; and (2) by adding at the end the following new paragraph: (2) Any delinquent nontax debt owed by an individual to the Department of Education under a program administered by the Secretary of Education under title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1070 et seq.) shall not be subject to collection under this section through garnishment of disposable pay of the individual. . II Borrower’s Right to Reasonable and Flexible Repayment Options 201. Exclusion from gross income for discharge of student loan indebtedness (a) In general Section 108(f)(1) of the Internal Revenue Code of 1986 is amended by striking if such discharge and all that follows and inserting a period. (b) Student loans Section 108(f)(2) of such Code is amended by striking made by— and all that follows and inserting the following: . Such term includes indebtedness used to refinance indebtedness which qualifies as a student loan under the preceding sentence. . (c) Conforming amendments Section 108(f) of such Code is amended by striking paragraphs (3) and (4). (d) Effective date The amendments made by this section shall apply to discharges of indebtedness after the date of the enactment of this Act. 202. 529 plan distribution for student loan payments (a) In general Section 529(e)(3)(A) is amended by striking clause (iii) and inserting the following new clause: (iii) interest or principal paid with respect to a qualified education loan (as defined in section 221) with respect to a designated beneficiary. . (b) Conforming amendments (1) Section 529(e)(3)(A) of such Code is amended by striking the second sentence. (2) Section 72(t)(7)(A) of such Code is amended by inserting determined without regard to subparagraph (A)(iii) thereof after section 529(e)(3) . (3) Section 530(b)(2)(A)(i) of such Code is amended by inserting determined without regard to subparagraph (A)(iii) thereof after section 529(e)(3) . (c) Effective date The amendments made by this section shall apply to distributions made after the date of the enactment of this Act.