Bank on Students Emergency Loan Refinancing Act

I 116TH CONGRESS 1ST SESSION H. R. 1707 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 MARCH 13, 2019 Mr. COURTNEY (for himself, Mr. AGUILAR, Ms. BONAMICI, Mr. BRENDAN F. BOYLE of Pennsylvania, Mr. BROWN of Maryland, Mr. CA´RDENAS, Ms. CASTOR of Florida, Mr. CICILLINE, Mr. CISNEROS, Mr. COHEN, Mrs. DAVIS of California, Ms. DEGETTE, Mrs. DINGELL, Ms. ESHOO, Ms. FINKENAUER, Mr. FOSTER, Mr. GONZALEZ of Texas, Mr. GRIJALVA, Ms. HILL of California, Mr. HIMES, Ms. JACKSON LEE, Ms. JAYAPAL, Mr. KEATING, Mr. KILMER, Mr. LARSON of Connecticut, Ms. LEE of Cali- fornia, Mrs. LOWEY, Mrs. LURIA, Mr. SEAN PATRICK MALONEY of New York, Ms. MOORE, Mr. NEGUSE, Mr. NORCROSS, Ms. NORTON, Mr. PERLMUTTER, Ms. PINGREE, Mr. RASKIN, Miss RICE of New York, Mr. SABLAN, Ms. SA´NCHEZ, Ms. SCANLON, Ms. SCHAKOWSKY, Mr. SCHRA- DER, Mr. SERRANO, Mr. SHERMAN, Mr. SMITH of Washington, Ms. SPEIER, Mr. TAKANO, Mr. THOMPSON of California, Ms. TITUS, Mr. TRONE, Mr. VISCLOSKY, Ms. WASSERMAN SCHULTZ, Mr. WELCH, Ms. WILD, Ms. WILSON of Florida, Mrs. HAYES, Mr. LUJA´N, Mr. PHILLIPS, and Ms. DELAURO) introduced the following bill; which was referred to the Committee on Education and Labor, and in addition to the Commit- tees on Ways and Means, and the Budget, for a period to be subsequently determined by the Speaker, in each case for consideration of such provi- sions as fall within the jurisdiction of the committee concerned A BILL To amend the Higher Education Act of 1965 to provide for the refinancing of certain Federal student loans, and for other purposes. VerDate Sep 11 2014 21:09 Mar 25, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6652 E:\BILLS\H1707.IH H1707 pamtmann on DSKBFK8HB2PROD with BILLS 2 •HR 1707 IH Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Bank on Students 4 Emergency Loan Refinancing Act’’. 5 TITLE I—REFINANCING 6 PROGRAMS 7 SEC. 101. REFINANCING PROGRAMS. 8 (a) PROGRAM AUTHORITY.—Section 451(a) of the 9 Higher Education Act of 1965 (20 U.S.C. 1087a(a)) is 10 amended— 11 (1) by striking ‘‘and (2)’’ and inserting ‘‘(2)’’; 12 and 13 (2) by inserting ‘‘; and (3) to make loans under 14 section 460A and section 460B’’ after ‘‘section 15 459A’’. 16 (b) REFINANCING PROGRAM.—Part D of title IV of 17 the Higher Education Act of 1965 (20 U.S.C. 1087a et 18 seq.) is amended by adding at the end the following: 19 ‘‘SEC. 460A. REFINANCING FFEL AND FEDERAL DIRECT 20 LOANS. 21 ‘‘(a) IN GENERAL.—Beginning not later than 180 22 days after the date of enactment of the Bank on Students 23 Emergency Loan Refinancing Act, the Secretary shall es- 24 tablish a program under which the Secretary, upon the 25 VerDate Sep 11 2014 21:09 Mar 25, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1707.IH H1707 pamtmann on DSKBFK8HB2PROD with BILLS 3 •HR 1707 IH receipt of an application from a qualified borrower, makes 1 a loan under this part, in accordance with the provisions 2 of this section, in order to permit the borrower to obtain 3 the interest rate provided under subsection (c). 4 ‘‘(b) REFINANCING DIRECT LOANS.— 5 ‘‘(1) FEDERAL DIRECT LOANS.—Upon applica- 6 tion of a qualified borrower, the Secretary shall 7 repay a Federal Direct Stafford Loan, a Federal Di- 8 rect Unsubsidized Stafford Loan, a Federal Direct 9 PLUS Loan, or a Federal Direct Consolidation 10 Loan of the qualified borrower, for which the first 11 disbursement was made, or the application for the 12 consolidation loan was received, before July 1, 2019, 13 with the proceeds of a refinanced Federal Direct 14 Stafford Loan, a Federal Direct Unsubsidized Staf- 15 ford Loan, a Federal Direct PLUS Loan, or a Fed- 16 eral Direct Consolidation Loan, respectively, issued 17 to the borrower in an amount equal to the sum of 18 the unpaid principal, accrued unpaid interest, and 19 late charges of the original loan. 20 ‘‘(2) REFINANCING FFEL PROGRAM LOANS AS 21 REFINANCED FEDERAL DIRECT LOANS.—Upon ap- 22 plication of a qualified borrower for any loan that 23 was made, insured, or guaranteed under part B and 24 for which the first disbursement was made, or the 25 VerDate Sep 11 2014 21:09 Mar 25, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1707.IH H1707 pamtmann on DSKBFK8HB2PROD with BILLS 4 •HR 1707 IH application for the consolidation loan was received, 1 before July 1, 2010, the Secretary shall make a loan 2 under this part, in an amount equal to the sum of 3 the unpaid principal, accrued unpaid interest, and 4 late charges of the original loan to the borrower in 5 accordance with the following: 6 ‘‘(A) The Secretary shall pay the proceeds 7 of such loan to the eligible lender of the loan 8 made, insured, or guaranteed under part B, in 9 order to discharge the borrower from any re- 10 maining obligation to the lender with respect to 11 the original loan. 12 ‘‘(B) A loan made under this section that 13 was originally a loan made, insured, or guaran- 14 teed— 15 ‘‘(i) under section 428 shall be a Fed- 16 eral Direct Stafford Loan; 17 ‘‘(ii) under section 428B shall be a 18 Federal Direct PLUS Loan; 19 ‘‘(iii) under section 428H shall be a 20 Federal Direct Unsubsidized Stafford 21 Loan; and 22 ‘‘(iv) under section 428C shall be a 23 Federal Direct Consolidation Loan. 24 VerDate Sep 11 2014 21:09 Mar 25, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1707.IH H1707 pamtmann on DSKBFK8HB2PROD with BILLS 5 •HR 1707 IH ‘‘(C) The interest rate for each loan made 1 by the Secretary under this paragraph shall be 2 the rate provided under subsection (c). 3 ‘‘(c) INTEREST RATES.— 4 ‘‘(1) IN GENERAL.—The interest rate for the 5 refinanced Federal Direct Stafford Loans, Federal 6 Direct Unsubsidized Stafford Loans, Federal Direct 7 PLUS Loans, and Federal Direct Consolidation 8 Loans, shall be a rate equal to— 9 ‘‘(A) in any case where the original loan 10 was a loan under section 428 or 428H, a Fed- 11 eral Direct Stafford loan, or a Federal Direct 12 Unsubsidized Stafford Loan, that was issued to 13 an undergraduate student, a rate equal to the 14 rate for Federal Direct Stafford Loans and 15 Federal Direct Unsubsidized Stafford Loans 16 issued to undergraduate students for the 12- 17 month period beginning on July 1, 2016, and 18 ending on June 30, 2017; 19 ‘‘(B) in any case where the original loan 20 was a loan under section 428 or 428H, a Fed- 21 eral Direct Stafford Loan, or a Federal Direct 22 Unsubsidized Stafford Loan, that was issued to 23 a graduate or professional student, a rate equal 24 to the rate for Federal Direct Unsubsidized 25 VerDate Sep 11 2014 21:09 Mar 25, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H1707.IH H1707 pamtmann on DSKBFK8HB2PROD with BILLS 6 •HR 1707 IH Stafford Loans issued to graduate or profes- 1 sional students for the 12-month period begin- 2 ning on July 1, 2016, and ending on June 30, 3 2017; 4 ‘‘(C) in any case where the original loan 5 was a loan under section 428B or a Federal Di- 6 rect PLUS Loan, a rate equal to the rate for 7 Federal Direct PLUS Loans for the 12-month 8 period beginning on July 1, 2016, and ending 9 on June 30, 2017; and 10 ‘‘(D) in any case where the original loan 11 was a loan under section 428C or a Federal Di- 12 rect Consolidation Loan, a rate calculated in ac- 13 cordance with paragraph (2). 14 ‘‘(2) INTEREST RATES FOR CONSOLIDATION 15 LOANS.— 16 ‘‘(A) METHOD OF CALCULATION.—In 17 order to determine the interest rate for any re- 18 financed Federal Direct Consolidation Loan 19 under paragraph (1)(D), the Secretary shall— 20 ‘‘(i) determine each of the component 21 loans that were originally consolidated in 22 the loan under section 428C or the Federal 23 Direct Consolidation Loan, and calculate 24 the proportion of the unpaid principal bal- 25 VerDate Sep 11 2014 21:09 Mar 25, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H1707.IH H1707 pamtmann on DSKBFK8HB2PROD with BILLS 7 •HR 1707 IH ance of the loan under section 428C or the 1 Federal Direct Consolidation Loan that 2 each component loan represents; 3 ‘‘(ii) use the proportions determined 4 in accordance with clause (i) and the inter- 5 est rate applicable for each component 6 loan, as determined under subparagraph 7 (B), to calculate the weighted average of 8 the interest rates on the loans consolidated 9 into the loan under section 428C or the 10 Federal Direct Consolidation Loan; and 11 ‘‘(iii) apply the weighted average cal- 12 culated under clause (ii) as the interest 13 rate for the refinanced Federal Direct Con- 14 solidation Loan. 15 ‘‘(B) INTEREST RATES FOR COMPONENT 16 LOANS.—The interest rates for the component 17 loans of a loan made under section 428C or a 18 Federal Direct Consolidation Loan shall be the 19 following: 20 ‘‘(i) The interest rate for any loan 21 under section 428 or 428H, Federal Direct 22 Stafford Loan, or Federal Direct Unsub- 23 sidized Stafford Loan issued to an under- 24 VerDate Sep 11 2014 21:09 Mar 25, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H1707.IH H1707 pamtmann on DSKBFK8HB2PROD with BILLS 8 •HR 1707 IH graduate student shall be a rate equal to 1 the lesser of— 2 ‘‘(I) the rate for Federal Direct 3 Stafford Loans and Federal Direct 4 Unsubsidized Stafford Loans issued 5 to undergraduate students for the 12- 6 month period beginning on July 1, 7 2016, and ending on June 30, 2017; 8 or 9 ‘‘(II) the original interest rate of 10 the component loan. 11 ‘‘(ii) The interest rate for any loan 12 under section 428 or 428H, Federal Direct 13 Stafford Loan, or Federal Direct Unsub- 14 sidized Stafford Loan issued to a graduate 15 or professional student shall be a rate 16 equal to the lesser of— 17 ‘‘(I) the rate for Federal Direct 18 Unsubsidized Stafford Loans issued 19 to graduate or professional students 20 for the 12-month period beginning on 21 July 1, 2016, and ending on June 30, 22 2017; or 23 ‘‘(II) the original interest rate of 24 the component loan. 25 VerDate Sep 11 2014 21:09 Mar 25, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H1707.IH H1707 pamtmann on DSKBFK8HB2PROD with BILLS 9 •HR 1707 IH ‘‘(iii) The interest rate for any loan 1 under section 428B or Federal Direct 2 PLUS Loan shall be a rate equal to the 3 lesser of— 4 ‘‘(I) the rate for Federal Direct 5 PLUS Loans for the 12-month period 6 beginning on July 1, 2016, and end- 7 ing on June 30, 2017; or 8 ‘‘(II) the original interest rate of 9 the component loan. 10 ‘‘(iv) The interest rate for any compo- 11 nent loan that is a loan under section 12 428C or a Federal Direct Consolidation 13 Loan shall be the weighted average of the 14 interest rates that would apply under this 15 subparagraph for each loan comprising the 16 component consolidation loan. 17 ‘‘(v) The interest rate for any eligible 18 loan that is a component of a loan made 19 under section 428C or a Federal Direct 20 Consolidation Loan and is not described in 21 clauses (i) through (iv) shall be the inter- 22 est rate on the original component loan. 23 ‘‘(3) FIXED RATE.—The applicable rate of in- 24 terest determined under paragraph (1) for a refi- 25 VerDate Sep 11 2014 21:09 Mar 25, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H1707.IH H1707 pamtmann on DSKBFK8HB2PROD with BILLS 10 •HR 1707 IH nanced loan under this section shall be fixed for the 1 period of the loan. 2 ‘‘(d) TERMS AND CONDITIONS OF LOANS.— 3 ‘‘(1) IN GENERAL.—A loan that is refinanced 4 under this section shall have the same terms and 5 conditions as the original loan, except as otherwise 6 provided in this section. 7 ‘‘(2) NO AUTOMATIC EXTENSION OF REPAY- 8 MENT PERIOD.—Refinancing a loan under this sec- 9 tion shall not result in the extension of the duration 10 of the repayment period of the loan, and the bor- 11 rower shall retain the same repayment term that 12 was in effect on the original loan. Nothing in this 13 paragraph shall be construed to prevent a borrower 14 from electing a different repayment plan at any time 15 in accordance with section 455(d)(3). 16 ‘‘(e) DEFINITION OF QUALIFIED BORROWER.— 17 ‘‘(1) IN GENERAL.—For purposes of this sec- 18 tion, the term ‘qualified borrower’ means a bor- 19 rower— 20 ‘‘(A) of a loan under this part or part B 21 for which the first disbursement was made, or 22 the application for a consolidation loan was re- 23 ceived, before July 1, 2019; and 24 VerDate Sep 11 2014 21:09 Mar 25, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H1707.IH H1707 pamtmann on DSKBFK8HB2PROD with BILLS 11 •HR 1707 IH ‘‘(B) who meets the eligibility requirements 1 based on income or debt-to-income ratio estab- 2 lished by the Secretary. 3 ‘‘(2) INCOME REQUIREMENTS.—Not later than 4 180 days after the date of enactment of the Bank 5 on Students Emergency Loan Refinancing Act, the 6 Secretary shall establish eligibility requirements 7 based on income or debt-to-income ratio that take 8 into consideration providing access to refinancing 9 under this section for borrowers with the greatest fi- 10 nancial need. 11 ‘‘(f) NOTIFICATION TO BORROWERS.—The Secretary, 12 in coordination with the Director of the Bureau of Con- 13 sumer Financial Protection, shall undertake a campaign 14 to alert borrowers of loans that are eligible for refinancing 15 under this section that the borrowers are eligible to apply 16 for such refinancing. The campaign shall include the fol- 17 lowing activities: 18 ‘‘(1) Developing consumer information mate- 19 rials about the availability of Federal student loan 20 refinancing. 21 ‘‘(2) Requiring servicers of loans under this 22 part or part B to provide such consumer information 23 to borrowers in a manner determined appropriate by 24 VerDate Sep 11 2014 21:09 Mar 25, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H1707.IH H1707 pamtmann on DSKBFK8HB2PROD with BILLS 12 •HR 1707 IH the Secretary, in consultation with the Director of 1 the Bureau of Consumer Financial Protection. 2 ‘‘SEC. 460B. FEDERAL DIRECT REFINANCED PRIVATE LOAN 3 PROGRAM. 4 ‘‘(a) DEFINITIONS.—In this section: 5 ‘‘(1) ELIGIBLE PRIVATE EDUCATION LOAN.— 6 The term ‘eligible private education loan’ means a 7 private education loan, as defined in section 140(a) 8 of the Truth in Lending Act (15 U.S.C. 1650(a)), 9 that— 10 ‘‘(A) was disbursed to the borrower before 11 July 1, 2019; and 12 ‘‘(B) was for the borrower’s own postsec- 13 ondary educational expenses for an eligible pro- 14 gram at an institution of higher education par- 15 ticipating in the loan progr [Text truncated for display. Full text available on Congress.gov.]