“To amend the Higher Education Act of 1965 to lower the interest rate on Federal student loans to 2 percent.”
No CRS summary available for this bill.
This section expands the general authority for the William D. Ford Federal Direct Loan Program to include, as a third purpose, making loans under section 460A(b), in addition to existing authorities for loans to eligible students and parents and for purchasing loans under section 1087i–1 of the Higher Education Act of 1965.
This section establishes a program to automatically modify the interest rate to 2.0% (from borrowers' prior applicable rates) on the unpaid principal balance of eligible federal student loans held by the Secretary of Education, effective the first July 1 after enactment of the Affordable Loans for Students Act. The section further directs the Secretary to automatically refinance eligible federal student loans not held by the Secretary into Federal Direct Consolidation Loans at 2.0% interest—unless the borrower opts out—with no origination fees, retention of the original repayment term, and preservation of any more generous pre-refinancing benefits such as loan forgiveness; eligible loans not held by the Secretary include Federal Family Education Loan (FFEL) Program loans, Federal Perkins Loans, and certain health professional loans. Eligible loans held by the Secretary include Direct Loans first disbursed before the effective date, plus FFEL, Perkins, and certain health professional loans already held by the Secretary. (Thus, the program covers most existing federal student loans, significantly reducing monthly payments and total interest costs for affected borrowers.) The section also requires the Secretary to report annually to the authorizing committees, beginning 180 days after the second July 1 post-enactment, on the number of borrowers with modified or refinanced loans and the number delinquent on such loans; and makes conforming amendments to the Higher Education Act of 1965.
This section establishes a fixed interest rate of 2.0% on the unpaid principal balance for Federal Direct Stafford Loans, Federal Direct Unsubsidized Stafford Loans, Federal Direct PLUS Loans, and Federal Direct Consolidation Loans for which the first disbursement is made or the application is received on or after the first July 1 after enactment of the Affordable Loans for Students Act (limiting prior variable rates under 20 U.S.C. 1087e(b)(8)(A)-(E), based on 10-year Treasury note yields plus fixed adders up to statutory caps, to loans before that date).