118 HR 4139 IH: Student Loan Refinancing Act U.S. House of Representatives 2023-06-14 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
I118th CONGRESS1st SessionH. R. 4139IN THE HOUSE OF REPRESENTATIVESJune 14, 2023Mr. Turner (for himself, Mr. Norcross, Mr. Fitzpatrick, and Mr. Doggett) introduced the following bill; which was referred to the Committee on Education and the WorkforceA BILLTo amend the Higher Education Act of 1965 to provide for the refinancing of certain Federal student loans, and for other purposes.
1.
Short title
This Act may be cited as the Student Loan Refinancing Act.
<enum>I</enum><header>Refinancing Programs</header> <section id="H71689F01B15A4D8B9531C13389AE3543"><enum>101.</enum><header>Refinancing programs</header> <subsection id="H85862EE3EE3943BFBA9895BD70669BA5"><enum>(a)</enum><header>Program authority</header><text>Section 451(a) of the Higher Education Act of 1965 (<external-xref legal-doc="usc" parsable-cite="usc/20/1087a">20 U.S.C. 1087a(a)</external-xref>) is amended—</text> <paragraph id="H29C1440AB3464CB88AB09FB718D81C10"><enum>(1)</enum><text>by striking <quote>and (2)</quote> and inserting <quote>(2)</quote>; and</text></paragraph> <paragraph commented="no" display-inline="no-display-inline" id="HCAAAA89AB63A413297C368F30E8EE049"><enum>(2)</enum><text>by inserting <quote>; and (3) to make loans under section 460A</quote> after <quote>section 459A</quote>.</text></paragraph></subsection> <subsection commented="no" display-inline="no-display-inline" id="H87305AC302AF4C218561053C468284F3"><enum>(b)</enum><header>Refinancing Program</header><text>Part D of title IV of the Higher Education Act of 1965 (<external-xref legal-doc="usc" parsable-cite="usc/20/1087a">20 U.S.C. 1087a et seq.</external-xref>) is amended by adding at the end the following:</text> <quoted-block display-inline="no-display-inline" id="HD671A8B0AB8241E8B86AB57C0CD33B69" style="OLC"> <section id="H6AEBE5E155014D7096A3A39D22401408"><enum>460A.</enum><header>Refinancing FFEL and Federal Direct Loans</header> <subsection id="H553D5A61C2B640A4AC8BF1949EC4A978"><enum>(a)</enum><header>In general</header><text display-inline="yes-display-inline">Beginning not later than 30 days after the date of enactment of the <short-title>Student Loan Refinancing Act</short-title>, the Secretary shall establish a program under which the Secretary, upon the receipt of an application from a 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).</text></subsection> <subsection id="H7F049C237FFE44EC8FE5DEA9E967C1A6"><enum>(b)</enum><header>Refinancing Direct Loans</header> <paragraph id="H9513714F28134D0D9684DB8D884BFCA1"><enum>(1)</enum><header>Federal Direct Loans</header><text>Upon application of a borrower, the Secretary shall repay a Federal Direct Stafford Loan, a Federal Direct Unsubsidized Stafford Loan, a Federal Direct PLUS Loan, or a Federal Direct Consolidation Loan of the borrower, with the proceeds of a refinanced Federal Direct Stafford Loan, a Federal Direct Unsubsidized Stafford Loan, a Federal Direct PLUS Loan, or a 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.</text></paragraph> <paragraph id="H44BE5533818B42569F02B4F0117444B2"><enum>(2)</enum><header>Refinancing FFEL program loans as refinanced Federal Direct Loans</header><text>Upon application of a borrower for any loan that was made, insured, or guaranteed under part B, 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:</text> <subparagraph id="H4F7E6A57C159486F9050A88D5413855A"><enum>(A)</enum><text>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.</text></subparagraph> <subparagraph id="HA89D36A51EB24158867F2B6EE5836805"><enum>(B)</enum><text display-inline="yes-display-inline">A loan made under this section that was originally a loan made, insured, or guaranteed—</text> <clause id="HC50F371A10014BE29F817EAE7584FC58"><enum>(i)</enum><text>under section 428 shall be a Federal Direct Stafford Loan;</text></clause> <clause id="H46FF2ED4AAFB4C099D76F20ED76B9315"><enum>(ii)</enum><text>under section 428B shall be a Federal Direct PLUS Loan;</text></clause> <clause id="H5AF120E8951D40EAA03D4E99CA537B6C"><enum>(iii)</enum><text>under section 428H shall be a Federal Direct Unsubsidized Stafford Loan; and</text></clause> <clause id="H65F0F9481E8D468895D36D6C143DD264"><enum>(iv)</enum><text>under section 428C shall be a Federal Direct Consolidation Loan.</text></clause></subparagraph> <subparagraph id="H5D568BD4B4EA4CF482D267D989CD7283"><enum>(C)</enum><text>The interest rate for each loan made by the Secretary under this paragraph shall be the rate provided under subsection (c).</text></subparagraph></paragraph></subsection> <subsection id="H93410AF4B2C247E49C500CE3CB2FE2A1"><enum>(c)</enum><header>Interest rates</header> <paragraph commented="no" display-inline="no-display-inline" id="HC666AC71CCB343C2A0BB5D8B61CC0076"><enum>(1)</enum><header display-inline="yes-display-inline">In general</header><text display-inline="yes-display-inline">The interest rate for the refinanced 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 following:</text> <subparagraph commented="no" display-inline="no-display-inline" id="HE2A92C4FFAF243D19081276DA9031AA8"><enum>(A)</enum><header>Federal Direct Stafford loans</header> <clause id="H0D80C5FAC798446C8489DB34A231FA11"><enum>(i)</enum><header>Rates for undergraduate FDSL</header><text>In the case of a refinanced Federal Direct Stafford loan for which the original loan was a loan under section 428 or a Federal Direct Stafford loan that was made to an undergraduate student, the rate of interest on such refinanced Federal Direct Stafford Loan shall be equal to the rate of interest for a Federal Direct Stafford loan made to an undergraduate student for which the first disbursement is made on the date on which the refinanced Federal Direct Stafford Loan is made under this section.</text></clause> <clause id="HA02936F23113477084BFF55067ACE205"><enum>(ii)</enum><header>Rates for graduate and professional FDSL</header><text>In the case of a refinanced Federal Direct Stafford loan for which the original loan was a loan under section 428 or a Federal Direct Stafford loan that was made to a graduate or professional student, the rate of interest on such refinanced Federal Direct Stafford Loan shall be equal to the rate of interest for a Federal Direct Stafford loan made to a graduate or professional student for which the first disbursement is made on the date on which the refinanced Federal Direct Stafford Loan is made under this section.</text></clause></subparagraph> <subparagraph commented="no" display-inline="no-display-inline" id="H0E58C05FB5DC421BA8ECC3787E8731DF"><enum>(B)</enum><header>Federal Direct Unsubsidized Stafford loans</header> <clause id="H5ADCBEDF53024A5DB4BFC9624E7C7587"><enum>(i)</enum><header>Rates for undergraduate FDUSL</header><text display-inline="yes-display-inline">In the case of a refinanced Federal Direct Unsubsidized Stafford loan for which the original loan was a loan under section 428H or a Federal Direct Unsubsidized Stafford Loan that was made to an undergraduate student, the rate of interest on such refinanced Federal Direct Unsubsidized Stafford Loan shall be equal to the rate of interest for a Federal Direct Unsubsidized Stafford loan made to an undergraduate student for which the first disbursement is made on the date on which the refinanced Federal Direct Unsubsidized Stafford Loan is made under this section.</text></clause> <clause id="HA24FAC198F464F939AC961FD51799C78"><enum>(ii)</enum><header>Rates for graduate and professional FDUSL</header><text display-inline="yes-display-inline">In the case of a refinanced Federal Direct Unsubsidized Stafford loan for which the original loan was a loan under section 428H or a Federal Direct Unsubsidized Stafford Loan that was made to an graduate student, the rate of interest on such refinanced Federal Direct Unsubsidized Stafford Loan shall be equal to the rate of interest for a Federal Direct Unsubsidized Stafford loan made to a graduate student for which the first disbursement is made on the date on which the refinanced Federal Direct Unsubsidized Stafford Loan is made under this section.</text></clause></subparagraph> <subparagraph commented="no" display-inline="no-display-inline" id="HF527A3AA31AD404782611280FB30914D"><enum>(C)</enum><header>Federal Direct PLUS loans</header><text display-inline="yes-display-inline">In the case of a refinanced Federal Direct PLUS Loan for which the original loan was a loan under section 428B or a Federal Direct PLUS Loan, the rate of interest on such refinanced Federal Direct PLUS loan shall be equal to the rate of interest for a Federal Direct PLUS loan for which the first disbursement is made on the date on which the refinanced Federal Direct PLUS loan is made under this section.</text></subparagraph> <subparagraph commented="no" display-inline="no-display-inline" id="H5EFD3B1C3F6F48C681F010F55BC7E705"><enum>(D)</enum><header>Consolidation loans</header><text>In the case of a refinanced Federal Direct Consolidation Loan for which the original loan was a loan under section 428C or a Federal Direct Consolidation Loan, the rate of interest of such refinanced Federal Direct Consolidation Loan shall be equal to the lower of a rate calculated in accordance with paragraph (2).</text></subparagraph></paragraph> <paragraph id="H820CBD397BA24FBD9D8453FC9F329646"><enum>(2)</enum><header>Interest Rates for Consolidation Loans</header> <subparagraph id="H05F411919E8446978DFD97C85C68A36B"><enum>(A)</enum><header>Method of calculation</header><text>In order to determine the interest rate for any refinanced Federal Direct Consolidation Loan under paragraph (1)(D), the Secretary shall—</text> <clause id="H59B3037016684FAD8FDD5F7454D0B650"><enum>(i)</enum><text>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;</text></clause> <clause id="HC8D386B482264FF4B1F8611217871B07"><enum>(ii)</enum><text>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</text></clause> <clause id="HF3EE1E7DBE264EEB85E4DD41CD7F6C9F"><enum>(iii)</enum><text>apply the weighted average calculated under clause (ii) as the interest rate for the refinanced Federal Direct Consolidation Loan.</text></clause></subparagraph> <subparagraph id="H0BFBAF533EA04E51B3F175D595584B1B" commented="no"><enum>(B)</enum><header>Interest rates for component loans</header><text>The interest rates for the component loans of a loan made under section 428C or a Federal Direct Consolidation Loan shall be the following:</text> <clause id="HD215CC476F70438DA6B19556A3609067" commented="no"><enum>(i)</enum><header>Federal Direct Stafford loans</header> <subclause id="H0BC9A6D73D274015A02CCECC022CBF79"><enum>(I)</enum><header>Undergraduate FDSL</header><text>The interest rate for any component loan that is a loan under section 428 or a Federal Direct Stafford Loan made to an undergraduate student shall be a rate equal to the lesser of—</text> <item id="HE18F27E5B9D445DEA00590D980EF9C54" commented="no"><enum>(aa)</enum><text display-inline="yes-display-inline">the rate of interest for a refinanced Federal Direct Stafford loan determined under paragraph (1)(A)(i) if such loan were made on the date on which the refinanced Federal Direct Consolidation Loan is made under this section; or</text></item> <item id="H94E3053CFDDD4D299D3D19E1AB091B48" commented="no"><enum>(bb)</enum><text>the original interest rate of the component loan.</text></item></subclause> <subclause id="HBE570AA1A7BC4940811011077D4B422C"><enum>(II)</enum><header>Graduate or professional FDSL</header><text>The interest rate for any component loan that is a loan under section 428 or a Federal Direct Stafford Loan made to a graduate or professional student shall be a rate equal to the lesser of—</text> <item id="H811466326FBA446B9ED0B07C4ECCBFB3" commented="no"><enum>(aa)</enum><text display-inline="yes-display-inline">the rate of interest for a refinanced Federal Direct Stafford loan determined under paragraph (1)(A)(ii) if such loan were made on the date on which the refinanced Federal Direct Consolidation Loan is made under this section; or</text></item> <item id="H465EF79F43D3419AB026146C5563830B" commented="no"><enum>(bb)</enum><text>the original interest rate of the component loan.</text></item></subclause></clause> <clause id="H4A4FF2EB2EE542BEBB441455C4B9E9A4" commented="no"><enum>(ii)</enum><header>Federal Direct Unsubsidized Stafford loans</header> <subclause id="H1CD22679922146828DB9787EFA0E1416"><enum>(I)</enum><header>Undergraduate FDUSL</header><text>The interest rate for any component loan that is a loan under section 428H or a Federal Direct Unsubsidized Stafford Loan made to an undergraduate student shall be a rate equal to the lesser of—</text> <item id="HF9ED2AEAE04F44CDBFAE43B7A773438B" commented="no"><enum>(aa)</enum><text display-inline="yes-display-inline">the rate of interest for a refinanced Federal Direct Unsubsidized Stafford loan determined under paragraph (1)(B)(i) if such loan were made on the date on which the refinanced Federal Direct Consolidation Loan is made under this section; or</text></item> <item id="HEA86188ECB5647FBAA386FEEADFE8E98" commented="no"><enum>(bb)</enum><text>the original interest rate of the component loan.</text></item></subclause> <subclause id="H89E9565149C14FB3A4EE8A618D3D9FBB"><enum>(II)</enum><header>Graduate FDUSL</header><text>The interest rate for any component loan that is a loan under section 428H or a Federal Direct Unsubsidized Stafford Loan made to a graduate or professional student shall be a rate equal to the lesser of—</text> <item id="HC5D15425290443D0B6A83AF4143FEB09" commented="no"><enum>(aa)</enum><text display-inline="yes-display-inline">the rate of interest for a refinanced Federal Direct Unsubsidized Stafford loan determined under paragraph (1)(B)(ii) if such loan were made on the date on which the refinanced Federal Direct Consolidation Loan is made under this section; or</text></item> <item id="HD853EA244F8947A9B6620219471A5478" commented="no"><enum>(bb)</enum><text>the original interest rate of the component loan.</text></item></subclause></clause> <clause id="H010F8701960E42D0A10276CBE0FDFFC8" commented="no"><enum>(iii)</enum><header>Federal Direct PLUS loans</header><text>The interest rate for any component loan that is a loan any loan under section 428B or Federal Direct PLUS Loan shall be a rate equal to the lesser of—</text> <subclause id="H525DC6A6DB584C85A9ACE96BAD076DD8" commented="no"><enum>(I)</enum><text>the rate of interest for a refinanced Federal Direct PLUS loan determined under paragraph (1)(C) if such loan were made on the date on which the refinanced Federal Direct Consolidation Loan is made under this section; or</text></subclause> <subclause id="HC9A53CF45BFF4B10B36191D43E33449D" commented="no"><enum>(II)</enum><text>the original interest rate of the component loan.</text></subclause></clause> <clause id="H53225D95C8564D15A962E674720FC70D" commented="no"><enum>(iv)</enum><header>Federal Direct Consolidation Loan</header><text>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.</text></clause> <clause id="HCA0F617FFB0B465E98306E3E428CDA09" commented="no"><enum>(v)</enum><header>Other loans</header><text>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.</text></clause></subparagraph></paragraph> <paragraph id="HF0EDE8F61DE1426D8C9DAB4039227CF0"><enum>(3)</enum><header>Fixed Rate</header><text>The applicable rate of interest determined under paragraph (1) for a refinanced loan under this section shall be fixed for the period of the loan.</text></paragraph></subsection> <subsection id="H3CB5C4E3ED7E4D02BF7B962ADD3C1F67"><enum>(d)</enum><header>Terms and conditions of loans</header> <paragraph id="HED34D82637064C15B9B41DD550A92DF0"><enum>(1)</enum><header>In general</header><text>Except as otherwise provided in this section, a loan that is refinanced under this section shall have the same terms and conditions as the original loan, including any suspensions of payments or interest accrual under section 3513 of the Coronavirus Aid, Relief, and Economic Security Act (<external-xref legal-doc="usc" parsable-cite="usc/20/1001">20 U.S.C. 1001</external-xref> note), or any extensions of such suspensions.</text></paragraph> <paragraph id="H2A32DB87F2C64B61B710CF5B20C909ED"><enum>(2)</enum><header>No automatic extension of repayment period</header><text>Refinancing 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). </text></paragraph> <paragraph id="HC1548EE3B7AB4441AC28006B887C4A09"><enum>(3)</enum><header>Limit on refinancing</header><text display-inline="yes-display-inline">A loan made, insured, or guaranteed under this title may not be refinanced under this section more than twice during a 10-year period.</text></paragraph></subsection> <subsection commented="no" display-inline="no-display-inline" id="H5D98A97E095C4E35B8106898488D668F"><enum>(e)</enum><header>Notification to borrowers</header><text>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:</text> <paragraph commented="no" display-inline="no-display-inline" id="HB2C1DA8DA8694108959E35B845AF493F"><enum>(1)</enum><text>Developing consumer information materials about the availability of Federal student loan refinancing.</text></paragraph> <paragraph commented="no" display-inline="no-display-inline" id="H58D79C52EB1E470890D673E955485D0B"><enum>(2)</enum><text>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. </text></paragraph></subsection></section><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection commented="no" display-inline="no-display-inline" id="H22F137B30B00413A8EA3572924D070ED"><enum>(c)</enum><header>Amendments to public service repayment plan provisions</header><text>Section 455(m) of the Higher Education Act of 1965 (<external-xref legal-doc="usc" parsable-cite="usc/20/1087e">20 U.S.C. 1087e(m)</external-xref>) is amended—</text> <paragraph commented="no" display-inline="no-display-inline" id="HBD7882DE64C143AEBCA14AB7EE1E2AC2"><enum>(1)</enum><text>by redesignating paragraphs (3) and (4) as paragraphs (4) and (5), respectively;</text></paragraph> <paragraph commented="no" display-inline="no-display-inline" id="H79B9B8C495B84DE2868F4CABA81F0D64"><enum>(2)</enum><text>by inserting after paragraph (2) the following:</text> <quoted-block display-inline="no-display-inline" id="H76A77F538B2B4373B5DF305E00E559A1" style="OLC"> <paragraph id="H15ABBB73BDA24275AF4080FC8DC643B8"><enum>(3)</enum><header>Special rules for section 460A loans</header> <subparagraph id="H1C535AB41A7F474A98DD7060AB4BB53E"><enum>(A)</enum><header>Refinanced Federal Direct loans</header><text>Notwithstanding paragraph (1), in determining the number of monthly payments that meet the requirements of such paragraph for an eligible Federal Direct Loan refinanced 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.</text></subparagraph> <subparagraph id="H396CAF7172604744B9D01264F24CFA2A"><enum>(B)</enum><header>Refinanced FFEL loans</header><text>In the case of an eligible Federal Direct Loan refinanced under section 460A that was originally a loan under part B, only monthly payments made after the date on which the loan was refinanced may be included for purposes of paragraph (1).</text></subparagraph></paragraph><after-quoted-block>; and</after-quoted-block></quoted-block></paragraph> <paragraph commented="no" display-inline="no-display-inline" id="H1BA3E6902A284CED86C41D4AFA8EFC2A"><enum>(3)</enum><text>in paragraph (4)(A) (as redesignated by paragraph (1)), by inserting <quote>(including any Federal Direct Stafford Loan, Federal Direct PLUS Loan, Federal Direct Unsubsidized Stafford Loan, or Federal Direct Consolidation Loan refinanced under section 460A)</quote> before the period at the end.</text></paragraph></subsection> <subsection commented="no" display-inline="no-display-inline" id="H0BAA8DCB830040D0B88B1F83D7552DE4"><enum>(d)</enum><header>Income-Contingent repayment</header><text display-inline="yes-display-inline">Section 455(e) of the Higher Education Act of 1965 (<external-xref legal-doc="usc" parsable-cite="usc/20/1087e">20 U.S.C. 1087e(e)</external-xref>) is amended by adding at the end the following: </text> <quoted-block style="OLC" id="H8302C1D64D8D456597D47AB8E62B18EA" display-inline="no-display-inline"> <paragraph id="H9347381260314968A24C4B4E09F3CE81"><enum>(9)</enum><header>Special rule for refinanced loans</header><text display-inline="yes-display-inline">In calculating the period of time during which a borrower of a loan that is refinanced under section 460A has made monthly payments for purposes of paragraph (7), the Secretary shall deem the period to include all monthly payments made for the original loan, and all monthly payments made for the refinanced loan, that otherwise meet the requirements of this subsection.</text></paragraph><after-quoted-block>.</after-quoted-block></quoted-block></subsection> <subsection id="H6270D913813248CAA4B673658E58F6AD"><enum>(e)</enum><header>Income-Based repayment</header><text>Section 493C of the Higher Education Act of 1965 (<external-xref legal-doc="usc" parsable-cite="usc/20/1098e">20 U.S.C. 1098e</external-xref>) is amended by adding at the end the following:</text> <quoted-block display-inline="no-display-inline" id="H5F2C1FD036A2491E827AD3632EBD7EC2" style="OLC"> <subsection id="H3E30FE8DB8F54DD99B077133B3FE7B4B"><enum>(f)</enum><header>Special rule for refinanced loans</header><text display-inline="yes-display-inline">In calculating the period of time during which a borrower of a loan that is refinanced 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 refinanced loan, that otherwise meet the requirements of this section.</text></subsection><after-quoted-block>.</after-quoted-block></quoted-block></subsection></section>