Coronavirus Emergency Student Loan Refinancing Act

I 116TH CONGRESS 2D SESSION H. R. 6397 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 26, 2020 Mr. COURTNEY (for himself, Mr. BLUMENAUER, Mr. BROWN of Maryland, Mr. CA´RDENAS, Mr. CICILLINE, Mr. CISNEROS, Mr. DEFAZIO, Ms. DELAURO, Ms. DELBENE, Mrs. DINGELL, Mr. MICHAEL F. DOYLE of Pennsylvania, Ms. ESCOBAR, Mr. FOSTER, Mrs. HAYES, Mr. HIMES, Mr. KILMER, Mr. LARSON of Connecticut, Ms. LEE of California, Mr. LYNCH, Mr. MCNERNEY, Ms. NORTON, Mr. PAYNE, Mr. PERLMUTTER, Mr. PETERS, Mr. PETERSON, Mr. PHILLIPS, Mr. RUSH, Mr. RYAN, Ms. SA´NCHEZ, Ms. SCHAKOWSKY, Mr. DAVID SCOTT of Georgia, Ms. SEWELL of Alabama, Ms. SLOTKIN, Mr. SOTO, Mr. STANTON, Mr. SWALWELL of California, Mr. TAKANO, Mr. WELCH, Mr. YARMUTH, Ms. BASS, and Mr. CROW) 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 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 ‘‘Coronavirus Emer- 4 gency Student Loan Refinancing Act’’. 5 VerDate Sep 11 2014 22:50 Apr 09, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H6397.IH H6397 pamtmann on DSKBC07HB2PROD with BILLS 2 •HR 6397 IH TITLE I—REFINANCING 1 PROGRAMS 2 SEC. 101. REFINANCING PROGRAMS. 3 (a) PROGRAM AUTHORITY.—Section 451(a) of the 4 Higher Education Act of 1965 (20 U.S.C. 1087a(a)) is 5 amended— 6 (1) by striking ‘‘and (2)’’ and inserting ‘‘(2)’’; 7 and 8 (2) by inserting ‘‘; and (3) to make loans under 9 section 460A and section 460B’’ after ‘‘section 10 459A’’. 11 (b) REFINANCING PROGRAM.—Part D of title IV of 12 the Higher Education Act of 1965 (20 U.S.C. 1087a et 13 seq.) is amended by adding at the end the following: 14 ‘‘SEC. 460A. REFINANCING FFEL AND FEDERAL DIRECT 15 LOANS. 16 ‘‘(a) IN GENERAL.—Beginning not later than 30 17 days after the date of enactment of the Coronavirus Emer- 18 gency Student Loan Refinancing Act, the Secretary shall 19 establish a program under which the Secretary, upon the 20 receipt of an application from a qualified borrower, makes 21 a loan under this part, in accordance with the provisions 22 of this section, in order to permit the borrower to obtain 23 the interest rate provided under subsection (c). 24 ‘‘(b) REFINANCING DIRECT LOANS.— 25 VerDate Sep 11 2014 22:50 Apr 09, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H6397.IH H6397 pamtmann on DSKBC07HB2PROD with BILLS 3 •HR 6397 IH ‘‘(1) FEDERAL DIRECT LOANS.—Upon applica- 1 tion of a qualified borrower, the Secretary shall 2 repay a Federal Direct Stafford Loan, a Federal Di- 3 rect Unsubsidized Stafford Loan, a Federal Direct 4 PLUS Loan, or a Federal Direct Consolidation 5 Loan of the qualified borrower, for which the first 6 disbursement was made, or the application for the 7 consolidation loan was received, before July 1, 2020, 8 with the proceeds of a refinanced Federal Direct 9 Stafford Loan, a Federal Direct Unsubsidized Staf- 10 ford Loan, a Federal Direct PLUS Loan, or a Fed- 11 eral Direct Consolidation Loan, respectively, issued 12 to the borrower in an amount equal to the sum of 13 the unpaid principal, accrued unpaid interest, and 14 late charges of the original loan. 15 ‘‘(2) REFINANCING FFEL PROGRAM LOANS AS 16 REFINANCED FEDERAL DIRECT LOANS.—Upon ap- 17 plication of a qualified borrower for any loan that 18 was made, insured, or guaranteed under part B and 19 for which the first disbursement was made, or the 20 application for the consolidation loan was received, 21 before July 1, 2010, the Secretary shall make a loan 22 under this part, in an amount equal to the sum of 23 the unpaid principal, accrued unpaid interest, and 24 VerDate Sep 11 2014 22:50 Apr 09, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H6397.IH H6397 pamtmann on DSKBC07HB2PROD with BILLS 4 •HR 6397 IH late charges of the original loan to the borrower in 1 accordance with the following: 2 ‘‘(A) The Secretary shall pay the proceeds 3 of such loan to the eligible lender of the loan 4 made, insured, or guaranteed under part B, in 5 order to discharge the borrower from any re- 6 maining obligation to the lender with respect to 7 the original loan. 8 ‘‘(B) A loan made under this section that 9 was originally a loan made, insured, or guaran- 10 teed— 11 ‘‘(i) under section 428 shall be a Fed- 12 eral Direct Stafford Loan; 13 ‘‘(ii) under section 428B shall be a 14 Federal Direct PLUS Loan; 15 ‘‘(iii) under section 428H shall be a 16 Federal Direct Unsubsidized Stafford 17 Loan; and 18 ‘‘(iv) under section 428C shall be a 19 Federal Direct Consolidation Loan. 20 ‘‘(C) The interest rate for each loan made 21 by the Secretary under this paragraph shall be 22 the rate provided under subsection (c). 23 ‘‘(c) INTEREST RATES.— 24 VerDate Sep 11 2014 22:50 Apr 09, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H6397.IH H6397 pamtmann on DSKBC07HB2PROD with BILLS 5 •HR 6397 IH ‘‘(1) IN GENERAL.—The interest rate for the 1 refinanced Federal Direct Stafford Loans, Federal 2 Direct Unsubsidized Stafford Loans, Federal Direct 3 PLUS Loans, and Federal Direct Consolidation 4 Loans, shall be a rate equal to— 5 ‘‘(A) in any case where the original loan 6 was a loan under section 428 or 428H, a Fed- 7 eral Direct Stafford loan, or a Federal Direct 8 Unsubsidized Stafford Loan, that was issued to 9 an undergraduate student, a rate equal to the 10 lowest yield on the 10-year Treasury note in the 11 preceding 6 months plus 2.05 percent; 12 ‘‘(B) in any case where the original loan 13 was a loan under section 428 or 428H, a Fed- 14 eral Direct Stafford Loan, or a Federal Direct 15 Unsubsidized Stafford Loan, that was issued to 16 a graduate or professional student, a rate equal 17 to the lowest yield on the 10-year Treasury note 18 in the preceding 6 months plus 3.6 percent; 19 ‘‘(C) in any case where the original loan 20 was a loan under section 428B or a Federal Di- 21 rect PLUS Loan, a rate equal to the lowest 22 yield on the 10-year Treasury note in the pre- 23 ceding 6 months plus 4.6 percent; and 24 VerDate Sep 11 2014 22:50 Apr 09, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H6397.IH H6397 pamtmann on DSKBC07HB2PROD with BILLS 6 •HR 6397 IH ‘‘(D) in any case where the original loan 1 was a loan under section 428C or a Federal Di- 2 rect Consolidation Loan, a rate calculated in ac- 3 cordance with paragraph (2). 4 ‘‘(2) INTEREST RATES FOR CONSOLIDATION 5 LOANS.— 6 ‘‘(A) METHOD OF CALCULATION.—In 7 order to determine the interest rate for any re- 8 financed Federal Direct Consolidation Loan 9 under paragraph (1)(D), the Secretary shall— 10 ‘‘(i) determine each of the component 11 loans that were originally consolidated in 12 the loan under section 428C or the Federal 13 Direct Consolidation Loan, and calculate 14 the proportion of the unpaid principal bal- 15 ance of the loan under section 428C or the 16 Federal Direct Consolidation Loan that 17 each component loan represents; 18 ‘‘(ii) use the proportions determined 19 in accordance with clause (i) and the inter- 20 est rate applicable for each component 21 loan, as determined under subparagraph 22 (B), to calculate the weighted average of 23 the interest rates on the loans consolidated 24 VerDate Sep 11 2014 22:50 Apr 09, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H6397.IH H6397 pamtmann on DSKBC07HB2PROD with BILLS 7 •HR 6397 IH into the loan under section 428C or the 1 Federal Direct Consolidation Loan; and 2 ‘‘(iii) apply the weighted average cal- 3 culated under clause (ii) as the interest 4 rate for the refinanced Federal Direct Con- 5 solidation Loan. 6 ‘‘(B) INTEREST RATES FOR COMPONENT 7 LOANS.—The interest rates for the component 8 loans of a loan made under section 428C or a 9 Federal Direct Consolidation Loan shall be the 10 following: 11 ‘‘(i) 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 an under- 15 graduate student shall be a rate equal to 16 the lesser of— 17 ‘‘(I) the rate for Federal Direct 18 Stafford Loans and Federal Direct 19 Unsubsidized Stafford Loans issued 20 to undergraduate students for the 12- 21 month period beginning on July 1, 22 2020, and ending on June 30, 2021; 23 or 24 VerDate Sep 11 2014 22:50 Apr 09, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H6397.IH H6397 pamtmann on DSKBC07HB2PROD with BILLS 8 •HR 6397 IH ‘‘(II) the original interest rate of 1 the component loan. 2 ‘‘(ii) The interest rate for any loan 3 under section 428 or 428H, Federal Direct 4 Stafford Loan, or Federal Direct Unsub- 5 sidized Stafford Loan issued to a graduate 6 or professional student shall be a rate 7 equal to the lesser of— 8 ‘‘(I) the rate for Federal Direct 9 Unsubsidized Stafford Loans issued 10 to graduate or professional students 11 for the 12-month period beginning on 12 July 1, 2020, and ending on June 30, 13 2021; or 14 ‘‘(II) the original interest rate of 15 the component loan. 16 ‘‘(iii) The interest rate for any loan 17 under section 428B or Federal Direct 18 PLUS Loan shall be a rate equal to the 19 lesser of— 20 ‘‘(I) the rate for Federal Direct 21 PLUS Loans for the 12-month period 22 beginning on July 1, 2020, and end- 23 ing on June 30, 2021; or 24 VerDate Sep 11 2014 22:50 Apr 09, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H6397.IH H6397 pamtmann on DSKBC07HB2PROD with BILLS 9 •HR 6397 IH ‘‘(II) the original interest rate of 1 the component loan. 2 ‘‘(iv) The interest rate for any compo- 3 nent loan that is a loan under section 4 428C or a Federal Direct Consolidation 5 Loan shall be the weighted average of the 6 interest rates that would apply under this 7 subparagraph for each loan comprising the 8 component consolidation loan. 9 ‘‘(v) The interest rate for any eligible 10 loan that is a component of a loan made 11 under section 428C or a Federal Direct 12 Consolidation Loan and is not described in 13 clauses (i) through (iv) shall be the inter- 14 est rate on the original component loan. 15 ‘‘(3) FIXED RATE.—The applicable rate of in- 16 terest determined under paragraph (1) for a refi- 17 nanced loan under this section shall be fixed for the 18 period of the loan. 19 ‘‘(d) TERMS AND CONDITIONS OF LOANS.— 20 ‘‘(1) IN GENERAL.—A loan that is refinanced 21 under this section shall have the same terms and 22 conditions as the original loan, except as otherwise 23 provided in this section. 24 VerDate Sep 11 2014 22:50 Apr 09, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H6397.IH H6397 pamtmann on DSKBC07HB2PROD with BILLS 10 •HR 6397 IH ‘‘(2) NO AUTOMATIC EXTENSION OF REPAY- 1 MENT PERIOD.—Refinancing a loan under this sec- 2 tion shall not result in the extension of the duration 3 of the repayment period of the loan, and the bor- 4 rower shall retain the same repayment term that 5 was in effect on the original loan. Nothing in this 6 paragraph shall be construed to prevent a borrower 7 from electing a different repayment plan at any time 8 in accordance with section 455(d)(3). 9 ‘‘(e) DEFINITION OF QUALIFIED BORROWER.— 10 ‘‘(1) IN GENERAL.—For purposes of this sec- 11 tion, the term ‘qualified borrower’ means a bor- 12 rower— 13 ‘‘(A) of a loan under this part or part B 14 for which the first disbursement was made, or 15 the application for a consolidation loan was re- 16 ceived, before July 1, 2020; 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 30 days after the date of enactment of the 22 Coronavirus Emergency Student Loan Refinancing 23 Act, the Secretary shall establish eligibility require- 24 ments based on income or debt-to-income ratio that 25 VerDate Sep 11 2014 22:50 Apr 09, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H6397.IH H6397 pamtmann on DSKBC07HB2PROD with BILLS 11 •HR 6397 IH take into consideration providing access to refi- 1 nancing under this section for borrowers with the 2 greatest financial need. 3 ‘‘(f) NOTIFICATION TO BORROWERS.—The Secretary, 4 in coordination with the Director of the Bureau of Con- 5 sumer Financial Protection, shall undertake a campaign 6 to alert borrowers of loans that are eligible for refinancing 7 under this section that the borrowers are eligible to apply 8 for such refinancing. The campaign shall include the fol- 9 lowing activities: 10 ‘‘(1) Developing consumer information mate- 11 rials about the availability of Federal student loan 12 refinancing. 13 ‘‘(2) Requiring servicers of loans under this 14 part or part B to provide such consumer information 15 to borrowers in a manner determined appropriate by 16 the Secretary, in consultation with the Director of 17 the Bureau of Consumer Financial Protection. 18 ‘‘SEC. 460B. FEDERAL DIRECT REFINANCED PRIVATE LOAN 19 PROGRAM. 20 ‘‘(a) DEFINITIONS.—In this section: 21 ‘‘(1) ELIGIBLE PRIVATE EDUCATION LOAN.— 22 The term ‘eligible private education loan’ means a 23 private education loan, as defined in section 140(a) 24 VerDate Sep 11 2014 22:50 Apr 09, 2020 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H6397.IH H6397 pamtmann on DSKBC07HB2PROD with BILLS 12 •HR 6397 IH of the Truth in Lending Act (15 U.S.C. 1650(a)), 1 that— 2 ‘‘(A) was disbursed to the borrower before 3 July 1, 2020; and 4 ‘‘(B) was for the borrower’s own postsec- 5 ondary educational expenses for an eligible pro- 6 gram at an institution of higher education par- 7 ticipating in the loan program under this part, 8 as of the date that the loan was disbursed. 9 ‘‘(2) FEDERAL DIRECT REFINANCED PRIVATE 10 LOAN.—The term ‘Federal Direct Refinanced Pri- 11 vate Loan’ means a loan issued under subsection 12 (b)(1). 13 ‘‘(3) PRIVATE EDUCATIONAL LENDER.—The 14 term ‘private educational lender’ has the meaning 15 given the term in section 140(a) of the Truth in 16 Lending Act (15 U.S.C. 1650(a)). 17 ‘‘(4) QUALIFIED BORROWER.—The term ‘quali- 18 fied borrower’ means an individual who— 19 ‘‘(A) has an eligible private education loan; 20 ‘‘(B) has been current on payments on the 21 eligible private education loan for the 6 months 22 prior to the date of the qualified borrower’s ap- 23 plication for refinancing under this section, and 24 VerDate Sep 11 2014 22:50 Apr 09, 2020 Jkt 099200 PO 00000 Frm 00012 Fmt [Text truncated for display. 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