[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 1521 Introduced in Senate (IS)]

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115th CONGRESS
  1st Session
                                S. 1521

 To amend the Higher Education Act of 1965 to reduce the interest rate 
 caps for Federal Direct student loans, to eliminate loan origination 
     fees on all Federal Direct student loans, and to provide for 
    refinancing of Federal Direct student loans and Federal family 
                            education loans.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 10, 2017

  Mr. Nelson introduced the following bill; which was read twice and 
  referred to the Committee on Health, Education, Labor, and Pensions

_______________________________________________________________________

                                 A BILL


 
 To amend the Higher Education Act of 1965 to reduce the interest rate 
 caps for Federal Direct student loans, to eliminate loan origination 
     fees on all Federal Direct student loans, and to provide for 
    refinancing of Federal Direct student loans and Federal family 
                            education loans.

    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 Loan Relief Act of 2017''.

SEC. 2. REDUCTION OF INTEREST RATES FOR FEDERAL DIRECT STUDENT LOANS.

    Section 455(b) of the Higher Education Act of 1965 (20 U.S.C. 
1087e(b)) is amended by adding at the end the following:
            ``(11) Interest rate provisions for new loans on or after 
        july 1, 2018.--
                    ``(A) Rates for undergraduate fdsl and fdusl.--
                Notwithstanding the preceding paragraphs of this 
                subsection, for Federal Direct Stafford Loans and 
                Federal Direct Unsubsidized Stafford Loans issued to 
                undergraduate students, for which the first 
                disbursement is made on or after July 1, 2018, the 
                applicable rate of interest shall, for loans disbursed 
                during any 12-month period beginning on July 1 and 
                ending on June 30, be determined on the preceding June 
                1 and be equal to the lesser of--
                            ``(i) a rate equal to the high yield of the 
                        10-year Treasury note auctioned at the final 
                        auction held prior to such June 1 plus the 
                        Federal Reserve discount rate charged for 
                        primary credit on the date of such auction, as 
                        authorized under section 14(d) of the Federal 
                        Reserve Act (12 U.S.C. 357); or
                            ``(ii) 4 percent.
                    ``(B) Rates for graduate and professional fdusl.--
                Notwithstanding the preceding paragraphs of this 
                subsection, for Federal Direct Unsubsidized Stafford 
                Loans issued to graduate or professional students, for 
                which the first disbursement is made on or after July 
                1, 2018, the applicable rate of interest shall, for 
                loans disbursed during any 12-month period beginning on 
                July 1 and ending on June 30, be determined on the 
                preceding June 1 and be equal to the lesser of--
                            ``(i) a rate equal to the high yield of the 
                        10-year Treasury note auctioned at the final 
                        auction held prior to such June 1 plus the 
                        Federal Reserve discount rate charged for 
                        primary credit on the date of such auction, as 
                        authorized under section 14(d) of the Federal 
                        Reserve Act (12 U.S.C. 357); or
                            ``(ii) 5 percent.
                    ``(C) Plus loans.--Notwithstanding the preceding 
                paragraphs of this subsection, for Federal Direct PLUS 
                Loans, for which the first disbursement is made on or 
                after July 1, 2018, the applicable rate of interest 
                shall, for loans disbursed during any 12-month period 
                beginning on July 1 and ending on June 30, be 
                determined on the preceding June 1 and be equal to the 
                lesser of--
                            ``(i) a rate equal to the high yield of the 
                        10-year Treasury note auctioned at the final 
                        auction held prior to such June 1 plus the 
                        Federal Reserve discount rate charged for 
                        primary credit on the date of such auction, as 
                        authorized under section 14(d) of the Federal 
                        Reserve Act (12 U.S.C. 357); or
                            ``(ii) 6 percent.
                    ``(D) Consolidation loans.--Notwithstanding the 
                preceding paragraphs of this subsection, any Federal 
                Direct Consolidation Loan for which the application is 
                received on or after July 1, 2018, shall bear interest 
                at an annual rate on the unpaid principal balance of 
                the loan that is equal to the weighted average of the 
                interest rates on the loans consolidated, rounded to 
                the nearest higher one-eighth of one percent.
                    ``(E) Consultation.--The Secretary shall determine 
                the applicable rate of interest under this paragraph 
                after consultation with the Secretary of the Treasury 
                and the Chairman of the Board of Governors of the 
                Federal Reserve System and shall publish such rate in 
                the Federal Register as soon as practicable after the 
                date of determination.
                    ``(F) Rate.--The applicable rate of interest 
                determined under this paragraph for a Federal Direct 
                Stafford Loan, a Federal Direct Unsubsidized Stafford 
                Loan, or a Federal Direct PLUS Loan shall be fixed for 
                the period of the loan.''.

SEC. 3. ELIMINATION OF THE LOAN ORIGINATION FEES ON FEDERAL DIRECT 
              STUDENT LOANS.

    Section 455(c) of the Higher Education Act of 1965 (20 U.S.C. 
1087e(c)) is amended by adding at the end the following:
            ``(3) Sunset.--The Secretary may not charge the borrower of 
        a loan under this part for which the first disbursement is made 
        on or after July 1, 2018, an origination fee.''.

SEC. 4. REFINANCING FFEL AND FEDERAL DIRECT LOANS.

    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 Student Loan Relief Act of 2017, the Secretary 
shall establish a program under which the Secretary, upon the receipt 
of an application from a qualified borrower, makes 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) Refinancing Direct Loans.--
            ``(1) Federal direct loans.--Upon application of a 
        qualified borrower, the Secretary shall repay any Federal 
        Direct Stafford Loan, Federal Direct Unsubsidized Stafford 
        Loan, Federal Direct PLUS Loan, or Federal Direct Consolidation 
        Loan of the qualified borrower, for which the first 
        disbursement was made, or the application for the original 
        consolidation loan was received, before July 1, 2018, with the 
        proceeds of a new Federal Direct Stafford Loan, Federal Direct 
        Unsubsidized Stafford Loan, Federal Direct PLUS Loan, or 
        Federal Direct Consolidation Loan, respectively, issued to the 
        borrower in an amount equal to the sum of the unpaid principal, 
        accrued unpaid interest, and late charges of the original loan.
            ``(2) Refinancing 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, or the application for 
        the consolidation loan was received, before July 1, 2010, the 
        Secretary shall make 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 to the borrower in 
        accordance with the following:
                    ``(A) The Secretary shall pay the proceeds of such 
                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) A loan made under this paragraph that 
                covers--
                            ``(i) a loan originally made, insured, or 
                        guaranteed under section 428 shall be a Federal 
                        Direct Stafford Loan;
                            ``(ii) a loan originally made, insured, or 
                        guaranteed under section 428B shall be a 
                        Federal Direct PLUS Loan;
                            ``(iii) a loan originally made, insured, or 
                        guaranteed under section 428H shall be a 
                        Federal Direct Unsubsidized Stafford Loan; and
                            ``(iv) a loan originally made, insured, or 
                        guaranteed under section 428C shall be a 
                        Federal Direct Consolidation Loan.
                    ``(C) The interest rate for each loan made by the 
                Secretary under this paragraph shall be the applicable 
                rate provided under subsection (c).
    ``(c) Interest Rates.--
            ``(1) In general.--The interest rate for the new Federal 
        Direct Stafford Loans, Federal Direct Unsubsidized Stafford 
        Loans, Federal Direct PLUS Loans, and Federal Direct 
        Consolidation Loans, shall be a rate equal to--
                    ``(A) in any case where the original loan was a 
                loan under section 428 or 428H, a Federal Direct 
                Stafford loan, or a Federal Direct Unsubsidized 
                Stafford Loan, that was issued to an undergraduate 
                student, a rate equal to the rate determined under 
                section 455(b)(11)(A);
                    ``(B) in any case where the original loan was a 
                loan under section 428 or 428H, a Federal Direct 
                Stafford Loan, or a Federal Direct Unsubsidized 
                Stafford Loan, that was issued to a graduate or 
                professional student, a rate equal to the rate 
                determined under section 455(b)(11)(B);
                    ``(C) in any case where the original loan was a 
                loan under section 428B or a Federal Direct PLUS Loan, 
                a rate equal to the rate determined under section 
                455(b)(11)(C); and
                    ``(D) in any case where the original loan was a 
                loan under section 428C or a Federal Direct 
                Consolidation Loan, a rate calculated in accordance 
                with paragraph (2).
            ``(2) Interest rate for consolidation loans.--
                    ``(A) Method of calculation.--In order to determine 
                the interest rate for any new Federal Direct 
                Consolidation Loan under paragraph (1)(D), the 
                Secretary shall--
                            ``(i) determine each of the component loans 
                        that were originally consolidated in the loan 
                        under section 428C or the Federal Direct 
                        Consolidation Loan, and calculate the 
                        proportion of the unpaid principal balance of 
                        the loan under section 428C or the Federal 
                        Direct Consolidation Loan that each component 
                        loan represents;
                            ``(ii) use the proportions determined in 
                        accordance with clause (i) and the interest 
                        rate applicable for each component loan, as 
                        determined under subparagraph (B), to calculate 
                        the weighted average of the interest rates on 
                        the loans consolidated into the loan under 
                        section 428C or the Federal Direct 
                        Consolidation Loan; and
                            ``(iii) apply the weighted average 
                        calculated under clause (ii) as the interest 
                        rate for the new Federal Direct Consolidation 
                        Loan.
                    ``(B) Interest rates for component loans.--The 
                interest rates for the component loans of a loan made 
                under section 428C or a Federal Direct Consolidation 
                Loan shall be the following:
                            ``(i) The interest rate for any loan under 
                        section 428 or 428H, Federal Direct Stafford 
                        Loan, or Federal Direct Unsubsidized Stafford 
                        Loan issued to an undergraduate student shall 
                        be a rate equal to the rate for Federal Direct 
                        Stafford Loans and Federal Direct Unsubsidized 
                        Stafford Loans issued to undergraduate students 
                        that is applicable on the date of the 
                        application for the new Federal Direct 
                        Consolidation Loan.
                            ``(ii) The interest rate for any loan under 
                        section 428 or 428H, Federal Direct Stafford 
                        Loan, or Federal Direct Unsubsidized Stafford 
                        Loan issued to a graduate or professional 
                        student shall be a rate equal to the rate for 
                        Federal Direct Unsubsidized Stafford Loans 
                        issued to graduate or professional students 
                        that is applicable on the date of the 
                        application for the new Federal Direct 
                        Consolidation Loan.
                            ``(iii) The interest rate for any loan 
                        under section 428B or Federal Direct PLUS Loan 
                        shall be a rate equal to the rate for Federal 
                        Direct PLUS Loans that is applicable on the 
                        date of the application for the new Federal 
                        Direct Consolidation Loan.
                            ``(iv) The interest rate for any component 
                        loan that is a loan under section 428C or a 
                        Federal Direct Consolidation Loan shall be the 
                        weighted average of the interest rates that 
                        would apply under this subparagraph for each 
                        loan comprising the component consolidation 
                        loan.
                            ``(v) The interest rate for any eligible 
                        loan that is a component of a loan made under 
                        section 428C or a Federal Direct Consolidation 
                        Loan and is not described in clauses (i) 
                        through (iv) shall be the interest rate on the 
                        original component loan.
    ``(d) Terms and Conditions of Loans.--
            ``(1) In general.--A loan that is refinanced 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.--
        Refinancing a loan under this section shall not require the 
        extension of the duration of the repayment period of the loan, 
        and the borrower shall retain the right to use 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).
    ``(e) Definition of Qualified Borrower.--
            ``(1) In general.--For purposes of this section, 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 
                a consolidation loan was received, before July 1, 2018; 
                and
                    ``(B) who meets the eligibility requirements 
                established under paragraph (2).
            ``(2) Income requirements.--Not later than 180 days after 
        the date of enactment of the Student Loan Relief Act of 2017, 
        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) Notification to Borrowers.--The Secretary, in coordination 
with the Director of the Bureau of Consumer Financial Protection, shall 
undertake a campaign to alert borrowers of loans that are eligible for 
refinancing under this section that the borrowers are eligible to apply 
for such refinancing. The campaign shall include the following 
activities:
            ``(1) Developing consumer information materials about the 
        availability of Federal student loan refinancing.
            ``(2) Requiring servicers of loans under this part or part 
        B to provide such consumer information to borrowers in a manner 
        determined appropriate by the Secretary, in consultation with 
        the Director of the Bureau of Consumer Financial Protection.''.
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