Title: Coronavirus Emergency Student Loan Refinancing Act
Policy area: Education

Summary:
Coronavirus Emergency Student Loan Refinancing Act
This bill establishes refinancing programs for federal and private student loans.
Specifically, the bill establishes a program that allows qualified borrowers to refinance their federal student loans down to lower interest rates. Such 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 creates the Federal Direct Refinanced Private Loan as a new type of loan. Such loans allow qualified borrowers to refinance their private education loans.

[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6397 Introduced in House (IH)]

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116th CONGRESS
  2d Session
                                H. R. 6397

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


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 26, 2020

 Mr. Courtney (for himself, Mr. Blumenauer, Mr. Brown of Maryland, Mr. 
 Cardenas, Mr. Cicilline, Mr. Cisneros, Mr. DeFazio, Ms. DeLauro, Ms. 
   DelBene, Mrs. Dingell, Mr. Michael F. Doyle of Pennsylvania, Ms. 
 Escobar, Mr. Foster, Mrs. Hayes, Mr. Himes, Mr. Kilmer, Mr. Larson of 
   Connecticut, Ms. Lee of California, Mr. Lynch, Mr. McNerney, Ms. 
   Norton, Mr. Payne, Mr. Perlmutter, Mr. Peters, Mr. Peterson, Mr. 
 Phillips, Mr. Rush, Mr. Ryan, Ms. Sanchez, Ms. Schakowsky, Mr. David 
  Scott of Georgia, Ms. Sewell of Alabama, Ms. Slotkin, Mr. Soto, Mr. 
    Stanton, Mr. Swalwell of California, Mr. Takano, Mr. Welch, Mr. 
 Yarmuth, Ms. Bass, and Mr. Crow) introduced the following bill; which 
          was referred to the Committee on Education and Labor

_______________________________________________________________________

                                 A BILL


 
     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 ``Coronavirus Emergency 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 and section 460B'' 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 Coronavirus Emergency Student Loan Refinancing Act, 
the Secretary shall establish a program under which the Secretary, upon 
the receipt of an application from a qualified 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 
        qualified 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 qualified borrower, for which the first 
        disbursement was made, or the application for the consolidation 
        loan was received, before July 1, 2020, 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 qualified borrower for any 
        loan that was made, insured, or guaranteed under part B and for 
        which the first disbursement was made, or the application for 
        the consolidation loan was received, before July 1, 2010, 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--
                    ``(A) in any case where the original loan was a 
                loan under section 428 or 428H, a Federal Direct 
                Stafford loan, or a Federal Direct Unsubsidized 
                Stafford Loan, that was issued to an undergraduate 
                student, a rate equal to the lowest yield on the 10-
                year Treasury note in the preceding 6 months plus 2.05 
                percent;
                    ``(B) in any case where the original loan was a 
                loan under section 428 or 428H, a Federal Direct 
                Stafford Loan, or a Federal Direct Unsubsidized 
                Stafford Loan, that was issued to a graduate or 
                professional student, a rate equal to the lowest yield 
                on the 10-year Treasury note in the preceding 6 months 
                plus 3.6 percent;
                    ``(C) in any case where the original loan was a 
                loan under section 428B or a Federal Direct PLUS Loan, 
                a rate equal to the lowest yield on the 10-year 
                Treasury note in the preceding 6 months plus 4.6 
                percent; and
                    ``(D) in any case where the original loan was a 
                loan under section 428C or a Federal Direct 
                Consolidation Loan, 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) The interest rate for any loan under 
                        section 428 or 428H, Federal Direct Stafford 
                        Loan, or Federal Direct Unsubsidized Stafford 
                        Loan issued to an undergraduate student shall 
                        be a rate equal to the lesser of--
                                    ``(I) the rate for Federal Direct 
                                Stafford Loans and Federal Direct 
                                Unsubsidized Stafford Loans issued to 
                                undergraduate students for the 12-month 
                                period beginning on July 1, 2020, and 
                                ending on June 30, 2021; or
                                    ``(II) the original interest rate 
                                of the component loan.
                            ``(ii) The interest rate for any loan under 
                        section 428 or 428H, Federal Direct Stafford 
                        Loan, or Federal Direct Unsubsidized Stafford 
                        Loan issued to a graduate or professional 
                        student shall be a rate equal to the lesser 
                        of--
                                    ``(I) the rate for Federal Direct 
                                Unsubsidized Stafford Loans issued to 
                                graduate or professional students for 
                                the 12-month period beginning on July 
                                1, 2020, and ending on June 30, 2021; 
                                or
                                    ``(II) the original interest rate 
                                of the component loan.
                            ``(iii) The interest rate for any loan 
                        under section 428B or Federal Direct PLUS Loan 
                        shall be a rate equal to the lesser of--
                                    ``(I) the rate for Federal Direct 
                                PLUS Loans for the 12-month period 
                                beginning on July 1, 2020, and ending 
                                on June 30, 2021; or
                                    ``(II) the original interest rate 
                                of the component loan.
                            ``(iv) 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) 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.--A loan that is refinanced under this 
        section shall have the same terms and conditions as the 
        original loan, except as otherwise provided in this section.
            ``(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).
    ``(e) Definition of Qualified Borrower.--
            ``(1) In general.--For purposes of this section, the term 
        `qualified borrower' means a borrower--
                    ``(A) of a loan under this part or part B for which 
                the first disbursement was made, or the application for 
                a consolidation loan was received, before July 1, 2020; 
                and
                    ``(B) who meets the eligibility requirements based 
                on income or debt-to-income ratio established by the 
                Secretary.
            ``(2) Income requirements.--Not later than 30 days after 
        the date of enactment of the Coronavirus Emergency Student Loan 
        Refinancing Act, the Secretary shall establish eligibility 
        requirements based on income or debt-to-income ratio that take 
        into consideration providing access to refinancing under this 
        section for borrowers with the greatest financial need.
    ``(f) 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.

``SEC. 460B. FEDERAL DIRECT REFINANCED PRIVATE LOAN PROGRAM.

    ``(a) Definitions.--In this section:
            ``(1) Eligible private education loan.--The term `eligible 
        private education loan' means a private education loan, as 
        defined in section 140(a) of the Truth in Lending Act (15 
        U.S.C. 1650(a)), that--
                    ``(A) was disbursed to the borrower before July 1, 
                2020; and
                    ``(B) was for the borrower's own postsecondary 
                educational expenses for an eligible program at an 
                institution of higher education participating in the 
                loan program under this part, as of the date that the 
                loan was disbursed.
            ``(2) Federal direct refinanced private loan.--The term 
        `Federal Direct Refinanced Private Loan' means a loan issued 
        under subsection (b)(1).
            ``(3) Private educational lender.--The term `private 
        educational lender' has the meaning given the term in section 
        140(a) of the Truth in Lending Act (15 U.S.C. 1650(a)).
            ``(4) Qualified borrower.--The term `qualified borrower' 
        means an individual who--
                    ``(A) has an eligible private education loan;
                    ``(B) has been current on payments on the eligible 
                private education loan for the 6 months prior to the 
                date of the qualified borrower's application for 
                refinancing under this section, and is in good standing 
                on the loan at the time of such application;
                    ``(C) is not in default on the eligible private 
                education loan or on any loan made, insured, or 
                guaranteed under this part or part B or E; and
                    ``(D) meets the eligibility requirements described 
                in subsection (b)(2).
    ``(b) Program Authorized.--
            ``(1) In general.--The Secretary, in consultation with the 
        Secretary of the Treasury, shall carry out a program under 
        which the Secretary, upon application by a qualified borrower 
        who has an eligible private education loan, shall issue such 
        borrower a loan under this part in accordance with the 
        following:
                    ``(A) The loan issued under this program shall be 
                in an amount equal to the sum of the unpaid principal, 
                accrued unpaid interest, and late charges of the 
                private education loan.
                    ``(B) The Secretary shall pay the proceeds of the 
                loan issued under this program to the private 
                educational lender of the private education loan, in 
                order to discharge the qualified borrower from any 
                remaining obligation to the lender with respect to the 
                original loan.
                    ``(C) The Secretary shall require that the 
                qualified borrower undergo loan counseling that 
                provides all of the information and counseling required 
                under clauses (i) through (viii) of section 
                485(b)(1)(A) before the loan is refinanced in 
                accordance with this section, and before the proceeds 
                of such loan are paid to the private educational 
                lender.
                    ``(D) The Secretary shall issue the loan as a 
                Federal Direct Refinanced Private Loan, which shall 
                have the same terms, conditions, and benefits as a 
                Federal Direct Unsubsidized Stafford Loan, except as 
                otherwise provided in this section.
            ``(2) Borrower eligibility.--Not later than 30 days after 
        the date of enactment of the Coronavirus Emergency Student Loan 
        Refinancing Act, the Secretary, in consultation with the 
        Secretary of the Treasury and the Director of the Bureau of 
        Consumer Financial Protection, shall establish eligibility 
        requirements--
                    ``(A) based on income or debt-to-income ratio that 
                take into consideration providing access to refinancing 
                under this section for borrowers with the greatest 
                financial need;
                    ``(B) to ensure eligibility only for borrowers in 
                good standing;
                    ``(C) to minimize inequities between Federal Direct 
                Refinanced Private Loans and other Federal student 
                loans;
                    ``(D) to preclude windfall profits for private 
                educational lenders; and
                    ``(E) to ensure full access to the program 
                authorized in this subsection for borrowers with 
                private loans who otherwise meet the criteria 
                established in accordance with subparagraphs (A) and 
                (B).
    ``(c) Interest Rate.--
            ``(1) In general.--The interest rate for a Federal Direct 
        Refinanced Private Loan is--
                    ``(A) in the case of a Federal Direct Refinanced 
                Private Loan for a private education loan originally 
                issued for undergraduate postsecondary educational 
                expenses, a rate equal to the lowest yield on the 10-
                year Treasury note in the preceding 6 months plus 2.05 
                percent; and
                    ``(B) in the case of a Federal Direct Refinanced 
                Private Loan for a private education loan originally 
                issued for graduate or professional degree 
                postsecondary educational expenses, a rate equal to the 
                lowest yield on the 10-year Treasury note in the 
                preceding 6 months plus 3.6 percent.
            ``(2) Combined undergraduate and graduate study loans.--If 
        a Federal Direct Refinanced Private Loan is for a private 
        education loan originally issued for both undergraduate and 
        graduate or professional postsecondary educational expenses, 
        the interest rate shall be a lowest yield on the 10-year 
        Treasury note in the preceding 6 months plus 4.6 percent.
            ``(3) Fixed rate.--The applicable rate of interest 
        determined under this subsection for a Federal Direct 
        Refinanced Private Loan shall be fixed for the period of the 
        loan.
    ``(d) No Inclusion in Aggregate Limits.--The amount of a Federal 
Direct Refinanced Private Loan, or a Federal Direct Consolidated Loan 
to the extent such loan was used to repay a Federal Direct Refinanced 
Private Loan, shall not be included in calculating a borrower's annual 
or aggregate loan limits under section 428 or 428H.
    ``(e) No Eligibility for Service-Related Repayment.--
Notwithstanding sections 428K(a)(2)(A), 428L(b)(2), 455(m)(3)(A), and 
460(b), a Federal Direct Refinanced Private Loan, or any Federal Direct 
Consolidation Loan to the extent such loan was used to repay a Federal 
Direct Refinanced Private Loan, shall not be eligible for any loan 
repayment or loan forgiveness program under section 428K, 428L, or 460 
or for the repayment plan for public service employees under section 
455(m).
    ``(f) Notification to Borrowers.--The Secretary, in coordination 
with the Secretary of the Treasury and the Director of the Bureau of 
Consumer Financial Protection, shall undertake a campaign to alert 
borrowers about the availability of private student loan refinancing 
under this section.''.
    (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-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.--
            ``(1) Refinanced federal direct and ffel 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.
            ``(2) Federal direct refinanced private loans.--In 
        calculating the period of time during which a borrower of a 
        Federal Direct Refinanced Private Loan under section 460B has 
        made monthly payments for purposes of subsection (b)(7), the 
        Secretary shall include only payments--
                    ``(A) that are made after the date of the issuance 
                of the Federal Direct Refinanced Private Loan; and
                    ``(B) that otherwise meet the requirements of this 
                section.''.
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