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Calendar No. 235
105th CONGRESS
1st Session
S. 1294
[Report No. 105-122]
_______________________________________________________________________
A BILL
To amend the Higher Education Act of 1965 to allow the consolidation of
student loans under the Federal Family Loan Program and the Direct Loan
Program.
_______________________________________________________________________
October 29, 1997
Reported with an amendment
Calendar No. 235
105th CONGRESS
1st Session
S. 1294
[Report No. 105-122]
To amend the Higher Education Act of 1965 to allow the consolidation of
student loans under the Federal Family Loan Program and the Direct Loan
Program.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
October 9, 1997
Mr. Jeffords introduced the following bill; which was read twice and
referred to the Committee on Labor and Human Resources
October 29, 1997
Reported by Mr. Jeffords, with an amendment
[Strike out all after the enacting clause and insert the part printed
in italic]
_______________________________________________________________________
A BILL
To amend the Higher Education Act of 1965 to allow the consolidation of
student loans under the Federal Family Loan Program and the Direct Loan
Program.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
<DELETED>SECTION 1. SHORT TITLE; REFERENCE.</DELETED>
<DELETED> (a) Short Title.--This Act may be cited as the ``Emergency
Student Loan Consolidation Act of 1997''.</DELETED>
<DELETED> (b) References.--Except as otherwise expressly provided,
whenever in this Act an amendment or repeal is expressed in terms of an
amendment to, or repeal of, a section or other provision, the reference
shall be considered to be made to a section or other provision of the
Higher Education Act of 1965 (20 U.S.C. 1001 et seq.).</DELETED>
<DELETED>SEC. 2. LOAN CONSOLIDATION PROVISIONS.</DELETED>
<DELETED> (a) Definition of Loans Eligible for Consolidation.--
Section 428C(a)(4) (20 U.S.C. 1078-3(a)(4)) is amended--</DELETED>
<DELETED> (1) by redesignating subparagraphs (C) and (D) as
subparagraphs (D) and (E), respectively; and</DELETED>
<DELETED> (2) by inserting after subparagraph (B) the
following new subparagraph:</DELETED>
<DELETED> ``(C) made under part D of this title,
except that loans made under such part shall be
eligible student loans only for consolidation loans for
which the application is received by an eligible lender
during the period beginning on the date of enactment of
the Emergency Student Loan Consolidation Act of 1997
and ending on October 1, 1998;''.</DELETED>
<DELETED> (b) Terms of Consolidation Loans.--Section
428C(b)(4)(C)(ii) is amended--</DELETED>
<DELETED> (1) in subclause (I), by inserting after
``consolidation loan'' the following: ``for which the
application is received by an eligible lender before the date
of enactment of the Emergency Student Loan Consolidation Act of
1997, or on or after October 1, 1998,'' ;</DELETED>
<DELETED> (2) by striking ``or'' at the end of subclause
(I);</DELETED>
<DELETED> (3) by inserting ``or (II)'' before the semicolon
at the end of subclause (II);</DELETED>
<DELETED> (4) by redesignating subclause (II) as subclause
(III); and</DELETED>
<DELETED> (5) by inserting after subclause (I) the following
new subclause:</DELETED>
<DELETED> ``(II) by the Secretary, in the
case of a consolidation loan for which the
application is received by an eligible lender
on or after the date of enactment of the
Emergency Student Loan Consolidation Act of
1997 and before October 1, 1998, except that
the Secretary shall pay such interest only on
that portion of the loan that repays Federal
Stafford Loans for which the student borrower
received an interest subsidy under section 428
or Federal Direct Stafford Loans for which the
borrower received an interest subsidy under
section 455; or''.</DELETED>
<DELETED> (c) Interest Rate.--Section 428C(c)(1) is amended by
adding at the end the following new subparagraph:</DELETED>
<DELETED> ``(D) A consolidation loan for which the
application is received by an eligible lender on or after the
date of enactment of the Emergency Student Loan Consolidation
Act of 1997 and before October 1, 1998, shall bear interest at
an annual rate on the unpaid principal balance of the loan that
is equal to the rate specified in section 427A(f).''.</DELETED>
<DELETED> (d) Amendments Effective for Pending Applicants.--The
consolidation loans authorized by the amendments made by this section
shall be available notwithstanding any pending application by a student
for a consolidation loan under part D of title IV of the Higher
Education Act of 1965, upon withdrawal of such application by the
student at any time prior to receipt of such a consolidation
loan.</DELETED>
<DELETED>SEC. 3. ADMINISTRATIVE EXPENSE REDUCTIONS.</DELETED>
<DELETED> Section 458(a)(1) (20 U.S.C. 1087h(a)(1)) is amended by
striking ``$532,000,000'' and inserting ``$507,000,000''.</DELETED>
<DELETED>SEC. 4. TREATMENT OF TAX BENEFITS.</DELETED>
<DELETED> (a) Family Contribution for Dependent Students.--
</DELETED>
<DELETED> (1) Parents' available income.--Section 475(c)(1)
is amended--</DELETED>
<DELETED> (A) by striking ``and'' at the end of
subparagraph (D);</DELETED>
<DELETED> (B) by striking the period at the end of
subparagraph (E) and inserting ``; and''; and</DELETED>
<DELETED> (C) by adding at the end the following new
subparagraph:</DELETED>
<DELETED> ``(F) the amount of any tax credit taken
by the parents under section 25A of the Internal
Revenue Code of 1986.''.</DELETED>
<DELETED> (2) Student contribution from available income.--
Section 475(g)(2) is amended--</DELETED>
<DELETED> (A) by striking ``and'' at the end of
subparagraph (C);</DELETED>
<DELETED> (B) by striking the period at the end of
subparagraph (D) and inserting ``; and''; and</DELETED>
<DELETED> (C) by inserting after subparagraph (D)
the following new subparagraph:</DELETED>
<DELETED> ``(E) the amount of any tax credit taken
by the student under section 25A of the Internal
Revenue Code of 1986.''.</DELETED>
<DELETED> (b) Family Contribution for Independent Students Without
Dependents Other Than a Spouse.--Section 476(b)(1)(A) (20 U.S.C.
1087pp(b)(1)(A)) is amended--</DELETED>
<DELETED> (1) by striking ``and'' at the end of clause (iv);
and</DELETED>
<DELETED> (2) by inserting after clause (v) the following
new clause:</DELETED>
<DELETED> ``(vi) the amount of any tax
credit taken under section 25A of the Internal
Revenue Code of 1986; and''.</DELETED>
<DELETED> (c) Family Contribution for Independent Students With
Dependents Other Than a Spouse.--Section 477(b)(1) (20 U.S.C.
1087qq(b)(1)) is amended--</DELETED>
<DELETED> (1) by striking ``and'' at the end of subparagraph
(D);</DELETED>
<DELETED> (2) by striking the period at the end of
subparagraph (E) and inserting ``; and''; and</DELETED>
<DELETED> (3) by adding at the end the following new
subparagraph:</DELETED>
<DELETED> ``(F) the amount of any tax credit taken
under section 25A of the Internal Revenue Code of
1986.''.</DELETED>
<DELETED> (d) Total Income.--Section 480(a)(2) (20 U.S.C.
1087vv(a)(2)) is amended--</DELETED>
<DELETED> (1) by striking ``individual, and'' and inserting
``individual,''; and</DELETED>
<DELETED> (2) by inserting ``and no portion of any tax
credit taken under section 25A of the Internal Revenue Code of
1986,'' before ``shall be included''.</DELETED>
<DELETED> (e) Other Financial Assistance.--Section 480(j) is amended
by adding at the end the following new paragraph:</DELETED>
<DELETED> ``(4) Notwithstanding paragraph (1), a tax credit taken
under section 25A of the Internal Revenue Code of 1986 shall not be
treated as estimated financial assistance for purposes of section
471(3).''.</DELETED>
SECTION 1. SHORT TITLE; REFERENCE.
(a) Short Title.--This Act may be cited as the ``Emergency Student
Loan Consolidation Act of 1997''.
(b) References.--Except as otherwise expressly provided, whenever
in this Act an amendment or repeal is expressed in terms of an
amendment to, or repeal of, a section or other provision, the reference
shall be considered to be made to a section or other provision of the
Higher Education Act of 1965 (20 U.S.C. 1001 et seq.).
SEC. 2. LOAN CONSOLIDATION PROVISIONS.
(a) Definition of Loans Eligible for Consolidation.--Section
428C(a)(4) (20 U.S.C. 1078-3(a)(4)) is amended--
(1) by redesignating subparagraphs (C) and (D) as
subparagraphs (D) and (E), respectively; and
(2) by inserting after subparagraph (B) the following new
subparagraph:
``(C) made under part D of this title, except that
loans made under such part shall be eligible student
loans only for consolidation loans for which the
application is received by an eligible lender during
the period beginning on the date of enactment of the
Emergency Student Loan Consolidation Act of 1997 and
ending on October 1, 1998;''.
(b) Terms of Consolidation Loans.--Section 428C(b)(4)(C)(ii) is
amended--
(1) in subclause (I), by inserting after ``consolidation
loan'' the following: ``for which the application is received
by an eligible lender before the date of enactment of the
Emergency Student Loan Consolidation Act of 1997, or on or
after October 1, 1998,'' ;
(2) by striking ``or'' at the end of subclause (I);
(3) by inserting ``or (II)'' before the semicolon at the
end of subclause (II);
(4) by redesignating subclause (II) as subclause (III); and
(5) by inserting after subclause (I) the following new
subclause:
``(II) by the Secretary, in the case of a
consolidation loan for which the application is
received by an eligible lender on or after the
date of enactment of the Emergency Student Loan
Consolidation Act of 1997 and before October 1,
1998, except that the Secretary shall pay such
interest only on that portion of the loan that
repays Federal Stafford Loans for which the
student borrower received an interest subsidy
under section 428 or Federal Direct Stafford
Loans for which the borrower received an
interest subsidy under section 455; or''.
(c) Nondiscrimination in Loan Consolidation.--Section 428C(b) is
amended by adding at the end the following new paragraph:
``(6) Nondiscrimination in loan consolidation.--An eligible
lender that makes consolidation loans under this section shall
not discriminate against any borrower seeking such a loan--
``(A) based on the number or type of eligible
student loans the borrower seeks to consolidate;
``(B) based on the type or category of institution
of higher education that the borrower attended;
``(C) based on the interest rate that is authorized
to be collected with respect to the consolidation loan;
or
``(D) with respect to the types of repayment
schedules offered to such borrower.''.
(d) Interest Rate.--Section 428C(c)(1) is amended--
(1) in the first sentence of subparagraph (A), by striking
``(B) or (C)'' and inserting ``(B), (C), or (D)''; and
(2) by adding at the end the following new subparagraph:
``(D) A consolidation loan for which the application is
received by an eligible lender on or after the date of
enactment of the Emergency Student Loan Consolidation Act of
1997 and before October 1, 1998, shall bear interest at an
annual rate on the unpaid principal balance of the loan that is
equal to the rate specified in section 427A(f), except that the
eligible lender may continue to calculate interest on such a
loan at the rate previously in effect and defer, until not
later than April 1, 1998, the recalculation of the interest on
such a loan at the rate required by this subparagraph if the
recalculation is applied retroactively to the date on which the loan is
made.''.
(e) Amendments Effective for Pending Applicants.--The consolidation
loans authorized by the amendments made by this section shall be
available notwithstanding any pending application by a student for a
consolidation loan under part D of title IV of the Higher Education Act
of 1965, upon withdrawal of such application by the student at any time
prior to receipt of such a consolidation loan.
SEC. 3. ADMINISTRATIVE EXPENSE REDUCTIONS.
Section 458(a)(1) (20 U.S.C. 1087h(a)(1)) is amended by striking
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