Zero-Percent Student Loan Refinancing Act
This bill establishes a temporary program through which the Department of Education (ED) must make interest-free refinancing loans to borrowers of federal student loans from August 1, 2021, through December 31, 2024.
The bill requires ED to automatically refinance Federal Direct Loans and notify each borrower of the refinancing.
Borrowers who have other types of eligible loans (i.e., Federal Family Education Loans, Federal Perkins Loans, and certain health profession and nursing loans) must apply for refinancing. ED and the Consumer Financial Protection Bureau must carry out a campaign to notify borrowers of these types of loans that they are eligible to apply for refinancing under the program.
[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3024 Introduced in House (IH)]
<DOC>
117th CONGRESS
1st Session
H. R. 3024
To establish a temporary program for the refinancing of certain Federal
student loans, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 7, 2021
Mr. Courtney (for himself, Mrs. Hayes, Mr. Larson of Connecticut, Mr.
Morelle, Ms. Norton, Mr. Perlmutter, Ms. Pingree, Mr. Sires, Ms.
Strickland, and Ms. Wilson of Florida) introduced the following bill;
which was referred to the Committee on Education and Labor
_______________________________________________________________________
A BILL
To establish a temporary program 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 ``Zero-Percent Student Loan
Refinancing Act''.
SEC. 2. TEMPORARY PROGRAM FOR REFINANCING STUDENT LOANS.
(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'' 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. TEMPORARY PROGRAM FOR THE REFINANCING OF FEDERAL DIRECT
LOANS AND OTHER FEDERAL STUDENT LOANS.
``(a) Definitions.--In this section:
``(1) Covered non-part d loan.--The term `covered non-part
D loan' means a loan--
``(A) 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;
``(B) made under part E; or
``(C) made under--
``(i) subpart II of part A of title VII of
the Public Health Service Act (42 U.S.C. 292q
et seq.); or
``(ii) part E of title VIII of the Public
Health Service Act (42 U.S.C. 297a et seq.).
``(2) Covered period.--The term `covered period' means the
period beginning on August 1, 2021, and ending at the close of
December 31, 2024.
``(3) Original loan.--The term `original loan', used with
respect to a refinanced loan issued under this section, means a
loan for which a borrower's liability is discharged by such
refinanced loan.
``(4) Qualified borrower.--The term `qualified borrower'
means a borrower of a loan under this part, or a covered non-
part D loan, for which the first disbursement was made, or the
application for a consolidation loan was received, before
January 1, 2025.
``(b) In General.--Beginning on August 1, 2021, the Secretary shall
carry out a program under which the Secretary makes interest-free
refinancing loans to qualified borrowers in accordance with this
section.
``(c) Refinancing Direct Loans.--
``(1) Federal direct loans.--
``(A) In general.--Beginning on August 1, 2021, the
Secretary shall cancel the obligation of a qualified
borrower to repay a Federal Direct Stafford Loan, a
Federal Direct Unsubsidized Stafford Loan, a Federal
Direct PLUS Loan, or a Federal Direct Consolidation
Loan for which the first disbursement was made, or the
application for the consolidation loan was received,
before January 1, 2025, and issue to such borrower in
accordance with this section a refinanced Federal
Direct Stafford Loan, a refinanced Federal Direct
Unsubsidized Stafford Loan, a refinanced Federal Direct
PLUS Loan, or a refinanced Federal Direct Consolidation
Loan, respectively, in an amount equal to the sum of
the unpaid principal, accrued unpaid interest, and late
charges of the original loan.
``(B) Information.--The Secretary shall notify each
qualified borrower of a loan refinanced under
subparagraph (A) regarding the refinancing and the
benefits the refinancing provides to the qualified
borrower.
``(2) Refinancing covered non-part d loans as refinanced
federal direct loans.--Upon application of a qualified borrower
of any covered non-part D loan, 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 holder of the covered non-part D loan, in
order to discharge the borrower from any remaining
obligation with respect to the original loan.
``(B) Any Federal student loan made under this
section the proceeds of which are used to discharge a
loan that was made, insured, or guaranteed--
``(i) under section 428 shall be a Federal
Direct Stafford Loan;
``(ii) under section 428B shall be a
Federal Direct PLUS Loan;
``(iii) under section 428H shall be a
Federal Direct Unsubsidized Stafford Loan; and
``(iv) under section 428C shall be a
Federal Direct Consolidation Loan.
``(C) Any Federal student loan made under this
section the proceeds of which are used to discharge a
loan described subparagraph (B) or (C) of subsection
(a)(1) shall be a Federal Direct Consolidation Loan.
``(3) Application deadline.--To be eligible to receive a
refinancing loan under paragraph (2) a qualified borrower shall
submit an application to the Secretary during the covered
period. A borrower who submits an application after the
expiration of the covered period shall not eligible to receive
a refinancing loan under such paragraph.
``(d) Terms and Conditions of Loans.--
``(1) In general.--A loan made under this section shall
have the same terms and conditions as the original loan, except
as otherwise provided in this section.
``(2) Interest rates.--No interest shall accrue on a loan
that is made under this section.
``(3) No automatic extension of repayment period.--A loan
made 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).
``(4) Special rule for refinanced perkins and health
loans.--Notwithstanding paragraph (1), in the case of a loan
that is made under this section as a Federal Direct
Consolidation Loan the proceeds of which are used to discharge
a loan described in subparagraph (B) or (C) of subsection
(a)(1)--
``(A) the refinanced Federal Direct Consolidation
Loan shall have the same terms and conditions as a
Federal Direct Consolidation Loan, except as otherwise
provided in this section; and
``(B) the Secretary may adjust such terms and
conditions as necessary to enable the borrower to
access loan forgiveness or other benefits available to
the borrower under the loan before refinancing under
this section, in any case where such benefits are more
generous than provided under a Federal Direct
Consolidation Loan.
``(5) Rule of construction.--Nothing in this section shall
be construed to prevent a borrower of a Federal student loan
described in subparagraph (B) or (C) of subsection (a)(1) from
consolidating such loans with other loans eligible for
consolidation under this section, or to require such a borrower
to consolidate such loans with other Federal student loans into
a single consolidation loan under this section.
``(e) 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 covered non-part D 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 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.''.
(c) Income-Contingent Repayment.--Section 455(e) of the Higher
Education Act of 1965 (20 U.S.C. 1087e(e)) is amended by adding at the
end the following new paragraph:
``(9) Special rule for refinanced loans.--For purposes of
paragraph (7), the period of time during which a borrower of a
loan that is refinanced under section 460A has made monthly
payments shall be calculated in the manner described in section
493C(f) for the applicable type of loan.''.
(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, ffel, and plus loans.--In
calculating the period of time during which a borrower of a
loan (with the exception of a Federal Direct Consolidation
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) Refinanced federal direct consolidation loans.--In
calculating the period of time during which a borrower of a
Federal Direct Consolidation Loan that is refinanced under
section 460A has made monthly payments for the purposes of
subsection (b)(7), the Secretary shall--
``(A) review the borrower's payment history to
identify each component loan of such Federal Direct
Consolidation Loan;
``(B) for each such component loan--
``(i) calculate the weighted factor of the
component loan, which shall be the factor that
represents the portion of such Federal Direct
Consolidation Loan that is attributable to such
component loan; and
``(ii) determine the number of qualifying
monthly payments made on such component loan
before consolidation;
``(C) calculate the number of qualifying monthly
payments determined under subparagraph (B)(ii) with
respect to a component loan that shall be deemed as
qualifying monthly payments made on the Federal Direct
Consolidation Loan by multiplying--
``(i) the weighted factor of such component
loan as determined under subparagraph (B)(i);
by
``(ii) the number of qualifying monthly
payments made on such component loan as
determined under subparagraph (B)(ii); and
``(D) calculate and inform the borrower of the
total number of qualifying monthly payments with
respect to the component loans of the Federal Direct
Consolidation Loan that shall be deemed as qualifying
monthly payments made on the refinanced Federal
Consolidation Loan, by--
``(i) adding together the result of each
calculation made under subparagraph (C) with
respect to each such component loan; and
``(ii) rounding the number determined under
clause (i) to the nearest whole number.
``(3) Component loan defined.--In this subsection, the term
`component loan', used with respect to a Federal Direct
Consolidation Loan, means a loan for which the liability was
discharged by the proceeds of such Federal Direct Consolidation
Loan.''.
(e) Conforming Amendments.--The Higher Education Act of 1965 (20
U.S.C. 1001 et seq.) is amended--
(1) in section 428C(a)(3)(B)(i)(V) (20 U.S.C. 1078-
3(3)(B)(i)(V))--
(A) by striking ``or'' at the end of item (bb);
(B) by striking the period at the end of item (cc)
and inserting ``; or''; and
(C) by adding at the end the following:
``(dd) for the purpose of
obtaining a refinancing loan
under section 460A.''; and
(2) in section 455 (20 U.S.C. 1087e)--
(A) in subsection (b), by striking ``(b) Interest
Rate.--'' and inserting the following:
``(b) Interest Rate.--Except as otherwise provided in sections
460A, the terms and conditions of interest for loans made under this
part are as follows:''.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Education and Labor.
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