To provide interest-free deferment on unsubsidized student loans made to recent college students during periods when the national unemployment rate is above 7 percent and other periods of deferment.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Unshackling Students to Lead, Excel, 
Act, Develop, and Serve Act of 2012'' or the ``U.S. LEADS Act''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) Outstanding student loan debt will reach one trillion 
        dollars this year.
            (2) In 2008, two-thirds of students graduating with a 
        bachelor's degree had outstanding student loan debt.
            (3) In 2010, the average debt owed by college graduates 
        paying off student loans was $24,000.
            (4) Of all students who graduated with a 4-year degree in 
        2009, only 55.6 percent are working in jobs that require a 
        college degree.
            (5) Of all students who graduated with a 4-year degree in 
        2009, 22.4 percent are not working.
            (6) The median student loan debt for students who graduated 
        from college between 2006 and 2010 is $20,000.
            (7) Average in-State tuition and fees at public 4-year 
        institutions of higher education have risen 8.3 percent between 
        the 2010-2011 and 2011-2012 academic years.

SEC. 3. INTEREST-FREE DEFERMENT DURING PERIODS WHEN THE NATIONAL 
              UNEMPLOYMENT RATE EXCEEDS 7 PERCENT.

    (a) FFEL Subsidized Loan Deferment.--Section 428(b)(1)(M) of the 
Higher Education Act of 1965 (20 U.S.C. 1078(b)(1)(M)) is amended--
            (1) by striking ``or'' at the end of clause (iii);
            (2) by adding ``or'' at the end of clause (iv); and
            (3) by adding at the end the following new clause:
                            ``(v) in a case of a borrower who is 
                        between the ages of 21 and 25, inclusive, and a 
                        recent college student, as defined in section 
                        455(f)(5), with respect to loans made under 
                        this section to such borrower for a period of 
                        enrollment during which the borrower was 
                        pursuing a degree described in subparagraph (A) 
                        of such section 455(f)(5)--
                                    ``(I) beginning as soon as 
                                practicable after the last day of the 
                                second consecutive month for which the 
                                Bureau of Labor Statistics of the 
                                Department of Labor (in this paragraph 
                                referred to as the `Bureau') publishes 
                                a national unemployment rate that 
                                exceeds 7 percent, and ending as soon 
                                as practicable after the Bureau 
                                publishes a national unemployment rate 
                                that is 7 percent or lower, except that 
                                such period shall not exceed 5 years; 
                                or
                                    ``(II) beginning as soon as 
                                practicable after the last day of the 
                                second consecutive month for which the 
                                Bureau publishes a national 
                                unemployment rate for individuals ages 
                                21 through 25 years old that exceeds 9 
                                percent, and ending as soon as 
                                practicable after the Bureau publishes 
                                a national unemployment rate for such 
                                individuals that is 9 percent or lower, 
                                except that such period shall not 
                                exceed 5 years.''.
    (b) 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) in the case of a borrower 
                                who is between the ages of 21 and 25, 
                                inclusive, and a recent college 
                                student, as defined in section 
                                455(f)(5), by the Secretary, in the 
                                case of a consolidation loan made to 
                                the borrower for a period of enrollment 
                                during which the borrower was pursuing 
                                a degree described in subparagraph (A) 
                                of such section 455(f)(5) and for which 
                                the application is received on or after 
                                the date of enactment of the U.S. Leads 
                                Act, except that in the case of a 
                                deferral under clause (ii) of section 
                                428(b)(1)(M), the Secretary shall pay 
                                such interest only for a period not in 
                                excess of 3 years for which a borrower 
                                would be eligible for such a deferral 
                                and, in the case of a deferral under 
                                clause (v) of such section, for a 
                                period not in excess of 5 years for 
                                which the borrower would be eligible 
                                for such a deferral; or''; and
            (4) in subclause (IV) (as so redesignated by this 
        subsection), by striking ``(I) or (II)'' and inserting ``(I), 
        (II), or (III)''.
    (c) FFEL Unsubsidized Loan Deferment.--
            (1) In general.--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 new 
                subparagraph:
                    ``(C) In the case of a borrower who is between the 
                ages of 21 and 25, inclusive, and a recent college 
                student, as defined in section 455(f)(5), interest on 
                loans made under this section to the borrower for a 
                period of enrollment during which the borrower was 
                pursuing a degree described in subparagraph (A) of such 
                section 455(f)(5) and for which payments are deferred--
                            ``(i) under clause (i), (iii), or (iv) of 
                        section 428(b)(1)(M), for a period of deferment 
                        granted to such borrower on or after the date 
                        of enactment of the U.S. Leads Act, shall 
                        accrue and be paid by the Secretary during any 
                        period during which the loans are so deferred;
                            ``(ii) under clause (ii) of section 
                        428(b)(1)(M), for a period of deferment granted 
                        to such borrower on or after the date of 
                        enactment of the U.S. Leads Act, shall accrue 
                        and be paid by the Secretary during any period 
                        during which the loans are so deferred, not in 
                        excess of 3 years; and
                            ``(iii) under clause (v) of section 
                        428(b)(1)(M), for a period of deferment granted 
                        to such borrower on or after the date of 
                        enactment of the U.S. Leads Act, shall accrue 
                        and be paid by the Secretary during any period 
                        during which the loans are so deferred, not in 
                        excess of 5 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 such 
        subparagraph granted to a borrower described in section 
        428H(e)(2)(C) on or after the date of enactment of the U.S. 
        Leads Act)'' after ``of this paragraph''.
    (d) Direct Loan Deferment.--Section 455(f) of the Higher Education 
Act of 1965 (20 U.S.C. 1087(f)) is amended--
            (1) in paragraph (1)--
                    (A) in subparagraph (A)--
                            (i) by striking ``or'' at the end of clause 
                        (i); and
                            (ii) by adding at the end the following:
                            ``(iii) Federal Direct Unsubsidized 
                        Stafford Loan or Federal Direct Consolidation 
                        Loan made to a borrower for a period of 
                        enrollment during which the borrower was 
                        pursuing a degree described in paragraph (5)(A) 
                        and the borrower is between the ages of 21 and 
                        25, inclusive, and a recent college student, as 
                        defined in paragraph (5); or''; and
                    (B) in subparagraph (B)--
                            (i) by inserting ``not described in 
                        subparagraph (A)(iii)'' after ``Unsubsidized 
                        Stafford Loan''; and
                            (ii) by striking ``subparagraph (A)(ii)'' 
                        and inserting ``clause (ii) or (iii) of 
                        subparagraph (A)'';
            (2) in paragraph (2)--
                    (A) by striking ``or'' at the end of subparagraph 
                (C);
                    (B) by striking the period at the end of 
                subparagraph (D) and inserting ``; or''; and
                    (C) by adding at the end the following new 
                subparagraph:
                    ``(E) in a case of a borrower who is between the 
                ages of 21 and 25, inclusive, and a recent college 
                student, as defined in paragraph (5), with respect to 
                loans made under this part to such borrower for a 
                period of enrollment during which the borrower was 
                pursuing a degree described in subparagraph (A) of such 
                paragraph (5)--
                            ``(i) beginning as soon as practicable 
                        after the last day of the second consecutive 
                        month for which the Bureau of Labor Statistics 
                        of the Department of Labor (in this paragraph 
                        referred to as the `Bureau') publishes a 
                        national unemployment rate that exceeds 7 
                        percent, and ending as soon as practicable 
                        after the Bureau publishes a national 
                        unemployment rate that is 7 percent or lower, 
                        except that such period shall not exceed 5 
                        years; or
                            ``(ii) beginning as soon as practicable 
                        after the last day of the second consecutive 
                        month for which the Bureau publishes a national 
                        unemployment rate for individuals ages 21 
                        through 25 years old that exceeds 9 percent, 
                        and ending as soon as practicable after the 
                        Bureau publishes a national unemployment rate 
                        for such individuals that is 9 percent or 
                        lower, except that such period shall not exceed 
                        5 years.''; and
            (3) by adding at the end the following new paragraph:
            ``(5) Definition of recent college student.--For the 
        purpose of this subsection, the term `recent college student' 
        means a borrower who--
                    ``(A) who has received a baccalaureate degree from 
                an institution of higher education within 48 months 
                prior to the date of enactment of the U.S. Leads Act; 
                and
                    ``(B) who has not previously received any such 
                baccalaureate degree.''.

Summary: Unshackling Students to Lead, Excel, Act, Develop, and Serve Act of 2012 or US LEADS Act - Amends title IV of the Higher Education Act of 1965 to allow recent college graduates to defer payment on their student loans under the Federal Family Education Loan (FFEL) and Direct Loan (DL) programs without accruing interest when the national unemployment rate exceeds 7 or the unemployment rate for 21-25 year olds exceeds 9. Limits that deferral period to a maximum of five years. Makes the deferral available only to graduates aged 21-25 who received their first baccalaureate degree within the four years preceding this Act's enactment.