; and (ii) in the case of a subsidized loan, such period shall not include any period described in subparagraph (A) or any period during which the borrower is in deferment due to an economic hardship described in section 435(o); and ; and (D) in subparagraph (C) (as so redesignated by subparagraph (B))— (i) in clause (i), by striking subparagraph (A) and inserting subparagraphs (A) and (B) ; and (ii) in clause (ii), by inserting , subject to subparagraph (B), after unsubsidized loan ; and (2) by striking and at the end of paragraph (8); (3) by striking the period at the end of paragraph (9) and inserting ; and ; and (4) by adding at the end the following new paragraph: (10) the amount of the principal and interest on a borrower’s loans repaid or canceled under paragraph (7) shall not be included in the gross income of the borrower for purposes of the Internal Revenue Code of 1986. . 9. Excluding loans forgiven under certain repayment programs from gross income Section 455(e)(2) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(e)(2) ) is amended— (1) in the paragraph heading, by inserting and forgiveness after repayment ; and (2) by adding at the end the following: The amount of the principal and interest on a borrower’s loans forgiven pursuant to income contingent repayment shall not be included in the gross income of the borrower for purposes of the Internal Revenue Code of 1986. .