II 

115TH CONGRESS 

1ST SESSION S. 1521 

To amend the Higher Education Act of 1965 to reduce the interest rate 

caps for Federal Direct student loans, to eliminate loan origination 

fees on all Federal Direct student loans, and to provide for refinancing 

of Federal Direct student loans and Federal family education loans. 

IN THE SENATE OF THE UNITED STATES 

JULY 10, 2017 

Mr. NELSON introduced the following bill; which was read twice and referred 

to the Committee on Health, Education, Labor, and Pensions 

A BILL 

To amend the Higher Education Act of 1965 to reduce 

the interest rate caps for Federal Direct student loans, 

to eliminate loan origination fees on all Federal Direct 

student loans, and to provide for refinancing of Federal 

Direct student loans and Federal family education loans. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Student Loan Relief 

5 Act of 2017’’. 


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1 SEC. 2. REDUCTION OF INTEREST RATES FOR FEDERAL DI2 RECT STUDENT LOANS. 

3 Section 455(b) of the Higher Education Act of 1965 

4 (20 U.S.C. 1087e(b)) is amended by adding at the end 

5 the following: 

6 ‘‘(11) INTEREST RATE PROVISIONS FOR NEW

7 LOANS ON OR AFTER JULY 1, 2018.— 

8 ‘‘(A) RATES FOR UNDERGRADUATE FDSL

9 AND FDUSL.—Notwithstanding the preceding 

10 paragraphs of this subsection, for Federal Di11 rect Stafford Loans and Federal Direct Unsub12 sidized Stafford Loans issued to undergraduate 

13 students, for which the first disbursement is 

14 made on or after July 1, 2018, the applicable 

15 rate of interest shall, for loans disbursed during 

16 any 12-month period beginning on July 1 and 

17 ending on June 30, be determined on the pre18 ceding June 1 and be equal to the lesser of— 

19 ‘‘(i) a rate equal to the high yield of 

20 the 10-year Treasury note auctioned at the 

21 final auction held prior to such June 1 

22 plus the Federal Reserve discount rate 

23 charged for primary credit on the date of 

24 such auction, as authorized under section 

25 14(d) of the Federal Reserve Act (12 

26 U.S.C. 357); or 


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1 ‘‘(ii) 4 percent. 

2 ‘‘(B) RATES FOR GRADUATE AND PROFES3 SIONAL FDUSL.—Notwithstanding the pre4 ceding paragraphs of this subsection, for Fed5 eral Direct Unsubsidized Stafford Loans issued 

6 to graduate or professional students, for which 

7 the first disbursement is made on or after July 

8 1, 2018, the applicable rate of interest shall, for 

9 loans disbursed during any 12-month period be10 ginning on July 1 and ending on June 30, be 

11 determined on the preceding June 1 and be 

12 equal to the lesser of— 

13 ‘‘(i) a rate equal to the high yield of 

14 the 10-year Treasury note auctioned at the 

15 final auction held prior to such June 1 

16 plus the Federal Reserve discount rate 

17 charged for primary credit on the date of 

18 such auction, as authorized under section 

19 14(d) of the Federal Reserve Act (12 

20 U.S.C. 357); or 

21 ‘‘(ii) 5 percent. 

22 ‘‘(C) PLUS LOANS.—Notwithstanding the 

23 preceding paragraphs of this subsection, for 

24 Federal Direct PLUS Loans, for which the first 

25 disbursement is made on or after July 1, 2018, 


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1 the applicable rate of interest shall, for loans 

2 disbursed during any 12-month period begin3 ning on July 1 and ending on June 30, be de4 termined on the preceding June 1 and be equal 

5 to the lesser of— 

6 ‘‘(i) a rate equal to the high yield of 

7 the 10-year Treasury note auctioned at the 

8 final auction held prior to such June 1 

9 plus the Federal Reserve discount rate 

10 charged for primary credit on the date of 

11 such auction, as authorized under section 

12 14(d) of the Federal Reserve Act (12 

13 U.S.C. 357); or 

14 ‘‘(ii) 6 percent. 

15 ‘‘(D) CONSOLIDATION LOANS.—Notwith16 standing the preceding paragraphs of this sub17 section, any Federal Direct Consolidation Loan 

18 for which the application is received on or after 

19 July 1, 2018, shall bear interest at an annual 

20 rate on the unpaid principal balance of the loan 

21 that is equal to the weighted average of the in22 terest rates on the loans consolidated, rounded 

23 to the nearest higher one-eighth of one percent. 

24 ‘‘(E) CONSULTATION.—The Secretary shall 

25 determine the applicable rate of interest under 


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1 this paragraph after consultation with the Sec2 retary of the Treasury and the Chairman of the 

3 Board of Governors of the Federal Reserve Sys4 tem and shall publish such rate in the Federal 

5 Register as soon as practicable after the date of 

6 determination. 

7 ‘‘(F) RATE.—The applicable rate of inter8 est determined under this paragraph for a Fed9 eral Direct Stafford Loan, a Federal Direct Un10 subsidized Stafford Loan, or a Federal Direct 

11 PLUS Loan shall be fixed for the period of the 

12 loan.’’. 

13 SEC. 3. ELIMINATION OF THE LOAN ORIGINATION FEES ON 

14 FEDERAL DIRECT STUDENT LOANS. 

15 Section 455(c) of the Higher Education Act of 1965 

16 (20 U.S.C. 1087e(c)) is amended by adding at the end 

17 the following: 

18 ‘‘(3) SUNSET.—The Secretary may not charge 

19 the borrower of a loan under this part for which the 

20 first disbursement is made on or after July 1, 2018, 

21 an origination fee.’’. 

22 SEC. 4. REFINANCING FFEL AND FEDERAL DIRECT LOANS. 

23 Part D of title IV of the Higher Education Act of 

24 1965 (20 U.S.C. 1087a et seq.) is amended by adding at 

25 the end the following: 


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1 ‘‘SEC. 460A. REFINANCING FFEL AND FEDERAL DIRECT 

2 LOANS. 

3 ‘‘(a) IN GENERAL.—Beginning not later than 180 

4 days after the date of enactment of the Student Loan Re5 lief Act of 2017, the Secretary shall establish a program 

6 under which the Secretary, upon the receipt of an applica7 tion from a qualified borrower, makes a loan under this 

8 part, in accordance with the provisions of this section, in 

9 order to permit the borrower to obtain the interest rate 

10 provided under subsection (c). 

11 ‘‘(b) REFINANCING DIRECT LOANS.— 

12 ‘‘(1) FEDERAL DIRECT LOANS.—Upon applica13 tion of a qualified borrower, the Secretary shall 

14 repay any Federal Direct Stafford Loan, Federal Di15 rect Unsubsidized Stafford Loan, Federal Direct 

16 PLUS Loan, or Federal Direct Consolidation Loan 

17 of the qualified borrower, for which the first dis18 bursement was made, or the application for the 

19 original consolidation loan was received, before July 

20 1, 2018, with the proceeds of a new Federal Direct 

21 Stafford Loan, Federal Direct Unsubsidized Staf22 ford Loan, Federal Direct PLUS Loan, or Federal 

23 Direct Consolidation Loan, respectively, issued to 

24 the borrower in an amount equal to the sum of the 

25 unpaid principal, accrued unpaid interest, and late 

26 charges of the original loan. 


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1 ‘‘(2) REFINANCING FFEL PROGRAM LOANS AS

2 REFINANCED FEDERAL DIRECT LOANS.—Upon ap3 plication of a qualified borrower for any loan that 

4 was made, insured, or guaranteed under part B and 

5 for which the first disbursement was made, or the 

6 application for the consolidation loan was received, 

7 before July 1, 2010, the Secretary shall make a loan 

8 under this part, in an amount equal to the sum of 

9 the unpaid principal, accrued unpaid interest, and 

10 late charges of the original loan to the borrower in 

11 accordance with the following: 

12 ‘‘(A) The Secretary shall pay the proceeds 

13 of such loan to the eligible lender of the loan 

14 made, insured, or guaranteed under part B, in 

15 order to discharge the borrower from any re16 maining obligation to the lender with respect to 

17 the original loan. 

18 ‘‘(B) A loan made under this paragraph 

19 that covers— 

20 ‘‘(i) a loan originally made, insured, 

21 or guaranteed under section 428 shall be a 

22 Federal Direct Stafford Loan; 

23 ‘‘(ii) a loan originally made, insured, 

24 or guaranteed under section 428B shall be 

25 a Federal Direct PLUS Loan; 


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1 ‘‘(iii) a loan originally made, insured, 

2 or guaranteed under section 428H shall be 

3 a Federal Direct Unsubsidized Stafford 

4 Loan; and 

5 ‘‘(iv) a loan originally made, insured, 

6 or guaranteed under section 428C shall be 

7 a Federal Direct Consolidation Loan. 

8 ‘‘(C) The interest rate for each loan made 

9 by the Secretary under this paragraph shall be 

10 the applicable rate provided under subsection 

11 (c). 

12 ‘‘(c) INTEREST RATES.— 

13 ‘‘(1) IN GENERAL.—The interest rate for the 

14 new Federal Direct Stafford Loans, Federal Direct 

15 Unsubsidized Stafford Loans, Federal Direct PLUS 

16 Loans, and Federal Direct Consolidation Loans, 

17 shall be a rate equal to— 

18 ‘‘(A) in any case where the original loan 

19 was a loan under section 428 or 428H, a Fed20 eral Direct Stafford loan, or a Federal Direct 

21 Unsubsidized Stafford Loan, that was issued to 

22 an undergraduate student, a rate equal to the 

23 rate determined under section 455(b)(11)(A); 

24 ‘‘(B) in any case where the original loan 

25 was a loan under section 428 or 428H, a FedVerDate Sep 11 2014 06:31 Jul 14, 2017 Jkt 069200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1521.IS S1521

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1 eral Direct Stafford Loan, or a Federal Direct 

2 Unsubsidized Stafford Loan, that was issued to 

3 a graduate or professional student, a rate equal 

4 to the rate determined under section 

5 455(b)(11)(B); 

6 ‘‘(C) in any case where the original loan 

7 was a loan under section 428B or a Federal Di8 rect PLUS Loan, a rate equal to the rate deter9 mined under section 455(b)(11)(C); and 

10 ‘‘(D) in any case where the original loan 

11 was a loan under section 428C or a Federal Di12 rect Consolidation Loan, a rate calculated in ac13 cordance with paragraph (2). 

14 ‘‘(2) INTEREST RATE FOR CONSOLIDATION

15 LOANS.— 

16 ‘‘(A) METHOD OF CALCULATION.—In 

17 order to determine the interest rate for any new 

18 Federal Direct Consolidation Loan under para19 graph (1)(D), the Secretary shall— 

20 ‘‘(i) determine each of the component 

21 loans that were originally consolidated in 

22 the loan under section 428C or the Federal 

23 Direct Consolidation Loan, and calculate 

24 the proportion of the unpaid principal bal25 ance of the loan under section 428C or the 


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1 Federal Direct Consolidation Loan that 

2 each component loan represents; 

3 ‘‘(ii) use the proportions determined 

4 in accordance with clause (i) and the inter5 est rate applicable for each component 

6 loan, as determined under subparagraph 

7 (B), to calculate the weighted average of 

8 the interest rates on the loans consolidated 

9 into the loan under section 428C or the 

10 Federal Direct Consolidation Loan; and 

11 ‘‘(iii) apply the weighted average cal12 culated under clause (ii) as the interest 

13 rate for the new Federal Direct Consolida14 tion Loan. 

15 ‘‘(B) INTEREST RATES FOR COMPONENT

16 LOANS.—The interest rates for the component 

17 loans of a loan made under section 428C or a 

18 Federal Direct Consolidation Loan shall be the 

19 following: 

20 ‘‘(i) The interest rate for any loan 

21 under section 428 or 428H, Federal Direct 

22 Stafford Loan, or Federal Direct Unsub23 sidized Stafford Loan issued to an under24 graduate student shall be a rate equal to 

25 the rate for Federal Direct Stafford Loans 


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1 and Federal Direct Unsubsidized Stafford 

2 Loans issued to undergraduate students 

3 that is applicable on the date of the appli4 cation for the new Federal Direct Consoli5 dation Loan. 

6 ‘‘(ii) The interest rate for any loan 

7 under section 428 or 428H, Federal Direct 

8 Stafford Loan, or Federal Direct Unsub9 sidized Stafford Loan issued to a graduate 

10 or professional student shall be a rate 

11 equal to the rate for Federal Direct Un12 subsidized Stafford Loans issued to grad13 uate or professional students that is appli14 cable on the date of the application for the 

15 new Federal Direct Consolidation 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 rate for Federal Direct PLUS Loans that 

20 is applicable on the date of the application 

21 for the new Federal Direct Consolidation 

22 Loan. 

23 ‘‘(iv) The interest rate for any compo24 nent loan that is a loan under section 

25 428C or a Federal Direct Consolidation 


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1 Loan shall be the weighted average of the 

2 interest rates that would apply under this 

3 subparagraph for each loan comprising the 

4 component consolidation loan. 

5 ‘‘(v) The interest rate for any eligible 

6 loan that is a component of a loan made 

7 under section 428C or a Federal Direct 

8 Consolidation Loan and is not described in 

9 clauses (i) through (iv) shall be the inter10 est rate on the original component loan. 

11 ‘‘(d) 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 REPAY17 MENT PERIOD.—Refinancing a loan under this sec18 tion shall not require the extension of the duration 

19 of the repayment period of the loan, and the bor20 rower shall retain the right to use the same repay21 ment term that was in effect on the original loan. 

22 Nothing in this paragraph shall be construed to pre23 vent a borrower from electing a different repayment 

24 plan at any time in accordance with section 

25 455(d)(3). 


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1 ‘‘(e) DEFINITION OF QUALIFIED BORROWER.— 

2 ‘‘(1) IN GENERAL.—For purposes of this sec3 tion, the term ‘qualified borrower’ means a bor4 rower— 

5 ‘‘(A) of a loan under this part or part B 

6 for which the first disbursement was made, or 

7 the application for a consolidation loan was re8 ceived, before July 1, 2018; and 

9 ‘‘(B) who meets the eligibility requirements 

10 established under paragraph (2). 

11 ‘‘(2) INCOME REQUIREMENTS.—Not later than 

12 180 days after the date of enactment of the Student 

13 Loan Relief Act of 2017, the Secretary shall estab14 lish eligibility requirements based on income or debt15 to-income ratio that take into consideration pro16 viding access to refinancing under this section for 

17 borrowers with the greatest financial need. 

18 ‘‘(f) NOTIFICATION TO BORROWERS.—The Secretary, 

19 in coordination with the Director of the Bureau of Con20 sumer Financial Protection, shall undertake a campaign 

21 to alert borrowers of loans that are eligible for refinancing 

22 under this section that the borrowers are eligible to apply 

23 for such refinancing. The campaign shall include the fol24 lowing activities: 


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1 ‘‘(1) Developing consumer information mate2 rials about the availability of Federal student loan 

3 refinancing. 

4 ‘‘(2) Requiring servicers of loans under this 

5 part or part B to provide such consumer information 

6 to borrowers in a manner determined appropriate by 

7 the Secretary, in consultation with the Director of 

8 the Bureau of Consumer Financial Protection.’’. 

Æ 


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