Student Loan Refinancing Act

I 118TH CONGRESS 1ST SESSION H. R. 4139 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 JUNE 14, 2023 Mr. TURNER (for himself, Mr. NORCROSS, Mr. FITZPATRICK, and Mr. DOG- GETT) introduced the following bill; which was referred to the Committee on Education and the Workforce 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 ‘‘Student Loan Refi- 4 nancing Act’’. 5 VerDate Sep 11 2014 04:59 Jul 15, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H4139.IH H4139 pbinns on DSKJLVW7X2PROD with $$_JOB 2 •HR 4139 IH TITLE I—REFINANCING 1 PROGRAMS 2 SEC. 101. REFINANCING PROGRAMS. 3 (a) PROGRAM AUTHORITY.—Section 451(a) of the 4 Higher Education Act of 1965 (20 U.S.C. 1087a(a)) is 5 amended— 6 (1) by striking ‘‘and (2)’’ and inserting ‘‘(2)’’; 7 and 8 (2) by inserting ‘‘; and (3) to make loans under 9 section 460A’’ after ‘‘section 459A’’. 10 (b) REFINANCING PROGRAM.—Part D of title IV of 11 the Higher Education Act of 1965 (20 U.S.C. 1087a et 12 seq.) is amended by adding at the end the following: 13 ‘‘SEC. 460A. REFINANCING FFEL AND FEDERAL DIRECT 14 LOANS. 15 ‘‘(a) IN GENERAL.—Beginning not later than 30 16 days after the date of enactment of the Student Loan Re- 17 financing Act, the Secretary shall establish a program 18 under which the Secretary, upon the receipt of an applica- 19 tion from a borrower, makes a loan under this part, in 20 accordance with the provisions of this section, in order to 21 permit the borrower to obtain the interest rate provided 22 under subsection (c). 23 ‘‘(b) REFINANCING DIRECT LOANS.— 24 VerDate Sep 11 2014 04:59 Jul 15, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H4139.IH H4139 pbinns on DSKJLVW7X2PROD with $$_JOB 3 •HR 4139 IH ‘‘(1) FEDERAL DIRECT LOANS.—Upon applica- 1 tion of a borrower, the Secretary shall repay a Fed- 2 eral Direct Stafford Loan, a Federal Direct Unsub- 3 sidized Stafford Loan, a Federal Direct PLUS 4 Loan, or a Federal Direct Consolidation Loan of the 5 borrower, with the proceeds of a refinanced Federal 6 Direct Stafford Loan, a Federal Direct Unsubsidized 7 Stafford Loan, a Federal Direct PLUS Loan, or a 8 Federal Direct Consolidation Loan, respectively, 9 issued to the borrower in an amount equal to the 10 sum of the unpaid principal, accrued unpaid inter- 11 est, and late charges of the original loan. 12 ‘‘(2) REFINANCING FFEL PROGRAM LOANS AS 13 REFINANCED FEDERAL DIRECT LOANS.—Upon ap- 14 plication of a borrower for any loan that was made, 15 insured, or guaranteed under part B, the Secretary 16 shall make a loan under this part, in an amount 17 equal to the sum of the unpaid principal, accrued 18 unpaid interest, and late charges of the original loan 19 to the borrower in accordance with the following: 20 ‘‘(A) The Secretary shall pay the proceeds 21 of such loan to the eligible lender of the loan 22 made, insured, or guaranteed under part B, in 23 order to discharge the borrower from any re- 24 VerDate Sep 11 2014 04:59 Jul 15, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H4139.IH H4139 pbinns on DSKJLVW7X2PROD with $$_JOB 4 •HR 4139 IH maining obligation to the lender with respect to 1 the original loan. 2 ‘‘(B) A loan made under this section that 3 was originally a loan made, insured, or guaran- 4 teed— 5 ‘‘(i) under section 428 shall be a Fed- 6 eral Direct Stafford Loan; 7 ‘‘(ii) under section 428B shall be a 8 Federal Direct PLUS Loan; 9 ‘‘(iii) under section 428H shall be a 10 Federal Direct Unsubsidized Stafford 11 Loan; and 12 ‘‘(iv) under section 428C shall be a 13 Federal Direct Consolidation Loan. 14 ‘‘(C) The interest rate for each loan made 15 by the Secretary under this paragraph shall be 16 the rate provided under subsection (c). 17 ‘‘(c) INTEREST RATES.— 18 ‘‘(1) IN GENERAL.—The interest rate for the 19 refinanced Federal Direct Stafford Loans, Federal 20 Direct Unsubsidized Stafford Loans, Federal Direct 21 PLUS Loans, and Federal Direct Consolidation 22 Loans, shall be a rate equal to the following: 23 ‘‘(A) FEDERAL DIRECT STAFFORD 24 LOANS.— 25 VerDate Sep 11 2014 04:59 Jul 15, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H4139.IH H4139 pbinns on DSKJLVW7X2PROD with $$_JOB 5 •HR 4139 IH ‘‘(i) RATES FOR UNDERGRADUATE 1 FDSL.—In the case of a refinanced Federal 2 Direct Stafford loan for which the original 3 loan was a loan under section 428 or a 4 Federal Direct Stafford loan that was 5 made to an undergraduate student, the 6 rate of interest on such refinanced Federal 7 Direct Stafford Loan shall be equal to the 8 rate of interest for a Federal Direct Staf- 9 ford loan made to an undergraduate stu- 10 dent for which the first disbursement is 11 made on the date on which the refinanced 12 Federal Direct Stafford Loan is made 13 under this section. 14 ‘‘(ii) RATES FOR GRADUATE AND PRO- 15 FESSIONAL FDSL.—In the case of a refi- 16 nanced Federal Direct Stafford loan for 17 which the original loan was a loan under 18 section 428 or a Federal Direct Stafford 19 loan that was made to a graduate or pro- 20 fessional student, the rate of interest on 21 such refinanced Federal Direct Stafford 22 Loan shall be equal to the rate of interest 23 for a Federal Direct Stafford loan made to 24 a graduate or professional student for 25 VerDate Sep 11 2014 04:59 Jul 15, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H4139.IH H4139 pbinns on DSKJLVW7X2PROD with $$_JOB 6 •HR 4139 IH which the first disbursement is made on 1 the date on which the refinanced Federal 2 Direct Stafford Loan is made under this 3 section. 4 ‘‘(B) FEDERAL DIRECT UNSUBSIDIZED 5 STAFFORD LOANS.— 6 ‘‘(i) RATES FOR UNDERGRADUATE 7 FDUSL.—In the case of a refinanced Fed- 8 eral Direct Unsubsidized Stafford loan for 9 which the original loan was a loan under 10 section 428H or a Federal Direct Unsub- 11 sidized Stafford Loan that was made to an 12 undergraduate student, the rate of interest 13 on such refinanced Federal Direct Unsub- 14 sidized Stafford Loan shall be equal to the 15 rate of interest for a Federal Direct Un- 16 subsidized Stafford loan made to an under- 17 graduate student for which the first dis- 18 bursement is made on the date on which 19 the refinanced Federal Direct Unsub- 20 sidized Stafford Loan is made under this 21 section. 22 ‘‘(ii) RATES FOR GRADUATE AND PRO- 23 FESSIONAL FDUSL.—In the case of a refi- 24 nanced Federal Direct Unsubsidized Staf- 25 VerDate Sep 11 2014 04:59 Jul 15, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H4139.IH H4139 pbinns on DSKJLVW7X2PROD with $$_JOB 7 •HR 4139 IH ford loan for which the original loan was a 1 loan under section 428H or a Federal Di- 2 rect Unsubsidized Stafford Loan that was 3 made to an graduate student, the rate of 4 interest on such refinanced Federal Direct 5 Unsubsidized Stafford Loan shall be equal 6 to the rate of interest for a Federal Direct 7 Unsubsidized Stafford loan made to a 8 graduate student for which the first dis- 9 bursement is made on the date on which 10 the refinanced Federal Direct Unsub- 11 sidized Stafford Loan is made under this 12 section. 13 ‘‘(C) FEDERAL DIRECT PLUS LOANS.—In 14 the case of a refinanced Federal Direct PLUS 15 Loan for which the original loan was a loan 16 under section 428B or a Federal Direct PLUS 17 Loan, the rate of interest on such refinanced 18 Federal Direct PLUS loan shall be equal to the 19 rate of interest for a Federal Direct PLUS loan 20 for which the first disbursement is made on the 21 date on which the refinanced Federal Direct 22 PLUS loan is made under this section. 23 ‘‘(D) CONSOLIDATION LOANS.—In the case 24 of a refinanced Federal Direct Consolidation 25 VerDate Sep 11 2014 04:59 Jul 15, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H4139.IH H4139 pbinns on DSKJLVW7X2PROD with $$_JOB 8 •HR 4139 IH Loan for which the original loan was a loan 1 under section 428C or a Federal Direct Con- 2 solidation Loan, the rate of interest of such re- 3 financed Federal Direct Consolidation Loan 4 shall be equal to the lower of a rate calculated 5 in accordance with paragraph (2). 6 ‘‘(2) INTEREST RATES FOR CONSOLIDATION 7 LOANS.— 8 ‘‘(A) METHOD OF CALCULATION.—In 9 order to determine the interest rate for any re- 10 financed Federal Direct Consolidation Loan 11 under paragraph (1)(D), the Secretary shall— 12 ‘‘(i) determine each of the component 13 loans that were originally consolidated in 14 the loan under section 428C or the Federal 15 Direct Consolidation Loan, and calculate 16 the proportion of the unpaid principal bal- 17 ance of the loan under section 428C or the 18 Federal Direct Consolidation Loan that 19 each component loan represents; 20 ‘‘(ii) use the proportions determined 21 in accordance with clause (i) and the inter- 22 est rate applicable for each component 23 loan, as determined under subparagraph 24 (B), to calculate the weighted average of 25 VerDate Sep 11 2014 04:59 Jul 15, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H4139.IH H4139 pbinns on DSKJLVW7X2PROD with $$_JOB 9 •HR 4139 IH 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) FEDERAL DIRECT STAFFORD 13 LOANS.— 14 ‘‘(I) UNDERGRADUATE FDSL.— 15 The interest rate for any component 16 loan that is a loan under section 428 17 or a Federal Direct Stafford Loan 18 made to an undergraduate student 19 shall be a rate equal to the lesser of— 20 ‘‘(aa) the rate of interest for 21 a refinanced Federal Direct Staf- 22 ford loan determined under para- 23 graph (1)(A)(i) if such loan were 24 made on the date on which the 25 VerDate Sep 11 2014 04:59 Jul 15, 2023 Jkt 039200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H4139.IH H4139 pbinns on DSKJLVW7X2PROD with $$_JOB 10 •HR 4139 IH refinanced Federal Direct Con- 1 solidation Loan is made under 2 this section; or 3 ‘‘(bb) the original interest 4 rate of the component loan. 5 ‘‘(II) GRADUATE OR PROFES- 6 SIONAL FDSL.—The interest rate for 7 any component loan that is a loan 8 under section 428 or a Federal Direct 9 Stafford Loan made to a graduate or 10 professional student shall be a rate 11 equal to the lesser of— 12 ‘‘(aa) the rate of interest for 13 a refinanced Federal Direct Staf- 14 ford loan determined under para- 15 graph (1)(A)(ii) if such loan were 16 made on the date on which the 17 refinanced Federal Direct Con- 18 solidation Loan is made under 19 this section; or 20 ‘‘(bb) the original interest 21 rate of the component loan. 22 ‘‘(ii) FEDERAL DIRECT UNSUBSIDIZED 23 STAFFORD LOANS.— 24 VerDate Sep 11 2014 04:59 Jul 15, 2023 Jkt 039200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H4139.IH H4139 pbinns on DSKJLVW7X2PROD with $$_JOB 11 •HR 4139 IH ‘‘(I) UNDERGRADUATE FDUSL.— 1 The interest rate for any component 2 loan that is a loan under section 3 428H or a Federal Direct Unsub- 4 sidized Stafford Loan made to an un- 5 dergraduate student shall be a rate 6 equal to the lesser of— 7 ‘‘(aa) the rate of interest for 8 a refinanced Federal Direct Un- 9 subsidized Stafford loan deter- 10 mined under paragraph (1)(B)(i) 11 if such loan were made on the 12 date on which the refinanced 13 Federal Direct Consolidation 14 Loan is made under this section; 15 or 16 ‘‘(bb) the original interest 17 rate of the component loan. 18 ‘‘(II) GRADUATE FDUSL.—The 19 interest rate for any component loan 20 that is a loan under section 428H or 21 a Federal Direct Unsubsidized Staf- 22 ford Loan made to a graduate or pro- 23 fessional student shall be a rate equal 24 to the lesser of— 25 VerDate Sep 11 2014 04:59 Jul 15, 2023 Jkt 039200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H4139.IH H4139 pbinns on DSKJLVW7X2PROD with $$_JOB 12 •HR 4139 IH ‘‘(aa) the rate of interest for 1 a refinanced Federal Direct Un- 2 subsidized Stafford loan deter- 3 mined under paragraph (1)(B)(ii) 4 if such loan were made on the 5 date on which the refinanced 6 Federal Direct Consolidation 7 Loan is made under this section; 8 or 9 ‘‘(bb) the original interest 10 rate of the component loan. 11 ‘‘(iii) FEDERAL DIRECT PLUS 12 LOANS.—The interest rate for any compo- 13 nent loan that is a loan any loan under 14 section 428B or Federal Direct PLUS 15 Loan shall be a rate equal to the lesser 16 of— 17 ‘‘(I) the rate of interest for a re- 18 financed Federal Direct PLUS loan 19 determined under paragraph (1)(C) if 20 such loan were made on the date on 21 which the refinanced Federal Direct 22 Consolidation Loan is made under 23 this section; or 24 VerDate Sep 11 2014 04:59 Jul 15, 2023 Jkt 039200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H4139.IH H4139 pbinns on DSKJLVW7X2PROD with $$_JOB 13 •HR 4139 IH ‘‘(II) the original interest rate of 1 the component loan. 2 ‘‘(iv) FEDERAL DIRECT CONSOLIDA- 3 TION LOAN.—The interest rate for any 4 component loan that is a loan under sec- 5 tion 428C or a Federal Direct Consolida- 6 tion Loan shall be the weighted average of 7 the interest rates that would apply under 8 this subparagraph for each loan comprising 9 the component consolidation loan. 10 ‘‘(v) OTHER LOANS.—The interest 11 rate for any eligible loan that is a compo- 12 nent of a loan made under section 428C or 13 a Federal Direct Consolidation Loan and 14 is not described in clauses (i) through (iv) 15 shall be the interest rate on the original 16 component loan. 17 ‘‘(3) FIXED RATE.—The applicable rate of in- 18 terest determined under paragraph (1) for a refi- 19 nanced loan under this section shall be fixed for the 20 period of the loan. 21 ‘‘(d) TERMS AND CONDITIONS OF LOANS.— 22 ‘‘(1) IN GENERAL.—Except as otherwise pro- 23 vided in this section, a loan that is refinanced under 24 this section shall have the same terms and condi- 25 VerDate Sep 11 2014 04:59 Jul 15, 2023 Jkt 039200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6201 E:\BILLS\H4139.IH H4139 pbinns on DSKJLVW7X2PROD with $$_JOB 14 •HR 4139 IH tions as the original loan, including any suspensions 1 of payments or i [Text truncated for display. 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