[Congressional Bills 105th Congress]
[From the U.S. Government Publishing Office]
[S. 1294 Introduced in Senate (IS)]







105th CONGRESS
  1st Session
                                S. 1294

To amend the Higher Education Act of 1965 to allow the consolidation of 
student loans under the Federal Family Loan Program and the Direct Loan 
                                Program.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            October 9, 1997

 Mr. Jeffords introduced the following bill; which was read twice and 
         referred to the Committee on Labor and Human Resources

_______________________________________________________________________

                                 A BILL


 
To amend the Higher Education Act of 1965 to allow the consolidation of 
student loans under the Federal Family Loan Program and the Direct Loan 
                                Program.

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

SECTION 1. SHORT TITLE; REFERENCE.

    (a) Short Title.--This Act may be cited as the ``Emergency Student 
Loan Consolidation Act of 1997''.
    (b) References.--Except as otherwise expressly provided, whenever 
in this Act an amendment or repeal is expressed in terms of an 
amendment to, or repeal of, a section or other provision, the reference 
shall be considered to be made to a section or other provision of the 
Higher Education Act of 1965 (20 U.S.C. 1001 et seq.).

SEC. 2. LOAN CONSOLIDATION PROVISIONS.

    (a) Definition of Loans Eligible for Consolidation.--Section 
428C(a)(4) (20 U.S.C. 1078-3(a)(4)) is amended--
            (1) by redesignating subparagraphs (C) and (D) as 
        subparagraphs (D) and (E), respectively; and
            (2) by inserting after subparagraph (B) the following new 
        subparagraph:
                    ``(C) made under part D of this title, except that 
                loans made under such part shall be eligible student 
                loans only for consolidation loans for which the 
                application is received by an eligible lender during 
                the period beginning on the date of enactment of the 
                Emergency Student Loan Consolidation Act of 1997 and 
                ending on October 1, 1998;''.
    (b) Terms of Consolidation Loans.--Section 428C(b)(4)(C)(ii) is 
amended--
            (1) in subclause (I), by inserting after ``consolidation 
        loan'' the following: ``for which the application is received 
        by an eligible lender before the date of enactment of the 
        Emergency Student Loan Consolidation Act of 1997, or on or 
        after October 1, 1998,'' ;
            (2) by striking ``or'' at the end of subclause (I);
            (3) by inserting ``or (II)'' before the semicolon at the 
        end of subclause (II);
            (4) by redesignating subclause (II) as subclause (III); and
            (5) by inserting after subclause (I) the following new 
        subclause:
                            ``(II) by the Secretary, in the case of a 
                        consolidation loan for which the application is 
                        received by an eligible lender on or after the 
                        date of enactment of the Emergency Student Loan 
                        Consolidation Act of 1997 and before October 1, 
                        1998, except that the Secretary shall pay such 
                        interest only on that portion of the loan that 
                        repays Federal Stafford Loans for which the 
                        student borrower received an interest subsidy 
                        under section 428 or Federal Direct Stafford 
                        Loans for which the borrower received an 
                        interest subsidy under section 455; or''.
    (c) Interest Rate.--Section 428C(c)(1) is amended by adding at the 
end the following new subparagraph:
            ``(D) A consolidation loan for which the application is 
        received by an eligible lender on or after the date of 
        enactment of the Emergency Student Loan Consolidation Act of 
        1997 and before October 1, 1998, shall bear interest at an 
        annual rate on the unpaid principal balance of the loan that is 
        equal to the rate specified in section 427A(f).''.
    (d) Amendments Effective for Pending Applicants.--The consolidation 
loans authorized by the amendments made by this section shall be 
available notwithstanding any pending application by a student for a 
consolidation loan under part D of title IV of the Higher Education Act 
of 1965, upon withdrawal of such application by the student at any time 
prior to receipt of such a consolidation loan.

SEC. 3. ADMINISTRATIVE EXPENSE REDUCTIONS.

    Section 458(a)(1) (20 U.S.C. 1087h(a)(1)) is amended by striking 
``$532,000,000'' and inserting ``$507,000,000''.

SEC. 4. TREATMENT OF TAX BENEFITS.

    (a) Family Contribution for Dependent Students.--
            (1) Parents' available income.--Section 475(c)(1) is 
        amended--
                    (A) by striking ``and'' at the end of subparagraph 
                (D);
                    (B) by striking the period at the end of 
                subparagraph (E) and inserting ``; and''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(F) the amount of any tax credit taken by the 
                parents under section 25A of the Internal Revenue Code 
                of 1986.''.
            (2) Student contribution from available income.--Section 
        475(g)(2) is amended--
                    (A) by striking ``and'' at the end of subparagraph 
                (C);
                    (B) by striking the period at the end of 
                subparagraph (D) and inserting ``; and''; and
                    (C) by inserting after subparagraph (D) the 
                following new subparagraph:
                    ``(E) the amount of any tax credit taken by the 
                student under section 25A of the Internal Revenue Code 
                of 1986.''.
    (b) Family Contribution for Independent Students Without Dependents 
Other Than a Spouse.--Section 476(b)(1)(A) (20 U.S.C. 1087pp(b)(1)(A)) 
is amended--
            (1) by striking ``and'' at the end of clause (iv); and
            (2) by inserting after clause (v) the following new clause:
                            ``(vi) the amount of any tax credit taken 
                        under section 25A of the Internal Revenue Code 
                        of 1986; and''.
    (c) Family Contribution for Independent Students With Dependents 
Other Than a Spouse.--Section 477(b)(1) (20 U.S.C. 1087qq(b)(1)) is 
amended--
            (1) by striking ``and'' at the end of subparagraph (D);
            (2) by striking the period at the end of subparagraph (E) 
        and inserting ``; and''; and
            (3) by adding at the end the following new subparagraph:
                    ``(F) the amount of any tax credit taken under 
                section 25A of the Internal Revenue Code of 1986.''.
    (d) Total Income.--Section 480(a)(2) (20 U.S.C. 1087vv(a)(2)) is 
amended--
            (1) by striking ``individual, and'' and inserting 
        ``individual,''; and
            (2) by inserting ``and no portion of any tax credit taken 
        under section 25A of the Internal Revenue Code of 1986,'' 
        before ``shall be included''.
    (e) Other Financial Assistance.--Section 480(j) is amended by 
adding at the end the following new paragraph:
    ``(4) Notwithstanding paragraph (1), a tax credit taken under 
section 25A of the Internal Revenue Code of 1986 shall not be treated 
as estimated financial assistance for purposes of section 471(3).''.
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