SECTION 1. SHORT TITLE.

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

SEC. 2. STUDENT LOAN CONSOLIDATION.

    Section 459B of the Higher Education Act of 1965 (20 U.S.C. 1087i-
2) is amended--
            (1) in subsection (a)(3), by striking ``section'' and 
        inserting ``subsection'';
            (2) in subsection (b), by striking ``this section'' and 
        inserting ``subsection (a)'' each place the term appears; and
            (3) by inserting at the end the following:
    ``(c) Temporary Loan Consolidation Authority for Certain Loans Made 
After July 1, 2006.--
            ``(1) Loan consolidation authority.--
                    ``(A) In general.--A borrower who has 1 or more 
                loans in a category described in subparagraph (B) may 
                consolidate all of the loans of the borrower that are 
                described in subparagraph (B) into a Federal Direct 
                Consolidation Loan during the period described in 
                subparagraph (C).
                    ``(B) Categories of loans that may be 
                consolidated.--The categories of loans that may be 
                consolidated under subparagraph (A) are loans made on 
                or after July 1, 2006, that are--
                            ``(i) loans made under this part;
                            ``(ii) loans purchased by the Secretary 
                        pursuant to section 459A; and
                            ``(iii) loans made under part B that are 
                        held by an eligible lender, as such term is 
                        defined in section 435(d).
                    ``(C) Time period in which loans may be 
                consolidated.--
                            ``(i) Federal direct loans.--In the case of 
                        a borrower who has 1 or more loans described 
                        under subparagraph (B)(i), the Secretary 
                        shall--
                                    ``(I) consolidate the loans 
                                described under subparagraph (B)(i) not 
                                later than 90 days after the date of 
                                enactment of the Federal Student Loan 
                                Refinancing Act; and
                                    ``(II) notify the borrower, in 
                                writing, prior to such consolidation 
                                that--
                                            ``(aa) the borrower's loans 
                                        under this part have been 
                                        consolidated at a lower 
                                        interest rate; and
                                            ``(bb) the borrower's 
                                        repayment plan and the other 
                                        terms and conditions of the 
                                        borrower's loan remain 
                                        unchanged.
                            ``(ii) Other loans.--In the case of a 
                        borrower who has 1 or more loans described 
                        under clause (ii) or (iii) of subparagraph (B), 
                        the Secretary shall--
                                    ``(I) initiate the loan 
                                consolidation process for the loans 
                                described under clause (ii) or (iii) of 
                                subparagraph (B), not later than 90 
                                days after the date of enactment of the 
                                Federal Student Loan Refinancing Act, 
                                by sending a completed loan 
                                consolidation application to the 
                                borrower;
                                    ``(II) notify the borrower, as part 
                                of such application, that a fee will be 
                                assessed and that the interest rate of 
                                the Federal Direct Consolidation Loan 
                                will be set in accordance with 
                                paragraph (2); and
                                    ``(III) notify the borrower, as 
                                part of such application, that if the 
                                borrower wishes to consolidate in 
                                accordance with the completed 
                                application, the borrower must endorse 
                                the application and submit the 
                                application to the Secretary not more 
                                than 6 months after receipt of the 
                                application.
            ``(2) Terms of loans.--The following terms and conditions 
        shall apply to a Federal Direct Consolidation Loan made under 
        this subsection:
                    ``(A) The applicable rate of interest on a Federal 
                Direct Consolidation Loan made under this subsection 
                shall be--
                            ``(i) 4 percent; or
                            ``(ii) in a case in which the weighted 
                        average of the interest rates on the 
                        outstanding loans of a borrower that will be 
                        consolidated is less than 4 percent, the lesser 
                        of--
                                    ``(I) the weighted average of the 
                                interest rates on the outstanding loans 
                                of a borrower that will be 
                                consolidated; or
                                    ``(II) a rate of interest equal 
                                to--
                                            ``(aa) 4 percent; minus
                                            ``(bb) 0.4 percent of the 
                                        principal balance of the 
                                        consolidation loan, at the time 
                                        of consolidation.
                    ``(B) In the case of a loan consolidated under 
                paragraph (1)(C)(ii), an origination fee equal to 0.4 
                percent of the principal balance of the consolidation 
                loan, at the time of consolidation, will be added to 
                the principal balance of the loan, and the Secretary 
                shall use the fee to cover the cost of making and 
                servicing the loan.
                    ``(C) If 1 or more of the loans being consolidated 
                is a loan described under paragraph (1)(B)(iii), the 
                interest rate on the Federal Direct Consolidation Loan 
                under this subsection shall be reduced by 0.25 percent.
                    ``(D) Any benefit a borrower is receiving or 
                earning at the time a Federal Direct Consolidation Loan 
                is issued under this subsection shall not be affected 
                by consolidation under this section, including benefits 
                such as a deferment or forbearance, accumulation of 
                monthly payments as part of the public service loan 
                forgiveness program under section 455(m), accumulation 
                of monthly payments toward a loan discharge under the 
                income-based repayment plan under section 493C, 
                participation in a particular repayment plan, and other 
                benefits to the borrower.''.

SEC. 3. EXEMPTIONS FROM OTHER LAWS.

    (a) Exemption From the Paperwork Reduction Act.--Chapter 35 of 
title 44, United States Code, shall not apply to this Act.
    (b) Inapplicability of Rulemaking Requirements.--Sections 482(c) 
and 492 of the Higher Education Act of 1965 (20 U.S.C. 1089(c), 1098a) 
and section 553 of title 5, United States Code, shall not apply to the 
amendments made by this Act, or to any regulations promulgated under 
such amendments.
Output: Federal Student Loan Refinancing Act This bill amends title IV (Student Assistance) of the Higher Education Act of 1965 to allow borrowers that received loans under the William D. Ford Federal Direct Loan (DL) or Federal Family Education Loan (FFEL) program on or after July 1, 2006, to consolidate those loans as Federal Direct Consolidation Loans.  It directs the Department of Education (ED) to consolidate DLs, and send a completed loan consolidation application to FFEL borrowers, within 90 days of this bill's enactment. It gives FFEL borrowers six months after their receipt of such application to endorse it and submit it to ED if they wish to consolidate their loans. The bill sets the interest rate on Federal Direct Consolidation Loans at 4% or, if the weighted average of the interest rates of the loans being consolidated is less than 4%, the lesser of: (1) that weighted average, or (2) an interest rate equal to 0.4% of the principal balance of the consolidation loan at the time of consolidation. It adds an origination fee equal to 0.4% of the principal balance of the consolidation loan at the time of consolidation if an FFEL is being consolidated. It reduces the interest rate on a Federal Direct Consolidation Loan by 0.25% if one or more of the loans being consolidated is an FFEL held by an eligible lender. The bill prohibits any benefit a borrower is receiving or earning when issued a Federal Direct Consolidation Loan from being affected by the consolidation.