1-17-07, House Passed Bill 356-71
Referred to Senate
110th CONGRESS
1st Session
H. R. 5
IN THE SENATE OF THE UNITED STATES
January 17, 2007
Received; read twice and referred to the Committee
on Health, Education, Labor, and Pensions
AN ACT
To amend the Higher Education Act of 1965 to reduce interest rates
for student borrowers.
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 `College Student Relief Act of 2007'.
SEC. 2. INTEREST RATE REDUCTIONS.
(1) Section 427A(l) of the Higher Education Act of 1965 (20 U.S.C. 1077a(l))
is amended by adding at the end the following new paragraph:
`(4) REDUCED RATES FOR UNDERGRADUATE SUBSIDIZED LOANS- Notwithstanding
subsection (h) and paragraph (1) of this subsection, with respect to any
loan to an undergraduate student made, insured, or guaranteed under this
part (other than a loan made pursuant to section 428B, 428C, or 428H)
for which the first disbursement is made on or after July 1, 2006, and
before January 1, 2012, the applicable rate of interest shall be as follows:
`(A) For a loan for which the first disbursement is made on or after
July 1, 2006, and before July 1, 2007, 6.80 percent on the unpaid principal
balance of the loan.
`(B) For a loan for which the first disbursement is made on or after
July 1, 2007, and before July 1, 2008, 6.12 percent on the unpaid principal
balance of the loan.
`(C) For a loan for which the first disbursement is made on or after
July 1, 2008, and before July 1, 2009, 5.44 percent on the unpaid principal
balance of the loan.
`(D) For a loan for which the first disbursement is made on or after
July 1, 2009, and before July 1, 2010, 4.76 percent on the unpaid principal
balance of the loan.
`(E) For a loan for which the first disbursement is made on or after
July 1, 2010, and before July 1, 2011, 4.08 percent on the unpaid principal
balance of the loan.
`(F) For a loan for which the first disbursement is made on or after
July 1, 2011, and before January 1, 2012, 3.40 percent on the unpaid
principal balance of the loan.'.
(2) SPECIAL ALLOWANCE CROSS REFERENCE- Section 438(b)(2)(I)(ii)(II) of
such Act is amended by striking `section 427A(l)(1)' and inserting `section
427A(l)(1) or (l)(4)'.
(b) Direct Loan Interest Rates- Section 455(b)(7) of the Higher Education
Act of 1965 (20 U.S.C. 1087e(b)(7)) is amended by adding at the end the
following new subparagraph:
`(D) REDUCED RATES FOR UNDERGRADUATE FDSL- Notwithstanding the preceding
paragraphs of this subsection, for Federal Direct Stafford Loans made
to undergraduate students for which the first disbursement is made on
or after July 1, 2006, and before January 1, 2012, the applicable rate
of interest shall be as follows:
`(i) For a loan for which the first disbursement is made on or after
July 1, 2006, and before July 1, 2007, 6.80 percent on the unpaid
principal balance of the loan.
`(ii) For a loan for which the first disbursement is made on or after
July 1, 2007, and before July 1, 2008, 6.12 percent on the unpaid
principal balance of the loan.
`(iii) For a loan for which the first disbursement is made on or after
July 1, 2008, and before July 1, 2009, 5.44 percent on the unpaid
principal balance of the loan.
`(iv) For a loan for which the first disbursement is made on or after
July 1, 2009, and before July 1, 2010, 4.76 percent on the unpaid
principal balance of the loan.
`(v) For a loan for which the first disbursement is made on or after
July 1, 2010, and before July 1, 2011, 4.08 percent on the unpaid
principal balance of the loan.
`(vi) For a loan for which the first disbursement is made on or after
July 1, 2011, and before January 1, 2012, 3.40 percent on the unpaid
principal balance of the loan.'.
SEC. 3. REDUCTION OF LENDER INSURANCE PERCENTAGE.
(a) Amendment- Subparagraph (G) of section 428(b)(1) of the Higher Education
Act of 1965 (20 U.S.C. 1078(b)(1)(G)) is amended to read as follows:
`(G) insures 95 percent of the unpaid principal of loans insured under
the program, except that--
`(i) such program shall insure 100 percent of the unpaid principal
of loans made with funds advanced pursuant to section 428(j) or 439(q);
and
`(ii) notwithstanding the preceding provisions of this subparagraph,
such program shall insure 100 percent of the unpaid principal amount
of exempt claims as defined in subsection (c)(1)(G);'.
(b) Effective Date- The amendment made by subsection (a) shall take effect
with respect to loans made on or after July 1, 2007.
SEC. 4. GUARANTEE AGENCY COLLECTION RETENTION.
Clause (ii) of section 428(c)(6)(A) of the Higher Education Act of 1965
(20 U.S.C. 1078(c)(6)(A)(ii)) is amended to read as follows:
`(ii) an amount equal to 24 percent of such payments for use in accordance
with section 422B, except that--
`(I) beginning October 1, 2003 and ending September 30, 2007, this
subparagraph shall be applied by substituting `23 percent' for `24
percent';
`(II) beginning October 1, 2007 and ending September 30, 2008, this
subparagraph shall be applied by substituting `20 percent' for `24
percent';
`(III) beginning October 1, 2008 and ending September 30, 2010,
this subparagraph shall be applied by substituting `18 percent'
for `24 percent'; and
`(IV) beginning October 1, 2010, this subparagraph shall be applied
by substituting for `24 percent' a percentage determined in accordance
with the regulations of the Secretary and equal to the average rate
paid to collection agencies that have contracts with the Secretary.'.
SEC. 5. ELIMINATION OF EXCEPTIONAL PERFORMER STATUS FOR LENDERS.
(a) Elimination of Status- Part B of title IV of the Higher Education Act
of 1965 (20 U.S.C. 1071 et seq.) is amended by striking section 428I (20
U.S.C. 1078-9).
(b) Conforming Amendments- Part B of title IV of such Act is further amended--
(1) in section 428(c)(1) (20 U.S.C. 1078(c)(1))--
(A) by striking subparagraph (D); and
(B) by redesignating subparagraphs (E) through (H) as subparagraphs
(D) through (G), respectively; and
(2) in section 438(b)(5) (20 U.S.C. 1087-1(b)(5)), by striking the matter
following subparagraph (B).
(c) Effective Date- The amendments made by subsections (a) and (b) shall
take effect on July 1, 2007.
SEC. 6. REDUCTION OF LENDER SPECIAL ALLOWANCE PAYMENTS.
Section 438(b)(2)(I) of the Higher Education Act of 1965 (20 U.S.C. 1087-1(b)(2)(I))
is amended by adding at the end the following new clauses:
`(vi) REDUCTION FOR LOANS DISBURSED ON OR AFTER JULY 1, 2007- With
respect to a loan on which the applicable interest rate is determined
under section 427A(l) and for which the first disbursement of principal
is made on or after July 1, 2007, the special allowance payment computed
pursuant to this subparagraph shall be computed--
`(I) by substituting `2.24 percent' for `2.34 percent' each place
it appears in this subparagraph;
`(II) by substituting `1.64 percent' for `1.74 percent' in clause
(ii); and
`(III) by substituting `2.54 percent' for `2.64 percent' each place
it appears in clauses (iii) and (iv).
`(vii) SMALLER LENDER EXEMPTION- Clause (vi) shall not apply to the
calculation of the special allowance payment with respect to any 3-month
period for any holder of eligible loans that, together with its affiliated
holders, is designated by the Secretary as a small lender.
`(viii) DESIGNATION OF SMALL LENDERS- In determining which holders
of eligible loans qualify for the exemption provided under clause
(vii), the Secretary shall, using the most recently available data
with respect to the total principal amount of eligible loans held
by holders--
`(I) rank all holders of eligible loans in descending order by total
principal amount of eligible loans held;
`(II) calculate the total principal amount of eligible loans held
by all holders; and
`(III) identify the subset of consecutively ranked holders under
subclause (I), starting with the lowest ranked holder, that together
hold a total principal amount of such loans equal to 10 percent
of the total amount calculated under subclause (II), but excluding
the holder, if any, whose holdings when added cause the total holdings
of the subset to both equal and then exceed such 10 percent of such
total amount calculated; and
`(IV) designate as small lenders any holder identified as a member
of the subset under subclause (III).'.
SEC. 7. INCREASED LOAN FEES FROM LENDERS.
Paragraph (2) of section 438(d) of the Higher Education Act of 1965 (20
U.S.C. 1087-1(d)(2)) is amended to read as follows:
`(2) AMOUNT OF LOAN FEES- The amount of the loan fee which shall be deducted
under paragraph (1), but which may not be collected from the borrower,
shall be equal to--
`(A) 0.50 percent of the principal amount of the loan with respect to
any loan under this part for which the first disbursement was made on
or after October 1, 1993, and before July 1, 2007; and
`(B) 1.0 percent of the principal amount of the loan with respect to
any loan under this part for which the first disbursement was made on
or after July 1, 2007.'.
SEC. 8. INTEREST PAYMENT REBATE FEE.
Section 428C(f)(2) of the Higher Education Act of 1965 (20 U.S.C. 1078-2(f)(2))
is amended--
(1) by striking `SPECIAL RULE--' and inserting `SPECIAL RULES--(A)'; and
(2) by adding at the end the following new subparagraph:
`(B) For consolidation loans based on applications received on or after
July 1, 2007, if 90 percent or more of the total principal and accrued
unpaid interest outstanding on the loans held, directly or indirectly,
by any holder is comprised of principal and accrued unpaid interest owed
on consolidation loans, the rebate described in paragraph (1) for such
holder shall be equal to 1.30 percent of the principal plus accrued unpaid
interest on such loans.'.
Passed the House of Representatives January 17, 2007.
Attest:
KAREN L. HAAS,
Clerk.
END
