IIB 
110TH CONGRESS 
1ST SESSION 
H. R. 5 
IN THE SENATE OF THE UNITED STATES 
JANUARY 17, 2007 
Received; read twice and referred to the Committee on Health, Education, 
Labor, and Pensions 
AN ACT 
To amend the Higher Education Act of 1965 to reduce 
interest rates for student borrowers. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
VerDate Aug 31 2005 
02:28 Jan 18, 2007
Jkt 059200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H5.RFS
H5
ccoleman on PROD1PC71 with BILLS
HR 5 RFS
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘College Student Relief 
Act of 2007’’. 
SEC. 2. INTEREST RATE REDUCTIONS. 
(a) FFEL INTEREST RATES.— 
(1) Section 427A(l) of the Higher Education 
Act of 1965 (20 U.S.C. 1077a(l)) is amended by 
adding at the end the following new paragraph: 
‘‘(4) REDUCED
RATES
FOR
UNDERGRADUATE 
SUBSIDIZED
LOANS.—Notwithstanding subsection 
(h) and paragraph (1) of this subsection, with re-
spect to any loan to an undergraduate student made, 
insured, or guaranteed under this part (other than 
a loan made pursuant to section 428B, 428C, or 
428H) for which the first disbursement is made on 
or after July 1, 2006, and before January 1, 2012, 
the applicable rate of interest shall be as follows: 
‘‘(A) For a loan for which the first dis-
bursement is made on or after July 1, 2006, 
and before July 1, 2007, 6.80 percent on the 
unpaid principal balance of the loan. 
‘‘(B) For a loan for which the first dis-
bursement is made on or after July 1, 2007, 
and before July 1, 2008, 6.12 percent on the 
unpaid principal balance of the loan. 
VerDate Aug 31 2005 
02:28 Jan 18, 2007
Jkt 059200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H5.RFS
H5
ccoleman on PROD1PC71 with BILLS
HR 5 RFS
‘‘(C) For a loan for which the first dis-
bursement is made on or after July 1, 2008, 
and before July 1, 2009, 5.44 percent on the 
unpaid principal balance of the loan. 
‘‘(D) For a loan for which the first dis-
bursement is made on or after July 1, 2009, 
and before July 1, 2010, 4.76 percent on the 
unpaid principal balance of the loan. 
‘‘(E) For a loan for which the first dis-
bursement is made on or after July 1, 2010, 
and before July 1, 2011, 4.08 percent on the 
unpaid principal balance of the loan. 
‘‘(F) For a loan for which the first dis-
bursement is made on or after July 1, 2011, 
and before January 1, 2012, 3.40 percent on 
the unpaid principal balance of the loan.’’. 
(2) SPECIAL ALLOWANCE CROSS REFERENCE.— 
Section 438(b)(2)(I)(ii)(II) of such Act is amended 
by striking ‘‘section 427A(l)(1)’’ and inserting ‘‘sec-
tion 427A(l)(1) or (l)(4)’’. 
(b) DIRECT
LOAN
INTEREST
RATES.—Section 
455(b)(7) of the Higher Education Act of 1965 (20 
U.S.C. 1087e(b)(7)) is amended by adding at the end the 
following new subparagraph: 
VerDate Aug 31 2005 
02:28 Jan 18, 2007
Jkt 059200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H5.RFS
H5
ccoleman on PROD1PC71 with BILLS
HR 5 RFS
‘‘(D) 
REDUCED
RATES
FOR
UNDER-
GRADUATE
FDSL.—Notwithstanding the pre-
ceding paragraphs of this subsection, for Fed-
eral Direct Stafford Loans made to under-
graduate students for which the first disburse-
ment is made on or after July 1, 2006, and be-
fore January 1, 2012, the applicable rate of in-
terest shall be as follows: 
‘‘(i) For a loan for which the first dis-
bursement is made on or after July 1, 
2006, and before July 1, 2007, 6.80 per-
cent on the unpaid principal balance of the 
loan. 
‘‘(ii) For a loan for which the first 
disbursement is made on or after July 1, 
2007, and before July 1, 2008, 6.12 per-
cent on the unpaid principal balance of the 
loan. 
‘‘(iii) For a loan for which the first 
disbursement is made on or after July 1, 
2008, and before July 1, 2009, 5.44 per-
cent on the unpaid principal balance of the 
loan. 
‘‘(iv) For a loan for which the first 
disbursement is made on or after July 1, 
VerDate Aug 31 2005 
02:28 Jan 18, 2007
Jkt 059200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H5.RFS
H5
ccoleman on PROD1PC71 with BILLS
HR 5 RFS
2009, and before July 1, 2010, 4.76 per-
cent on the unpaid principal balance of the 
loan. 
‘‘(v) For a loan for which the first 
disbursement is made on or after July 1, 
2010, and before July 1, 2011, 4.08 per-
cent on the unpaid principal balance of the 
loan. 
‘‘(vi) For a loan for which the first 
disbursement is made on or after July 1, 
2011, and before January 1, 2012, 3.40 
percent on the unpaid principal balance of 
the loan.’’. 
SEC. 3. REDUCTION OF LENDER INSURANCE PERCENTAGE. 
(a) AMENDMENT.—Subparagraph (G) of section 
428(b)(1) of the Higher Education Act of 1965 (20 
U.S.C. 1078(b)(1)(G)) is amended to read as follows: 
‘‘(G) insures 95 percent of the unpaid 
principal of loans insured under the program, 
except that— 
‘‘(i) such program shall insure 100 
percent of the unpaid principal of loans 
made with funds advanced pursuant to sec-
tion 428(j) or 439(q); and 
VerDate Aug 31 2005 
02:28 Jan 18, 2007
Jkt 059200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6201
E:\BILLS\H5.RFS
H5
ccoleman on PROD1PC71 with BILLS
HR 5 RFS
‘‘(ii) notwithstanding the preceding 
provisions of this subparagraph, such pro-
gram shall insure 100 percent of the un-
paid principal amount of exempt claims as 
defined in subsection (c)(1)(G);’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall take effect with respect to loans made 
on or after July 1, 2007. 
SEC. 4. GUARANTEE AGENCY COLLECTION RETENTION. 
Clause (ii) of section 428(c)(6)(A) of the Higher 
Education Act of 1965 (20 U.S.C. 1078(c)(6)(A)(ii)) is 
amended to read as follows: 
‘‘(ii) an amount equal to 24 percent of 
such payments for use in accordance with 
section 422B, except that— 
‘‘(I) beginning October 1, 2003 
and ending September 30, 2007, this 
subparagraph shall be applied by sub-
stituting ‘23 percent’ for ‘24 percent’; 
‘‘(II) beginning October 1, 2007 
and ending September 30, 2008, this 
subparagraph shall be applied by sub-
stituting ‘20 percent’ for ‘24 percent’; 
‘‘(III) beginning October 1, 2008 
and ending September 30, 2010, this 
VerDate Aug 31 2005 
02:28 Jan 18, 2007
Jkt 059200
PO 00000
Frm 00006
Fmt 6652
Sfmt 6201
E:\BILLS\H5.RFS
H5
ccoleman on PROD1PC71 with BILLS
HR 5 RFS
subparagraph shall be applied by sub-
stituting ‘18 percent’ for ‘24 percent’; 
and 
‘‘(IV) beginning October 1, 2010, 
this subparagraph shall be applied by 
substituting for ‘24 percent’ a per-
centage determined in accordance 
with the regulations of the Secretary 
and equal to the average rate paid to 
collection agencies that have contracts 
with the Secretary.’’. 
SEC. 5. ELIMINATION OF EXCEPTIONAL PERFORMER STA-
TUS FOR LENDERS. 
(a) ELIMINATION OF STATUS.—Part B of title IV of 
the Higher Education Act of 1965 (20 U.S.C. 1071 et 
seq.) is amended by striking section 428I (20 U.S.C. 
1078–9). 
(b) CONFORMING AMENDMENTS.—Part B of title IV 
of such Act is further amended— 
(1) 
in 
section 
428(c)(1) 
(20 
U.S.C. 
1078(c)(1))— 
(A) by striking subparagraph (D); and 
(B) by redesignating subparagraphs (E) 
through (H) as subparagraphs (D) through 
(G), respectively; and 
VerDate Aug 31 2005 
02:28 Jan 18, 2007
Jkt 059200
PO 00000
Frm 00007
Fmt 6652
Sfmt 6201
E:\BILLS\H5.RFS
H5
ccoleman on PROD1PC71 with BILLS
HR 5 RFS
(2) in section 438(b)(5) (20 U.S.C. 1087– 
1(b)(5)), by striking the matter following subpara-
graph (B). 
(c) EFFECTIVE DATE.—The amendments made by 
subsections (a) and (b) shall take effect on July 1, 2007. 
SEC. 6. REDUCTION OF LENDER SPECIAL ALLOWANCE PAY-
MENTS. 
Section 438(b)(2)(I) of the Higher Education Act of 
1965 (20 U.S.C. 1087–1(b)(2)(I)) is amended by adding 
at the end the following new clauses: 
‘‘(vi) REDUCTION
FOR
LOANS
DIS-
BURSED ON OR AFTER JULY 1, 2007.—With 
respect to a loan on which the applicable 
interest rate is determined under section 
427A(l) and for which the first disburse-
ment of principal is made on or after July 
1, 2007, the special allowance payment 
computed pursuant to this subparagraph 
shall be computed— 
‘‘(I) by substituting ‘2.24 per-
cent’ for ‘2.34 percent’ each place it 
appears in this subparagraph; 
‘‘(II) by substituting ‘1.64 per-
cent’ for ‘1.74 percent’ in clause (ii); 
and 
VerDate Aug 31 2005 
02:28 Jan 18, 2007
Jkt 059200
PO 00000
Frm 00008
Fmt 6652
Sfmt 6201
E:\BILLS\H5.RFS
H5
ccoleman on PROD1PC71 with BILLS