A bill to amend the Rural Electrification Act of 1936 to permit the prepayment of Federal financing bank loans made to rural electrification and telephone systems, and for other purposes.

Amends the Rural Electrification Act of 1936 to permit Rural Electrification Administration borrowers to prepay Federal Financing Bank loans without penalties if: (1) private capital is used to replace such loans; and (2) any savings will be used to avoid future rate increases, passed on to customers, or used to improve the borrower's financial strength.