II 

113TH CONGRESS 

1ST SESSION S. 909 

To amend the Federal Direct Loan Program under the Higher Education 

Act of 1965 to provide for student loan affordability, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MAY 8, 2013 

Mr. REED (for himself and Mr. DURBIN) introduced the following bill; which 

was read twice and referred to the Committee on Health, Education, 

Labor, and Pensions 

A BILL 

To amend the Federal Direct Loan Program under the Higher Education Act of 1965 to provide for student loan 

affordability, 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 ‘‘Responsible Student 

5 Loan Solutions Act’’. 

6 SEC. 2. STUDENT LOAN AFFORDABILITY. 

7 (a) TERMS AND CONDITIONS OF FEDERAL DIRECT

8 LOANS.—Section 455 of the Higher Education Act of 

9 1965 (20 U.S.C. 1087e) is amended— 


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1 (1) in subsection (a), by adding at the end the 

2 following: 

3 ‘‘(4) FEDERAL DIRECT STAFFORD LOAN LIMITS

4 FOR NEW LOANS ON OR AFTER JULY 1, 2013.— 

5 ‘‘(A) AGGREGATE LOAN LIMITS.—Notwith6 standing any other provision of this Act, with 

7 respect to Federal Direct Stafford Loans for 

8 which the first disbursement is made on or 

9 after July 1, 2013, the aggregate unpaid prin10 cipal amount for all such loans made on or 

11 after such date (and including Federal Direct 

12 Stafford Loans first disbursed before such date) 

13 to any student shall not at any time exceed— 

14 ‘‘(i) $31,000, in the case of any de15 pendent student (except an undergraduate 

16 dependent student whose parents are un17 able to borrow under the Federal Direct 

18 PLUS Loan Program) who has not suc19 cessfully completed a program of under20 graduate education; or 

21 ‘‘(ii) $57,500, in the case of any inde22 pendent student, or an undergraduate de23 pendent student whose parents are unable 

24 to borrow under the Federal Direct PLUS 

25 Loan Program, who has not successfully 


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1 completed a program of undergraduate 

2 education. 

3 ‘‘(B) ANNUAL LOAN LIMITS.—Notwith4 standing any other provision of this Act, with 

5 respect to Federal Direct Stafford Loans for 

6 which the first disbursement is made on or 

7 after July 1, 2013, the maximum annual 

8 amount for all such loans made on or after such 

9 date a student who has not successfully com10 pleted a program of undergraduate education 

11 may borrow in any academic year shall not at 

12 any time exceed— 

13 ‘‘(i) in the case of a dependent stu14 dent (except an undergraduate dependent 

15 student whose parents are unable to bor16 row under the Federal Direct PLUS Loan 

17 Program)— 

18 ‘‘(I) who has not successfully 

19 completed the first year of a program 

20 of undergraduate education, $5,500; 

21 ‘‘(II) who has successfully com22 pleted such first year but has not suc23 cessfully completed the remainder of a 

24 program of undergraduate education, 

25 $6,500; and 


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1 ‘‘(III) who has successfully com2 pleted the first and second years of a 

3 program of undergraduate education 

4 but has not successfully completed the 

5 remainder of such program, $7,500; 

6 and 

7 ‘‘(ii) in the case of an independent 

8 student, or an undergraduate dependent 

9 student whose parents are unable to bor10 row under the Federal Direct PLUS Loan 

11 Program— 

12 ‘‘(I) who has not successfully 

13 completed the first year of a program 

14 of undergraduate education, $9,500; 

15 ‘‘(II) who has successfully com16 pleted such first year but has not suc17 cessfully completed the remainder of a 

18 program of undergraduate education, 

19 $10,500; and 

20 ‘‘(III) who has successfully com21 pleted the first and second years of a 

22 program of undergraduate education 

23 but has not successfully completed the 

24 remainder of such program, 

25 $12,500.’’; 


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1 (2) in subsection (b)— 

2 (A) in paragraph (7)— 

3 (i) in the paragraph heading, by in4 serting ‘‘, AND BEFORE JULY 1, 2013’’ after 

5 ‘‘2006’’; 

6 (ii) in subparagraph (A), by inserting 

7 ‘‘and before July 1, 2013,’’ after ‘‘2006,’’; 

8 (iii) in subparagraph (B), by inserting 

9 ‘‘and before July 1, 2013,’’ after ‘‘2006,’’; 

10 and 

11 (iv) in subparagraph (C), by inserting 

12 ‘‘and before July 1, 2013,’’ after ‘‘2006,’’; 

13 (B) by redesignating paragraphs (8) and 

14 (9) as paragraphs (9) and (10), respectively; 

15 and 

16 (C) by inserting after paragraph (7) the 

17 following: 

18 ‘‘(8) INTEREST RATES FOR NEW LOANS ON OR

19 AFTER JULY 1, 2013.— 

20 ‘‘(A) RATES FOR FDSL AND FDUSL.—Not21 withstanding the preceding paragraphs of this 

22 subsection, for— 

23 ‘‘(i) Federal Direct Stafford Loans for 

24 which the first disbursement is made on or 

25 after July 1, 2013, the applicable rate of 


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1 interest shall, during any 12-month period 

2 beginning on July 1 and ending on June 

3 30, be determined on the preceding June 1 

4 and be equal to— 

5 ‘‘(I) the bond equivalent rate of 

6 91-day Treasury bills auctioned at the 

7 final auction held prior to such June 

8 1; plus 

9 ‘‘(II) a percentage determined 

10 under subparagraph (D), 

11 except that such rate shall not exceed 6.8 

12 percent; and 

13 ‘‘(ii) Federal Direct Unsubsidized 

14 Stafford Loans for which the first dis15 bursement is made on or after July 1, 

16 2013, the applicable rate of interest shall, 

17 during any 12-month period beginning on 

18 July 1 and ending on June 30, be deter19 mined on the preceding June 1 and be 

20 equal to— 

21 ‘‘(I) the bond equivalent rate of 

22 91-day Treasury bills auctioned at the 

23 final auction held prior to such June 

24 1; plus 


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1 ‘‘(II) a percentage determined 

2 under subparagraph (D), 

3 except that such rate shall not exceed 8.25 

4 percent. 

5 ‘‘(B) RATES FOR PLUS LOANS.—Notwith6 standing the preceding paragraphs of this sub7 section, for Federal Direct PLUS Loans for 

8 which the first disbursement is made on or 

9 after July 1, 2013, the applicable rate of inter10 est shall, during any 12-month period beginning 

11 on July 1 and ending on June 30, be deter12 mined on the preceding June 1 and be equal 

13 to— 

14 ‘‘(i) the bond equivalent rate of 91- 

15 day Treasury bills auctioned at the final 

16 auction held prior to such June 1; plus 

17 ‘‘(ii) a percentage determined under 

18 subparagraph (D), 

19 except that such rate shall not exceed 8.25 per20 cent. 

21 ‘‘(C) CONSOLIDATION LOANS.—Notwith22 standing the preceding paragraphs of this sub23 section, for Federal Direct Consolidation Loans 

24 for which the first disbursement is made on or 

25 after July 1, 2013, the applicable rate of interVerDate Mar 15 2010 03:08 May 10, 2013 Jkt 029200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S909.IS S909

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1 est shall, during any 12-month period beginning 

2 on July 1 and ending on June 30, be deter3 mined on the preceding June 1 and be equal 

4 to— 

5 ‘‘(i) the bond equivalent rate of 91- 

6 day Treasury bills auctioned at the final 

7 auction held prior to such June 1; plus 

8 ‘‘(ii) a percentage determined under 

9 subparagraph (D), 

10 except that such rate shall not exceed 8.25 per11 cent. 

12 ‘‘(D) PERCENTAGE DETERMINATION.—Ex13 cept as provided in the flush text under clauses 

14 (i) and (ii) of subparagraph (A), subparagraph 

15 (B), and subparagraph (C), during each 12- 

16 month period beginning on July 1 and ending 

17 on June 30, beginning on July 1, 2013, the 

18 Secretary shall determine a percentage for ap19 plication under clauses (i)(II) and (ii)(II) of 

20 subparagraph (A), subparagraph (B)(ii), and 

21 subparagraph (C)(ii). In carrying out this sub22 paragraph, the Secretary may determine dif23 ferent percentages for application under each 

24 such clause or subparagraph, as long as such 

25 percentages in the aggregate— 


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1 ‘‘(i) represent the total cost of admin2 istering the Federal Direct Loan program 

3 and borrower benefits; and 

4 ‘‘(ii) result in such program being rev5 enue neutral for such 12-month period.’’; 

6 and 

7 (3) in subsection (c), by adding at the end the 

8 following: 

9 ‘‘(3) REDUCTION OF FEE FOR FEDERAL DIRECT

10 PLUS LOANS.—Notwithstanding paragraph (1), for 

11 any Federal Direct PLUS Loan for which the first 

12 disbursement is made on or after July 1, 2013, the 

13 Secretary shall charge the borrower of the Loan an 

14 origination fee of not more than 3 percent of the 

15 principal amount of the loan.’’. 

16 (b) REFINANCING.—Part D of title IV of the Higher 

17 Education Act of 1965 (20 U.S.C. 1087a et seq.) is 

18 amended by adding at the end the following: 

19 ‘‘SEC. 460A. REFINANCING. 

20 ‘‘(a) REFINANCING FOR PLUS LOANS.— 

21 ‘‘(1) REISSUING FEDERAL DIRECT PLUS

22 LOANS.—The Secretary may reissue a Federal Di23 rect PLUS Loan for which the first disbursement 

24 was made before July 1, 2013, that is not in default 


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1 in order to permit the borrower to obtain the inter2 est rate provided under section 455(b)(8)(B). 

3 ‘‘(2) PURCHASING FEDERAL PLUS LOANS.—The 

4 Secretary may purchase a Federal PLUS Loan that 

5 is not in default and reissue such loan in order to 

6 permit the borrower to obtain the interest rate pro7 vided under section 455(b)(8)(B). 

8 ‘‘(3) ADMINISTRATIVE FEE.—The Secretary 

9 may charge a borrower an amount not to exceed 0.5 

10 percent of the principal amount of the loan to be re11 issued or purchased to cover the administrative cost 

12 of reissuing or purchasing such loan, which amount 

13 shall be paid to the Secretary. 

14 ‘‘(b) REFINANCING FOR STAFFORD LOANS.— 

15 ‘‘(1) REISSUING FEDERAL DIRECT STAFFORD

16 LOANS.—The Secretary may reissue a Federal Di17 rect Stafford Loan or a Federal Direct Unsubsidized 

18 Stafford Loan for which the first disbursement was 

19 made before July 1, 2013, that is not in default in 

20 order to permit the borrower to obtain the interest 

21 rate provided under section 455(b)(8)(A). 

22 ‘‘(2) PURCHASING FEDERAL STAFFORD

23 LOANS.—The Secretary may purchase a Federal 

24 Stafford Loan or a Federal Unsubsidized Stafford 

25 Loan that is not in default and reissue such loan in 


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1 order to permit the borrower to obtain the interest 

2 rate provided under section 455(b)(8)(A). 

3 ‘‘(3) ADMINISTRATIVE FEE.—The Secretary 

4 may charge a borrower an amount not to exceed 0.5 

5 percent of the principal amount of the loan to be re6 issued or purchased to cover the administrative cost 

7 of reissuing or purchasing such loan, which amount 

8 shall be paid to the Secretary.’’. 

Æ 


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