Student Loan Refinancing Act
Bill: H.R.5084 | Sponsor: Rep. Turner, Michael R. (R-OH)
Policy area: Education

Summary:
Student Loan Refinancing Act
This bill establishes a refinancing program for federal student loans.
Specifically, the Department of Education (ED) must, within 30 days, establish a program that allows borrowers to refinance their federal student loans down to lower interest rates. The refinanced interest rates are (1) calculated based on the type of student loan (e.g., Stafford), and (2) fixed for the period of the loan.
In addition, the bill requires ED to coordinate with the Consumer Financial Protection Bureau to alert borrowers of their program eligibility.

To amend the Higher Education Act of 1965 to provide for the 
 refinancing of certain Federal student loans, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Student Loan Refinancing Act''.

                     TITLE I--REFINANCING PROGRAMS

SEC. 101. REFINANCING PROGRAMS.

    (a) Program Authority.--Section 451(a) of the Higher Education Act 
of 1965 (20 U.S.C. 1087a(a)) is amended--
            (1) by striking ``and (2)'' and inserting ``(2)''; and
            (2) by inserting ``; and (3) to make loans under section 
        460A'' after ``section 459A''.
    (b) Refinancing Program.--Part D of title IV of the Higher 
Education Act of 1965 (20 U.S.C. 1087a et seq.) is amended by adding at 
the end the following:

``SEC. 460A. REFINANCING FFEL AND FEDERAL DIRECT LOANS.

    ``(a) In General.--Beginning not later than 30 days after the date 
of enactment of the Student Loan Refinancing Act, the Secretary shall 
establish a program under which the Secretary, upon the receipt of an 
application from a borrower, makes a loan under this part, in 
accordance with the provisions of this section, in order to permit the 
borrower to obtain the interest rate provided under subsection (c).
    ``(b) Refinancing Direct Loans.--
            ``(1) Federal direct loans.--Upon application of a 
        borrower, the Secretary shall repay a Federal Direct Stafford 
        Loan, a Federal Direct Unsubsidized Stafford Loan, a Federal 
        Direct PLUS Loan, or a Federal Direct Consolidation Loan of the 
        borrower, with the proceeds of a refinanced Federal Direct 
        Stafford Loan, a Federal Direct Unsubsidized Stafford Loan, a 
        Federal Direct PLUS Loan, or a Federal Direct Consolidation 
        Loan, respectively, issued to the borrower in an amount equal 
        to the sum of the unpaid principal, accrued unpaid interest, 
        and late charges of the original loan.
            ``(2) Refinancing ffel program loans as refinanced federal 
        direct loans.--Upon application of a borrower for any loan that 
        was made, insured, or guaranteed under part B, the Secretary 
        shall make a loan under this part, in an amount equal to the 
        sum of the unpaid principal, accrued unpaid interest, and late 
        charges of the original loan to the borrower in accordance with 
        the following:
                    ``(A) The Secretary shall pay the proceeds of such 
                loan to the eligible lender of the loan made, insured, 
                or guaranteed under part B, in order to discharge the 
                borrower from any remaining obligation to the lender 
                with respect to the original loan.
                    ``(B) A loan made under this section that was 
                originally a loan made, insured, or guaranteed--
                            ``(i) under section 428 shall be a Federal 
                        Direct Stafford Loan;
                            ``(ii) under section 428B shall be a 
                        Federal Direct PLUS Loan;
                            ``(iii) under section 428H shall be a 
                        Federal Direct Unsubsidized Stafford Loan; and
                            ``(iv) under section 428C shall be a 
                        Federal Direct Consolidation Loan.
                    ``(C) The interest rate for each loan made by the 
                Secretary under this paragraph shall be the rate 
                provided under subsection (c).
    ``(c) Interest Rates.--
            ``(1) In general.--The interest rate for the refinanced 
        Federal Direct Stafford Loans, Federal Direct Unsubsidized 
        Stafford Loans, Federal Direct PLUS Loans, and Federal Direct 
        Consolidation Loans, shall be a rate equal to the following:
                    ``(A) Federal direct stafford loans.--
                            ``(i) Rates for undergraduate fdsl.--In the 
                        case of a refinanced Federal Direct Stafford 
                        loan for which the original loan was a loan 
                        under section 428 or a Federal Direct Stafford 
                        loan that was made to an undergraduate student, 
                        the rate of interest on such refinanced Federal 
                        Direct Stafford Loan shall be equal to the rate 
                        of interest for a Federal Direct Stafford loan 
                        made to an undergraduate student for which the 
                        first disbursement is made on the date on which 
                        the refinanced Federal Direct Stafford Loan is 
                        made under this section.
                            ``(ii) Rates for graduate and professional 
                        fdsl.--In the case of a refinanced Federal 
                        Direct Stafford loan for which the original 
                        loan was a loan under section 428 or a Federal 
                        Direct Stafford loan that was made to a 
                        graduate or professional student, the rate of 
                        interest on such refinanced Federal Direct 
                        Stafford Loan shall be equal to the rate of 
                        interest for a Federal Direct Stafford loan 
                        made to a graduate or professional student for 
                        which the first disbursement is made on the 
                        date on which the refinanced Federal Direct 
                        Stafford Loan is made under this section.
                    ``(B) Federal direct unsubsidized stafford loans.--
                            ``(i) Rates for undergraduate fdusl.--In 
                        the case of a refinanced Federal Direct 
                        Unsubsidized Stafford loan for which the 
                        original loan was a loan under section 428H or 
                        a Federal Direct Unsubsidized Stafford Loan 
                        that was made to an undergraduate student, the 
                        rate of interest on such refinanced Federal 
                        Direct Unsubsidized Stafford Loan shall be 
                        equal to the rate of interest for a Federal 
                        Direct Unsubsidized Stafford loan made to an 
                        undergraduate student for which the first 
                        disbursement is made on the date on which the 
                        refinanced Federal Direct Unsubsidized Stafford 
                        Loan is made under this section.
                            ``(ii) Rates for graduate and professional 
                        fdusl.--In the case of a refinanced Federal 
                        Direct Unsubsidized Stafford loan for which the 
                        original loan was a loan under section 428H or 
                        a Federal Direct Unsubsidized Stafford Loan 
                        that was made to an graduate student, the rate 
                        of interest on such refinanced Federal Direct 
                        Unsubsidized Stafford Loan shall be equal to 
                        the rate of interest for a Federal Direct 
                        Unsubsidized Stafford loan made to a graduate 
                        student for which the first disbursement is 
                        made on the date on which the refinanced 
                        Federal Direct Unsubsidized Stafford Loan is 
                        made under this section.
                    ``(C) Federal direct plus loans.--In the case of a 
                refinanced Federal Direct PLUS Loan for which the 
                original loan was a loan under section 428B or a 
                Federal Direct PLUS Loan, the rate of interest on such 
                refinanced Federal Direct PLUS loan shall be equal to 
                the rate of interest for a Federal Direct PLUS loan for 
                which the first disbursement is made on the date on 
                which the refinanced Federal Direct PLUS loan is made 
                under this section.
                    ``(D) Consolidation loans.--In the case of a 
                refinanced Federal Direct Consolidation Loan for which 
                the original loan was a loan under section 428C or a 
                Federal Direct Consolidation Loan, the rate of interest 
                of such refinanced Federal Direct Consolidation Loan 
                shall be equal to the lower of a rate calculated in 
                accordance with paragraph (2).
            ``(2) Interest rates for consolidation loans.--
                    ``(A) Method of calculation.--In order to determine 
                the interest rate for any refinanced Federal Direct 
                Consolidation Loan under paragraph (1)(D), the 
                Secretary shall--
                            ``(i) determine each of the component loans 
                        that were originally consolidated in the loan 
                        under section 428C or the Federal Direct 
                        Consolidation Loan, and calculate the 
                        proportion of the unpaid principal balance of 
                        the loan under section 428C or the Federal 
                        Direct Consolidation Loan that each component 
                        loan represents;
                            ``(ii) use the proportions determined in 
                        accordance with clause (i) and the interest 
                        rate applicable for each component loan, as 
                        determined under subparagraph (B), to calculate 
                        the weighted average of the interest rates on 
                        the loans consolidated into the loan under 
                        section 428C or the Federal Direct 
                        Consolidation Loan; and
                            ``(iii) apply the weighted average 
                        calculated under clause (ii) as the interest 
                        rate for the refinanced Federal Direct 
                        Consolidation Loan.
                    ``(B) Interest rates for component loans.--The 
                interest rates for the component loans of a loan made 
                under section 428C or a Federal Direct Consolidation 
                Loan shall be the following:
                            ``(i) Federal direct stafford loans.--
                                    ``(I) Undergraduate fdsl.--The 
                                interest rate for any component loan 
                                that is a loan under section 428 or a 
                                Federal Direct Stafford Loan made to an 
                                undergraduate student shall be a rate 
                                equal to the lesser of--
                                            ``(aa) the rate of interest 
                                        for a refinanced Federal Direct 
                                        Stafford loan determined under 
                                        paragraph (1)(A)(i) if such 
                                        loan were made on the date on 
                                        which the refinanced Federal 
                                        Direct Consolidation Loan is 
                                        made under this section; or
                                            ``(bb) the original 
                                        interest rate of the component 
                                        loan.
                                    ``(II) Graduate or professional 
                                fdsl.--The interest rate for any 
                                component loan that is a loan under 
                                section 428 or a Federal Direct 
                                Stafford Loan made to a graduate or 
                                professional student shall be a rate 
                                equal to the lesser of--
                                            ``(aa) the rate of interest 
                                        for a refinanced Federal Direct 
                                        Stafford loan determined under 
                                        paragraph (1)(A)(ii) if such 
                                        loan were made on the date on 
                                        which the refinanced Federal 
                                        Direct Consolidation Loan is 
                                        made under this section; or
                                            ``(bb) the original 
                                        interest rate of the component 
                                        loan.
                            ``(ii) Federal direct unsubsidized stafford 
                        loans.--
                                    ``(I) Undergraduate fdusl.--The 
                                interest rate for any component loan 
                                that is a loan under section 428H or a 
                                Federal Direct Unsubsidized Stafford 
                                Loan made to an undergraduate student 
                                shall be a rate equal to the lesser 
                                of--
                                            ``(aa) the rate of interest 
                                        for a refinanced Federal Direct 
                                        Unsubsidized Stafford loan 
                                        determined under paragraph 
                                        (1)(B)(i) if such loan were 
                                        made on the date on which the 
                                        refinanced Federal Direct 
                                        Consolidation Loan is made 
                                        under this section; or
                                            ``(bb) the original 
                                        interest rate of the component 
                                        loan.
                                    ``(II) Graduate fdusl.--The 
                                interest rate for any component loan 
                                that is a loan under section 428H or a 
                                Federal Direct Unsubsidized Stafford 
                                Loan made to a graduate or professional 
                                student shall be a rate equal to the 
                                lesser of--
                                            ``(aa) the rate of interest 
                                        for a refinanced Federal Direct 
                                        Unsubsidized Stafford loan 
                                        determined under paragraph 
                                        (1)(B)(ii) if such loan were 
                                        made on the date on which the 
                                        refinanced Federal Direct 
                                        Consolidation Loan is made 
                                        under this section; or
                                            ``(bb) the original 
                                        interest rate of the component 
                                        loan.
                            ``(iii) Federal direct plus loans.--The 
                        interest rate for any component loan that is a 
                        loan any loan under section 428B or Federal 
                        Direct PLUS Loan shall be a rate equal to the 
                        lesser of--
                                    ``(I) the rate of interest for a 
                                refinanced Federal Direct PLUS loan 
                                determined under paragraph (1)(C) if 
                                such loan were made on the date on 
                                which the refinanced Federal Direct 
                                Consolidation Loan is made under this 
                                section; or
                                    ``(II) the original interest rate 
                                of the component loan.
                            ``(iv) Federal direct consolidation loan.--
                        The interest rate for any component loan that 
                        is a loan under section 428C or a Federal 
                        Direct Consolidation Loan shall be the weighted 
                        average of the interest rates that would apply 
                        under this subparagraph for each loan 
                        comprising the component consolidation loan.
                            ``(v) Other loans.--The interest rate for 
                        any eligible loan that is a component of a loan 
                        made under section 428C or a Federal Direct 
                        Consolidation Loan and is not described in 
                        clauses (i) through (iv) shall be the interest 
                        rate on the original component loan.
            ``(3) Fixed rate.--The applicable rate of interest 
        determined under paragraph (1) for a refinanced loan under this 
        section shall be fixed for the period of the loan.
    ``(d) Terms and Conditions of Loans.--
            ``(1) In general.--Except as otherwise provided in this 
        section, a loan that is refinanced under this section shall 
        have the same terms and conditions as the original loan, 
        including any suspensions of payments or interest accrual under 
        section 3513 of the Coronavirus Aid, Relief, and Economic 
        Security Act (20 U.S.C. 1001 note), or any extensions of such 
        suspensions.
            ``(2) No automatic extension of repayment period.--
        Refinancing a loan under this section shall not result in the 
        extension of the duration of the repayment period of the loan, 
        and the borrower shall retain the same repayment term that was 
        in effect on the original loan. Nothing in this paragraph shall 
        be construed to prevent a borrower from electing a different 
        repayment plan at any time in accordance with section 
        455(d)(3).
            ``(3) Limit on refinancing.--A loan made, insured, or 
        guaranteed under this title may not be refinanced under this 
        section more than twice during a 10-year period.
    ``(e) Notification to Borrowers.--The Secretary, in coordination 
with the Director of the Bureau of Consumer Financial Protection, shall 
undertake a campaign to alert borrowers of loans that are eligible for 
refinancing under this section that the borrowers are eligible to apply 
for such refinancing. The campaign shall include the following 
activities:
            ``(1) Developing consumer information materials about the 
        availability of Federal student loan refinancing.
            ``(2) Requiring servicers of loans under this part or part 
        B to provide such consumer information to borrowers in a manner 
        determined appropriate by the Secretary, in consultation with 
        the Director of the Bureau of Consumer Financial Protection.''.
    (c) Amendments to Public Service Repayment Plan Provisions.--
Section 455(m) of the Higher Education Act of 1965 (20 U.S.C. 1087e(m)) 
is amended--
            (1) by redesignating paragraphs (3) and (4) as paragraphs 
        (4) and (5), respectively;
            (2) by inserting after paragraph (2) the following:
            ``(3) Special rules for section 460a loans.--
                    ``(A) Refinanced federal direct loans.--
                Notwithstanding paragraph (1), in determining the 
                number of monthly payments that meet the requirements 
                of such paragraph for an eligible Federal Direct Loan 
                refinanced under section 460A that was originally a 
                loan under this part, the Secretary shall include all 
                monthly payments made on the original loan that meet 
                the requirements of such paragraph.
                    ``(B) Refinanced ffel loans.--In the case of an 
                eligible Federal Direct Loan refinanced under section 
                460A that was originally a loan under part B, only 
                monthly payments made after the date on which the loan 
                was refinanced may be included for purposes of 
                paragraph (1).''; and
            (3) in paragraph (4)(A) (as redesignated by paragraph (1)), 
        by inserting ``(including any Federal Direct Stafford Loan, 
        Federal Direct PLUS Loan, Federal Direct Unsubsidized Stafford 
        Loan, or Federal Direct Consolidation Loan refinanced under 
        section 460A)'' before the period at the end.
    (d) Income-Contingent Repayment.--Section 455(e) of the Higher 
Education Act of 1965 (20 U.S.C. 1087e(e)) is amended by adding at the 
end the following:
            ``(9) Special rule for refinanced loans.--In calculating 
        the period of time during which a borrower of a loan that is 
        refinanced under section 460A has made monthly payments for 
        purposes of paragraph (7), the Secretary shall deem the period 
        to include all monthly payments made for the original loan, and 
        all monthly payments made for the refinanced loan, that 
        otherwise meet the requirements of this subsection.''.
    (e) 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 Rule for Refinanced Loans.--In calculating the period 
of time during which a borrower of a loan that is refinanced under 
section 460A has made monthly payments for purposes of subsection 
(b)(7), the Secretary shall deem the period to include all monthly 
payments made for the original loan, and all monthly payments made for 
the refinanced loan, that otherwise meet the requirements of this 
section.''.
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