I 
114TH CONGRESS 
1ST SESSION H. R. 1131 
To amend the Higher Education Act of 1965 to provide for the refinancing 
of certain Federal student loans, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
FEBRUARY 26, 2015 
Mr. MCDERMOTT introduced the following bill; which was referred to the 
Committee on Education and the Workforce, and in addition to the Com-
mittees on Ways and Means and the Judiciary, for a period to be subse-
quently determined by the Speaker, in each case for consideration of such 
provisions as fall within the jurisdiction of the committee concerned 
A BILL 
To amend the Higher Education Act of 1965 to provide 
for the refinancing of certain Federal student loans, and 
for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Fairness in Student 
Loan Lending Act’’. 
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SEC. 2. REFINANCING PROGRAMS. 
(a) PROGRAM AUTHORITY.—Section 451(a) of the 
Higher Education Act of 1965 (20 U.S.C. 1087a(a)) is 
amended— 
(1) by striking ‘‘and (2)’’ and inserting ‘‘(2)’’; 
and 
(2) by inserting ‘‘; and (3) to make loans under 
section 460A and section 460B’’ after ‘‘section 
459A’’. 
(b) REFINANCING PROGRAM.—Part D of title IV of 
the Higher Education Act of 1965 (20 U.S.C. 1087a et 
seq.) is amended by adding at the end the following: 
‘‘SEC. 460A. REFINANCING FFEL AND FEDERAL DIRECT 
LOANS. 
‘‘(a) IN GENERAL.—Beginning not later than 180 
days after the date of enactment of the Fairness in Stu-
dent Loan Lending Act, the Secretary shall establish a 
program under which the Secretary, upon the receipt of 
an application from a qualified borrower, reissues the bor-
rower’s original loan under this part or part B as a loan 
under this part, in accordance with the provisions of this 
section, in order to permit the borrower to obtain the in-
terest rate provided under subsection (c)). 
‘‘(b) REISSUING LOANS.— 
‘‘(1) FEDERAL DIRECT LOANS.—Upon applica-
tion of a qualified borrower, the Secretary shall re-
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issue a Federal Direct Stafford Loan, a Federal Di-
rect Unsubsidized Stafford Loan, a Federal Direct 
PLUS Loan, or a Federal Direct Consolidation 
Loan of the qualified borrower, for which the first 
disbursement was made, or the application for the 
reissuance of a loan under this section was received 
before July 1, 2015, in an amount equal to the sum 
of— 
‘‘(A) the unpaid principal, accrued unpaid 
interest, and late charges of the original loan; 
and 
‘‘(B) the administrative fee under sub-
section (d)(3). 
‘‘(2) DISCHARGING AND REISSUING FFEL PRO-
GRAM
LOANS
AS
REFINANCED
FEDERAL
DIRECT 
LOANS.—Upon application of a qualified borrower 
for any loan that was made, insured, or guaranteed 
under part B and for which the first disbursement 
was made before July 1, 2010, the Secretary shall 
reissue such loan as a loan under this part, in an 
amount equal to the sum of the unpaid principal, ac-
crued unpaid interest, and late charges of the origi-
nal loan and the administrative fee under subsection 
(d)(3), to the borrower in accordance with the fol-
lowing: 
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‘‘(A) The Secretary shall pay the proceeds 
of such reissued loan to the eligible lender of 
the loan made, insured, or guaranteed under 
part B, in order to discharge the borrower from 
any remaining obligation to the lender with re-
spect to the original loan. 
‘‘(B) The Secretary shall reissue— 
‘‘(i) a loan originally made, insured, 
or guaranteed under section 428 as a Fed-
eral Direct Stafford Loan; 
‘‘(ii) a loan originally made, insured, 
or guaranteed under section 428B as a 
Federal Direct PLUS Loan; 
‘‘(iii) a loan originally made, insured, 
or guaranteed under section 428H as a 
Federal 
Direct 
Unsubsidized 
Stafford 
Loan; and 
‘‘(iv) a loan originally made, insured, 
or guaranteed under section 428C as a 
Federal Direct Consolidation Loan. 
‘‘(C) The interest rate for each loan re-
issued under this paragraph shall be the rate 
provided under subsection (c)). 
‘‘(c) INTEREST RATE.— 
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‘‘(1) IN GENERAL.—The interest rate for the 
reissued Federal Direct Stafford Loans, Federal Di-
rect Unsubsidized Stafford Loans, Federal Direct 
PLUS Loans, and Federal Direct Consolidation 
Loans, shall be a rate equal to the high yield of the 
10-year Treasury note auctioned at the final auction 
held prior to the first day of the month in which the 
application for reissuance under this section is re-
ceived, plus 1.0 percent. 
‘‘(2) FIXED RATE.—The applicable rate of in-
terest determined under paragraph (1) for a re-
issued loan under this section shall be fixed for the 
period of the loan. 
‘‘(d) TERMS AND CONDITIONS OF LOANS.— 
‘‘(1) IN
GENERAL.—A loan that is reissued 
under this section shall have the same terms and 
conditions as the original loan, except as otherwise 
provided in this section. 
‘‘(2) NO
AUTOMATIC
EXTENSION
OF
REPAY-
MENT PERIOD.—Reissuing a loan under this section 
shall not result in the extension of the duration of 
the repayment period of the loan, and the borrower 
shall retain the same repayment term that was in ef-
fect on the original loan. Nothing in this paragraph 
shall be construed to prevent a borrower from elect-
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ing a different repayment plan at any time in ac-
cordance with section 455(d)(3). 
‘‘(3) ADMINISTRATIVE
FEE.—The Secretary 
shall charge the borrower of a loan reissued under 
this section an administrative fee of not more than 
0.5 percent of the sum of the unpaid principal, ac-
crued unpaid interest, and late charges, of the origi-
nal loan. 
‘‘(e) DEFINITION OF QUALIFIED BORROWER.— 
‘‘(1) IN
GENERAL.—The term ‘qualified bor-
rower’ means a borrower— 
‘‘(A) of a loan under this part or part B 
for which the first disbursement was made, or 
the application for reissuance under this section 
was received, before July 1, 2015; and 
‘‘(B) who meets the eligibility requirements 
based on income or debt-to-income ratio estab-
lished by the Secretary. 
‘‘(2) INCOME REQUIREMENTS.—Not later than 
180 days after the date of enactment of the Fairness 
in Student Loan Lending Act, the Secretary shall 
establish eligibility requirements based on income or 
debt-to-income ratio that take into consideration 
providing access to refinancing under this section for 
borrowers with the greatest financial need. 
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‘‘(f) EXPIRATION OF AUTHORITY.—The Secretary’s 
authority to reissue loans under this section shall expire 
on the date that is determined in accordance with section 
4 of the Fairness in Student Loan Lending Act. 
‘‘SEC. 460B. FEDERAL DIRECT REFINANCED PRIVATE LOAN 
PROGRAM. 
‘‘(a) DEFINITIONS.—In this section: 
‘‘(1) ELIGIBLE PRIVATE EDUCATION LOAN.— 
The term ‘eligible private education loan’ means a 
private education loan, as defined in section 140 of 
the Truth in Lending Act (15 U.S.C. 1650), that— 
‘‘(A) was disbursed to the borrower before 
July 1, 2015; and 
‘‘(B) was for the borrower’s own postsec-
ondary educational expenses for an eligible pro-
gram at an institution of higher education par-
ticipating in the loan program under this part 
or part B, as of the date that the loan was dis-
bursed. 
‘‘(2) FEDERAL DIRECT REFINANCED PRIVATE 
LOAN.—The term ‘Federal Direct Refinanced Pri-
vate Loan’ means a loan issued under subsection 
(b)(1). 
‘‘(3) PRIVATE
EDUCATIONAL
LENDER.—The 
term ‘private educational lender’ has the meaning 
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given the term in section 140 of the Truth in Lend-
ing Act (15 U.S.C. 1650). 
‘‘(4) QUALIFIED BORROWER.—The term ‘quali-
fied borrower’ means an individual who— 
‘‘(A) has an eligible private education loan; 
‘‘(B) has been current on payments on the 
eligible private education loan for the 6 months 
prior to the date of the qualified borrower’s ap-
plication for refinancing under this section, and 
is in good standing on the loan at the time of 
such application; 
‘‘(C) is not in default on the eligible pri-
vate education loan or on any loan made, in-
sured, or guaranteed under this part or part B 
or E; and 
‘‘(D) meets the eligibility requirements 
based on income or debt-to-income ratio estab-
lished by the Secretary under subsection (b)(2). 
‘‘(b) PROGRAM AUTHORIZED.— 
‘‘(1) IN GENERAL.—The Secretary, in consulta-
tion with the Secretary of the Treasury, shall carry 
out a program under which the Secretary, upon ap-
plication by a qualified borrower, shall issue such 
borrower a loan under this part in accordance with 
the following: 
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‘‘(A) The loan issued under this program 
shall be in an amount equal to the sum of the 
unpaid principal, accrued unpaid interest, and 
late charges of the private education loan and 
the origination fee under subsection (f). 
‘‘(B) The Secretary shall pay the proceeds 
of the loan issued under this program to the 
private educational lender of the private edu-
cation loan, in order to discharge the qualified 
borrower from any remaining obligation to the 
lender with respect to the original loan. 
‘‘(C) The Secretary shall require that the 
qualified borrower undergo loan counseling that 
provides all of the information and counseling 
required under clauses (i) through (viii) of sec-
tion 485(b)(1)(A) before the loan is reissued in 
accordance with this section, and before the 
proceeds of such loan are paid to the private 
educational lender. 
‘‘(D) The Secretary shall issue the loan as 
a Federal Direct Refinanced Private Loan, 
which shall have the same terms, conditions, 
and benefits as a Federal Direct Unsubsidized 
Stafford Loan, except as otherwise provided in 
this section. 
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‘‘(2) INCOME REQUIREMENTS.—Not later than 
180 days after the date of enactment of the Fairness 
in Student Loan Lending Act, the Secretary shall 
establish eligibility requirements based on income or 
debt-to-income ratio that take into consideration 
providing access to refinancing under this section for 
borrowers with the greatest financial need. 
‘‘(c) INTEREST RATE.— 
‘‘(1) IN
GENERAL.—The interest rate for a 
Federal Direct Refinanced Private Loan shall be a 
rate equal to the high yield of the 10-year Treasury 
note auctioned at the final auction held prior to the 
first day of the month in which the application for 
reissuance under this section is received, plus 1.0 
percent. 
‘‘(2) FIXED RATE.—The applicable rate of in-
terest determined under this subsection for a Fed-
eral Direct Refinanced Private Loan shall be fixed 
for the period of the loan. 
‘‘(d) NO INCLUSION IN AGGREGATE LIMITS.—The 
amount of a Federal Direct Refinanced Private Loan, or 
a Federal Direct Consolidated Loan to the extent such 
loan was used to repay a Federal Direct Refinanced Pri-
vate Loan, shall not be included in calculating a bor-
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