II 

111TH CONGRESS 

1ST SESSION S. 1541 

To amend title IV of the Higher Education Act of 1965 to authorize private 

education loan refinancing under the Federal student loan program. 

IN THE SENATE OF THE UNITED STATES 

JULY 30, 2009 

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

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

A BILL 

To amend title IV of the Higher Education Act of 1965 

to authorize private education loan refinancing under 

the Federal student loan program. 

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; PURPOSE. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Private Student Loan Debt Swap Act of 2009’’. 

6 (b) PURPOSE.—It is the purpose of this Act to estab7 lish a temporary private student loan debt swap program 

8 to assist eligible borrowers in refinancing all or a portion 

9 of their private education debt with less costly loans with 

10 the same terms and conditions as Federal direct loans. 


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1 SEC. 2. PRIVATE EDUCATION LOAN REFINANCING. 

2 Title IV of the Higher Education Act of 1965 (20 

3 U.S.C. 1070 et seq.) is amended by adding at the end 

4 the following: 

5 ‘‘PART J—PRIVATE EDUCATION LOAN 

6 REFINANCING 

7 ‘‘SEC. 499E. PRIVATE EDUCATION LOAN REFINANCING. 

8 ‘‘(a) IN GENERAL.— 

9 ‘‘(1) AUTHORITY.—The Secretary shall carry 

10 out a Private Education Loan Debt Swap program 

11 in accordance with this section. 

12 ‘‘(2) AVAILABILITY OF FUNDS.—There are 

13 hereby made available, in accordance with the provi14 sions of this section, such sums as may be necessary 

15 to make loans under this section through refinancing 

16 to all individuals eligible to receive private education 

17 loan refinancing under this section. 

18 ‘‘(3) PRIVATE EDUCATION LOAN.—In this sec19 tion, the term ‘private education loan’ has the mean20 ing given the term in section 140 of the Truth in 

21 Lending Act (15 U.S.C. 1650). 

22 ‘‘(b) ELIGIBLE DEBT SWAP LOAN BORROWER.—An 

23 individual shall be eligible to receive private education loan 

24 refinancing under this section if the individual— 

25 ‘‘(1)(A) was, at any time after July 1, 1994, el26 igible to obtain an unsubsidized Federal Stafford 


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1 Loan under section 428H for a period of under2 graduate or graduate enrollment; 

3 ‘‘(B) incurred at least 1 private education loan 

4 for such period of enrollment; 

5 ‘‘(C) is not enrolled in an eligible institution on 

6 at least a half-time basis; 

7 ‘‘(D) remains indebted on at least 1 private 

8 education loan eligible for refinancing under this 

9 section and— 

10 ‘‘(i) has never obtained an unsubsidized 

11 Federal Stafford Loan under section 428H; or 

12 ‘‘(ii) has borrowed an aggregate amount 

13 under the unsubsidized Federal Stafford Loan 

14 program under section 428H that is less than 

15 the maximum aggregate amount indicated 

16 under section 428H(d) for loans first disbursed 

17 on or after July 1, 2008; 

18 ‘‘(E) is not in default on a loan made, insured, 

19 or guaranteed under this title; 

20 ‘‘(F) has made not less than 2 consecutive pay21 ments on the private education loan to be refinanced 

22 and is not more than 90 days delinquent on such 

23 loan; and 

24 ‘‘(G) has not previously obtained refinancing 

25 under this section; or 


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1 ‘‘(2)(A) was, at any time after July 1, 2006, el2 igible to obtain a Federal PLUS Loan under section 

3 428B for a period of graduate or professional enroll4 ment; 

5 ‘‘(B) incurred at least 1 private education loan 

6 for such period of enrollment; 

7 ‘‘(C) is not in default on a loan made, insured, 

8 or guaranteed under this title; 

9 ‘‘(D) has made not less than 2 consecutive pay10 ments on the private education loan to be refinanced 

11 and is not more than 90 days delinquent on such 

12 loan; 

13 ‘‘(E) does not have an adverse credit history; 

14 and 

15 ‘‘(F) has not previously obtained refinancing 

16 under this section. 

17 ‘‘(c) REFINANCING UNDER THE DEBT SWAP LOAN

18 PROGRAM.— 

19 ‘‘(1) IN GENERAL.—The Secretary shall refi20 nance or make a payment on a private education 

21 loan in accordance with this subsection for an indi22 vidual who is eligible for private education loan refi23 nancing pursuant to subsection (b). 

24 ‘‘(2) TYPES OF LOANS THAT SHALL BE REFI25 NANCED.—A private education loan is eligible to be 


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1 refinanced under this subsection if the loan was in2 curred— 

3 ‘‘(A) after July 1, 1994, and before July 

4 1, 2010; and 

5 ‘‘(B) to pay the cost of attendance for en6 rollment in an eligible program at an institution 

7 of higher education eligible to participate in 

8 programs under this title. 

9 ‘‘(3) LOAN LIMITS.—The maximum amount of 

10 a private education loan that may be refinanced 

11 under this subsection is— 

12 ‘‘(A) for an individual described in sub13 section (b)(1), an amount equal to the sum of 

14 unpaid principal, accrued interest, and late 

15 charges of all private education loans eligible 

16 under paragraph (2) incurred by such indi17 vidual not to exceed the maximum aggregate 

18 amount of unsubsidized Federal Stafford Loans 

19 under section 428H(d) for loans first disbursed 

20 on or after July 1, 2008, applicable to an un21 dergraduate student under such section if the 

22 individual incurred such loan to enroll in an un23 dergraduate program or applicable to a grad24 uate student under such section if the indi25 vidual incurred such loan to enroll in a gradVerDate Nov 24 2008 08:22 Jul 31, 2009 Jkt 079200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1541.IS S1541

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1 uate program, less any amount previously bor2 rowed by such individual pursuant to section 

3 428 or part D; and 

4 ‘‘(B) for an individual described in sub5 section (b)(2), an amount equal to the sum of 

6 unpaid principal, accrued interest, and late 

7 charges of all private education loans eligible 

8 under paragraph (2) incurred by such indi9 vidual, less any amount previously borrowed by 

10 such individual pursuant to section 428B for 

11 such period of enrollment in a graduate or pro12 fessional program. 

13 ‘‘(4) INTEREST RATE.—The interest rate for a 

14 private education loan refinanced under this sub15 section shall be— 

16 ‘‘(A) for an individual described in sub17 section (b)(1), the same interest rate applicable 

18 to an unsubsidized Federal Stafford Loan; and 

19 ‘‘(B) for an individual described in sub20 section (b)(2), the same interest rate applicable 

21 to a Federal Direct PLUS loan. 

22 ‘‘(5) REPAYMENT TERMS.—A private education 

23 debt swap loan made under this subsection through 

24 refinancing shall have the same repayment terms, 


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1 conditions, and benefits as Federal Direct Consolida2 tion Loans. 

3 ‘‘(6) TERMINATION OF AUTHORITY.—The au4 thority to refinance private education loans under 

5 this subsection expires on July 1, 2011, or the date 

6 that is 1 year after certification by the Secretary to 

7 Congress that the debt swap loan program pursuant 

8 to this section is fully operational, whichever date is 

9 later. 

10 ‘‘(7) LOAN APPLICATION AND PROMISSORY

11 NOTE.—The Secretary shall develop and distribute a 

12 standard application and promissory note and loan 

13 disclosure form for loans made under this section 

14 through refinancing. 

15 ‘‘(8) LOAN DISBURSEMENT.—Proceeds of any 

16 loan made under this section shall be paid by the 

17 Secretary directly to the holder of the private edu18 cation loan being refinanced for the purpose of dis19 charging or reducing such private education loan 

20 debt on behalf of the borrower, subject to repayment 

21 terms under this section. 

22 ‘‘(d) PUBLIC AWARENESS CAMPAIGN.— 

23 ‘‘(1) IN GENERAL.—The Secretary shall carry 

24 out a national awareness campaign on the availVerDate Nov 24 2008 08:22 Jul 31, 2009 Jkt 079200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S1541.IS S1541

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1 ability and benefits of refinancing private education 

2 loans under this section. 

3 ‘‘(2) CONTENT OF CAMPAIGN.—The campaign 

4 described in paragraph (1) shall include— 

5 ‘‘(A) explaining the benefits of borrowing 

6 through the Federal student loan programs au7 thorized under this title compared to private 

8 loans; and 

9 ‘‘(B) information on all of the repayment 

10 options, loan forgiveness opportunities, low11 fixed interest rates and other benefits of such 

12 Federal student loan programs. 

13 ‘‘(e) REPORT TO CONGRESS.—The Secretary shall re14 port to Congress annually on the volume and repayment 

15 status of private education loans refinanced under this 

16 section.’’. 

Æ 


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