Bank on Students Emergency Loan Refinancing Act - Amends title IV (Student Assistance) of the Higher Education Act of 1965 to direct the Secretary of Education to establish a program to refinance the unpaid principal, accrued unpaid interest, and late charges on: (1) the William D. Ford Federal Direct Loans (DLs) of qualified borrowers if the DLs were first disbursed or (in the case of Direct Consolidation Loans) applied for before July 1, 2013, and (2) the Federal Family Education Loans (FFEL) of qualified borrowers as DLs. (FFELs were not disbursed after June 30, 2010.)
Refinances the FFELs as Federal Direct Stafford, Unsubsidized Stafford, PLUS, or Consolidated Loans depending on the categorization of the FFEL as a Stafford, Unsubsidized Stafford, PLUS, or Consolidated Loan.
Sets the interest rate on the refinanced loans, other than the Federal Direct Consolidation Loans, at the rate for the 12 months beginning on July 1, 2013, applicable to the DL's categorization and, in the case of Stafford Loans, applicable to a loan issued to an undergraduate student or a loan issued to a graduate student.
Sets the interest on refinanced Consolidation Loans at the rate on Federal Direct PLUS Loans for the 12-month period beginning on July 1, 2013.
Fixes the interest rate on such loans for the period of such loans.
Directs the Secretary to establish eligibility requirements based on a borrower's income or debt-to-income ratio that take into consideration providing access to refinancing for borrowers with the greatest financial need.
Imposes an administrative fee on the borrowers of such reissued loans that is based on the unpaid principal, and accrued unpaid interest and late charges, of their original loan.
Requires the Secretary to establish a program to refinance the unpaid principal, accrued unpaid interest, and late charges on private education loans as Federal Direct Refinanced Private Loans if the private education loans were first disbursed to qualified borrowers before July 1, 2013, and were for their own postsecondary educational expenses.
Sets the interest rate on Federal Direct Refinanced Private Loans at the rate applicable for the 12 months beginning on July 1, 2013, to: (1) Direct Stafford and Unsubsidized Stafford Loans issued to undergraduates if the private education loan was issued for undergraduate expenses, (2) Direct Unsubsidized Stafford Loans issued to graduate or professional students if the private education loan was issued for graduate or professional studies, or (3) Direct PLUS Loans if the private education loan was issued for undergraduate and graduate or professional studies.
Fixes the interest rate on such loans for the period of such loans.
Directs the Secretary to establish eligibility requirements based on a borrower's income or debt-to-income ratio that take into consideration providing access to refinancing for borrowers with the greatest financial need.
Requires qualified borrowers of such loans to undergo loan counseling before their private education loan is refinanced.
Imposes an origination fee on the borrowers of Federal Direct Refinanced Private Loans.
Amends the Internal Revenue Code to require an individual taxpayer whose adjusted gross income exceeds $1 million to pay a minimum tax rate of 30% of the excess of the taxpayer's adjusted gross income over the taxpayer's modified charitable contribution deduction for the taxable year (tentative fair share tax). Establishes the amount of such tax as the excess (if any) of the tentative fair share tax over the excess of: (1) the sum of the taxpayer's regular tax liability, the alternative minimum tax (AMT) amount, and the payroll tax for the taxable year; over (2) certain tax credits. Provides for a phase-in of such tax. Requires an inflation adjustment to the $1 million income threshold for taxable years beginning after 2015.
Requires the Secretary to terminate this Act's refinancing programs when the net cost of carrying out the programs is equal to the Secretary's estimate of the amount of additional revenue generated during the 10-year period beginning on the date of this Act's enactment due to the fair share tax.
[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[S. 2292 Introduced in Senate (IS)]
113th CONGRESS
2d Session
S. 2292
To amend the Higher Education Act of 1965 to provide for the
refinancing of certain Federal student loans, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
May 6, 2014
Ms. Warren (for herself, Mrs. Boxer, Mrs. Murray, Mr. Durbin, Mr. Reed,
Ms. Landrieu, Ms. Stabenow, Mr. Brown, Mr. Whitehouse, Mr. Udall of
Colorado, Mr. Udall of New Mexico, Mrs. Shaheen, Mr. Merkley, Mr.
Begich, Mrs. Gillibrand, Mr. Franken, Mr. Blumenthal, Mr. Schatz, Ms.
Baldwin, Mr. Murphy, Ms. Hirono, Ms. Heitkamp, Mr. Markey, Mr. Booker,
Mr. Sanders, Mr. Leahy, and Mr. Heinrich) introduced the following
bill; which was read twice and referred to the Committee on Finance
_______________________________________________________________________
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 ``Bank on Students Emergency Loan
Refinancing 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 Bank on Students Emergency Loan Refinancing 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
consolidation loan was received before July 1, 2013, 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, or the application for the consolidation loan was
received, 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 Rates.--
``(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--
``(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, 2013, and ending on June
30, 2014;
``(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, 2013, and ending on June
30, 2014;
``(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, 2013, and
ending on June 30, 2014; and
``(D) in any case where the original loan was a
loan under section 428C or a Federal Direct
Consolidation Loan, a rate equal to the rate for
Federal Direct PLUS Loans for the 12-month period
beginning on July 1, 2013, and ending on June 30, 2014.
``(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, and accrued unpaid interest and late
charges, of the original loan.
``(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, 2013;
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 Emergency Loan
Refinancing 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 Bank on Students
Emergency Loan Refinancing 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,
2013; 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 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
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 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 Bank on Students Emergency Loan
Refinancing 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 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, 2013, and ending on June
30, 2014; 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, 2013, and ending on
June 30, 2014.
``(2) Combined undergraduate and graduate study loans.--If
a Federal Direct Refinanced Private Loan is for a private
educational 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,
2013, and ending on June 30, 2014.
``(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) 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 Bank on Students
Emergency Loan Refinancing 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)),
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. 59B. Fair share tax.
``SEC. 59B. 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 2015, 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 2014'
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 redesignating subparagraphs (C) through (X)
as subparagraphs (D) through (Y), respectively, and by inserting after
subparagraph (B) the following new subparagraph:
``(C) section 59B (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, 2014.
SEC. 4. DEFICIT NEUTRAL IMPLEMENTATION OF STUDENT LOAN REFINANCING
PROGRAMS.
(a) Amount of Revenue.--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 Bank on Students Emergency Loan Refinancing
Act attributable to the amendments made by section 3 of the Bank on
Students Emergency Loan Refinancing 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.
<all>
Introduced in Senate
Sponsor introductory remarks on measure. (CR S2720-2721)
Read twice and referred to the Committee on Finance.
Committee on Banking, Housing, and Urban Affairs Subcommittee on Financial Institutions and Consumer Protection. Hearings held. With printed Hearing: S.Hrg. 113-445.
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