; (2) in subparagraph (A), in the matter before clause (i), by striking , if agreed upon by the borrower and the lender and all that follows through clause (ii)(IV) and inserting be paid monthly or quarterly, if agreed upon by the borrower and the lender and shall not be capitalized. ; (3) by striking subparagraph (B); and (4) by redesignating subparagraph (C) as subparagraph (B). (e) Income contingent repayment Section 455(e)(5) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(e)(5) ) is amended by striking the last sentence and inserting No interest may be capitalized on such loan on or after the date of the enactment of the Student Loan Refinancing and Recalculation Act , and the Secretary shall promulgate regulations with respect to the treatment of accrued interest that is not capitalized. . (f) Effect of deferment on principal and interest Section 455(f)(1)(B) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(f)(1)(B) ) is amended by striking capitalized or . (g) Income-Based repayment program Section 493C(b)(3) of the Higher Education Act of 1965 ( 20 U.S.C. 1098e(b)(3) ) is amended to read as follows: (3) on subsidized loans, any interest due and not paid under paragraph (2) shall be paid by the Secretary for a period of not more than 3 years after the date of the borrower’s election under paragraph (1), except that such period shall not include any period during which the borrower is in deferment due to an economic hardship described in section 435(o)