Short title

This Act may be cited as the

College Student Relief Act of 2007

Interest rate reductions

(a)

FFEL Interest Rates

(1)Section 427A(l) of the Higher Education Act of 1965 (20 U.S.C. 1077a(l)) is amended by adding at the end the following new paragraph:

(4)

Reduced rates for undergraduate subsidized loans

Notwithstanding subsection (h) and paragraph (1) of this subsection, with respect to any loan to an undergraduate student made, insured, or guaranteed under this part (other than a loan made pursuant to section 428B, 428C, or 428H) for which the first disbursement is made on or after July 1, 2006, and before January 1, 2012, the applicable rate of interest shall be as follows: (A)For a loan for which the first disbursement is made on or after July 1, 2006, and before July 1, 2007, 6.80 percent on the unpaid principal balance of the loan. (B)For a loan for which the first disbursement is made on or after July 1, 2007, and before July 1, 2008, 6.12 percent on the unpaid principal balance of the loan. (C)For a loan for which the first disbursement is made on or after July 1, 2008, and before July 1, 2009, 5.44 percent on the unpaid principal balance of the loan. (D)For a loan for which the first disbursement is made on or after July 1, 2009, and before July 1, 2010, 4.76 percent on the unpaid principal balance of the loan. (E)For a loan for which the first disbursement is made on or after July 1, 2010, and before July 1, 2011, 4.08 percent on the unpaid principal balance of the loan. (F)For a loan for which the first disbursement is made on or after July 1, 2011, and before January 1, 2012, 3.40 percent on the unpaid principal balance of the loan.

(2)

Special allowance cross reference

Section 438(b)(2)(I)(ii)(II) of such Act is amended by striking section 427A(l)(1) and inserting section 427A(l)(1) or (l)(4). (b)

Direct Loan interest rates

Section 455(b)(7) of the Higher Education Act of 1965 (20 U.S.C. 1087e(b)(7)) is amended by adding at the end the following new subparagraph:

(D)

Reduced rates for undergraduate FDSL

Notwithstanding the preceding paragraphs of this subsection, for Federal Direct Stafford Loans made to undergraduate students for which the first disbursement is made on or after July 1, 2006, and before January 1, 2012, the applicable rate of interest shall be as follows: (i)For a loan for which the first disbursement is made on or after July 1, 2006, and before July 1, 2007, 6.80 percent on the unpaid principal balance of the loan. (ii)For a loan for which the first disbursement is made on or after July 1, 2007, and before July 1, 2008, 6.12 percent on the unpaid principal balance of the loan. (iii)For a loan for which the first disbursement is made on or after July 1, 2008, and before July 1, 2009, 5.44 percent on the unpaid principal balance of the loan. (iv)For a loan for which the first disbursement is made on or after July 1, 2009, and before July 1, 2010, 4.76 percent on the unpaid principal balance of the loan. (v)For a loan for which the first disbursement is made on or after July 1, 2010, and before July 1, 2011, 4.08 percent on the unpaid principal balance of the loan. (vi)For a loan for which the first disbursement is made on or after July 1, 2011, and before January 1, 2012, 3.40 percent on the unpaid principal balance of the loan.

Reduction of lender insurance percentage

(a)

Amendment

Subparagraph (G) of section 428(b)(1) of the Higher Education Act of 1965 (20 U.S.C. 1078(b)(1)(G)) is amended to read as follows:

(G)insures 95 percent of the unpaid principal of loans insured under the program, except that— (i)such program shall insure 100 percent of the unpaid principal of loans made with funds advanced pursuant to section 428(j) or 439(q); and (ii)notwithstanding the preceding provisions of this subparagraph, such program shall insure 100 percent of the unpaid principal amount of exempt claims as defined in subsection (c)(1)(G);

(b)

Effective date

The amendment made by subsection (a) shall take effect with respect to loans made on or after July 1, 2007.

Guarantee agency collection retention

Clause (ii) of section 428(c)(6)(A) of the Higher Education Act of 1965 (20 U.S.C. 1078(c)(6)(A)(ii)) is amended to read as follows:

(ii)an amount equal to 24 percent of such payments for use in accordance with section 422B, except that— (I)beginning October 1, 2003 and ending September 30, 2007, this subparagraph shall be applied by substituting 23 percent for 24 percent; (II)beginning October 1, 2007 and ending September 30, 2008, this subparagraph shall be applied by substituting 20 percent for 24 percent; (III)beginning October 1, 2008 and ending September 30, 2010, this subparagraph shall be applied by substituting 18 percent for 24 percent; and (IV)beginning October 1, 2010, this subparagraph shall be applied by substituting for 24 percent a percentage determined in accordance with the regulations of the Secretary and equal to the average rate paid to collection agencies that have contracts with the Secretary.

Elimination of exceptional performer status for lenders

(a)

Elimination of Status

Part B of title IV of the Higher Education Act of 1965 (20 U.S.C. 1071 et seq.) is amended by striking section 428I (20 U.S.C. 1078–9). (b)

Conforming amendments

Part B of title IV of such Act is further amended— (1)in section 428(c)(1) (20 U.S.C. 1078(c)(1))— (A)by striking subparagraph (D); and (B)by redesignating subparagraphs (E) through (H) as subparagraphs (D) through (G), respectively; and (2)in section 438(b)(5) (20 U.S.C. 1087–1(b)(5)), by striking the matter following subparagraph (B). (c)

Effective date

The amendments made by subsections (a) and (b) shall take effect on July 1, 2007.

Reduction of lender special allowance payments

Section 438(b)(2)(I) of the Higher Education Act of 1965 (20 U.S.C. 1087–1(b)(2)(I)) is amended by adding at the end the following new clauses:

(vi)

Reduction for loans disbursed on or after July 1, 2007

With respect to a loan on which the applicable interest rate is determined under section 427A(l) and for which the first disbursement of principal is made on or after July 1, 2007, the special allowance payment computed pursuant to this subparagraph shall be computed— (I)by substituting 2.24 percent for 2.34 percent each place it appears in this subparagraph; (II)by substituting 1.64 percent for 1.74 percent in clause (ii); and (III)by substituting 2.54 percent for 2.64 percent each place it appears in clauses (iii) and (iv). (vii)

Smaller lender exemption

Clause (vi) shall not apply to the calculation of the special allowance payment with respect to any 3-month period for any holder of eligible loans that, together with its affiliated holders, is designated by the Secretary as a small lender. (viii)

Designation of small lenders

In determining which holders of eligible loans qualify for the exemption provided under clause (vii), the Secretary shall, using the most recently available data with respect to the total principal amount of eligible loans held by holders— (I)rank all holders of eligible loans in descending order by total principal amount of eligible loans held; (II)calculate the total principal amount of eligible loans held by all holders; and (III)identify the subset of consecutively ranked holders under subclause (I), starting with the lowest ranked holder, that together hold a total principal amount of such loans equal to 10 percent of the total amount calculated under subclause (II), but excluding the holder, if any, whose holdings when added cause the total holdings of the subset to both equal and then exceed such 10 percent of such total amount calculated; and (IV)designate as small lenders any holder identified as a member of the subset under subclause (III).

Increased loan fees from lenders

Paragraph (2) of section 438(d) of the Higher Education Act of 1965 (20 U.S.C. 1087–1(d)(2)) is amended to read as follows:

(2)

Amount of loan fees

The amount of the loan fee which shall be deducted under paragraph (1), but which may not be collected from the borrower, shall be equal to— (A)0.50 percent of the principal amount of the loan with respect to any loan under this part for which the first disbursement was made on or after October 1, 1993, and before July 1, 2007; and (B)1.0 percent of the principal amount of the loan with respect to any loan under this part for which the first disbursement was made on or after July 1, 2007.

Interest payment rebate fee

Section 428C(f)(2) of the Higher Education Act of 1965 (20 U.S.C. 1078–2(f)(2)) is amended— (1)by striking Special rule— and inserting Special rules—(A); and (2)by adding at the end the following new subparagraph:

(B)For consolidation loans based on applications received on or after July 1, 2007, if 90 percent or more of the total principal and accrued unpaid interest outstanding on the loans held, directly or indirectly, by any holder is comprised of principal and accrued unpaid interest owed on consolidation loans, the rebate described in paragraph (1) for such holder shall be equal to 1.30 percent of the principal plus accrued unpaid interest on such loans.