Student Loan Refinancing and Recalculation Act

I 116TH CONGRESS 1ST SESSION H. R. 1899 To provide for the refinancing and recalculation of certain Federal student loans, and for other purposes. IN THE HOUSE OF REPRESENTATIVES MARCH 27, 2019 Mr. GARAMENDI (for himself, Mr. FITZPATRICK, Mr. CARBAJAL, Mr. MCNER- NEY, Mr. TONKO, Mr. DOGGETT, Ms. KUSTER of New Hampshire, Mr. COSTA, Mr. KRISHNAMOORTHI, Ms. NORTON, Mr. COHEN, Ms. PINGREE, Mr. GONZALEZ of Texas, Miss RICE of New York, Mr. HARDER of Cali- fornia, Ms. HAALAND, Ms. HILL of California, Mr. SAN NICOLAS, Mr. BRENDAN F. BOYLE of Pennsylvania, Ms. JUDY CHU of California, Mr. KATKO, Ms. JACKSON LEE, Mr. ROSE of New York, Mr. LOWENTHAL, and Mr. SOTO) introduced the following bill; which was referred to the Committee on Education and Labor A BILL To provide for the refinancing and recalculation of certain Federal student loans, and for other purposes. 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 ‘‘Student Loan Refi- 4 nancing and Recalculation Act’’. 5 VerDate Sep 11 2014 22:38 Apr 08, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H1899.IH H1899 pamtmann on DSKBFK8HB2PROD with BILLS 2 •HR 1899 IH SEC. 2. REFINANCING PROGRAMS. 1 (a) PROGRAM AUTHORITY.—Section 451(a) of the 2 Higher Education Act of 1965 (20 U.S.C. 1087a(a)) is 3 amended— 4 (1) by striking ‘‘and (2)’’ and inserting ‘‘(2)’’; 5 and 6 (2) by inserting ‘‘; and (3) to make loans under 7 section 460A’’ after ‘‘section 459A’’. 8 (b) REFINANCING PROGRAM.—Part D of title IV of 9 the Higher Education Act of 1965 (20 U.S.C. 1087a et 10 seq.) is amended by adding at the end the following: 11 ‘‘SEC. 460A. REFINANCING FFEL AND FEDERAL DIRECT 12 LOANS. 13 ‘‘(a) IN GENERAL.—Beginning not later than 180 14 days after the date of enactment of the Student Loan Re- 15 financing and Recalculation Act, the Secretary shall estab- 16 lish a program under which the Secretary, upon the re- 17 ceipt of an application from a qualified borrower, reissues 18 the borrower’s original loan under this part or part B as 19 a loan under this part, in accordance with the provisions 20 of this section, in order to permit the borrower to obtain 21 the interest rate provided under subsection (c). 22 ‘‘(b) REISSUING LOANS.— 23 ‘‘(1) FEDERAL DIRECT LOANS.—Upon applica- 24 tion of a qualified borrower, the Secretary shall re- 25 issue a Federal Direct Stafford Loan, a Federal Di- 26 VerDate Sep 11 2014 22:38 Apr 08, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H1899.IH H1899 pamtmann on DSKBFK8HB2PROD with BILLS 3 •HR 1899 IH rect Unsubsidized Stafford Loan, a Federal Direct 1 PLUS Loan, or a Federal Direct Consolidation 2 Loan of the qualified borrower, for which the first 3 disbursement was made, or the application for the 4 reissuance of a loan under this section was received 5 before July 1, 2019, in an amount equal to the sum 6 of— 7 ‘‘(A) the unpaid principal, accrued unpaid 8 interest, and late charges of the original loan; 9 and 10 ‘‘(B) the administrative fee under sub- 11 section (d)(3). 12 ‘‘(2) DISCHARGING AND REISSUING FFEL PRO- 13 GRAM LOANS AS REFINANCED FEDERAL DIRECT 14 LOANS.—Upon application of a qualified borrower 15 for any loan that was made, insured, or guaranteed 16 under part B and for which the first disbursement 17 was made before July 1, 2010, the Secretary shall 18 reissue such loan as a loan under this part, in an 19 amount equal to the sum of the unpaid principal, ac- 20 crued unpaid interest, and late charges of the origi- 21 nal loan and the administrative fee under subsection 22 (d)(3), to the borrower in accordance with the fol- 23 lowing: 24 VerDate Sep 11 2014 22:38 Apr 08, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H1899.IH H1899 pamtmann on DSKBFK8HB2PROD with BILLS 4 •HR 1899 IH ‘‘(A) The Secretary shall pay the proceeds 1 of such reissued loan to the eligible lender of 2 the loan made, insured, or guaranteed under 3 part B, in order to discharge the borrower from 4 any remaining obligation to the lender with re- 5 spect to the original loan. 6 ‘‘(B) The Secretary shall reissue— 7 ‘‘(i) a loan originally made, insured, 8 or guaranteed under section 428 as a Fed- 9 eral Direct Stafford Loan; 10 ‘‘(ii) a loan originally made, insured, 11 or guaranteed under section 428B as a 12 Federal Direct PLUS Loan; 13 ‘‘(iii) a loan originally made, insured, 14 or guaranteed under section 428H as a 15 Federal Direct Unsubsidized Stafford 16 Loan; and 17 ‘‘(iv) a loan originally made, insured, 18 or guaranteed under section 428C as a 19 Federal Direct Consolidation Loan. 20 ‘‘(C) The interest rate for each loan re- 21 issued under this paragraph shall be the rate 22 provided under subsection (c). 23 ‘‘(c) INTEREST RATE.— 24 VerDate Sep 11 2014 22:38 Apr 08, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H1899.IH H1899 pamtmann on DSKBFK8HB2PROD with BILLS 5 •HR 1899 IH ‘‘(1) IN GENERAL.—The interest rate for the 1 reissued Federal Direct Stafford Loans, Federal Di- 2 rect Unsubsidized Stafford Loans, Federal Direct 3 PLUS Loans, and Federal Direct Consolidation 4 Loans, shall be a rate equal to— 5 ‘‘(A) the high yield of the 10-year Treas- 6 ury note auctioned at the final auction held 7 prior to the first day of the month in which the 8 application for reissuance under this section is 9 received, plus 10 ‘‘(B) 1.0 percent. 11 ‘‘(2) FIXED RATE.—The applicable rate of in- 12 terest determined under paragraph (1) for a re- 13 issued loan under this section shall be fixed for the 14 period of the loan. 15 ‘‘(d) TERMS AND CONDITIONS OF LOANS.— 16 ‘‘(1) IN GENERAL.—A loan that is reissued 17 under this section shall have the same terms and 18 conditions as the original loan, except as otherwise 19 provided in this section. 20 ‘‘(2) NO AUTOMATIC EXTENSION OF REPAY- 21 MENT PERIOD.—Reissuing a loan under this section 22 shall not result in the extension of the duration of 23 the repayment period of the loan, and the borrower 24 shall retain the same repayment term that was in ef- 25 VerDate Sep 11 2014 22:38 Apr 08, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H1899.IH H1899 pamtmann on DSKBFK8HB2PROD with BILLS 6 •HR 1899 IH fect on the original loan. Nothing in this paragraph 1 shall be construed to prevent a borrower from elect- 2 ing a different repayment plan at any time in ac- 3 cordance with section 455(d)(3). 4 ‘‘(3) ADMINISTRATIVE FEE.—The Secretary 5 shall charge the borrower of a loan reissued under 6 this section an administrative fee of not more than 7 0.5 percent of the sum of the unpaid principal, ac- 8 crued unpaid interest, and late charges, of the origi- 9 nal loan. 10 ‘‘(e) DEFINITION OF QUALIFIED BORROWER.— 11 ‘‘(1) IN GENERAL.—The term ‘qualified bor- 12 rower’ means a borrower— 13 ‘‘(A) of a loan under this part or part B 14 for which the first disbursement was made, or 15 the application for reissuance under this section 16 was received, before July 1, 2019; and 17 ‘‘(B) who meets the eligibility requirements 18 based on income or debt-to-income ratio estab- 19 lished by the Secretary. 20 ‘‘(2) INCOME REQUIREMENTS.—Not later than 21 180 days after the date of enactment of the Student 22 Loan Refinancing and Recalculation Act, the Sec- 23 retary shall establish eligibility requirements based 24 on income or debt-to-income ratio that take into con- 25 VerDate Sep 11 2014 22:38 Apr 08, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H1899.IH H1899 pamtmann on DSKBFK8HB2PROD with BILLS 7 •HR 1899 IH sideration providing access to refinancing under this 1 section for borrowers with the greatest financial 2 need. 3 ‘‘(f) EXPIRATION OF AUTHORITY.—The Secretary’s 4 authority to reissue loans under this section shall expire 5 on the date that is determined in accordance with section 6 4 of the Fairness in Student Loan Lending Act.’’. 7 (c) AMENDMENTS TO PUBLIC SERVICE REPAYMENT 8 PLAN PROVISIONS.—Section 455(m) of the Higher Edu- 9 cation Act of 1965 (20 U.S.C. 1087e(m)) is amended— 10 (1) by redesignating paragraphs (3) and (4) as 11 paragraphs (4) and (5), respectively; 12 (2) by inserting after paragraph (2) the fol- 13 lowing: 14 ‘‘(3) SPECIAL RULES FOR SECTION 460A 15 LOANS.— 16 ‘‘(A) REFINANCED FEDERAL DIRECT 17 LOANS.—Notwithstanding paragraph (1), in de- 18 termining the number of monthly payments 19 that meet the requirements of such paragraph 20 for an eligible Federal Direct Loan reissued 21 under section 460A that was originally a loan 22 under this part, the Secretary shall include all 23 monthly payments made on the original loan 24 that meet the requirements of such paragraph. 25 VerDate Sep 11 2014 22:38 Apr 08, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H1899.IH H1899 pamtmann on DSKBFK8HB2PROD with BILLS 8 •HR 1899 IH ‘‘(B) REFINANCED FFEL LOANS.—In the 1 case of an eligible Federal Direct Loan reissued 2 under section 460A that was originally a loan 3 under part B, only monthly payments made 4 after the date on which the loan was reissued 5 may be included for purposes of paragraph 6 (1).’’; and 7 (3) in paragraph (4)(A) (as redesignated by 8 paragraph (1) of this subsection), by inserting ‘‘(in- 9 cluding any Federal Direct Stafford Loan, Federal 10 Direct PLUS Loan, Federal Direct Unsubsidized 11 Stafford Loan, or Federal Direct Consolidation 12 Loan reissued under section 460A)’’ before the pe- 13 riod at the end. 14 (d) INCOME-BASED REPAYMENT.—Section 493C of 15 the Higher Education Act of 1965 (20 U.S.C. 1098e) is 16 amended by adding at the end the following: 17 ‘‘(a) REFINANCED FEDERAL DIRECT AND FFEL 18 LOANS.—In calculating the period of time during which 19 a borrower of a loan that is reissued under section 460A 20 has made monthly payments for purposes of subsection 21 (b)(7), the Secretary shall deem the period to include all 22 monthly payments made for the original loan, and all 23 monthly payments made for the reissued loan, that other- 24 wise meet the requirements of this section.’’. 25 VerDate Sep 11 2014 22:38 Apr 08, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H1899.IH H1899 pamtmann on DSKBFK8HB2PROD with BILLS 9 •HR 1899 IH SEC. 3. INTEREST RATES. 1 (a) INTEREST RATES.—Section 455(b) of the Higher 2 Education Act of 1965 (20 U.S.C. 1087e(b)) is amend- 3 ed— 4 (1) by redesignating paragraph (9) as para- 5 graph (10); and 6 (2) by inserting after paragraph (8) the fol- 7 lowing: 8 ‘‘(9) INTEREST RATE PROVISIONS FOR NEW 9 LOANS ON OR AFTER JULY 1, 2019.— 10 ‘‘(A) RATES FOR UNDERGRADUATE FDSL 11 AND FDUSL.—Notwithstanding the preceding 12 paragraphs of this subsection, for Federal Di- 13 rect Stafford Loans and Federal Direct Unsub- 14 sidized Stafford Loans issued to undergraduate 15 students, for which the first disbursement is 16 made on or after July 1, 2019, the applicable 17 rate of interest shall, for loans disbursed during 18 any 12-month period beginning on July 1 and 19 ending on June 30, be determined on the pre- 20 ceding June 1 and be equal to the lesser of— 21 ‘‘(i) a rate equal to— 22 ‘‘(I) the high yield of the 10-year 23 Treasury note auctioned at the final 24 auction held prior to such June 1, 25 plus 26 VerDate Sep 11 2014 22:38 Apr 08, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H1899.IH H1899 pamtmann on DSKBFK8HB2PROD with BILLS 10 •HR 1899 IH ‘‘(II) 1 percent; or 1 ‘‘(ii) 8.25 percent. 2 ‘‘(B) RATES FOR GRADUATE AND PROFES- 3 SIONAL FDUSL.—Notwithstanding the pre- 4 ceding paragraphs of this subsection, for Fed- 5 eral Direct Unsubsidized Stafford Loans issued 6 to graduate or professional students, for which 7 the first disbursement is made on or after July 8 1, 2019, the applicable rate of interest shall, for 9 loans disbursed during any 12-month period be- 10 ginning on July 1 and ending on June 30, be 11 determined on the preceding June 1 and be 12 equal to the lesser of— 13 ‘‘(i) a rate equal to— 14 ‘‘(I) the high yield of the 10-year 15 Treasury note auctioned at the final 16 auction held prior to such June 1, 17 plus 18 ‘‘(II) 1 percent; or 19 ‘‘(ii) 9.5 percent. 20 ‘‘(C) PLUS LOANS.—Notwithstanding the 21 preceding paragraphs of this subsection, for 22 Federal Direct PLUS Loans, for which the first 23 disbursement is made on or after July 1, 2019, 24 the applicable rate of interest shall, for loans 25 VerDate Sep 11 2014 22:38 Apr 08, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H1899.IH H1899 pamtmann on DSKBFK8HB2PROD with BILLS 11 •HR 1899 IH disbursed during any 12-month period begin- 1 ning on July 1 and ending on June 30, be de- 2 termined on the preceding June 1 and be equal 3 to the lesser of— 4 ‘‘(i) a rate equal to— 5 ‘‘(I) the high yield of the 10-year 6 Treasury note auctioned at the final 7 auction held prior to such June 1, 8 plus 9 ‘‘(II) 1 percent; or 10 ‘‘(ii) 10.5 percent. 11 ‘‘(D) CONSOLIDATION LOANS.—Notwith- 12 standing the preceding paragraphs of this sub- 13 section, any Federal Direct Consolidation Loan 14 for which the application is received on or after 15 July 1, 2019, shall bear interest at an annual 16 rate on the unpaid principal balance of the loan 17 that is equal to the weighted average of the in- 18 terest rates on the loans consolidated, rounded 19 to the nearest higher one-eighth of one percent. 20 ‘‘(E) CONSULTATION.—The Secretary shall 21 determine the applicable rate of interest under 22 this paragraph after consultation with the Sec- 23 retary of the Treasury and shall publish such 24 VerDate Sep 11 2014 22:38 Apr 08, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H1899.IH H1899 pamtmann on DSKBFK8HB2PROD with BILLS 12 •HR 1899 IH rate in the Federal Register as soon as prac- 1 ticable after the date of determination. 2 ‘‘(F) RATE.—The applicable rate of inter- 3 est determined under this paragraph for a Fed- 4 eral Direct Stafford Loan, a Federal Direct Un- 5 subsidized Stafford Loan, or a Federal Direct 6 PLUS Loan shall be fixed for the period of the 7 loan.’’. 8 (b) IN SCHOOL DEFERMENT.—Section 455(f) of the 9 Higher Education Act of 1965 (20 U.S.C. 1087e(f)) is 10 amended— 11 (1) in paragraph (1), in the matter preceding 12 subparagraph (A), by striking ‘‘A borrower’’ and in- 13 serting ‘‘Except as provided in paragraph (5), a bor- 14 rower’’; 15 (2) in paragraph (2)(A)— 16 (A) by striking the matter following clause 17 (ii); 18 (B) in clause (ii), by striking the comma at 19 the end and inserting ‘‘; or’’; and 20 (C) by adding at the end the following: 21 ‘‘(iii) is serving in a medical or dental 22 internship or residency program;’’; and 23 (3) by adding at the end [Text truncated for display. Full text available on Congress.gov.]