II 

113TH CONGRESS 

1ST SESSION S. 1066 

To allow certain student loan borrowers to refinance Federal student loans. 

IN THE SENATE OF THE UNITED STATES 

MAY 23, 2013 

Mrs. GILLIBRAND introduced the following bill; which was read twice and 

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

A BILL 

To allow certain student loan borrowers to refinance Federal 

student 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 ‘‘Federal Student Loan 

5 Refinancing Act’’. 

6 SEC. 2. STUDENT LOAN CONSOLIDATION. 

7 Section 459B of the Higher Education Act of 1965 

8 (20 U.S.C. 1087i–2) is amended— 

9 (1) in subsection (a)(3), by striking ‘‘section’’ 

10 and inserting ‘‘subsection’’; 


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1 (2) in subsection (b), by striking ‘‘this section’’ 

2 and inserting ‘‘subsection (a)’’ each place the term 

3 appears; and 

4 (3) by inserting at the end the following: 

5 ‘‘(c) TEMPORARY LOAN CONSOLIDATION AUTHORITY

6 FOR CERTAIN LOANS MADE AFTER JULY 1, 2006.— 

7 ‘‘(1) LOAN CONSOLIDATION AUTHORITY.— 

8 ‘‘(A) IN GENERAL.—A borrower who has 1 

9 or more loans in a category described in sub10 paragraph (B) may consolidate all of the loans 

11 of the borrower that are described in subpara12 graph (B) into a Federal Direct Consolidation 

13 Loan during the period described in subpara14 graph (C). 

15 ‘‘(B) CATEGORIES OF LOANS THAT MAY BE

16 CONSOLIDATED.—The categories of loans that 

17 may be consolidated under subparagraph (A) 

18 are loans made on or after July 1, 2006, that 

19 are— 

20 ‘‘(i) loans made under this part; 

21 ‘‘(ii) loans purchased by the Secretary 

22 pursuant to section 459A; and 

23 ‘‘(iii) loans made under part B that 

24 are held by an eligible lender, as such term 

25 is defined in section 435(d). 


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1 ‘‘(C) TIME PERIOD IN WHICH LOANS MAY

2 BE CONSOLIDATED.— 

3 ‘‘(i) FEDERAL DIRECT LOANS.—In the 

4 case of a borrower who has 1 or more 

5 loans described under subparagraph (B)(i), 

6 the Secretary shall— 

7 ‘‘(I) consolidate the loans de8 scribed under subparagraph (B)(i) not 

9 later than 90 days after the date of 

10 enactment of the Federal Student 

11 Loan Refinancing Act; and 

12 ‘‘(II) notify the borrower, in writ13 ing, prior to such consolidation that— 

14 ‘‘(aa) the borrower’s loans 

15 under this part have been con16 solidated at a lower interest rate; 

17 and 

18 ‘‘(bb) the borrower’s repay19 ment plan and the other terms 

20 and conditions of the borrower’s 

21 loan remain unchanged. 

22 ‘‘(ii) OTHER LOANS.—In the case of a 

23 borrower who has 1 or more loans de24 scribed under clause (ii) or (iii) of subpara25 graph (B), the Secretary shall— 


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1 ‘‘(I) initiate the loan consolida2 tion process for the loans described 

3 under clause (ii) or (iii) of subpara4 graph (B), not later than 90 days 

5 after the date of enactment of the 

6 Federal Student Loan Refinancing 

7 Act, by sending a completed loan con8 solidation application to the borrower; 

9 ‘‘(II) notify the borrower, as part 

10 of such application, that a fee will be 

11 assessed and that the interest rate of 

12 the Federal Direct Consolidation 

13 Loan will be set in accordance with 

14 paragraph (2); and 

15 ‘‘(III) notify the borrower, as 

16 part of such application, that if the 

17 borrower wishes to consolidate in ac18 cordance with the completed applica19 tion, the borrower must endorse the 

20 application and submit the application 

21 to the Secretary not more than 6 

22 months after receipt of the applica23 tion. 


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1 ‘‘(2) TERMS OF LOANS.—The following terms 

2 and conditions shall apply to a Federal Direct Con3 solidation Loan made under this subsection: 

4 ‘‘(A) The applicable rate of interest on a 

5 Federal Direct Consolidation Loan made under 

6 this subsection shall be— 

7 ‘‘(i) 4 percent; or 

8 ‘‘(ii) in a case in which the weighted 

9 average of the interest rates on the out10 standing loans of a borrower that will be 

11 consolidated is less than 4 percent, the 

12 lesser of— 

13 ‘‘(I) the weighted average of the 

14 interest rates on the outstanding 

15 loans of a borrower that will be con16 solidated; or 

17 ‘‘(II) a rate of interest equal to— 

18 ‘‘(aa) 4 percent; minus 

19 ‘‘(bb) 0.4 percent of the 

20 principal balance of the consoli21 dation loan, at the time of con22 solidation. 

23 ‘‘(B) In the case of a loan consolidated 

24 under paragraph (1)(C)(ii), an origination fee 

25 equal to 0.4 percent of the principal balance of 


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1 the consolidation loan, at the time of consolida2 tion, will be added to the principal balance of 

3 the loan, and the Secretary shall use the fee to 

4 cover the cost of making and servicing the loan. 

5 ‘‘(C) If 1 or more of the loans being con6 solidated is a loan described under subpara7 graph (B)(iii), the interest rate on the Federal 

8 Direct Consolidation Loan under this sub9 section shall be reduced by 0.25 percent. 

10 ‘‘(D) Any benefit a borrower is receiving or 

11 earning at the time a Federal Direct Consolida12 tion loan is issued under this subsection shall 

13 not be affected by consolidation under this sec14 tion, including benefits such as a deferment or 

15 forbearance, accumulation of monthly payments 

16 as part of the public service loan forgiveness 

17 program under section 455(m), accumulation of 

18 monthly payments toward a loan discharge 

19 under the income-based repayment plan under 

20 section 493C, participation in a particular re21 payment plan, and other benefits to the bor22 rower.’’. 


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1 SEC. 3. EXEMPTIONS FROM OTHER LAWS. 

2 (a) EXEMPTION FROM THE PAPERWORK REDUCTION

3 ACT.—Chapter 35 of title 44, United States Code, shall 

4 not apply to this Act. 

5 (b) INAPPLICABILITY OF RULEMAKING REQUIRE6 MENTS.—Sections 482(c) and 492 of the Higher Edu7 cation Act of 1965 (20 U.S.C. 1089(c), 1098a) and sec8 tion 553 of title 5, United States Code, shall not apply 

9 to the amendments made by this Act, or to any regulations 

10 promulgated under such amendments. 

Æ 


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