has 
                  the meaning given the term in section 455(r)(2) of the 
                  Higher Education Act of 1965;
                      ``(C) the terms `founder' and `full-time employee', 
                  with respect to a small business startup, have the 
                  meanings given the terms by the Administrator; and
                      ``(D) the term `small business startup' means a 
                  small business concern that, as of the date that the 
                  small business concern submits an application under 
                  paragraph (3), has been in existence for not more than 
                  3 years.
              ``(2) Role of small business development centers.--Any 
          small business development center may, for purposes of eligible 
          Federal Direct Loan deferment or cancellation under subsection 
          (f)(5) or (r) of section 455 of the Higher Education Act of 
          1965 (20 U.S.C. 1087e)--
                      ``(A) certify a small business startup under 
                  paragraph (3); and
                      ``(B) approve eligible Federal Direct Loan 
                  deferment or cancellation for a founder or full-time 
                  employee of a qualifying small business startup under 
                  paragraph (5) or (6).
              ``(3) Certification.--In order to be certified by a small 
          business development center, a small business startup shall 
          submit to the small business development center an application 
          that includes--
                      ``(A) a 5-year business plan for the small business 
                  startup;
                      ``(B) the number of employees that the small 
                  business startup intends to employ on an annual basis; 
                  and
                      ``(C) information that demonstrates that the small 
                  business startup has the potential for success.
              ``(4) Publication of distressed areas.--The Administrator 
          shall identify and make publicly available on the website of 
          the Administration a list of distressed areas.
              ``(5) Loan deferment for founders and full-time employees 
          of a small business startup.--
                      ``(A) Application.--In order to be approved by a 
                  small business development center for eligible Federal 
                  Direct Loan deferment under subsection (f)(5) of 
                  section 455 of the Higher Education Act of 1965 (20 
                  U.S.C. 1087e), a borrower of an eligible Federal Direct 
                  Loan shall submit to the small business development 
                  center an application that includes such information as 
                  the Administrator may require.
                      ``(B) Requirements.--A small business development 
                  center shall approve a borrower who applies under 
                  subparagraph (A) for eligible Federal Direct Loan 
                  deferment if the small business development center 
                  determines that--
                              ``(i) the borrower is, as of the date of 
                          the application, a founder or full-time 
                          employee of a small business startup that is 
                          certified under paragraph (3); and
                              ``(ii) the employment of the borrower with 
                          the small business startup began during the 5-
                          year period beginning on the date on which the 
                          small business startup was established.
              ``(6) Loan cancellation for founders and full-time 
          employees of a small business startup in a distressed area.--
                      ``(A) Application.--In order to be approved by a 
                  small business development center for eligible Federal 
                  Direct Loan cancellation under subsection (r) of 
                  section 455 of the Higher Education Act of 1965 (20 
                  U.S.C. 1087e), a borrower of an eligible Federal Direct 
                  Loan shall submit to the small business development 
                  center an application that includes such information as 
                  the Administrator may require, including an 
                  identification of the time period during which the 
                  borrower has made 24 monthly payments on the eligible 
                  Federal Direct Loan, as required under subparagraphs 
                  (A)(ii) and (C) of paragraph (1) of such subsection 
                  (r).
                      ``(B) Requirements.--A small business development 
                  center shall approve a borrower who applies under 
                  subparagraph (A) for eligible Federal Direct Loan 
                  cancellation if the small business development center 
                  determines that the borrower--
                              ``(i) as of the date of the application, is 
                          employed as a founder or full-time employee of 
                          a small business startup that--
                                      ``(I) is located in an area that 
                                  was a distressed area when the small 
                                  business startup was established;
                                      ``(II) is certified under paragraph 
                                  (3) by the small business development 
                                  center; and
                                      ``(III) as of the date that the 
                                  small business development center 
                                  approves the borrower under this 
                                  paragraph, has been operating 
                                  continuously for not less than 5 years 
                                  and not more than 10 years; and
                              ``(ii) was employed as a founder or a full-
                          time employee by a small business startup 
                          described in clause (i) during a period 
                          beginning not more than 5 years after the date 
                          on which the small business startup was 
                          established, as identified by the borrower 
                          under subparagraph (A).''.
target: Reigniting Opportunity for Innovators Act This bill amends title IV (Student Assistance) of the Higher Education Act of 1965 to make qualified founders and full-time employees of small business start-ups eligible for deferring for up to three years their loans under the federal Direct Loan program. If the start-up is located in an economically distressed area, qualified founders and employees are also eligible for loan cancellation of up to $20,000 under that program.
feat_title: Reigniting Opportunity for Innovators Act