Responsible Student Loan Solutions Act

Summary: Responsible Student Loan Solutions Act - Amends title IV (Student Assistance) of the Higher Education Act of 1965 to limit the unpaid amount of Direct Stafford loans that students may amass before completing their undergraduate education. Varies that limit on the basis of whether a student is a dependent student, independent student, or dependent student whose parents are unable to borrow a Direct PLUS loan. Limits the amount of Direct Stafford loans that students may borrow in any academic year before the completion of their undergraduate studies. Varies that limit on the basis of whether a student: (1) is a dependent student, independent student, or dependent student whose parents are unable to borrow a Direct PLUS loan; and (2) has or has not successfully completed the first year or first and second years of their undergraduate studies. Sets the annual interest rate on Direct loans at the bond equivalent rate on 91-day Treasury bills plus a percentage that: (1) represents the total cost of administering the Direct Loan program and borrower benefits, and (2) results in the program being revenue neutral for the applicable 12-month period. Allows the Secretary of Education to use different percentages under that formula for the Direct Stafford Loan, Unsubsidized Stafford Loan, PLUS Loan, and Consolidation Loan programs. Caps the annual interest rate for Direct Stafford loans at 6.8%, and for Direct Unsubsidized Stafford loans and Direct PLUS and Consolidation loans at 8.25% Directs the Secretary to charge the borrower of a Direct PLUS loan an origination fee of up to 3% of the loan principal. Limits the applicability of the preceding provisions to loans first disbursed on or after July 1, 2013. Authorizes the Secretary to refinance federal PLUS and Stafford loans to permit borrowers to obtain an interest rate determined pursuant to this Act's provisions. Allows the Secretary to charge borrowers an administrative fee for refinancing such loans that does not exceed 0.5% of the loan principal.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Responsible Student Loan Solutions 
Act''.

SEC. 2. STUDENT LOAN AFFORDABILITY.

    (a) Terms and Conditions of Federal Direct Loans.--Section 455 of 
the Higher Education Act of 1965 (20 U.S.C. 1087e) is amended--
            (1) in subsection (a), by adding at the end the following:
            ``(4) Federal direct stafford loan limits for new loans on 
        or after july 1, 2013.--
                    ``(A) Aggregate loan limits.--Notwithstanding any 
                other provision of this Act, with respect to Federal 
                Direct Stafford Loans for which the first disbursement 
                is made on or after July 1, 2013, the aggregate unpaid 
                principal amount for all such loans made on or after 
                such date (and including Federal Direct Stafford Loans 
                first disbursed before such date) to any student shall 
                not at any time exceed--
                            ``(i) $31,000, in the case of any dependent 
                        student (except an undergraduate dependent 
                        student whose parents are unable to borrow 
                        under the Federal Direct PLUS Loan Program) who 
                        has not successfully completed a program of 
                        undergraduate education; or
                            ``(ii) $57,500, in the case of any 
                        independent student, or an undergraduate 
                        dependent student whose parents are unable to 
                        borrow under the Federal Direct PLUS Loan 
                        Program, who has not successfully completed a 
                        program of undergraduate education.
                    ``(B) Annual loan limits.--Notwithstanding any 
                other provision of this Act, with respect to Federal 
                Direct Stafford Loans for which the first disbursement 
                is made on or after July 1, 2013, the maximum annual 
                amount for all such loans made on or after such date a 
                student who has not successfully completed a program of 
                undergraduate education may borrow in any academic year 
                shall not at any time exceed--
                            ``(i) in the case of a dependent student 
                        (except an undergraduate dependent student 
                        whose parents are unable to borrow under the 
                        Federal Direct PLUS Loan Program)--
                                    ``(I) who has not successfully 
                                completed the first year of a program 
                                of undergraduate education, $5,500;
                                    ``(II) who has successfully 
                                completed such first year but has not 
                                successfully completed the remainder of 
                                a program of undergraduate education, 
                                $6,500; and
                                    ``(III) who has successfully 
                                completed the first and second years of 
                                a program of undergraduate education 
                                but has not successfully completed the 
                                remainder of such program, $7,500; and
                            ``(ii) in the case of an independent 
                        student, or an undergraduate dependent student 
                        whose parents are unable to borrow under the 
                        Federal Direct PLUS Loan Program--
                                    ``(I) who has not successfully 
                                completed the first year of a program 
                                of undergraduate education, $9,500;
                                    ``(II) who has successfully 
                                completed such first year but has not 
                                successfully completed the remainder of 
                                a program of undergraduate education, 
                                $10,500; and
                                    ``(III) who has successfully 
                                completed the first and second years of 
                                a program of undergraduate education 
                                but has not successfully completed the 
                                remainder of such program, $12,500.'';
            (2) in subsection (b)--
                    (A) in paragraph (7)--
                            (i) in the paragraph heading, by inserting 
                        ``, and before july 1, 2013'' after ``2006'';
                            (ii) in subparagraph (A), by inserting 
                        ``and before July 1, 2013,'' after ``2006,'';
                            (iii) in subparagraph (B), by inserting 
                        ``and before July 1, 2013,'' after ``2006,''; 
                        and
                            (iv) in subparagraph (C), by inserting 
                        ``and before July 1, 2013,'' after ``2006,'';
                    (B) by redesignating paragraphs (8) and (9) as 
                paragraphs (9) and (10), respectively; and
                    (C) by inserting after paragraph (7) the following:
            ``(8) Interest rates for new loans on or after july 1, 
        2013.--
                    ``(A) Rates for fdsl and fdusl.--Notwithstanding 
                the preceding paragraphs of this subsection, for--
                            ``(i) Federal Direct Stafford Loans for 
                        which the first disbursement is made on or 
                        after July 1, 2013, the applicable rate of 
                        interest shall, during any 12-month period 
                        beginning on July 1 and ending on June 30, be 
                        determined on the preceding June 1 and be equal 
                        to--
                                    ``(I) the bond equivalent rate of 
                                91-day Treasury bills auctioned at the 
                                final auction held prior to such June 
                                1; plus
                                    ``(II) a percentage determined 
                                under subparagraph (D),
                        except that such rate shall not exceed 6.8 
                        percent; and
                            ``(ii) Federal Direct Unsubsidized Stafford 
                        Loans for which the first disbursement is made 
                        on or after July 1, 2013, the applicable rate 
                        of interest shall, during any 12-month period 
                        beginning on July 1 and ending on June 30, be 
                        determined on the preceding June 1 and be equal 
                        to--
                                    ``(I) the bond equivalent rate of 
                                91-day Treasury bills auctioned at the 
                                final auction held prior to such June 
                                1; plus
                                    ``(II) a percentage determined 
                                under subparagraph (D),
                        except that such rate shall not exceed 8.25 
                        percent.
                    ``(B) Rates for plus loans.--Notwithstanding the 
                preceding paragraphs of this subsection, for Federal 
                Direct PLUS Loans for which the first disbursement is 
                made on or after July 1, 2013, the applicable rate of 
                interest shall, during any 12-month period beginning on 
                July 1 and ending on June 30, be determined on the 
                preceding June 1 and be equal to--
                            ``(i) the bond equivalent rate of 91-day 
                        Treasury bills auctioned at the final auction 
                        held prior to such June 1; plus
                            ``(ii) a percentage determined under 
                        subparagraph (D),
                except that such rate shall not exceed 8.25 percent.
                    ``(C) Consolidation loans.--Notwithstanding the 
                preceding paragraphs of this subsection, for Federal 
                Direct Consolidation Loans for which the first 
                disbursement is made on or after July 1, 2013, the 
                applicable rate of interest shall, during any 12-month 
                period beginning on July 1 and ending on June 30, be 
                determined on the preceding June 1 and be equal to--
                            ``(i) the bond equivalent rate of 91-day 
                        Treasury bills auctioned at the final auction 
                        held prior to such June 1; plus
                            ``(ii) a percentage determined under 
                        subparagraph (D),
                except that such rate shall not exceed 8.25 percent.
                    ``(D) Percentage determination.--Except as provided 
                in the flush text under clauses (i) and (ii) of 
                subparagraph (A), subparagraph (B), and subparagraph 
                (C), during each 12-month period beginning on July 1 
                and ending on June 30, beginning on July 1, 2013, the 
                Secretary shall determine a percentage for application 
                under clauses (i)(II) and (ii)(II) of subparagraph (A), 
                subparagraph (B)(ii), and subparagraph (C)(ii). In 
                carrying out this subparagraph, the Secretary may 
                determine different percentages for application under 
                each such clause or subparagraph, as long as such 
                percentages in the aggregate--
                            ``(i) represent the total cost of 
                        administering the Federal Direct Loan program 
                        and borrower benefits; and
                            ``(ii) result in such program being revenue 
                        neutral for such 12-month period.''; and
            (3) in subsection (c), by adding at the end the following:
            ``(3) Reduction of fee for federal direct plus loans.--
        Notwithstanding paragraph (1), for any Federal Direct PLUS Loan 
        for which the first disbursement is made on or after July 1, 
        2013, the Secretary shall charge the borrower of the Loan an 
        origination fee of not more than 3 percent of the principal 
        amount of the loan.''.
    (b) Refinancing.--Part D of title IV of the Higher Education Act of 
1965 (20 U.S.C. 1087a et seq.) is amended by adding at the end the 
following:

``SEC. 460A. REFINANCING.

    ``(a) Refinancing for PLUS Loans.--
            ``(1) Reissuing federal direct plus loans.--The Secretary 
        may reissue a Federal Direct PLUS Loan for which the first 
        disbursement was made before July 1, 2013, that is not in 
        default in order to permit the borrower to obtain the interest 
        rate provided under section 455(b)(8)(B).
            ``(2) Purchasing federal plus loans.--The Secretary may 
        purchase a Federal PLUS Loan that is not in default and reissue 
        such loan in order to permit the borrower to obtain the 
        interest rate provided under section 455(b)(8)(B).
            ``(3) Administrative fee.--The Secretary may charge a 
        borrower an amount not to exceed 0.5 percent of the principal 
        amount of the loan to be reissued or purchased to cover the 
        administrative cost of reissuing or purchasing such loan, which 
        amount shall be paid to the Secretary.
    ``(b) Refinancing for Stafford Loans.--
            ``(1) Reissuing federal direct stafford loans.--The 
        Secretary may reissue a Federal Direct Stafford Loan or a 
        Federal Direct Unsubsidized Stafford Loan for which the first 
        disbursement was made before July 1, 2013, that is not in 
        default in order to permit the borrower to obtain the interest 
        rate provided under section 455(b)(8)(A).
            ``(2) Purchasing federal stafford loans.--The Secretary may 
        purchase a Federal Stafford Loan or a Federal Unsubsidized 
        Stafford Loan that is not in default and reissue such loan in 
        order to permit the borrower to obtain the interest rate 
        provided under section 455(b)(8)(A).
            ``(3) Administrative fee.--The Secretary may charge a 
        borrower an amount not to exceed 0.5 percent of the principal 
        amount of the loan to be reissued or purchased to cover the 
        administrative cost of reissuing or purchasing such loan, which 
        amount shall be paid to the Secretary.''.