[Congressional Bills 114th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1131 Introduced in House (IH)]

114th CONGRESS
  1st Session
                                H. R. 1131

     To amend the Higher Education Act of 1965 to provide for the 
 refinancing of certain Federal student loans, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           February 26, 2015

Mr. McDermott introduced the following bill; which was referred to the 
   Committee on Education and the Workforce, and in addition to the 
  Committees on Ways and Means and the Judiciary, for a period to be 
subsequently determined by the Speaker, in each case for consideration 
  of such provisions as fall within the jurisdiction of the committee 
                               concerned

_______________________________________________________________________

                                 A BILL


 
     To amend the Higher Education Act of 1965 to provide for the 
 refinancing of certain Federal student loans, and for other purposes.

    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 ``Fairness in Student Loan Lending 
Act''.

SEC. 2. REFINANCING PROGRAMS.

    (a) Program Authority.--Section 451(a) of the Higher Education Act 
of 1965 (20 U.S.C. 1087a(a)) is amended--
            (1) by striking ``and (2)'' and inserting ``(2)''; and
            (2) by inserting ``; and (3) to make loans under section 
        460A and section 460B'' after ``section 459A''.
    (b) Refinancing Program.--Part D of title IV of the Higher 
Education Act of 1965 (20 U.S.C. 1087a et seq.) is amended by adding at 
the end the following:

``SEC. 460A. REFINANCING FFEL AND FEDERAL DIRECT LOANS.

    ``(a) In General.--Beginning not later than 180 days after the date 
of enactment of the Fairness in Student Loan Lending Act, the Secretary 
shall establish a program under which the Secretary, upon the receipt 
of an application from a qualified borrower, reissues the borrower's 
original loan under this part or part B as a loan under this part, in 
accordance with the provisions of this section, in order to permit the 
borrower to obtain the interest rate provided under subsection (c)).
    ``(b) Reissuing Loans.--
            ``(1) Federal direct loans.--Upon application of a 
        qualified borrower, the Secretary shall reissue a Federal 
        Direct Stafford Loan, a Federal Direct Unsubsidized Stafford 
        Loan, a Federal Direct PLUS Loan, or a Federal Direct 
        Consolidation Loan of the qualified borrower, for which the 
        first disbursement was made, or the application for the 
        reissuance of a loan under this section was received before 
        July 1, 2015, in an amount equal to the sum of--
                    ``(A) the unpaid principal, accrued unpaid 
                interest, and late charges of the original loan; and
                    ``(B) the administrative fee under subsection 
                (d)(3).
            ``(2) Discharging and reissuing ffel program loans as 
        refinanced federal direct loans.--Upon application of a 
        qualified borrower for any loan that was made, insured, or 
        guaranteed under part B and for which the first disbursement 
        was made before July 1, 2010, the Secretary shall reissue such 
        loan as a loan under this part, in an amount equal to the sum 
        of the unpaid principal, accrued unpaid interest, and late 
        charges of the original loan and the administrative fee under 
        subsection (d)(3), to the borrower in accordance with the 
        following:
                    ``(A) The Secretary shall pay the proceeds of such 
                reissued loan to the eligible lender of the loan made, 
                insured, or guaranteed under part B, in order to 
                discharge the borrower from any remaining obligation to 
                the lender with respect to the original loan.
                    ``(B) The Secretary shall reissue--
                            ``(i) a loan originally made, insured, or 
                        guaranteed under section 428 as a Federal 
                        Direct Stafford Loan;
                            ``(ii) a loan originally made, insured, or 
                        guaranteed under section 428B as a Federal 
                        Direct PLUS Loan;
                            ``(iii) a loan originally made, insured, or 
                        guaranteed under section 428H as a Federal 
                        Direct Unsubsidized Stafford Loan; and
                            ``(iv) a loan originally made, insured, or 
                        guaranteed under section 428C as a Federal 
                        Direct Consolidation Loan.
                    ``(C) The interest rate for each loan reissued 
                under this paragraph shall be the rate provided under 
                subsection (c)).
    ``(c) Interest Rate.--
            ``(1) In general.--The interest rate for the reissued 
        Federal Direct Stafford Loans, Federal Direct Unsubsidized 
        Stafford Loans, Federal Direct PLUS Loans, and Federal Direct 
        Consolidation Loans, shall be a rate equal to the high yield of 
        the 10-year Treasury note auctioned at the final auction held 
        prior to the first day of the month in which the application 
        for reissuance under this section is received, plus 1.0 
        percent.
            ``(2) Fixed rate.--The applicable rate of interest 
        determined under paragraph (1) for a reissued loan under this 
        section shall be fixed for the period of the loan.
    ``(d) Terms and Conditions of Loans.--
            ``(1) In general.--A loan that is reissued under this 
        section shall have the same terms and conditions as the 
        original loan, except as otherwise provided in this section.
            ``(2) No automatic extension of repayment period.--
        Reissuing a loan under this section shall not result in the 
        extension of the duration of the repayment period of the loan, 
        and the borrower shall retain the same repayment term that was 
        in effect on the original loan. Nothing in this paragraph shall 
        be construed to prevent a borrower from electing a different 
        repayment plan at any time in accordance with section 
        455(d)(3).
            ``(3) Administrative fee.--The Secretary shall charge the 
        borrower of a loan reissued under this section an 
        administrative fee of not more than 0.5 percent of the sum of 
        the unpaid principal, accrued unpaid interest, and late 
        charges, of the original loan.
    ``(e) Definition of Qualified Borrower.--
            ``(1) In general.--The term `qualified borrower' means a 
        borrower--
                    ``(A) of a loan under this part or part B for which 
                the first disbursement was made, or the application for 
                reissuance under this section was received, before July 
                1, 2015; and
                    ``(B) who meets the eligibility requirements based 
                on income or debt-to-income ratio established by the 
                Secretary.
            ``(2) Income requirements.--Not later than 180 days after 
        the date of enactment of the Fairness in Student Loan Lending 
        Act, the Secretary shall establish eligibility requirements 
        based on income or debt-to-income ratio that take into 
        consideration providing access to refinancing under this 
        section for borrowers with the greatest financial need.
    ``(f) Expiration of Authority.--The Secretary's authority to 
reissue loans under this section shall expire on the date that is 
determined in accordance with section 4 of the Fairness in Student Loan 
Lending Act.

``SEC. 460B. FEDERAL DIRECT REFINANCED PRIVATE LOAN PROGRAM.

    ``(a) Definitions.--In this section:
            ``(1) Eligible private education loan.--The term `eligible 
        private education loan' means a private education loan, as 
        defined in section 140 of the Truth in Lending Act (15 U.S.C. 
        1650), that--
                    ``(A) was disbursed to the borrower before July 1, 
                2015; and
                    ``(B) was for the borrower's own postsecondary 
                educational expenses for an eligible program at an 
                institution of higher education participating in the 
                loan program under this part or part B, as of the date 
                that the loan was disbursed.
            ``(2) Federal direct refinanced private loan.--The term 
        `Federal Direct Refinanced Private Loan' means a loan issued 
        under subsection (b)(1).
            ``(3) Private educational lender.--The term `private 
        educational lender' has the meaning given the term in section 
        140 of the Truth in Lending Act (15 U.S.C. 1650).
            ``(4) Qualified borrower.--The term `qualified borrower' 
        means an individual who--
                    ``(A) has an eligible private education loan;
                    ``(B) has been current on payments on the eligible 
                private education loan for the 6 months prior to the 
                date of the qualified borrower's application for 
                refinancing under this section, and is in good standing 
                on the loan at the time of such application;
                    ``(C) is not in default on the eligible private 
                education loan or on any loan made, insured, or 
                guaranteed under this part or part B or E; and
                    ``(D) meets the eligibility requirements based on 
                income or debt-to-income ratio established by the 
                Secretary under subsection (b)(2).
    ``(b) Program Authorized.--
            ``(1) In general.--The Secretary, in consultation with the 
        Secretary of the Treasury, shall carry out a program under 
        which the Secretary, upon application by a qualified borrower, 
        shall issue such borrower a loan under this part in accordance 
        with the following:
                    ``(A) The loan issued under this program shall be 
                in an amount equal to the sum of the unpaid principal, 
                accrued unpaid interest, and late charges of the 
                private education loan and the origination fee under 
                subsection (f).
                    ``(B) The Secretary shall pay the proceeds of the 
                loan issued under this program to the private 
                educational lender of the private education loan, in 
                order to discharge the qualified borrower from any 
                remaining obligation to the lender with respect to the 
                original loan.
                    ``(C) The Secretary shall require that the 
                qualified borrower undergo loan counseling that 
                provides all of the information and counseling required 
                under clauses (i) through (viii) of section 
                485(b)(1)(A) before the loan is reissued in accordance 
                with this section, and before the proceeds of such loan 
                are paid to the private educational lender.
                    ``(D) The Secretary shall issue the loan as a 
                Federal Direct Refinanced Private Loan, which shall 
                have the same terms, conditions, and benefits as a 
                Federal Direct Unsubsidized Stafford Loan, except as 
                otherwise provided in this section.
            ``(2) Income requirements.--Not later than 180 days after 
        the date of enactment of the Fairness in Student Loan Lending 
        Act, the Secretary shall establish eligibility requirements 
        based on income or debt-to-income ratio that take into 
        consideration providing access to refinancing under this 
        section for borrowers with the greatest financial need.
    ``(c) Interest Rate.--
            ``(1) In general.--The interest rate for a Federal Direct 
        Refinanced Private Loan shall be a rate equal to the high yield 
        of the 10-year Treasury note auctioned at the final auction 
        held prior to the first day of the month in which the 
        application for reissuance under this section is received, plus 
        1.0 percent.
            ``(2) Fixed rate.--The applicable rate of interest 
        determined under this subsection for a Federal Direct 
        Refinanced Private Loan shall be fixed for the period of the 
        loan.
    ``(d) No Inclusion in Aggregate Limits.--The amount of a Federal 
Direct Refinanced Private Loan, or a Federal Direct Consolidated Loan 
to the extent such loan was used to repay a Federal Direct Refinanced 
Private Loan, shall not be included in calculating a borrower's annual 
or aggregate loan limits under section 428 or 428H.
    ``(e) No Eligibility for Service-Related Repayment.--
Notwithstanding sections 428K(a)(2)(A), 428L(b)(2), 455(m)(3)(A), and 
460(b), a Federal Direct Refinanced Private Loan, or any Federal Direct 
Consolidation Loan to the extent such loan was used to repay a Federal 
Direct Refinanced Private Loan, shall not be eligible for any loan 
repayment or loan forgiveness program under section 428K, 428L, or 460 
or for the repayment plan for public service employees under section 
455(m).
    ``(f) Origination Fee.--The Secretary shall charge the borrower of 
a Federal Direct Refinanced Private Loan an origination fee that equals 
the origination fee charged for Federal Direct Unsubsidized Stafford 
Loans disbursed on the date upon which the Federal Direct Refinanced 
Private Loan is issued.
    ``(g) Expiration of Authority.--The Secretary's authority to 
reissue loans under this section shall expire on the date that is 
determined in accordance with section 4 of the Fairness in Student Loan 
Lending Act.''.
    (c) Amendments to Public Service Repayment Plan Provisions.--
Section 455(m) of the Higher Education Act of 1965 (20 U.S.C. 1087e(m)) 
is amended--
            (1) by redesignating paragraphs (3) and (4) as paragraphs 
        (4) and (5), respectively;
            (2) by inserting after paragraph (2) the following:
            ``(3) Special rules for section 460a loans.--
                    ``(A) Refinanced federal direct loans.--
                Notwithstanding paragraph (1), in determining the 
                number of monthly payments that meet the requirements 
                of such paragraph for an eligible Federal Direct Loan 
                reissued under section 460A that was originally a loan 
                under this part, the Secretary shall include all 
                monthly payments made on the original loan that meet 
                the requirements of such paragraph.
                    ``(B) Refinanced ffel loans.--In the case of an 
                eligible Federal Direct Loan reissued under section 
                460A that was originally a loan under part B, only 
                monthly payments made after the date on which the loan 
                was reissued may be included for purposes of paragraph 
                (1).''; and
            (3) in paragraph (4)(A) (as redesignated by paragraph (1) 
        of this subsection), by inserting ``(including any Federal 
        Direct Stafford Loan, Federal Direct PLUS Loan, Federal Direct 
        Unsubsidized Stafford Loan, or Federal Direct Consolidation 
        Loan reissued under section 460A)'' before the period at the 
        end.
    (d) Income-Based Repayment.--Section 493C of the Higher Education 
Act of 1965 (20 U.S.C. 1098e) is amended by adding at the end the 
following:
    ``(f)  Special Rule for Refinanced Loans.--
            ``(1) Refinanced federal direct and ffel loans.--In 
        calculating the period of time during which a borrower of a 
        loan that is reissued under section 460A has made monthly 
        payments for purposes of subsection (b)(7), the Secretary shall 
        deem the period to include all monthly payments made for the 
        original loan, and all monthly payments made for the reissued 
        loan, that otherwise meet the requirements of this section.
            ``(2) Federal direct refinanced private loans.--In 
        calculating the period of time during which a borrower of a 
        Federal Direct Refinanced Private Loan under section 460B has 
        made monthly payments for purposes of subsection (b)(7), the 
        Secretary shall include only payments--
                    ``(A) that are made after the date of the issuance 
                of the Federal Direct Refinanced Private Loan; and
                    ``(B) that otherwise meet the requirements of this 
                section.''.

SEC. 3. FAIR SHARE TAX ON HIGH-INCOME TAXPAYERS.

    (a) In General.--Subchapter A of chapter 1 of the Internal Revenue 
Code of 1986 is amended by adding at the end the following new part:

          ``PART VII--FAIR SHARE TAX ON HIGH-INCOME TAXPAYERS

``Sec. 59A. Fair share tax.

``SEC. 59A. FAIR SHARE TAX.

    ``(a) General Rule.--
            ``(1) Phase-in of tax.--In the case of any high-income 
        taxpayer, there is hereby imposed for a taxable year (in 
        addition to any other tax imposed by this subtitle) a tax equal 
        to the product of--
                    ``(A) the amount determined under paragraph (2), 
                and
                    ``(B) a fraction (not to exceed 1)--
                            ``(i) the numerator of which is the excess 
                        of--
                                    ``(I) the taxpayer's adjusted gross 
                                income, over
                                    ``(II) the dollar amount in effect 
                                under subsection (c)(1), and
                            ``(ii) the denominator of which is the 
                        dollar amount in effect under subsection 
                        (c)(1).
            ``(2) Amount of tax.--The amount of tax determined under 
        this paragraph is an amount equal to the excess (if any) of--
                    ``(A) the tentative fair share tax for the taxable 
                year, over
                    ``(B) the excess of--
                            ``(i) the sum of--
                                    ``(I) the regular tax liability (as 
                                defined in section 26(b)) for the 
                                taxable year,
                                    ``(II) the tax imposed by section 
                                55 for the taxable year, plus
                                    ``(III) the payroll tax for the 
                                taxable year, over
                            ``(ii) the credits allowable under part IV 
                        of subchapter A (other than sections 27(a), 31, 
                        and 34).
    ``(b) Tentative Fair Share Tax.--For purposes of this section--
            ``(1) In general.--The tentative fair share tax for the 
        taxable year is 30 percent of the excess of--
                    ``(A) the adjusted gross income of the taxpayer, 
                over
                    ``(B) the modified charitable contribution 
                deduction for the taxable year.
            ``(2) Modified charitable contribution deduction.--For 
        purposes of paragraph (1)--
                    ``(A) In general.--The modified charitable 
                contribution deduction for any taxable year is an 
                amount equal to the amount which bears the same ratio 
                to the deduction allowable under section 170 (section 
                642(c) in the case of a trust or estate) for such 
                taxable year as--
                            ``(i) the amount of itemized deductions 
                        allowable under the regular tax (as defined in 
                        section 55) for such taxable year, determined 
                        after the application of section 68, bears to
                            ``(ii) such amount, determined before the 
                        application of section 68.
                    ``(B) Taxpayer must itemize.--In the case of any 
                individual who does not elect to itemize deductions for 
                the taxable year, the modified charitable contribution 
                deduction shall be zero.
    ``(c) High-Income Taxpayer.--For purposes of this section--
            ``(1) In general.--The term `high-income taxpayer' means, 
        with respect to any taxable year, any taxpayer (other than a 
        corporation) with an adjusted gross income for such taxable 
        year in excess of $1,000,000 (50 percent of such amount in the 
        case of a married individual who files a separate return).
            ``(2) Inflation adjustment.--
                    ``(A) In general.--In the case of a taxable year 
                beginning after 2016, the $1,000,000 amount under 
                paragraph (1) shall be increased by an amount equal 
                to--
                            ``(i) such dollar amount, multiplied by
                            ``(ii) the cost-of-living adjustment 
                        determined under section 1(f)(3) for the 
                        calendar year in which the taxable year begins, 
                        determined by substituting `calendar year 2015' 
                        for `calendar year 1992' in subparagraph (B) 
                        thereof.
                    ``(B) Rounding.--If any amount as adjusted under 
                subparagraph (A) is not a multiple of $10,000, such 
                amount shall be rounded to the next lowest multiple of 
                $10,000.
    ``(d) Payroll Tax.--For purposes of this section, the payroll tax 
for any taxable year is an amount equal to the excess of--
            ``(1) the taxes imposed on the taxpayer under sections 
        1401, 1411, 3101, 3201, and 3211(a) (to the extent such taxes 
        are attributable to the rate of tax in effect under section 
        3101) with respect to such taxable year or wages or 
        compensation received during the taxable year, over
            ``(2) the deduction allowable under section 164(f) for such 
        taxable year.
    ``(e) Special Rule for Estates and Trusts.--For purposes of this 
section, in the case of an estate or trust, adjusted gross income shall 
be computed in the manner described in section 67(e).
    ``(f) Not Treated as Tax Imposed by This Chapter for Certain 
Purposes.--The tax imposed under this section shall not be treated as 
tax imposed by this chapter for purposes of determining the amount of 
any credit under this chapter (other than the credit allowed under 
section 27(a)) or for purposes of section 55.''.
    (b) Conforming Amendment.--Section 26(b)(2) of the Internal Revenue 
Code of 1986 is amended by inserting after subparagraph (A) the 
following new subparagraph:
                    ``(B) section 59A (relating to fair share tax),''.
    (c) Clerical Amendment.--The table of parts for subchapter A of 
chapter 1 of the Internal Revenue Code of 1986 is amended by adding at 
the end the following new item:

         ``Part VII--Fair Share Tax on High-Income Taxpayers''.

    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2015.

SEC. 4. DEFICIT NEUTRAL IMPLEMENTATION OF STUDENT LOAN REFINANCING 
              PROGRAMS.

    (a) Amount of Revenue.--Not later than 1 year after the date of 
enactment of the Fairness in Student Loan Lending Act, the Secretary of 
Education shall estimate the amount that is equal to the amount of the 
net increase in revenue received in the Treasury during the 10-year 
period beginning on the date of enactment of the Fairness in Student 
Loan Lending Act attributable to the amendments made by section 3 of 
the Fairness in Student Loan Lending Act.
    (b) Deficit-Neutral Termination of the Refinancing Program.--The 
Secretary of Education shall terminate the refinancing programs carried 
out under sections 460A and 460B of the Higher Education Act of 1965 on 
the date that the net cost of carrying out such refinancing programs is 
equal to the amount of additional revenue estimated under subsection 
(a).
    (c) Methodology.--When estimating cost and revenue under this 
section, the Secretary shall utilize the accounting methods and 
assumptions that are used by the Congressional Budget Office, as of the 
date of enactment of this Act, to make such estimations.

SEC. 5. UNDUE HARDSHIP EXCEPTIONS TO DISCHARGE.

    Section 523(a)(8) of title 11, United States Code, is amended by 
striking ``dependents, for'' and all that follows through the end of 
subparagraph (B) and inserting ``dependents, for an educational benefit 
overpayment or loan made, insured, or guaranteed by a governmental unit 
or made under any program funded in whole or in part by a governmental 
unit or an obligation to repay funds received from a governmental unit 
as an educational benefit, scholarship, or stipend;''.
                                 <all>