[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8461 Introduced in House (IH)]
<DOC>
118th CONGRESS
2d Session
H. R. 8461
To amend the Higher Education Act of 1965 to direct the Secretary of
Education to carry out a program under which an institution of higher
education may elect to cosign Federal student loans made to students
attending the institution, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 17, 2024
Mr. Perry introduced the following bill; which was referred to the
Committee on Education and the Workforce
_______________________________________________________________________
A BILL
To amend the Higher Education Act of 1965 to direct the Secretary of
Education to carry out a program under which an institution of higher
education may elect to cosign Federal student loans made to students
attending the institution, and for other purposes.
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 ``Student Loan Reform Act''.
SEC. 2. INSTITUTIONAL COSIGNER PROGRAM.
Part D of title IV of the Higher Education Act of 1965 (20 U.S.C.
1087a et seq.) is amended by inserting after section 454 the following:
``SEC. 454A. INSTITUTIONAL COSIGNER PROGRAM.
``(a) Program Required.--Beginning on July 1, 2024, the Secretary
shall carry out a program under which an institution of higher
education may elect to cosign all eligible direct loans made to
students enrolled at the institution for an academic year.
``(b) Agreement With Secretary.--To be eligible to participate in
the program under this section for an academic year, an institution of
higher education shall enter into an agreement with the Secretary under
which the institution agrees to the following:
``(1) The institution will cosign all new eligible direct
loans made to students enrolled at the institution for such
academic year.
``(2) With respect to each such loan, the institution will
abide by the terms and conditions of cosigner liability
described in subsection (d).
``(c) Master Promissory Note.--As part of the program under this
section, the Secretary shall--
``(1) revise the master promissory note applicable to each
eligible direct loan to include--
``(A) the terms and conditions of cosigner and
borrower liability described in subsection (d);
``(B) the interest rate for the loan, as determined
under subsection (e); and
``(C) a field in which an authorized representative
of an institution participating in the program may
cosign the note on behalf of the institution; and
``(2) ensure that each institution participating in the
program signs the note applicable to each new eligible direct
loan made to a student at the institution for the academic year
concerned.
``(d) Cosigner and Borrower Liability.--
``(1) In general.--Notwithstanding any other provision of
law, an institution of higher education that is a cosigner of
an eligible direct loan of a borrower shall assume the
obligation to repay, in accordance with paragraph (2), the
outstanding balance of principal and interest due on the loan
if--
``(A) the borrower defaulted on the loan;
``(B) a period of 90 days has elapsed since the
date on which the loan entered default; and
``(C) the loan has not been rehabilitated.
``(2) Amount and schedule of repayment.--An institution
that is obligated to repay an eligible direct loan under
paragraph (1) shall make payments on the loan pursuant to a
standard repayment plan under section 455(d)(1)(A) with a
repayment period of 10 years.
``(3) Termination of obligation.--The obligation of an
institution to repay an eligible direct loan under paragraph
(1) shall terminate on the earlier of--
``(A) the date on which the loan is rehabilitated;
or
``(B) the date on which the total outstanding
balance of principal and interest due on the loan has
been repaid.
``(4) Effect on default status of borrower.--A borrower who
has defaulted on an eligible direct loan on which an
institution is making payments under paragraph (1) shall be
considered in default on such loan for purposes of adverse
credit reporting and delinquent debt collection procedures
under Federal law.
``(5) Recovery from borrower.--Any amounts recovered from
the borrower of an eligible direct loan during a period in
which an institution is making payments on the loan under
paragraph (1) shall be subtracted from the total outstanding
balance of principal and interest due on the loan.
``(6) Rule of construction.--Nothing in this subsection
shall be construed to limit the remedies available under this
part against the borrower of an eligible Federal student loan.
``(e) Reduced Interest Rate.--Notwithstanding any other provision
of law, the interest rate applicable to an eligible direct loan
cosigned by an institution participating in the program under this
section shall be a rate determined by the Secretary that is--
``(1) lower than the standard rate applicable to the loan
under section 455(b); and
``(2) reduced below such standard rate by a percentage that
is proportionate to the reduced risk posed by the loan, as
determined by the Secretary.
``(f) List of Participating Institutions.--On an annual basis, the
Secretary shall publish, on a publicly accessible website of the
Department of Education, a list that identifies each institution
participating in the program under this section for an academic year.
``(g) Eligible Direct Loan Defined.--In this section, the term
`eligible direct loan' means a loan made under this part on or after
July 1, 2024.''.
SEC. 3. MODIFICATION OF COHORT DEFAULT RATE THRESHOLD.
(a) In General.--Section 435(a) of the Higher Education Act of 1965
(20 U.S.C. 1085(a)) is amended--
(1) in paragraph (2)--
(A) by striking subparagraphs (B) and (C) and
inserting the following:
``(B) For purposes of determinations under
subparagraph (A), the threshold percentage is--
``(i) 40 percent, in the case of an
institution that is participating in the
institutional cosigner program under section
454A in the year in which the cohort default
rate is determined; or
``(ii) 30 percent, in the case of an
institution that is not participating in such
program in the year in which the cohort default
rate is determined.''; and
(B) by redesignating subparagraph (D) as
subparagraph (C);
(2) in paragraph (3), by striking ``paragraph (2)(B)(iv)''
and inserting ``paragraph (2)(B)''; and
(3) in paragraph (7), by striking ``paragraph (2)(B)(iv)''
each place it appears and inserting ``paragraph (2)(B)''.
(b) Effective Date.--The amendments made by subsection (a) shall
take effect on July 1, 2024.
<all>