I 
115TH CONGRESS 
1ST SESSION H. R. 2725 
To amend the Higher Education Act of 1965 to provide for the refinancing 
of certain Federal student loans. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 25, 2017 
Mr. ROKITA (for himself and Mr. HASTINGS) 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 the refinancing of certain Federal student loans. 
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 ‘‘Student Loan Lower 
Interest Rate and Lower Monthly Payment Refinancing 
Act of 2017’’. 
SEC. 2. REFINANCING PROGRAM. 
(a) PROGRAM AUTHORITY.—Part C of title I of the 
Higher Education Act of 1965 is amended by adding at 
the end the following: 
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‘‘SEC. 138A. REFINANCING CERTAIN FEDERAL STUDENT 
LOANS. 
‘‘(a) IN GENERAL.—To enable State, private and 
nonprofit lenders to make loans at lower market-based 
variable interest rates to all eligible borrowers for the pur-
pose of refinancing existing student loan debt incurred 
pursuant to parts B, D, and E, of title IV, there are here-
by made available, in accordance with the provisions of 
this title and title IV, such sums as may be necessary to 
insure a portion of each loan, as set forth in this part, 
and to otherwise make payments consistent with the terms 
in this part. 
‘‘(b) DISCRIMINATION
BY
CREDITORS
PROHIB-
ITED.—No agency, organization, institution, bank, credit 
union, corporation, or other lender who regularly extends, 
renews, or continues credit or provides insurance under 
this part shall exclude from receipt or deny the benefits 
of, or discriminate against any borrower or applicant in 
obtaining, such credit or insurance on the basis of race, 
national origin, religion, sex, marital status, age, or handi-
capped status. 
‘‘(c) DESIGNATION.— 
‘‘(1) IN
GENERAL.—The program established 
under this part shall be referred to as the ‘Student 
Loan Lower Interest Rate and Lower Monthly Pay-
ment Refinancing Program’. 
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‘‘(2) REFINANCING
LOANS.—Notwithstanding 
any other provision of this part, loans made to bor-
rowers under this part that, except as otherwise 
specified in this part, have the same terms, condi-
tions, and benefits as loans made to borrowers under 
section 428C, shall be known as ‘Refinancing 
Loans’. 
‘‘SEC. 138B. REFINANCING CERTAIN FEDERAL STUDENT 
LOANS. 
‘‘(a) IN GENERAL.—Beginning not later than 180 
days after the date of enactment of the Student Loan 
Lower Interest Rate and Lower Monthly Payment Refi-
nancing Act, the Secretary shall establish a process under 
which eligible lenders may receive loan insurance from the 
Secretary for the purpose of extending, upon the receipt 
of an application from an eligible borrower, a loan to refi-
nance one or more eligible loans, in accordance with the 
provisions of this section. 
‘‘(b) DEFINITIONS.— 
‘‘(1) DEFINITION OF ELIGIBLE BORROWER.— 
For the purpose of this section, the term ‘eligible 
borrower’ means a borrower who— 
‘‘(A) has one or more eligible loans; 
‘‘(B) is not subject to a judgment secured 
through litigation with respect to a loan under 
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this title or to an order for wage garnishment 
under section 488A; and 
‘‘(C) at the time of application for a Refi-
nancing Loan— 
‘‘(i) is in repayment status as deter-
mined under section 428(b)(7)(A); 
‘‘(ii) is in a grace period preceding re-
payment; or 
‘‘(iii) is a defaulted borrower who has 
made arrangements to repay the obligation 
on the defaulted loans satisfactory to the 
holders of the defaulted loans. 
‘‘(2) TERMINATION.—An individual’s status as 
an eligible borrower under this section terminates 
upon receipt of a Refinancing Loan under this sec-
tion, except that— 
‘‘(A) an individual who receives eligible 
loans after the date of receipt of the Refi-
nancing loan may receive a subsequent Refi-
nancing Loan; 
‘‘(B) eligible loans received prior to the 
date of a Refinancing Loan may be added dur-
ing the 180-day period following the making of 
the Refinancing Loan; 
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‘‘(C) eligible loans received following the 
making of the Refinancing Loan may be added 
during the 180-day period following the making 
of the Refinancing Loan; and 
‘‘(D) eligible loans received prior to the 
date of the first Refinancing Loan may be 
added to a subsequent Refinancing Loan. 
‘‘(3) ELIGIBLE LENDERS.—Entities eligible to 
make Refinancing Loans, and receive default insur-
ance from the Secretary, shall be either— 
‘‘(A) State agencies described in subpara-
graphs (D) and (F) of section 435(d)(1); 
‘‘(B) other eligible lenders described in 
subparagraphs (A) and (J) of such section, 
which made or held loans prior to July 1, 2010; 
and 
‘‘(C) any other entity that prior to July 1, 
2010, made or held a loan as a beneficiary of 
an eligible lender trustee agreement under part 
B of title IV. 
‘‘(4) ELIGIBLE LOANS.—For the purposes of 
this section, ‘eligible loans’ shall include any loan 
made, insured or guaranteed under parts B, D, and 
E of title IV. 
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‘‘(c) REFINANCING ELIGIBLE LOANS.—Upon appli-
cation of an eligible borrower, an eligible lender shall repay 
directly to the existing holder of each of that eligible bor-
rower’s eligible loans with the proceeds of a Refinancing 
Loan in an amount equal to the sum of the unpaid prin-
cipal, accrued unpaid interest, and late charges of the 
original eligible loans in order to discharge the eligible bor-
rower from any remaining obligation to the existing holder 
with respect to the original eligible loans. 
‘‘(d) INTEREST RATES.— 
‘‘(1) IN GENERAL.—Notwithstanding the cur-
rent interest rates of the eligible loans being refi-
nanced, the interest rate for the Refinancing Loan, 
shall be a variable rate equal to no more than— 
‘‘(A) for the calendar quarter beginning on 
July 1, 2015, and each subsequent calendar 
quarter, the daily average of 1-month London 
Inter Bank Offered Rate (LIBOR) for United 
States dollars in effect for each of the days in 
the prior calendar quarter as compiled and re-
leased by the British Bankers Association, plus 
‘‘(B) 3.5 percent per annum. 
‘‘(2) ADJUSTABLE RATE.—The applicable rate 
of interest determined under paragraph (1) for a 
Refinancing Loan under this section shall adjust on 
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the first day of each calendar quarter for the period 
of the loan. 
‘‘(e) INSURANCE.— 
‘‘(1) DEFAULT
INSURANCE.—The Secretary 
shall provide default insurance on Refinancing 
Loans and shall upon presentment with a defaulted 
Refinancing Loan shall pay an amount, as set for 
below, to the eligible lender in exchange for all 
rights, title and interest to the Refinancing Loan. 
‘‘(2) DEFAULT.— 
‘‘(A) a Refinancing Loan is in default and 
eligible for an insurance payment, if the Refi-
nancing Loan has, experienced at least 270 
consecutive days of nonpayment; and 
‘‘(B) such state of nonpayment is not 
caused by application of a deferment or forbear-
ance as described in section 435. 
‘‘(3) PHASE-OUT OF DEFAULT INSURANCE COV-
ERAGE.—To the extent an eligible lender provides 
the Secretary with a defaulted eligible loan, the Sec-
retary shall pay to the eligible lender an amount 
equal to— 
‘‘(A) for a default occurring in the first 5 
years from the date of disbursement of the Re-
financing Loan made, the Secretary shall insure 
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97 percent of the unpaid principal and accrued 
interest and fees; 
‘‘(B) for a default occurring in the second 
5 years (years 6 through 10) from the date of 
disbursement of the Refinancing Loan, the Sec-
retary shall insure 87 percent of the unpaid 
principal and accrued interest and fees; and 
‘‘(C) for a default occurring at any point 
after the tenth year after disbursement of the 
Refinancing Loan, the Secretary shall insure 77 
percent of the unpaid principal and accrued in-
terest. 
‘‘(f) INSURANCE FEES PAID TO THE SECRETARY.— 
In lieu of any other fees or charges by the Secretary asso-
ciated with loans under this part, eligible lenders shall pay 
to the Secretary— 
‘‘(1) a Default Insurance Fee equal to 0.50 per-
cent of the disbursed loan amount; and 
‘‘(2) a Monthly Insurance Fee payable each 
month calculated on annual basis equal to 1.05 per-
cent of the average principal plus accrued unpaid in-
terest for the prior month of the Refinancing Loans 
disbursed under this section. 
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‘‘(g) NO SPECIAL ALLOWANCE.—No special allow-
ance under section 438 shall be paid with respect to the 
portion of any Refinancing Loan. 
‘‘(h) TERMS
AND CONDITIONS
OF REFINANCING 
LOANS.— 
‘‘(1) IN GENERAL.—A Refinancing Loan made 
under this section shall have the same terms and 
conditions as the loans authorized under section 
455, except as otherwise provided in this section. 
‘‘(2) NO
AUTOMATIC
EXTENSION
OF
REPAY-
MENT PERIOD.—Refinancing a loan under this sec-
tion may, at the behest of the eligible borrower, re-
sult in the extension of the duration of the repay-
ment period of the loan. In addition, a borrower 
may, at the time of making the Refinancing Loan, 
enroll in any repayment plan for which the eligible 
borrower is eligible in accordance with section 
455(d)(3). 
‘‘(3) BORROWER
BENEFITS.—Eligible lenders 
may offer any borrower benefits, including interest 
rate and principal reductions as desirable in connec-
tion with Refinancing Loans. In addition to such 
benefits, and any other benefits required of Consoli-
dation loans authorized under section 455— 
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‘‘(A) Refinancing Loans may, to the extent 
offered under the Direct Loan Program, also 
offer— 
‘‘(i) an income contingent repayment 
plan; 
‘‘(ii) an income-based repayment plan; 
‘‘(iii) a Pay As You Earn (PAYE) Re-
payment Plan; and 
‘‘(iv) the public service loan forgive-
ness program under section 455(m); and 
‘‘(B) Refinancing Loans shall, to the ex-
tent offered under the Direct Loan Program, 
also offer— 
‘‘(i) the benefit for active duty service 
members benefit offered under section 
455(o); 
‘‘(ii) deferment as provided for in sec-
tion 435; 
‘‘(iii) forbearance as provided for in 
section 435; and 
‘‘(iv) discharge for disability or death 
of the borrower. 
‘‘(i) LOAN DISCHARGE.—In the case of loans dis-
charged under income contingent repayment, income- 
based repayment, or public service loan forgiveness, or for 
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disability or death of the borrower, the Secretary shall, 
upon such discharge, pay to the eligible lender an amount 
equal to the unpaid principal and accrued interest.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) PART B.—Section 428C(a)(3)(B)(i) of the 
Higher Education Act of 1965 (20 U.S.C. 1078– 
3(a)(3)(B)(i)) is amended— 
(A) in the matter preceding subclause 
(I)— 
(i) by inserting ‘‘, section 138A,’’ 
after ‘‘An individual’s status as an eligible 
borrower under this section’’; 
(ii) by striking ‘‘both sections’’ and 
inserting ‘‘each such section’’; and 
(iii) by inserting ‘‘, a Refinancing 
Loan under section 138A,’’ after ‘‘upon re-
ceipt of a consolidation loan under this sec-
tion’’; 
(B) in subclause (III), by striking the 
semicolon and inserting ‘‘; and’’; 
(C) in subclause (IV), by striking ‘‘; and’’ 
and inserting a period; and 
(D) by striking subclause (V). 
(2) PART D.—Section 455 of the Higher Edu-
cation Act of 1965 (20 U.S.C. 1087e) is amended— 
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(A) in subsection (a), by adding at the end 
the following: 
‘‘(4)(A) 
CONSOLIDATION
OF
REFINANCING 
LOANS.—Notwithstanding any provisions of this 
part, eligible borrowers may consolidate Refinancing 
Loans authorized under section 138A into a Direct 
Consolidation Loan in the event that the interest 
rate on each such Refinancing Loan exceeds 6.875 
percent for the quarter. 
‘‘(B) ELIGIBILITY
PERIOD.—Any application 
for a Consolidation Loan that includes Refinancing 
Loans under this paragraph must be received by the 
Secretary by the end of a quarter during which the 
Refinancing Loan interest exceeds 6.875 percent.’’; 
and 
(B) by adding at the end the following new 
subsection: 
‘‘(r) REPAYMENT TERMS
FOR FEDERAL FAMILY 
EDUCATION LOANS.— 
‘‘(1) APPLICABILITY OF PROGRAMS AVAILABLE 
UNDER THIS SECTION.—The Secretary shall apply 
subsections (d), (e), (f), (l), (m), and (o) to all loans 
made under part B as if such loans were made 
under this part. 
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‘‘(2) PAYMENT OF BALANCE AND INTEREST.— 
In carrying out paragraph (1), the Secretary shall 
pay to the holder of a loan made under part B the 
amount of principal, interest, or special allowance 
payments necessary to apply subsections (d), (e), (f), 
(l), (m), and (o) to such loan, as appropriate.’’. 
SEC. 3. OFFSET. 
(a) PUBLIC SERVICE LOAN FORGIVENESS.—Section 
455(m) of the Higher Education Act of 1965 (20 U.S.C. 
1087e(m)) is amended— 
(1) in paragraph (1), by striking ‘‘The Sec-
retary’’ and inserting ‘‘Except as provided in para-
graph (2)(B), the Secretary’’; and 
(2) in paragraph (2)— 
(A) by striking ‘‘After the’’ and inserting 
the following: 
‘‘(A) IN GENERAL.—Except as provided in 
subparagraph (B), after the’’; and 
(B) by adding after subparagraph (A) the 
following: 
‘‘(B) CAP ON LOAN CANCELLATION.—With 
respect to any eligible Federal Direct Loans 
made to a new borrower on or after July 1, 
2017, the Secretary may cancel, in accordance 
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with subparagraph (A), up to $57,500 of the 
obligation on such loans.’’. 
(b) INCOME-BASED REPAYMENT.—Section 493C of 
the Higher Education Act of 1965 (20 U.S.C. 1098e) is 
amended by adding at the end the following: 
‘‘(f) SPECIAL TERMS FOR NEW BORROWERS ON AND 
AFTER JULY 1, 2017.—Subsection (e)(2) shall not apply 
with respect to any loan made to a new borrower on or 
after July 1, 2017, for enrollment in a graduate or profes-
sional program.’’. 
Æ 
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