II 

113TH CONGRESS 

1ST SESSION S. 1266 

To provide for the establishment of a mechanism to allow borrowers of 

private education loans to refinance their loans, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JUNE 27, 2013 

Mr. BROWN (for himself, Ms. HEITKAMP, Mr. DURBIN, Mrs. MURRAY, and 

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

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

A BILL 

To provide for the establishment of a mechanism to allow 

borrowers of private education loans to refinance their 

loans, and for other purposes. 

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 ‘‘Refinancing Education 

5 Funding to Invest (REFI) for the Future Act of 2013’’. 

6 SEC. 2. FINDINGS AND PURPOSE. 

7 (a) FINDINGS.—Congress finds that— 

8 (1) there is approximately $1,100,000,000,000 

9 of outstanding student loan debt in the United 


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1 States, including more than $150,000,000,000 in 

2 private education loans; 

3 (2) as of 2008, 81 percent of individuals grad4 uating with an undergraduate degree with more 

5 than $40,000 in student loans had a private edu6 cation loan; 

7 (3) the limited number of lenders in the private 

8 education loan marketplace reduce the ability of bor9 rowers with private education loans to restructure, 

10 refinance, or negotiate repayment terms for their 

11 current loans, leading to excessive debt burdens and 

12 potential default; and 

13 (4) excessive student indebtedness reduces eco14 nomic activity, threatens homeownership, hurts 

15 small business growth, and limits opportunities for 

16 economic expansion in rural communities. 

17 (b) PURPOSE.—The purpose of this Act is to spur 

18 economic growth, by establishing a mechanism to allow 

19 borrowers of private education loans to refinance their 

20 loans in order— 

21 (1) to facilitate greater competition in the pri22 vate education lending and refinancing markets; 

23 (2) to address inefficiencies in the private edu24 cation lending and refinancing markets; 


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1 (3) to encourage innovation in the private edu2 cation refinancing markets; and 

3 (4) to promote the participation of private cap4 ital in the private education refinancing markets. 

5 SEC. 3. DEFINITIONS. 

6 In this Act— 

7 (1) the term ‘‘private education loan’’ has the 

8 same meaning as in section 140(a) of the Truth in 

9 Lending Act (15 U.S.C. 1650(a)); and 

10 (2) the term ‘‘Secretary’’ means the Secretary 

11 of the Treasury, other than in the context of the 

12 Secretary of Education. 

13 SEC. 4. TEMPORARY AUTHORITY TO CREATE A CREDIT FA14 CILITY TO INCREASE MARKET EFFICIENCY IN 

15 THE STUDENT LOAN MARKET. 

16 (a) AUTHORITY.— 

17 (1) IN GENERAL.— 

18 (A) CREDIT FACILITIES AUTHORIZA19 TION.—Upon a determination by the Secretary 

20 that borrowers are unable to secure adequate 

21 credit accommodations with existing private 

22 education loans, the Secretary, notwithstanding 

23 any provision of section 484 of the Higher Edu24 cation Act of 1965 (20 U.S.C. 1091), is authorVerDate Mar 15 2010 04:36 Jul 03, 2013 Jkt 029200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S1266.IS S1266

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1 ized to establish lending, purchase, and other 

2 credit facilities to— 

3 (i) accommodate reasonable refi4 nancing opportunities or other loan adjust5 ments that— 

6 (I) improve the sustainability of 

7 payments for the borrower; and 

8 (II) reduce the likelihood of de9 linquency and default on private edu10 cation loans; 

11 (ii) benefit borrowers that are most 

12 likely to have private student debt service 

13 obligations that represent a dispropor14 tionate share of their income; and 

15 (iii) ensure that borrowers pay lower 

16 interest rates that are commensurate with 

17 credit risk, so that they may pursue more 

18 economically productive activities, such as 

19 home purchases and small business forma20 tion. 

21 (B) CONSULTATION.— 

22 (i) IN GENERAL.—Any determination 

23 under subparagraph (A) shall be made 

24 jointly with the Secretary of Education 


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1 and the Director of the Bureau of Con2 sumer Financial Protection. 

3 (ii) COMPLIANCE SYSTEM.—Prior to 

4 establishing a facility under this sub5 section, the Secretary, or any adminis6 trator designated by the Secretary to es7 tablish a program to carry out the author8 ity provided in this subsection, shall estab9 lish a compliance system in consultation 

10 with the Bureau of Consumer Financial 

11 Protection. 

12 (2) NO NET COST TO GOVERNMENT.—Mecha13 nisms established under this subsection shall not re14 sult in any net cost to the Federal Government, as 

15 determined jointly by the Secretary, the Secretary of 

16 Education, and the Director of the Office of Man17 agement and Budget. 

18 (b) FEDERAL REGISTER NOTICE.—Prior to exer19 cising any authority provided under subsection (a), the 

20 Secretary shall publish a notice in the Federal Register 

21 to seek comment from interested parties on its proposed 

22 exercise of such authority, including— 

23 (1) the terms and conditions governing the 

24 lending, purchases, or other credit facilities author25 ized by subsection (a); 


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1 (2) an outline of methodology and factors con2 sidered in the purchase or restructuring of private 

3 education loans; 

4 (3) private education loan modification options 

5 that may be available for existing loans; 

6 (4) how they will ensure that borrowers whose 

7 education debt service obligations represent a dis8 proportionate share of their income will be provided 

9 relief; and 

10 (5) how the use of the methodology and factors, 

11 as proposed in the notice, will be used to ensure that 

12 any exercise of authority by the Secretary will result 

13 in no net cost to the Federal Government. 

14 (c) INITIAL REPORT.—Not later than 90 days after 

15 the date of enactment of this Act, the Secretary shall sub16 mit to the appropriate committees of Congress a report 

17 that includes— 

18 (1) a plan of the Secretary to implement credit 

19 mechanisms under the authority of this Act; 

20 (2) a description of macroeconomic benefits of 

21 increased efficiency and refinance activity in the stu22 dent loan market; and 

23 (3) a description of the benefits through the use 

24 of such authority to private education loan bor25 rowers, including how any incidental net gain from 


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1 the credit mechanism would be used to benefit stu2 dent borrowers. 

3 (d) ANNUAL REPORTS.—Beginning 1 year after the 

4 date of the first use of the authority provided under this 

5 section, the Secretary shall provide an annual report to 

6 the Committee on Banking, Housing, and Urban Affairs 

7 of the Senate and the Committee on Financial Services 

8 of the House of Representatives describing the utilization, 

9 impact, and financial performance of any program estab10 lished under the authority of this section. 

11 (e) PUBLIC AWARENESS.—Not later than 60 days 

12 after the date of publication of a notice in the Federal 

13 Register pursuant to subsection (b), the Secretary, in con14 sultation with the Secretary of Education and the Director 

15 of the Bureau of Consumer Financial Protection, shall 

16 begin a national awareness campaign to alert all private 

17 education loan borrowers who may benefit from any pro18 gram or facilities established under this section. Such 

19 campaign shall include outreach to targeted populations 

20 of borrowers that are most likely to have private education 

21 loan debt service obligations that represent a dispropor22 tionate share of their income. 

23 (f) EXPIRATION OF AUTHORITY.—Three years after 

24 the date on which a credit facility is established under this 

25 Act, and not later than 5 years after the date of enactment 


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1 of this Act, any new lending, purchase, or other activity 

2 initiated through the facilities established by the Secretary 

3 under subsection (a) shall cease. 

4 SEC. 5. SENSE OF CONGRESS. 

5 It is the sense of Congress that the Federal financial 

6 institutions, such as the Federal Financing Bank and the 

7 Federal Reserve banks, and federally chartered private en8 tities, such as the Federal home loan banks, should con9 sider, in consultation with the Secretary and the Secretary 

10 of Education, using available authorities in a timely man11 ner, if needed, to assist in ensuring that borrowers of pri12 vate education loans can secure credit accommodations to 

13 refinance existing loans, in a manner that results in no 

14 increased costs to taxpayers. 

Æ 


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