H.R. 3180

H.R. 3180 - College Opportunity for All Act

This Act proposes to amend the Higher Education Act of 1965 (HEA) to revise and reauthorize requirements relating to: (1) Pell Grants and other student aid amounts and access to higher education for all students; (2) support and educational opportunities for students at minority-serving institutions, including centers for teacher education; (3) postbaccalaureate opportunities at Hispanic-serving institutions; (4) TRIO and other outreach programs to disadvantaged students pursuing a postsecondary education; (5) support for working students through revision of student aid need analysis; (6) student loan forgiveness for certain public service employment; (7) relief to borrowers through elimination of origination fees and allowance of refinancing of consolidation loans; (8) simplification of the student aid process; (9) voluntary flexible agreements with guaranty agencies; and (10) allowance for State and other taxes.

Regarding the portion of H.R. 3180 that deals with loan consolidation:

Sec. 8. Providing Relief to Borrowers.

a) Elimination of loan fees to borrowers for FFEL and Direct loans.
-Amends Section 438(c) of the HEA by adding a paragraph that terminates origination fees after July 1, after the date of enactment. It states that no lender can collect an origination fee, and that the Secretary can't collect an origination fee from a lender.

b) Consolidation Loan Lender of Choice
-Allows borrower choice of consolidator by striking the portion of Section 438(b)(1) that states that the lender is to make the loan to the borrower only if the lender holds an outstanding loan to the borrower, also adds provisions requiring disclosure by lenders and institutions (similar to provisions in H.R. 2711).

c) Allows for consolidation loan refinancing for FFEL and Direct loans by adding a new clause stating that a borrower of a fixed rate consolidation loan may obtain a subsequent consolidation loan for the purpose of refinancing earlier consolidation loan at prevailing interest rate determined under 427A(m) or 455(b)(8) if the interest rate on the earlier consolidation loan exceeds the prevailing rate by 1% or more. The refinanced consolidation loan interest rate is the prevailing rate, which equals the market rate + 2.3%, not to exceed 8.25%. The excess interest goes to the government.

H.R. 3180 eliminates loan fees, and allows for choice of borrower. It allows for refinancing, not by striking the borrower eligibility provision, but by adding a paragraph allowing for refinancing at the prevailing rate if the interest rate on the earlier loan exceeds the prevailing rate by 1% or more. It also makes the rate for reconsolidation loans variable, not to exceed 8.25%. However, it is not bipartisan; it has Democrat support only, it's tied to student aid for a specific minority. It also significantly increases Pell grant maximums, and adds quite a bit in appropriations for the various grants, etc.: $500 million in 2004, more for the following 4 years.