To provide interest-free deferment on unsubsidized student loans during periods of unemployment, and for other purposes.

Summary: Graduate Success Act - Amends title IV (Student Assistance) of the Higher Education Act of 1965 to direct the Secretary of Education to pay the interest that accrues on unsubsidized Federal Family Education Loans (FFELs) and Direct Loans (DLs) that are deferred due to a student borrower's lack of full-time employment.

Requires the Secretary to pay the interest that accrues on Federal Consolidation Loans that are in deferment due to a borrower's lack of full-time employment, provided the application for such a loan is received on or after this Act's enactment.

Directs the Secretary to pay the interest that accrues on FFELs and DLs that are subject to income-based repayment provisions and are in deferment due to a borrower's lack of full-time employment.

Limits these interest-free deferment periods to those occurring on or after this Act's enactment and covering no more than three years of full-time unemployment.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Graduate Success Act''.

SEC. 2. INTEREST-FREE DEFERMENT OF UNSUBSIDIZED LOANS DURING PERIODS OF 
              UNEMPLOYMENT.

    (a) FFEL Unsubsidized Loan Deferment.--
            (1) Section 428H(e)(2) of the Higher Education Act of 1965 
        (20 U.S.C. 1078-8(e)(2)) is amended--
                    (A) in subparagraph (A), by inserting ``Except as 
                provided in subparagraph (C),'' before ``Interest on''; 
                and
                    (B) by adding at the end the following:
            ``(C) Interest on loans made under this section for which 
        payments are deferred under clause (ii) of section 
        428(b)(1)(M), for a period of deferment granted to a borrower 
        on or after the date of enactment of the Graduate Success Act, 
        shall accrue and be paid by the Secretary during any period 
        during which loans are so deferred, not in excess of 3 
        years.''.
            (2) Conforming amendment.--Section 428(b)(1)(Y)(iii) of the 
        Higher Education Act of 1965 (20 U.S.C. 1078(b)(1)(Y)(iii)) is 
        amended by inserting ``(other than a deferment under clause 
        (ii) of such subparagraph on or after the date of enactment of 
        the Graduate Success Act)'' after ``of this paragraph''.
    (b) Direct Unsubsidized Loan Deferment.--Section 455(f)(1) of the 
Higher Education Act of 1965 (20 U.S.C. 1087e(f)(1)) is amended--
            (1) in subparagraph (A)--
                    (A) by striking ``or'' at the end of clause (i); 
                and
                    (B) by adding at the end the following:
                            ``(iii) a Federal Direct Unsubsidized 
                        Stafford Loan, with respect to a period of 
                        deferment described in subparagraph (B) of 
                        paragraph (2) granted to a borrower on or after 
                        the date of enactment of the Graduate Success 
                        Act; or''; and
            (2) in subparagraph (B), by inserting ``not described in 
        subparagraph (A)(iii)'' after ``Unsubsidized Stafford Loan''.
    (c) Treatment of Consolidation Loans.--Section 428C(b)(4)(C)(ii) of 
the Higher Education Act of 1965 (20 U.S.C. 1078-3(b)(4)(C)(ii)) is 
amended--
            (1) by striking ``or'' at the end of subclause (II);
            (2) by redesignating subclause (III) as subclause (IV);
            (3) by inserting after subclause (II) the following:
                                    ``(III) by the Secretary, in the 
                                case of a consolidation loan for which 
                                the application is received on or after 
                                the date of enactment of the Graduate 
                                Success Act, except that the Secretary 
                                shall pay such interest only for a 
                                period not in excess of 3 years for 
                                which the borrower would be eligible 
                                for a deferral under clause (ii) of 
                                section 428(b)(1)(M); or''; and
            (4) in subclause (IV) (as so redesignated by this 
        subsection), by striking ``(I) or (II)'' and inserting ``(I), 
        (II), or (III)''.
    (d) Income-Based Repayment.--Section 493C(b)(3) of the Higher 
Education Act of 1965 (20 U.S.C. 10983(b)(3)) is amended--
            (1) in subparagraph (A), by striking ``and'' after the 
        semicolon;
            (2) by redesignating subparagraph (B) as subparagraph (C);
            (3) by inserting after subparagraph (A) the following:
                    ``(B) shall, on subsidized and unsubsidized loans, 
                be paid by the Secretary for a period of not more than 
                3 years during which the borrower is eligible for a 
                deferment due to unemployment described in section 
                455(f)(2)(B) (regardless of whether the student is in 
                such a deferment), except that--
                            ``(i) this subparagraph shall only apply to 
                        periods during which the borrower is eligible 
                        for a such deferment on or after the date of 
                        enactment of the Graduate Success Act; and
                            ``(ii) in the case of a subsidized loan, 
                        such period shall not include any period 
                        described in subparagraph (A) or any period 
                        during which the borrower is in deferment due 
                        to an economic hardship described in section 
                        435(o); and''; and
            (4) in subparagraph (C) (as so redesignated by paragraph 
        (2))--
                    (A) in clause (i), by striking ``subparagraph (A)'' 
                and inserting ``subparagraphs (A) and (B)''; and
                    (B) in clause (ii), by inserting ``, subject to 
                subparagraph (B),'' after ``unsubsidized loan''.