Responsible Student Loan Solutions Act

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. Short title This Act may be cited as the Responsible Student Loan Solutions Act 2. Student Loan Affordability (a) Terms and conditions of federal direct loans Section 455 of the Higher Education Act of 1965 ( 20 U.S.C. 1087e (1) in subsection (a), by adding at the end the following: (4) Federal Direct Stafford Loan limits for new loans on or after July 1, 2013 (A) Aggregate loan limits Notwithstanding any other provision of this Act, with respect to Federal Direct Stafford Loans for which the first disbursement is made on or after July 1, 2013, the aggregate unpaid principal amount for all such loans made on or after such date (and including Federal Direct Stafford Loans first disbursed before such date) to any student shall not at any time exceed— (i) $31,000, in the case of any dependent student (except an undergraduate dependent student whose parents are unable to borrow under the Federal Direct PLUS Loan Program) who has not successfully completed a program of undergraduate education; or (ii) $57,500, in the case of any independent student, or an undergraduate dependent student whose parents are unable to borrow under the Federal Direct PLUS Loan Program, who has not successfully completed a program of undergraduate education. (B) Annual loan limits Notwithstanding any other provision of this Act, with respect to Federal Direct Stafford Loans for which the first disbursement is made on or after July 1, 2013, the maximum annual amount for all such loans made on or after such date a student who has not successfully completed a program of undergraduate education may borrow in any academic year shall not at any time exceed— (i) in the case of a dependent student (except an undergraduate dependent student whose parents are unable to borrow under the Federal Direct PLUS Loan Program)— (I) who has not successfully completed the first year of a program of undergraduate education, $5,500; (II) who has successfully completed such first year but has not successfully completed the remainder of a program of undergraduate education, $6,500; and (III) who has successfully completed the first and second years of a program of undergraduate education but has not successfully completed the remainder of such program, $7,500; and (ii) in the case of an independent student, or an undergraduate dependent student whose parents are unable to borrow under the Federal Direct PLUS Loan Program— (I) who has not successfully completed the first year of a program of undergraduate education, $9,500; (II) who has successfully completed such first year but has not successfully completed the remainder of a program of undergraduate education, $10,500; and (III) who has successfully completed the first and second years of a program of undergraduate education but has not successfully completed the remainder of such program, $12,500. ; (2) in subsection (b)— (A) in paragraph (7)— (i) in the paragraph heading, by inserting , and before July 1, 2013 2006 (ii) in subparagraph (A), by inserting and before July 1, 2013, 2006, (iii) in subparagraph (B), by inserting and before July 1, 2013, 2006, (iv) in subparagraph (C), by inserting and before July 1, 2013, 2006, (B) by redesignating paragraphs (8) and (9) as paragraphs (9) and (10), respectively; and (C) by inserting after paragraph (7) the following: (8) Interest rates for new loans on or after July 1, 2013 (A) Rates for FDSL and FDUSL Notwithstanding the preceding paragraphs of this subsection, for— (i) Federal Direct Stafford Loans for which the first disbursement is made on or after July 1, 2013, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to— (I) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to such June 1; plus (II) a percentage determined under subparagraph (D), except that such rate shall not exceed 6.8 percent; and (ii) Federal Direct Unsubsidized Stafford Loans for which the first disbursement is made on or after July 1, 2013, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to— (I) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to such June 1; plus (II) a percentage determined under subparagraph (D), except that such rate shall not exceed 8.25 percent. (B) Rates for PLUS Loans Notwithstanding the preceding paragraphs of this subsection, for Federal Direct PLUS Loans for which the first disbursement is made on or after July 1, 2013, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to— (i) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to such June 1; plus (ii) a percentage determined under subparagraph (D), except that such rate shall not exceed 8.25 percent. (C) Consolidation loans Notwithstanding the preceding paragraphs of this subsection, for Federal Direct Consolidation Loans for which the first disbursement is made on or after July 1, 2013, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to— (i) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to such June 1; plus (ii) a percentage determined under subparagraph (D), except that such rate shall not exceed 8.25 percent. (D) Percentage determination Except as provided in the flush text under clauses (i) and (ii) of subparagraph (A), subparagraph (B), and subparagraph (C), during each 12-month period beginning on July 1 and ending on June 30, beginning on July 1, 2013, the Secretary shall determine a percentage for application under clauses (i)(II) and (ii)(II) of subparagraph (A), subparagraph (B)(ii), and subparagraph (C)(ii). In carrying out this subparagraph, the Secretary may determine different percentages for application under each such clause or subparagraph, as long as such percentages in the aggregate— (i) represent the total cost of administering the Federal Direct Loan program and borrower benefits; and (ii) result in such program being revenue neutral for such 12-month period. ; and (3) in subsection (c), by adding at the end the following: (3) Reduction of fee for Federal Direct PLUS Loans Notwithstanding paragraph (1), for any Federal Direct PLUS Loan for which the first disbursement is made on or after July 1, 2013, the Secretary shall charge the borrower of the Loan an origination fee of not more than 3 percent of the principal amount of the loan. . (b) Refinancing Part D of title IV of the Higher Education Act of 1965 ( 20 U.S.C. 1087a et seq. 460A. Refinancing (a) Refinancing for PLUS loans (1) Reissuing Federal Direct PLUS loans The Secretary may reissue a Federal Direct PLUS Loan for which the first disbursement was made before July 1, 2013, that is not in default in order to permit the borrower to obtain the interest rate provided under section 455(b)(8)(B). (2) Purchasing Federal PLUS Loans The Secretary may purchase a Federal PLUS Loan that is not in default and reissue such loan in order to permit the borrower to obtain the interest rate provided under section 455(b)(8)(B). (3) Administrative fee The Secretary may charge a borrower an amount not to exceed 0.5 percent of the principal amount of the loan to be reissued or purchased to cover the administrative cost of reissuing or purchasing such loan, which amount shall be paid to the Secretary. (b) Refinancing for Stafford loans (1) Reissuing Federal Direct Stafford loans The Secretary may reissue a Federal Direct Stafford Loan or a Federal Direct Unsubsidized Stafford Loan for which the first disbursement was made before July 1, 2013, that is not in default in order to permit the borrower to obtain the interest rate provided under section 455(b)(8)(A). (2) Purchasing Federal Stafford Loans The Secretary may purchase a Federal Stafford Loan or a Federal Unsubsidized Stafford Loan that is not in default and reissue such loan in order to permit the borrower to obtain the interest rate provided under section 455(b)(8)(A). (3) Administrative fee The Secretary may charge a borrower an amount not to exceed 0.5 percent of the principal amount of the loan to be reissued or purchased to cover the administrative cost of reissuing or purchasing such loan, which amount shall be paid to the Secretary. .

Summary: Responsible Student Loan Solutions Act - Amends title IV (Student Assistance) of the Higher Education Act of 1965 to limit the unpaid amount of Direct Stafford loans that students may amass before completing their undergraduate education. Varies that limit on the basis of whether a student is a dependent student, independent student, or dependent student whose parents are unable to borrow a Direct PLUS loan. Limits the amount of Direct Stafford loans that students may borrow in any academic year before the completion of their undergraduate studies. Varies that limit on the basis of whether a student: (1) is a dependent student, independent student, or dependent student whose parents are unable to borrow a Direct PLUS loan; and (2) has or has not successfully completed the first year or first and second years of their undergraduate studies. Sets the annual interest rate on Direct loans at the bond equivalent rate on 91-day Treasury bills plus a percentage that: (1) represents the total cost of administering the Direct Loan program and borrower benefits, and (2) results in the program being revenue neutral for the applicable 12-month period. Allows the Secretary of Education to use different percentages under that formula for the Direct Stafford Loan, Unsubsidized Stafford Loan, PLUS Loan, and Consolidation Loan programs. Caps the annual interest rate for Direct Stafford loans at 6.8%, and for Direct Unsubsidized Stafford loans and Direct PLUS and Consolidation loans at 8.25% Directs the Secretary to charge the borrower of a Direct PLUS loan an origination fee of up to 3% of the loan principal. Limits the applicability of the preceding provisions to loans first disbursed on or after July 1, 2013. Authorizes the Secretary to refinance federal PLUS and Stafford loans to permit borrowers to obtain an interest rate determined pursuant to this Act's provisions. Allows the Secretary to charge borrowers an administrative fee for refinancing such loans that does not exceed 0.5% of the loan principal.