To provide for refinancing of consolidated student loans.

March 11, 2004

Mrs. BOXER introduced the following bill; which was read twice and referred to the Committee on Health, Education, Labor, and Pensions

To provide for refinancing of consolidated student loans.

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 `Consolidated Student Loan Reduction Act of 2004'.

SEC. 2. REFINANCING AUTHORITY FOR CONSOLIDATED STUDENT LOANS.

(a) FEDERAL CONSOLIDATION LOANS- Section 428C of the Higher Education Act of 1965 (20 U.S.C. 1078-3) is amended by adding at the end the following:

`(g) REFINANCING AUTHORITY-

`(1) IN GENERAL- Notwithstanding any other provision of this part and subject to paragraph (2), a borrower may refinance a consolidation loan at a fixed rate that is equal to the interest rate for Federal Stafford Loans under section 427A(k) at the time the borrower applies for the refinancing.

`(2) ONE PERCENT INTEREST RATE DIFFERENCE REQUIRED- A borrower may refinance a consolidation loan under this subsection whenever the interest rate for the consolidation loan to be refinanced exceeds the fixed interest rate determined under paragraph (1) by 1 percent or more.

`(3) STUDENT FEE PROHIBITED- No student shall be charged a fee to refinance a consolidation loan under this subsection.'.

(b) FEDERAL DIRECT CONSOLIDATION LOANS- Section 455(g) of the Higher Education Act of 1965 (20 U.S.C. 1087e(g)) is amended--

(1) by striking `A borrower' and inserting the following:

`(1) IN GENERAL- A borrower'; and

(2) by adding at the end the following:

`(2) REFINANCING AUTHORITY-

`(A) IN GENERAL- Notwithstanding any other provision of this part and subject to subparagraph (B), a borrower may refinance a Federal Direct Consolidation Loan at a fixed rate that is equal to the interest rate for Federal Stafford Loans under section 427A(k) at the time the borrower applies for the refinancing.

`(B) ONE PERCENT INTEREST RATE DIFFERENCE REQUIRED- A borrower may refinance a consolidation loan under this subsection whenever the interest rate for the consolidation loan to be refinanced exceeds the fixed interest rate determined under subparagraph (A) by 1 percent or more.

`(C) STUDENT FEE PROHIBITED- No student shall be charged a fee to refinance a consolidation loan under this paragraph.'.

END