A bill to amend title IV of the Higher Education Act of 1965 to authorize private education loan refinancing under the Federal student loan program.

SECTION 1. SHORT TITLE; PURPOSE.

    (a) Short Title.--This Act may be cited as the ``Private Student 
Loan Debt Swap Act of 2009''.
    (b) Purpose.--It is the purpose of this Act to establish a 
temporary private student loan debt swap program to assist eligible 
borrowers in refinancing all or a portion of their private education 
debt with less costly loans with the same terms and conditions as 
Federal direct loans.

SEC. 2. PRIVATE EDUCATION LOAN REFINANCING.

    Title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et 
seq.) is amended by adding at the end the following:

              ``PART J--PRIVATE EDUCATION LOAN REFINANCING

``SEC. 499E. PRIVATE EDUCATION LOAN REFINANCING.

    ``(a) In General.--
            ``(1) Authority.--The Secretary shall carry out a Private 
        Education Loan Debt Swap program in accordance with this 
        section.
            ``(2) Availability of funds.--There are hereby made 
        available, in accordance with the provisions of this section, 
        such sums as may be necessary to make loans under this section 
        through refinancing to all individuals eligible to receive 
        private education loan refinancing under this section.
            ``(3) Private education loan.--In this section, the term 
        `private education loan' has the meaning given the term in 
        section 140 of the Truth in Lending Act (15 U.S.C. 1650).
    ``(b) Eligible Debt Swap Loan Borrower.--An individual shall be 
eligible to receive private education loan refinancing under this 
section if the individual--
            ``(1)(A) was, at any time after July 1, 1994, eligible to 
        obtain an unsubsidized Federal Stafford Loan under section 428H 
        for a period of undergraduate or graduate enrollment;
            ``(B) incurred at least 1 private education loan for such 
        period of enrollment;
            ``(C) is not enrolled in an eligible institution on at 
        least a half-time basis;
            ``(D) remains indebted on at least 1 private education loan 
        eligible for refinancing under this section and--
                    ``(i) has never obtained an unsubsidized Federal 
                Stafford Loan under section 428H; or
                    ``(ii) has borrowed an aggregate amount under the 
                unsubsidized Federal Stafford Loan program under 
                section 428H that is less than the maximum aggregate 
                amount indicated under section 428H(d) for loans first 
                disbursed on or after July 1, 2008;
            ``(E) is not in default on a loan made, insured, or 
        guaranteed under this title;
            ``(F) has made not less than 2 consecutive payments on the 
        private education loan to be refinanced and is not more than 90 
        days delinquent on such loan; and
            ``(G) has not previously obtained refinancing under this 
        section; or
            ``(2)(A) was, at any time after July 1, 2006, eligible to 
        obtain a Federal PLUS Loan under section 428B for a period of 
        graduate or professional enrollment;
            ``(B) incurred at least 1 private education loan for such 
        period of enrollment;
            ``(C) is not in default on a loan made, insured, or 
        guaranteed under this title;
            ``(D) has made not less than 2 consecutive payments on the 
        private education loan to be refinanced and is not more than 90 
        days delinquent on such loan;
            ``(E) does not have an adverse credit history; and
            ``(F) has not previously obtained refinancing under this 
        section.
    ``(c) Refinancing Under the Debt Swap Loan Program.--
            ``(1) In general.--The Secretary shall refinance or make a 
        payment on a private education loan in accordance with this 
        subsection for an individual who is eligible for private 
        education loan refinancing pursuant to subsection (b).
            ``(2) Types of loans that shall be refinanced.--A private 
        education loan is eligible to be refinanced under this 
        subsection if the loan was incurred--
                    ``(A) after July 1, 1994, and before July 1, 2010; 
                and
                    ``(B) to pay the cost of attendance for enrollment 
                in an eligible program at an institution of higher 
                education eligible to participate in programs under 
                this title.
            ``(3) Loan limits.--The maximum amount of a private 
        education loan that may be refinanced under this subsection 
        is--
                    ``(A) for an individual described in subsection 
                (b)(1), an amount equal to the sum of unpaid principal, 
                accrued interest, and late charges of all private 
                education loans eligible under paragraph (2) incurred 
                by such individual not to exceed the maximum aggregate 
                amount of unsubsidized Federal Stafford Loans under 
                section 428H(d) for loans first disbursed on or after 
                July 1, 2008, applicable to an undergraduate student 
                under such section if the individual incurred such loan 
                to enroll in an undergraduate program or applicable to 
                a graduate student under such section if the individual 
                incurred such loan to enroll in a graduate program, 
                less any amount previously borrowed by such individual 
                pursuant to section 428 or part D; and
                    ``(B) for an individual described in subsection 
                (b)(2), an amount equal to the sum of unpaid principal, 
                accrued interest, and late charges of all private 
                education loans eligible under paragraph (2) incurred 
                by such individual, less any amount previously borrowed 
                by such individual pursuant to section 428B for such 
                period of enrollment in a graduate or professional 
                program.
            ``(4) Interest rate.--The interest rate for a private 
        education loan refinanced under this subsection shall be--
                    ``(A) for an individual described in subsection 
                (b)(1), the same interest rate applicable to an 
                unsubsidized Federal Stafford Loan; and
                    ``(B) for an individual described in subsection 
                (b)(2), the same interest rate applicable to a Federal 
                Direct PLUS loan.
            ``(5) Repayment terms.--A private education debt swap loan 
        made under this subsection through refinancing shall have the 
        same repayment terms, conditions, and benefits as Federal 
        Direct Consolidation Loans.
            ``(6) Termination of authority.--The authority to refinance 
        private education loans under this subsection expires on July 
        1, 2011, or the date that is 1 year after certification by the 
        Secretary to Congress that the debt swap loan program pursuant 
        to this section is fully operational, whichever date is later.
            ``(7) Loan application and promissory note.--The Secretary 
        shall develop and distribute a standard application and 
        promissory note and loan disclosure form for loans made under 
        this section through refinancing.
            ``(8) Loan disbursement.--Proceeds of any loan made under 
        this section shall be paid by the Secretary directly to the 
        holder of the private education loan being refinanced for the 
        purpose of discharging or reducing such private education loan 
        debt on behalf of the borrower, subject to repayment terms 
        under this section.
    ``(d) Public Awareness Campaign.--
            ``(1) In general.--The Secretary shall carry out a national 
        awareness campaign on the availability and benefits of 
        refinancing private education loans under this section.
            ``(2) Content of campaign.--The campaign described in 
        paragraph (1) shall include--
                    ``(A) explaining the benefits of borrowing through 
                the Federal student loan programs authorized under this 
                title compared to private loans; and
                    ``(B) information on all of the repayment options, 
                loan forgiveness opportunities, low-fixed interest 
                rates and other benefits of such Federal student loan 
                programs.
    ``(e) Report to Congress.--The Secretary shall report to Congress 
annually on the volume and repayment status of private education loans 
refinanced under this section.''.

Summary: Private Student Loan Debt Swap Act of 2009 - Amends title IV (Student Assistance) of the Higher Education Act of 1965 to direct the Secretary of Education to implement a Private Education Loan Debt Swap program.

Requires the Secretary, under such program, to refinance the private education loans of certain borrowers who: (1) after July 1, 1994, were eligible for unsubsidized Stafford Loans under the Federal Family Education Loan (FFEL) program, or, after July 1, 2006, were eligible for FFEL PLUS Loans for graduate or professional education; (2) are not in default on a loan made, insured, or guaranteed under title IV; and (3) have made at least two consecutive payments on the private education loan to be refinanced and are not more than 90 days delinquent on such loan.

Makes the program applicable only to private education loans incurred after July 1, 1994, and before July 1, 2010, which were used for the cost of enrolling at institutions of higher education eligible to participate in title IV programs.

Sets the interest rate on such refinanced loans at the rate applicable to: (1) unsubsidized Stafford loans, for borrowers who were eligible for such loans; and (2) Federal Direct PLUS loans, for borrowers who were eligible for those loans.

Gives refinanced loans the same repayment terms, conditions, and benefits as Consolidation Loans under the Direct Loan program.

Directs the Secretary carry out a national awareness campaign on the availability and benefits of refinancing private education loans under this program.