II

105TH CONGRESS

1ST SESSION S. 1294

To amend the Higher Education Act of 1965 to allow the consolidation

of student loans under the Federal Family Loan Program and the

Direct Loan Program.

IN THE SENATE OF THE UNITED STATES

OCTOBER 9, 1997

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

referred to the Committee on Labor and Human Resources

A BILL

To amend the Higher Education Act of 1965 to allow the

consolidation of student loans under the Federal Family

Loan Program and the Direct 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; REFERENCE.

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

5 ‘‘Emergency Student Loan Consolidation Act of 1997’’.

6 (b) REFERENCES.—Except as otherwise expressly

7 provided, whenever in this Act an amendment or repeal

8 is expressed in terms of an amendment to, or repeal of,

9 a section or other provision, the reference shall be consid-
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1 ered to be made to a section or other provision of the

2 Higher Education Act of 1965 (20 U.S.C. 1001 et seq.).

3 SEC. 2. LOAN CONSOLIDATION PROVISIONS.

4 (a) DEFINITION OF LOANS ELIGIBLE FOR CONSOLI5 DATION.—Section 428C(a)(4) (20 U.S.C. 1078–3(a)(4))

6 is amended—

7 (1) by redesignating subparagraphs (C) and

8 (D) as subparagraphs (D) and (E), respectively; and

9 (2) by inserting after subparagraph (B) the fol10 lowing new subparagraph:

11 ‘‘(C) made under part D of this title, ex12 cept that loans made under such part shall be

13 eligible student loans only for consolidation

14 loans for which the application is received by an

15 eligible lender during the period beginning on

16 the date of enactment of the Emergency Stu17 dent Loan Consolidation Act of 1997 and end18 ing on October 1, 1998;’’.

19 (b) TERMS OF CONSOLIDATION LOANS.—Section

20 428C(b)(4)(C)(ii) is amended—

21 (1) in subclause (I), by inserting after ‘‘consoli22 dation loan’’ the following: ‘‘for which the applica23 tion is received by an eligible lender before the date

24 of enactment of the Emergency Student Loan Con-
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1 solidation Act of 1997, or on or after October 1,

2 1998,’’ ;

3 (2) by striking ‘‘or’’ at the end of subclause (I);

4 (3) by inserting ‘‘or (II)’’ before the semicolon

5 at the end of subclause (II);

6 (4) by redesignating subclause (II) as subclause

7 (III); and

8 (5) by inserting after subclause (I) the follow9 ing new subclause:

10 ‘‘(II) by the Secretary, in the case of

11 a consolidation loan for which the applica12 tion is received by an eligible lender on or

13 after the date of enactment of the Emer14 gency Student Loan Consolidation Act of

15 1997 and before October 1, 1998, except

16 that the Secretary shall pay such interest

17 only on that portion of the loan that re18 pays Federal Stafford Loans for which the

19 student borrower received an interest sub20 sidy under section 428 or Federal Direct

21 Stafford Loans for which the borrower re22 ceived an interest subsidy under section

23 455; or’’.

24 (c) INTEREST RATE.—Section 428C(c)(1) is amend25 ed by adding at the end the following new subparagraph:
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1 ‘‘(D) A consolidation loan for which the applica2 tion is received by an eligible lender on or after the

3 date of enactment of the Emergency Student Loan

4 Consolidation Act of 1997 and before October 1,

5 1998, shall bear interest at an annual rate on the

6 unpaid principal balance of the loan that is equal to

7 the rate specified in section 427A(f).’’.

8 (d) AMENDMENTS EFFECTIVE FOR PENDING APPLI9 CANTS.—The consolidation loans authorized by the

10 amendments made by this section shall be available not11 withstanding any pending application by a student for a

12 consolidation loan under part D of title IV of the Higher

13 Education Act of 1965, upon withdrawal of such applica14 tion by the student at any time prior to receipt of such

15 a consolidation loan.

16 SEC. 3. ADMINISTRATIVE EXPENSE REDUCTIONS.

17 Section 458(a)(1) (20 U.S.C. 1087h(a)(1)) is amend18 ed by striking ‘‘$532,000,000’’ and inserting

19 ‘‘$507,000,000’’.

20 SEC. 4. TREATMENT OF TAX BENEFITS.

21 (a) FAMILY CONTRIBUTION FOR DEPENDENT STU22 DENTS.—

23 (1) PARENTS’ AVAILABLE INCOME.—Section

24 475(c)(1) is amended—
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1 (A) by striking ‘‘and’’ at the end of sub2 paragraph (D);

3 (B) by striking the period at the end of

4 subparagraph (E) and inserting ‘‘; and’’; and

5 (C) by adding at the end the following new

6 subparagraph:

7 ‘‘(F) the amount of any tax credit taken

8 by the parents under section 25A of the Inter9 nal Revenue Code of 1986.’’.

10 (2) STUDENT CONTRIBUTION FROM AVAILABLE

11 INCOME.—Section 475(g)(2) is amended—

12 (A) by striking ‘‘and’’ at the end of sub13 paragraph (C);

14 (B) by striking the period at the end of

15 subparagraph (D) and inserting ‘‘; and’’; and

16 (C) by inserting after subparagraph (D)

17 the following new subparagraph:

18 ‘‘(E) the amount of any tax credit taken

19 by the student under section 25A of the Inter20 nal Revenue Code of 1986.’’.

21 (b) FAMILY CONTRIBUTION FOR INDEPENDENT STU22 DENTS WITHOUT DEPENDENTS OTHER THAN A

23 SPOUSE.—Section 476(b)(1)(A) (20 U.S.C.

24 1087pp(b)(1)(A)) is amended—
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1 (1) by striking ‘‘and’’ at the end of clause (iv);

2 and

3 (2) by inserting after clause (v) the following

4 new clause:

5 ‘‘(vi) the amount of any tax credit

6 taken under section 25A of the Internal

7 Revenue Code of 1986; and’’.

8 (c) FAMILY CONTRIBUTION FOR INDEPENDENT STU9 DENTS WITH DEPENDENTS OTHER THAN A SPOUSE.—

10 Section 477(b)(1) (20 U.S.C. 1087qq(b)(1)) is amended—

11 (1) by striking ‘‘and’’ at the end of subpara12 graph (D);

13 (2) by striking the period at the end of sub14 paragraph (E) and inserting ‘‘; and’’; and

15 (3) by adding at the end the following new sub16 paragraph:

17 ‘‘(F) the amount of any tax credit taken

18 under section 25A of the Internal Revenue

19 Code of 1986.’’.

20 (d) TOTAL INCOME.—Section 480(a)(2) (20 U.S.C.

21 1087vv(a)(2)) is amended—

22 (1) by striking ‘‘individual, and’’ and inserting

23 ‘‘individual,’’; and
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1 (2) by inserting ‘‘and no portion of any tax

2 credit taken under section 25A of the Internal Reve3 nue Code of 1986,’’ before ‘‘shall be included’’.

4 (e) OTHER FINANCIAL ASSISTANCE.—Section 480(j)

5 is amended by adding at the end the following new para6 graph:

7 ‘‘(4) Notwithstanding paragraph (1), a tax credit

8 taken under section 25A of the Internal Revenue Code of

9 1986 shall not be treated as estimated financial assistance

10 for purposes of section 471(3).’’.

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