Refinancing student loans has been a challenge to many students after school due to several reasons. Some students fail to get job immediately the graduate from college while some get jobs but have more financial commitments that they barely have enough money to repay their student loans. Therefore, on October 9, 2015, Mr. Peters alongside nine others introduced a bill in the House of Representative through the Committee on Education to legislate a law that will help students consolidate their loans for easy refinancing. The bill was referred to as H.R. 3751. This bill had three critical sections as elucidated here:
Section one: Title
This part defines the draft law by providing a short title as the “Federal Student Loan Refinancing Act”. The objective of the bill is to enable some students borrowing federal loans to refinance them with little difficulty.
Section 2: Student loan consolidation
This article aims at making amendments to the 1965’s Higher Education Act, particularly on section 459B to allow students who have more than one loan to consolidate them and facilitate repayment. This part established a temporary loan consolidation authority to handle some loans disbursed after July 1, 2006. It set out the categories of loans that qualify for consolidation including federal direct loans and other loans as well as the loans consolidation period.
It also set out the terms and conditions of the loans, which include determination of interest rate on federal direct consolidation loan, an original fee to take care of the cost of servicing and making the loan, and any other benefit that students borrowing loans can earn or receive. Based on the contents of this section two, students have an advantage and more benefits with this act in place than before its enactment. On the rate of interest, for instance, the law provides that the applicable interest rate on a federal direct consolidation loan shall be four percent.
The benefits provided for under this act include participation in particular repayment plan, accrual of monthly disbursements as part of the public service loan forgiveness and toward a loan discharge, forbearance, and deferments.
Section 3: Exemptions from other laws
In the part, the act outlines other statutes that shall not apply to it regarding the student loan consolidation and refinancing. Some of such laws inapplicable include the Paperwork Reduction Act, mainly chapter 35 of title 44, and the rulemaking requirements entrenched in the Higher Education Act of 1965, particularly Section 482(c) and 492.
Going forward, students have an advantage in consolidating and refinancing their loans because of the favorable provisions, terms, and conditions established by this act.