(2) by redesignating paragraphs (9) and (10) 
as paragraphs (10) and (11), respectively; and 
(3) by inserting after paragraph (8) the fol-
lowing: 
‘‘(9) INTEREST
RATE
PROVISIONS
FOR
NEW 
LOANS ON OR AFTER JULY 1, 2017.— 
‘‘(A) RATES FOR UNDERGRADUATE FDSL 
AND
FDUSL.—Notwithstanding the preceding 
paragraphs of this subsection, for Federal Di-
rect Stafford Loans and Federal Direct Unsub-
sidized Stafford Loans issued to undergraduate 
students, for which the first disbursement is 
made on or after July 1, 2017, the applicable 
rate of interest shall, during any 12-month pe-
riod 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) 1.09 percent, 
except that such rate shall not exceed 5 per-
cent. 
‘‘(B) IN
SCHOOL
AND
GRACE
PERIOD 
RULES
FOR
UNDERGRADUATES.—Notwith-
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standing the preceding paragraphs of this sub-
section, with respect to any Federal Direct 
Stafford Loan or Federal Direct Unsubsidized 
Stafford Loan issued to an undergraduate stu-
dent for which the first disbursement is made 
on or after July 1, 2017, the applicable rate of 
interest for interest which accrues— 
‘‘(i) prior to the beginning of the re-
payment period of the loan; or 
‘‘(ii) during the period in which prin-
cipal need not be paid (whether or not 
such principal is in fact paid) by reason of 
a provision described in subsection (f), 
shall be determined under subparagraph (A) by 
substituting ‘0.49 percent’ for ‘1.09 percent’. 
‘‘(C) RATES FOR GRADUATE AND PROFES-
SIONAL
FDUSL.—Notwithstanding 
the 
pre-
ceding paragraphs of this subsection, for Fed-
eral Direct Unsubsidized Stafford Loans issued 
to graduate or professional students, for which 
the first disbursement is made on or after July 
1, 2017, the applicable rate of interest shall, 
during any 12-month period beginning on July 
1 and ending on June 30, be determined under 
subparagraph (A)— 
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‘‘(i) by substituting ‘1.86 percent’ for 
‘1.09 percent’; and 
‘‘(ii) by substituting ‘8.25 percent’ for 
‘5 percent’. 
‘‘(D) IN
SCHOOL
AND
GRACE
PERIOD 
RULES
FOR
GRADUATE
AND
PROFESSIONAL 
STUDENTS.—Notwithstanding 
the 
preceding 
paragraphs of this subsection, with respect to 
any Federal Direct Unsubsidized Stafford Loan 
issued to a graduate student or professional 
student for which the first disbursement is 
made on or after July 1, 2017, the applicable 
rate of interest for interest which accrues— 
‘‘(i) prior to the beginning of the re-
payment period of the loan; or 
‘‘(ii) during the period in which prin-
cipal need not be paid (whether or not 
such principal is in fact paid) by reason of 
a provision described in subsection (f), 
shall be determined under subparagraph (A) by 
substituting ‘1.26 percent’ for ‘1.09 percent’. 
‘‘(E) PLUS LOANS.—Notwithstanding the 
preceding paragraphs of this subsection, with 
respect to Federal Direct PLUS Loan for which 
the first disbursement is made on or after July 
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1, 2017, the applicable rate of interest shall be 
determined under subparagraph (A)— 
‘‘(i) by substituting ‘2.36 percent’ for 
‘1.09 percent’; and 
‘‘(ii) by substituting ‘8.25 percent’ for 
‘5 percent’. 
‘‘(F) CONSOLIDATION
LOANS.—Notwith-
standing the preceding paragraphs of this sub-
section, any Federal Direct Consolidation loan 
for which the application is received on or after 
July 1, 2017, shall bear interest at an annual 
rate on the unpaid principal balance of the loan 
that is equal to the lesser of— 
‘‘(i) the weighted average of the inter-
est rates on the loans consolidated, round-
ed to the nearest higher 1⁄8 of 1 percent; 
or 
‘‘(ii) 8.25 percent.’’. 
SEC. 302. BORROWER MODIFICATION OF INTEREST RATES 
UNDER TITLE IV. 
Section 455(b) of the Higher Education Act of 1965 
(20 U.S.C. 1087e(b)), as amended by section 301, is fur-
ther amended by adding at the end the following: 
‘‘(12) BORROWER MODIFICATION OF INTEREST 
RATE.— 
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‘‘(A) 
MODIFICATION.—Notwithstanding 
any other provision of law, the borrower of a 
Federal Stafford Loan under section 428, a 
Federal Direct Stafford Loan, a Federal Un-
subsidized Stafford Loan under section 428H, a 
Federal Direct Unsubsidized Stafford Loan, a 
Federal PLUS Loan under section 428B, a 
Federal Direct PLUS Loan, a Federal Consoli-
dation Loan under section 428C, or a Federal 
Direct Consolidation Loan may elect to modify 
the interest rate of the loan to be equal to— 
‘‘(i) in the case of a Federal Direct 
Stafford Loan, a Federal Direct Unsub-
sidized Stafford Loan, a Federal Direct 
PLUS Loan, or a Federal Direct Consoli-
dation Loan, the interest rate that would 
be applicable to such loan if such loan were 
first disbursed (or in the case of a Federal 
Direct Consolidation Loan, first applied 
for) on the date on which such borrower 
elects to modify the interest rate of such 
loan; and 
‘‘(ii) in the case of a Federal Stafford 
Loan, a Federal Unsubsidized Stafford 
Loan, a Federal PLUS Loan, or a Federal 
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Consolidation Loan, the weighted average 
of the interest rates applicable to loans 
under part B on the date the loan was first 
disbursed (or in the case of a Federal Con-
solidation Loan, first applied for). 
‘‘(B) FIXED RATE.—Except as provided in 
subparagraph (C), an interest rate elected 
under subparagraph (A) for a loan shall be 
fixed for the life of the loan. 
‘‘(C) CONTINUING
AUTHORITY
TO
MOD-
IFY.—A borrower may elect to modify the inter-
est rate of a loan in accordance with subpara-
graph (A) at any time during the life of the 
loan.’’. 
SEC. 303. EXCESS REVENUE IN THE FEDERAL DIRECT LOAN 
PROGRAM. 
(a) IN GENERAL.—The Secretary of Education shall, 
for each fiscal year beginning with the first full fiscal year 
following the date of enactment of this Act, as soon as 
practicable after the end of such fiscal year, determine 
whether the amount of Federal funds expended to carry 
out the William D. Ford Federal Direct Loan Program 
under part D of title IV of the Higher Education Act of 
1965 (20 U.S.C. 1087a et seq.) during such fiscal year 
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