Sec. 2. Refinancing programs
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Section 451(a) of the Higher Education Act of 1965 (20 U.S.C. 1087a(a)) is amended— by striking and
(2)and inserting
(2); and by inserting ; and
(3)to make loans under section 460A and section 460B after section 459A . 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: Beginning not later than 180 days after the date of enactment of the Bank on Students Emergency Loan Refinancing Act , the Secretary shall establish a program under which the Secretary, upon the receipt of an application from a qualified borrower, reissues the borrower's original loan under this part or part B as 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). Upon application of a qualified borrower, the Secretary shall reissue 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, 2013, in an amount equal to the sum of— the unpaid principal, accrued unpaid interest, and late charges of the original loan; and the administrative fee under subsection (d)(3). 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 reissue such loan as 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 and the administrative fee under subsection (d)(3), to the borrower in accordance with the following: The Secretary shall pay the proceeds of such reissued 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. The Secretary shall reissue— a loan originally made, insured, or guaranteed under section 428 as a Federal Direct Stafford Loan; a loan originally made, insured, or guaranteed under section 428B as a Federal Direct PLUS Loan; a loan originally made, insured, or guaranteed under section 428H as a Federal Direct Unsubsidized Stafford Loan; and a loan originally made, insured, or guaranteed under section 428C as a Federal Direct Consolidation Loan. The interest rate for each loan reissued under this paragraph shall be the rate provided under subsection (c). The interest rate for the reissued Federal Direct Stafford Loans, Federal Direct Unsubsidized Stafford Loans, Federal Direct PLUS Loans, and Federal Direct Consolidation Loans, shall be a rate equal to— 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 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, 2013, and ending on June 30, 2014; 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 rate for Federal Direct Unsubsidized Stafford Loans issued to graduate or professional students for the 12-month period beginning on July 1, 2013, and ending on June 30, 2014; in any case where the original loan was a loan under section 428B or a Federal Direct PLUS Loan, a rate equal to the rate for Federal Direct PLUS Loans for the 12-month period beginning on July 1, 2013, and ending on June 30, 2014; and in any case where the original loan was a loan under section 428C or a Federal Direct Consolidation Loan, a rate equal to the rate for Federal Direct PLUS Loans for the 12-month period beginning on July 1, 2013, and ending on June 30, 2014. The applicable rate of interest determined under paragraph
(1)for a reissued loan under this section shall be fixed for the period of the loan. A loan that is reissued under this section shall have the same terms and conditions as the original loan, except as otherwise provided in this section. Reissuing 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). The Secretary shall charge the borrower of a loan reissued under this section an administrative fee of not more than 0.5 percent of the sum of the unpaid principal, and accrued unpaid interest and late charges, of the original loan. For purposes of this section, the term qualified borrower means a borrower— 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, 2013; and who meets the eligibility requirements based on income or debt-to-income ratio established by the Secretary. Not later than 180 days after the date of enactment of the Bank on Students Emergency 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. The Secretary's authority to reissue loans under this section shall expire on the date that is determined in accordance with section 4 of the Bank on Students Emergency Loan Refinancing Act . In this section: The term eligible private education loan means a private education loan, as defined in section 140 of the Truth in Lending Act (15 U.S.C. 1650), that— was disbursed to the borrower before July 1, 2013; and 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. The term Federal Direct Refinanced Private Loan means a loan issued under subsection (b)(1). The term private educational lender has the meaning given the term in section 140 of the Truth in Lending Act ( 15 U.S.C. 1650 ). The term qualified borrower means an individual who— has an eligible private education loan; 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; 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 meets the eligibility requirements based on income or debt-to-income ratio established by the Secretary under subsection (b)(2). 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: 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 and the origination fee under subsection (f). 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. 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 reissued in accordance with this section, and before the proceeds of such loan are paid to the private educational lender. 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. Not later than 180 days after the date of enactment of the Bank on Students Emergency 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. The interest rate for a Federal Direct Refinanced Private Loan is— 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 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, 2013, and ending on June 30, 2014; and 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 rate for Federal Direct Unsubsidized Stafford Loans issued to graduate or professional students for the 12-month period beginning on July 1, 2013, and ending on June 30, 2014. If a Federal Direct Refinanced Private Loan is for a private educational loan originally issued for both undergraduate and graduate or professional postsecondary educational expenses, the interest rate shall be a rate equal to the rate for Federal Direct PLUS Loans for the 12-month period beginning on July 1, 2013, and ending on June 30, 2014. 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. 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. 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). The Secretary shall charge the borrower of a Federal Direct Refinanced Private Loan an origination fee that equals the origination fee charged for Federal Direct Unsubsidized Stafford Loans disbursed on the date upon which the Federal Direct Refinanced Private Loan is issued. The Secretary's authority to reissue loans under this section shall expire on the date that is determined in accordance with section 4 of the Bank on Students Emergency Loan Refinancing Act . . Section 455(m) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(m) ) is amended— by redesignating paragraphs
(3)and
(4)as paragraphs
(4)and (5), respectively; by inserting after paragraph
(2)the following: Notwithstanding paragraph (1), in determining the number of monthly payments that meet the requirements of such paragraph for an eligible Federal Direct Loan reissued 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. In the case of an eligible Federal Direct Loan reissued under section 460A that was originally a loan under part B, only monthly payments made after the date on which the loan was reissued may be included for purposes of paragraph (1). ; and 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 reissued under section 460A) before the period at the end. Section 493C of the Higher Education Act of 1965 (20 U.S.C. 1098e) is amended by adding at the end the following: In calculating the period of time during which a borrower of a loan that is reissued 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 reissued loan, that otherwise meet the requirements of this section. 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— that are made after the date of the issuance of the Federal Direct Refinanced Private Loan; and that otherwise meet the requirements of this section. .
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