Sec. 201. 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 12 months after the date of enactment of the Student Loan Debt Relief Act of 2019 , the Secretary shall establish a program under which the Secretary automatically refinances loans made under this part in accordance with the provisions of this section, in order to lower the rate of interest on such loans. With respect to each Federal Direct Stafford Loan, Federal Direct Unsubsidized Stafford Loan, Federal Direct PLUS Loan, and Federal Direct Consolidation Loan, for which the first disbursement was made to a borrower, or the application for the consolidation loan was received from a borrower, on or before the date of enactment of the Student Loan Debt Relief Act of 2019 , the Secretary shall, without any further action by the borrower (other than under subparagraph (C))— discharge the liability on such Federal Direct Stafford Loan, Federal Direct Unsubsidized Stafford Loan, Federal Direct PLUS Loan, or Federal Direct Consolidation Loan; issue to the borrower a new Federal Direct Stafford Loan, Federal Direct Unsubsidized Stafford Loan, Federal Direct PLUS Loan, or Federal Direct Consolidation Loan, respectively— in an amount equal to the sum of the unpaid principal, accrued unpaid interest, and late charges of the loan for which the liability is being discharged under subparagraph (A); and which has the same terms and conditions as the original loan, except that the rate of interest shall be determined under subsection (c); and provide the borrower an opportunity to opt-out of the refinancing under this paragraph. With respect to each loan that was made, insured, or guaranteed under part B and for which the first disbursement was made to a borrower, or the application for the consolidation loan was received from a borrower, before July 1, 2010, the Secretary shall, without any further action by the borrower (other than to provide the borrower an opportunity to opt-out of the refinancing under this paragraph), issue to the borrower a loan made under this part— in an amount equal to the sum of the unpaid principal, accrued unpaid interest, and late charges of the loan selected to be so refinanced; the proceeds of which shall be paid to the holder of the loan selected to be so refinanced to discharge the liability on such loan; and which has a rate of interest determined under subsection (c). A loan issued under this section the proceeds of which is discharging the liability on a loan made, insured, or guaranteed— under section 428 shall be a Federal Direct Stafford Loan; under section 428B shall be a Federal Direct PLUS Loan; under section 428H shall be a Federal Direct Unsubsidized Stafford Loan; and under section 428C shall be a Federal Direct Consolidation Loan. The interest rate for Federal Direct Stafford Loans, Federal Direct Unsubsidized Stafford Loans, Federal Direct PLUS Loans, and Federal Direct Consolidation Loans issued under this section, shall be a rate equal to— in a case in which the original loan is 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, 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, 2016, and ending on June 30, 2017; in a case in which the original loan is 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, the rate for Federal Direct Unsubsidized Stafford Loans issued to graduate or professional students for the 12-month period beginning on July 1, 2016, and ending on June 30, 2017; in an case in which the original loan is a loan under section 428B or a Federal Direct PLUS Loan, the rate for Federal Direct PLUS Loans for the 12-month period beginning on July 1, 2016, and ending on June 30, 2017; and in a case in which the original loan is a loan under section 428C or a Federal Direct Consolidation Loan, a rate calculated in accordance with paragraph (2). To determine the interest rate for a Federal Direct Federal Consolidation Loan issued under this section, the Secretary shall— determine each original loan for which the liability was discharged by the proceeds of a loan under section 428C or a 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 is applicable to each such original loan; use the proportions determined in accordance with clause
(i)and the interest rate applicable for each original 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 apply the weighted average calculated under clause
(ii)as the interest rate for the Federal Direct Consolidation Loan made under this section and for which the interest rate is being determined under this paragraph. The interest rate for each original loan for which the liability is discharged by the proceeds of loan made under section 428C or a Federal Direct Consolidation Loan shall be the following: The interest rate for any such original loan made, insured or guaranteed under section 428 or 428H, or that is a Federal Direct Stafford Loan or Federal Direct Unsubsidized Stafford Loan, issued to an undergraduate student shall be a rate equal to the lesser of— 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, 2016, and ending on June 30, 2017; or the interest rate on such original loan. The interest rate for any such original loan made, insured or guaranteed under section 428 or 428H, or that is a 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— the rate for Federal Direct Unsubsidized Stafford Loans issued to graduate or professional students for the 12-month period beginning on July 1, 2016, and ending on June 30, 2017; or the interest rate on the original loan. The interest rate for any such original loan made, insured or guaranteed under section 428B or that is a Federal Direct PLUS Loan shall be a rate equal to the lesser of— the rate for Federal Direct PLUS Loans for the 12-month period beginning on July 1, 2016, and ending on June 30, 2017; or the interest rate on the original loan. The interest rate for any such original loan that is a loan under section 428C or a Federal Direct Consolidation Loan shall be the weighted average of the interest rates determined under this subparagraph for each loan for which the liability is discharged by the proceeds of such consolidation loan. The interest rate for any original loan for which the liability was discharged with the proceeds 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 such original loan. The applicable rate of interest determined under paragraph
(1)for a loan issued under this section shall be fixed for the period of the loan. A loan issued under this section shall not result in the extension of the duration of the repayment period of the original 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). In this section, the term original loan means a loan for which the liability is discharged with the proceeds of a loan issued under this section. During the period beginning on the date that is 6 months after the date of enactment of the Student Loan Debt Relief Act of 2019 , and ending on the date that is 9 months after such date of enactment, the Secretary, in consultation with the Secretary of the Treasury, shall carry out a program under which the Secretary, upon receiving an application from a borrower who has a loan obligation on an eligible private education loan, shall issue such borrower a loan under this section in accordance with the following: The loan issued under this section shall be in an amount equal to the sum of the unpaid principal, accrued unpaid interest, and late charges of the private education loan. The Secretary shall pay the proceeds of the loan issued under this section to the private educational lender (or subsequent holder) of the private education loan, in order to discharge the borrower and any cosigners from any remaining obligation to the lender with respect to the private education loan. The Secretary shall require that the 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 carrying out subparagraphs
(A)and
(B)with respect to such borrower. The Secretary shall issue the loan as a Federal Direct Stafford Loan with a rate of interest determined under subsection (b). The interest rate for a Federal Direct Stafford Loan issued under this section shall be— in the case of a Federal Direct Stafford Loan discharging the liability on a private education loan 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, 2016, and ending on June 30, 2017; and in the case of a Federal Direct Stafford Loan discharging the liability on a private education loan 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, 2016, and ending on June 30, 2017. In the case of a Federal Direct Stafford Loan discharging the liability on a private education loan 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, 2016, and ending on June 30, 2017. The applicable rate of interest determined under this subsection for a Federal Direct Stafford Loan issued under this section shall be fixed for the period of the loan. The amount of a Federal Direct Stafford Loan issued under this section, or a Federal Direct Consolidated Loan to the extent such loan is used to repay such a Federal Direct Stafford Loan, shall not be included in calculating a borrower’s annual or aggregate loan limits under section 428 or 428H. Not later than 6 months after the date of enactment of the Student Loan Debt Relief Act of 2019 , the Secretary, in consultation with the Secretary of the Treasury and the Director of the Bureau of Consumer Financial Protection, shall establish a requirement that private educational lenders report the data described in paragraph
(2)to the Secretary, to Congress, to the Secretary of the Treasury, and to the Director of the Bureau of Consumer Financial Protection, in order to allow for an assessment of the private education loan market. The data that private educational lenders shall report in accordance with paragraph
(1)shall include each of the following about private education loans (as defined in section 140(a) of the Truth in Lending Act ( 15 U.S.C. 1650(a) )): The total amount of private education loan debt the lender holds. The total number of private education loan borrowers the lender serves. The average interest rate on the outstanding private education loan debt held by the lender. The proportion of private education loan borrowers who are in default on a loan held by the lender. The proportion of the outstanding private education loan volume held by the lender that is in default. The proportions of outstanding private education loan borrowers who are 30, 60, and 90 days delinquent. The proportions of outstanding private education loan volume that is 30, 60, and 90 days delinquent. The authority to issue loans under this section shall expire on the date that is 8 months after the date of enactment of the Student Loan Debt Relief Act of 2019 . In this section: 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) ). 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— was disbursed to the borrower on or before the date of enactment of the Student Loan Debt Relief Act of 2019 ; 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. . Section 455(d)(1)(D) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(d)(1)(D) ) is amended by inserting before the semicolon at the end the following: , and in calculating the period of time during which a borrower of a loan issued under section 460A has made monthly payments on such loan for purposes of the plan described in this subparagraph, the Secretary shall treat each monthly payment that otherwise meets the requirements of such plan and that was made on a loan for which the liability is discharged by the proceeds of such loan issued under section 460A, as a monthly payment made on such loan issued under section 460A . 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; and by inserting after paragraph
(2)the following: Notwithstanding paragraph (1), in determining the number of monthly payments made under paragraph
(1)on an eligible Federal Direct Loan issued under section 460A the proceeds of which discharges the liability on a loan made under this part, the Secretary shall treat each monthly payment made under paragraph
(1)on the loan before the liability on such loan was so discharged as a monthly payment made on such eligible Federal Direct Loan. ; 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 issued under section 460A has made monthly payments on such loan for purposes of subsection (b)(7), the Secretary shall treat each monthly payment that otherwise meets the requirements of this section and that was made on a loan for which the liability is discharged by the proceeds of such loan issued under section 460A, as a monthly payment made on such loan issued under section 460A. .
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