Student Loan Refinancing Act
This bill establishes a refinancing program for federal student loans.
Specifically, the Department of Education (ED) must, within 30 days, establish a program that allows borrowers to refinance their federal student loans down to lower interest rates. The refinanced interest rates are (1) calculated based on the type of student loan (e.g., Stafford), and (2) fixed for the period of the loan.
In addition, the bill requires ED to coordinate with the Consumer Financial Protection Bureau to alert borrowers of their program eligibility.
[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5084 Introduced in House (IH)]
<DOC>
117th CONGRESS
1st Session
H. R. 5084
To amend the Higher Education Act of 1965 to provide for the
refinancing of certain Federal student loans, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
August 23, 2021
Mr. Turner (for himself and Mr. Brown) introduced the following bill;
which was referred to the Committee on Education and Labor
_______________________________________________________________________
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 ``Student Loan Refinancing Act''.
TITLE I--REFINANCING PROGRAMS
SEC. 101. 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'' 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 30 days after the date
of enactment of the Student Loan Refinancing Act, 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).
``(b) Refinancing Direct Loans.--
``(1) Federal direct loans.--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.
``(2) Refinancing ffel program loans as refinanced federal
direct loans.--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:
``(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
originally a loan 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) 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 the following:
``(A) Federal direct stafford loans.--
``(i) Rates for undergraduate fdsl.--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.
``(ii) Rates for graduate and professional
fdsl.--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.
``(B) Federal direct unsubsidized stafford loans.--
``(i) Rates for undergraduate fdusl.--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.
``(ii) Rates for graduate and professional
fdusl.--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.
``(C) Federal direct plus loans.--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.
``(D) Consolidation loans.--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).
``(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) Federal direct stafford loans.--
``(I) Undergraduate fdsl.--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--
``(aa) 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
``(bb) the original
interest rate of the component
loan.
``(II) Graduate or professional
fdsl.--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--
``(aa) 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
``(bb) the original
interest rate of the component
loan.
``(ii) Federal direct unsubsidized stafford
loans.--
``(I) Undergraduate fdusl.--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--
``(aa) 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
``(bb) the original
interest rate of the component
loan.
``(II) Graduate fdusl.--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--
``(aa) 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
``(bb) the original
interest rate of the component
loan.
``(iii) Federal direct plus loans.--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--
``(I) 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
``(II) the original interest rate
of the component loan.
``(iv) Federal direct consolidation loan.--
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) Other loans.--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.
``(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.--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 (20 U.S.C. 1001 note), or any extensions of such
suspensions.
``(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).
``(3) Limit on refinancing.--A loan made, insured, or
guaranteed under this title may not be refinanced under this
section more than twice during a 10-year period.
``(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 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.''.
(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-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:
``(9) Special rule for refinanced 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 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.''.
(e) 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.--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.''.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Education and Labor.
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