Servicemember Student Loan Affordability Act of 2020

II 116TH CONGRESS 2D SESSION S. 4002 To amend the Servicemembers Civil Relief Act to extend the interest rate limitation on debt entered into during military service to debt incurred during military service to consolidate or refinance student loans incurred before military service. IN THE SENATE OF THE UNITED STATES JUNE 18, 2020 Mr. DURBIN (for himself and Ms. DUCKWORTH) introduced the following bill; which was read twice and referred to the Committee on Veterans’ Affairs A BILL To amend the Servicemembers Civil Relief Act to extend the interest rate limitation on debt entered into during military service to debt incurred during military service to consolidate or refinance student loans incurred before military service. 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 ‘‘Servicemember Stu- 4 dent Loan Affordability Act of 2020’’. 5 VerDate Sep 11 2014 22:09 Jul 03, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S4002.IS S4002 pbinns on DSKJLVW7X2PROD with BILLS 2 •S 4002 IS SEC. 2. INTEREST RATE LIMITATION ON DEBT ENTERED 1 INTO DURING MILITARY SERVICE TO CON- 2 SOLIDATE OR REFINANCE STUDENT LOANS 3 INCURRED BEFORE MILITARY SERVICE. 4 (a) IN GENERAL.—Subsection (a) of section 207 of 5 the Servicemembers Civil Relief Act (50 U.S.C. 3937) is 6 amended— 7 (1) in paragraph (1), by inserting ‘‘ON DEBT 8 INCURRED BEFORE SERVICE’’ after ‘‘LIMITATION TO 9 6 PERCENT’’; 10 (2) by redesignating paragraphs (2) and (3) as 11 paragraphs (3) and (4), respectively; 12 (3) by inserting after paragraph (1) the fol- 13 lowing new paragraph (2): 14 ‘‘(2) LIMITATION TO 6 PERCENT ON DEBT IN- 15 CURRED DURING SERVICE TO CONSOLIDATE OR RE- 16 FINANCE STUDENT LOANS INCURRED BEFORE SERV- 17 ICE.—An obligation or liability bearing interest at a 18 rate in excess of 6 percent per year that is incurred 19 by a servicemember, or the servicemember and the 20 servicemember’s spouse jointly, during military serv- 21 ice to consolidate or refinance one or more student 22 loans incurred by the servicemember before such 23 military service shall not bear an interest at a rate 24 in excess of 6 percent during the period of military 25 service.’’; 26 VerDate Sep 11 2014 22:09 Jul 03, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S4002.IS S4002 pbinns on DSKJLVW7X2PROD with BILLS 3 •S 4002 IS (4) in paragraph (3), as redesignated by para- 1 graph (2) of this subsection, by inserting ‘‘or (2)’’ 2 after ‘‘paragraph (1)’’; and 3 (5) in paragraph (4), as so redesignated, by 4 striking ‘‘paragraph (2)’’ and inserting ‘‘paragraph 5 (3)’’. 6 (b) IMPLEMENTATION OF LIMITATION.—Subsection 7 (b) of such section is amended— 8 (1) in paragraph (1)(A), by striking ‘‘the inter- 9 est rate limitation in subsection (a)’’ and inserting 10 ‘‘an interest rate limitation in paragraph (1) or (2) 11 of subsection (a)’’; and 12 (2) in paragraph (2)— 13 (A) in the paragraph heading, by striking 14 ‘‘EFFECTIVE AS OF DATE OF ORDER TO ACTIVE 15 DUTY’’ and inserting ‘‘EFFECTIVE DATE’’; and 16 (B) by inserting before the period at the 17 end the following: ‘‘in the case of an obligation 18 or liability covered by subsection (a)(1), or as of 19 the date the servicemember (or servicemember 20 and spouse jointly) incurs the obligation or li- 21 ability concerned under subsection (a)(2)’’. 22 (c) STUDENT LOAN DEFINED.—Subsection (d) of 23 such section is amended by adding at the end the following 24 new paragraph: 25 VerDate Sep 11 2014 22:09 Jul 03, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S4002.IS S4002 pbinns on DSKJLVW7X2PROD with BILLS 4 •S 4002 IS ‘‘(3) STUDENT LOAN.—The term ‘student loan’ 1 means the following: 2 ‘‘(A) A Federal student loan made, in- 3 sured, or guaranteed under title IV of the 4 Higher Education Act of 1965 (20 U.S.C. 1070 5 et seq.). 6 ‘‘(B) A private student loan as that term 7 is defined in section 140(a) of the Truth in 8 Lending Act (15 U.S.C. 1650(a)).’’. 9 Æ VerDate Sep 11 2014 22:09 Jul 03, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6301 E:\BILLS\S4002.IS S4002 pbinns on DSKJLVW7X2PROD with BILLS