I 
109TH CONGRESS 
1ST SESSION H. R. 1617 
To allow borrowers consolidating student loans to choose a variable or fixed 
interest rate, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
APRIL 13, 2005 
Mr. PETRI introduced the following bill; which was referred to the Committee 
on Education and the Workforce 
A BILL 
To allow borrowers consolidating student loans to choose 
a variable or fixed interest rate, 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. REFERENCE. 
Except as otherwise expressly provided, whenever in 
this Act an amendment or repeal is expressed in terms 
of an amendment to, or repeal of, a section or other provi-
sion, the reference shall be considered to be made to a 
section or other provision of the Higher Education Act of 
1965 (20 U.S.C. 1001 et seq.).
SEC. 2. CONSOLIDATION LOAN INTEREST RATES. 
(a) FFEL LOANS.—Paragraph (3) of section 
427A(l) (20 U.S.C. 1077a(l)) is amended to read as fol-
lows: 
‘‘(3) CONSOLIDATION LOANS.— 
‘‘(A) BORROWER ELECTION.—With respect 
to any consolidation loan under section 428C 
for which the application is received by an eligi-
ble lender on or after July 1, 2006, the applica-
ble rate of interest shall, at the election of the 
borrower at the time of application for the loan, 
be either at the rate determined under subpara-
graph (B) or the rate determined under sub-
paragraph (C). 
‘‘(B) VARIABLE
RATE.—Except as pro-
vided in subparagraph (D), the rate determined 
under this subparagraph 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, for such 12-month period, 
to— 
‘‘(i) the bond equivalent rate of 91- 
day Treasury bills auctioned at the final 
auction held prior to such June 1; plus 
‘‘(ii) 2.3 percent,
except that such rate shall not exceed 8.25 per-
cent. 
‘‘(C) FIXED RATE.—Except as provided in 
subparagraph (D), the rate determined under 
this subparagraph shall be determined on the 
date on which the obligation to repay the loan 
is signed, and be equal, for the duration of the 
term of the loan, to— 
‘‘(i) the average bond equivalent rate 
of the 3-year Treasury note as determined 
on the basis of the last publication in May 
of the Federal Reserve Statistical Release 
H–15 (or its successor) prior to the date 
on which the obligation to repay the loan 
is signed; plus 
‘‘(ii) 2.3 percent, 
except that such rate shall not exceed 8.25 per-
cent. 
‘‘(D) CONSOLIDATION OF PLUS LOANS.— 
In the case of any such consolidation loan that 
is used to repay loans each of which was made 
under section 428B or was a Federal Direct 
PLUS Loan (or both), the rates determined 
under subparagraphs (B) and (C) shall be de-
termined—
‘‘(i) by substituting ‘3.1 percent’ for 
‘2.3 percent’; and 
‘‘(ii) by substituting ‘9.0 percent’ for 
‘8.25 percent’.’’. 
(b) DIRECT LOANS.—Subparagraph (C) of section 
455(b)(7) (20 U.S.C. 1087e(b)(7)) is amended to read as 
follows: 
‘‘(C) CONSOLIDATION LOANS.— 
‘‘(i) BORROWER ELECTION.—Notwith-
standing the preceding paragraphs of this 
subsection, with respect to any Federal Di-
rect Consolidation Loan for which the ap-
plication is received by an eligible lender 
on or after July 1, 2006, the applicable 
rate of interest shall, at the election of the 
borrower at the time of application for the 
loan, be either at the rate determined 
under clause (ii) or the rate determined 
under clause (iii). 
‘‘(ii) VARIABLE
RATE.—Except as 
provided in clause (iv), the rate determined 
under this clause shall, during any 12- 
month period beginning on July 1 and 
ending on June 30, be determined on the