Bank on Students Coronavirus Emergency Loan Refinancing Act of 2020

II 116TH CONGRESS 2D SESSION S. 4141 To refinance Federal and private student loans, and for other purposes. IN THE SENATE OF THE UNITED STATES JULY 1, 2020 Ms. WARREN (for herself, Ms. BALDWIN, Mr. BENNET, Mr. BLUMENTHAL, Mr. BOOKER, Mr. BROWN, Ms. CANTWELL, Mr. CARDIN, Mr. CASEY, Ms. CORTEZ MASTO, Ms. DUCKWORTH, Mr. DURBIN, Mrs. FEINSTEIN, Mrs. GILLIBRAND, Ms. HARRIS, Ms. HASSAN, Mr. HEINRICH, Ms. HIRONO, Ms. KLOBUCHAR, Mr. LEAHY, Mr. MANCHIN, Mr. MARKEY, Mr. MENEN- DEZ, Mr. MERKLEY, Mr. MURPHY, Mr. PETERS, Mr. REED, Mr. SAND- ERS, Mrs. SHAHEEN, Ms. SMITH, Ms. STABENOW, Mr. UDALL, Mr. VAN HOLLEN, Mr. WHITEHOUSE, and Mr. WYDEN) introduced the following bill; which was read twice and referred to the Committee on Health, Edu- cation, Labor, and Pensions A BILL To refinance Federal and private 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 ‘‘Bank on Students 4 Coronavirus Emergency Loan Refinancing Act of 2020’’. 5 VerDate Sep 11 2014 17:26 Jul 14, 2020 Jkt 099200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S4141.IS S4141 pamtmann on DSKBC07HB2PROD with BILLS 2 •S 4141 IS SEC. 2. REFINANCING PROGRAM. 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 and section 460B’’ after ‘‘section 8 459A’’. 9 (b) REFINANCING PROGRAM.—Part D of title IV of 10 the Higher Education Act of 1965 (20 U.S.C. 1087a et 11 seq.) is amended by adding at the end the following: 12 ‘‘SEC. 460A. REFINANCING FEDERAL DIRECT LOANS AND 13 OTHER FEDERAL LOANS. 14 ‘‘(a) DEFINITIONS.—In this section: 15 ‘‘(1) FFEL, PERKINS, OR PHSA STUDENT 16 LOAN.—The term ‘FFEL, Perkins, or PHSA stu- 17 dent loan’ means a loan— 18 ‘‘(A) made, insured, or guaranteed under 19 part B and for which the first disbursement 20 was made, or the application for the consolida- 21 tion loan was received, before July 1, 2010; 22 ‘‘(B) made under part E; or 23 ‘‘(C) made under— 24 VerDate Sep 11 2014 17:26 Jul 14, 2020 Jkt 099200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S4141.IS S4141 pamtmann on DSKBC07HB2PROD with BILLS 3 •S 4141 IS ‘‘(i) subpart II of part A of title VII 1 of the Public Health Service Act (42 2 U.S.C. 292q et seq.); or 3 ‘‘(ii) part E of title VIII of the Public 4 Health Service Act (42 U.S.C. 297a et 5 seq.). 6 ‘‘(2) QUALIFIED BORROWER.—The term ‘quali- 7 fied borrower’ means a borrower of a loan under this 8 part, or FFEL, Perkins, or PHSA student loan, for 9 which the first disbursement was made, or the appli- 10 cation for a consolidation loan was received, before 11 July 1, 2020. 12 ‘‘(b) IN GENERAL.—Beginning not later than 90 13 days after the date of enactment of the Bank on Students 14 Coronavirus Emergency Loan Refinancing Act of 2020, 15 the Secretary shall establish a program under which the 16 Secretary makes a loan under this part, in accordance 17 with the provisions of this section, in order to permit a 18 qualified borrower to obtain the interest rate provided 19 under subsection (d). 20 ‘‘(c) REFINANCING DIRECT LOANS.— 21 ‘‘(1) FEDERAL DIRECT LOANS.— 22 ‘‘(A) IN GENERAL.—By not later than 120 23 days after the date of enactment of the Bank 24 on Students Coronavirus Emergency Loan Refi- 25 VerDate Sep 11 2014 17:26 Jul 14, 2020 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S4141.IS S4141 pamtmann on DSKBC07HB2PROD with BILLS 4 •S 4141 IS nancing Act of 2020, the Secretary shall repay 1 a Federal Direct Stafford Loan, a Federal Di- 2 rect Unsubsidized Stafford Loan, a Federal Di- 3 rect PLUS Loan, or a Federal Direct Consoli- 4 dation Loan of the qualified borrower, for which 5 the first disbursement was made, or the appli- 6 cation for the consolidation loan was received, 7 before July 1, 2020, with the proceeds of a refi- 8 nanced Federal Direct Stafford Loan, a Federal 9 Direct Unsubsidized Stafford Loan, a Federal 10 Direct PLUS Loan, or a Federal Direct Con- 11 solidation Loan, respectively, issued to the bor- 12 rower under this section in an amount equal to 13 the sum of the unpaid principal, accrued unpaid 14 interest, and late charges of the original loan. 15 ‘‘(B) INFORMATION.—The Secretary shall 16 notify each qualified borrower of a loan refi- 17 nanced under subparagraph (A) regarding the 18 refinancing and the benefits the refinancing 19 provides to the qualified borrower. 20 ‘‘(2) REFINANCING FFEL, PERKINS, OR PHSA 21 STUDENT LOANS AS REFINANCED FEDERAL DIRECT 22 LOANS.—Upon application of a qualified borrower of 23 any FFEL, Perkins, or PHSA student loan, the 24 Secretary shall make a loan under this part, in an 25 VerDate Sep 11 2014 17:26 Jul 14, 2020 Jkt 099200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S4141.IS S4141 pamtmann on DSKBC07HB2PROD with BILLS 5 •S 4141 IS amount equal to the sum of the unpaid principal, ac- 1 crued unpaid interest, and late charges of the origi- 2 nal loan to the borrower in accordance with the fol- 3 lowing: 4 ‘‘(A) The Secretary shall pay the proceeds 5 of such loan to the holder of the FFEL, Per- 6 kins, or PHSA student loan, in order to dis- 7 charge the borrower from any remaining obliga- 8 tion with respect to the original loan. 9 ‘‘(B) Any Federal student loan made 10 under this section that was originally a loan de- 11 scribed in subsection (a)(1)(A) and that was 12 made, insured, or guaranteed— 13 ‘‘(i) under section 428 shall be a Fed- 14 eral Direct Stafford Loan; 15 ‘‘(ii) under section 428B shall be a 16 Federal Direct PLUS Loan; 17 ‘‘(iii) under section 428H shall be a 18 Federal Direct Unsubsidized Stafford 19 Loan; and 20 ‘‘(iv) under section 428C shall be a 21 Federal Direct Consolidation Loan. 22 ‘‘(C) Any Federal student loan made under 23 this section that was originally a loan described 24 VerDate Sep 11 2014 17:26 Jul 14, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S4141.IS S4141 pamtmann on DSKBC07HB2PROD with BILLS 6 •S 4141 IS in subparagraph (B) or (C) of subsection (a)(1) 1 shall be a Federal Direct Consolidation Loan. 2 ‘‘(D) The interest rate for each loan made 3 by the Secretary under this paragraph shall be 4 the rate provided under subsection (d). 5 ‘‘(d) INTEREST RATES.— 6 ‘‘(1) IN GENERAL.—The interest rate for the 7 refinanced Federal Direct Stafford Loans, Federal 8 Direct Unsubsidized Stafford Loans, Federal Direct 9 PLUS Loans, and Federal Direct Consolidation 10 Loans, shall be a rate equal to— 11 ‘‘(A) in any case where the original loan 12 was a loan under section 428 or 428H, a Fed- 13 eral Direct Stafford loan, or a Federal Direct 14 Unsubsidized Stafford Loan, that was issued to 15 an undergraduate student, a rate equal to the 16 rate for Federal Direct Stafford Loans and 17 Federal Direct Unsubsidized Stafford Loans 18 issued to undergraduate students for the 12- 19 month period beginning on July 1, 2020, and 20 ending on June 30, 2021; 21 ‘‘(B) in any case where the original loan 22 was a loan under section 428 or 428H, a Fed- 23 eral Direct Stafford Loan, or a Federal Direct 24 Unsubsidized Stafford Loan, that was issued to 25 VerDate Sep 11 2014 17:26 Jul 14, 2020 Jkt 099200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S4141.IS S4141 pamtmann on DSKBC07HB2PROD with BILLS 7 •S 4141 IS a graduate or professional student, a rate equal 1 to the rate for Federal Direct Unsubsidized 2 Stafford Loans issued to graduate or profes- 3 sional students for the 12-month period begin- 4 ning on July 1, 2020, and ending on June 30, 5 2021; 6 ‘‘(C) in any case where the original loan 7 was a loan under section 428B or a Federal Di- 8 rect PLUS Loan, a rate equal to the rate for 9 Federal Direct PLUS Loans for the 12-month 10 period beginning on July 1, 2020, and ending 11 on June 30, 2021; 12 ‘‘(D) in any case where the original loan 13 was a loan under section 428C or a Federal Di- 14 rect Consolidation Loan, a rate calculated in ac- 15 cordance with paragraph (2); and 16 ‘‘(E) in any case where the original loan 17 was a Federal student loan described in sub- 18 paragraph (B) or (C) of subsection (a)(1), the 19 lesser of— 20 ‘‘(i)(I) in any case where the original 21 loan was issued to an undergraduate stu- 22 dent, the rate that applies under subpara- 23 graph (A); or 24 VerDate Sep 11 2014 17:26 Jul 14, 2020 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S4141.IS S4141 pamtmann on DSKBC07HB2PROD with BILLS 8 •S 4141 IS ‘‘(II) in any case where the original 1 loan was issued to a graduate or profes- 2 sional student, the rate that applies under 3 subparagraph (B); or 4 ‘‘(ii) the original interest rate of the 5 loan. 6 ‘‘(2) INTEREST RATES FOR REFINANCED CON- 7 SOLIDATION LOANS.— 8 ‘‘(A) METHOD OF CALCULATION.—In 9 order to determine the interest rate for any re- 10 financed Federal Direct Consolidation Loan 11 under paragraph (1)(D), the Secretary shall— 12 ‘‘(i) determine each of the component 13 loans that were originally consolidated in 14 the loan under section 428C or the Federal 15 Direct Consolidation Loan, and calculate 16 the proportion of the unpaid principal bal- 17 ance of the loan under section 428C or the 18 Federal Direct Consolidation Loan that 19 each component loan represents; 20 ‘‘(ii) use the proportions determined 21 in accordance with clause (i) and the inter- 22 est rate applicable for each component 23 loan, as determined under subparagraph 24 (B), to calculate the weighted average of 25 VerDate Sep 11 2014 17:26 Jul 14, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S4141.IS S4141 pamtmann on DSKBC07HB2PROD with BILLS 9 •S 4141 IS the interest rates on the loans consolidated 1 into the loan under section 428C or the 2 Federal Direct Consolidation Loan; and 3 ‘‘(iii) apply the weighted average cal- 4 culated under clause (ii) as the interest 5 rate for the refinanced Federal Direct Con- 6 solidation Loan. 7 ‘‘(B) INTEREST RATES FOR COMPONENT 8 LOANS.—The interest rates for the component 9 loans of a loan made under section 428C or a 10 Federal Direct Consolidation Loan shall be the 11 following: 12 ‘‘(i) The interest rate for any loan 13 under section 428 or 428H, Federal Direct 14 Stafford Loan, or Federal Direct Unsub- 15 sidized Stafford Loan, that is issued to an 16 undergraduate student shall be a rate 17 equal to the lesser of— 18 ‘‘(I) the rate for Federal Direct 19 Stafford Loans and Federal Direct 20 Unsubsidized Stafford Loans issued 21 to undergraduate students for the 12- 22 month period beginning on July 1, 23 2020, and ending on June 30, 2021; 24 or 25 VerDate Sep 11 2014 17:26 Jul 14, 2020 Jkt 099200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S4141.IS S4141 pamtmann on DSKBC07HB2PROD with BILLS 10 •S 4141 IS ‘‘(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, that is issued to a 6 graduate or professional student shall be a 7 rate 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 17:26 Jul 14, 2020 Jkt 099200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S4141.IS S4141 pamtmann on DSKBC07HB2PROD with BILLS 11 •S 4141 IS ‘‘(II) the original interest rate of 1 the component loan. 2 ‘‘(iv) The interest rate for any loan 3 under part E of this title, or subpart II of 4 part A of title VII or part E of title VIII 5 of the Public Health Service Act (42 6 U.S.C. 292q et seq.; 297a et seq.), shall be 7 a rate equal to the lesser of— 8 ‘‘(I) the rate for Federal Direct 9 Stafford Loans and Federal Direct 10 Unsubsidized Stafford Loans issued 11 to graduate students for the 12-month 12 period beginning on July 1, 2020, and 13 ending on June 30, 2021; or 14 ‘‘(II) the original interest rate of 15 the component loan. 16 ‘‘(v) The interest rate for any compo- 17 nent loan that is a loan under section 18 428C or a Federal Direct Consolidation 19 Loan shall be the weighted average of the 20 interest rates that would apply under this 21 subparagraph for each loan comprising the 22 component consolidation loan. 23 ‘‘(3) FIXED RATE.—The applicable rate of in- 24 terest determined under paragraph (1) for a refi- 25 VerDate Sep 11 2014 22:32 Jul 15, 2020 Jkt 099200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S4141.IS S4141 pamtmann on DSKBC07HB2PROD with BILLS 12 •S 4141 IS nanced loan under this section shall be fixed for the 1 period of the loan. 2 ‘‘(4) RULE OF CONSTRUCTION.—Nothing in 3 this section shall be construed to prevent a borrower 4 of a Federal student loan described in subparagraph 5 (B) or (C) of subsection (a)(1) from consolidating 6 such loans with other loans eligible for consolidation 7 under this section, or to require such a borrower to 8 consolidate such loans with other Federal student 9 loans into a single consolidation loan under this sec- 10 tion. 11 ‘‘(e) TERMS AND CONDITIONS OF LOANS.— 12 ‘‘(1) IN GENERAL.—A loan that is refinanced 13 under this section shall have the same terms and 14 conditions as the original loan, except as otherwise 15 provided in this section. 16 ‘‘(2) NO AUTOMATIC EXTENSION OF REPAY- 17 MENT PERIOD.—Refinancing a loan under this sec- 18 tion shall not result in the extension of the duration 19 of the repayment period of the loan, and the bor- 20 rower shall retain the same repayment term that 21 was in effect on the original loan. Nothing in this 22 paragraph shall be construed to prevent a borrower 23 from electing a different repayment plan at any time 24 in accordance with section 455(d)(3). 25 VerDate Sep 11 2014 17:26 Jul 14, 2020 Jkt 099200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S4141.IS S4141 pamtmann on DSKBC07HB2PROD with BILLS 13 •S 4141 IS ‘‘(3) SPECIAL RULE FOR REFINANCED PERKINS 1 AND HEALTH LOANS.—Notwithstanding paragraph 2 (1), in the case of a loan that is refinanced under 3 this section as a Federal Direct Consolidation Loan 4 and that was originally a loan described in subp [Text truncated for display. Full text available on Congress.gov.]