H. R IN THE HOUSE OF REPRESENTATIVES

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1 I TH CONGRESS 1ST SESSION H. R. To provide for the establishment of a mechanism to allow borrowers of Federal student loans to refinance their loans, to amend the Internal Revenue Code of 1 to extend the exclusion for employer-provided educational assistance to employer payment of interest on certain refinanced student loans, and for other purposes. IN THE HOUSE OF REPRESENTATIVES NOVEMBER 1, 0 Mrs. COMSTOCK introduced the following bill; which was referred to the Committee on Education and the Workforce, and in addition to the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned A BILL To provide for the establishment of a mechanism to allow borrowers of Federal student loans to refinance their loans, to amend the Internal Revenue Code of 1 to extend the exclusion for employer-provided educational assistance to employer payment of interest on certain refinanced student loans, and for other purposes. 1 Be it enacted by the Senate and House of Representa- tives of the United States of America in Congress assembled, SSpencer on DSKSPTVN1PROD with BILLS VerDate Sep 01 00: Nov, 0 Jkt 000 PO Frm Fmt Sfmt 01 E:\BILLS\H.IH H

2 1 SECTION 1. SHORT TITLE This Act may be cited as the Student Loan Relief Act of 0. SEC.. PURPOSE. The purpose of this Act is to spur economic growth by establishing a mechanism to allow borrowers of Federal student loans to refinance their loans in order (1) to allow credit-worthy borrowers to get a lower interest rate than the Federal rate; () to encourage innovation in the education refinancing markets; and () to promote the participation of private capital in the education refinancing markets. TITLE I REFINANCING STUDENT LOANS SEC. 1. DEFINITIONS. In this title (1) the term Federal student loan means a loan made, insured, or guaranteed under title IV of the Higher Education Act of (0 U.S.C. 0 et seq.); and () the term Secretary means the Secretary of the Treasury, other than in the context of the SSpencer on DSKSPTVN1PROD with BILLS Secretary of Education. HR IH VerDate Sep 01 00: Nov, 0 Jkt 000 PO Frm 0000 Fmt Sfmt 01 E:\BILLS\H.IH H

3 SSpencer on DSKSPTVN1PROD with BILLS HR IH VerDate Sep 01 00: Nov, 0 Jkt 000 PO Frm 0000 Fmt Sfmt 01 E:\BILLS\H.IH H SEC.. TEMPORARY AUTHORITY TO CREATE A CREDIT FACILITY TO INCREASE MARKET EFFICIENCY IN THE STUDENT LOAN MARKET. (a) AUTHORITY. (1) IN GENERAL. The Secretary, notwithstanding any provision of section of the Higher Education Act of (0 U.S.C. 1), is authorized to facilitate Federal student loan refinancing into the private market to ensure that borrowers pay lower interest rates that are commensurate with credit risk, so that they may pursue more economically productive activities, such as home purchases and small business formation. () NO NET COST TO GOVERNMENT. Mecha- nisms established under this subsection shall not result in any net cost to the Federal Government, as determined jointly by the Secretary, the Secretary of Education, and the Director of the Office of Management and Budget. () FEDERAL GUARANTEE. A private loan that results from refinancing under a program established under the authority of this section shall receive a Federal Government guarantee of percent of the private loan, including accrued interest on such loan.

4 SSpencer on DSKSPTVN1PROD with BILLS 1 () DISCLOSURES. Each lender of a prospec- tive borrower of a private loan that would result from refinancing under a program established under the authority of this section shall disclose to the pro- spective borrower the information described in sec- tion C(b)(1)(F) of the Higher Education Act of (0 U.S.C. (b)(1)(f)) (b) PUBLIC AWARENESS. The Secretary, in con- sultation with the Secretary of Education, shall (1) begin a national awareness campaign to alert all Federal student loan borrowers who may benefit from any program or facilities established under this section; and () include in the campaign under paragraph (1) a disclosure that a private loan that results from refinancing under a program established under the authority of this section is not eligible for income driven repayment or loan forgiveness. (c) EXPIRATION OF AUTHORITY. Three years after the date on which a credit facility is established under this Act, and not later than years after the date of enactment of this Act, any new lending, purchase, or other activity initiated through the facilities established by the Secretary under subsection (a) shall cease, except the Federal guar- HR IH VerDate Sep 01 00: Nov, 0 Jkt 000 PO Frm 0000 Fmt Sfmt 01 E:\BILLS\H.IH H

5 antee described in subsection (a)() shall continue for the life of the private loan. TITLE II EXCLUSION FOR EM- PLOYER PAYMENT OF INTER- EST ON CERTAIN REFI- NANCED STUDENT LOANS SEC. 01. EXCLUSION FOR EMPLOYER PAYMENT OF INTER- EST ON CERTAIN REFINANCED STUDENT LOANS. (a) IN GENERAL. Paragraph (1) of section (c) of the Internal Revenue Code of 1 is amended by striking and at the end of subparagraph (A), by redesignating subparagraph (B) as subparagraph (C), and by inserting after subparagraph (A) the following new subparagraph: (B) the payment by an employer, whether paid to the employee or to a lender, of any indebtedness of the employee under a qualified education refinance loan or any interest relating to such a loan, and. (b) QUALIFIED EDUCATION REFINANCE LOAN. Subsection (c) of section of the Internal Revenue Code of 1 is amended by adding at the end the following SSpencer on DSKSPTVN1PROD with BILLS new paragraph: HR IH VerDate Sep 01 00: Nov, 0 Jkt 000 PO Frm 0000 Fmt Sfmt 01 E:\BILLS\H.IH H

6 () QUALIFIED EDUCATION REFINANCE LOAN. The term qualified education refinance loan means any indebtedness used solely to refinance a qualified education loan (within the meaning of section 1(d)(1)) with respect to which the lender offers the borrower protection in the event of unemployment or financial hardship (as reasonably determined by the lender, including periods of forbearance or career assistance).. (c) CONFORMING AMENDMENT; DENIAL OF DOUBLE BENEFIT. Paragraph (1) of section 1(e) of the Internal Revenue Code of 1 is amended by inserting before the period the following:, or for which an exclusion is allowable under section to the taxpayer s employer by reason of the payment by such employer of any indebtedness on a qualified education loan of the taxpayer. (d) EFFECTIVE DATE. The amendments made by this section shall apply to expenses paid after December 1, 0. Æ SSpencer on DSKSPTVN1PROD with BILLS HR IH VerDate Sep 01 00: Nov, 0 Jkt 000 PO Frm 0000 Fmt Sfmt 01 E:\BILLS\H.IH H