I 

112TH CONGRESS 

1ST SESSION H. R. 2732 

To amend the Higher Education Act of 1965 to provide for temporary 

student loan debt conversion authority. 

IN THE HOUSE OF REPRESENTATIVES 

AUGUST 1, 2011 

Mr. BISHOP of New York introduced the following bill; which was referred to 

the Committee on Education and the Workforce 

A BILL 

To amend the Higher Education Act of 1965 to provide 

for temporary student loan debt conversion authority. 

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 ‘‘Student Loan Sim5 plification and Opportunity Act of 2011’’. 

6 SEC. 2. TEMPORARY STUDENT LOAN DEBT CONVERSION 

7 AUTHORITY. 

8 (a) REPEAL.— 


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1 (1) IN GENERAL.—Section 459A of the Higher 

2 Education Act of 1965 (20 U.S.C. 1087i–1) is re3 pealed. 

4 (2) CONFORMING AMENDMENTS.—Part D of 

5 the Higher Education Act of 1965 (20 U.S.C. 1087a 

6 et seq.) is amended— 

7 (A) in section 451(a) (20 U.S.C. 1087a), 

8 by striking ‘‘(1) to make loans to all eligible 

9 students (and the eligible parents of such stu10 dents) in attendance at participating institu11 tions of higher education selected by the Sec12 retary, to enable such students to pursue their 

13 courses of study at such institutions during the 

14 period beginning July 1, 1994; and (2) for pur15 chasing loans under section 459A.’’ and insert16 ing ‘‘to make loans to all eligible students (and 

17 the eligible parents of such students) in attend18 ance at participating institutions of higher edu19 cation selected by the Secretary, to enable such 

20 students to pursue their courses of study at 

21 such institutions during the period beginning 

22 July 1, 1994.’’; and 

23 (B) in section 459B(a)(2)(B) (20 U.S.C. 

24 1087i–2(a)(2)(B)), by striking ‘‘purchased by 

25 the Secretary pursuant to section 459A’’ and 


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1 inserting ‘‘purchased by the Secretary pursuant 

2 to section 459A under the terms of that provi3 sion in effect on or before June 30, 2010, or 

4 converted by the Secretary pursuant to section 

5 459A’’. 

6 (b) STUDENT LOAN DEBT CONVERSION.—Part D of 

7 title IV of the Higher Education Act of 1965 (20 U.S.C. 

8 1087a et seq.) is amended by inserting after section 459 

9 the following: 

10 ‘‘SEC. 459A. TEMPORARY AUTHORITY TO CONVERT STU11 DENT LOAN DEBT. 

12 ‘‘(a) IN GENERAL.— 

13 ‘‘(1) AUTHORITY.—The Secretary shall, at the 

14 request of an eligible borrower (as described in sub15 section (b)), convert an eligible student loan debt (as 

16 described in subsection (c)) into a Federal debt by 

17 paying the holder of the eligible student loan the 

18 outstanding balance of principal and interest on that 

19 loan, and the borrower shall enter into an agreement 

20 to repay to the Secretary the amount advanced to 

21 convert the debt to a Federal debt. 

22 ‘‘(2) DURATION OF AUTHORITY.—The Sec23 retary shall convert eligible student loan debt under 

24 this section for those eligible borrowers whose appliVerDate Mar 15 2010 21:34 Aug 02, 2011 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H2732.IH H2732

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1 cations for conversion are received on or after Janu2 ary 1, 2012, and before October 1, 2012. 

3 ‘‘(3) DESIGNATION OF LOAN.—The repayment 

4 obligation of the borrower whose eligible student 

5 loan debt was repaid by the Secretary and converted 

6 to a Federal debt under this section shall be referred 

7 to as a ‘FFEL Debt Conversion Loan’. 

8 ‘‘(b) ELIGIBLE BORROWER.—A borrower is eligible 

9 for a FFEL Debt Conversion Loan if the borrower, in ad10 dition to the loans described in subsection (c), has an out11 standing loan that was made under this part, or an out12 standing loan that was purchased by the Secretary pursu13 ant to section 459A under the terms of that provision in 

14 effect on or before June 30, 2010. 

15 ‘‘(c) ELIGIBLE STUDENT LOAN DEBT.—A student 

16 loan of an eligible borrower is eligible for payment by a 

17 FFEL Debt Conversion Loan if— 

18 ‘‘(1) the loan was made, insured, or guaranteed 

19 under part B, and not previously purchased by the 

20 Secretary pursuant to section 459A under the terms 

21 of that provision in effect on or before June 30, 

22 2010; 

23 ‘‘(2) the loan is not in default; and 

24 ‘‘(3) the loan is not delinquent for 270 days or 

25 more. 


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1 ‘‘(d) TERMS AND CONDITIONS OF DEBT CONVER2 SION LOANS.— 

3 ‘‘(1) CONTINUATION OF TERMS.—A FFEL 

4 Debt Conversion Loan shall be repayable by the bor5 rower under the same terms and conditions as were 

6 applicable under the promissory note signed by the 

7 borrower for the eligible student loan debt being re8 paid by the Secretary under this section, including 

9 such terms as applied when the borrower entered re10 payment, and the availability of grace periods and 

11 deferments. 

12 ‘‘(2) AGGREGATE LOAN LIMITS.—Notwith13 standing any other provision of this title, a FFEL 

14 Debt Conversion Loan shall be included in the cal15 culation of the aggregate loan limit that was applica16 ble to the borrower’s eligible student loan for which 

17 the FFEL Debt Conversion Loan was obtained. 

18 ‘‘(3) OTHER TERMS.— 

19 ‘‘(A) FFEL TERMS.—Other borrower ben20 efits offered by the originating lender or the 

21 holder of the eligible student loan being repaid 

22 that are not specified in part B or in the bor23 rower’s promissory note for that loan are not 

24 available with respect to a FFEL Debt Conver25 sion Loan. 


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1 ‘‘(B) DIRECT LOAN TERMS.—Except as 

2 provided in paragraph (5), benefits offered only 

3 for loans made under this part are not available 

4 with respect to a FFEL Debt Conversion Loan. 

5 ‘‘(4) FEES.— 

6 ‘‘(A) NO FEES IMPOSED BY SECRETARY.— 

7 The Secretary shall not charge the borrower 

8 any origination or other fee for the making of 

9 a FFEL Debt Conversion Loan. 

10 ‘‘(B) NO FEES IMPOSED BY HOLDER OF

11 ELIGIBLE STUDENT LOAN DEBT.—Notwith12 standing any other provision of law, the holder 

13 of an eligible student loan shall not charge the 

14 Secretary or the borrower any origination or 

15 other fee, including any fee for providing the in16 formation described in subsection (e), for the 

17 conversion of the eligible student loan debt to a 

18 FFEL Debt Conversion Loan. 

19 ‘‘(5) FFEL DEBT CONVERSION BENEFITS.— 

20 The Secretary may offer benefits to a borrower of a 

21 FFEL Debt Conversion Loan, in an amount that 

22 shall not exceed 2 percent of the amount advanced 

23 on the FFEL Debt Conversion Loan, which may in24 clude payments to borrowers, reductions in the out25 standing principal and interest on the FFEL Debt 


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1 Conversion Loan, or such other benefits as the Sec2 retary may establish. 

3 ‘‘(e) INFORMATION FROM HOLDERS OF STUDENT

4 LOAN DEBT ELIGIBLE FOR CONVERSION.—A holder of an 

5 eligible student loan shall promptly provide the Secretary 

6 with the amount outstanding and such other information 

7 as may be needed to convert that debt under this section. 

8 ‘‘(f) NOTIFICATION.—Not later than December 1, 

9 2011, the Secretary shall notify eligible borrowers— 

10 ‘‘(1) of their eligibility to convert an eligible 

11 student loan debt under this section; and 

12 ‘‘(2) of the time frame for applying for such 

13 conversion.’’. 

14 (c) CONFORMING AMENDMENTS.— 

15 (1) COHORT DEFAULT RATE.—Section 

16 435(m)(2) of the Higher Education Act of 1965 (20 

17 U.S.C. 1085(m)(2)) is amended by adding at the 

18 end the following: 

19 ‘‘(E) For purposes of this subsection, a 

20 borrower who obtains a FFEL Debt Conversion 

21 Loan under section 459A shall continue to be 

22 considered as having entered repayment on the 

23 date the borrower entered repayment on the eli24 gible student loan debt that was repaid by the 


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1 Secretary and converted to a Federal debt 

2 under that section.’’. 

3 (2) CONTRACTS.—Section 456(b) of the Higher 

4 Education Act of 1965 (20 U.S.C. 1087f(b)) is 

5 amended— 

6 (A) in paragraph (2), by inserting ‘‘, con7 verted,’’ after ‘‘made’’; and 

8 (B) in paragraph (3), by inserting ‘‘, con9 verted,’’ after ‘‘made’’. 

10 (3) FEDERAL CONSOLIDATION LOANS.—Section 

11 428C(a)(4)(C) of the Higher Education Act of 1965 

12 (20 U.S.C. 1078–3(a)(4)(C)) is amended by insert13 ing ‘‘or converted’’ after ‘‘made’’. 

14 (4) INCOME-BASED REPAYMENT.—Section 493C 

15 of the Higher Education Act of 1965 (20 U.S.C. 

16 1098e) is amended— 

17 (A) in subsection (a)(3)(A), by inserting 

18 ‘‘converted,’’ after ‘‘made,’’; 

19 (B) in subsection (b)(1), by inserting ‘‘con20 verted,’’ after ‘‘made,’’; and 

21 (C) in subsection (c), by inserting ‘‘con22 verted,’’ after ‘‘made,’’. 

23 (d) INAPPLICABILITY OF TITLE IV NEGOTIATED

24 RULEMAKING AND MASTER CALENDAR EXCEPTION.— 

25 Sections 482(c) and 492 of the Higher Education Act of 


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1 1965 (20 U.S.C. 1089(c), 1098a) shall not apply to the 

2 amendments made by this section, or to any regulations 

3 promulgated under those amendments. 

4 (e) ANNUAL COST ESTIMATE.—Notwithstanding any 

5 other provision of this Act or an amendment made by this 

6 Act, the Secretary of Education shall carry out the re7 quirement of section 459A(e)(3) of the Higher Education 

8 Act of 1965, as in effect on the day before the date of 

9 enactment of this Act, with respect to the annual cost esti10 mates required to be submitted not later than February 

11 15, 2012. 

12 (f) FUNDS FOR FEDERAL PELL GRANTS.—The pro13 ceeds to the Federal Government from the temporary au14 thority to convert student loan debt provided by the 

15 amendments made by this Act shall be used to carry out 

16 Federal Pell Grants under section 401 of the Higher Edu17 cation Act of 1965 (20 U.S.C. 1070a). 

Æ 


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