[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3863 Engrossed in House (EH)]


  2d Session

                               H. R. 3863

_______________________________________________________________________

                                 AN ACT

 To amend the Higher Education Act of 1965 to permit lenders under the 
 unsubsidized Federal Family Education Loan program to pay origination 
                      fees on behalf of borrowers.
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
104th CONGRESS
  2d Session
                                H. R. 3863

_______________________________________________________________________

                                 AN ACT


 
 To amend the Higher Education Act of 1965 to permit lenders under the 
 unsubsidized Federal Family Education Loan program to pay origination 
                      fees on behalf of borrowers.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Student Debt Reduction Act of 
1996''.

SEC. 2. UNSUBSIDIZED STUDENT LOANS.

    (a) Amendment.--Paragraph (1) of section 428H(f) of the Higher 
Education Act of 1965 (20 U.S.C. 1078-8(f)(1)) is amended to read as 
follows:
            ``(1) Amount of origination fee.--Except as provided in 
        paragraph (5), an origination fee shall be paid to the 
        Secretary with respect to each loan under this section in the 
        amount of 3.0 percent of the principal amount of the loan. Each 
        lender under this section is authorized to charge the borrower 
        for such origination fee, provided that the lender assesses the 
        same fee to all student borrowers. Any such fee charged to the 
        borrower shall be deducted proportionately from each 
        installment payment of the proceeds of the loan prior to 
        payment to the borrower.''.
    (b) Conforming Amendments.--Section 428H(f) of such Act is further 
amended--
            (1) in paragraph (3), by striking ``the origination fee'' 
        and inserting ``any origination fee that is charged to the 
        borrower'';
            (2) in paragraph (4), by striking ``origination fees 
        authorized to be collected from borrowers'' and inserting 
        ``origination fees required under paragraph (1)''; and
            (3) by adding at the end the following new paragraph:
            ``(6) Exception.--Notwithstanding paragraph (1), a lender 
        may assess a lesser origination fee for a borrower 
        demonstrating greater financial need as determined by such 
        borrower's adjusted gross family income.''.
    (c) Report on Competitive Allocation.--Within 60 days after the 
date of enactment of this Act, the Secretary of Education shall submit 
to each House of the Congress a legislative proposal that would permit 
the Secretary to allocate the right to make subsidized and unsubsidized 
student loans on the basis of competitive bidding. Such proposal shall 
include provision to ensure that any payments received from such 
competitive bidding are equally allocated to deficit reduction and to 
pro rata reduction of origination fees in both guaranteed and direct 
student loans.

SEC. 3. STUDY OF LOAN FEES.

    (a) Study Required.--The Secretary of Education shall conduct a 
statistical analysis of the subsidized and unsubsidized student loan 
programs under part B of title IV of the Higher Education Act of 1965 
to gather data on lenders' use of loan fees and to determine if there 
are any anomalies that would indicate any institutional, programmatic 
or socioeconomic discrimination in the assessing or waiving such fees.
    (b) Report.--The Secretary of Education shall submit to each House 
of the Congress a report on the study required by subsection (a) within 
2 years after the date of enactment of this Act.
    (c) Statistical Characteristics To Be Studied.--In conducting the 
study required by subsection (a), the Secretary of Education shall 
compare recipients of loans on the basis of income, residence location, 
type and location of higher education, program of instruction and type 
of lender.

            Passed the House of Representatives September 11, 1996.

            Attest:

                                                                 Clerk.