[Congressional Record Volume 163, Number 195 (Thursday, November 30, 2017)]
[Senate]
[Pages S7638-S7640]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SA 1799. Ms. WARREN submitted an amendment intended to be proposed to
amendment SA 1618 proposed by Mr. McConnell (for Mr. Hatch (for himself
and Ms. Murkowski)) to the bill H.R. 1, to provide for reconciliation
pursuant to titles II and V of the concurrent resolution on the budget
for fiscal year 2018; which was ordered to lie on the table; as
follows:
At the end of title I, insert the following:
Subtitle __--Student Loan Refinancing
SEC. __01. SHORT TITLE.
This subtitle may be cited as the ``Bank on Students Loan
Refinancing Act of 2017''.
SEC. __02. REPEAL OF INCREASED ESTATE AND GIFT TAX EXEMPTION.
Section 11061 of this Act is repealed and the Internal
Revenue Code of 1986 shall be applied as if such section, and
the amendments made thereby, had never taken effect.
SEC. __03. 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 Bank on Students Loan
Refinancing 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 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
consolidation loan was received, before July 1, 2017, 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.
``(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 section that was--
``(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 rate provided under
subsection (c).
``(c) Interest Rates.--
``(1) In general.--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--
``(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 for
Federal Direct Stafford Loans and Federal Direct Unsubsidized
Stafford Loans issued to undergraduate students for the 12-
month period beginning on July 1, 2016, and ending on June
30, 2017;
``(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
for Federal Direct Unsubsidized Stafford Loans issued to
graduate or professional students for the 12-month period
beginning on July 1, 2016, and ending on June 30, 2017;
``(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 for Federal Direct PLUS Loans for the 12-month
period beginning on July 1, 2016, and ending on June 30,
2017; 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 rates for consolidation loans.--
``(A) Method of calculation.--In order to determine the
interest rate for any refinanced 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 refinanced 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 lesser of--
``(I) the rate for Federal Direct Stafford Loans and
Federal Direct Unsubsidized Stafford Loans issued to
undergraduate students for the 12-month period beginning on
July 1, 2016, and ending on June 30, 2017; or
``(II) the original interest rate of the component 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 lesser of--
``(I) the rate for Federal Direct Unsubsidized Stafford
Loans issued to graduate or professional students for the 12-
month period beginning on July 1, 2016, and ending on June
30, 2017; or
``(II) the original interest rate of the component loan.
``(iii) The interest rate for any loan under section 428B
or Federal Direct PLUS Loan shall be a rate equal to the
lesser of--
``(I) the rate for Federal Direct PLUS Loans for the 12-
month period beginning on July 1, 2016, and ending on June
30, 2017; or
``(II) the original interest rate of the component 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)
[[Page S7639]]
through (iv) shall be the interest rate on the original
component loan.
``(3) Fixed rate.--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.
``(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 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).
``(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, 2017; 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 Bank on Students Loan
Refinancing 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.
``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(a) of the Truth in Lending Act (15
U.S.C. 1650(a)), that--
``(A) was disbursed to the borrower before July 1, 2017;
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,
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(a) of the Truth in Lending Act (15 U.S.C. 1650(a)).
``(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 described in
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
who has an eligible private education loan, 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.
``(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 refinanced
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) Borrower eligibility.--Not later than 180 days after
the date of enactment of the Bank on Students Loan
Refinancing Act of 2017, the Secretary, in consultation with
the Secretary of the Treasury and the Director of the Bureau
of Consumer Financial Protection, shall establish eligibility
requirements--
``(A) 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;
``(B) to ensure eligibility only for borrowers in good
standing;
``(C) to minimize inequities between Federal Direct
Refinanced Private Loans and other Federal student loans;
``(D) to preclude windfall profits for private educational
lenders; and
``(E) to ensure full access to the program authorized in
this subsection for borrowers with private loans who
otherwise meet the criteria established in accordance with
subparagraphs (A) and (B).
``(c) Interest Rate.--
``(1) In general.--The interest rate for a Federal Direct
Refinanced Private Loan is--
``(A) in the case of a Federal Direct Refinanced Private
Loan for a private education loan originally issued for
undergraduate postsecondary educational expenses, a rate
equal to the rate for Federal Direct Stafford Loans and
Federal Direct Unsubsidized Stafford Loans issued to
undergraduate students for the 12-month period beginning on
July 1, 2016, and ending on June 30, 2017; and
``(B) in the case of a Federal Direct Refinanced Private
Loan for a private education loan originally issued for
graduate or professional degree postsecondary educational
expenses, a rate equal to the rate for Federal Direct
Unsubsidized Stafford Loans issued to graduate or
professional students for the 12-month period beginning on
July 1, 2016, and ending on June 30, 2017.
``(2) Combined undergraduate and graduate study loans.--If
a Federal Direct Refinanced Private Loan is for a private
education loan originally issued for both undergraduate and
graduate or professional postsecondary educational expenses,
the interest rate shall be a rate equal to the rate for
Federal Direct PLUS Loans for the 12-month period beginning
on July 1, 2016, and ending on June 30, 2017.
``(3) 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) Private Educational Lender Reporting Requirement.--
``(1) Reporting required.--Not later than 180 days after
the date of enactment of the Bank on Students Loan
Refinancing Act of 2017, the Secretary, in consultation with
the Secretary of the Treasury and the Director of the Bureau
of Consumer Financial Protection, shall establish a
requirement that private educational lenders report the data
described in paragraph (2) to the Secretary, to Congress, to
the Secretary of the Treasury, and to the Director of the
Bureau of Consumer Financial Protection, in order to allow
for an assessment of the private education loan market.
``(2) Contents of reporting.--The data that private
educational lenders shall report in accordance with paragraph
(1) shall include each of the following about private
education loans (as defined in section 140(a) of the Truth in
Lending Act (15 U.S.C. 1650(a))):
``(A) The total amount of private education loan debt the
lender holds.
``(B) The total number of private education loan borrowers
the lender serves.
``(C) The average interest rate on the outstanding private
education loan debt held by the lender.
``(D) The proportion of private education loan borrowers
who are in default on a loan held by the lender.
``(E) The proportion of the outstanding private education
loan volume held by the lender that is in default.
``(F) The proportions of outstanding private education loan
borrowers who are 30, 60, and 90 days delinquent.
``(G) The proportions of outstanding private education loan
volume that is 30, 60, and 90 days delinquent.
``(g) Notification to Borrowers.--The Secretary, in
coordination with the Secretary of the Treasury and the
Director of the Bureau of Consumer Financial Protection,
shall undertake a campaign to alert borrowers about the
availability of private student loan refinancing under this
section.''.
[[Page S7640]]
(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 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.
``(B) Refinanced ffel loans.--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).''; and
(3) in paragraph (4)(A) (as redesignated by paragraph (1)),
by inserting ``(including any Federal Direct Stafford Loan,
Federal Direct PLUS Loan, Federal Direct Unsubsidized
Stafford Loan, or Federal Direct Consolidation Loan
refinanced 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 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.
``(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.''.
______