SUBCHAPTER IV—STUDENT ASSISTANCE
Part A—Grants to Students in Attendance at Institutions of Higher Education
Editorial Notes
Codification
Part A of title IV of the Higher Education Act of 1965, comprising this part, was originally enacted by
§1070. Statement of purpose; program authorization
(a) Purpose
It is the purpose of this part, to assist in making available the benefits of postsecondary education to eligible students (defined in accordance with
(1) providing Federal Pell Grants to all eligible students;
(2) providing supplemental educational opportunity grants to those students who demonstrate financial need;
(3) providing for payments to the States to assist them in making financial aid available to such students;
(4) providing for special programs and projects designed (A) to identify and encourage qualified youths with financial or cultural need with a potential for postsecondary education, (B) to prepare students from low-income families for postsecondary education, and (C) to provide remedial (including remedial language study) and other services to students; and
(5) providing assistance to institutions of higher education.
(b) Secretary required to carry out purposes
The Secretary shall, in accordance with subparts 1 through 9 of this part, carry out programs to achieve the purposes of this part.
(
Editorial Notes
Prior Provisions
A prior section 1070,
Amendments
2009—Subsec. (b).
1998—Subsec. (a)(1).
Statutory Notes and Related Subsidiaries
Effective Date of 2009 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Higher Education Relief Opportunities for Students
Community Scholarship Mobilization
Community School Partnerships
Study of Federal Benefit Coordination
Olympic Scholarships
"(a)
"(1)
"(2)
"(3)
"(b)
"(c)
"(d)
"(e)
[
Persian Gulf Conflict Higher Education Assistance
"SEC. 4. OPERATION DESERT SHIELD/DESERT STORM WAIVER AUTHORITY.
"(a)
"(1) the men and women serving on active duty in connection with Operation Desert Shield or Operation Desert Storm who are borrowers of Stafford Loans or Perkins Loans are not placed in a worse position financially in relation to those loans because of such service;
"(2) the administrative requirements placed on all borrowers of student loans made in accordance with title IV of the Act [
"(3) the future eligibility of such an individual for Pell Grants is not reduced by the amount of such assistance awarded for a period of instruction that such individual was unable to complete, or for which the individual did not receive academic credit, because he or she was called up for such service.
"(b)
"(1) the length of, and eligibility requirements for, the military deferments authorized under sections 427(a)(2)(C)(ii), 428(b)(1)(M)(ii), and 464(c)(2)(A)(ii) of the Act [
"(2) administrative requirements placed on all borrowers of student loans made in accordance with title IV of the Act who are or were engaged in such military service;
"(3) the number of years for which individuals who are engaged in such military service may be eligible for Pell Grants under subpart 1 of part A of title IV of the Act [
"(4) the point at which the borrower of a Stafford Loan who is or was engaged in such military service is required to resume repayment of principal and interest on such loan after the borrower completes a period of deferment under section 427(a)(2)(C)(ii) or 428(b)(1)(M)(ii) of the Act;
"(5) the point at which the borrower of a Stafford Loan who is or was engaged in such military service is required to resume repayment of principal and interest on such loan after the borrower completes a single period of deferment under section 427(a)(2)(C)(i) or 428(b)(1)(M)(i) of the Act subsequent to such service; and
"(6) the modification of the terms 'annual adjusted family income' and 'available income,' as used in the determination of need for student financial assistance under title IV of the Act for such individual (and the determination of such need for his or her spouse and dependents, if applicable), to mean the sums received in the first calendar year of the award year for which such determination is made, in order to reflect more accurately the financial condition of such individual and his or her family.
"(c)
"(d)
"(1) Individuals 'serving on active duty in connection with Operation Desert Shield or Operation Desert Storm' shall include—
"(A) any Reserve of an Armed Force called to active duty under section 672(a) [now 12301(a)], 672(g) [now 12301(g)], 673 [now 12302], 673b [now 12304], 674 [now 12306], or 688 of
"(B) for purposes of waivers of administrative requirements under subsection (b)(2) only, any other member of an Armed Force on active duty in connection with Operation Desert Shield or Operation Desert Storm, who has been assigned to a duty station at a location other than the location at which such member is normally assigned.
"(2) The term 'active duty' has the meaning given such term in
"SEC. 5. TUITION REFUNDS OR CREDITS.
"(a)
"(b)
"SEC. 6. TERMINATION OF AUTHORITY.
"The provisions of sections 4 and 5 shall cease to be effective on September 30, 1997."
"SEC. 371. SHORT TITLE
"This part may be cited as the 'Persian Gulf Conflict Higher Education Assistance Act'.
"SEC. 372. [Superseded by section 4 of
"SEC. 373. [Superseded by section 5 of
"SEC. 374. [Amended
"SEC. 375. [Superseded by section 6 of
"SEC. 376. COORDINATION WITH OTHER LAW
"If the Higher Education Technical Amendments of 1991 [
subpart 1—federal pell grants
Editorial Notes
Codification
§1070a. Federal Pell Grants: amount and determinations; applications
(a) Purpose; definitions
(1) Purpose
The purpose of this subpart is to provide a Federal Pell Grant to low-income students.
(2) Definitions
In this section—
(A) the term "adjusted gross income" means—
(i) in the case of a dependent student, the adjusted gross income (as defined in
(ii) in the case of an independent student, the adjusted gross income (as defined in
(B) the term "family size" has the meaning given the term in
(C) the term "poverty line" means the poverty line (as determined under the poverty guidelines updated periodically in the Federal Register by the Department of Health and Human Services under the authority of
(D) the term "single parent" means—
(i) a parent of a dependent student who was a head of household (as defined in
(ii) an independent student who is a parent and was a head of household (as defined in
(E) the term "total maximum Federal Pell Grant" means the total maximum Federal Pell Grant award per student for any academic year described under subsection (b)(5); and
(F) the term "minimum Federal Pell Grant" means the minimum amount of a Federal Pell Grant that shall be awarded to a student for any academic year in which that student is attending full time, which shall be equal to 10 percent of the total maximum Federal Pell Grant for such academic year.
(b) Amount and distribution of grants
(1) Determination of amount of a Federal Pell Grant
Subject to paragraphs (2) and (3), the amount of a Federal Pell Grant for a student shall be determined in accordance with the following:
(A) A student shall be eligible for a total maximum Federal Pell Grant for an academic year in which the student is enrolled in an eligible program full time—
(i) if the student (and the student's spouse, if applicable), or, in the case of a dependent student, the dependent student's parents (or single parent), is not required to file a Federal income tax return in the second year preceding the academic year;
(ii) if the student or, in the case of a dependent student, the dependent student's parent, is a single parent, and the adjusted gross income is greater than zero and equal to or less than 225 percent of the poverty line; or
(iii) if the student or, in the case of a dependent student, the dependent student's parent, is not a single parent, and the adjusted gross income is greater than zero and equal to or less than 175 percent of the poverty line.
(B) A student who is not eligible for a total maximum Federal Pell Grant under subparagraph (A) for an academic year, shall be eligible for a Federal Pell Grant for an academic year in which the student is enrolled in an eligible program full time if such student's student aid index in such award year is less than the total maximum Federal Pell Grant for that award year. The amount of the Federal Pell Grant for a student eligible under this subparagraph shall be—
(i) the total maximum Federal Pell Grant as calculated under paragraph (5)(A) for that year, less
(ii) an amount equal to the amount determined to be the student aid index with respect to that student for that year, except that a student aid index of less than zero shall be considered to be zero for the purposes of this clause,
rounded to the nearest $5, except that a student eligible for less than the minimum Federal Pell Grant as defined in section (a)(2)(F) 1 shall not be eligible for an award.
(C) A student who is not eligible for a Federal Pell Grant under subparagraph (A) or (B) shall be eligible for the minimum Federal Pell Grant for an academic year in which the student is enrolled in an eligible program full time—
(i) in the case of a dependent student—
(I) if the student's parent is a single parent, and the adjusted gross income is equal to or less than 325 percent of the poverty line; or
(II) if the student's parent is not a single parent, and the adjusted gross income is equal to or less than 275 percent of the poverty line; or
(ii) in the case of an independent student—
(I) if the student is a single parent, and the adjusted gross income is equal to or less than 400 percent of the poverty line;
(II) if the student is a parent and is not a single parent, and the adjusted gross income is equal to or less than 350 percent of the poverty line; or
(III) if the student is not a parent, and the adjusted gross income is equal to or less than 275 percent of the poverty line.
(D) A student eligible for the total maximum Federal Pell Grant under subparagraph (A) who has (or whose spouse or parent, as applicable based on whose information is used under such subparagraph, has) foreign income that would, if added to adjusted gross income, result in the student no longer being eligible for such total maximum Federal Pell Grant, shall not be provided a Federal Pell Grant until the student aid administrator evaluates the student's FAFSA and makes a determination regarding whether it is appropriate to make an adjustment under
(E) With respect to a student who is not eligible for the total maximum Federal Pell Grant under subparagraph (A) or a minimum Federal Pell Grant under subparagraph (C), the Secretary shall subtract from the student or parents' adjusted gross income, as applicable based on whose income is used for the Federal Pell Grant calculation, the sum of the following for the individual whose income is so used, and consider such difference the adjusted gross income for purposes of determining the student's eligibility for such Federal Pell Grant award under such subparagraph:
(i) If the applicant, or, if applicable, the parents or spouse of the applicant, elects to report receiving college grant and scholarship aid included in gross income on a Federal tax return described in
(ii) Income earned from work under part C of this subchapter.
(2) Less than full-time enrollment
In any case where a student is enrolled in an eligible program of an institution of higher education on less than a full-time basis (including a student who attends an institution of higher education on less than a half-time basis) during any academic year, the amount of the Federal Pell Grant to which that student is entitled shall be reduced in direct proportion to the degree to which that student is not so enrolled on a full-time basis, rounded to the nearest whole percentage point, as provided in a schedule of reductions published by the Secretary computed in accordance with this subpart. Such schedule of reductions shall be published in the Federal Register in accordance with
(3) Award may not exceed cost of attendance
No Federal Pell Grant under this subpart shall exceed the cost of attendance (as defined in
(4) Study abroad
Notwithstanding any other provision of this subpart, the Secretary shall allow the amount of the Federal Pell Grant to be exceeded for students participating in a program of study abroad approved for credit by the institution at which the student is enrolled when the reasonable costs of such program are greater than the cost of attendance at the student's home institution, except that the amount of such Federal Pell Grant in any fiscal year shall not exceed the maximum amount of a Federal Pell Grant for which a student is eligible under paragraph (1) or (2) during such award year. If the preceding sentence applies, the financial aid administrator at the home institution may use the cost of the study abroad program, rather than the home institution's cost, to determine the cost of attendance of the student.
(5) Total maximum Federal Pell Grant
(A) In general
For award year 2024–2025, and each subsequent award year, the total maximum Federal Pell Grant award per student shall be equal to the sum of—
(i) $1,060; and
(ii) the amount specified as the maximum Federal Pell Grant in the last enacted appropriation Act applicable to that award year.
(B) Rounding
The total maximum Federal Pell Grant for any award year shall be rounded to the nearest $5.
(6) Funds by fiscal year
(A) In general
To carry out this section—
(i) there are authorized to be appropriated and are appropriated (in addition to any other amounts appropriated to carry out this section and out of any money in the Treasury not otherwise appropriated) such sums as are necessary to carry out paragraph (5)(A)(i) for fiscal year 2024 and each subsequent fiscal year; and
(ii) such sums as may be necessary are authorized to be appropriated to carry out paragraph (5)(A)(ii) for each of the fiscal years 2024 through 2034.
(B) Availability of funds
The amounts made available by subparagraph (A) for any fiscal year shall be available beginning on October 1 of that fiscal year, and shall remain available through September 30 of the succeeding fiscal year.
(7) Appropriation
(A) In general
In addition to any funds appropriated under paragraph (6) and any funds made available for this section under any appropriations Act, there are authorized to be appropriated, and there are appropriated (out of any money in the Treasury not otherwise appropriated) to carry out this section—
(i) $1,170,000,000 for fiscal year 2024;
(ii) $3,170,000,000 for fiscal year 2025;
(iii) $2,170,000,000 for fiscal year 2026; and
(iv) $1,236,000,000 for fiscal year 2027 and each succeeding fiscal year.
(B) No effect on previous appropriations
The amendments made to this section by the FAFSA Simplification Act shall not—
(i) increase or decrease the amounts that have been appropriated or are available to carry out this section for fiscal year 2017, 2018, 2019, 2020, 2021, 2022, 2023, or 2024 as of the day before the effective date of such Act; or
(ii) extend the period of availability for obligation that applied to any such amount, as of the day before such effective date.
(C) Availability of funds
The amounts made available by this paragraph for any fiscal year shall be available beginning on October 1 of that fiscal year, and shall remain available through September 30 of the succeeding fiscal year.
(8) Method of distribution
(A) In general
For each fiscal year through fiscal year 2034, the Secretary shall pay to each eligible institution such sums as may be necessary to pay each eligible student for each academic year during which that student is in attendance at an institution of higher education as an undergraduate, a Federal Pell Grant in the amount for which that student is eligible.
(B) Alternative disbursement
Nothing in this section shall be interpreted to prohibit the Secretary from paying directly to students, in advance of the beginning of the academic term, an amount for which they are eligible, in the cases where an eligible institution does not participate in the disbursement system under subparagraph (A).
(9) Additional payment periods in same award year
(A) Effective in the 2017–2018 award year and thereafter, the Secretary shall award an eligible student not more than one and one-half Federal Pell Grants during a single award year to permit such student to work toward completion of an eligible program if, during that single award year, the student has received a Federal Pell Grant for an award year and is enrolled in an eligible program for one or more additional payment periods during the same award year that are not otherwise fully covered by the student's Federal Pell Grant.
(B) In the case of a student receiving more than one Federal Pell Grant in a single award year under subparagraph (A), the total amount of Federal Pell Grants awarded to such student for the award year may exceed the total maximum Federal Pell Grant available for an award year.
(C) Any period of study covered by a Federal Pell Grant awarded under subparagraph (A) shall be included in determining a student's duration limit under subsection (d)(5).
(D) In any case where an eligible student is receiving a Federal Pell Grant for a payment period that spans 2 award years, the Secretary shall allow the eligible institution in which the student is enrolled to determine the award year to which the additional period shall be assigned, as it determines is most beneficial to students.
(c) Special rule
(1) In general
A student described in paragraph (2) shall be eligible for the total maximum Federal Pell Grant.
(2) Applicability
Paragraph (1) shall apply to any dependent or independent student—
(A) whose parent or guardian was—
(i) an individual who, on or after September 11, 2001, died in the line of duty while serving on active duty as a member of the Armed Forces; or
(ii) actively serving as a public safety officer and died in the line of duty while performing as a public safety officer; and
(B) who is less than 33 years of age.
(3) Information
Notwithstanding any other provision of law—
(A) the Secretary shall establish the necessary data-sharing agreements with the Secretary of Veterans Affairs and the Secretary of Defense, as applicable, to provide the information necessary to determine which students meet the requirements of paragraph (2)(A)(i); and
(B) the financial aid administrator shall verify with the student that the student is eligible for the adjustment and notify the Secretary of the adjustment of the student's eligibility.
(4) Treatment of Pell amount
Notwithstanding section 1212 of the Omnibus Crime Control and Safe Streets Act of 1968 (
(5) Prevention of double benefits
No eligible student described in paragraph (2) may concurrently receive a grant under both this subsection and subsection (b).
(6) Terms and conditions
The Secretary shall award grants under this subsection in the same manner and with the same terms and conditions, including the length of the period of eligibility, as the Secretary awards Federal Pell Grants under subsection (b), except that—
(A) the award rules and determination of need applicable to the calculation of Federal Pell Grants under subsection (b)(1) shall not apply to grants made under this subsection; and
(B) the maximum period determined under subsection (d)(5) shall be determined by including all grants made under this section received by the eligible student and all grants so received under subpart 10 before the effective date of this subsection.
(7) Definition of public safety officer
For purposes of this subsection, the term "public safety officer" means—
(A) a public safety officer, as defined in section 1204 of title I of the Omnibus Crime Control and Safe Streets Act of 1968 (
(B) a fire police officer, defined as an individual who—
(i) is serving in accordance with State or local law as an officially recognized or designated member of a legally organized public safety agency;
(ii) is not a law enforcement officer, a firefighter, a chaplain, or a member of a rescue squad or ambulance crew; and
(iii) provides scene security or directs traffic—
(I) in response to any fire drill, fire call, or other fire, rescue, or police emergency; or
(II) at a planned special event.
(d) Period of eligibility for grants
(1) In general
The period during which a student may receive Federal Pell Grants shall be the period required for the completion of the first undergraduate baccalaureate course of study being pursued by that student at the institution at which the student is in attendance, except that any period during which the student is enrolled in a noncredit or remedial course of study, as described in paragraph (2), shall not be counted for the purpose of this paragraph.
(2) Noncredit or remedial courses; study abroad
Nothing in this section shall exclude from eligibility courses of study which are noncredit or remedial in nature (including courses in English language instruction) which are determined by the institution to be necessary to help the student be prepared for the pursuit of a first undergraduate baccalaureate degree or certificate or, in the case of courses in English language instruction, to be necessary to enable the student to use already existing knowledge, training, or skills. Nothing in this section shall exclude from eligibility programs of study abroad that are approved for credit by the home institution at which the student is enrolled.
(3) No concurrent payments
No student is entitled to receive Pell Grant payments concurrently from more than one institution or from both the Secretary and an institution.
(4) Postbaccalaureate program
Notwithstanding paragraph (1), the Secretary may allow, on a case-by-case basis, a student to receive a Federal Pell Grant if the student—
(A) is carrying at least one-half the normal full-time work load for the course of study the student is pursuing, as determined by the institution of higher education; and
(B) is enrolled or accepted for enrollment in a postbaccalaureate program that does not lead to a graduate degree, and in courses required by a State in order for the student to receive a professional certification or licensing credential that is required for employment as a teacher in an elementary school or secondary school in that State,
except that this paragraph shall not apply to a student who is enrolled in an institution of higher education that offers a baccalaureate degree in education.
(5) Maximum period
(A) In general
Except as provided in subparagraph (B), the period during which a student may receive Federal Pell Grants shall not exceed 12 semesters, or the equivalent of 12 semesters, as determined by the Secretary by regulation. Such regulations shall provide, with respect to a student who received a Federal Pell Grant for a term but was enrolled at a fraction of full time, that only that same fraction of such semester or equivalent shall count towards such duration limits.
(B) Exception
(i) In general
Any Federal Pell Grant that a student received during a period described in subclause (I) or (II) of clause (ii) shall not count towards the student's duration limits under this paragraph.
(ii) Applicable periods
Clause (i) shall apply with respect to any Federal Pell Grant awarded to a student to enroll in an eligible program at an institution—
(I) during a period of a student's attendance at an institution—
(aa) at which the student was unable to complete a course of study due to the closing of the institution; or
(bb) for which the student was falsely certified as eligible for Federal aid under this subchapter; or
(II) during a period—
(aa) for which the student received a loan under this subchapter; and
(bb) for which the loan described in item (aa) is discharged under—
(AA)
(BB)
(CC)
(e) Applications for grants
(1) Deadlines
The Secretary shall from time to time set dates by which students shall file the Free Application for Federal Student Aid under
(2) Application
Each student desiring a Federal Pell Grant for any year shall file the Free Application for Federal Student Aid containing the information necessary to enable the Secretary to carry out the functions and responsibilities of this subpart.
(f) Distribution of grants to students
Payments under this section shall be made in accordance with regulations promulgated by the Secretary for such purpose, in such manner as will best accomplish the purpose of this section. Any disbursement allowed to be made by crediting the student's account shall be limited to tuition and fees, and food and housing if that food and housing is institutionally owned or operated. The student may elect to have the institution provide other such goods and services by crediting the student's account.
(g) Insufficient appropriations
If, for any fiscal year, the funds appropriated for payments under this subpart are insufficient to satisfy fully all entitlements, as calculated under subsections (b) and (c) (but at the maximum grant level specified in such appropriation), the Secretary shall promptly transmit a notice of such insufficiency to each House of the Congress, and identify in such notice the additional amount that would be required to be appropriated to satisfy fully all entitlements (as so calculated at such maximum grant level).
(h) Use of excess funds
(1) 15 percent or less
If, at the end of a fiscal year, the funds available for making payments under this subpart exceed the amount necessary to make the payments required under this subpart to eligible students by 15 percent or less, then all of the excess funds shall remain available for making payments under this subpart during the next succeeding fiscal year.
(2) More than 15 percent
If, at the end of a fiscal year, the funds available for making payments under this subpart exceed the amount necessary to make the payments required under this subpart to eligible students by more than 15 percent, then all of such funds shall remain available for making such payments but payments may be made under this paragraph only with respect to entitlements for that fiscal year.
(i) Treatment of institutions and students under other laws
Any institution of higher education which enters into an agreement with the Secretary to disburse to students attending that institution the amounts those students are eligible to receive under this subpart shall not be deemed, by virtue of such agreement, a contractor maintaining a system of records to accomplish a function of the Secretary. Recipients of Pell Grants shall not be considered to be individual grantees for purposes of
(j) Institutional ineligibility based on default rates
(1) In general
No institution of higher education shall be an eligible institution for purposes of this subpart if such institution of higher education is ineligible to participate in a loan program under part B or D as a result of a final default rate determination made by the Secretary under part B or D after the final publication of cohort default rates for fiscal year 1996 or a succeeding fiscal year.
(2) Sanctions subject to appeal opportunity
No institution may be subject to the terms of this subsection unless the institution has had the opportunity to appeal the institution's default rate determination under regulations issued by the Secretary for the loan program authorized under part B or D, as applicable. This subsection shall not apply to an institution that was not participating in the loan program authorized under part B or D on October 7, 1998, unless the institution subsequently participates in the loan programs.
(
Editorial Notes
References in Text
The FAFSA Simplification Act, referred to in subsec. (b)(7)(B), is title VII of
The Omnibus Crime Control and Safe Streets Act of 1968, referred to in subsec. (c)(4), is
The effective date of this subsection, referred to in subsec. (c)(6)(B), probably means the effective date of section 103(c) of div. R of
Prior Provisions
A prior section 1070a,
A prior section 401 of
Another prior section 401 of
Amendments
2024—Subsec. (b)(7)(A).
Subsec. (b)(7)(B)(i).
2022—Subsec. (b)(5)(A).
Subsec. (b)(6)(A)(i).
Subsec. (b)(6)(A)(ii).
Subsec. (b)(7)(B)(i).
Subsec. (b)(8)(A).
Subsec. (c)(2).
Subsec. (c)(3)(A).
Subsec. (c)(5) to (7).
2020—
2019—Subsec. (b)(7)(A)(iv)(X).
Subsec. (b)(7)(A)(iv)(XI).
2018—Subsec. (b)(7)(A)(iv)(VIII).
Subsec. (b)(7)(A)(iv)(IX).
2017—Subsec. (b)(7)(A)(iv)(VII).
Subsec. (b)(8).
2015—Subsec. (b)(2)(A)(ii).
2014—Subsec. (b)(2)(A)(ii).
2011—Subsec. (b)(2)(A)(ii).
Subsec. (b)(4).
Subsec. (b)(5).
"(A) The Secretary shall award a student not more than two Federal Pell Grants during a single award year to permit such student to accelerate the student's progress toward a degree or certificate if the student is enrolled—
"(i) on at least a half-time basis for a period of more than one academic year, or more than two semesters or an equivalent period of time, during a single award year; and
"(ii) in a program of instruction at an institution of higher education for which the institution awards an associate or baccalaureate degree or a certificate.
"(B) In the case of a student receiving more than one Federal Pell Grant in a single award year under subparagraph (A), the total amount of Federal Pell Grants awarded to such student for the award year may exceed the maximum basic grant level specified in the appropriate appropriations Act for such award year."
Subsec. (b)(6).
Subsec. (b)(7).
Subsec. (b)(7)(A)(iv).
Subsec. (b)(7)(A)(iv)(II).
Subsec. (b)(7)(A)(iv)(III).
Subsec. (b)(8).
Subsec. (b)(8)(A)(iv).
Subsec. (b)(8)(C)(i)(I), (ii)(I).
Subsec. (c)(5).
2010—Subsec. (b)(2)(A).
Subsec. (b)(4).
Subsec. (b)(6).
Subsec. (b)(8)(A).
Subsec. (b)(8)(A)(iii) to (x).
Subsec. (b)(8)(B).
Subsec. (b)(8)(B)(ii).
Subsec. (b)(8)(B)(iii).
Subsec. (b)(8)(C).
2009—Subsec. (a)(1).
Subsec. (b)(1).
Subsec. (b)(8)(A)(ii), (iii).
Subsec. (b)(8)(A)(vi), (viii).
Subsec. (f)(4).
2008—Subsec. (b).
Subsec. (b)(2)(A).
Subsec. (b)(4).
Subsec. (b)(5).
"(i) the student is enrolled full-time in an associate or baccalaureate degree program of study that is 2 years or longer at an eligible institution that is computed in credit hours; and
"(ii) the student completes course work toward completion of an associate or baccalaureate degree that exceeds the requirements for a full academic year as defined by the institution.
"(B) The Secretary shall promulgate regulations implementing this paragraph."
Subsec. (b)(7).
Subsec. (b)(8)(D).
"(D)
Subsec. (b)(8)(F).
"(F)
Subsec. (c)(5).
Subsec. (f)(3).
Subsec. (f)(4).
2007—Subsec. (a)(1).
Subsec. (b)(3) to (7).
Subsec. (b)(8).
Subsec. (b)(9).
1998—
Subsec. (a)(1).
Subsec. (a)(3).
Subsec. (b)(1).
Subsec. (b)(2)(A).
"(i) $3,700 for academic year 1993–1994,
"(ii) $3,900 for academic year 1994–1995,
"(iii) $4,100 for academic year 1995–1996,
"(iv) $4,300 for academic year 1996–1997, and
"(v) $4,500 for academic year 1997–1998,
less an amount equal to the amount determined to be the expected family contribution with respect to that student for that year."
Subsec. (b)(2)(B).
Subsec. (b)(3).
"(3)(A) For any academic year for which an appropriation Act provides a maximum basic grant in an amount in excess of $2,400, the amount of a student's basic grant shall equal $2,400 plus—
"(i) one-half of the amount by which such maximum basic grant exceeds $2,400; plus
"(ii) the lesser of—
"(I) the remaining one-half of such excess; or
"(II) the sum of the student's tuition and the student's allowance determined under subparagraph (B), if applicable.
"(B) For purposes of subparagraph (A)(ii)(II), a student's allowance is $750 if the student has dependent care expenses (as defined in
Subsec. (b)(4), (5).
Subsec. (b)(6).
Subsec. (b)(7), (8).
Subsec. (c)(1).
Subsec. (c)(4).
Subsec. (d)(1).
Subsecs. (d)(2), (f)(1).
Subsec. (f)(3).
Subsec. (j).
1994—Subsec. (b)(8).
"(8)(A) No basic grant shall be awarded to an incarcerated student under this subpart that exceeds the sum of the amount of tuition and fees normally assessed by the institution of higher education for the course of study such student is pursuing plus an allowance (determined in accordance with regulations issued by the Secretary) for books and supplies associated with such course of study, except that no basic grant shall be awarded to any incarcerated student serving under sentence of death or any life sentence without eligibility for parole or release.
"(B) Basic grants under this subpart shall only be awarded to incarcerated individuals in a State if such grants are used to supplement and not supplant the level of postsecondary education assistance provided by such State to incarcerated individuals in fiscal year 1988."
1993—Subsec. (a)(1).
Subsec. (b)(2)(B).
Subsec. (b)(6).
Subsec. (i).
1992—Subsec. (a)(1).
Subsec. (a)(3).
Subsec. (b)(1).
Subsec. (b)(2)(A)(i) to (v).
"(i) $2,300 for academic year 1987–1988,
"(ii) $2,500 for academic year 1988–1989,
"(iii) $2,700 for academic year 1989–1990,
"(iv) $2,900 for academic year 1990–1991, and
"(v) $3,100 for academic year 1991–1992,".
Subsec. (b)(2)(B).
Subsec. (b)(3).
Subsec. (b)(4).
Subsec. (b)(5).
Subsec. (b)(6) to (8).
Subsec. (c)(1).
"(A) such period may not exceed the full-time equivalent of—
"(i) 5 academic years in the case of an undergraduate degree or certificate program normally requiring 4 years or less;
"(ii) 6 academic years in the case of an undergraduate degree or certificate program normally requiring more than 4 years;
"(B) any period during which the student is enrolled in a noncredit or remedial course of study as defined in paragraph (2) shall not be counted for the purpose of subparagraph (A); and
"(C) an institution of higher education at which the student is in attendance may waive subparagraph (A) for undue hardship based on—
"(i) the death of a relative of the student;
"(ii) the personal injury or illness of the student; or
"(iii) special circumstances as determined by the institution."
Subsec. (c)(2).
Subsec. (f)(1).
Subsec. (f)(3).
Subsec. (g).
"(1) If, for any fiscal year, the funds appropriated for payments under this subpart are insufficient to satisfy fully all entitlements, as calculated under subsection (b) of this section, the amount paid with respect to each entitlement shall be—
"(A) the full amount for any student whose expected family contribution is $200 or less, or
"(B) a percentage of that entitlement, as determined in accordance with a schedule of reductions established by the Secretary for this purpose, for any student whose expected family contribution is more than $200.
"(2) Any schedule established by the Secretary for the purpose of paragraph (1)(B) of this subsection shall contain a single linear reduction formula in which the percentage reduction increases uniformly as the entitlement decreases, and shall provide that if an entitlement is reduced to less than $100, no payment shall be made."
Subsec. (i).
1987—Subsec. (g)(2).
Statutory Notes and Related Subsidiaries
Effective Date of 2024 Amendment
Effective Date of 2022 Amendment
Effective Date of 2020 Amendment
Amendment by
Effective Date of 2011 Amendment
Amendment by section 309(a) of
Effective Date of 2010 Amendment
Effective Date of 2009 Amendment
Amendment by
Effective Date of 2008 Amendment
"(A)
"(B)
Effective Date of 2007 Amendment
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1994 Amendment
Effective Date of 1993 Amendment
Amendment by section 2(b)(1), (3)–(5), (k)(1) of
Effective Date of 1992 Amendment
"(1) as otherwise provided in such part A;
"(2) that the changes made in section 411 [this section], relating to Pell Grants, shall apply to the awarding of Pell Grants for periods of enrollment beginning on or after July 1, 1993; and
"(3) that the changes in section 413C(a)(2) [
Effective Date of 1987 Amendment
Amendment by
Effective Date
Section effective Oct. 17, 1986, except as otherwise provided, see section 2 of
"(3) Section 411(c) of the Act [
"(4) Section 411(f) of the Act [
On-Time Effective Date Permitted
"(1)
"(A) may implement on or after July 1, 2023, but not later than, July 1, 2024, the amendments made by—
"(i) section 702(b) of the FAFSA Simplification Act [amending
"(ii) section 702(i) of such Act [amending
"(iii) section 702(l) of such Act [enacting
"(iv) section 703 of such Act [amending this section] regarding only the period of eligibility for grants under subsection (d) of section 401 of the Higher Education Act of 1965 [
"(B) shall specify in a designation on what date and for which award years the implementation of amendments described in subparagraph (A) are effective on or after July 1, 2023, and prior to July 1, 2024, and shall publish any designation under this paragraph in the Federal Register not less than 60 days before implementation.
"(2)
Study of Pell Grant Eligibility for Less Than Half-Time Students
Maximum Pell Grants
Provisions limiting the maximum Pell grant that a student may receive were contained in the following appropriation acts:
1 So in original. Probably should be "subsection (a)(2)(F)".
§1070a–1. Omitted
Editorial Notes
Codification
Section,
A prior section 1070a–1,
§§1070a–2 to 1070a–6. Repealed. Pub. L. 102–325, title IV, §401(i), July 23, 1992, 106 Stat. 482
Section 1070a–2,
Section 1070a–3,
Section 1070a–4,
Section 1070a–5,
Section 1070a–6,
subpart 2—federal early outreach and student services programs
Editorial Notes
Codification
Division 1—Federal TRIO Programs
§1070a–11. Program authority; authorization of appropriations
(a) Grants and contracts authorized
The Secretary shall, in accordance with the provisions of this division, carry out a program of making grants and contracts designed to identify qualified individuals from disadvantaged backgrounds, to prepare them for a program of postsecondary education, to provide support services for such students who are pursuing programs of postsecondary education, to motivate and prepare students for doctoral programs, and to train individuals serving or preparing for service in programs and projects so designed.
(b) Recipients, duration, and size
(1) Recipients
For the purposes described in subsection (a), the Secretary is authorized, without regard to
(2) Duration
Grants or contracts made under this division shall be awarded for a period of 5 years, except that—
(A) in order to synchronize the awarding of grants for programs under this division, the Secretary may, under such terms as are consistent with the purposes of this division, provide a one-time, limited extension of the length of such an award;
(B) grants made under
(C) grants under
(3) Minimum grants
Unless the institution or agency requests a smaller amount, an individual grant authorized under this division shall be awarded in an amount that is not less than $200,000, except that an individual grant authorized under
(c) Procedures for awarding grants and contracts
(1) Application requirements
An eligible entity that desires to receive a grant or contract under this division shall submit an application to the Secretary in such manner and form, and containing such information and assurances, as the Secretary may reasonably require.
(2) Considerations
(A) Prior experience
In making grants under this division, the Secretary shall consider each applicant's prior experience of high quality service delivery, as determined under subsection (f), under the particular program for which funds are sought. The level of consideration given the factor of prior experience shall not vary from the level of consideration given such factor during fiscal years 1994 through 1997, except that grants made under
(B) Participant need
In making grants under this division, the Secretary shall consider the number, percentages, and needs of eligible participants in the area, institution of higher education, or secondary school to be served to aid such participants in preparing for, enrolling in, or succeeding in postsecondary education, as appropriate to the particular program for which the eligible entity is applying.
(3) Order of awards; program fraud
(A) Except with respect to grants made under
(B) The Secretary shall not provide assistance to a program otherwise eligible for assistance under this division, if the Secretary has determined that such program has involved the fraudulent use of funds under this division.
(4) Peer review process
(A) The Secretary shall ensure that, to the extent practicable, members of groups underrepresented in higher education, including African Americans, Hispanics, Native Americans, Alaska Natives, Asian Americans, and Native American Pacific Islanders (including Native Hawaiians), are represented as readers of applications submitted under this division. The Secretary shall also ensure that persons from urban and rural backgrounds are represented as readers.
(B) The Secretary shall ensure that each application submitted under this division is read by at least three readers who are not employees of the Federal Government (other than as readers of applications).
(5) Number of applications for grants and contracts
The Secretary shall not limit the number of applications submitted by an entity under any program authorized under this division if the additional applications describe programs serving different populations or different campuses.
(6) Coordination with other programs for disadvantaged students
The Secretary shall encourage coordination of programs assisted under this division with other programs for disadvantaged students operated by the sponsoring institution or agency, regardless of the funding source of such programs. The Secretary shall not limit an entity's eligibility to receive funds under this division because such entity sponsors a program similar to the program to be assisted under this division, regardless of the funding source of such program. The Secretary shall permit the Director of a program receiving funds under this division to administer one or more additional programs for disadvantaged students operated by the sponsoring institution or agency, regardless of the funding sources of such programs. The Secretary shall, as appropriate, require each applicant for funds under the programs authorized by this division to identify and make available services under such program, including mentoring, tutoring, and other services provided by such program, to foster care youth (including youth in foster care and youth who have left foster care after reaching age 13) or to homeless children and youths as defined in
(7) Application status
The Secretary shall inform each entity operating programs under this division regarding the status of their application for continued funding at least 8 months prior to the expiration of the grant or contract. The Secretary, in the case of an entity that is continuing to operate a successful program under this division, shall ensure that the start-up date for a new grant or contract for such program immediately follows the termination of the preceding grant or contract so that no interruption of funding occurs for such successful reapplicants. The Secretary shall inform each entity requesting assistance under this division for a new program regarding the status of their application at least 8 months prior to the proposed startup date of such program.
(8) Review and notification by the Secretary
(A) Guidance
Not later than 180 days after August 14, 2008, the Secretary shall issue nonregulatory guidance regarding the rights and responsibilities of applicants with respect to the application and evaluation process for programs and projects assisted under this division, including applicant access to peer review comments. The guidance shall describe the procedures for the submission, processing, and scoring of applications for grants under this division, including—
(i) the responsibility of applicants to submit materials in a timely manner and in accordance with the processes established by the Secretary under the authority of the General Education Provisions Act [
(ii) steps the Secretary will take to ensure that the materials submitted by applicants are processed in a proper and timely manner;
(iii) steps the Secretary will take to ensure that prior experience points for high quality service delivery are awarded in an accurate and transparent manner;
(iv) steps the Secretary will take to ensure the quality and integrity of the peer review process, including assurances that peer reviewers will consider applications for grants under this division in a thorough and complete manner consistent with applicable Federal law; and
(v) steps the Secretary will take to ensure that the final score of an application, including prior experience points for high quality service delivery and points awarded through the peer review process, is determined in an accurate and transparent manner.
(B) Updated guidance
Not later than 45 days before the date of the commencement of each competition for a grant under this division that is held after the expiration of the 180-day period described in subparagraph (A), the Secretary shall update and publish the guidance described in such subparagraph.
(C) Review
(i) In general
With respect to any competition for a grant under this division, an applicant may request a review by the Secretary if the applicant—
(I) has evidence of a specific technical, administrative, or scoring error made by the Department, an agent of the Department, or a peer reviewer, with respect to the scoring or processing of a submitted application; and
(II) has otherwise met all of the requirements for submission of the application.
(ii) Technical or administrative error
In the case of evidence of a technical or administrative error listed in clause (i)(I), the Secretary shall review such evidence and provide a timely response to the applicant. If the Secretary determines that a technical or administrative error was made by the Department or an agent of the Department, the application of the applicant shall be reconsidered in the peer review process for the applicable grant competition.
(iii) Scoring error
In the case of evidence of a scoring error listed in clause (i)(I), when the error relates to either prior experience points for high quality service delivery or to the final score of an application, the Secretary shall—
(I) review such evidence and provide a timely response to the applicant; and
(II) if the Secretary determines that a scoring error was made by the Department or a peer reviewer, adjust the prior experience points or final score of the application appropriately and quickly, so as not to interfere with the timely awarding of grants for the applicable grant competition.
(iv) Error in peer review process
(I) Referral to secondary review
In the case of a peer review process error listed in clause (i)(I), if the Secretary determines that points were withheld for criteria not required in Federal statute, regulation, or guidance governing a program assisted under this division or the application for a grant for such program, or determines that information pertaining to selection criteria was wrongly determined to be missing from an application by a peer reviewer, then the Secretary shall refer the application to a secondary review panel.
(II) Timely review; replacement score
The secondary review panel described in subclause (I) shall conduct a secondary review in a timely fashion, and the score resulting from the secondary review shall replace the score from the initial peer review.
(III) Composition of secondary review panel
The secondary review panel shall be composed of reviewers each of whom—
(aa) did not review the application in the original peer review;
(bb) is a member of the cohort of peer reviewers for the grant program that is the subject of such secondary review; and
(cc) to extent practicable, has conducted peer reviews in not less than two previous competitions for the grant program that is the subject of such secondary review.
(IV) Final score
The final peer review score of an application subject to a secondary review under this clause shall be adjusted appropriately and quickly using the score awarded by the secondary review panel, so as not to interfere with the timely awarding of grants for the applicable grant competition.
(V) Qualification for secondary review
To qualify for a secondary review under this clause, an applicant shall have evidence of a scoring error and demonstrate that—
(aa) points were withheld for criteria not required in statute, regulation, or guidance governing the Federal TRIO programs or the application for a grant for such programs; or
(bb) information pertaining to selection criteria was wrongly determined to be missing from the application.
(v) Finality
(I) In general
A determination by the Secretary under clause (i), (ii), or (iii) shall not be reviewable by any officer or employee of the Department.
(II) Scoring
The score awarded by a secondary review panel under clause (iv) shall not be reviewable by any officer or employee of the Department other than the Secretary.
(vi) Funding of applications with certain adjusted scores
To the extent feasible based on the availability of appropriations, the Secretary shall fund applications with scores that are adjusted upward under clauses (ii), (iii), and (iv) to equal or exceed the minimum cut off score for the applicable grant competition.
(d) Outreach
(1) In general
The Secretary shall conduct outreach activities to ensure that entities eligible for assistance under this division submit applications proposing programs that serve geographic areas and eligible populations which have been underserved by the programs assisted under this division.
(2) Notice
In carrying out the provisions of paragraph (1), the Secretary shall notify the entities described in subsection (b) of the availability of assistance under this subsection not less than 120 days prior to the deadline for submission of applications under this division and shall consult national, State, and regional organizations about candidates for notification.
(3) Technical assistance
The Secretary shall provide technical training to applicants for projects and programs authorized under this division. The Secretary shall give priority to serving programs and projects that serve geographic areas and eligible populations which have been underserved by the programs assisted under this division. Technical training activities shall include the provision of information on authorizing legislation, goals and objectives of the program, required activities, eligibility requirements, the application process and application deadlines, and assistance in the development of program proposals and the completion of program applications. Such training shall be furnished at conferences, seminars, and workshops to be conducted at not less than 10 sites throughout the United States to ensure that all areas of the United States with large concentrations of eligible participants are served.
(4) Special rule
The Secretary may contract with eligible entities to conduct the outreach activities described in this subsection.
(e) Documentation of status as a low-income individual
(1) Except in the case of an independent student, as defined in
(A) a signed statement from the individual's parent or legal guardian;
(B) verification from another governmental source;
(C) a signed financial aid application; or
(D) a signed United States or Puerto Rico income tax return.
(2) In the case of an independent student, as defined in
(A) a signed statement from the individual;
(B) verification from another governmental source;
(C) a signed financial aid application; or
(D) a signed United States or Puerto Rico income tax return.
(3) Notwithstanding this subsection and subsection (h)(4), individuals who are foster care youth (including youth in foster care and youth who have left foster care after reaching age 13), or homeless children and youths as defined in
(f) Outcome criteria
(1) Use for prior experience determination
For competitions for grants under this division that begin on or after January 1, 2009, the Secretary shall determine an eligible entity's prior experience of high quality service delivery, as required under subsection (c)(2), based on the outcome criteria described in paragraphs (2) and (3).
(2) Disaggregation of relevant data
The outcome criteria under this subsection shall be disaggregated by low-income students, first generation college students, and individuals with disabilities, in the schools and institutions of higher education served by the program to be evaluated.
(3) Contents of outcome criteria
The outcome criteria under this subsection shall measure, annually and for longer periods, the quality and effectiveness of programs authorized under this division and shall include the following:
(A) For programs authorized under
(i) the delivery of service to a total number of students served by the program;
(ii) the continued secondary school enrollment of such students;
(iii) the graduation of such students from secondary school with a regular secondary school diploma in the standard number of years;
(iv) the completion by such students of a rigorous secondary school program of study that will make such students eligible for programs such as the Academic Competitiveness Grants Program;
(v) the enrollment of such students in an institution of higher education; and
(vi) to the extent practicable, the postsecondary education completion of such students.
(B) For programs authorized under
(i) the delivery of service to a total number of students served by the program, as agreed upon by the entity and the Secretary for the period;
(ii) such students' school performance, as measured by the grade point average, or its equivalent;
(iii) such students' academic performance, as measured by standardized tests, including tests required by the students' State;
(iv) the retention in, and graduation from, secondary school of such students;
(v) the completion by such students of a rigorous secondary school program of study that will make such students eligible for programs such as the Academic Competitiveness Grants Program;
(vi) the enrollment of such students in an institution of higher education; and
(vii) to the extent practicable, the postsecondary education completion of such students.
(C) For programs authorized under
(i) the extent to which the eligible entity met or exceeded the entity's objectives regarding the retention in postsecondary education of the students served by the program;
(ii)(I) in the case of an entity that is an institution of higher education offering a baccalaureate degree, the extent to which the entity met or exceeded the entity's objectives regarding the percentage of such students' completion of the degree programs in which such students were enrolled; or
(II) in the case of an entity that is an institution of higher education that does not offer a baccalaureate degree, the extent to which such students met or exceeded the entity's objectives regarding—
(aa) the completion of a degree or certificate by such students; and
(bb) the transfer of such students to institutions of higher education that offer baccalaureate degrees;
(iii) the extent to which the entity met or exceeded the entity's objectives regarding the delivery of service to a total number of students, as agreed upon by the entity and the Secretary for the period; and
(iv) the extent to which the entity met or exceeded the entity's objectives regarding the students served under the program who remain in good academic standing.
(D) For programs authorized under
(i) the delivery of service to a total number of students served by the program, as agreed upon by the entity and the Secretary for the period;
(ii) the provision of appropriate scholarly and research activities for the students served by the program;
(iii) the acceptance and enrollment of such students in graduate programs; and
(iv) the continued enrollment of such students in graduate study and the attainment of doctoral degrees by former program participants.
(E) For programs authorized under
(i) the enrollment of students without a secondary school diploma or its recognized equivalent, who were served by the program, in programs leading to such diploma or equivalent;
(ii) the enrollment of secondary school graduates who were served by the program in programs of postsecondary education;
(iii) the delivery of service to a total number of students served by the program, as agreed upon by the entity and the Secretary for the period; and
(iv) the provision of assistance to students served by the program in completing financial aid applications and college admission applications.
(4) Measurement of progress
In order to determine the extent to which each outcome criterion described in paragraph (2) or (3) is met or exceeded, the Secretary shall compare the agreed upon target for the criterion, as established in the eligible entity's application approved by the Secretary, with the results for the criterion, measured as of the last day of the applicable time period for the determination for the outcome criterion.
(g) Authorization of appropriations
For the purpose of making grants and contracts under this division, there are authorized to be appropriated $900,000,000 for fiscal year 2009 and such sums as may be necessary for each of the five succeeding fiscal years. Of the amount appropriated under this division, the Secretary may use no more than ½ of 1 percent of such amount to obtain additional qualified readers and additional staff to review applications, to increase the level of oversight monitoring, to support impact studies, program assessments and reviews, and to provide technical assistance to potential applicants and current grantees. In expending these funds, the Secretary shall give priority to the additional administrative requirements provided in the Higher Education Amendments of 1992, to outreach activities, and to obtaining additional readers.
(h) Definitions
For the purpose of this division:
(1) Different campus
The term "different campus" means a site of an institution of higher education that—
(A) is geographically apart from the main campus of the institution;
(B) is permanent in nature; and
(C) offers courses in educational programs leading to a degree, certificate, or other recognized educational credential.
(2) Different population
The term "different population" means a group of individuals that an eligible entity desires to serve through an application for a grant under this division, and that—
(A) is separate and distinct from any other population that the entity has applied for a grant under this division to serve; or
(B) while sharing some of the same needs as another population that the eligible entity has applied for a grant under this division to serve, has distinct needs for specialized services.
(3) First generation college student
The term "first generation college student" means—
(A) an individual both of whose parents did not complete a baccalaureate degree; or
(B) in the case of any individual who regularly resided with and received support from only one parent, an individual whose only such parent did not complete a baccalaureate degree.
(4) Low-income individual
The term "low-income individual" means an individual from a family whose taxable income for the preceding year did not exceed 150 percent of an amount equal to the poverty level determined by using criteria of poverty established by the Bureau of the Census.
(5) Veteran eligibility
No veteran shall be deemed ineligible to participate in any program under this division by reason of such individual's age who—
(A) served on active duty for a period of more than 180 days and was discharged or released therefrom under conditions other than dishonorable;
(B) served on active duty and was discharged or released therefrom because of a service connected disability;
(C) was a member of a reserve component of the Armed Forces called to active duty for a period of more than 30 days; or
(D) was a member of a reserve component of the Armed Forces who served on active duty in support of a contingency operation (as that term is defined in
(6) Waiver
The Secretary may waive the service requirements in subparagraph (A), (B), or (C) of paragraph (5) if the Secretary determines the application of the service requirements to a veteran will defeat the purpose of a program under this division.
(
Editorial Notes
References in Text
The General Education Provisions Act, referred to in subsec. (c)(8)(A)(i), is title IV of
The Higher Education Amendments of 1992, referred to in subsec. (g), is
Codification
In subsec. (b)(1), "
Amendments
2009—Subsec. (b)(1).
Subsec. (c)(8)(C)(iv)(I).
2008—Subsec. (b)(1).
Subsec. (b)(2).
Subsec. (b)(2)(A).
Subsec. (b)(3).
"(A) $170,000 for programs authorized by
"(B) $180,000 for programs authorized by
"(C) $190,000 for programs authorized by
Subsec. (c)(2).
Subsec. (c)(3)(B).
Subsec. (c)(5).
Subsec. (c)(6).
Subsec. (c)(8).
Subsec. (e)(1), (2).
Subsec. (e)(3).
Subsec. (f).
Subsec. (g).
Subsec. (h).
Subsec. (h)(5)(A).
Subsec. (h)(5)(B).
Subsec. (h)(5)(C), (D).
Subsec. (h)(6).
1998—Subsec. (b)(2)(C).
Subsec. (b)(3).
Subsec. (c).
Subsec. (c)(2).
Subsec. (f).
Subsec. (g)(4).
1993—Subsec. (b)(2).
Subsec. (c)(1).
Subsec. (c)(2)(A).
Subsec. (e).
"(1) in the case of an individual who is eighteen years of age or younger or a dependent student by providing the Secretary with a signed statement from the parent or legal guardian, verification from another governmental source, a signed financial aid application, or a signed United States or Puerto Rican income tax return; and
"(2) in the case of an individual who is age 18 or older or who is an independent student, by providing the Secretary with a signed statement from the individual, verification from another governmental source, a signed financial aid form, or a signed United States or Puerto Rican income tax return."
Statutory Notes and Related Subsidiaries
Effective Date of 2009 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by section 2(b)(6), (8), (9) of
Advanced Placement Fee Payment Program
Similar provisions were contained in
References to Subpart 2, 3, or 4 of This Part Deemed To Refer to Subpart 3, 4, or 2 of This Part
§1070a–12. Talent search
(a) Program authority
The Secretary shall carry out a program to be known as talent search which shall be designed—
(1) to identify qualified youths with potential for education at the postsecondary level and to encourage such youths to complete secondary school and to undertake a program of postsecondary education;
(2) to publicize the availability of, and facilitate the application for, student financial assistance available to persons who pursue a program of postsecondary education; and
(3) to encourage persons who have not completed programs of education at the secondary or postsecondary level to enter or reenter, and complete such programs.
(b) Required services
Any project assisted under this section shall provide—
(1) connections to high quality academic tutoring services, to enable students to complete secondary or postsecondary courses;
(2) advice and assistance in secondary course selection and, if applicable, initial postsecondary course selection;
(3) assistance in preparing for college entrance examinations and completing college admission applications;
(4)(A) information on the full range of Federal student financial aid programs and benefits (including Federal Pell Grant awards and loan forgiveness) and resources for locating public and private scholarships; and
(B) assistance in completing financial aid applications, including the Free Application for Federal Student Aid described in
(5) guidance on and assistance in—
(A) secondary school reentry;
(B) alternative education programs for secondary school dropouts that lead to the receipt of a regular secondary school diploma;
(C) entry into general educational development (GED) programs; or
(D) postsecondary education; and
(6) connections to education or counseling services designed to improve the financial literacy and economic literacy of students or the students' parents, including financial planning for postsecondary education.
(c) Permissible services
Any project assisted under this section may provide services such as—
(1) academic tutoring, which may include instruction in reading, writing, study skills, mathematics, science, and other subjects;
(2) personal and career counseling or activities;
(3) information and activities designed to acquaint youth with the range of career options available to the youth;
(4) exposure to the campuses of institutions of higher education, as well as cultural events, academic programs, and other sites or activities not usually available to disadvantaged youth;
(5) workshops and counseling for families of students served;
(6) mentoring programs involving elementary or secondary school teachers or counselors, faculty members at institutions of higher education, students, or any combination of such persons; and
(7) programs and activities as described in subsection (b) or paragraphs (1) through (6) of this subsection that are specially designed for students who are limited English proficient, students from groups that are traditionally underrepresented in postsecondary education, students with disabilities, students who are homeless children and youths (as such term is defined in
(d) Requirements for approval of applications
In approving applications for projects under this section for any fiscal year the Secretary shall—
(1) require an assurance that not less than two-thirds of the individuals participating in the project proposed to be carried out under any application be low-income individuals who are first generation college students;
(2) require that such participants be persons who either have completed 5 years of elementary education or are at least 11 years of age but not more than 27 years of age, unless the imposition of any such limitation with respect to any person would defeat the purposes of this section or the purposes of
(3) require an assurance that individuals participating in the project proposed in the application do not have access to services from another project funded under this section or under
(4) require an assurance that the project will be located in a setting accessible to the persons proposed to be served by the project.
(
Editorial Notes
Amendments
2008—Subsec. (a)(2).
Subsec. (a)(3).
Subsecs. (b), (c).
Subsec. (d).
1998—Subsec. (b)(4).
Subsec. (b)(5).
Subsec. (b)(8).
Subsec. (b)(9).
Statutory Notes and Related Subsidiaries
Effective Date of 1998 Amendment
Amendment by
§1070a–13. Upward bound
(a) Program authority
The Secretary shall carry out a program to be known as upward bound which shall be designed to generate skills and motivation necessary for success in education beyond secondary school.
(b) Required services
Any project assisted under this section shall provide—
(1) academic tutoring to enable students to complete secondary or postsecondary courses, which may include instruction in reading, writing, study skills, mathematics, science, and other subjects;
(2) advice and assistance in secondary and postsecondary course selection;
(3) assistance in preparing for college entrance examinations and completing college admission applications;
(4)(A) information on the full range of Federal student financial aid programs and benefits (including Federal Pell Grant awards and loan forgiveness) and resources for locating public and private scholarships; and
(B) assistance in completing financial aid applications, including the Free Application for Federal Student Aid described in
(5) guidance on and assistance in—
(A) secondary school reentry;
(B) alternative education programs for secondary school dropouts that lead to the receipt of a regular secondary school diploma;
(C) entry into general educational development (GED) programs; or
(D) postsecondary education; and
(6) education or counseling services designed to improve the financial literacy and economic literacy of students or the students' parents, including financial planning for postsecondary education.
(c) Additional required services for multiple-year grant recipients
Any project assisted under this section which has received funding for two or more years shall include, as part of the core curriculum in the next and succeeding years, instruction in mathematics through precalculus, laboratory science, foreign language, composition, and literature.
(d) Permissible services
Any project assisted under this section may provide such services as—
(1) exposure to cultural events, academic programs, and other activities not usually available to disadvantaged youth;
(2) information, activities, and instruction designed to acquaint youth participating in the project with the range of career options available to the youth;
(3) on-campus residential programs;
(4) mentoring programs involving elementary school or secondary school teachers or counselors, faculty members at institutions of higher education, students, or any combination of such persons;
(5) work-study positions where youth participating in the project are exposed to careers requiring a postsecondary degree;
(6) special services, including mathematics and science preparation, to enable veterans to make the transition to postsecondary education; and
(7) programs and activities as described in subsection (b), subsection (c), or paragraphs (1) through (6) of this subsection that are specially designed for students who are limited English proficient, students from groups that are traditionally underrepresented in postsecondary education, students with disabilities, students who are homeless children and youths (as such term is defined in
(e) Requirements for approval of applications
In approving applications for projects under this section for any fiscal year, the Secretary shall—
(1) require an assurance that not less than two-thirds of the youths participating in the project proposed to be carried out under any application be low-income individuals who are first generation college students;
(2) require an assurance that the remaining youths participating in the project proposed to be carried out under any application be low-income individuals, first generation college students, or students who have a high risk for academic failure;
(3) require that there be a determination by the institution, with respect to each participant in such project that the participant has a need for academic support in order to pursue successfully a program of education beyond secondary school;
(4) require that such participants be persons who have completed 8 years of elementary education and are at least 13 years of age but not more than 19 years of age, unless the imposition of any such limitation would defeat the purposes of this section; and
(5) require an assurance that no student will be denied participation in a project assisted under this section because the student will enter the project after the 9th grade.
(f) Maximum stipends
Youths participating in a project proposed to be carried out under any application may be paid stipends not in excess of $60 per month during the summer school recess, for a period not to exceed three months, except that youth participating in a work-study position under subsection (d)(5) may be paid a stipend of $300 per month during the summer school recess, for a period not to exceed three months. Youths participating in a project proposed to be carried out under any application may be paid stipends not in excess of $40 per month during the remaining period of the year.
(g) Additional funds
(1) Authorization and appropriation
There are authorized to be appropriated, and there are appropriated to the Secretary, from funds not otherwise appropriated, $57,000,000 for each of the fiscal years 2008 through 2011 to carry out paragraph (2), except that any amounts that remain unexpended for such purpose for each of such fiscal years may be available for technical assistance and administration costs for the Upward Bound program. The authority to award grants under this subsection shall expire at the end of fiscal year 2011.
(2) Use of funds
The amounts made available by paragraph (1) shall be available to provide assistance to all Upward Bound projects that did not receive assistance in fiscal year 2007 and that have a grant score above 70. Such assistance shall be made available in the form of 4-year grants.
(h) Absolute priority prohibited in Upward Bound Program
Upon enactment of this subsection and except as otherwise expressly provided by amendment to this section, the Secretary shall not continue, implement, or enforce the absolute priority for the Upward Bound Program published by the Department of Education in the Federal Register on September 22, 2006 (71 Fed. Reg. 55447 et seq.). This subsection shall not be applied retroactively. In implementing this subsection, the Department shall allow the programs and participants chosen in the grant cycle to which the priority applies to continue their grants and participation without a further recompetition. The entities shall not be required to apply the absolute priority conditions or restrictions to future participants.
(
Editorial Notes
Amendments
2008—Subsec. (b).
Subsec. (c).
Subsec. (d).
Subsec. (e).
Subsec. (e)(2).
Subsec. (e)(5).
Subsec. (f).
Subsec. (g).
Subsec. (h).
2007—Subsec. (f).
1998—Subsec. (b)(2).
Subsec. (b)(9).
Subsec. (b)(10), (11).
Subsec. (b)(12).
Subsec. (e).
1993—Subsec. (c).
Statutory Notes and Related Subsidiaries
Effective Date of 2007 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
§1070a–14. Student support services
(a) Program authority
The Secretary shall carry out a program to be known as student support services which shall be designed—
(1) to increase college retention and graduation rates for eligible students;
(2) to increase the transfer rates of eligible students from 2-year to 4-year institutions;
(3) to foster an institutional climate supportive of the success of students who are limited English proficient, students from groups that are traditionally underrepresented in postsecondary education, students with disabilities, students who are homeless children and youths (as such term is defined in
(4) to improve the financial literacy and economic literacy of students, including—
(A) basic personal income, household money management, and financial planning skills; and
(B) basic economic decisionmaking skills.
(b) Required services
A project assisted under this section shall provide—
(1) academic tutoring, directly or through other services provided by the institution, to enable students to complete postsecondary courses, which may include instruction in reading, writing, study skills, mathematics, science, and other subjects;
(2) advice and assistance in postsecondary course selection;
(3)(A) information on both the full range of Federal student financial aid programs and benefits (including Federal Pell Grant awards and loan forgiveness) and resources for locating public and private scholarships; and
(B) assistance in completing financial aid applications, including the Free Application for Federal Student Aid described in
(4) education or counseling services designed to improve the financial literacy and economic literacy of students, including financial planning for postsecondary education;
(5) activities designed to assist students participating in the project in applying for admission to, and obtaining financial assistance for enrollment in, graduate and professional programs; and
(6) activities designed to assist students enrolled in two-year institutions of higher education in applying for admission to, and obtaining financial assistance for enrollment in, a four-year program of postsecondary education.
(c) Permissible services
A project assisted under this section may provide services such as—
(1) individualized counseling for personal, career, and academic matters provided by assigned counselors;
(2) information, activities, and instruction designed to acquaint students participating in the project with the range of career options available to the students;
(3) exposure to cultural events and academic programs not usually available to disadvantaged students;
(4) mentoring programs involving faculty or upper class students, or a combination thereof;
(5) securing temporary housing during breaks in the academic year for—
(A) students who are homeless children and youths (as such term is defined in
(B) students who are in foster care or are aging out of the foster care system; and
(6) programs and activities as described in subsection (b) or paragraphs (1) through (4) of this subsection that are specially designed for students who are limited English proficient, students from groups that are traditionally underrepresented in postsecondary education, students with disabilities, students who are homeless children and youths (as such term is defined in
(d) Special rule
(1) Use for student aid
A recipient of a grant that undertakes any of the permissible services identified in subsection (c) may, in addition, use such funds to provide grant aid to students. A grant provided under this paragraph shall not exceed the Federal Pell Grant amount, determined under
(2) Eligible students
For purposes of receiving grant aid under this subsection, eligible students shall be current participants in the student support services program offered by the institution and be—
(A) students who are in their first 2 years of postsecondary education and who are receiving Federal Pell Grants under subpart 1 of part A; or
(B) students who have completed their first 2 years of postsecondary education and who are receiving Federal Pell Grants under subpart 1 if the institution demonstrates to the satisfaction of the Secretary that—
(i) these students are at high risk of dropping out; and
(ii) it will first meet the needs of all its eligible first- and second-year students for services under this paragraph.
(3) Determination of need
A grant provided to a student under paragraph (1) shall not be considered in determining that student's need for grant or work assistance under this subchapter, except that in no case shall the total amount of student financial assistance awarded to a student under this subchapter exceed that student's cost of attendance, as defined in
(4) Matching required
A recipient of a grant who uses such funds for the purpose described in paragraph (1) shall match the funds used for such purpose, in cash, from non-Federal funds, in an amount that is not less than 33 percent of the total amount of funds used for that purpose. This paragraph shall not apply to any grant recipient that is an institution of higher education eligible to receive funds under part A or B of subchapter III or subchapter V.
(5) Reservation
In no event may a recipient use more than 20 percent of the funds received under this section for grant aid.
(6) Supplement, not supplant
Funds received by a grant recipient that are used under this subsection shall be used to supplement, and not supplant, non-Federal funds expended for student support services programs.
(e) Requirements for approval of applications
In approving applications for projects under this section for any fiscal year, the Secretary shall—
(1) require an assurance that not less than two-thirds of the persons participating in the project proposed to be carried out under any application—
(A) be individuals with disabilities; or
(B) be low-income individuals who are first generation college students;
(2) require an assurance that the remaining students participating in the project proposed to be carried out under any application be low-income individuals, first generation college students, or individuals with disabilities;
(3) require an assurance that not less than one-third of the individuals with disabilities participating in the project be low-income individuals;
(4) require that there be a determination by the institution, with respect to each participant in such project, that the participant has a need for academic support in order to pursue successfully a program of education beyond secondary school;
(5) require that such participants be enrolled or accepted for enrollment at the institution which is the recipient of the grant or contract; and
(6) consider, in addition to such other criteria as the Secretary may prescribe, the institution's effort, and where applicable past history, in—
(A) providing sufficient financial assistance to meet the full financial need of each student in the project; and
(B) maintaining the loan burden of each such student at a manageable level.
(
Editorial Notes
Amendments
2010—Subsec. (d)(1).
2008—Subsec. (a)(3), (4).
Subsec. (b).
Subsecs. (c), (d).
Subsec. (d)(1).
Subsec. (e).
2000—Subsecs. (c), (d).
1998—Subsec. (c)(6).
1993—Subsec. (c)(2).
Statutory Notes and Related Subsidiaries
Effective Date of 2010 Amendment
Amendment by
Effective Date of 2000 Amendment
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
§1070a–15. Postbaccalaureate achievement program authority
(a) Program authority
The Secretary shall carry out a program to be known as the "Ronald E. McNair Postbaccalaureate Achievement Program" that shall be designed to provide disadvantaged college students with effective preparation for doctoral study.
(b) Required services
A project assisted under this section shall provide—
(1) opportunities for research or other scholarly activities at the institution or at graduate centers designed to provide students with effective preparation for doctoral study;
(2) summer internships;
(3) seminars and other educational activities designed to prepare students for doctoral study;
(4) tutoring;
(5) academic counseling; and
(6) activities designed to assist students participating in the project in securing admission to and financial assistance for enrollment in graduate programs.
(c) Permissible services
A project assisted under this section may provide services such as—
(1) education or counseling services designed to improve the financial literacy and economic literacy of students, including financial planning for postsecondary education;
(2) mentoring programs involving faculty members at institutions of higher education, students, or any combination of such persons; and
(3) exposure to cultural events and academic programs not usually available to disadvantaged students.
(d) Requirements
In approving applications for projects assisted under this section for any fiscal year, the Secretary shall require—
(1) an assurance that not less than two-thirds of the individuals participating in the project proposed to be carried out under any application be low-income individuals who are first generation college students;
(2) an assurance that the remaining persons participating in the project proposed to be carried out be from a group that is underrepresented in graduate education, including—
(A) Alaska Natives, as defined in
(B) Native Hawaiians, as defined in
(C) Native American Pacific Islanders, as defined in
(3) an assurance that participants be enrolled in a degree program at an eligible institution having an agreement with the Secretary in accordance with the provisions of
(4) an assurance that participants in summer research internships have completed their sophomore year in postsecondary education.
(e) Award considerations
In addition to such other selection criteria as may be prescribed by regulations, the Secretary shall consider in making awards to institutions under this section—
(1) the quality of research and other scholarly activities in which students will be involved;
(2) the level of faculty involvement in the project and the description of the research in which students will be involved; and
(3) the institution's plan for identifying and recruiting participants including students enrolled in projects authorized under this section.
(f) Maximum stipends
Students participating in research under a project under this section may receive an award that—
(1) shall include a stipend not to exceed $2,800 per annum; and
(2) may include, in addition, the costs of summer tuition, summer room and board, and transportation to summer programs.
(g) Funding
From amounts appropriated pursuant to the authority of
(
Editorial Notes
Amendments
2015—Subsec. (d)(2)(A).
Subsec. (d)(2)(B).
2009—Subsec. (d)(2)(C).
2008—Subsec. (b).
Subsec. (b)(5) to (8).
"(7) mentoring programs involving faculty members at institutions of higher education, students, or any combination of such persons; and
"(8) exposure to cultural events and academic programs not usually available to disadvantaged students."
Subsec. (c).
Subsec. (d).
Subsec. (d)(2).
Subsec. (e).
Subsec. (f).
Subsec. (g).
1998—Subsec. (e)(1).
Statutory Notes and Related Subsidiaries
Effective Date of 2015 Amendment
Amendment by
Effective Date of 2009 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
§1070a–16. Educational opportunity centers
(a) Program authority; services provided
The Secretary shall carry out a program to be known as educational opportunity centers which shall be designed—
(1) to provide information with respect to financial and academic assistance available for individuals desiring to pursue a program of postsecondary education;
(2) to provide assistance to such persons in applying for admission to institutions at which a program of postsecondary education is offered, including preparing necessary applications for use by admissions and financial aid officers; and
(3) to improve the financial literacy and economic literacy of students, including—
(A) basic personal income, household money management, and financial planning skills; and
(B) basic economic decisionmaking skills.
(b) Permissible services
An educational opportunity center assisted under this section may provide services such as—
(1) public information campaigns designed to inform the community regarding opportunities for postsecondary education and training;
(2) academic advice and assistance in course selection;
(3) assistance in completing college admission and financial aid applications;
(4) assistance in preparing for college entrance examinations;
(5) education or counseling services designed to improve the financial literacy and economic literacy of students;
(6) guidance on secondary school reentry or entry to a general educational development (GED) program or other alternative education programs for secondary school dropouts;
(7) individualized personal, career, and academic counseling;
(8) tutorial services;
(9) career workshops and counseling;
(10) mentoring programs involving elementary or secondary school teachers, faculty members at institutions of higher education, students, or any combination of such persons; and
(11) programs and activities as described in paragraphs (1) through (10) that are specially designed for students who are limited English proficient, students from groups that are traditionally underrepresented in postsecondary education, students with disabilities, students who are homeless children and youths (as such term is defined in
(c) Requirements for approval of applications
In approving applications for educational opportunity centers under this section for any fiscal year the Secretary shall—
(1) require an assurance that not less than two-thirds of the persons participating in the project proposed to be carried out under any application be low-income individuals who are first generation college students;
(2) require that such participants be persons who are at least nineteen years of age, unless the imposition of such limitation with respect to any person would defeat the purposes of this section or the purposes of
(3) require an assurance that individuals participating in the project proposed in the application do not have access to services from another project funded under this section or under
(
Editorial Notes
Amendments
2008—Subsec. (a)(3).
Subsec. (b)(5), (6).
Subsec. (b)(7).
Subsec. (b)(8) to (10).
Subsec. (b)(11).
§1070a–17. Staff development activities
(a) Secretary's authority
For the purpose of improving the operation of the programs and projects authorized by this division, the Secretary is authorized to make grants to institutions of higher education and other public and private nonprofit institutions and organizations to provide training for staff and leadership personnel employed in, participating in, or preparing for employment in, such programs and projects.
(b) Contents of training programs
Such training shall include conferences, internships, seminars, workshops, and the publication of manuals designed to improve the operation of such programs and projects and shall be carried out in the various regions of the Nation in order to ensure that the training opportunities are appropriate to meet the needs in the local areas being served by such programs and projects. Such training shall be offered annually for new directors of projects funded under this division as well as annually on the following topics and other topics chosen by the Secretary:
(1) Legislative and regulatory requirements for the operation of programs funded under this division.
(2) Assisting students in receiving adequate financial aid from programs assisted under this subchapter and other programs.
(3) The design and operation of model programs for projects funded under this division.
(4) The use of appropriate educational technology in the operation of projects assisted under this division.
(5) Strategies for recruiting and serving hard to reach populations, including students who are limited English proficient, students from groups that are traditionally underrepresented in postsecondary education, students with disabilities, students who are homeless children and youths (as such term is defined in
(c) Consultation
Grants for the purposes of this section shall be made only after consultation with regional and State professional associations of persons having special knowledge with respect to the needs and problems of such programs and projects.
(
Editorial Notes
Amendments
2008—Subsec. (b)(5).
1998—Subsec. (a).
Subsec. (b)(4).
Statutory Notes and Related Subsidiaries
Effective Date of 1998 Amendment
Amendment by
§1070a–18. Reports, evaluations, and grants for project improvement and dissemination
(a) Reports to the authorizing committees
(1) In general
The Secretary shall submit annually, to the authorizing committees, a report that documents the performance of all programs funded under this division. Such report shall—
(A) be submitted not later than 12 months after the eligible entities receiving funds under this division are required to report their performance to the Secretary;
(B) focus on the programs' performance on the relevant outcome criteria determined under
(C) aggregate individual project performance data on the outcome criteria in order to provide national performance data for each program;
(D) include, when appropriate, descriptive data, multi-year data, and multi-cohort data; and
(E) include comparable data on the performance nationally of low-income students, first-generation students, and students with disabilities.
(2) Information
The Secretary shall provide, with each report submitted under paragraph (1), information on the impact of the secondary review process described in
(b) Evaluations
(1) In general
(A) Authorization of grants and contracts
For the purpose of improving the effectiveness of the programs and projects assisted under this division, the Secretary shall make grants to, or enter into contracts with, institutions of higher education and other public and private institutions and organizations to rigorously evaluate the effectiveness of the programs and projects assisted under this division, including a rigorous evaluation of the programs and projects assisted under
(B) Content of upward bound evaluation
The evaluation of the programs and projects assisted under
(C) Implementation
Each evaluation described in this paragraph shall be implemented in accordance with the requirements of this section.
(2) Practices
(A) In general
The evaluations described in paragraph (1) shall identify institutional, community, and program or project practices that are effective in—
(i) enhancing the access of low-income individuals and first-generation college students to postsecondary education;
(ii) the preparation of such individuals and students for postsecondary education; and
(iii) fostering the success of the individuals and students in postsecondary education.
(B) Primary purpose
Any evaluation conducted under this division shall have as the evaluation's primary purpose the identification of particular practices that further the achievement of the outcome criteria determined under
(C) Dissemination and use of evaluation findings
The Secretary shall disseminate to eligible entities and make available to the public the practices identified under subparagraph (B). The practices may be used by eligible entities that receive assistance under this division after the dissemination.
(3) Special rule related to evaluation participation
The Secretary shall not require an eligible entity, as a condition for receiving, or that receives, assistance under any program or project under this division to participate in an evaluation under this section that—
(A) requires the eligible entity to recruit additional students beyond those the program or project would normally recruit; or
(B) results in the denial of services for an eligible student under the program or project.
(4) Consideration
When designing an evaluation under this subsection, the Secretary shall continue to consider—
(A) the burden placed on the program participants or the eligible entity; and
(B) whether the evaluation meets generally accepted standards of institutional review boards.
(c) Grants
The Secretary may award grants to institutions of higher education or other private and public institutions and organizations, that are carrying out a program or project assisted under this division prior to October 7, 1998, to enable the institutions and organizations to expand and leverage the success of such programs or projects by working in partnership with other institutions, community-based organizations, or combinations of such institutions and organizations, that are not receiving assistance under this division and are serving low-income students and first generation college students, in order to—
(1) disseminate and replicate best practices of programs or projects assisted under this division; and
(2) provide technical assistance regarding programs and projects assisted under this division.
(d) Results
In order to improve overall program or project effectiveness, the results of evaluations and grants described in this section shall be disseminated by the Secretary to similar programs or projects assisted under this subpart, as well as other individuals concerned with postsecondary access for and retention of low-income individuals and first-generation college students.
(
Editorial Notes
Amendments
2008—
Subsec. (a).
Subsec. (b).
"(1)
"(2)
Former subsec. (b) redesignated (c).
Subsecs. (c), (d).
1998—
Statutory Notes and Related Subsidiaries
Effective Date of 1998 Amendment
Amendment by
Division 2—Gaining Early Awareness and Readiness for Undergraduate Programs
Editorial Notes
Codification
§1070a–21. Early intervention and college awareness program authorized
(a) Program authorized
The Secretary is authorized, in accordance with the requirements of this division, to establish a program that encourages eligible entities to provide support, and maintain a commitment, to eligible low-income students, including students with disabilities, to assist the students in obtaining a secondary school diploma (or its recognized equivalent) and to prepare for and succeed in postsecondary education, by providing—
(1) financial assistance, academic support, additional counseling, mentoring, outreach, and supportive services to secondary school students, including students with disabilities, to reduce—
(A) the risk of such students dropping out of school; or
(B) the need for remedial education for such students at the postsecondary level; and
(2) information to students and their families about the advantages of obtaining a postsecondary education and, college financing options for the students and their families.
(b) Awards
(1) In general
From funds appropriated under
(2) Award period
The Secretary may award a grant under this division to an eligible entity described in paragraphs (1) and (2) of subsection (c) for—
(A) six years; or
(B) in the case of an eligible entity that applies for a grant under this division for seven years to enable the eligible entity to provide services to a student through the student's first year of attendance at an institution of higher education, seven years.
(3) Priority
In making awards to eligible entities described in subsection (c)(1), the Secretary shall—
(A) give priority to eligible entities that—
(i) on the day before August 14, 2008, carried out successful educational opportunity programs under this division (as this division was in effect on such day); and
(ii) have a prior, demonstrated commitment to early intervention leading to college access through collaboration and replication of successful strategies; and
(B) ensure that students served under this division on the day before August 14, 2008, continue to receive assistance through the completion of secondary school.
(c) "Eligible entity" defined
For the purposes of this division, the term "eligible entity" means—
(1) a State; or
(2) a partnership—
(A) consisting of—
(i) one or more local educational agencies; and
(ii) one or more degree granting institutions of higher education; and
(B) which may include not less than two other community organizations or entities, such as businesses, professional organizations, State agencies, institutions or agencies sponsoring programs authorized under subpart 4, or other public or private agencies or organizations.
(
Editorial Notes
Prior Provisions
A prior section 1070a–21,
Amendments
2008—Subsec. (a).
"(1) encourages eligible entities to provide or maintain a guarantee to eligible low-income students who obtain a secondary school diploma (or its recognized equivalent), of the financial assistance necessary to permit the students to attend an institution of higher education; and
"(2) supports eligible entities in providing—
"(A) additional counseling, mentoring, academic support, outreach, and supportive services to elementary school, middle school, and secondary school students who are at risk of dropping out of school; and
"(B) information to students and their parents about the advantages of obtaining a postsecondary education and the college financing options for the students and their parents."
Subsec. (b)(2), (3).
Subsec. (c)(2).
"(A) one or more local educational agencies acting on behalf of—
"(i) one or more elementary schools or secondary schools; and
"(ii) the secondary schools that students from the schools described in clause (i) would normally attend;
"(B) one or more degree granting institutions of higher education; and
"(C) at least two community organizations or entities, such as businesses, professional associations, community-based organizations, philanthropic organizations, State agencies, institutions or agencies sponsoring programs authorized under subpart 4 of this part, or other public or private agencies or organizations."
Statutory Notes and Related Subsidiaries
Effective Date
Division effective Oct. 1, 1998, except as otherwise provided in
Evaluation of Tuition Guaranty Programs
§1070a–22. Requirements
(a) Funding rules
In awarding grants from the amount appropriated under
(1) to eligible entities described in
(2) to eligible entities described in
(3) to eligible entities described in paragraph (1) or (2) of
(A) the geographic distribution of such grant awards; and
(B) the distribution of such grant awards between urban and rural applicants.
(b) Coordination
Each eligible entity shall ensure that the activities assisted under this division are, to the extent practicable, coordinated with, and complement and enhance—
(1) services under this division provided by other eligible entities serving the same school district or State; and
(2) related services under other Federal or non-Federal programs.
(c) Designation of fiscal agent
An eligible entity described in
(d) Cohort approach
(1) In general
The Secretary shall require that eligible entities described in
(A) provide services under this division to at least one grade level of students, beginning not later than 7th grade, in a participating school that has a 7th grade and in which at least 50 percent of the students enrolled are eligible for free or reduced-price lunch under the Richard B. Russell National School Lunch Act [
(B) ensure that the services are provided through the 12th grade to students in the participating grade level and provide the option of continued services through the student's first year of attendance at an institution of higher education to the extent the provision of such services was described in the eligible entity's application for assistance under this division; and
(C) provide services under this division to students who have received services under a previous GEAR UP grant award but have not yet completed the 12th grade.
(2) Coordination requirement
In order for the Secretary to require the cohort approach described in paragraph (1), the Secretary shall, where applicable, ensure that the cohort approach is done in coordination and collaboration with existing early intervention programs and does not duplicate the services already provided to a school or community.
(e) Supplement, not supplant
Grant funds awarded under this division shall be used to supplement, and not supplant, other Federal, State, and local funds that would otherwise be expended to carry out activities assisted under this division.
(
Editorial Notes
References in Text
The Richard B. Russell National School Lunch Act, referred to in subsec. (d)(1)(A), is act June 4, 1946, ch. 281,
Prior Provisions
A prior section 1070a–22,
Amendments
2008—Subsec. (a).
Subsecs. (b), (c).
Subsec. (d).
Subsec. (d)(1)(B), (C).
Subsec. (e).
Subsec. (f).
Subsec. (g).
1999—Subsec. (g)(1)(A).
§1070a–23. Applications
(a) Application required for eligibility
(1) In general
In order for an eligible entity to qualify for a grant under this division, the eligible entity shall submit to the Secretary an application for carrying out the program under this division.
(2) Contents
Each application submitted pursuant to paragraph (1) shall be in such form, contain or be accompanied by such information or assurances, and be submitted at such time as the Secretary may reasonably require. Each such application shall, at a minimum—
(A) describe the activities for which assistance under this division is sought, including how the eligible entity will carry out the required activities described in
(B) describe, in the case of an eligible entity described in
(C) describe, in the case of an eligible entity described in
(D) provide assurances that adequate administrative and support staff will be responsible for coordinating the activities described in
(E) provide assurances that activities assisted under this division will not displace an employee or eliminate a position at a school assisted under this division, including a partial displacement such as a reduction in hours, wages, or employment benefits;
(F) describe, in the case of an eligible entity described in
(i) how vacancies in the program under this division will be filled; and
(ii) how the eligible entity will serve students attending different secondary schools;
(G) describe how the eligible entity will coordinate programs under this division with other existing Federal, State, or local programs to avoid duplication and maximize the number of students served;
(H) provide such additional assurances as the Secretary determines necessary to ensure compliance with the requirements of this division;
(I) provide information about the activities that will be carried out by the eligible entity to support systemic changes from which future cohorts of students will benefit; and
(J) describe the sources of matching funds that will enable the eligible entity to meet the matching requirement described in subsection (b).
(b) Matching requirement
(1) In general
The Secretary shall not approve an application submitted under subsection (a) unless such application—
(A) provides that the eligible entity will provide, from State, local, institutional, or private funds, not less than 50 percent of the cost of the program, which matching funds may be provided in cash or in kind and may be accrued over the full duration of the grant award period, except that the eligible entity shall make substantial progress towards meeting the matching requirement in each year of the grant award period;
(B) specifies the methods by which matching funds will be paid; and
(C) includes provisions designed to ensure that funds provided under this division shall supplement and not supplant funds expended for existing programs.
(2) Special rule
Notwithstanding the matching requirement described in paragraph (1)(A), the Secretary may by regulation modify the percentage requirement described in paragraph (1)(A) for eligible entities described in
(A) at the time of application—
(i) if the eligible entity demonstrates significant economic hardship that precludes the eligible entity from meeting the matching requirement; or
(ii) if the eligible entity is described in
(B) in response to a petition by an eligible entity subsequent to a grant award under this section if the eligible entity demonstrates that the matching funds described in its application are no longer available and the eligible entity has exhausted all revenues for replacing such matching funds.
(c) Methods for complying with matching requirement
An eligible entity may count toward the matching requirement described in subsection (b)(1)(A)—
(1) the amount of the financial assistance obligated to students from State, local, institutional, or private funds under this division, including pre-existing non-Federal financial assistance programs, including—
(A) the amount contributed to a student scholarship fund established under
(B) the amount of the costs of administering the scholarship program under
(2) the amount of tuition, fees, room or board waived or reduced for recipients of financial assistance under this division;
(3) the amount expended on documented, targeted, long-term mentoring and counseling provided by volunteers or paid staff of nonschool organizations, including businesses, religious organizations, community groups, postsecondary educational institutions, nonprofit and philanthropic organizations, and other organizations; and
(4) other resources recognized by the Secretary, including equipment and supplies, cash contributions from non-Federal sources, transportation expenses, in-kind or discounted program services, indirect costs, and facility usage.
(d) Peer review panels
The Secretary shall convene peer review panels to assist in making determinations regarding the awarding of grants under this division.
(
Editorial Notes
Prior Provisions
A prior section 1070a–23,
Amendments
2008—
Subsec. (a).
Subsec. (a)(1).
Subsec. (a)(2).
"(A) describe the activities for which assistance under this division is sought; and
"(B) provide such additional assurances as the Secretary determines necessary to ensure compliance with the requirements of this division."
Subsec. (b)(1).
Subsec. (b)(1)(A).
Subsec. (b)(2).
Subsec. (c)(1).
Subsec. (c)(4).
§1070a–24. Activities
(a) Required activities
Each eligible entity receiving a grant under this division shall provide comprehensive mentoring, outreach, and supportive services to students participating in the programs under this division. Such activities shall include the following:
(1) Providing information regarding financial aid for postsecondary education to participating students in the cohort described in
(2) Encouraging student enrollment in rigorous and challenging curricula and coursework, in order to reduce the need for remedial coursework at the postsecondary level.
(3) Improving the number of participating students who—
(A) obtain a secondary school diploma; and
(B) complete applications for and enroll in a program of postsecondary education.
(4) In the case of an eligible entity described in
(b) Permissible activities for States and partnerships
An eligible entity that receives a grant under this division may use grant funds to carry out one or more of the following activities:
(1) Providing tutors and mentors, who may include adults or former participants of a program under this division, for eligible students.
(2) Conducting outreach activities to recruit priority students described in subsection (d) to participate in program activities.
(3) Providing supportive services to eligible students.
(4) Supporting the development or implementation of rigorous academic curricula, which may include college preparatory, Advanced Placement, or International Baccalaureate programs, and providing participating students access to rigorous core academic courses that reflect challenging State academic standards.
(5) Supporting dual or concurrent enrollment programs between the secondary school and institution of higher education partners of an eligible entity described in
(A) meeting challenging State academic standards;
(B) successfully applying for postsecondary education;
(C) successfully applying for student financial aid; and
(D) developing graduation and career plans.
(6) Providing special programs or tutoring in science, technology, engineering, or mathematics.
(7) In the case of an eligible entity described in
(8) Introducing eligible students to institutions of higher education, through trips and school-based sessions.
(9) Providing an intensive extended school day, school year, or summer program that offers—
(A) additional academic classes; or
(B) assistance with college admission applications.
(10) Providing other activities designed to ensure secondary school completion and postsecondary education enrollment of at-risk children, such as—
(A) the identification of at-risk children;
(B) after-school and summer tutoring;
(C) assistance to at-risk children in obtaining summer jobs;
(D) academic counseling;
(E) financial literacy and economic literacy education or counseling;
(F) volunteer and parent involvement;
(G) encouraging former or current participants of a program under this division to serve as peer counselors;
(H) skills assessments;
(I) personal and family counseling, and home visits;
(J) staff development; and
(K) programs and activities described in this subsection that are specially designed for students who are limited English proficient.
(11) Enabling eligible students to enroll in Advanced Placement or International Baccalaureate courses, or college entrance examination preparation courses.
(12) Providing services to eligible students in the participating cohort described in
(13) Fostering and improving parent and family involvement in elementary and secondary education by promoting the advantages of a college education, and emphasizing academic admission requirements and the need to take college preparation courses, through parent engagement and leadership activities.
(14) Disseminating information that promotes the importance of higher education, explains college preparation and admission requirements, and raises awareness of the resources and services provided by the eligible entities to eligible students, their families, and communities.
(15) In the event that matching funds described in the application are no longer available, engaging entities described in
(c) Additional permissible activities for States
In addition to the required activities described in subsection (a) and the permissible activities described in subsection (b), an eligible entity described in
(1) Providing technical assistance to—
(A) secondary schools that are located within the State; or
(B) partnerships described in
(2) Providing professional development opportunities to individuals working with eligible cohorts of students described in
(3) Providing administrative support to help build the capacity of eligible entities described in
(4) Providing strategies and activities that align efforts in the State to prepare eligible students to attend and succeed in postsecondary education, which may include the development of graduation and career plans.
(5) Disseminating information on the use of scientifically valid research and best practices to improve services for eligible students.
(6)(A) Disseminating information on effective coursework and support services that assist students in obtaining the goals described in subparagraph (B)(ii).
(B) Identifying and disseminating information on best practices with respect to—
(i) increasing parental involvement; and
(ii) preparing students, including students with disabilities and students who are limited English proficient, to succeed academically in, and prepare financially for, postsecondary education.
(7) Working to align State academic standards and curricula with the expectations of postsecondary institutions and employers.
(8) Developing alternatives to traditional secondary school that give students a head start on attaining a recognized postsecondary credential (including an industry-recognized certificate, an apprenticeship, or an associate's or a bachelor's degree), including school designs that give students early exposure to college-level courses and experiences and allow students to earn transferable college credits or an associate's degree at the same time as a secondary school diploma.
(9) Creating community college programs for drop-outs that are personalized drop-out recovery programs that allow drop-outs to complete a regular secondary school diploma and begin college-level work.
(d) Priority students
For eligible entities not using a cohort approach, the eligible entity shall treat as a priority student any student in secondary school who is—
(1) eligible to be counted under
(2) eligible for assistance under a State program funded under part A or E of title IV of the Social Security Act (
(3) eligible for assistance under subtitle B of title VII of the McKinney-Vento Homeless Assistance Act (
(4) otherwise considered by the eligible entity to be a disconnected student.
(e) Allowable providers
In the case of eligible entities described in
(
Editorial Notes
References in Text
The Social Security Act, referred to in subsec. (d)(2), is act Aug. 14, 1935, ch. 531,
The McKinney-Vento Homeless Assistance Act, referred to in subsec. (d)(3), is
Prior Provisions
A prior section 1070a–24,
Amendments
2008—
1999—Subsec. (c)(2).
§1070a–25. Scholarship component
(a) In general
(1) States
In order to receive a grant under this division, an eligible entity described in
(2) Partnerships
An eligible entity described in
(b) Limitation
(1) In general
Subject to paragraph (2), each eligible entity described in
(2) Exception
Notwithstanding paragraph (1), the Secretary may allow an eligible entity to use more than 50 percent of grant funds received under this division for such activities, if the eligible entity demonstrates that the eligible entity has another means of providing the students with the financial assistance described in this section and describes such means in the application submitted under
(c) Notification of eligibility
Each eligible entity providing scholarships under this section shall provide information on the eligibility requirements for the scholarships to all participating students upon the students' entry into the programs assisted under this division.
(d) Grant amounts
The maximum amount of a scholarship that an eligible student shall be eligible to receive under this section shall be established by the eligible entity. The minimum amount of the scholarship for each fiscal year shall not be less than the minimum Federal Pell Grant award under
(e) Portability of assistance
(1) In general
Each eligible entity described in
(2) Requirement for portability
Funds held in reserve under paragraph (1) shall be made available to an eligible student when the eligible student has—
(A) completed a secondary school diploma, its recognized equivalent, or another recognized alternative standard for individuals with disabilities; and
(B) enrolled in an institution of higher education.
(3) Qualified educational expenses
Funds available to an eligible student under this subsection may be used for—
(A) tuition, fees, books, supplies, and equipment required for the enrollment or attendance of the eligible student at an institution of higher education; and
(B) in the case of an eligible student with special needs, expenses for special needs services that are incurred in connection with such enrollment or attendance.
(4) Return of funds
(A) Redistribution
(i) In general
Funds held in reserve under paragraph (1) that are not used by an eligible student within six years of the student's scheduled completion of secondary school may be redistributed by the eligible entity to other eligible students.
(ii) Return of excess to the Secretary
If, after meeting the requirements of paragraph (1) and, if applicable, redistributing excess funds in accordance with clause (i) of this subparagraph, an eligible entity has funds held in reserve under paragraph (1) that remain available, the eligible entity shall return such remaining reserved funds to the Secretary for distribution to other grantees under this division in accordance with the funding rules described in
(B) Nonparticipating entity
Notwithstanding subparagraph (A), in the case of an eligible entity that does not receive assistance under this subpart for six fiscal years, the eligible entity shall return any funds held in reserve under paragraph (1) that are not awarded or obligated to eligible students to the Secretary for distribution to other grantees under this division.
(f) Relation to other assistance
Scholarships provided under this section shall not be considered for the purpose of awarding Federal grant assistance under this subchapter, except that in no case shall the total amount of student financial assistance awarded to a student under this subchapter exceed such student's total cost of attendance.
(g) Eligible students
A student eligible for assistance under this section is a student who—
(1) is less than 22 years old at time of first scholarship award under this section;
(2) receives a secondary school diploma or its recognized equivalent on or after January 1, 1993;
(3) is enrolled or accepted for enrollment in a program of undergraduate instruction at an institution of higher education that is located within the State's boundaries, except that, at the State's option, an eligible entity may offer scholarship program portability for recipients who attend institutions of higher education outside such State; and
(4) who participated in the activities required under
(
Editorial Notes
Prior Provisions
A prior section 1070a–25,
Amendments
2008—Subsecs. (b), (c).
Subsec. (d).
"(1) 75 percent of the average cost of attendance for an in-State student, in a 4-year program of instruction, at public institutions of higher education in such State, as determined in accordance with regulations prescribed by the Secretary; or
"(2) the maximum Federal Pell Grant funded under
Subsec. (e).
Subsec. (f).
Subsec. (g).
Subsec. (g)(4).
Statutory Notes and Related Subsidiaries
Effective Date of 2008 Amendment
"(1)
"(2)
§1070a–26. 21st Century Scholar Certificates
(a) In general
An eligible entity that receives a grant under this division shall provide certificates, to be known as 21st Century Scholar Certificates, to all students served by the eligible entity who are participating in a program under this division.
(b) Information required
A 21st Century Scholar Certificate shall be personalized for each student and indicate the amount of Federal financial aid for college and the estimated amount of any scholarship provided under
(
Editorial Notes
Prior Provisions
A prior section 1070a–26,
Amendments
2008—
1999—Subsec. (a)(2).
§1070a–27. Evaluation and report
(a) Evaluation
Each eligible entity receiving a grant under this division shall biennially evaluate the activities assisted under this division in accordance with the standards described in subsection (b) and shall submit to the Secretary a copy of such evaluation. The evaluation shall permit service providers to track eligible student progress during the period such students are participating in the activities and shall be consistent with the standards developed by the Secretary pursuant to subsection (b).
(b) Evaluation standards
The Secretary shall prescribe standards for the evaluation described in subsection (a). Such standards shall—
(1) provide for input from eligible entities and service providers; and
(2) ensure that data protocols and procedures are consistent and uniform.
(c) Federal evaluation
In order to evaluate and improve the impact of the activities assisted under this division, the Secretary shall, from not more than 0.75 percent of the funds appropriated under
(1) the implementation of the scholarship component described in
(2) the use of methods for complying with matching requirements described in paragraphs (1) and (2) of
(d) Report
The Secretary shall biennially report to Congress regarding the activities assisted under this division and the evaluations conducted pursuant to this section.
(
Editorial Notes
Prior Provisions
A prior section 1070a–27,
Amendments
2008—Subsec. (c).
§1070a–28. Authorization of appropriations
There are authorized to be appropriated to carry out this division $400,000,000 for fiscal year 2009 and such sums as may be necessary for each of the five succeeding fiscal years.
(
Editorial Notes
Amendments
2008—
Division 3—[Repealed]
Editorial Notes
Codification
§§1070a–31 to 1070a–35. Repealed. Pub. L. 110–315, title IV, §405, Aug. 14, 2008, 122 Stat. 3215
Section 1070a–31,
A prior section 1070a–31,
Section 1070a–32,
A prior section 1070a–32,
Section 1070a–33,
A prior section 1070a–33,
Section 1070a–34,
A prior section 1070a–34,
Section 1070a–35,
A prior section 1070a–35,
Prior sections 1070a–36 and 1070a–37 were omitted in the general amendment of this division by
Section 1070a–36,
Section 1070a–37,
Division 4—Model Program Community Partnership and Counseling Grants
§§1070a–41 to 1070a–43. Repealed. Pub. L. 105–244, title IV, §405, Oct. 7, 1998, 112 Stat. 1664
Section 1070a–41,
Section 1070a–42,
Section 1070a–43,
Statutory Notes and Related Subsidiaries
Effective Date of Repeal
Repeal effective Oct. 1, 1998, except as otherwise provided in
Division 5—Public Information
§§1070a–51 to 1070a–53. Repealed. Pub. L. 105–244, title IV, §405, Oct. 7, 1998, 112 Stat. 1664
Section 1070a–51,
Section 1070a–52,
Section 1070a–53,
Statutory Notes and Related Subsidiaries
Effective Date of Repeal
Repeal effective Oct. 1, 1998, except as otherwise provided in
Division 6—National Student Savings Demonstration Program
§1070a–61. Repealed. Pub. L. 105–244, title IV, §405, Oct. 7, 1998, 112 Stat. 1664
Section,
Statutory Notes and Related Subsidiaries
Effective Date of Repeal
Repeal effective Oct. 1, 1998, except as otherwise provided in
Division 7—Preeligibility Form
§1070a–71. Repealed. Pub. L. 105–244, title IV, §405, Oct. 7, 1998, 112 Stat. 1664
Section,
Statutory Notes and Related Subsidiaries
Effective Date of Repeal
Repeal effective Oct. 1, 1998, except as otherwise provided in
Division 8—Technical Assistance for Teachers and Counselors
§1070a–81. Repealed. Pub. L. 105–244, title IV, §405, Oct. 7, 1998, 112 Stat. 1664
Section,
Statutory Notes and Related Subsidiaries
Effective Date of Repeal
Repeal effective Oct. 1, 1998, except as otherwise provided in
subpart 3—federal supplemental educational opportunity grants
Editorial Notes
Codification
§1070b. Purpose; appropriations authorized
(a) Purpose of subpart
It is the purpose of this subpart to provide, through institutions of higher education, supplemental grants to assist in making available the benefits of postsecondary education to qualified students who demonstrate financial need in accordance with the provisions of part F of this subchapter.
(b) Authorization of appropriations
(1) For the purpose of enabling the Secretary to make payments to institutions of higher education which have made agreements with the Secretary in accordance with
(2) Sums appropriated pursuant to this subsection for any fiscal year shall be available for payments to institutions until the end of the second fiscal year succeeding the fiscal year for which such sums were appropriated.
(
Editorial Notes
Prior Provisions
A prior section 1070b,
Amendments
2008—Subsec. (b)(1).
1998—Subsec. (b)(1).
1992—Subsec. (b).
Statutory Notes and Related Subsidiaries
Effective Date of 1998 Amendment
Amendment by
§1070b–1. Amount and duration of grants
(a) Amount of grant
(1) Except as provided in paragraph (3), from the funds received by it for such purpose under this subpart, an institution which awards a supplemental grant to a student for an academic year under this subpart shall, for each year, pay to that student an amount not to exceed the lesser of (A) the amount determined by the institution, in accordance with the provisions of part F of this subchapter, to be needed by that student to enable the student to pursue a course of study at the institution or in a program of study abroad that is approved for credit by the institution at which the student is enrolled, or (B) $4,000.
(2) If the amount determined under paragraph (1) with respect to a student for any academic year is less than $100, no payment shall be made to that student for that year. For a student enrolled for less than a full academic year, the minimum payment required shall be reduced proportionately.
(3) For students participating in study abroad programs, the institution shall consider all reasonable costs associated with such study abroad when determining student eligibility. The amount of grant to be awarded in such cases may exceed the maximum amount of $4,000 by as much as $400 if reasonable study abroad costs exceed the cost of attendance at the home institution.
(b) Period for receipt of grants; continuing eligibility
(1) The period during which a student may receive supplemental grants shall be the period required for the completion of the first undergraduate baccalaureate course of study being pursued by that student.
(2) A supplemental grant awarded under this subpart shall entitle the student (to whom it is awarded) to payments pursuant to such grant only if the student meets the requirements of
(c) Distribution of grant during academic year
Nothing in this section shall be construed to prohibit an institution from making payments of varying amounts from a supplemental grant to a student during an academic year to cover costs for a period which are not applicable to other periods of such academic year.
(
Editorial Notes
Prior Provisions
A prior section 1070b–1,
Amendments
1992—Subsec. (a)(1).
Subsec. (a)(3).
§1070b–2. Agreements with institutions; selection of recipients
(a) Institutional eligibility
Assistance may be made available under this subpart only to an institution which—
(1) has, in accordance with
(2) agrees that the Federal share of awards under this subpart will not exceed 75 percent of such awards, except that the Federal share may be exceeded if the Secretary determines, pursuant to regulations establishing objective criteria for such determinations, that a larger Federal share is required to further the purpose of this subpart; and
(3) agrees that the non-Federal share of awards made under this subpart shall be made from the institution's own resources, including—
(A) institutional grants and scholarships;
(B) tuition or fee waivers;
(C) State scholarships; and
(D) foundation or other charitable organization funds.
(b) Eligibility for selection
Awards may be made under this subpart only to a student who—
(1) is an eligible student under
(2) makes application at a time and in a manner consistent with the requirements of the Secretary and that institution.
(c) Selection of individuals and determination of amount of awards
(1) From among individuals who are eligible for supplemental grants for each fiscal year, the institution shall, in accordance with the agreement under
(2)(A) In carrying out paragraph (1) of this subsection, each institution of higher education shall, in the agreement made under
(i) will be designed to award supplemental grants under this subpart, first, to students with exceptional need, and
(ii) will give a priority for supplemental grants under this subpart to students who receive Pell Grants and meet the requirements of
(B) For the purpose of subparagraph (A), the term "students with exceptional need" means students with the lowest student aid indexes at the institution.
(d) Use of funds for less-than-full-time students
If the institution's allocation under this subpart is directly or indirectly based in part on the financial need demonstrated by students who are independent students or attending the institution on less than a full-time basis, then a reasonable proportion of the allocation shall be made available to such students.
(e) Use and transfer of funds for administrative expenses
An agreement entered into pursuant to this section shall provide that funds granted to an institution of higher education may be used only to make payments to students participating in a grant program authorized under this subpart, except that an institution may use a portion of the sums allocated to it under this subpart to meet administrative expenses in accordance with
(
Editorial Notes
Prior Provisions
A prior section 1070b–2,
Amendments
2020—Subsec. (c)(2)(B).
1998—Subsec. (d).
1993—Subsec. (d).
1992—Subsec. (a)(2).
"(A) 95 percent of such awards in fiscal year 1989,
"(B) 90 percent of such awards in fiscal year 1990, and
"(C) 85 percent of such awards in fiscal year 1991,
except that the Federal share may be exceeded if the Secretary determines, pursuant to regulations establishing objective criteria for such determinations, that a larger Federal share is required to further the purpose of this subpart; and".
Subsec. (d).
Subsec. (e).
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
Effective Date
Section effective Oct. 17, 1986, except as otherwise provided, see section 2 of
§1070b–3. Allocation of funds
(a) Allocation based on previous allocation
(1) From the amount appropriated pursuant to
(2)(A) From the amount so appropriated, the Secretary shall next allocate to each eligible institution that began participation in the program under this subpart after fiscal year 1999 but is not a first or second time participant, an amount equal to the greater of—
(i) $5,000; or
(ii) 90 percent of the amount received and used under this subpart for the first year it participated in the program.
(B) From the amount so appropriated, the Secretary shall next allocate to each eligible institution that began participation in the program under this subpart after fiscal year 1999 and is a first or second time participant, an amount equal to the greatest of—
(i) $5,000;
(ii) an amount equal to (I) 90 percent of the amount received and used under this subpart in the second preceding fiscal year by eligible institutions offering comparable programs of instruction, divided by (II) the number of students enrolled at such comparable institutions in such fiscal year, multiplied by (III) the number of students enrolled at the applicant institution in such fiscal year; or
(iii) 90 percent of the institution's allocation under this part for the preceding fiscal year.
(C) Notwithstanding subparagraphs (A) and (B) of this paragraph, the Secretary shall allocate to each eligible institution which—
(i) was a first-time participant in the program in fiscal year 2000 or any subsequent fiscal year, and
(ii) received a larger amount under this subsection in the second year of participation,
an amount equal to 90 percent of the amount it received under this subsection in its second year of participation.
(3)(A) If the amount appropriated for any fiscal year is less than the amount required to be allocated to all institutions under paragraph (1) of this subsection, then the amount of the allocation to each such institution shall be ratably reduced.
(B) If the amount appropriated for any fiscal year is more than the amount required to be allocated to all institutions under paragraph (1) but less than the amount required to be allocated to all institutions under paragraph (2), then—
(i) the Secretary shall allot the amount required to be allocated to all institutions under paragraph (1), and
(ii) the amount of the allocation to each institution under paragraph (2) shall be ratably reduced.
(C) If additional amounts are appropriated for any such fiscal year, such reduced amounts shall be increased on the same basis as they were reduced (until the amount allocated equals the amount required to be allocated under paragraphs (1) and (2) of this subsection).
(4)(A) Notwithstanding any other provision of this section, the Secretary may allocate an amount equal to not more than 10 percent of the amount by which the amount appropriated in any fiscal year to carry out this part exceeds $700,000,000 among eligible institutions described in subparagraph (B).
(B) In order to receive an allocation pursuant to subparagraph (A) an institution shall be an eligible institution from which 50 percent or more of the Pell Grant recipients attending such eligible institution graduate from or transfer to a 4-year institution of higher education.
(b) Allocation of excess based on fair share
(1) From the remainder of the amount appropriated pursuant to
(2) For any eligible institution, the excess eligible amount is the amount, if any, by which—
(A)(i) the amount of that institution's need (as determined under subsection (c)), divided by (ii) the sum of the need of all institutions (as so determined), multiplied by (iii) the amount appropriated pursuant to
(B) the amount required to be allocated to that institution under subsection (a).
(c) Determination of institution's need
(1) The amount of an institution's need is equal to—
(A) the sum of the need of the institution's eligible undergraduate students; minus
(B) the sum of grant aid received by students under subparts 1 and 3 1 of this part.
(2) To determine the need of an institution's eligible undergraduate students, the Secretary shall—
(A) establish various income categories for dependent and independent undergraduate students;
(B) establish a student aid index for each income category of dependent and independent undergraduate students, determined on the basis of the average student aid index (computed in accordance with part F of this subchapter) of a representative sample within each income category for the second preceding fiscal year;
(C) compute 75 percent of the average cost of attendance for all undergraduate students;
(D) multiply the number of eligible dependent students in each income category by 75 percent of the average cost of attendance for all undergraduate students determined under subparagraph (C), minus the student aid index determined under subparagraph (B) for that income category, except that the amount computed by such subtraction shall not be less than zero;
(E) add the amounts determined under subparagraph (D) for each income category of dependent students;
(F) multiply the number of eligible independent students in each income category by 75 percent of the average cost of attendance for all undergraduate students determined under subparagraph (C), minus the student aid index determined under subparagraph (B) for that income category, except that the amount computed by such subtraction shall not be less than zero;
(G) add the amounts determined under subparagraph (F) for each income category of independent students; and
(H) add the amounts determined under subparagraphs (E) and (G).
(3)(A) For purposes of paragraph (2), the term "average cost of attendance" means the average of the attendance costs for undergraduate students, which shall include (i) tuition and fees determined in accordance with subparagraph (B), (ii) standard living expenses determined in accordance with subparagraph (C), and (iii) books and supplies determined in accordance with subparagraph (D).
(B) The average undergraduate tuition and fees described in subparagraph (A)(i) shall be computed on the basis of information reported by the institution to the Secretary, which shall include (i) total revenue received by the institution from undergraduate tuition and fees for the second year preceding the year for which it is applying for an allocation, and (ii) the institution's enrollment for such second preceding year.
(C) The standard living expense described in subparagraph (A)(ii) is equal to 150 percent of the difference between the income protection allowance for a family of five with one in college and the income protection allowance for a family of six with one in college for a single independent student.
(D) The allowance for books and supplies described in subparagraph (A)(iii) is equal to $600.
(d) Reallocation of excess allocations
(1) If an institution returns to the Secretary any portion of the sums allocated to such institution under this section for any fiscal year the Secretary shall, in accordance with regulations, reallocate such excess to other institutions.
(2) If under paragraph (1) of this subsection an institution returns more than 10 percent of its allocation, the institution's allocation for the next fiscal year shall be reduced by the amount returned. The Secretary may waive this paragraph for a specific institution if the Secretary finds that enforcing this paragraph would be contrary to the interest of the program.
(e) Filing deadlines
The Secretary shall, from time to time, set dates before which institutions must file applications for allocations under this part.
(
Editorial Notes
References in Text
Subpart 3 of this part, referred to in subsec. (c)(1)(B), was redesignated subpart 4 by
Prior Provisions
A prior section 1070b–3,
Amendments
2020—Subsec. (c)(2)(B).
Subsec. (c)(2)(D), (F).
2008—Subsec. (a)(1).
Subsec. (c)(3)(D).
1998—Subsec. (a)(1).
Subsec. (a)(2)(A), (B).
Subsec. (a)(2)(C)(i).
Subsec. (b).
Subsec. (c).
Subsec. (c)(1).
Subsec. (c)(2)(A)(i).
Subsecs. (d) to (f).
1993—Subsec. (d)(3)(C).
1992—Subsec. (a)(4).
Subsec. (e).
1987—Subsec. (d)(2)(D).
"(i) 75 percent of the average cost of attendance for all undergraduate students determined under subparagraph (C); or
"(ii) the average cost of attendance for all undergraduate students minus the expected family contribution determined under subparagraph (B) for that income category, except that the amount computed by such subtraction shall not be less than zero;".
Subsec. (d)(2)(F).
"(i) 75 percent of the average cost of attendance for all undergraduate students determined under subparagraph (C); or
"(ii) the average cost of attendance for all undergraduate students minus the expected family contribution determined under subparagraph (B) for that income category, except that the amount computed by such subtraction for any income category shall not be less than zero;".
Subsec. (d)(3)(A).
Subsec. (d)(3)(B).
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Amendment by
Effective Date of 1998 Amendment
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
Effective Date
Section 401(b)(6) of
1 See References in Text note below.
§1070b–4. Carryover and carryback authority
(a) Carryover authority
Of the sums made available to an eligible institution under this subpart for a fiscal year, not more than 10 percent may, at the discretion of the institution, remain available for expenditure during the succeeding fiscal year to carry out the program under this subpart.
(b) Carryback authority
(1) In general
Of the sums made available to an eligible institution under this subpart for a fiscal year, not more than 10 percent may, at the discretion of the institution, be used by the institution for expenditure for the fiscal year preceding the fiscal year for which the sums were appropriated.
(2) Use of carried-back funds
An eligible institution may make grants to students after the end of the academic year, but prior to the beginning of the succeeding fiscal year, from such succeeding fiscal year's appropriations.
(
Statutory Notes and Related Subsidiaries
Effective Date
Section effective Oct. 1, 1998, except as otherwise provided in
subpart 4—leveraging educational assistance partnership program
Editorial Notes
Codification
§1070c. Purpose; appropriations authorized
(a) Purpose of subpart
It is the purpose of this subpart to make incentive grants available to States to assist States in—
(1) providing grants to—
(A) eligible students attending institutions of higher education or participating in programs of study abroad that are approved for credit by institutions of higher education at which such students are enrolled; and
(B) eligible students for campus-based community service work-study; and
(2) carrying out the activities described in
(b) Authorization of appropriations; availability
(1) In general
There are authorized to be appropriated to carry out this subpart $200,000,000 for fiscal year 2009 and such sums as may be necessary for each of the five succeeding fiscal years.
(2) Reservation
For any fiscal year for which the amount appropriated under paragraph (1) exceeds $30,000,000, the excess amount shall be available to carry out
(3) Availability
Sums appropriated pursuant to the authority of paragraph (1) for any fiscal year shall remain available for payments to States under this subpart until the end of the fiscal year succeeding the fiscal year for which such sums were appropriated.
(
Editorial Notes
Prior Provisions
A prior section 1070c,
Amendments
2008—Subsec. (b)(1), (2).
2000—Subsec. (a)(2).
1998—Subsec. (a).
"(1) eligible students attending institutions of higher education or participating in programs of study abroad that are approved for credit by institutions of higher education at which such students are enrolled; and
"(2) eligible students for campus-based community service work-study."
Subsec. (b)(1).
Subsec. (b)(2), (3).
1992—
"(a)
"(b)
"(2) Sums appropriated pursuant to paragraph (1) for any fiscal year shall remain available for payments to States under this subpart until the end of the fiscal year succeeding the fiscal year for which such sums were appropriated."
Statutory Notes and Related Subsidiaries
Effective Date of 1998 Amendment
Amendment by
§1070c–1. Allotment among States
(a) Allotment based on number of eligible students in attendance
(1) From the sums appropriated pursuant to
(2) For the purpose of this subsection, the number of students who are deemed eligible in a State for participation in the grant program authorized by this subpart, and the number of such students in all the States, shall be determined for the most recent year for which satisfactory data are available.
(b) Reallotment
The amount of any State's allotment under subsection (a) for any fiscal year which the Secretary determines will not be required for such fiscal year for the leveraging educational assistance partnership program of that State shall be available for reallotment from time to time, on such dates during such year as the Secretary may fix, to other States in proportion to the original allotments to such States under such part for such year, but with such proportionate amount for any of such States being reduced to the extent it exceeds the sum the Secretary estimates such State needs and will be able to use for such year for carrying out the State plan. The total of such reductions shall be similarly reallotted among the States whose proportionate amounts were not so reduced. Any amount reallotted to a State under this part during a year from funds appropriated pursuant to
(c) Allotments subject to continuing compliance
The Secretary shall make payments for continuing incentive grants only to States which continue to meet the requirements of
(
Editorial Notes
Prior Provisions
A prior section 1070c–1,
Amendments
1998—Subsec. (a)(1).
Subsec. (b).
Statutory Notes and Related Subsidiaries
Effective Date of 1998 Amendment
Amendment by
§1070c–2. Applications for leveraging educational assistance partnership programs
(a) Submission and contents of applications
A State which desires to obtain a payment under this subpart for any fiscal year shall submit annually an application therefor through the State agency administering its program under this subpart as of July 1, 1985, unless the Governor of that State so designates, in writing, a different agency to administer the program. The application shall contain such information as may be required by, or pursuant to, regulation for the purpose of enabling the Secretary to make the determinations required under this subpart.
(b) Payment of Federal share of grants made by qualified program
From a State's allotment under this subpart for any fiscal year the Secretary is authorized to make payments to such State for paying up to 50 percent of the amount of student grants pursuant to a State program which—
(1) is administered by a single State agency;
(2) provides that such grants will be in amounts not to exceed the lesser of $12,500 or the student's cost of attendance per academic year (A) for attendance on a full-time basis at an institution of higher education, and (B) for campus-based community service work learning study jobs;
(3) provides that—
(A) not more than 20 percent of the allotment to the State for each fiscal year may be used for the purpose described in paragraph (2)(B);
(B) grants for the campus-based community work learning study jobs may be made only to students who are otherwise eligible for assistance under this subpart; and
(C) grants for such jobs be made in accordance with the provisions of
(4) provides for the selection of recipients of such grants or of such State work-study jobs on the basis of substantial financial need determined annually on the basis of criteria established by the State and approved by the Secretary, except that for the purpose of collecting data to make such determination of financial need, no student or parent shall be charged a fee that is payable to an entity other than such State;
(5) provides that, effective with respect to any academic year beginning on or after October 1, 1978, all nonprofit institutions of higher education in the State are eligible to participate in the State program, except in any State in which participation of nonprofit institutions of higher education is in violation of the constitution of the State or in any State in which participation of nonprofit institutions of higher education is in violation of a statute of the State which was enacted prior to October 1, 1978;
(6) provides for the payment of the non-Federal portion of such grants or of such work-study jobs from funds supplied by such State which represent an additional expenditure for such year by such State for grants or work-study jobs for students attending institutions of higher education over the amount expended by such State for such grants or work-study jobs, if any, during the second fiscal year preceding the fiscal year in which such State initially received funds under this subpart;
(7) provides that if the State's allocation under this subpart is based in part on the financial need demonstrated by students who are independent students or attending the institution less than full time, a reasonable proportion of the State's allocation shall be made available to such students;
(8) provides for State expenditures under such program of an amount not less than the average annual aggregate expenditures for the preceding three fiscal years or the average annual expenditure per full-time equivalent student for such years;
(9) provides (A) for such fiscal control and fund accounting procedures as may be necessary to assure proper disbursement of and accounting for Federal funds paid to the State agency under this subpart, and (B) for the making of such reports, in such form and containing such information, as may be reasonably necessary to enable the Secretary to perform his functions under this subpart;
(10) for any academic year beginning after June 30, 1987, provides the non-Federal share of the amount of student grants or work-study jobs under this subpart through State funds for the program under this subpart; and
(11) provides notification to eligible students that such grants are—
(A) Leveraging Educational Assistance Partnership Grants; and
(B) funded by the Federal Government, the State, and, where applicable, other contributing partners.
(c) Reservation and disbursement of allotments and reallotments
Upon his approval of any application for a payment under this subpart, the Secretary shall reserve from the applicable allotment (including any applicable reallotment) available therefor, the amount of such payment, which (subject to the limits of such allotment or reallotment) shall be equal to the Federal share of the cost of the students' incentive grants or work-study jobs covered by such application. The Secretary shall pay such reserved amount, in advance or by way of reimbursement, and in such installments as the Secretary may determine. The Secretary may amend the reservation of any amount under this section, either upon approval of an amendment of the application or upon revision of the estimated cost of the student grants or work-study jobs with respect to which such reservation was made. If the Secretary approves an upward revision of such estimated cost, the Secretary may reserve the Federal share of the added cost only from the applicable allotment (or reallotment) available at the time of such approval.
(
Editorial Notes
Prior Provisions
A prior section 1070c–2,
Amendments
2008—Subsec. (b)(2).
Subsec. (b)(9).
Subsec. (b)(10).
Subsec. (b)(11).
1998—
1993—Subsec. (b)(7).
1992—Subsec. (b)(2).
Subsec. (b)(4).
Subsec. (b)(7).
Statutory Notes and Related Subsidiaries
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
§1070c–3. Administration of State programs; judicial review
(a) Disapproval of applications; suspension of eligibility
(1) The Secretary shall not finally disapprove any application for a State program submitted under
(2) Whenever the Secretary, after reasonable notice and opportunity for hearing to the State agency administering a State program approved under this subpart, finds—
(A) that the State program has been so changed that it no longer complies with the provisions of this subpart, or
(B) that in the administration of the program there is a failure to comply substantially with any such provisions,
the Secretary shall notify such State agency that the State will not be regarded as eligible to participate in the program under this subpart until he is satisfied that there is no longer any such failure to comply.
(b) Review of decisions
(1) If any State is dissatisfied with the Secretary's final action with respect to the approval of its State program submitted under this subpart or with his final action under subsection (a), such State may appeal to the United States court of appeals for the circuit in which such State is located. The summons and notice of appeal may be served at any place in the United States. The Commissioner shall forthwith certify and file in the court the transcript of the proceedings and the record on which he based his action.
(2) The findings of fact by the Secretary, if supported by substantial evidence, shall be conclusive; but the court, for good cause shown, may remand the case to the Secretary to take further evidence, and the Secretary may thereupon make new or modified findings of fact and may modify his previous action, and shall certify to the court the transcript and record of further proceedings. Such new or modified findings of fact shall likewise be conclusive if supported by substantial evidence.
(3) The court shall have jurisdiction to affirm the action of the Secretary or to set it aside, in whole or in part. The judgment of the court shall be subject to review by the Supreme Court of the United States upon certiorari or certification as provided in title 28, section 1254.
(
Editorial Notes
Prior Provisions
A prior section 1070c–3,
§1070c–3a. Grants for access and persistence
(a) Purpose
It is the purpose of this section to expand college access and increase college persistence by making allotments to States to enable the States to—
(1) expand and enhance partnerships with institutions of higher education, early information and intervention, mentoring, or outreach programs, private corporations, philanthropic organizations, and other interested parties, including community-based organizations, in order to—
(A) carry out activities under this section; and
(B) provide coordination and cohesion among Federal, State, and local governmental and private efforts that provide financial assistance to help low-income students attend an institution of higher education;
(2) provide need-based grants for access and persistence to eligible low-income students;
(3) provide early notification to low-income students of the students' eligibility for financial aid; and
(4) encourage increased participation in early information and intervention, mentoring, or outreach programs.
(b) Allotments to States
(1) In general
(A) Authorization
From sums reserved under
(B) Determination of allotment
In making allotments under subparagraph (A), the Secretary shall consider the following:
(i) Continuation of award
Except as provided in clause (ii), if a State continues to meet the specifications established in such State's application under subsection (c), the Secretary shall make an allotment to such State that is not less than the allotment made to such State for the previous fiscal year.
(ii) Special continuation and transition rule
If a State that applied for and received an allotment under this section for fiscal year 2010 pursuant to subsection (j) meets the specifications established in the State's application under subsection (c) for fiscal year 2011, then the Secretary shall make an allotment to such State for fiscal year 2011 that is not less than the allotment made pursuant to subsection (j) to such State for fiscal year 2010 under this section (as this section was in effect on the day before August 14, 2008).
(iii) Priority
The Secretary shall give priority in making allotments to States that meet the requirements described in paragraph (2)(B)(ii).
(2) Federal share
(A) In general
The Federal share of the cost of carrying out the activities under subsection (d) for any fiscal year shall not exceed 66.66 percent.
(B) Different percentages
The Federal share under this section shall be determined in accordance with the following:
(i) The Federal share of the cost of carrying out the activities under subsection (d) shall be 57 percent if a State applies for an allotment under this section in partnership with any number of degree-granting institutions of higher education in the State whose combined full-time enrollment represents less than a majority of all students attending institutions of higher education in the State, and—
(I) philanthropic organizations that are located in, or that provide funding in, the State; or
(II) private corporations that are located in, or that do business in, the State.
(ii) The Federal share of the cost of carrying out the activities under subsection (d) shall be 66.66 percent if a State applies for an allotment under this section in partnership with any number of degree-granting institutions of higher education in the State whose combined full-time enrollment represents a majority of all students attending institutions of higher education in the State, and—
(I) philanthropic organizations that are located in, or that provide funding in, the State; or
(II) private corporations that are located in, or that do business in, the State.
(C) Non-Federal share
(i) In general
The non-Federal share under this section may be provided in cash or in kind, fairly evaluated.
(ii) In-kind contribution
For the purpose of calculating the non-Federal share under this subparagraph, an in-kind contribution is a non-cash contribution that—
(I) has monetary value, such as the provision of—
(aa) room and board; or
(bb) transportation passes; and
(II) helps a student meet the cost of attendance at an institution of higher education.
(iii) Effect on need analysis
For the purpose of calculating a student's need in accordance with part F, an in-kind contribution described in clause (ii) shall not be considered an asset or income of the student or the student's parent.
(c) Application for allotment
(1) In general
(A) Submission
A State that desires to receive an allotment under this section on behalf of a partnership described in paragraph (3) shall submit an application to the Secretary at such time, in such manner, and containing such information as the Secretary may require.
(B) Content
An application submitted under subparagraph (A) shall include the following:
(i) A description of the State's plan for using the allotted funds.
(ii) An assurance that the State will provide matching funds, in cash or in kind, from State, institutional, philanthropic, or private funds, of not less than 33.33 percent of the cost of carrying out the activities under subsection (d). The State shall specify the methods by which matching funds will be paid. A State that uses non-Federal funds to create or expand partnerships with entities described in subsection (a)(1), in which such entities match State funds for student scholarships, may apply such matching funds from such entities toward fulfilling the State's matching obligation under this clause.
(iii) An assurance that the State will use funds provided under this section to supplement, and not supplant, Federal and State funds available for carrying out the activities under this subchapter.
(iv) An assurance that early information and intervention, mentoring, or outreach programs exist within the State or that there is a plan to make such programs widely available.
(v) A description of the organizational structure that the State has in place to administer the activities under subsection (d), including a description of how the State will compile information on degree completion of students receiving grants under this section.
(vi) A description of the steps the State will take to ensure that students who receive grants under this section persist to degree completion.
(vii) An assurance that the State has a method in place, such as acceptance of the automatic zero student aid index determination described in section 1087ss(c) 1 of this title, to identify eligible low-income students and award State grant aid to such students.
(viii) An assurance that the State will provide notification to eligible low-income students that grants under this section are—
(I) Leveraging Educational Assistance Partnership Grants; and
(II) funded by the Federal Government and the State, and, where applicable, other contributing partners.
(2) State agency
The State agency that submits an application for a State under
(3) Partnership
In applying for an allotment under this section, the State agency shall apply for the allotment in partnership with—
(A) not less than one public and one private degree-granting institution of higher education that are located in the State, if applicable;
(B) new or existing early information and intervention, mentoring, or outreach programs located in the State; and
(C) not less than one—
(i) philanthropic organization located in, or that provides funding in, the State; or
(ii) private corporation located in, or that does business in, the State.
(4) Roles of partners
(A) State agency
A State agency that is in a partnership receiving an allotment under this section—
(i) shall—
(I) serve as the primary administrative unit for the partnership;
(II) provide or coordinate non-Federal share funds, and coordinate activities among partners;
(III) encourage each institution of higher education in the State to participate in the partnership;
(IV) make determinations and early notifications of assistance as described under subsection (d)(2); and
(V) annually report to the Secretary on the partnership's progress in meeting the purpose of this section; and
(ii) may provide early information and intervention, mentoring, or outreach programs.
(B) Degree-granting institutions of higher education
A degree-granting institution of higher education that is in a partnership receiving an allotment under this section—
(i) shall—
(I) recruit and admit participating qualified students and provide such additional institutional grant aid to participating students as agreed to with the State agency;
(II) provide support services to students who receive grants for access and persistence under this section and are enrolled at such institution; and
(III) assist the State in the identification of eligible students and the dissemination of early notifications of assistance as agreed to with the State agency; and
(ii) may provide funding for early information and intervention, mentoring, or outreach programs or provide such services directly.
(C) Programs
An early information and intervention, mentoring, or outreach program that is in a partnership receiving an allotment under this section shall provide direct services, support, and information to participating students.
(D) Philanthropic organization or private corporation
A philanthropic organization or private corporation that is in a partnership receiving an allotment under this section shall provide funds for grants for access and persistence for participating students, or provide funds or support for early information and intervention, mentoring, or outreach programs.
(d) Authorized activities
(1) In general
(A) Establishment of partnership
Each State receiving an allotment under this section shall use the funds to establish a partnership to award grants for access and persistence to eligible low-income students in order to increase the amount of financial assistance such students receive under this subpart for undergraduate education expenses.
(B) Amount of grants
The amount of a grant for access and persistence awarded by a State to a student under this section shall be not less than—
(i) the average undergraduate tuition and mandatory fees at the public institutions of higher education in the State where the student resides that are of the same type of institution as the institution of higher education the student attends; minus
(ii) other Federal and State aid the student receives.
(C) Special rules
(i) Partnership institutions
A State receiving an allotment under this section may restrict the use of grants for access and persistence under this section by awarding the grants only to students attending institutions of higher education that are participating in the partnership.
(ii) Out-of-State institutions
If a State provides grants through another program under this subpart to students attending institutions of higher education located in another State, grants awarded under this section may be used at institutions of higher education located in another State.
(2) Early notification
(A) In general
Each State receiving an allotment under this section shall annually notify low-income students in grades seven through 12 in the State, and their families, of their potential eligibility for student financial assistance, including an access and persistence grant, to attend an institution of higher education.
(B) Content of notice
The notice under subparagraph (A)—
(i) shall include—
(I) information about early information and intervention, mentoring, or outreach programs available to the student;
(II) information that a student's eligibility for a grant for access and persistence is enhanced through participation in an early information and intervention, mentoring, or outreach program;
(III) an explanation that student and family eligibility for, and participation in, other Federal means-tested programs may indicate eligibility for a grant for access and persistence and other student aid programs;
(IV) a nonbinding estimate of the total amount of financial aid that a low-income student with a similar income level may expect to receive, including an estimate of the amount of a grant for access and persistence and an estimate of the amount of grants, loans, and all other available types of aid from the major Federal and State financial aid programs;
(V) an explanation that in order to be eligible for a grant for access and persistence, at a minimum, a student shall—
(aa) meet the requirement under paragraph (3);
(bb) graduate from secondary school; and
(cc) enroll at an institution of higher education—
(AA) that is a partner in the partnership; or
(BB) with respect to which attendance is permitted under subsection (d)(1)(C)(ii);
(VI) information on any additional requirements (such as a student pledge detailing student responsibilities) that the State may impose for receipt of a grant for access and persistence under this section; and
(VII) instructions on how to apply for a grant for access and persistence and an explanation that a student is required to file a Free Application for Federal Student Aid authorized under
(ii) may include a disclaimer that grant awards for access and persistence are contingent on—
(I) a determination of the student's financial eligibility at the time of the student's enrollment at an institution of higher education that is a partner in the partnership or qualifies under subsection (d)(1)(C)(ii);
(II) annual Federal and State spending for higher education; and
(III) other aid received by the student at the time of the student's enrollment at such institution of higher education.
(3) Eligibility
In determining which students are eligible to receive grants for access and persistence, the State shall ensure that each such student complies with the following subparagraph (A) or (B):
(A) Meets not less than two of the following criteria, with priority given to students meeting all of the following criteria:
(i) Has a student aid index equal to zero, as determined under part F, or a comparable alternative based upon the State's approved criteria in
(ii) Qualifies for the State's maximum undergraduate award, as authorized under
(iii) Is participating in, or has participated in, a Federal, State, institutional, or community early information and intervention, mentoring, or outreach program, as recognized by the State agency administering activities under this section.
(B) Is receiving, or has received, a grant for access and persistence under this section, in accordance with paragraph (5).
(4) Grant award
Once a student, including those students who have received early notification under paragraph (2) from the State, applies for admission to an institution that is a partner in the partnership, files a Free Application for Federal Student Aid and any related State form, and is determined eligible by the State under paragraph (3), the State shall—
(A) issue the student a preliminary award certificate for a grant for access and persistence with estimated award amounts; and
(B) inform the student that payment of the grant for access and persistence award amounts is subject to certification of enrollment and award eligibility by the institution of higher education.
(5) Duration of award
An eligible student who receives a grant for access and persistence under this section shall receive such grant award for each year of such student's undergraduate education in which the student remains eligible for assistance under this subchapter, including pursuant to
(e) Administrative cost allowance
A State that receives an allotment under this section may reserve not more than two percent of the funds made available annually through the allotment for State administrative functions required to carry out this section.
(f) Statutory and regulatory relief for institutions of higher education
The Secretary may grant, upon the request of an institution of higher education that is in a partnership described in subsection (b)(2)(B)(ii) and that receives an allotment under this section, a waiver for such institution from statutory or regulatory requirements that inhibit the ability of the institution to successfully and efficiently participate in the activities of the partnership.
(g) Applicability rule
The provisions of this subpart that are not inconsistent with this section shall apply to the program authorized by this section.
(h) Maintenance of effort requirement
Each State receiving an allotment under this section for a fiscal year shall provide the Secretary with an assurance that the aggregate amount expended per student or the aggregate expenditures by the State, from funds derived from non-Federal sources, for the authorized activities described in subsection (d) for the preceding fiscal year were not less than the amount expended per student or the aggregate expenditure by the State for the activities for the second preceding fiscal year.
(i) Special rule
Notwithstanding subsection (h), for purposes of determining a State's share of the cost of the authorized activities described in subsection (d), the State shall consider only those expenditures from non-Federal sources that exceed the State's total expenditures for need-based grants, scholarships, and work-study assistance for fiscal year 1999 (including any such assistance provided under this subpart).
(j) Continuation and transition
For the two-year period that begins on August 14, 2008, the Secretary shall continue to award grants under
(k) Reports
Not later than three years after August 14, 2008, and annually thereafter, the Secretary shall submit a report describing the activities and the impact of the partnerships under this section to the authorizing committees.
(
Editorial Notes
References in Text
Prior Provisions
A prior section 415E of
Another prior section 415E of
Amendments
2020—Subsec. (c)(1)(B)(vii).
Subsec. (d)(3)(A)(i).
2009—Subsec. (b)(1)(B).
2008—
2000—Subsec. (c).
Subsecs. (f), (g).
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Amendment by
Effective Date of 2009 Amendment
Amendment by
Effective Date
Section effective Oct. 1, 1998, except as otherwise provided in
1 See References in Text note below.
§1070c–4. "Community service" defined
For the purpose of this subpart, the term "community service" means services, including direct service, planning, and applied research which are identified by an institution of higher education, through formal or informal consultation with local nonprofit, governmental, and community-based organizations, and which—
(1) are designed to improve the quality of life for community residents, particularly low-income individuals, or to solve particular problems related to the needs of such residents, including but not limited to, such fields as health care, child care, education, literacy training, welfare, social services, public safety, crime prevention and control, transportation, recreation, housing and neighborhood improvement, rural development, and community improvement; and
(2) provide participating students with work-learning opportunities related to their educational or vocational programs or goals.
(
Editorial Notes
Prior Provisions
A prior section 1070c–4,
Amendments
1987—Par. (1).
Statutory Notes and Related Subsidiaries
Effective Date of 1987 Amendment
Amendment by
§§1070d to 1070d–1d. Repealed. Pub. L. 102–325, title IV, §402(a)(1), July 23, 1992, 106 Stat. 482
Section 1070d,
A prior section 1070d,
Another prior section 1070d,
Section 1070d–1,
A prior section 1070d–1,
Another prior section 1070d–1,
Section 1070d–1a,
A prior section 1070d–1a,
Section 1070d–1b,
A prior section 1070d–1b,
Section 1070d–1c,
A prior section 1070d–1c,
Section 1070d–1d,
A prior section 1070d–1d,
subpart 5—special programs for students whose families are engaged in migrant and seasonal farmwork
§1070d–2. Maintenance and expansion of existing programs
(a) Program authority
The Secretary shall maintain and expand existing secondary and postsecondary high school equivalency program and college assistance migrant program projects located at institutions of higher education or at private nonprofit organizations working in cooperation with institutions of higher education.
(b) Services provided by high school equivalency program
The services authorized by this subpart for the high school equivalency program include—
(1) recruitment services to reach persons—
(A)(i) who are 16 years of age and over; or
(ii) who are beyond the age of compulsory school attendance in the State in which such persons reside and are not enrolled in school;
(B)(i) who themselves, or whose immediate family, have spent a minimum of 75 days during the past 24 months in migrant and seasonal farmwork; or
(ii) who are eligible to participate, or have participated within the preceding 2 years, in programs under part C of title I of the Elementary and Secondary Education Act of 1965 [
(C) who lack a high school diploma or its equivalent;
(2) educational services which provide instruction designed to help students obtain a general education diploma which meets the guidelines established by the State in which the project is located for high school equivalency;
(3) supportive services which include the following:
(A) personal, vocational, and academic counseling;
(B) placement services designed to place students in a university, college, or junior college program (including preparation for college entrance examinations), or in military service or career positions; and
(C) health services;
(4) information concerning, and assistance in obtaining, available student financial aid;
(5) stipends for high school equivalency program participants;
(6) housing for those enrolled in residential programs;
(7) exposure to cultural events, academic programs, and other educational and cultural activities usually not available to migrant youth;
(8) other essential supportive services (such as transportation and child care), as needed to ensure the success of eligible students; and
(9) other activities to improve persistence and retention in postsecondary education.
(c) Services provided by college assistance migrant program
(1) Services authorized by this subpart for the college assistance migrant program include—
(A) outreach and recruitment services to reach persons who themselves or whose immediate family have spent a minimum of 75 days during the past 24 months in migrant and seasonal farmwork or who have participated or are eligible to participate, in programs under part C of title I of the Elementary and Secondary Education Act of 1965 [
(B) supportive and instructional services to improve placement, persistence, and retention in postsecondary education, which include:
(i) personal, academic, career, and economic education or personal finance counseling as an ongoing part of the program;
(ii) tutoring and academic skill building instruction and assistance;
(iii) assistance with special admissions;
(iv) health services; and
(v) other services as necessary to assist students in completing program requirements;
(C) assistance in obtaining student financial aid which includes, but is not limited to:
(i) stipends;
(ii) scholarships;
(iii) student travel;
(iv) career oriented work study;
(v) books and supplies;
(vi) tuition and fees;
(vii) room and board; and
(viii) other assistance necessary to assist students in completing their first year of college;
(D) housing support for students living in institutional facilities and commuting students;
(E) exposure to cultural events, academic programs, and other activities not usually available to migrant youth;
(F) internships; and
(G) other essential supportive services (such as transportation and child care) as necessary to ensure the success of eligible students.
(2) A recipient of a grant to operate a college assistance migrant program under this subpart shall provide followup services for migrant students after such students have completed their first year of college, and shall not use more than 10 percent of such grant for such followup services. Such followup services may include—
(A) monitoring and reporting the academic progress of students who participated in the project during such student's first year of college and during such student's subsequent years in college;
(B) referring such students to on- or off-campus providers of counseling services, academic assistance, or financial aid, and coordinating such services, assistance, and aid with other non-program services, assistance, and aid, including services, assistance, and aid provided by community-based organizations, which may include mentoring and guidance; and
(C) for students attending two-year institutions of higher education, encouraging the students to transfer to four-year institutions of higher education, where appropriate, and monitoring the rate of transfer of such students.
(d) Management plan required
Each project application shall include a management plan which contains assurances that the grant recipient will coordinate the project, to the extent feasible, with other local, State, and Federal programs to maximize the resources available for migrant students, and that staff shall have a demonstrated knowledge and be sensitive to the unique characteristics and needs of the migrant and seasonal farmworker population, and provisions for:
(1) staff in-service training;
(2) training and technical assistance;
(3) staff travel;
(4) student travel;
(5) interagency coordination; and
(6) an evaluation plan.
(e) Five-year grant period; consideration of prior experience
Except under extraordinary circumstances, the Secretary shall award grants for a 5-year period. For the purpose of making grants under this subpart, the Secretary shall consider the prior experience of service delivery under the particular project for which funds are sought by each applicant. Such prior experience shall be awarded the same level of consideration given this factor for applicants for programs in accordance with
(f) Minimum allocations
The Secretary shall not allocate an amount less than—
(1) $180,000 for each project under the high school equivalency program, and
(2) $180,000 for each project under the college assistance migrant program.
(g) Reservation and allocation of funds
From the amounts made available under subsection (i), the Secretary—
(1) may reserve not more than a total of ½ of one percent for outreach activities, technical assistance, and professional development programs relating to the programs under subsection (a);
(2) for any fiscal year for which the amount appropriated to carry out this section is equal to or greater than $40,000,000, shall, in awarding grants from the remainder of such amounts—
(A) make available not less than 45 percent of such remainder for the high school equivalency programs and not less than 45 percent of such remainder for the college assistance migrant programs;
(B) award the rest of such remainder for high school equivalency programs or college assistance migrant programs based on the number, quality, and promise of the applications; and
(C) consider the need to provide an equitable geographic distribution of such grants; and
(3) for any fiscal year for which the amount appropriated to carry out this section is less than $40,000,000, shall, in awarding grants from the remainder of such amounts make available the same percentage of funds to the high school equivalency program and to the college assistance migrant program as was made available for each such program for the fiscal year preceding the fiscal year for which the grant was made.
(h) Data collection
The Secretary shall—
(1) annually collect data on persons receiving services authorized under this subpart regarding such persons' rates of secondary school graduation, entrance into postsecondary education, and completion of postsecondary education, as applicable;
(2) not less often than once every two years, prepare and submit to the authorizing committees a report based on the most recently available data under paragraph (1); and
(3) make such report available to the public.
(i) Authorization of appropriations
For the purpose of making grants and contracts under this section, there are authorized to be appropriated $75,000,000 for fiscal year 2009 and such sums as may be necessary for the each of the five succeeding fiscal years.
(
Editorial Notes
References in Text
The Elementary and Secondary Education Act of 1965, referred to in subsecs. (b)(1)(B)(ii) and (c)(1)(A), is
Prior Provisions
A prior section 1070d–2,
Another prior section 1070d–2,
A prior section 1070d–3,
Amendments
2014—Subsecs. (b)(1)(B)(ii), (c)(1)(A).
2008—Subsec. (b)(1)(B)(i).
Subsec. (b)(3)(B).
Subsec. (b)(5).
Subsec. (b)(7).
Subsec. (b)(8).
Subsec. (b)(9).
Subsec. (c)(1)(A).
Subsec. (c)(1)(B).
Subsec. (c)(1)(B)(i).
Subsec. (c)(1)(E) to (G).
Subsec. (c)(2)(A).
Subsec. (c)(2)(B).
Subsec. (c)(2)(C).
Subsec. (e).
Subsec. (f)(1), (2).
Subsecs. (g) to (i).
1998—Subsecs. (b)(1)(B)(ii), (c)(1)(A).
Subsec. (d).
Subsec. (e).
Subsec. (g).
Subsec. (h).
1994—Subsec. (b)(1)(B)(ii).
Subsec. (c)(1)(A).
1992—Subsec. (b)(1).
Subsec. (b)(4).
Subsec. (c).
Subsec. (e).
Subsec. (g).
1987—Subsec. (g).
Statutory Notes and Related Subsidiaries
Effective Date of 2014 Amendment
Amendment by
Effective Date of 1998 Amendments
Amendment by section 101(f) [title VIII, §405(d)(15)(A)] of
Amendment by
Effective Date of 1987 Amendment
Amendment by
subpart 6—robert c. byrd honors scholarship program
§1070d–31. Statement of purpose
It is the purpose of this subpart to establish a Robert C. Byrd Honors Scholarship Program to promote student excellence and achievement and to recognize exceptionally able students who show promise of continued excellence.
(
Editorial Notes
Prior Provisions
A prior section 1070d–31,
§1070d–32. Repealed. Pub. L. 102–325, title IV, §406(a), July 23, 1992, 106 Stat. 508
Section,
A prior section 1070d–32,
§1070d–33. Scholarships authorized
(a) Program authority
The Secretary is authorized, in accordance with the provisions of this subpart, to make grants to States to enable the States to award scholarships to individuals who have demonstrated outstanding academic achievement and who show promise of continued academic achievement.
(b) Period of award
Scholarships under this section shall be awarded for a period of not less than 1 or more than 4 years during the first 4 years of study at any institution of higher education eligible to participate in any programs assisted under this subchapter. The State educational agency administering the program in a State shall have discretion to determine the period of the award (within the limits specified in the preceding sentence), except that—
(1) if the amount appropriated for this subpart for any fiscal year exceeds the amount appropriated for this subpart for fiscal year 1993, the Secretary shall identify to each State educational agency the number of scholarships available to that State under
(2) the State educational agency shall award not less than that number of scholarships for a period of 4 years.
(c) Use at any institution permitted
A student awarded a scholarship under this subpart may attend any institution of higher education.
(d) Byrd Scholars
Individuals awarded scholarships under this subpart shall be known as "Byrd Scholars".
(
Editorial Notes
Prior Provisions
A prior section 1070d–33,
Amendments
2009—Subsec. (b)(1).
1993—Subsec. (b).
"(1) if the amount appropriated for this subpart for any fiscal year exceeds the amount appropriated for this subpart for fiscal year 1993, the Secretary shall identify to each State educational agency the number of scholarships available to that State under
"(2) the State educational agency shall award not less than that number of scholarships for a period of 4 years."
1992—Subsec. (b).
Statutory Notes and Related Subsidiaries
Effective Date of 2009 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
§1070d–34. Allocation among States
(a) Allocation formula
From the sums appropriated pursuant to the authority of
(b) Number of scholarships available
The number of scholarships to be made available in a State for any fiscal year shall bear the same ratio to the number of scholarships made available to all States as the State's population ages 5 through 17 bears to the population ages 5 through 17 in all the States, except that not less than 10 scholarships shall be made available to any State.
(c) Use of census data
For the purpose of this section, the population ages 5 through 17 in a State and in all the States shall be determined by the most recently available data, satisfactory to the Secretary, from the Bureau of the Census.
(d) Consolidation by Insular Areas prohibited
Notwithstanding
(e) FAS eligibility
(1) Fiscal years 2000 through 2004
Notwithstanding any other provision of this subpart, in the case of students from the Freely Associated States who may be selected to receive a scholarship under this subpart for the first time for any of the fiscal years 2000 through 2004—
(A) there shall be 10 scholarships in the aggregate awarded to such students for each of the fiscal years 2000 through 2004; and
(B) the Pacific Regional Educational Laboratory shall administer the program under this subpart in the case of scholarships for students in the Freely Associated States.
(2) Termination of eligibility
A student from the Freely Associated States shall not be eligible to receive a scholarship under this subpart after September 30, 2004.
(
Editorial Notes
Prior Provisions
A prior section 1070d–34,
Amendments
2009—Subsec. (d).
1998—Subsec. (e).
1993—Subsec. (d).
1992—
"(1) $1,500 multiplied by the number of individuals in the State eligible for scholarships pursuant to
"(2) $10,000, plus 5 percent of the amount to which a State is eligible under paragraph (1) of this section."
Statutory Notes and Related Subsidiaries
Effective Date of 2009 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
§1070d–35. Agreements
The Secretary shall enter into an agreement with each State desiring to participate in the scholarship program authorized by this subpart. Each such agreement shall include provisions designed to assure that—
(1) the State educational agency will administer the scholarship program authorized by this subpart in the State;
(2) the State educational agency will comply with the eligibility and selection provisions of this subpart;
(3) the State educational agency will conduct outreach activities to publicize the availability of scholarships under this subpart to all eligible students in the State, with particular emphasis on activities designed to assure that students from low-income and moderate-income families have access to the information on the opportunity for full participation in the scholarship program authorized by this subpart; and
(4) the State educational agency will pay to each individual in the State who is awarded a scholarship under this subpart $1,500.
(
Editorial Notes
Prior Provisions
A prior section 1070d–35,
Amendments
1992—Par. (3).
Par. (4).
Par. (5).
§1070d–36. Eligibility of scholars
(a) High school graduation or equivalent and admission to institution required
Each student awarded a scholarship under this subpart shall be a graduate of a public or private secondary school (or a home school, whether treated as a home school or a private school under State law) or have the equivalent of a certificate of graduation as recognized by the State in which the student resides and must have been admitted for enrollment at an institution of higher education.
(b) Selection based on promise of academic achievement
Each student awarded a scholarship under this subpart must demonstrate outstanding academic achievement and show promise of continued academic achievement.
(
Editorial Notes
Prior Provisions
A prior section 1070d–36,
Amendments
2008—Subsec. (a).
§1070d–37. Selection of scholars
(a) Establishment of criteria
The State educational agency is authorized to establish the criteria for the selection of scholars under this subpart.
(b) Adoption of procedures
The State educational agency shall adopt selection procedures designed to ensure an equitable geographic distribution of awards within the State (and in the case of the Federated States of Micronesia, the Republic of the Marshall Islands, the Virgin Islands, American Samoa, the Commonwealth of the Northern Mariana Islands, Guam, or Palau (until such time as the Compact of Free Association is ratified), not to exceed 10 individuals will be selected from such entities).
(c) Consultation requirement
In carrying out its responsibilities under subsections (a) and (b), the State educational agency shall consult with school administrators, school boards, teachers, counselors, and parents.
(d) Timing of selection
The selection process shall be completed, and the awards made, prior to the end of each secondary school academic year.
(
Editorial Notes
References in Text
For ratification of Compact of Free Association with the Republic of Palau, referred to in subsec. (b), see Proc. No. 6726, Sept. 27, 1994, 59 F.R. 49777, set out as a note under
Prior Provisions
A prior section 1070d–37,
Amendments
1993—Subsec. (b).
1992—Subsec. (b).
Subsec. (d).
Statutory Notes and Related Subsidiaries
Effective Date of 1993 Amendment
Amendment by
§1070d–38. Stipends and scholarship conditions
(a) Amount of award
Each student awarded a scholarship under this subpart shall receive a stipend of $1,500 for the academic year of study for which the scholarship is awarded, except that in no case shall the total amount of financial aid awarded to such student exceed such student's total cost-of-attendance.
(b) Use of award
The State educational agency shall establish procedures to assure that a scholar awarded a scholarship under this subpart pursues a course of study at an institution of higher education.
(
Editorial Notes
Prior Provisions
A prior section 1070d–38,
Amendments
1992—Subsec. (a).
§1070d–39. Repealed. Pub. L. 102–325, title IV, §406(g)(1), July 23, 1992, 106 Stat. 509
Section,
A prior section 1070d–39,
§1070d–40. Construction of needs provisions
Except as provided in
(
Editorial Notes
Prior Provisions
A prior section 1070d–40,
Amendments
1992—
§1070d–41. Authorization of appropriations
There are authorized to be appropriated for this subpart such sums as may be necessary for fiscal year 2009 and each of the five succeeding fiscal years.
(
Editorial Notes
Prior Provisions
A prior section 1070d–41,
Amendments
2008—
1998—
1992—
Statutory Notes and Related Subsidiaries
Effective Date of 1998 Amendment
Amendment by
subpart 7—child care access means parents in school
Editorial Notes
Prior Provisions
A prior subpart 7, consisted of sections 1070e and 1070e–1 and related to assistance to institutions of higher education, prior to the repeal of sections 1070e and 1070e–1 by
§1070e. Child care access means parents in school
(a) Purpose
The purpose of this section is to support the participation of low-income parents in postsecondary education through the provision of campus-based child care services.
(b) Program authorized
(1) Authority
The Secretary may award grants to institutions of higher education to assist the institutions in providing campus-based child care services to low-income students.
(2) Amount of grants
(A) In general
The amount of a grant awarded to an institution of higher education under this section for a fiscal year shall not exceed 1 percent of the total amount of all Federal Pell Grant funds awarded to students enrolled at the institution of higher education for the preceding fiscal year.
(B) Minimum
(i) In general
Except as provided in clause (ii), a grant under this section shall be awarded in an amount that is not less than $10,000.
(ii) Increase trigger
For any fiscal year for which the amount appropriated under the authority of subsection (g) is equal to or greater than $20,000,000, a grant under this section shall be awarded in an amount that is not less than $30,000.
(3) Duration; renewal; and payments
(A) Duration
The Secretary shall award a grant under this section for a period of 4 years.
(B) Payments
Subject to subsection (e)(2), the Secretary shall make annual grant payments under this section.
(4) Eligible institutions
An institution of higher education shall be eligible to receive a grant under this section for a fiscal year if the total amount of all Federal Pell Grant funds awarded to students enrolled at the institution of higher education for the preceding fiscal year equals or exceeds $350,000, except that for any fiscal year for which the amount appropriated to carry out this section is equal to or greater than $20,000,000, this sentence shall be applied by substituting "$250,000" for "$350,000".
(5) Use of funds
Grant funds under this section shall be used by an institution of higher education to support or establish a campus-based child care program primarily serving the needs of low-income students enrolled at the institution of higher education. Grant funds under this section may be used to provide before and after school services to the extent necessary to enable low-income students enrolled at the institution of higher education to pursue postsecondary education.
(6) Construction
Nothing in this section shall be construed to prohibit an institution of higher education that receives grant funds under this section from serving the child care needs of the community served by the institution.
(7) Definition of low-income student
For the purpose of this section, the term "low-income student" means a student—
(A) who is eligible to receive a Federal Pell Grant for the award year for which the determination is made; or
(B) who would otherwise be eligible to receive a Federal Pell Grant for the award year for which the determination is made, except that the student fails to meet the requirements of—
(i)
(ii)
(8) Publicity
The Secretary shall publicize the availability of grants under this section in appropriate periodicals, in addition to publication in the Federal Register, and shall inform appropriate educational organizations of such availability.
(c) Applications
An institution of higher education desiring a grant under this section shall submit an application to the Secretary at such time, in such manner, and accompanied by such information as the Secretary may require. Each application shall—
(1) demonstrate that the institution is an eligible institution described in subsection (b)(4);
(2) specify the amount of funds requested;
(3) demonstrate the need of low-income students at the institution for campus-based child care services by including in the application—
(A) information regarding student demographics;
(B) an assessment of child care capacity on or near campus;
(C) information regarding the existence of waiting lists for existing child care;
(D) information regarding additional needs created by concentrations of poverty or by geographic isolation; and
(E) other relevant data;
(4) contain a description of the activities to be assisted, including whether the grant funds will support an existing child care program or a new child care program;
(5) identify the resources, including technical expertise and financial support, the institution will draw upon to support the child care program and the participation of low-income students in the program, such as accessing social services funding, using student activity fees to help pay the costs of child care, using resources obtained by meeting the needs of parents who are not low-income students, and accessing foundation, corporate or other institutional support, and demonstrate that the use of the resources will not result in increases in student tuition;
(6) contain an assurance that the institution will meet the child care needs of low-income students through the provision of services, or through a contract for the provision of services;
(7) describe the extent to which the child care program will coordinate with the institution's early childhood education curriculum, to the extent the curriculum is available, to meet the needs of the students in the early childhood education program at the institution, and the needs of the parents and children participating in the child care program assisted under this section;
(8) in the case of an institution seeking assistance for a new child care program—
(A) provide a timeline, covering the period from receipt of the grant through the provision of the child care services, delineating the specific steps the institution will take to achieve the goal of providing low-income students with child care services;
(B) specify any measures the institution will take to assist low-income students with child care during the period before the institution provides child care services; and
(C) include a plan for identifying resources needed for the child care services, including space in which to provide child care services, and technical assistance if necessary;
(9) contain an assurance that any child care facility assisted under this section will meet the applicable State or local government licensing, certification, approval, or registration requirements; and
(10) contain a plan for any child care facility assisted under this section to become accredited within 3 years of the date the institution first receives assistance under this section.
(d) Priority
The Secretary shall give priority in awarding grants under this section to institutions of higher education that submit applications describing programs that—
(1) leverage significant local or institutional resources, including in-kind contributions, to support the activities assisted under this section; and
(2) utilize a sliding fee scale for child care services provided under this section in order to support a high number of low-income parents pursuing postsecondary education at the institution.
(e) Reporting requirements; continuing eligibility
(1) Reporting requirements
(A) Reports
Each institution of higher education receiving a grant under this section shall report to the Secretary annually.
(B) Contents
The report shall include—
(i) data on the population served under this section;
(ii) information on campus and community resources and funding used to help low-income students access child care services;
(iii) information on progress made toward accreditation of any child care facility; and
(iv) information on the impact of the grant on the quality, availability, and affordability of campus-based child care services.
(2) Continuing eligibility
The Secretary shall make continuation awards under this section to an institution of higher education only if the Secretary determines, on the basis of the reports submitted under paragraph (1), that the institution is making a good faith effort to ensure that low-income students at the institution have access to affordable, quality child care services.
(f) Construction
No funds provided under this section shall be used for construction, except for minor renovation or repair to meet applicable State or local health or safety requirements.
(g) Authorization of appropriations
There are authorized to be appropriated to carry out this section such sums as may be necessary for fiscal year 2009 and each of the five succeeding fiscal years.
(
Editorial Notes
Prior Provisions
A prior section 1070e,
Another prior section 1070e,
A prior section 1070e–1,
Another prior section 1070e–1,
Amendments
2008—Subsec. (b)(2)(B).
Subsec. (b)(4).
Subsec. (b)(7).
Subsec. (b)(8).
Subsec. (e)(1)(A).
Subsec. (e)(2).
Subsec. (g).
Statutory Notes and Related Subsidiaries
Effective Date
Section effective Oct. 1, 1998, except as otherwise provided in
subpart 8—[Repealed]
Editorial Notes
Codification
Subpart 8 of part A of title IV of the Higher Education Act of 1965, which comprised this subpart, was originally added to
§§1070f to 1070f–6. Repealed. Pub. L. 110–315, title IV, §411, Aug. 14, 2008, 122 Stat. 3226
Section 1070f,
A prior section 1070f,
Section 1070f–1,
Section 1070f–2,
Section 1070f–3,
Section 1070f–4,
Section 1070f–5,
Section 1070f–6,
subpart 9—teach grants
§1070g. Definitions
For the purposes of this subpart:
(1) Eligible institution
The term "eligible institution" means an institution of higher education, as defined in
(A) provides high quality teacher preparation and professional development services, including extensive clinical experience as a part of pre-service preparation;
(B) is financially responsible;
(C) provides pedagogical course work, or assistance in the provision of such coursework, including the monitoring of student performance, and formal instruction related to the theory and practices of teaching; and
(D) provides supervision and support services to teachers, or assistance in the provision of such services, including mentoring focused on developing effective teaching skills and strategies.
(2) Post-baccalaureate
The term "post-baccalaureate" means a program of instruction for individuals who have completed a baccalaureate degree, that does not lead to a graduate degree, and that consists of courses required by a State in order for a teacher candidate to receive a professional certification or licensing credential that is required for employment as a teacher in an elementary school or secondary school in that State, except that such term shall not include any program of instruction offered by an eligible institution that offers a baccalaureate degree in education.
(3) Teacher candidate
The term "teacher candidate" means a student or teacher described in subparagraph (A) or (B) of
(
Editorial Notes
Amendments
2007—Par. (1)(B).
Statutory Notes and Related Subsidiaries
Effective Date
Subpart effective Oct. 1, 2007, see section 1(c) of
§1070g–1. Program established
(a) Program authority
(1) Payments required
The Secretary shall pay to each eligible institution such sums as may be necessary to pay to each teacher candidate who files an application and agreement in accordance with
(2) References
Grants made under paragraph (1) shall be known as "Teacher Education Assistance for College and Higher Education Grants" or "TEACH Grants".
(b) Payment methodology
(1) Prepayment
Not less than 85 percent of any funds provided to an eligible institution under subsection (a) shall be advanced to the eligible institution prior to the start of each payment period and shall be based upon an amount requested by the institution as needed to pay teacher candidates until such time as the Secretary determines and publishes in the Federal Register with an opportunity for comment, an alternative payment system that provides payments to institutions in an accurate and timely manner, except that this sentence shall not be construed to limit the authority of the Secretary to place an institution on a reimbursement system of payment.
(2) Direct payment
Nothing in this section shall be interpreted to prohibit the Secretary from paying directly to teacher candidates, in advance of the beginning of the academic term, an amount for which teacher candidates are eligible, in cases where the eligible institution elects not to participate in the disbursement system required by paragraph (1).
(3) Distribution of grants to teacher candidates
Payments under this subpart shall be made, in accordance with regulations promulgated by the Secretary for such purpose, in such manner as will best accomplish the purposes of this subpart. Any disbursement allowed to be made by crediting the teacher candidate's account shall be limited to tuition and fees and, in the case of institutionally-owned housing, room and board. The teacher candidate may elect to have the institution provide other such goods and services by crediting the teacher candidate's account.
(c) Reductions in amount
(1) Part-time students
In any case where a teacher candidate attends an eligible institution on less than a full-time basis (including a teacher candidate who attends an eligible institution on less than a half-time basis) during any year, the amount of a grant under this subpart for which that teacher candidate is eligible shall be reduced in proportion to the degree to which that teacher candidate is not attending on a full-time basis, in accordance with a schedule of reductions established by the Secretary for the purposes of this subpart, computed in accordance with this subpart. Such schedule of reductions shall be established by regulation and published in the Federal Register in accordance with
(2) No exceeding cost
The amount of a grant awarded under this subpart, in combination with Federal assistance and other assistance the student may receive, shall not exceed the cost of attendance (as defined in
(d) Period of eligibility for grants
(1) Undergraduate and post-baccalaureate students
The period during which an undergraduate or post-baccalaureate student may receive grants under this subpart shall be the period required for the completion of the first undergraduate baccalaureate or post-baccalaureate course of study being pursued by the teacher candidate at the eligible institution at which the teacher candidate is in attendance, except that—
(A) any period during which the teacher candidate is enrolled in a noncredit or remedial course of study as described in paragraph (3) shall not be counted for the purpose of this paragraph; and
(B) the total amount that a teacher candidate may receive under this subpart for undergraduate or post-baccalaureate study shall not exceed $16,000.
(2) Graduate students
The period during which a graduate student may receive grants under this subpart shall be the period required for the completion of a master's degree course of study pursued by the teacher candidate at the eligible institution at which the teacher candidate is in attendance, except that the total amount that a teacher candidate may receive under this subpart for graduate study shall not exceed $8,000.
(3) Remedial course; study abroad
Nothing in this section shall be construed to exclude from eligibility courses of study which are noncredit or remedial in nature (including courses in English language acquisition) which are determined by the eligible institution to be necessary to help the teacher candidate be prepared for the pursuit of a first undergraduate baccalaureate or post-baccalaureate degree or certificate or, in the case of courses in English language instruction, to be necessary to enable the teacher candidate to utilize already existing knowledge, training, or skills. Nothing in this section shall be construed to exclude from eligibility programs of study abroad that are approved for credit by the home institution at which the teacher candidate is enrolled.
(
Editorial Notes
Amendments
2007—Subsecs. (a)(1), (c)(1).
Subsec. (c)(2).
§1070g–2. Applications; eligibility
(a) Applications; demonstration of eligibility
(1) Filing required
The Secretary shall periodically set dates by which teacher candidates shall file applications for grants under this subpart. Each teacher candidate desiring a grant under this subpart for any year shall file an application containing such information and assurances as the Secretary may determine necessary to enable the Secretary to carry out the functions and responsibilities of this subpart.
(2) Demonstration of TEACH Grant eligibility
Each application submitted under paragraph (1) shall contain such information as is necessary to demonstrate that—
(A) if the applicant is an enrolled student—
(i) the student is an eligible student for purposes of
(ii) the student—
(I) has a grade point average that is determined, under standards prescribed by the Secretary, to be comparable to a 3.25 average on a zero to 4.0 scale, except that, if the student is in the first year of a program of undergraduate education, such grade point average shall be determined on the basis of the student's cumulative secondary school grade point average; or
(II) displayed high academic aptitude by receiving a score above the 75th percentile on at least one of the batteries in an undergraduate, post-baccalaureate, or graduate school admissions test; and
(iii) the student is completing coursework and other requirements necessary to begin a career in teaching, or plans to complete such coursework and requirements prior to graduating; or
(B) if the applicant is a current or prospective teacher applying for a grant to obtain a graduate degree—
(i) the applicant is a teacher or a retiree from another occupation with expertise in a field in which there is a shortage of teachers, such as mathematics, science, special education, English language acquisition, or another high-need subject; or
(ii) the applicant is or was a teacher who is using high-quality alternative certification routes, such as Teach for America, to get certified.
(b) Agreements to serve
Each application under subsection (a) shall contain or be accompanied by an agreement by the applicant that—
(1) the applicant will—
(A) serve as a full-time teacher for a total of not less than 4 academic years within 8 years after completing the course of study for which the applicant received a TEACH Grant under this subpart (referred to in this section as the "service obligation window");
(B) teach in a school described in
(C) teach in any of the following fields—
(i) mathematics;
(ii) science;
(iii) a foreign language;
(iv) bilingual education;
(v) special education;
(vi) as a reading specialist; or
(vii) another field or geographic area documented as high-need by the Federal Government, State government, or local educational agency, and approved by the Secretary;
(D) submit a certification of employment by the chief administrative officer of the school in accordance with subsection (d)(5); and
(E) meet all State certification requirements for teaching (which may include meeting such requirements through a certification obtained through alternative routes to teaching);
(2) in the event that the applicant is determined to have failed or refused to carry out such service obligation, the sum of the amounts of any TEACH Grants received by such applicant will be treated as a loan and collected from the applicant in accordance with subsection (c) and the regulations thereunder; and
(3) contains, or is accompanied by, a plain-language disclosure form developed by the Secretary that clearly describes the nature of the TEACH Grant award, the service obligation, and the loan repayment requirements that are the consequence of the failure to complete the service obligation.
(c) Repayment for failure to complete service
(1) In general
In the event that any recipient of a grant under this subpart fails or refuses to comply with the service obligation in the agreement under subsection (b), the sum of the amounts of any TEACH Grants received by such recipient shall, upon a determination of such a failure or refusal in such service obligation, be treated as a Federal Direct Unsubsidized Stafford Loan under part D, and shall be subject to repayment, together with interest thereon accruing from the date of the grant award, in accordance with terms and conditions specified by the Secretary in regulations under this subpart.
(2) Reconsideration of conversion decisions
(A) Request to reconsider
In any case where the Secretary has determined that a recipient of a grant under this subpart has failed or refused to comply with the service obligation in the agreement under subsection (b) and has converted the grant into a Federal Direct Unsubsidized Stafford Loan under part D in accordance with paragraph (1), (including a TEACH Grant converted to a loan prior to October 13, 2021, and including cases where such loans have been fully or partially paid), the recipient may request that the Secretary reconsider such initial determination and may submit additional information to demonstrate satisfaction of the service obligation. Upon receipt of such a request, the Secretary shall reconsider the determination in accordance with this paragraph not later than 90 days after the date that such request was received.
(B) Reconsideration
If, in reconsidering an initial determination under subparagraph (A) (including reconsideration related to a TEACH Grant that was converted to a loan prior to October 13, 2021, and including cases where such loans were fully or partially paid), the Secretary determines that the reason for such determination was the recipient's failure to timely submit a certification required under subsection (b)(1)(D) (as in effect on the day before October 13, 2021), an error or processing delay by the Secretary, a change to the fields considered eligible for fulfillment of the service obligation (as described in subsection (b)(1)(C)), a recipient having previously requested to have the TEACH Grant converted to a loan, or another valid reason determined by the Secretary, and that the recipient has, as of the date of the reconsideration, demonstrated that the recipient did meet, or is meeting the service obligation in the agreement under subsection (b), the Secretary shall—
(i) discharge the Federal Direct Unsubsidized Stafford Loan under part D, and reinstate the recipient's grant under this subpart;
(ii) discharge any interest or fees that may have accumulated during the period that the grant was converted to a Federal Direct Unsubsidized Stafford Loan under part D;
(iii) if the recipient has other loans under part D, apply any payments made for the Federal Direct Unsubsidized Stafford Loan under part D during such period to those other loans under part D;
(iv) if the recipient does not have other loans under part D, reimburse the recipient for any amounts paid on the Federal Direct Unsubsidized Stafford Loan under part D during such period;
(v) request that consumer reporting agencies remove any negative credit reporting due to the conversion of the TEACH Grant to a loan; and
(vi) use the additional information provided under subparagraph (A) to determine the progress the recipient has made in meeting the service obligation.
(C) Extension of time to complete service obligation
In the case of a recipient whose TEACH Grant was reinstated in accordance with subparagraph (B), the Secretary shall, upon such reinstatement—
(i) extend the time remaining for the recipient to fulfill the service obligation described in subsection (b)(1) to a period of time equal to—
(I) 8 years; minus
(II) the number of full academic years of teaching that the recipient completed prior to the reconversion of the loan to a TEACH Grant under subparagraph (B), including any years of qualifying teaching completed during the period when the TEACH Grant was in loan status; and
(ii) treat any full academic years of teaching described in clause (i)(II) as years that count toward the individual's service obligation (regardless of whether the TEACH Grant funds were in grant or loan status) if that time otherwise meets the requirements of this section.
(d) Additional administrative provisions
(1) Change of high-need designation
If a recipient of an initial grant under this subpart has acquired an academic degree, or expertise, in a field that was, at the time of the recipient's application for that grant, designated as high need in accordance with subsection (b)(1)(C)(vii), but is no longer so designated, the grant recipient may fulfill the service obligation described in subsection (b)(1) by teaching in that field.
(2) Extenuating circumstances
The Secretary shall establish, by regulation, categories of extenuating circumstances under which a recipient of a grant under this subpart who is unable to fulfill all or part of the recipient's service obligation may be excused from fulfilling that portion of the service obligation.
(3) Communication with recipients
The Secretary shall notify TEACH grant recipients not less than once per calendar year regarding how to submit the employment certification under subsection (b)(1)(D) and the recommendations and requirements for submitting that certification under subsection (d)(5).
(4) Qualifying schools and high-need fields
The Secretary shall maintain and annually update a list of qualifying schools as described in subsection (b)(1)(B), and a list of high-need fields as described in subsection (b)(1)(C) and shall make such lists publicly available on the Department's website in a sortable and searchable format.
(5) Submission of employment certification
(A) Recommended submissions
The Secretary shall notify TEACH Grant recipients that the Department recommends that TEACH Grant recipients submit the employment certification described in subsection (b)(1)(D) as soon as practicable after the completion of each year of service.
(B) Required submission
A TEACH Grant recipient shall be required to submit to the Department employment certification within the timeframe that would allow that individual to complete their service obligation before the end of the service obligation window.
(C) Notification
The Secretary shall notify TEACH Grant recipients of the required submission deadlines described in this paragraph.
(D) Adjustment of deadline
The Secretary shall adjust the submission deadline described in subparagraph (B) to account for a service obligation window extension.
(E) Alternative to certification
The Secretary shall provide an alternative to the certification of employment described in subsection (b)(1)(D) for recipients who cannot obtain such required certification of employment from the chief administrative officer of the school because the recipient can demonstrate the school is no longer in existence or the school refuses to cooperate.
(
Editorial Notes
Amendments
2021—Subsec. (b)(1)(A).
Subsec. (b)(1)(C)(vii).
Subsec. (b)(1)(D), (E).
"(D) submit evidence of such employment in the form of a certification by the chief administrative officer of the school upon completion of each year of such service; and
"(E) comply with the requirements for being a highly qualified teacher as defined in section 9101 of the Elementary and Secondary Education Act of 1965;".
Subsec. (c).
Subsec. (d)(3), (4).
Subsec. (d)(5).
2008—Subsec. (b)(3).
Subsec. (d).
Statutory Notes and Related Subsidiaries
Effective Date of 2008 Amendment
Implementation of Pub. L. 117–49
"(1) subchapter I of
"(2) the master calendar requirements under section 482 of the Higher Education Act of 1965 (
"(3) negotiated rulemaking under section 492 of the Higher Education Act of 1965 (
"(4) the requirement to publish the notices related to the system of records of the agency before implementation required under paragraphs (4) and (11) of
Use of the Term "Highly Qualified" in Other Laws
"(1) any reference in sections 420N, 428J, 428K, and 460 of the Higher Education Act of 1965 (
"(2) any reference in section 6112 of the America COMPETES Act ([former] 20 U.S.C. 9812), section 553 of the America COMPETES Reauthorization Act of 2010 (
§1070g–3. Program period and funding
Beginning on July 1, 2008, there shall be available to the Secretary to carry out this subpart, from funds not otherwise appropriated, such sums as may be necessary to provide TEACH Grants in accordance with this subpart to each eligible applicant.
(
§1070g–4. Program report
Not later than two years after August 14, 2008, and every two years thereafter, the Secretary shall prepare and submit to the authorizing committees a report on TEACH grants with respect to the schools and students served by recipients of such grants. Such report shall take into consideration information related to—
(1) the number of TEACH grant recipients;
(2) the degrees obtained by such recipients;
(3) the location, including the school, local educational agency, and State, where the recipients completed the service agreed to under
(4) the duration of such service; and
(5) any other data necessary to conduct such evaluation.
(
subpart 10—scholarships for veteran's dependents
§1070h. Repealed. Pub. L. 117–103, div. R, §103(c)(2), Mar. 15, 2022, 136 Stat. 821
Section,
Statutory Notes and Related Subsidiaries
Effective Date of Repeal
Repeal effective as if included in title VII of div. FF of
Part B—Federal Family Education Loan Program
Editorial Notes
Codification
Part B of title IV of the Higher Education Act of 1965, comprising this part, was originally enacted by
§1071. Statement of purpose; nondiscrimination; and appropriations authorized
(a) Purpose; discrimination prohibited
(1) Purpose
The purpose of this part is to enable the Secretary—
(A) to encourage States and nonprofit private institutions and organizations to establish adequate loan insurance programs for students in eligible institutions (as defined in
(B) to provide a Federal program of student loan insurance for students or lenders who do not have reasonable access to a State or private nonprofit program of student loan insurance covered by an agreement under
(C) to pay a portion of the interest on loans to qualified students which are insured under this part, and
(D) to guarantee a portion of each loan insured under a program of a State or of a nonprofit private institution or organization which meets the requirements of
(2) Discrimination by creditors prohibited
No agency, organization, institution, bank, credit union, corporation, or other lender who regularly extends, renews, or continues credit or provides insurance under this part shall exclude from receipt or deny the benefits of, or discriminate against any borrower or applicant in obtaining, such credit or insurance on the basis of race, national origin, religion, sex, marital status, age, or handicapped status.
(b) Authorization of appropriations
For the purpose of carrying out this part—
(1) there are authorized to be appropriated to the student loan insurance fund (established by
(2) there are authorized to be appropriated, for payments under
(3) there is authorized to be appropriated the sum of $17,500,000 for making advances pursuant to
(4) there are authorized to be appropriated (A) the sum of $12,500,000 for making advances after June 30, 1968, pursuant to sections 1072(a) and (b) of this title, and (B) such sums as may be necessary for making advances pursuant to
(5) there are authorized to be appropriated such sums as may be necessary for the purpose of paying a loan processing and issuance fee in accordance with
(6) there is authorized to be appropriated, and there are appropriated, out of any money in the Treasury not otherwise appropriated, such sums as may be necessary for the purpose of carrying out
Sums appropriated under paragraphs (1), (2), (4), and (5) of this subsection shall remain available until expended, except that no sums may be expended after June 30, 2010, with respect to loans under this part for which the first disbursement is after such date. No additional sums are authorized to be appropriated under paragraph (3) or (4) of this subsection by reason of the reenactment of such paragraphs by the Higher Education Amendments of 1986.
(c) Designation
The program established under this part shall be referred to as the "Robert T. Stafford Federal Student Loan Program". Loans made pursuant to
(d) Termination of authority to make or insure new loans
Notwithstanding paragraphs (1) through (6) of subsection (b) or any other provision of law—
(1) no new loans (including consolidation loans) may be made or insured under this part after June 30, 2010; and
(2) no funds are authorized to be appropriated, or may be expended, under this chapter or any other Act to make or insure loans under this part (including consolidation loans) for which the first disbursement is after June 30, 2010,
except as expressly authorized by an Act of Congress enacted after March 30, 2010.
(
Editorial Notes
References in Text
The Higher Education Amendments of 1986, referred to in subsec. (b), is
Codification
Another section 411 of
Prior Provisions
A prior section 1071,
Amendments
2010—Subsec. (b).
Subsec. (d).
2008—Subsec. (b)(6).
2006—Subsec. (b)(5).
1998—Subsec. (d).
1992—Subsec. (c).
Subsec. (d).
1988—Subsec. (c).
Statutory Notes and Related Subsidiaries
Effective Date of 2008 Amendment
Effective Date of 2006 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
Effective Date of 1988 Amendment
"(a)
"(b)
"(2) The provisions of section 2402, relating to the National Center for Vocational Research, shall take effect on April 10, 1988.
"(3) The amendments made by section 3403 [amending
"(4) Allotments to States made under chapters 1 and 2 of title I of the Elementary and Secondary Education Act of 1965 [formerly
"(5) Amounts appropriated by the joint resolution entitled 'Joint resolution making further continuing appropriations for the fiscal year 1988, and for other purposes', approved December 22, 1987 (
"(A) Programs under subchapter D of
"(B) National programs under the Adult Education Act [formerly
"(C) Programs under the Indian Education Act [
"(D) Programs under title II of the Education for Economic Security Act [formerly
"(E) The program under section 702 of the McKinney-Vento Homeless Assistance Act [formerly
"(6) The provisions of part A of title II of this Act [§§2001 to 2034 of
"(7) The amendments made by section 6001 [amending
"(8) Any election under section 5209(b)(1) [
Effective Date
"(b)
"(1) as otherwise provided in such part B;
"(2) the changes in sections 427(a)(2)(C) and 428(b)(1)(M) of the Act [
"(3) the changes made in sections 425(a), 428(b)(1)(A), and 428(b)(1)(B) of the Act [
"(4) the changes made in subsections (a), (b), and (d) of section 433 of the Act [
"(5) the changes in section 428(b)(1)(H) [
"(6) the changes in sections 435(d)(5) and 438(d) of the Act [
"(7) the changes made in section 438(b) [
"(c)
"(d)
Study of Role of Guaranty Agencies
General Accounting Office Reports
§1072. Advances for reserve funds of State and nonprofit private loan insurance programs
(a) Purpose of and authority for advances to reserve funds
(1) Purpose; eligible recipients
From sums appropriated pursuant to paragraphs (3) and (4)(A) of
(2) Matching requirement
No advance shall be made after June 30, 1968, unless matched by an equal amount from non-Federal sources. Such equal amount may include the unencumbered non-Federal portion of a reserve fund. As used in the preceding sentence, the term "unencumbered non-Federal portion" means the amount (determined as of the time immediately preceding the making of the advance) of the reserve fund less the greater of—
(A) the sum of—
(i) advances made under this section prior to July 1, 1968;
(ii) an amount equal to twice the amount of advances made under this section after June 30, 1968, and before the advance for purposes of which the determination is made; and
(iii) the proceeds of earnings on advances made under this section; or
(B) any amount which is required to be maintained in such fund pursuant to State law or regulation, or by agreement with lenders, as a reserve against the insurance of outstanding loans.
Except as provided in section 1078(c)(9)(E) or (F) of this title, such unencumbered non-Federal portion shall not be subject to recall, repayment, or recovery by the Secretary.
(3) Terms and conditions; repayment
Advances pursuant to this subsection shall be upon such terms and conditions (including conditions relating to the time or times of payment) consistent with the requirements of
(b) Limitations on total advances
(1) In general
The total of the advances from the sums appropriated pursuant to paragraph (4)(A) of
(2) Calculation of population
For the purpose of this subsection, the population aged 18 to 22, inclusive, of each State and of all the States shall be determined by the Secretary on the basis of the most recent satisfactory data available to him.
(c) Advances for insurance obligations
(1) Use for payment of insurance obligations
From sums appropriated pursuant to
(2) Amount of advances
(A) Except as provided in subparagraph (B), the amount to be advanced to each such State shall be equal to 10 percent of the principal amount of loans made by lenders and insured by such agency on those loans on which the first payment of principal became due during the fiscal year immediately preceding the fiscal year in which the advance is made.
(B) The amount of any advance determined according to subparagraph (A) of this paragraph shall be reduced by—
(i) the amount of any advance or advances made to such State pursuant to this subsection at an earlier date; and
(ii) the amount of the unspent balance of the advances made to a State pursuant to subsection (a).
Notwithstanding subparagraph (A) and the preceding sentence of this subparagraph, but subject to subparagraph (D) of this paragraph, the amount of any advance to a State described in paragraph (5)(A) for the first year of its eligibility under such paragraph, and the amount of any advance to any State described in paragraph (5)(B) for each year of its eligibility under such paragraph, shall not be less than $50,000.
(C) For the purpose of subparagraph (B), the unspent balance of the advances made to a State pursuant to subsection (a) shall be that portion of the balance of the State's reserve fund (remaining at the time of the State's first request for an advance pursuant to this subsection) which bears the same ratio to such balance as the Federal advances made and not returned by such State, pursuant to subsection (a), bears to the total of all past contributions to such reserve funds from all sources (other than interest on investment of any portion of the reserve fund) contributed since the date such State executed an agreement pursuant to
(D) If the sums appropriated for any fiscal year for paying the amounts determined under subparagraphs (A) and (B) are not sufficient to pay such amounts in full, then such amounts shall be reduced—
(i) by ratably reducing that portion of the amount allocated to each State which exceeds $50,000; and
(ii) if further reduction is required, by equally reducing the $50,000 minimum allocation of each State.
If additional sums become available for paying such amounts for any fiscal year during which the preceding sentence has been applied, such reduced amounts shall be increased on the same basis as they were reduced.
(3) Use of earnings for insurance obligations
The earnings, if any, on any investments of advances received pursuant to this subsection must be used for making payments under the State's insurance obligations.
(4) Repayment of advances
Advances made by the Secretary under this subsection shall, subject to subsection (d), be repaid within such period as the Secretary may deem to be appropriate and shall be deposited in the fund established by
(5) Limitation on number of advances
Except as provided in paragraph (7), advances pursuant to this subsection shall be made to a State—
(A) in the case of a State which is actively carrying on a program under an agreement pursuant to
(B) in the case of a State which enters into an agreement pursuant to
(6) Payment of advances where no State program
(A) If for any fiscal year a State does not have a student loan insurance program covered by an agreement made pursuant to
(B) The Secretary may enter into an agreement with a private nonprofit institution or organization for the purpose of this paragraph under which such institution or organization—
(i) agrees to establish within such State at least one office with sufficient staff to handle written, electronic, and telephone inquiries from students, eligible lenders, and other persons in the State, to encourage maximum commercial lender participation within the State, and to conduct periodic visits to at least the major eligible lenders within the State;
(ii) agrees that its insurance will not be denied any student because of his or her choice of eligible institutions; and
(iii) certifies that it is neither an eligible institution, nor has any substantial affiliation with an eligible institution.
(7) Emergency advances
The Secretary is authorized to make advances, on terms and conditions satisfactory to the Secretary, to a guaranty agency—
(A) in accordance with
(B) if the Secretary is seeking to terminate the guaranty agency's agreement, or assuming the guaranty agency's functions, in accordance with
(d) Recovery of advances during fiscal years 1988 and 1989
(1) Amount and use of recovered funds
Notwithstanding any other provision of this section, advances made by the Secretary under this section shall be repaid in accordance with this subsection and shall be deposited in the fund established by
(2) Determination of guaranty agency obligations
In determining the amount of advances which shall be repaid by a guaranty agency under paragraph (1), the Secretary—
(A) shall consider the solvency and maturity of the reserve and insurance funds of the guaranty agency assisted by such advances, as determined by the Comptroller General taking into account the requirements of State law as in effect on October 17, 1986;
(B) shall not seek repayment of such advances from any State described in subsection (c)(5)(B) during any year of its eligibility under such subsection; and
(C) shall not seek repayment of such advances from any State if such repayment encumbers the reserve fund requirement of State law as in effect on October 17, 1986.
(e) Correction for errors under reduction of excess cash reserves
(1) In general
The Secretary shall pay any guaranty agency the amount of reimbursement of claims under
(2) Amount
The amount of reimbursement for claims shall be equal to the amount of reimbursement for claims withheld or canceled in order to be applied to such agency's obligation to eliminate excess cash reserves which exceeds the amount of that which would have been withheld or canceled if the maximum excess cash reserves had been accurately calculated.
(f) Refund of cash reserve payments
The Secretary shall, within 30 days after July 23, 1992, pay the full amount of payments withheld or canceled under paragraph (3) of this subsection to any guaranty agency which—
(1) was required to eliminate excess cash reserves, based on the maximum cash reserve (as described in subsection (e) of this section as in effect on September 1, 1988) permitted at the end of 1986;
(2) appealed the Secretary's demand that such agency should eliminate such excess cash reserves and received a waiver of a portion of the amount of such excess cash reserves to be eliminated;
(3) had payments under
(4) according to a Department of Education review that was completed and forwarded to such guaranty agency prior to January 1, 1992, is expected to become insolvent during or before 1996 and the payments withheld or canceled under paragraph (3) of this subsection are a factor in such agency's impending insolvency.
(g) Preservation and recovery of guaranty agency reserves
(1) Authority to recover funds
Notwithstanding any other provision of law, the reserve funds of the guaranty agencies, and any assets purchased with such reserve funds, regardless of who holds or controls the reserves or assets, shall be considered to be the property of the United States to be used in the operation of the program authorized by this part. However, the Secretary may not require the return of all reserve funds of a guaranty agency to the Secretary unless the Secretary determines that such return is in the best interest of the operation of the program authorized by this part, or to ensure the proper maintenance of such agency's funds or assets or the orderly termination of the guaranty agency's operations and the liquidation of its assets. The reserves shall be maintained by each guaranty agency to pay program expenses and contingent liabilities, as authorized by the Secretary, except that—
(A) the Secretary may direct a guaranty agency to return to the Secretary a portion of its reserve fund which the Secretary determines is unnecessary to pay the program expenses and contingent liabilities of the guaranty agency;
(B) the Secretary may direct the guaranty agency to require the return, to the guaranty agency or to the Secretary, of any reserve funds or assets held by, or under the control of, any other entity, which the Secretary determines are necessary to pay the program expenses and contingent liabilities of the guaranty agency, or which are required for the orderly termination of the guaranty agency's operations and the liquidation of its assets;
(C) the Secretary may direct a guaranty agency, or such agency's officers or directors, to cease any activities involving expenditure, use or transfer of the guaranty agency's reserve funds or assets which the Secretary determines is a misapplication, misuse, or improper expenditure of such funds or assets; and
(D) any such determination under subparagraph (A) or (B) shall be based on standards prescribed by regulations that are developed through negotiated rulemaking and that include procedures for administrative due process.
(2) Termination provisions in contracts
(A) To ensure that the funds and assets of the guaranty agency are preserved, any contract with respect to the administration of a guaranty agency's reserve funds, or the administration of any assets purchased or acquired with the reserve funds of the guaranty agency, that is entered into or extended by the guaranty agency, or any other party on behalf of or with the concurrence of the guaranty agency, after August 10, 1993, shall provide that the contract is terminable by the Secretary upon 30 days notice to the contracting parties if the Secretary determines that such contract includes an impermissible transfer of the reserve funds or assets, or is otherwise inconsistent with the terms or purposes of this section.
(B) The Secretary may direct a guaranty agency to suspend or cease activities under any contract entered into by or on behalf of such agency after January 1, 1993, if the Secretary determines that the misuse or improper expenditure of such guaranty agency's funds or assets or such contract provides unnecessary or improper benefits to such agency's officers or directors.
(3) Penalties
Violation of any direction issued by the Secretary under this subsection may be subject to the penalties described in
(4) Availability of funds
Any funds that are returned or otherwise recovered by the Secretary pursuant to this subsection shall be available for expenditure for expenses pursuant to
(h) Recall of reserves; limitations on use of reserve funds and assets
(1) In general
Notwithstanding any other provision of law, the Secretary shall, except as otherwise provided in this subsection, recall $1,000,000,000 from the reserve funds held by guaranty agencies on September 1, 2002.
(2) Deposit
Funds recalled by the Secretary under this subsection shall be deposited in the Treasury.
(3) Required share
The Secretary shall require each guaranty agency to return reserve funds under paragraph (1) based on the agency's required share of recalled reserve funds held by guaranty agencies as of September 30, 1996. For purposes of this paragraph, a guaranty agency's required share of recalled reserve funds shall be determined as follows:
(A) The Secretary shall compute each guaranty agency's reserve ratio by dividing (i) the amount held in the agency's reserve funds as of September 30, 1996 (but reflecting later accounting or auditing adjustments approved by the Secretary), by (ii) the original principal amount of all loans for which the agency has an outstanding insurance obligation as of such date, including amounts of outstanding loans transferred to the agency from another guaranty agency.
(B) If the reserve ratio of any guaranty agency as computed under subparagraph (A) exceeds 2.0 percent, the agency's required share shall include so much of the amounts held in the agency's reserve funds as exceed a reserve ratio of 2.0 percent.
(C) If any additional amount is required to be recalled under paragraph (1) (after deducting the total of the required shares calculated under subparagraph (B)), such additional amount shall be obtained by imposing on each guaranty agency an equal percentage reduction in the amount of the agency's reserve funds remaining after deduction of the amount recalled under subparagraph (B), except that such percentage reduction under this subparagraph shall not result in the agency's reserve ratio being reduced below 0.58 percent. The equal percentage reduction shall be the percentage obtained by dividing—
(i) the additional amount required to be recalled (after deducting the total of the required shares calculated under subparagraph (B)), by
(ii) the total amount of all such agencies' reserve funds remaining (after deduction of the required shares calculated under such subparagraph).
(D) If any additional amount is required to be recalled under paragraph (1) (after deducting the total of the required shares calculated under subparagraphs (B) and (C)), such additional amount shall be obtained by imposing on each guaranty agency with a reserve ratio (after deducting the required shares calculated under such subparagraphs) in excess of 0.58 percent an equal percentage reduction in the amount of the agency's reserve funds remaining (after such deduction) that exceed a reserve ratio of 0.58 percent. The equal percentage reduction shall be the percentage obtained by dividing—
(i) the additional amount to be recalled under paragraph (1) (after deducting the amount recalled under subparagraphs (B) and (C)), by
(ii) the total amount of all such agencies' reserve funds remaining (after deduction of the required shares calculated under such subparagraphs) that exceed a reserve ratio of 0.58 percent.
(4) Restricted accounts required
(A) In general
Within 90 days after the beginning of each of the fiscal years 1998 through 2002, each guaranty agency shall transfer a portion of the agency's required share determined under paragraph (3) to a restricted account established by the agency that is of a type selected by the agency with the approval of the Secretary. Funds transferred to such restricted accounts shall be invested in obligations issued or guaranteed by the United States or in other similarly low-risk securities.
(B) Requirement
A guaranty agency shall not use the funds in such a restricted account for any purpose without the express written permission of the Secretary, except that a guaranty agency may use the earnings from such restricted account for default reduction activities.
(C) Installments
In each of fiscal years 1998 through 2002, each guaranty agency shall transfer the agency's required share to such restricted account in 5 equal annual installments, except that—
(i) a guaranty agency that has a reserve ratio (as computed under subparagraph (3)(A)) equal to or less than 1.10 percent may transfer the agency's required share to such account in 4 equal installments beginning in fiscal year 1999; and
(ii) a guaranty agency may transfer such required share to such account in accordance with such other payment schedules as are approved by the Secretary.
(5) Shortage
If, on September 1, 2002, the total amount in the restricted accounts described in paragraph (4) is less than the amount the Secretary is required to recall under paragraph (1), the Secretary shall require the return of the amount of the shortage from other reserve funds held by guaranty agencies under procedures established by the Secretary. The Secretary shall first attempt to obtain the amount of such shortage from each guaranty agency that failed to transfer the agency's required share to the agency's restricted account in accordance with paragraph (4).
(6) Enforcement
(A) In general
The Secretary may take such reasonable measures, and require such information, as may be necessary to ensure that guaranty agencies comply with the requirements of this subsection.
(B) Prohibition
If the Secretary determines that a guaranty agency has failed to transfer to a restricted account any portion of the agency's required share under this subsection, the agency may not receive any other funds under this part until the Secretary determines that the agency has so transferred the agency's required share.
(C) Waiver
The Secretary may waive the requirements of subparagraph (B) for a guaranty agency described in such subparagraph if the Secretary determines that there are extenuating circumstances beyond the control of the agency that justify such waiver.
(7) Limitation
(A) Restriction on other authority
The Secretary shall not have any authority to direct a guaranty agency to return reserve funds under subsection (g)(1)(A) during the period from August 5, 1997, through September 30, 2002.
(B) Use of termination collections
Any reserve funds directed by the Secretary to be returned to the Secretary under subsection (g)(1)(B) during such period that do not exceed a guaranty agency's required share of recalled reserve funds under paragraph (3)—
(i) shall be used to satisfy the agency's required share of recalled reserve funds; and
(ii) shall be deposited in the restricted account established by the agency under paragraph (4), without regard to whether such funds exceed the next installment required under such paragraph.
(C) Use of sanctions collections
Any reserve funds directed by the Secretary to be returned to the Secretary under subsection (g)(1)(C) during such period that do not exceed a guaranty agency's next installment under paragraph (4)—
(i) shall be used to satisfy the agency's next installment; and
(ii) shall be deposited in the restricted account established by the agency under paragraph (4).
(D) Balance available to Secretary
Any reserve funds directed by the Secretary to be returned to the Secretary under subparagraph (B) or (C) of subsection (g)(1) that remain after satisfaction of the requirements of subparagraphs (B) and (C) of this paragraph shall be deposited in the Treasury.
(8) Definitions
For the purposes of this subsection:
(A) Default reduction activities
The term "default reduction activities" means activities to reduce student loan defaults that improve, strengthen, and expand default prevention activities, such as—
(i) establishing a program of partial loan cancellation to reward disadvantaged borrowers for good repayment histories with their lenders;
(ii) establishing a financial and debt management counseling program for high-risk borrowers that provides long-term training (beginning prior to the first disbursement of the borrower's first student loan and continuing through the completion of the borrower's program of education or training) in budgeting and other aspects of financial management, including debt management;
(iii) establishing a program of placement counseling to assist high-risk borrowers in identifying employment or additional training opportunities; and
(iv) developing public service announcements that would detail consequences of student loan default and provide information regarding a toll-free telephone number established by the guaranty agency for use by borrowers seeking assistance in avoiding default.
(B) Reserve funds
The term "reserve funds" when used with respect to a guaranty agency—
(i) includes any reserve funds in cash or liquid assets held by the guaranty agency, or held by, or under the control of, any other entity; and
(ii) does not include buildings, equipment, or other nonliquid assets.
(i) Additional recall of reserves
(1) In general
Notwithstanding any other provision of law and subject to paragraph (4), the Secretary shall recall, from reserve funds held in the Federal Student Loan Reserve Funds established under
(A) $85,000,000 in fiscal year 2002;
(B) $82,500,000 in fiscal year 2006; and
(C) $82,500,000 in fiscal year 2007.
(2) Deposit
Funds recalled by the Secretary under this subsection shall be deposited in the Treasury.
(3) Required share
The Secretary shall require each guaranty agency to return reserve funds under paragraph (1) on the basis of the agency's required share. For purposes of this paragraph, a guaranty agency's required share shall be determined as follows:
(A) Equal percentage
The Secretary shall require each guaranty agency to return an amount representing an equal percentage reduction in the amount of reserve funds held by the agency on September 30, 1996.
(B) Calculation
The equal percentage reduction shall be the percentage obtained by dividing—
(i) $250,000,000, by
(ii) the total amount of all guaranty agencies' reserve funds held on September 30, 1996, less any amounts subject to recall under subsection (h).
(C) Special rule
Notwithstanding subparagraphs (A) and (B), the percentage reduction under subparagraph (B) shall not result in the depletion of the reserve funds of any agency which charges the 1.0 percent insurance premium pursuant to
(4) Offset of required shares
If any guaranty agency returns to the Secretary any reserve funds in excess of the amount required under this subsection or subsection (h), the total amount required to be returned under paragraph (1) shall be reduced by the amount of such excess reserve funds returned.
(5) Definition of reserve funds
The term "reserve funds" when used with respect to a guaranty agency—
(A) includes any reserve funds in cash or liquid assets held by the guaranty agency, or held by, or under the control of, any other entity; and
(B) does not include buildings, equipment, or other nonliquid assets.
(
Editorial Notes
Codification
Amendment by
Prior Provisions
A prior section 1072,
Amendments
1998—Subsec. (a)(2).
Subsec. (c)(6)(B)(i).
Subsec. (c)(7)(A).
Subsec. (c)(7)(B).
Subsec. (g)(1).
Subsec. (i).
1997—Subsec. (h).
1993—Subsec. (c)(7).
Subsec. (c)(7)(B).
Subsec. (g).
1992—Subsec. (a)(2).
Subsec. (c)(5), (7).
Subsecs. (e), (f).
1987—Subsec. (e).
Statutory Notes and Related Subsidiaries
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1987 Amendment
§1072a. Federal Student Loan Reserve Fund
(a) Establishment
Each guaranty agency shall, not later than 60 days after October 7, 1998, deposit all funds, securities, and other liquid assets contained in the reserve fund established pursuant to
(b) Investment of funds
Funds transferred to the Federal Fund shall be invested in obligations issued or guaranteed by the United States or a State, or in other similarly low-risk securities selected by the guaranty agency, with the approval of the Secretary. Earnings from the Federal Fund shall be the sole property of the Federal Government.
(c) Additional deposits
After the establishment of the Federal Fund, a guaranty agency shall deposit into the Federal Fund—
(1) all amounts received from the Secretary as payment of reinsurance on loans pursuant to
(2) from amounts collected on behalf of the obligation of a defaulted borrower, a percentage amount equal to the complement of the reinsurance percentage in effect when payment under the guaranty agreement was made—
(A) with respect to the defaulted loan pursuant to sections 1078(c)(6)(A) 1 and 1078–6(a)(1)(B) of this title; and
(B) with respect to a loan that the Secretary has repaid or discharged under
(3) insurance premiums collected from borrowers pursuant to
(4) all amounts received from the Secretary as payment for supplemental preclaims activity performed prior to October 7, 1998;
(5) 70 percent of amounts received after October 7, 1998, from the Secretary as payment for administrative cost allowances for loans upon which insurance was issued prior to October 7, 1998; and
(6) other receipts as specified in regulations of the Secretary.
(d) Uses of funds
Subject to subsection (f), the Federal Fund may only be used by a guaranty agency—
(1) to pay lender claims pursuant to
(2) to pay into the Agency Operating Fund established pursuant to
(e) Ownership of Federal Fund
The Federal Fund, and any nonliquid asset (such as a building or equipment) developed or purchased by the guaranty agency in whole or in part with Federal reserve funds, regardless of who holds or controls the Federal reserve funds or such asset, shall be considered to be the property of the United States, prorated based on the percentage of such asset developed or purchased with Federal reserve funds, which property shall be used in the operation of the program authorized by this part, as provided in subsection (d). The Secretary may restrict or regulate the use of such asset only to the extent necessary to reasonably protect the Secretary's prorated share of the value of such asset. The Secretary may direct a guaranty agency, or such agency's officers or directors, to cease any activity involving expenditures, use, or transfer of the Federal Fund administered by the guaranty agency that the Secretary determines is a misapplication, misuse, or improper expenditure of the Federal Fund or the Secretary's share of such asset.
(f) Transition
(1) In general
In order to establish the Operating Fund, each guaranty agency may transfer not more than 180 days' cash expenses for normal operating expenses (not including claim payments) as a working capital reserve as defined in Office of Management and Budget Circular A–87 (Cost Accounting Standards) from the Federal Fund for deposit into the Operating Fund for use in the performance of the guaranty agency's duties under this part. Such transfers may occur during the first 3 years following the establishment of the Operating Fund. However, no agency may transfer in excess of 45 percent of the balance, as of September 30, 1998, of the agency's Federal Fund to the agency's Operating Fund during such 3-year period. In determining the amount that may be transferred, the agency shall ensure that sufficient funds remain in the Federal Fund to pay lender claims within the required time periods and to meet the reserve recall requirements of this section and subsections (h) and (i) of
(2) Special rule
A limited number of guaranty agencies may transfer interest earned on the Federal Fund to the Operating Fund during the first 3 years after October 7, 1998, if the guaranty agency demonstrates to the Secretary that—
(A) the cash flow in the Operating Fund will be negative without the transfer of such interest; and
(B) the transfer of such interest will substantially improve the financial circumstances of the guaranty agency.
(3) Repayment provisions
Each guaranty agency shall begin repayment of sums transferred pursuant to this subsection not later than the start of the fourth year after the establishment of the Operating Fund, and shall repay all amounts transferred not later than 5 years from the date of the establishment of the Operating Fund. With respect to amounts transferred from the Federal Fund, the guaranty agency shall not be required to repay any interest on the funds transferred and subsequently repaid. The guaranty agency shall provide to the Secretary a reasonable schedule for repayment of the sums transferred and an annual financial analysis demonstrating the agency's ability to comply with the schedule and repay all outstanding sums transferred.
(4) Prohibition
If a guaranty agency transfers funds from the Federal Fund in accordance with this section, and fails to make scheduled repayments to the Federal Fund, the agency may not receive any other funds under this part until the Secretary determines that the agency has made such repayments. The Secretary shall pay to the guaranty agency any funds withheld in accordance with this paragraph immediately upon making the determination that the guaranty agency has made all such repayments.
(5) Waiver
The Secretary may—
(A) waive the requirements of paragraph (3), but only with respect to repayment of interest that was transferred in accordance with paragraph (2); and
(B) waive paragraph (4);
for a guaranty agency, if the Secretary determines that there are extenuating circumstances (such as State constitutional prohibitions) beyond the control of the agency that justify such a waiver.
(6) Extension of repayment period for interest
(A) Extension permitted
The Secretary shall extend the period for repayment of interest that was transferred in accordance with paragraph (2) from 2 years to 5 years if the Secretary determines that—
(i) the cash flow of the Operating Fund will be negative as a result of repayment as required by paragraph (3);
(ii) the repayment of the interest transferred will substantially diminish the financial circumstances of the guaranty agency; and
(iii) the guaranty agency has demonstrated—
(I) that the agency is able to repay all transferred funds by the end of the 8th year following the date of establishment of the Operating Fund; and
(II) that the agency will be financially sound on the completion of repayment.
(B) Repayment of income on transferred funds
All repayments made to the Federal Fund during the 6th, 7th, and 8th years following the establishment of the Operating Fund of interest that was transferred shall include the sums transferred plus any income earned from the investment of the sums transferred after the 5th year.
(7) Investment of Federal funds
Funds transferred from the Federal Fund to the Operating Fund for operating expenses shall be invested in obligations issued or guaranteed by the United States or a State, or in other similarly low-risk securities selected by the guaranty agency, with the approval of the Secretary.
(8) Special rule
In calculating the minimum reserve level required by
(
Editorial Notes
References in Text
Amendments
2008—Subsec. (d)(1).
Statutory Notes and Related Subsidiaries
Effective Date
Section effective Oct. 1, 1998, except as otherwise provided in
1 See References in Text note below.
§1072b. Agency Operating Fund
(a) Establishment
Each guaranty agency shall, not later than 60 days after October 7, 1998, establish a fund designated as the Operating Fund.
(b) Investment of funds
Funds deposited into the Operating Fund shall be invested at the discretion of the guaranty agency in accordance with prudent investor standards.
(c) Additional deposits
After the establishment of the Operating Fund, the guaranty agency shall deposit into the Operating Fund—
(1) the loan processing and issuance fee paid by the Secretary pursuant to
(2) 30 percent of amounts received after October 7, 1998, from the Secretary as payment for administrative cost allowances for loans upon which insurance was issued prior to October 7, 1998;
(3) the account maintenance fee paid by the Secretary in accordance with
(4) the default aversion fee paid in accordance with
(5) amounts remaining pursuant to section 1078(c)(6)(B) 1 of this title from collection on defaulted loans held by the agency, after payment of the Secretary's equitable share, excluding amounts deposited in the Federal Fund pursuant to
(6) other receipts as specified in regulations of the Secretary.
(d) Uses of funds
(1) In general
Funds in the Operating Fund shall be used for application processing, loan disbursement, enrollment and repayment status management, default aversion activities (including those described in
(2) Special rule
The guaranty agency may, in the agency's discretion, transfer funds from the Operating Fund to the Federal Fund for use pursuant to
(3) Definitions
For purposes of this subsection:
(A) Default collection activities
The term "default collection activities" means activities of a guaranty agency that are directly related to the collection of the loan on which a default claim has been paid to the participating lender, including the due diligence activities required pursuant to regulations of the Secretary.
(B) Default aversion activities
The term "default aversion activities" means activities of a guaranty agency that are directly related to providing collection assistance to the lender on a delinquent loan, prior to the loan's being legally in a default status, including due diligence activities required pursuant to regulations of the Secretary.
(C) Enrollment and repayment status management
The term "enrollment and repayment status management" means activities of a guaranty agency that are directly related to ascertaining the student's enrollment status, including prompt notification to the lender of such status, an audit of the note or written agreement to determine if the provisions of that note or agreement are consistent with the records of the guaranty agency as to the principal amount of the loan guaranteed, and an examination of the note or agreement to assure that the repayment provisions are consistent with the provisions of this part.
(e) Ownership and regulation of Operating Fund
(1) Ownership
The Operating Fund, with the exception of funds transferred from the Federal Fund in accordance with
(2) Regulation
Except as provided in paragraph (3), the Secretary may not regulate the uses or expenditure of moneys in the Operating Fund, but the Secretary may require such necessary reports and audits as provided in
(3) Exception
Notwithstanding paragraphs (1) and (2), during any period in which funds are owed to the Federal Fund as a result of transfer under
(A) moneys in the Operating Fund may only be used for expenses related to the student loan programs authorized under this part; and
(B) the Secretary may regulate the uses or expenditure of moneys in the Operating Fund.
(
Editorial Notes
References in Text
Statutory Notes and Related Subsidiaries
Effective Date
Section effective Oct. 1, 1998, except as otherwise provided in
1 See References in Text note below.
§1073. Effects of adequate non-Federal programs
(a) Federal insurance barred to lenders with access to State or private insurance
Except as provided in subsection (b), the Secretary shall not issue certificates of insurance under
(b) Exceptions
The Secretary may issue certificates of insurance under
(1) for insurance of a loan made to a student borrower who does not, by reason of the borrower's residence, have access to loan insurance under the loan insurance program of such State (or under any private nonprofit loan insurance program which has received an advance under
(2) for insurance of all the loans made to student borrowers by a lender who satisfies the Secretary that, by reason of the residence of such borrowers, such lender will not have access to any single State or nonprofit private loan insurance program which will insure substantially all of the loans such lender intends to make to such student borrowers; or
(3) under such circumstances as may be approved by the guaranty agency in such State, for the insurance of a loan to a borrower for whom such lender previously was issued such a certificate if the loan covered by such certificate is not yet repaid.
(
Editorial Notes
Prior Provisions
A prior section 1073,
§1074. Scope and duration of Federal loan insurance program
(a) Limitations on amounts of loans covered by Federal insurance
The total principal amount of new loans made and installments paid pursuant to lines of credit (as defined in
(b) Apportionment of amounts
The Secretary may, if he or she finds it necessary to do so in order to assure an equitable distribution of the benefits of this part, assign, within the maximum amounts specified in subsection (a), Federal loan insurance quotas applicable to eligible lenders, or to States or areas, and may from time to time reassign unused portions of these quotas.
(
Editorial Notes
Prior Provisions
A prior section 1074,
Amendments
2010—Subsec. (a).
2008—Subsec. (a).
2006—Subsec. (a).
1998—Subsec. (a).
1997—Subsec. (a).
1992—Subsec. (a).
Statutory Notes and Related Subsidiaries
Effective Date of 2006 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
§1075. Limitations on individual federally insured loans and on Federal loan insurance
(a) Annual and aggregate limits
(1) Annual limits
(A) The total of loans made to a student in any academic year or its equivalent (as determined by the Secretary) which may be covered by Federal loan insurance under this part may not exceed—
(i) in the case of a student at an eligible institution who has not successfully completed the first year of a program of undergraduate education—
(I) $3,500, if such student is enrolled in a program whose length is at least one academic year in length (as determined under
(II) if such student is enrolled in a program of undergraduate education which is less than one academic year, the maximum annual loan amount that such student may receive may not exceed the amount that bears the same ratio to the amount specified in subclause (I) as the length of such program measured in semester, trimester, quarter, or clock hours bears to one academic year;
(ii) in the case of a student at an eligible institution who has successfully completed such first year but has not successfully completed the remainder of a program of undergraduate education—
(I) $4,500; or
(II) if such student is enrolled in a program of undergraduate education, the remainder of which is less than one academic year, the maximum annual loan amount that such student may receive may not exceed the amount that bears the same ratio to the amount specified in subclause (I) as such remainder measured in semester, trimester, quarter, or clock hours bears to one academic year;
(iii) in the case of a student at an eligible institution who has successfully completed the first and second years of a program of undergraduate education but has not successfully completed the remainder of such program—
(I) $5,500; or
(II) if such student is enrolled in a program of undergraduate education, the remainder of which is less than one academic year, the maximum annual loan amount that such student may receive may not exceed the amount that bears the same ratio to the amount specified in subclause (I) as such remainder measured in semester, trimester, quarter, or clock hours bears to one academic year; and
(iv) in the case of a graduate or professional student (as defined in regulations of the Secretary) at an eligible institution, $8,500.
(B) The annual insurable limits contained in subparagraph (A) shall not apply in cases where the Secretary determines, pursuant to regulations, that a higher amount is warranted in order to carry out the purpose of this part with respect to students engaged in specialized training requiring exceptionally high costs of education. The annual insurable limit per student shall not be deemed to be exceeded by a line of credit under which actual payments by the lender to the borrower will not be made in any year in excess of the annual limit.
(C) For the purpose of subparagraph (A), the number of years that a student has completed in a program of undergraduate education shall include any prior enrollment in an eligible program of undergraduate education for which the student was awarded an associate or baccalaureate degree, if such degree is required by the institution for admission to the program in which the student is enrolled.
(2) Aggregate limits
(A) The aggregate insured unpaid principal amount for all such insured loans made to any student shall not at any time exceed—
(i) $23,000, in the case of any student who has not successfully completed a program of undergraduate education, excluding loans made under section 1078–1 1 or 1078–2 of this title; and
(ii) $65,500, in the case of any graduate or professional student (as defined by regulations of the Secretary) and (I) including any loans which are insured by the Secretary under this section, or by a guaranty agency, made to such student before the student became a graduate or professional student),2 but (II) excluding loans made under section 1078–1 1 or 1078–2 of this title,
except that the Secretary may increase the limit applicable to students who are pursuing programs which the Secretary determines are exceptionally expensive.
(B) The Secretary may increase the aggregate insurable limit applicable to students who are pursuing programs which the Secretary determines are exceptionally expensive.
(b) Level of insurance coverage based on default rate
(1) Reduction for defaults in excess of 5 or 9 percent
(A) Except as provided in subparagraph (B), the insurance liability on any loan insured by the Secretary under this part shall be 100 percent of the unpaid balance of the principal amount of the loan plus interest, except that—
(i) if, for any fiscal year, the total amount of payments under
(ii) if, for any fiscal year, the total amount of such payments to such a lender exceeds 9 percent of such sum, the insurance liability under this subsection for that portion of such excess which represents loans insured after the applicable date with respect to such loans, as determined under subparagraph (C), shall be equal to 80 percent of the amount of such portion.
(B) Notwithstanding subparagraph (A), the provisions of clauses (i) and (ii) of such subparagraph shall not apply to an eligible lender as described in
(C) The applicable date with respect to a loan made by an eligible lender as described in
(i) the 90th day after the adjournment of the next regular session of the appropriate State legislature which convenes after October 12, 1976, or
(ii) if the primary source of lending capital for such lender is derived from the sale of bonds, and the constitution of the appropriate State prohibits a pledge of such State's credit as security against such bonds, the day which is one year after such 90th day.
(2) Computation of amounts in repayment
For the purpose of this subsection, the sum of the loans made by a lender which are insured by the Secretary and which are in repayment shall be the original principal amount of loans made by such lender which are insured by the Secretary reduced by—
(A) the amount the Secretary has been required to pay to discharge his or her insurance obligations under this part;
(B) the original principal amount of loans insured by the Secretary which have been fully repaid;
(C) the original principal amount insured on those loans for which payment of first installment of principal has not become due pursuant to
(D) the original principal amount of loans repaid by the Secretary under
(3) Payments to assignees
For the purpose of this subsection, payments by the Secretary under
(4) Pledge of full faith and credit
The full faith and credit of the United States is pledged to the payment of all amounts which may be required to be paid under the provisions of
(
Editorial Notes
References in Text
Prior Provisions
A prior section 1075,
Amendments
2006—Subsec. (a)(1)(A)(i)(I).
Subsec. (a)(1)(A)(ii)(I).
1998—Subsec. (a)(1)(A)(i)(I).
Subsec. (a)(1)(A)(i)(II), (III).
"(II) $1,750, if such student is enrolled in a program whose length is less than one academic year, but at least 2/3 of such an academic year; and
"(III) $875, if such student is enrolled in a program whose length is less than 2/3, but at least 1/3, of such an academic year;".
Subsec. (a)(1)(A)(iii)(II).
1993—Subsec. (a)(1)(A)(ii), (iii).
"(ii) the case of a student who has successfully completed such first year but has not successfully completed the remainder of a program of undergraduate study—
"(I) $3,500, if such student is enrolled in a program whose length is at least one academic year in length (as determined under
"(II) $2,325, if such student is enrolled in a program whose length is less than one academic year, but at least 2/3 of such an academic year; and
"(III) $1,175, if such student is enrolled in a program whose length is less than 2/3, but at least 1/3, of such an academic year;
"(iii) in the case of a student at an eligible institution who has successfully completed such first and second year but has not successfully completed the remainder of a program of undergraduate study—
"(I) $5,500, if such student is enrolled in a program whose length is at least one academic year in length (as determined under
"(II) $3,675, if such student is enrolled in a program whose length is less than one academic year, but at least 2/3 of such an academic year; and
"(III) $1,825, if such student is enrolled in a program whose length is less than 2/3, but at least 1/3, of such an academic year; and".
Subsec. (a)(1)(A)(iv).
Subsec. (a)(1)(C).
1992—Subsec. (a)(1)(A).
"(i) $2,625, in the case of a student who has not successfully completed the first and second year of a program of undergraduate education;
"(ii) $4,000, in the case of a student who has successfully completed such first and second year but who has not successfully completed the remainder of a program of undergraduate education; or
"(iii) $7,500, in the case of a graduate or professional student (as defined in regulations of the Secretary)."
Subsec. (a)(2)(A).
"(i) $17,250, in the case of any student who has not successfully completed a program of undergraduate education, excluding loans made under
"(ii) $54,750, in the case of any graduate or professional student (as defined by regulations of the Secretary and including any loans which are insured by the Secretary under this part, or by a guaranty agency, made to such person before he or she became a graduate or professional student), excluding loans made under
1987—Subsec. (a)(2)(A)(i).
Subsec. (a)(2)(A)(ii).
Statutory Notes and Related Subsidiaries
Effective Date of 2006 Amendment
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by section 2(c)(2) of
Effective Date of 1992 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
Effective Date
Section effective Oct. 17, 1986, except that subsec. (a) of this section applicable only to loans disbursed on or after Jan. 1, 1987, or made to cover the costs of instruction for periods of enrollment beginning on or after Jan. 1, 1987, see section 402(b) of
1 See References in Text note below.
2 So in original. There is no opening parenthesis.
§1076. Sources of funds
Loans made by eligible lenders in accordance with this part shall be insurable by the Secretary whether made from funds fully owned by the lender or from funds held by the lender in a trust or similar capacity and available for such loans.
(
Editorial Notes
Prior Provisions
A prior section 1076,
§1077. Eligibility of student borrowers and terms of federally insured student loans
(a) List of requirements
Except as provided in
(1) made to a student who (A) is an eligible student under
(2) evidenced by a note or other written agreement which—
(A) is made without security and without endorsement;
(B) provides for repayment (except as provided in subsection (c)) of the principal amount of the loan in installments over a period of not less than 5 years (unless sooner repaid or unless the student, during the 6 months preceding the start of the repayment period, specifically requests that repayment be made over a shorter period) nor more than 10 years beginning 6 months after the month in which the student ceases to carry at an eligible institution at least one-half the normal full-time academic workload as determined by the institution, except—
(i) as provided in subparagraph (C);
(ii) that the note or other written instrument may contain such reasonable provisions relating to repayment in the event of default in the payment of interest or in the payment of the cost of insurance premiums, or other default by the borrower, as may be authorized by regulations of the Secretary in effect at the time the loan is made; and
(iii) that the lender and the student, after the student ceases to carry at an eligible institution at least one-half the normal full-time academic workload as determined by the institution, may agree to a repayment schedule which begins earlier, or is of shorter duration, than required by this subparagraph, but in the event a borrower has requested and obtained a repayment period of less than 5 years, the borrower may at any time prior to the total repayment of the loan, have the repayment period extended so that the total repayment period is not less than 5 years;
(C) provides that periodic installments of principal need not be paid, but interest shall accrue and be paid, during any period—
(i) during which the borrower—
(I) is pursuing at least a half-time course of study as determined by an eligible institution; or
(II) is pursuing a course of study pursuant to a graduate fellowship program approved by the Secretary, or pursuant to a rehabilitation training program for individuals with disabilities approved by the Secretary,
except that no borrower shall be eligible for a deferment under this clause, or a loan made under this part (other than a loan made under
(ii) not in excess of 3 years during which the borrower is seeking and unable to find full-time employment;
(iii) not in excess of 3 years for any reason which the lender determines, in accordance with regulations prescribed by the Secretary under
(iv) in which the borrower is receiving treatment for cancer and the 6 months after such period.1
and provides that any such period shall not be included in determining the 10-year period described in subparagraph (B);
(D) provides for interest on the unpaid principal balance of the loan at a yearly rate, not exceeding the applicable maximum rate prescribed in
(E) provides that the lender will not collect or attempt to collect from the borrower any portion of the interest on the note which is payable by the Secretary under this part, and that the lender will enter into such agreements with the Secretary as may be necessary for the purpose of
(F) entitles the student borrower to accelerate without penalty repayment of the whole or any part of the loan;
(G)(i) contains a notice of the system,2 of disclosure of information concerning such loan to consumer reporting agencies under
(H) provides that, no more than 6 months prior to the date on which the borrower's first payment on a loan is due, the lender shall offer the borrower the option of repaying the loan in accordance with a graduated or income-sensitive repayment schedule established by the lender and in accordance with the regulations of the Secretary; and
(I) contains such other terms and conditions, consistent with the provisions of this part and with the regulations issued by the Secretary pursuant to this part, as may be agreed upon by the parties to such loan, including, if agreed upon, a provision requiring the borrower to pay the lender, in addition to principal and interest, amounts equal to the insurance premiums payable by the lender to the Secretary with respect to such loan;
(3) the funds borrowed by a student are disbursed to the institution by check or other means that is payable to and requires the endorsement or other certification by such student, except—
(A) that nothing in this subchapter shall be interpreted—
(i) to allow the Secretary to require checks to be made copayable to the institution and the borrower; or
(ii) to prohibit the disbursement of loan proceeds by means other than by check; and
(B) in the case of any student who is studying outside the United States in a program of study abroad that is approved for credit by the home institution at which such student is enrolled, the funds shall, at the request of the borrower, be delivered directly to the student and the checks may be endorsed, and fund transfers authorized, pursuant to an authorized power-of-attorney; and
(4) the funds borrowed by a student are disbursed in accordance with
(b) Special rules for multiple disbursement
For the purpose of subsection (a)(4)—
(1) all loans issued for the same period of enrollment shall be considered as a single loan; and
(2) the requirements of such subsection shall not apply in the case of a loan made under
(c) Special repayment rules
Except as provided in subsection (a)(2)(H), the total of the payments by a borrower during any year of any repayment period with respect to the aggregate amount of all loans to that borrower which are insured under this part shall not, unless the borrower and the lender otherwise agree, be less than $600 or the balance of all such loans (together with interest thereon), whichever amount is less (but in no instance less than the amount of interest due and payable).
(d) Borrower information
The lender shall obtain the borrower's driver's license number, if any, at the time of application for the loan.
(
Editorial Notes
Prior Provisions
A prior section 1077,
Amendments
2018—Subsec. (a)(2)(C)(iv).
2008—Subsec. (a)(2)(G)(i).
Subsec. (a)(2)(G)(ii).
1993—Subsec. (a)(2)(C)(i).
1992—Subsec. (a)(2)(A).
"(i) obtain a credit report, from at least one national credit bureau organization, with respect to a loan applicant who will be at least 21 years of age as of July 1 of the award year for which assistance is being sought, for which the lender may charge the applicant an amount not to exceed the lesser of $25 or the actual cost of obtaining the credit report; and
"(ii) require an applicant of the age specified in clause (i) who, in the judgment of the lender in accordance with the regulations of the Secretary, has an adverse credit history, to obtain a credit worthy cosigner in order to obtain the loan, provided that, for purposes of this clause, an insufficient or nonexistent credit history may not be considered to be an adverse credit history;".
Subsec. (a)(2)(C).
Subsec. (a)(2)(G) to (I).
Subsec. (a)(3).
Subsec. (c).
1991—Subsec. (a)(2)(A).
Subsec. (d).
1989—Subsec. (a)(2)(C)(i).
Subsec. (a)(4).
1988—Subsec. (a)(2)(C)(v).
Subsec. (a)(2)(C)(vii).
Subsec. (b)(2).
1987—Subsec. (a)(2)(C)(vi).
Subsec. (a)(2)(C)(vii).
Subsec. (a)(4).
Statutory Notes and Related Subsidiaries
Effective Date of 2018 Amendment
"(1) made on or after the date of the enactment of this Act [Sept. 28, 2018]; or
"(2) in repayment on the date of the enactment of this Act."
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
Effective Date of 1989 Amendment
Effective Date of 1988 Amendment
Amendment by section 5(b)(1) of
Effective Date of 1987 Amendment
Amendment by section 10(b) of
Amendment by
Effective Date
Section effective Oct. 17, 1986, except that subsec. (a)(2)(C) (other than cls. (viii), (ix), and (x) thereof) of this section shall apply only to loans to new borrowers made to cover the costs of instruction for periods of enrollment beginning on or after July 1, 1987, or disbursed on or after July 1, 1987, see section 402(b) of
1 So in original. The period probably should be a semicolon.
2 So in original. The comma probably should not appear.
§1077a. Applicable interest rates
(a) Rates to be consistent for borrower's entire debt
With respect to any loan to cover the cost of instruction for any period of instruction beginning on or after January 1, 1981, the rate of interest applicable to any borrower shall—
(1) not exceed 7 percent per year on the unpaid principal balance of the loan in the case of any borrower who, on the date of entering into the note or other written evidence of that loan, has an outstanding balance of principal or interest on any loan made, insured, or guaranteed under this part, for which the interest rate does not exceed 7 percent;
(2) except as provided in paragraph (3), be 9 percent per year on the unpaid principal balance of the loan in the case of any borrower who, on the date of entering into the note or other written evidence of that loan, has no outstanding balance of principal or interest on any loan described in paragraph (1) or any loan for which the interest rate is determined under paragraph (1); or
(3) be 8 percent per year on the unpaid principal balance of the loan for a loan to cover the cost of education for any period of enrollment beginning on or after a date which is 3 months after a determination made under subsection (b) in the case of any borrower who, on the date of entering into the note or other written evidence of the loan, has no outstanding balance of principal or interest on any loan for which the interest rate is determined under paragraph (1) or (2) of this subsection.
(b) Reduction for new borrowers after decline in Treasury bill rates
If for any 12-month period beginning on or after January 1, 1981, the Secretary, after consultation with the Secretary of the Treasury, determines that the average of the bond equivalent rates of 91-day Treasury bills auctioned for such 12-month period is equal to or less than 9 percent, the interest rate for loans under this part shall be the rate prescribed in subsection (a)(3) for borrowers described in such subsection.
(c) Rates for supplemental loans for students and loans for parents
(1) In general
Except as otherwise provided in this subsection, the applicable rate of interest on loans made pursuant to section 1078–1 1 or 1078–2 of this title on or after October 1, 1981, shall be 14 percent per year on the unpaid principal balance of the loan.
(2) Reduction of rate after decline in Treasury bill rates
If for any 12-month period beginning on or after October 1, 1981, the Secretary, after consultation with the Secretary of the Treasury, determines that the average of the bond equivalent rates of 91-day Treasury bills auctioned for such 12-month period is equal to or less than 14 percent, the applicable rate of interest for loans made pursuant to section 1078–1 1 or 1078–2 of this title on and after the first day of the first month beginning after the date of publication of such determination shall be 12 percent per year on the unpaid principal balance of the loan.
(3) Increase of rate after increase in Treasury bill rates
If for any 12-month period beginning on or after the date of publication of a determination under paragraph (2), the Secretary, after consultation with the Secretary of the Treasury, determines that the average of the bond equivalent rates of 91-day Treasury bills auctioned for such 12-month period exceeds 14 percent, the applicable rate of interest for loans made pursuant to section 1078–1 1 or 1078–2 of this title on and after the first day of the first month beginning after the date of publication of that determination under this paragraph shall be 14 percent per year on the unpaid principal balance of the loan.
(4) Availability of variable rates
(A) For any loan made pursuant to section 1078–1 1 or 1078–2 of this title and disbursed on or after July 1, 1987, or any loan made pursuant to such section prior to such date that is refinanced pursuant to section 1078–1(d) 1 or 1078–2(d) of this title, the applicable rate of interest during any 12-month period beginning on July 1 and ending on June 30 shall be determined under subparagraph (B), except that such rate shall not exceed 12 percent.
(B)(i) For any 12-month period beginning on July 1 and ending on or before June 30, 2001, the rate determined under this subparagraph is determined on the preceding June 1 and is equal to—
(I) the bond equivalent rate of 52-week Treasury bills auctioned at the final auction held prior to such June 1; plus
(II) 3.25 percent.
(ii) For any 12-month period beginning on July 1 of 2001 or any succeeding year, the rate determined under this subparagraph is determined on the preceding June 26 and is equal to—
(I) the weekly average 1-year constant maturity Treasury yield, as published by the Board of Governors of the Federal Reserve System, for the last calendar week ending on or before such June 26; plus
(II) 3.25 percent.
(C) The Secretary shall determine the applicable rate of interest under subparagraph (B) after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of determination.
(D) Notwithstanding subparagraph (A)—
(i) for any loan made pursuant to section 1078–1 1 of this title for which the first disbursement is made on or after October 1, 1992—
(I) subparagraph (B) shall be applied by substituting "3.1" for "3.25"; and
(II) the interest rate shall not exceed 11 percent; and
(ii) for any loan made pursuant to
(I) subparagraph (B) shall be applied by substituting "3.1" for "3.25"; and
(II) the interest rate shall not exceed 10 percent.
(E) Notwithstanding subparagraphs (A) and (D) for any loan made pursuant to
(i) subparagraph (B) shall be applied by substituting "3.1" for "3.25"; and
(ii) the interest rate shall not exceed 9 percent.
(d) Interest rates for new borrowers after July 1, 1988
Notwithstanding subsections (a) and (b) of this section, with respect to any loan (other than a loan made pursuant to sections 1078–1,1 1078–2, and 1078–3 of this title) to cover the cost of instruction for any period of enrollment beginning on or after July 1, 1988, to any borrower who, on the date of entering into the note or other written evidence of the loan, has no outstanding balance of principal or interest on any loan made, insured, or guaranteed under this part, the applicable rate of interest shall be—
(1) 8 percent per year on the unpaid principal balance of the loan during the period beginning on the date of the disbursement of the loan and ending 4 years after the commencement of repayment; and
(2) 10 percent per year on the unpaid principal balance of the loan during the remainder of the repayment period.
(e) Interest rates for new borrowers after October 1, 1992
(1) In general
Notwithstanding subsections (a), (b), and (d) of this section, with respect to any loan (other than a loan made pursuant to sections 1078–1,1 1078–2 and 1078–3 of this title) for which the first disbursement is made on or after October 1, 1992, to any borrower who, on the date of entering into the note or other written evidence of the loan, has no outstanding balance of principal or interest on any loan made, insured, or guaranteed under
(A) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to such June 1; plus
(B) 3.10 percent,
except that such rate shall not exceed 9 percent.
(2) Consultation
The Secretary shall determine the applicable rate of interest under paragraph (1) after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of determination.
(f) Interest rates for new loans after July 1, 1994
(1) In general
Notwithstanding subsections (a), (b), (d), and (e) of this section, with respect to any loan made, insured, or guaranteed under this part (other than a loan made pursuant to
(A) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to such June 1; plus
(B) 3.10 percent,
except that such rate shall not exceed 8.25 percent.
(2) Consultation
The Secretary shall determine the applicable rate of interest under paragraph (1) after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of determination.
(g) In school and grace period rules
(1) General rule
Notwithstanding the provisions of subsection (f), but subject to subsection (h), with respect to any loan under
(A) prior to the beginning of the repayment period of the loan; or
(B) during the period in which principal need not be paid (whether or not such principal is in fact paid) by reason of a provision described in
shall not exceed the rate determined under paragraph (2).
(2) Rate determination
For purposes of paragraph (1), the rate determined under this paragraph shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to—
(A) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction prior to such June 1; plus
(B) 2.5 percent,
except that such rate shall not exceed 8.25 percent.
(3) Consultation
The Secretary shall determine the applicable rate of interest under this subsection after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of determination.
(h) Interest rates for new loans after July 1, 1998
(1) In general
Notwithstanding subsections (a), (b), (d), (e), (f), and (g) of this section, with respect to any loan made, insured, or guaranteed under this part (other than a loan made pursuant to
(A) the bond equivalent rate of the securities with a comparable maturity as established by the Secretary; plus
(B) 1.0 percent,
except that such rate shall not exceed 8.25 percent.
(2) Interest rates for new PLUS loans after July 1, 1998
Notwithstanding subsections (a), (b), (d), (e), (f), and (g), with respect to any loan made under
(A) by substituting "2.1 percent" for "1.0 percent" in subparagraph (B); and
(B) by substituting "9.0 percent" for "8.25 percent" in the matter following such subparagraph.
(3) Consultation
The Secretary shall determine the applicable rate of interest under this subsection after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of determination.
(i) Treatment of excess interest payments on new borrower accounts resulting from decline in Treasury bill rates
(1) Excess interest on 10 percent loans
If, with respect to a loan for which the applicable interest rate is 10 percent under subsection (d) of this section at the close of any calendar quarter, the sum of the average of the bond equivalent rates of 91-day Treasury bills auctioned for that quarter and 3.25 percent is less than 10 percent, then an adjustment shall be made to a borrower's account—
(A) by calculating excess interest in the amount computed under paragraph (2) of this subsection; and
(B)(i) during any period in which a student is eligible to have interest payments paid on his or her behalf by the Government pursuant to
(ii) during any other period, by crediting such excess interest to the reduction of principal to the extent provided in paragraph (5) of this subsection.
(2) Amount of adjustment for 10 percent loans
The amount of any adjustment of interest on a loan to be made under this subsection for any quarter shall be equal to—
(A) 10 percent minus the sum of (i) the average of the bond equivalent rates of 91-day Treasury bills auctioned for such calendar quarter, and (ii) 3.25 percent; multiplied by
(B) the average daily principal balance of the loan (not including unearned interest added to principal) during such calendar quarter; divided by
(C) four.
(3) Excess interest on loans after 1992 amendments, to borrowers with outstanding balances
If, with respect to a loan made on or after July 23, 1992, to a borrower, who on the date of entering into the note or other written evidence of the loan, has an outstanding balance of principal or interest on any other loan made, insured, or guaranteed under this part, the sum of the average of the bond equivalent rates of 91-day Treasury bills auctioned for that quarter and 3.1 percent is less than the applicable interest rate, then an adjustment shall be made—
(A) by calculating excess interest in the amount computed under paragraph (4) of this subsection; and
(B)(i) during any period in which a student is eligible to have interest payments paid on his or her behalf by the Government pursuant to
(ii) during any other period, by crediting such excess interest to the reduction of principal to the extent provided in paragraph (5) of this subsection.
(4) Amount of adjustment
The amount of any adjustment of interest on a loan to be made under this subsection for any quarter shall be equal to—
(A) the applicable interest rate minus the sum of (i) the average of the bond equivalent rates of 91-day Treasury bills auctioned for such calendar quarter, and (ii) 3.1 percent; multiplied by
(B) the average daily principal balance of the loan (not including unearned interest added to principal) during such calendar quarter; divided by
(C) four.
(5) Annual adjustment of interest and borrower eligibility for credit
Any adjustment amount computed pursuant to paragraphs (2) and (4) of this subsection for any quarter shall be credited, by the holder of the loan on the last day of the calendar year in which such quarter falls, to the loan account of the borrower so as to reduce the principal balance of such account. No such credit shall be made to the loan account of a borrower who on the last day of the calendar year is delinquent for more than 30 days in making a required payment on the loan, but the excess interest shall be calculated and credited to the Secretary. Any credit which is to be made to a borrower's account pursuant to this subsection shall be made effective commencing no later than 30 days following the last day of the calendar year in which the quarter falls for which the credit is being made. Nothing in this subsection shall be construed to require refunding any repayment of a loan. At the option of the lender, the amount of such adjustment may be distributed to the borrower either by reduction in the amount of the periodic payment on loan, by reducing the number of payments that shall be made with respect to the loan, or by reducing the amount of the final payment of the loan. Nothing in this paragraph shall be construed to require the lender to make additional disclosures pursuant to
(6) Publication of Treasury bill rate
For the purpose of enabling holders of loans to make the determinations and adjustments provided for in this subsection, the Secretary shall for each calendar quarter commencing with the quarter beginning on July 1, 1987, publish a notice of the average of the bond equivalent rates of 91-day Treasury bills auctioned for such quarter. Such notice shall be published not later than 7 days after the end of the quarter to which the notice relates.
(7) Conversion to variable rate
(A) Subject to subparagraphs (C) and (D), a lender or holder shall convert the interest rate on a loan that is made pursuant to this part and is subject to the provisions of this subsection to a variable rate. Such conversion shall occur not later than January 1, 1995, and, commencing on the date of conversion, the applicable interest rate for each 12-month period beginning on July 1 and ending on June 30 shall be determined by the Secretary on the June 1 preceding each such 12-month period and be equal to the sum of (i) the bond equivalent rate of the 91-day Treasury bills auctioned at the final auction prior to such June 1; and (ii) 3.25 percent in the case of loans described in paragraph (1), or 3.10 percent in the case of loans described in paragraph (3).
(B) In connection with the conversion specified in subparagraph (A) for any period prior to such conversion, and subject to paragraphs (C) and (D), a lender or holder shall convert the interest rate to a variable rate on a loan that is made pursuant to this part and is subject to the provisions of this subsection to a variable rate. The interest rates for such period shall be reset on a quarterly basis and the applicable interest rate for any quarter or portion thereof shall equal the sum of (i) the average of the bond equivalent rates of 91-Treasury bills auctioned for the preceding 3-month period, and (ii) 3.25 percent in the case of loans described in paragraph (1) or 3.10 percent in the case of loans described in paragraph (3). The rebate of excess interest derived through this conversion shall be provided to the borrower as specified in paragraph (5) for loans described in paragraph (1) or to the Government and borrower as specified in paragraph (3).
(C) A lender or holder of a loan being converted pursuant to this paragraph shall complete such conversion on or before January 1, 1995. The lender or holder shall notify the borrower that the loan shall be converted to a variable interest rate and provide a description of the rate to the borrower not later than 30 days prior to the conversion. The notice shall advise the borrower that such rate shall be calculated in accordance with the procedures set forth in this paragraph and shall provide the borrower with a substantially equivalent benefit as the adjustment otherwise provided for under this subsection. Such notice may be incorporated into the disclosure required under
(D) The interest rate on a loan converted to a variable rate pursuant to this paragraph shall not exceed the maximum interest rate applicable to the loan prior to such conversion.
(E) Loans on which the interest rate is converted in accordance with subparagraph (A) or (B) shall not be subject to any other provisions of this subsection.
(j) Interest rates for new loans between July 1, 1998, and October 1, 1998
(1) In general
Notwithstanding subsection (h), but subject to paragraph (2), with respect to any loan made, insured, or guaranteed under this part (other than a loan made pursuant to
(A) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to such June 1; plus
(B) 2.3 percent,
except that such rate shall not exceed 8.25 percent.
(2) In school and grace period rules
Notwithstanding subsection (h), with respect to any loan under this part (other than a loan made pursuant to
(A) prior to the beginning of the repayment period of the loan; or
(B) during the period in which principal need not be paid (whether or not such principal is in fact paid) by reason of a provision described in
shall be determined under paragraph (1) by substituting "1.7 percent" for "2.3 percent".
(3) PLUS loans
Notwithstanding subsection (h), with respect to any loan under
(A)(i) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to such June 1; plus
(ii) 3.1 percent; or
(B) 9.0 percent.
(4) Consultation
The Secretary shall determine the applicable rate of interest under this subsection after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of determination.
(k) Interest rates for new loans on or after October 1, 1998, and before July 1, 2006
(1) In general
Notwithstanding subsection (h) and subject to paragraph (2) of this subsection, with respect to any loan made, insured, or guaranteed under this part (other than a loan made pursuant to
(A) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to such June 1; plus
(B) 2.3 percent,
except that such rate shall not exceed 8.25 percent.
(2) In school and grace period rules
Notwithstanding subsection (h), with respect to any loan under this part (other than a loan made pursuant to
(A) prior to the beginning of the repayment period of the loan; or
(B) during the period in which principal need not be paid (whether or not such principal is in fact paid) by reason of a provision described in
shall be determined under paragraph (1) by substituting "1.7 percent" for "2.3 percent".
(3) PLUS loans
Notwithstanding subsection (h), with respect to any loan under
(A) by substituting "3.1 percent" for "2.3 percent"; and
(B) by substituting "9.0 percent" for "8.25 percent".
(4) Consolidation loans
With respect to any consolidation loan under
(A) the weighted average of the interest rates on the loans consolidated, rounded to the nearest higher one-eighth of 1 percent; or
(B) 8.25 percent.
(5) Consultation
The Secretary shall determine the applicable rate of interest under this subsection after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of determination.
(l) Interest rates for new loans on or after July 1, 2006, and before July 1, 2010
(1) In general
Notwithstanding subsection (h), with respect to any loan made, insured, or guaranteed under this part (other than a loan made pursuant to
(2) PLUS loans
Notwithstanding subsection (h), with respect to any loan under
(3) Consolidation loans
With respect to any consolidation loan under
(A) the weighted average of the interest rates on the loans consolidated, rounded to the nearest higher one-eighth of 1 percent; or
(B) 8.25 percent.
(4) Reduced rates for undergraduate subsidized loans
Notwithstanding subsection (h) and paragraph (1) of this subsection, with respect to any loan to an undergraduate student made, insured, or guaranteed under this part (other than a loan made pursuant to
(A) For a loan for which the first disbursement is made on or after July 1, 2006, and before July 1, 2008, 6.8 percent on the unpaid principal balance of the loan.
(B) For a loan for which the first disbursement is made on or after July 1, 2008, and before July 1, 2009, 6.0 percent on the unpaid principal balance of the loan.
(C) For a loan for which the first disbursement is made on or after July 1, 2009, and before July 1, 2010, 5.6 percent on the unpaid principal balance of the loan.
(m) Lesser rates permitted
Nothing in this section or
(n) Definitions
For the purpose of subsections (a) and (d) of this section—
(1) the term "period of instruction" shall, at the discretion of the lender, be any academic year, semester, trimester, quarter, or other academic period; or shall be the period for which the loan is made as determined by the institution of higher education; and
(2) the term "period of enrollment" shall be the period for which the loan is made as determined by the institution of higher education and shall coincide with academic terms such as academic year, semester, trimester, quarter, or other academic period as defined by such institution.
(
Editorial Notes
References in Text
Codification
Amendments by section 2(c)(6)–(10) of
Prior Provisions
A prior section 1077a,
Amendments
2010—Subsec. (l).
Subsec. (l)(1), (2).
Subsec. (l)(3).
Subsec. (l)(4).
Subsec. (l)(4)(D), (E).
"(D) For a loan for which the first disbursement is made on or after July 1, 2010, and before July 1, 2011, 4.5 percent on the unpaid principal balance of the loan.
"(E) For a loan for which the first disbursement is made on or after July 1, 2011, and before July 1, 2012, 3.4 percent on the unpaid principal balance of the loan."
2007—Subsec. (l)(4).
2006—Subsec. (l)(2).
2002—Subsec. (k).
Subsecs. (l) to (n).
2000—Subsec. (c)(4)(B).
"(i) the bond equivalent rate of 52-week Treasury bills auctioned at the final auction held prior to such June 1; plus
"(ii) 3.25 percent."
1998—Subsec. (j).
Subsec. (k).
Subsec. (l).
Subsec. (m).
1993—Subsec. (c)(4)(E).
Subsec. (e)(1).
Subsecs. (f) to (h).
Subsec. (i).
Subsec. (i)(1)(B).
Subsec. (i)(2)(B).
Subsec. (i)(4)(B).
Subsec. (i)(5).
Subsec. (i)(7).
Subsecs. (j), (k).
1992—Subsec. (c)(4)(D).
Subsec. (e).
Subsecs. (f) to (h).
1987—Subsec. (c)(4)(A).
Subsec. (c)(4)(B).
"(i) the average of the bond equivalent rates of 91-day Treasury bills auctioned during the 12 months ending on November 30 preceding such calendar year; plus
"(ii) 3.75 percent."
Statutory Notes and Related Subsidiaries
Effective Date of 2007 Amendment
Amendment by
Effective Date of 2006 Amendment
Amendment by
Effective Date of 1998 Amendment
Effective Date of 1993 Amendment
Amendment by section 2(c)(5) of
Effective Date of 1987 Amendment
Amendment by
1 See References in Text note below.
§1078. Federal payments to reduce student interest costs
(a) Federal interest subsidies
(1) Types of loans that qualify
Each student who has received a loan for study at an eligible institution for which the first disbursement is made before July 1, 2010, and—
(A) which is insured by the Secretary under this part; or
(B) which is insured under a program of a State or of a nonprofit private institution or organization which was contracted for, and paid to the student, within the period specified in paragraph (5), and which—
(i) in the case of a loan insured prior to July 1, 1967, was made by an eligible lender and is insured under a program which meets the requirements of subparagraph (E) of subsection (b)(1) and provides that repayment of such loan shall be in installments beginning not earlier than 60 days after the student ceases to pursue a course of study (as described in subparagraph (D) of subsection (b)(1)) at an eligible institution, or
(ii) in the case of a loan insured after June 30, 1967, was made by an eligible lender and is insured under a program covered by an agreement made pursuant to subsection (b),
shall be entitled to have paid on his or her behalf and for his or her account to the holder of the loan a portion of the interest on such loan under circumstances described in paragraph (2).
(2) Additional requirements to receive subsidy
(A) Each student qualifying for a portion of an interest payment under paragraph (1) shall—
(i) have provided to the lender a statement from the eligible institution, at which the student has been accepted for enrollment, or at which the student is in attendance, which—
(I) sets forth the loan amount for which the student shows financial need; and
(II) sets forth a schedule for disbursement of the proceeds of the loan in installments, consistent with the requirements of
(ii) meet the requirements of subparagraph (B); and
(iii) have provided to the lender at the time of application for a loan made, insured, or guaranteed under this part, the student's driver's number, if any.
(B) For the purpose of clause (ii) of subparagraph (A), a student shall qualify for a portion of an interest payment under paragraph (1) if the eligible institution has determined and documented the student's amount of need for a loan based on the student's estimated cost of attendance, estimated financial assistance, and, for the purpose of an interest payment pursuant to this section, student aid index (as determined under part F), subject to the provisions of subparagraph (D).
(C) For the purpose of this paragraph—
(i) a student's cost of attendance shall be determined under
(ii) a student's estimated financial assistance means, for the period for which the loan is sought—
(I) the amount of assistance such student will receive under subpart 1 of part A of this subchapter (as determined in accordance with
(II) other scholarship, grant, or loan assistance, but excluding—
(aa) any national service education award or post-service benefit under title I of the National and Community Service Act of 1990 [
(bb) any veterans' education benefits as defined in
(iii) the determination of need and of the amount of a loan by an eligible institution under subparagraph (B) with respect to a student shall be calculated in accordance with part F.
(D) An eligible institution may not, in carrying out the provisions of subparagraphs (A) and (B) of this paragraph, provide a statement which certifies the eligibility of any student to receive any loan under this part in excess of the maximum amount applicable to such loan.
(E) For the purpose of subparagraphs (B) and (C) of this paragraph, any loan obtained by a student under section 1078–1 1 or 1078–8 of this title or a parent under
(3) Amount of interest subsidy
(A)(i) Subject to
(I) which accrues prior to the date the student ceases to carry at least one-half the normal full-time academic workload (as determined by the institution), or
(II) which accrues during a period in which principal need not be paid (whether or not such principal is in fact paid) by reason of a provision described in subsection (b)(1)(M) of this section or in
(ii) Such portion of the interest on a loan shall not exceed, for any period, the amount of the interest on that loan which is payable by the student after taking into consideration the amount of any interest on that loan which the student is entitled to have paid on his or her behalf for that period under any State or private loan insurance program.
(iii) The holder of a loan with respect to which payments are required to be made under this section shall be deemed to have a contractual right, as against the United States, to receive from the Secretary the portion of interest which has been so determined without administrative delay after the receipt by the Secretary of an accurate and complete request for payment pursuant to paragraph (4).
(iv) The Secretary shall pay this portion of the interest to the holder of the loan on behalf of and for the account of the borrower at such times as may be specified in regulations in force when the applicable agreement entered into pursuant to subsection (b) was made, or, if the loan was made by a State or is insured under a program which is not covered by such an agreement, at such times as may be specified in regulations in force at the time the loan was paid to the student.
(v) A lender may not receive interest on a loan for any period that precedes the date that is—
(I) in the case of a loan disbursed by check, 10 days before the first disbursement of the loan;
(II) in the case of a loan disbursed by electronic funds transfer, 3 days before the first disbursement of the loan; or
(III) in the case of a loan disbursed through an escrow agent, 3 days before the first disbursement of the loan.
(B) If—
(i) a State student loan insurance program is covered by an agreement under subsection (b),
(ii) a statute of such State limits the interest rate on loans insured by such program to a rate which is less than the applicable interest rate under this part, and
(iii) the Secretary determines that subsection (d) does not make such statutory limitation inapplicable and that such statutory limitation threatens to impede the carrying out of the purpose of this part,
then the Secretary may pay an administrative cost allowance to the holder of each loan which is insured under such program and which is made during the period beginning on the 60th day after October 16, 1968, and ending 120 days after the adjournment of such State's first regular legislative session which adjourns after January 1, 1969. Such administrative cost allowance shall be paid over the term of the loan in an amount per year (determined by the Secretary) which shall not exceed 1 percent of the unpaid principal balance of the loan.
(4) Submission of statements by holders on amount of payment
Each holder of a loan with respect to which payments of interest are required to be made by the Secretary shall submit to the Secretary, at such time or times and in such manner as the Secretary may prescribe, statements containing such information as may be required by or pursuant to regulation for the purpose of enabling the Secretary to determine the amount of the payment which he must make with respect to that loan.
(5) Duration of authority to make interest subsidized loans
The period referred to in subparagraph (B) of paragraph (1) of this subsection shall begin on November 8, 1965, and end at the close of June 30, 2010.
(6) Assessment of borrower's financial condition not prohibited or required
Nothing in this chapter or any other Act shall be construed to prohibit or require, unless otherwise specifically provided by law, a lender to evaluate the total financial situation of a student making application for a loan under this part, or to counsel a student with respect to any such loan, or to make a decision based on such evaluation and counseling with respect to the dollar amount of any such loan.
(7) Loans that have not been consummated
Lenders may not charge interest or receive interest subsidies or special allowance payments for loans for which the disbursement checks have not been cashed or for which electronic funds transfers have not been completed.
(b) Insurance program agreements to qualify loans for interest subsidies
(1) Requirements of insurance program
Any State or any nonprofit private institution or organization may enter into an agreement with the Secretary for the purpose of entitling students who receive loans which are insured under a student loan insurance program of that State, institution, or organization to have made on their behalf the payments provided for in subsection (a) if the Secretary determines that the student loan insurance program—
(A) authorizes the insurance in any academic year, as defined in
(i) in the case of a student at an eligible institution who has not successfully completed the first year of a program of undergraduate education—
(I) $3,500, if such student is enrolled in a program whose length is at least one academic year in length; and
(II) if such student is enrolled in a program of undergraduate education which is less than 1 academic year, the maximum annual loan amount that such student may receive may not exceed the amount that bears the same ratio to the amount specified in subclause (I) as the length of such program measured in semester, trimester, quarter, or clock hours bears to 1 academic year;
(ii) in the case of a student at an eligible institution who has successfully completed such first year but has not successfully completed the remainder of a program of undergraduate education—
(I) $4,500; or
(II) if such student is enrolled in a program of undergraduate education, the remainder of which is less than one academic year, the maximum annual loan amount that such student may receive may not exceed the amount that bears the same ratio to the amount specified in subclause (I) as such remainder measured in semester, trimester, quarter, or clock hours bears to one academic year;
(iii) in the case of a student at an eligible institution who has successfully completed the first and second years of a program of undergraduate education but has not successfully completed the remainder of such program—
(I) $5,500; or
(II) if such student is enrolled in a program of undergraduate education, the remainder of which is less than one academic year, the maximum annual loan amount that such student may receive may not exceed the amount that bears the same ratio to the amount specified in subclause (I) as such remainder measured in semester, trimester, quarter, or clock hours bears to one academic year;
(iv) in the case of a student who has received an associate or baccalaureate degree and is enrolled in an eligible program for which the institution requires such degree for admission, the number of years that a student has completed in a program of undergraduate education shall, for the purposes of clauses (ii) and (iii), include any prior enrollment in the eligible program of undergraduate education for which the student was awarded such degree;
(v) in the case of a graduate or professional student (as defined in regulations of the Secretary) at an eligible institution, $8,500; and
(vi) in the case of a student enrolled in coursework specified in
(I) $2,625 for coursework necessary for enrollment in an undergraduate degree or certificate program, and, in the case of a student who has obtained a baccalaureate degree, $5,500 for coursework necessary for enrollment in a graduate or professional degree or certification program; and
(II) in the case of a student who has obtained a baccalaureate degree, $5,500 for coursework necessary for a professional credential or certification from a State required for employment as a teacher in an elementary school or secondary school;
except in cases where the Secretary determines, pursuant to regulations, that a higher amount is warranted in order to carry out the purpose of this part with respect to students engaged in specialized training requiring exceptionally high costs of education, but the annual insurable limit per student shall not be deemed to be exceeded by a line of credit under which actual payments by the lender to the borrower will not be made in any years in excess of the annual limit;
(B) provides that the aggregate insured unpaid principal amount for all such insured loans made to any student shall be any amount up to a maximum of—
(i) $23,000, in the case of any student who has not successfully completed a program of undergraduate education, excluding loans made under section 1078–1 1 or 1078–2 of this title; and
(ii) $65,500, in the case of any graduate or professional student (as defined by regulations of the Secretary), and (I) including any loans which are insured by the Secretary under this section, or by a guaranty agency, made to such student before the student became a graduate or professional student, but (II) excluding loans made under section 1078–1 1 or 1078–2 of this title,
except that the Secretary may increase the limit applicable to students who are pursuing programs which the Secretary determines are exceptionally expensive;
(C) authorizes the insurance of loans to any individual student for at least 6 academic years of study or their equivalent (as determined under regulations of the Secretary);
(D) provides that (i) the student borrower shall be entitled to accelerate without penalty the whole or any part of an insured loan, (ii) the student borrower may annually change the selection of a repayment plan under this part, and (iii) the note, or other written evidence of any loan, may contain such reasonable provisions relating to repayment in the event of default by the borrower as may be authorized by regulations of the Secretary in effect at the time such note or written evidence was executed, and shall contain a notice that repayment may, following a default by the borrower, be subject to income contingent repayment in accordance with subsection (m);
(E) subject to subparagraphs (D) and (L), and except as provided by subparagraph (M), provides that—
(i) not more than 6 months prior to the date on which the borrower's first payment is due, the lender shall offer the borrower of a loan made, insured, or guaranteed under this section or
(ii) repayment of loans shall be in installments in accordance with the repayment plan selected under paragraph (9) and commencing at the beginning of the repayment period determined under paragraph (7);
(F) authorizes interest on the unpaid balance of the loan at a yearly rate not in excess (exclusive of any premium for insurance which may be passed on to the borrower) of the rate required by
(G) insures 98 percent of the unpaid principal of loans insured under the program, except that—
(i) such program shall insure 100 percent of the unpaid principal of loans made with funds advanced pursuant to subsection (j);
(ii) for any loan for which the first disbursement of principal is made on or after July 1, 2006, and before July 1, 2010, the preceding provisions of this subparagraph shall be applied by substituting "97 percent" for "98 percent"; and
(iii) notwithstanding the preceding provisions of this subparagraph, such program shall insure 100 percent of the unpaid principal amount of exempt claims as defined in subsection (c)(1)(G);
(H) provides—
(i) for loans for which the date of guarantee of principal is before July 1, 2006, for the collection of a single insurance premium equal to not more than 1.0 percent of the principal amount of the loan, by deduction proportionately from each installment payment of the proceeds of the loan to the borrower, and ensures that the proceeds of the premium will not be used for incentive payments to lenders; or
(ii) for loans for which the date of guarantee of principal is on or after July 1, 2006, and that are first disbursed before July 1, 2010, for the collection, and the deposit into the Federal Student Loan Reserve Fund under
(I) provides that the benefits of the loan insurance program will not be denied any student who is eligible for interest benefits under subsection (a)(1) and (2);
(J) provides that a student may obtain insurance under the program for a loan for any year of study at an eligible institution;
(K) in the case of a State program, provides that such State program is administered by a single State agency, or by one or more nonprofit private institutions or organizations under supervision of a single State agency;
(L) provides that the total of the payments by borrower—
(i) except as otherwise provided by a repayment plan selected by the borrower under clause (ii), (iii), or (v) of paragraph (9)(A), during any year of any repayment period with respect to the aggregate amount of all loans to that borrower which are insured under this part shall not, unless the borrower and the lender otherwise agree, be less than $600 or the balance of all such loans (together with interest thereon), whichever amount is less (but in no instance less than the amount of interest due and payable, notwithstanding any payment plan under paragraph (9)(A)); and
(ii) for a monthly or other similar payment period with respect to the aggregate of all loans held by the lender may, when the amount of a monthly or other similar payment is not a multiple of $5, be rounded to the next highest whole dollar amount that is a multiple of $5;
(M) provides that periodic installments of principal need not be paid, but interest shall accrue and be paid by the Secretary, during any period—
(i) during which the borrower—
(I) is pursuing at least a half-time course of study as determined by an eligible institution, except that no borrower, notwithstanding the provisions of the promissory note, shall be required to borrow an additional loan under this subchapter in order to be eligible to receive a deferment under this clause; or
(II) is pursuing a course of study pursuant to a graduate fellowship program approved by the Secretary, or pursuant to a rehabilitation training program for disabled individuals approved by the Secretary,
except that no borrower shall be eligible for a deferment under this clause, or loan made under this part (other than a loan made under
(ii) not in excess of 3 years during which the borrower is seeking and unable to find full-time employment, except that no borrower who provides evidence of eligibility for unemployment benefits shall be required to provide additional paperwork for a deferment under this clause;
(iii) during which the borrower—
(I) is serving on active duty during a war or other military operation or national emergency; or
(II) is performing qualifying National Guard duty during a war or other military operation or national emergency,
and for the 180-day period following the demobilization date for the service described in subclause (I) or (II);
(iv) not in excess of 3 years for any reason which the lender determines, in accordance with regulations prescribed by the Secretary under
(v) during which the borrower is receiving treatment for cancer and the 6 months after such period;
(N) provides that funds borrowed by a student—
(i) are disbursed to the institution by check or other means that is payable to, and requires the endorsement or other certification by, such student;
(ii) in the case of a student who is studying outside the United States in a program of study abroad that is approved for credit by the home institution at which such student is enrolled, and only after verification of the student's enrollment by the lender or guaranty agency, are, at the request of the student, disbursed directly to the student by the means described in clause (i), unless such student requests that the check be endorsed, or the funds transfer be authorized, pursuant to an authorized power-of-attorney; or
(iii) in the case of a student who is studying outside the United States in a program of study at an eligible foreign institution, are, at the request of the foreign institution, disbursed directly to the student, only after verification of the student's enrollment by the lender or guaranty agency by the means described in clause (i).2
(O) provides that the proceeds of the loans will be disbursed in accordance with the requirements of
(P) requires the borrower to notify the institution concerning any change in local address during enrollment and requires the borrower and the institution at which the borrower is in attendance promptly to notify the holder of the loan, directly or through the guaranty agency, concerning (i) any change of permanent address, (ii) when the student ceases to be enrolled on at least a half-time basis, and (iii) any other change in status, when such change in status affects the student's eligibility for the loan;
(Q) provides for the guarantee of loans made to students and parents under sections 1078–1 1 and 1078–2 of this title;
(R) with respect to lenders which are eligible institutions, provides for the insurance of loans by only such institutions as are located within the geographic area served by such guaranty agency;
(S) provides no restrictions with respect to the insurance of loans for students who are otherwise eligible for loans under such program if such a student is accepted for enrollment in or is attending an eligible institution within the State, or if such a student is a legal resident of the State and is accepted for enrollment in or is attending an eligible institution outside that State;
(T) authorizes (i) the limitation of the total number of loans or volume of loans, made under this part to students attending a particular eligible institution during any academic year; and (ii) the limitation, suspension, or termination of the eligibility of an eligible institution if—
(I) such institution is ineligible for the emergency action, limitation, suspension, or termination of eligible institutions under regulations issued by the Secretary or is ineligible pursuant to criteria, rules, or regulations issued under the student loan insurance program which are substantially the same as regulations with respect to emergency action, limitation, suspension, or termination of such eligibility issued by the Secretary;
(II) there is a State constitutional prohibition affecting the eligibility of such an institution;
(III) such institution fails to make timely refunds to students as required by regulations issued by the Secretary or has not satisfied within 30 days of issuance a final judgment obtained by a student seeking such a refund;
(IV) such institution or an owner, director, or officer of such institution is found guilty in any criminal, civil, or administrative proceeding, or such institution or an owner, director, or officer of such institution is found liable in any civil or administrative proceeding, regarding the obtaining, maintenance, or disbursement of State or Federal grant, loan, or work assistance funds; or
(V) such institution or an owner, director, or officer of such institution has unpaid financial liabilities involving the improper acquisition, expenditure, or refund of State or Federal financial assistance funds;
except that, if a guaranty agency limits, suspends, or terminates the participation of an eligible institution, the Secretary shall apply that limitation, suspension, or termination to all locations of such institution, unless the Secretary finds, within 30 days of notification of the action by the guaranty agency, that the guaranty agency's action did not comply with the requirements of this section;
(U) provides (i) for the eligibility of all lenders described in
(V) provides authority for the guaranty agency to require a participation agreement between the guaranty agency and each eligible institution within the State in which it is designated, as a condition for guaranteeing loans made on behalf of students attending the institution;
(W) provides assurances that the agency will implement all requirements of the Secretary for uniform claims and procedures pursuant to
(X) provides information to the Secretary in accordance with subsection (c)(9) and maintains reserve funds determined by the Secretary to be sufficient in relation to such agency's guarantee obligations; and
(Y) provides that—
(i) the lender shall determine the eligibility of a borrower for a deferment described in subparagraph (M)(i) based on—
(I) receipt of a request for deferment from the borrower and documentation of the borrower's eligibility for the deferment;
(II) receipt of a newly completed loan application that documents the borrower's eligibility for a deferment;
(III) receipt of student status information documenting that the borrower is enrolled on at least a half-time basis; or
(IV) the lender's confirmation of the borrower's half-time enrollment status through use of the National Student Loan Data System, if the confirmation is requested by the institution of higher education;
(ii) the lender will notify the borrower of the granting of any deferment under clause (i)(II) or (III) of this subparagraph and of the option to continue paying on the loan; and
(iii) the lender shall, at the time the lender grants a deferment to a borrower who received a loan under
(2) Contents of insurance program agreement
Such an agreement shall—
(A) provide that the holder of any such loan will be required to submit to the Secretary, at such time or times and in such manner as the Secretary may prescribe, statements containing such information as may be required by or pursuant to regulation for the purpose of enabling the Secretary to determine the amount of the payment which must be made with respect to that loan;
(B) include such other provisions as may be necessary to protect the United States from the risk of unreasonable loss and promote the purpose of this part, including such provisions as may be necessary for the purpose of
(C) provide for making such reports, in such form and containing such information, including financial information, as the Secretary may reasonably require to carry out the Secretary's functions under this part and protect the financial interest of the United States, and for keeping such records and for affording such access thereto as the Secretary may find necessary to assure the correctness and verification of such reports;
(D) provide for—
(i) conducting, except as provided in clause (ii), financial and compliance audits of the guaranty agency on at least an annual basis and covering the period since the most recent audit, conducted by a qualified, independent organization or person in accordance with standards established by the Comptroller General for the audit of governmental organizations, programs, and functions, and as prescribed in regulations of the Secretary, the results of which shall be submitted to the Secretary; or
(ii) with regard to a guaranty program of a State which is audited under
(E)(i) provide that any guaranty agency may transfer loans which are insured under this part to any other guaranty agency with the approval of the holder of the loan and such other guaranty agency; and
(ii) provide that the lender (or the holder of the loan) shall, not later than 120 days after the borrower has left the eligible institution, notify the borrower of the date on which the repayment period begins; and
(F) provide that, if the sale, other transfer, or assignment of a loan made under this part to another holder will result in a change in the identity of the party to whom the borrower must send subsequent payments or direct any communications concerning the loans, then—
(i) the transferor and the transferee will be required, not later than 45 days from the date the transferee acquires a legally enforceable right to receive payment from the borrower on such loan, either jointly or separately to provide a notice to the borrower of—
(I) the sale or other transfer;
(II) the identity of the transferee;
(III) the name and address of the party to whom subsequent payments or communications must be sent;
(IV) the telephone numbers of both the transferor and the transferee;
(V) the effective date of the transfer;
(VI) the date on which the current servicer (as of the date of the notice) will stop accepting payments; and
(VII) the date on which the new servicer will begin accepting payments; and
(ii) the transferee will be required to notify the guaranty agency, and, upon the request of an institution of higher education, the guaranty agency shall notify the last such institution the student attended prior to the beginning of the repayment period of any loan made under this part, of—
(I) any sale or other transfer of the loan; and
(II) the address and telephone number by which contact may be made with the new holder concerning repayment of the loan,
except that this subparagraph (F) shall only apply if the borrower is in the grace period described in
(3) Restrictions on inducements, payments, mailings, and advertising
A guaranty agency shall not—
(A) offer, directly or indirectly, premiums, payments, stock or other securities, prizes, travel, entertainment expenses, tuition payment or reimbursement, or other inducements to—
(i) any institution of higher education, any employee of an institution of higher education, or any individual or entity in order to secure applicants for loans made under this part; or
(ii) any lender, or any agent, employee, or independent contractor of any lender or guaranty agency, in order to administer or market loans made under this part (other than a loan made as part of the guaranty agency's lender-of-last-resort program pursuant to subsection (j)), for the purpose of securing the designation of the guaranty agency as the insurer of such loans;
(B) conduct unsolicited mailings, by postal or electronic means, of student loan application forms to students enrolled in secondary schools or postsecondary educational institutions, or to the families of such students, except that applications may be mailed, by postal or electronic means, to students or borrowers who have previously received loans guaranteed under this part by the guaranty agency;
(C) perform, for an institution of higher education participating in a program under this subchapter, any function that such institution is required to perform under this subchapter, except that the guaranty agency may perform functions on behalf of such institution in accordance with
(D) pay, on behalf of an institution of higher education, another person to perform any function that such institution is required to perform under this subchapter, except that the guaranty agency may perform functions on behalf of such institution in accordance with
(E) conduct fraudulent or misleading advertising concerning loan availability, terms, or conditions.
It shall not be a violation of this paragraph for a guaranty agency to provide technical assistance to institutions of higher education comparable to the technical assistance provided to institutions of higher education by the Department.
(4) Special rule
With respect to the graduate fellowship program referred to in paragraph (1)(M)(i)(II), the Secretary shall approve any course of study at a foreign university that is accepted for the completion of a recognized international fellowship program by the administrator of such a program. Requests for deferment of repayment of loans under this part by students engaged in graduate or postgraduate fellowship-supported study (such as pursuant to a Fulbright grant) outside the United States shall be approved until completion of the period of the fellowship.
(5) Guaranty agency information transfers
(A) Until such time as the Secretary has implemented
(B) Upon a request pursuant to subparagraph (A), a guaranty agency shall provide—
(i) the name and the social security number of the borrower; and
(ii) the amount borrowed and the cumulative amount borrowed.
(C) Any costs associated with fulfilling the request of a guaranty agency for information on students shall be paid by the guaranty agency requesting the information.
(6) State guaranty agency information request of State licensing boards
Each guaranty agency is authorized to enter into agreements with each appropriate State licensing board under which the State licensing board, upon request, will furnish the guaranty agency with the address of a student borrower in any case in which the location of the student borrower is unknown or unavailable to the guaranty agency.
(7) Repayment period
(A) In the case of a loan made under
(B) In the case of a loan made under
(C) In the case of a loan made under
(D) There shall be excluded from the 6-month period that begins on the date on which a student ceases to carry at least one-half the normal full-time academic workload as described in subparagraph (A) any period not to exceed 3 years during which a borrower who is a member of a reserve component of the Armed Forces named in
(8) Means of disbursement of loan proceeds
Nothing in this subchapter shall be interpreted to prohibit the disbursement of loan proceeds by means other than by check or to allow the Secretary to require checks to be made co-payable to the institution and the borrower.
(9) Repayment plans
(A) Design and selection
In accordance with regulations promulgated by the Secretary, the lender shall offer a borrower of a loan made under this part the plans described in this subparagraph for repayment of such loan, including principal and interest thereon. No plan may require a borrower to repay a loan in less than 5 years unless the borrower, during the 6 months immediately preceding the start of the repayment period, specifically requests that repayment be made over of 3 a shorter period. The borrower may choose from—
(i) a standard repayment plan, with a fixed annual repayment amount paid over a fixed period of time, not to exceed 10 years;
(ii) a graduated repayment plan paid over a fixed period of time, not to exceed 10 years;
(iii) an income-sensitive repayment plan, with income-sensitive repayment amounts paid over a fixed period of time, not to exceed 10 years, except that the borrower's scheduled payments shall not be less than the amount of interest due;
(iv) for new borrowers on or after October 7, 1998, who accumulate (after October 7, 1998) outstanding loans under this part totaling more than $30,000, an extended repayment plan, with a fixed annual or graduated repayment amount paid over an extended period of time, not to exceed 25 years, except that the borrower shall repay annually a minimum amount determined in accordance with paragraph (1)(L)(i); and
(v) beginning July 1, 2009, an income-based repayment plan that enables a borrower who has a partial financial hardship to make a lower monthly payment in accordance with
(B) Lender selection of option if borrower does not select
If a borrower of a loan made under this part does not select a repayment plan described in subparagraph (A), the lender shall provide the borrower with a repayment plan described in subparagraph (A)(i).
(c) Guaranty agreements for reimbursing losses
(1) Authority to enter into agreements
(A) The Secretary may enter into a guaranty agreement with any guaranty agency, whereby the Secretary shall undertake to reimburse it, under such terms and conditions as the Secretary may establish, with respect to losses (resulting from the default of the student borrower) on the unpaid balance of the principal and accrued interest of any insured loan. The guaranty agency shall be deemed to have a contractual right against the United States, during the life of such loan, to receive reimbursement according to the provisions of this subsection. Upon receipt of an accurate and complete request by a guaranty agency for reimbursement with respect to such losses, the Secretary shall pay promptly and without administrative delay. Except as provided in subparagraph (B) of this paragraph and in paragraph (7), the amount to be paid a guaranty agency as reimbursement under this subsection shall be equal to 100 percent of the amount expended by it in discharge of its insurance obligation incurred under its loan insurance program. A guaranty agency shall file a claim for reimbursement with respect to losses under this subsection within 30 days after the guaranty agency discharges its insurance obligation on the loan.
(B) Notwithstanding subparagraph (A)—
(i) if, for any fiscal year, the amount of such reimbursement payments by the Secretary under this subsection exceeds 5 percent of the loans which are insured by such guaranty agency under such program and which were in repayment at the end of the preceding fiscal year, the amount to be paid as reimbursement under this subsection for such excess shall be equal to 85 percent of the amount of such excess; and
(ii) if, for any fiscal year, the amount of such reimbursement payments exceeds 9 percent of such loans, the amount to be paid as reimbursement under this subsection for such excess shall be equal to 75 percent of the amount of such excess.
(C) For the purpose of this subsection, the amount of loans of a guaranty agency which are in repayment shall be the original principal amount of loans made by a lender which are insured by such a guaranty agency reduced by—
(i) the amount the insurer has been required to pay to discharge its insurance obligations under this part;
(ii) the original principal amount of loans insured by it which have been fully repaid; and
(iii) the original principal amount insured on those loans for which payment of the first installment of principal has not become due pursuant to subsection (b)(1)(E) of this section or such first installment need not be paid pursuant to subsection (b)(1)(M) of this section.
(D) Notwithstanding any other provisions of this section, in the case of a loan made pursuant to a lender-of-last-resort program, the Secretary shall apply the provisions of—
(i) the fourth sentence of subparagraph (A) by substituting "100 percent" for "95 percent"; 1
(ii) subparagraph (B)(i) by substituting "100 percent" for "85 percent"; and
(iii) subparagraph (B)(ii) by substituting "100 percent" for "75 percent".
(E) Notwithstanding any other provisions of this section, in the case of an outstanding loan transferred to a guaranty agency from another guaranty agency pursuant to a plan approved by the Secretary in response to the insolvency of the latter such guarantee agency, the Secretary shall apply the provision of—
(i) the fourth sentence of subparagraph (A) by substituting "100 percent" for "95 percent"; 1
(ii) subparagraph (B)(i) by substituting "90 percent" for "85 percent"; and
(iii) subparagraph (B)(ii) by substituting "80 percent" for "75 percent".
(F)(i) Notwithstanding any other provisions of this section, in the case of exempt claims, the Secretary shall apply the provisions of—
(I) the fourth sentence of subparagraph (A) by substituting "100 percent" for "95 percent"; 1
(II) subparagraph (B)(i) by substituting "100 percent" for "85 percent"; and
(III) subparagraph (B)(ii) by substituting "100 percent" for "75 percent".
(ii) For purposes of clause (i) of this subparagraph, the term "exempt claims" means claims with respect to loans for which it is determined that the borrower (or the student on whose behalf a parent has borrowed), without the lender's or the institution's knowledge at the time the loan was made, provided false or erroneous information or took actions that caused the borrower or the student to be ineligible for all or a portion of the loan or for interest benefits thereon.
(G) Notwithstanding any other provision of this section, the Secretary shall exclude a loan made pursuant to a lender-of-last-resort program when making reimbursement payment calculations under subparagraphs (B) and (C).
(2) Contents of guaranty agreements
The guaranty agreement—
(A) shall set forth such administrative and fiscal procedures as may be necessary to protect the United States from the risk of unreasonable loss thereunder, to ensure proper and efficient administration of the loan insurance program, and to assure that due diligence will be exercised in the collection of loans insured under the program, including (i) a requirement that each beneficiary of insurance on the loan submit proof that the institution was contacted and other reasonable attempts were made to locate the borrower (when the location of the borrower is unknown) and proof that contact was made with the borrower (when the location is known) and (ii) requirements establishing procedures to preclude consolidation lending from being an excessive proportion of guaranty agency recoveries on defaulted loans under this part;
(B) shall provide for making such reports, in such form and containing such information, as the Secretary may reasonably require to carry out the Secretary's functions under this subsection, and for keeping such records and for affording such access thereto as the Secretary may find necessary to assure the correctness and verification of such reports;
(C) shall set forth adequate assurances that, with respect to so much of any loan insured under the loan insurance program as may be guaranteed by the Secretary pursuant to this subsection, the undertaking of the Secretary under the guaranty agreement is acceptable in full satisfaction of State law or regulation requiring the maintenance of a reserve;
(D) shall provide that if, after the Secretary has made payment under the guaranty agreement pursuant to paragraph (1) of this subsection with respect to any loan, any payments are made in discharge of the obligation incurred by the borrower with respect to such loan (including any payments of interest accruing on such loan after such payment by the Secretary), there shall be paid over to the Secretary (for deposit in the fund established by
(E) shall set forth adequate assurance that an amount equal to each payment made under paragraph (1) will be promptly deposited in or credited to the accounts maintained for the purpose of
(F) set forth adequate assurances that the guaranty agency will not engage in any pattern or practice which results in a denial of a borrower's access to loans under this part because of the borrower's race, sex, color, religion, national origin, age, handicapped status, income, attendance at a particular eligible institution within the area served by the guaranty agency, length of the borrower's educational program, or the borrower's academic year in school;
(G) shall prohibit the Secretary from making any reimbursement under this subsection to a guaranty agency when a default claim is based on an inability to locate the borrower, unless the guaranty agency, at the time of filing for reimbursement, certifies to the Secretary that diligent attempts, including contact with the institution, have been made to locate the borrower through the use of reasonable skip-tracing techniques in accordance with regulations prescribed by the Secretary; and
(H) set forth assurances that—
(i) upon the request of an eligible institution, the guaranty agency shall, subject to clauses (ii) and (iii), furnish to the institution information with respect to students (including the names and addresses of such students) who received loans made, insured, or guaranteed under this part for attendance at the eligible institution and for whom default aversion assistance activities have been requested under subsection (l);
(ii) the guaranty agency shall not require the payment from the institution of any fee for such information; and
(iii) the guaranty agency will require the institution to use such information only to assist the institution in reminding students of their obligation to repay student loans and shall prohibit the institution from disseminating the information for any other purpose.
(I) may include such other provisions as may be necessary to promote the purpose of this part.
(3) Forbearance
A guaranty agreement under this subsection—
(A) shall contain provisions providing that—
(i) upon request, a lender shall grant a borrower forbearance, renewable at 12-month intervals, on terms agreed to by the parties to the loan with the approval of the insurer and documented in accordance with paragraph (10), and otherwise consistent with the regulations of the Secretary, if the borrower—
(I) is serving in a medical or dental internship or residency program, the successful completion of which is required to begin professional practice or service, or is serving in a medical or dental internship or residency program leading to a degree or certificate awarded by an institution of higher education, a hospital, or a health care facility that offers postgraduate training, provided that if the borrower qualifies for a deferment under
(II) has a debt burden under this subchapter that equals or exceeds 20 percent of income;
(III) is serving in a national service position for which the borrower receives a national service educational award under the National and Community Service Trust Act of 1993; or
(IV) is eligible for interest payments to be made on such loan for service in the Armed Forces under
(ii) the length of the forbearance granted by the lender—
(I) under clause (i)(I) shall equal the length of time remaining in the borrower's medical or dental internship or residency program, if the borrower is not eligible to receive a deferment described in such clause, or such length of time remaining in the program after the borrower has exhausted the borrower's eligibility for such deferment;
(II) under clause (i)(II) or (IV) shall not exceed 3 years; or
(III) under clause (i)(III) shall not exceed the period for which the borrower is serving in a position described in such clause; and
(iii) no administrative or other fee may be charged in connection with the granting of a forbearance under clause (i), and no adverse information regarding a borrower may be reported to a consumer reporting agency solely because of the granting of such forbearance;
(B) may, to the extent provided in regulations of the Secretary, contain provisions that permit such forbearance for the benefit of the student borrower as may be agreed upon by the parties to an insured loan and approved by the insurer;
(C) shall contain provisions that specify that—
(i) the form of forbearance granted by the lender pursuant to this paragraph, other than subparagraph (A)(i)(IV), shall be temporary cessation of payments, unless the borrower selects forbearance in the form of an extension of time for making payments, or smaller payments than were previously scheduled;
(ii) the form of forbearance granted by the lender pursuant to subparagraph (A)(i)(IV) shall be the temporary cessation of all payments on the loan other than payments of interest on the loan that are made under subsection (o);
(iii) the lender shall, at the time of granting a borrower forbearance, provide information to the borrower to assist the borrower in understanding the impact of capitalization of interest on the borrower's loan principal and total amount of interest to be paid during the life of the loan; and
(iv) the lender shall contact the borrower not less often than once every 180 days during the period of forbearance to inform the borrower of—
(I) the amount of unpaid principal and the amount of interest that has accrued since the last statement of such amounts provided to the borrower by the lender;
(II) the fact that interest will accrue on the loan for the period of forbearance;
(III) the amount of interest that will be capitalized, and the date on which capitalization will occur;
(IV) the option of the borrower to pay the interest that has accrued before the interest is capitalized; and
(V) the borrower's option to discontinue the forbearance at any time; and
(D) shall contain provisions that specify that—
(i) forbearance for a period not to exceed 60 days may be granted if the lender reasonably determines that such a suspension of collection activity is warranted following a borrower's request for deferment, forbearance, a change in repayment plan, or a request to consolidate loans, in order to collect or process appropriate supporting documentation related to the request, and
(ii) during such period interest shall accrue but not be capitalized.
Guaranty agencies shall not be precluded from permitting the parties to such a loan from entering into a forbearance agreement solely because the loan is in default. The Secretary shall permit lenders to exercise administrative forbearances that do not require the agreement of the borrower, under conditions authorized by the Secretary. Such forbearances shall include (i) forbearances for borrowers who are delinquent at the time of the granting of an authorized period of deferment under subsection (b)(1)(M) or
(4) Definitions
For the purpose of this subsection, the terms "insurance beneficiary" and "default" have the meanings assigned to them by
(5) Applicability to existing loans
In the case of any guaranty agreement with a guaranty agency, the Secretary may, in accordance with the terms of this subsection, undertake to guarantee loans described in paragraph (1) which are insured by such guaranty agency and are outstanding on the date of execution of the guaranty agreement, but only with respect to defaults occurring after the execution of such guaranty agreement or, if later, after its effective date.
(6) Secretary's equitable share
(A) For the purpose of paragraph (2)(D), the Secretary's equitable share of payments made by the borrower shall be that portion of the payments remaining after the guaranty agency with which the Secretary has an agreement under this subsection has deducted from such payments—
(i) a percentage amount equal to the complement of the reinsurance percentage in effect when payment under the guaranty agreement was made with respect to the loan; and
(ii) an amount equal to 24 percent of such payments for use in accordance with
(I) beginning October 1, 2003 and ending September 30, 2007, this clause shall be applied by substituting "23 percent" for "24 percent"; and
(II) beginning October 1, 2007, this clause shall be applied by substituting "16 percent" for "24 percent".
(B) A guaranty agency shall—
(i) on or after October 1, 2006—
(I) not charge the borrower collection costs in an amount in excess of 18.5 percent of the outstanding principal and interest of a defaulted loan that is paid off through consolidation by the borrower under this subchapter; and
(II) remit to the Secretary a portion of the collection charge under subclause (I) equal to 8.5 percent of the outstanding principal and interest of such defaulted loan; and
(ii) on and after October 1, 2009, remit to the Secretary the entire amount charged under clause (i)(I) with respect to each defaulted loan that is paid off with excess consolidation proceeds.
(C) For purposes of subparagraph (B), the term "excess consolidation proceeds" means, with respect to any guaranty agency for any Federal fiscal year beginning on or after October 1, 2009, the proceeds of consolidation of defaulted loans under this subchapter that exceed 45 percent of the agency's total collections on defaulted loans in such Federal fiscal year.
(7) New programs eligible for 100 percent reinsurance
(A) Notwithstanding paragraph (1)(C), the amount to be paid a guaranty agency for any fiscal year—
(i) which begins on or after October 1, 1977 and ends before October 1, 1991; and
(ii) which is either the fiscal year in which such guaranty agency begins to actively carry on a student loan insurance program which is subject to a guaranty agreement under subsection (b) of this section, or is one of the 4 succeeding fiscal years,
shall be 100 percent of the amount expended by such guaranty agency in discharge of its insurance obligation insured under such program.
(B) Notwithstanding the provisions of paragraph (1)(C), the Secretary may pay a guaranty agency 100 percent of the amount expended by such agency in discharge of such agency's insurance obligation for any fiscal year which—
(i) begins on or after October 1, 1991; and
(ii) is the fiscal year in which such guaranty agency begins to actively carry on a student loan insurance program which is subject to a guaranty agreement under subsection (b) or is one of the 4 succeeding fiscal years.
(C) The Secretary shall continuously monitor the operations of those guaranty agencies to which the provisions of subparagraph (A) or (B) are applicable and revoke the application of such subparagraph to any such guaranty agency which the Secretary determines has not exercised reasonable prudence in the administration of such program.
(8) Assignment to protect Federal fiscal interest
If the Secretary determines that the protection of the Federal fiscal interest so requires, a guaranty agency shall assign to the Secretary any loan of which it is the holder and for which the Secretary has made a payment pursuant to paragraph (1) of this subsection.
(9) Guaranty agency reserve level
(A) Each guaranty agency which has entered into an agreement with the Secretary pursuant to this subsection shall maintain in the agency's Federal Student Loan Reserve Fund established under
(B) The Secretary shall collect, on an annual basis, information from each guaranty agency having an agreement under this subsection to enable the Secretary to evaluate the financial solvency of each such agency. The information collected shall include the level of such agency's current reserves, cash disbursements and accounts receivable.
(C) If (i) any guaranty agency falls below the required minimum reserve level in any 2 consecutive years, (ii) any guaranty agency's Federal reimbursement payments are reduced to 85 percent pursuant to paragraph (1)(B)(i), or (iii) the Secretary determines that the administrative or financial condition of a guaranty agency jeopardizes such agency's continued ability to perform its responsibilities under its guaranty agreement, then the Secretary shall require the guaranty agency to submit and implement a management plan acceptable to the Secretary within 45 working days of any such event.
(D)(i) If the Secretary is not seeking to terminate the guaranty agency's agreement under subparagraph (E), or assuming the guaranty agency's functions under subparagraph (F), a management plan described in subparagraph (C) shall include the means by which the guaranty agency will improve its financial and administrative condition to the required level within 18 months.
(ii) If the Secretary is seeking to terminate the guaranty agency's agreement under subparagraph (E), or assuming the guaranty agency's functions under subparagraph (F), a management plan described in subparagraph (C) shall include the means by which the Secretary and the guaranty agency shall work together to ensure the orderly termination of the operations, and liquidation of the assets, of the guaranty agency.
(E) The Secretary may terminate a guaranty agency's agreement in accordance with subparagraph (F) if—
(i) a guaranty agency required to submit a management plan under this paragraph fails to submit a plan that is acceptable to the Secretary;
(ii) the Secretary determines that a guaranty agency has failed to improve substantially its administrative and financial condition;
(iii) the Secretary determines that the guaranty agency is in danger of financial collapse;
(iv) the Secretary determines that such action is necessary to protect the Federal fiscal interest; or
(v) the Secretary determines that such action is necessary to ensure the continued availability of loans to student or parent borrowers.
(F) If a guaranty agency's agreement under this subsection is terminated pursuant to subparagraph (E), then the Secretary shall assume responsibility for all functions of the guaranty agency under the loan insurance program of such agency. In performing such functions the Secretary is authorized to—
(i) permit the transfer of guarantees to another guaranty agency;
(ii) revoke the reinsurance agreement of the guaranty agency at a specified date, so as to require the merger, consolidation, or termination of the guaranty agency;
(iii) transfer guarantees to the Department of Education for the purpose of payment of such claims and process such claims using the claims standards of the guaranty agency, if such standards are determined by the Secretary to be in compliance with this chapter;
(iv) design and implement a plan to restore the guaranty agency's viability;
(v) provide the guaranty agency with additional advance funds in accordance with
(I) meet the immediate cash needs of the guaranty agency;
(II) ensure the uninterrupted payment of claims; or
(III) ensure that the guaranty agency will make loans as the lender-of-last-resort, in accordance with subsection (j);
(vi) use all funds and assets of the guaranty agency to assist in the activities undertaken in accordance with this subparagraph and take appropriate action to require the return, to the guaranty agency or the Secretary, of any funds or assets provided by the guaranty agency, under contract or otherwise, to any person or organization; or
(vii) take any other action the Secretary determines necessary to ensure the continued availability of loans made under this part to residents of the State or States in which the guaranty agency did business, the full honoring of all guarantees issued by the guaranty agency prior to the Secretary's assumption of the functions of such agency, and the proper servicing of loans guaranteed by the guaranty agency prior to the Secretary's assumption of the functions of such agency, and to avoid disruption of the student loan program.
(G) Notwithstanding any other provision of Federal or State law, if the Secretary has terminated or is seeking to terminate a guaranty agency's agreement under subparagraph (E), or has assumed a guaranty agency's functions under subparagraph (F)—
(i) no State court may issue any order affecting the Secretary's actions with respect to such guaranty agency;
(ii) any contract with respect to the administration of a guaranty agency's reserve funds, or the administration of any assets purchased or acquired with the reserve funds of the guaranty agency, that is entered into or extended by the guaranty agency, or any other party on behalf of or with the concurrence of the guaranty agency, after August 10, 1993, shall provide that the contract is terminable by the Secretary upon 30 days notice to the contracting parties if the Secretary determines that such contract includes an impermissible transfer of the reserve funds or assets, or is otherwise inconsistent with the terms or purposes of this section; and
(iii) no provision of State law shall apply to the actions of the Secretary in terminating the operations of a guaranty agency.
(H) Notwithstanding any other provision of law, the Secretary's liability for any outstanding liabilities of a guaranty agency (other than outstanding student loan guarantees under this part), the functions of which the Secretary has assumed, shall not exceed the fair market value of the reserves of the guaranty agency, minus any necessary liquidation or other administrative costs.
(I) The Secretary shall not take any action under subparagraph (E) or (F) without giving the guaranty agency notice and the opportunity for a hearing that, if commenced after September 24, 1998, shall be on the record.
(J) Notwithstanding any other provision of law, the information transmitted to the Secretary pursuant to this paragraph shall be confidential and exempt from disclosure under
(K) The Secretary, within 6 months after the end of each fiscal year, shall submit to the authorizing committees a report specifying the Secretary's assessment of the fiscal soundness of the guaranty agency system.
(10) Documentation of forbearance agreements
For the purposes of paragraph (3), the terms of forbearance agreed to by the parties shall be documented by confirming the agreement of the borrower by notice to the borrower from the lender, and by recording the terms in the borrower's file.
(d) Usury laws inapplicable
No provision of any law of the United States (other than this chapter and
(1) which bears interest (exclusive of any premium for insurance) on the unpaid principal balance at a rate not in excess of the rate specified in this part; and
(2) which is insured (i) by the United States under this part, or (ii) by a guaranty agency under a program covered by an agreement made pursuant to subsection (b) of this section.
(e) Repealed. Pub. L. 110–315, title IV, §422(h), Aug. 14, 2008, 122 Stat. 3231
(f) Payments of certain costs
(1) 4 Payment for certain activities
(A) In general
The Secretary—
(i) for loans originated during fiscal years beginning on or after October 1, 1998, and before October 1, 2003, and in accordance with the provisions of this paragraph, shall, except as provided in subparagraph (C), pay to each guaranty agency, a loan processing and issuance fee equal to 0.65 percent of the total principal amount of the loans on which insurance was issued under this part during such fiscal year by such agency; and
(ii) for loans originated on or after October 1, 2003, and first disbursed before July 1, 2010, and in accordance with the provisions of this paragraph, shall, except as provided in subparagraph (C), pay to each guaranty agency, a loan processing and issuance fee equal to 0.40 percent of the total principal amount of the loans on which insurance was issued under this part during such fiscal year by such agency.
(B) Payment
The payment required by subparagraph (A) shall be paid on a quarterly basis. The guaranty agency shall be deemed to have a contractual right against the United States to receive payments according to the provisions of this paragraph. Payments shall be made promptly and without administrative delay to any guaranty agency submitting an accurate and complete application under this subparagraph.
(C) Requirement for payment
No payment may be made under this paragraph for loans for which the disbursement checks have not been cashed or for which electronic funds transfers have not been completed.
(g) Action on insurance program and guaranty agreements
If a nonprofit private institution or organization—
(1) applies to enter into an agreement with the Secretary under subsections (b) and (c) with respect to a student loan insurance program to be carried on in a State with which the Secretary does not have an agreement under subsection (b), and
(2) as provided in the application, undertakes to meet the requirements of
the Secretary shall consider and act upon such application within 180 days, and shall forthwith notify the authorizing committees of his actions.
(h) Repealed. Pub. L. 110–315, title IV, §438(a)(2)(B), Aug. 14, 2008, 122 Stat. 3258
(i) Multiple disbursement of loans
(1) Escrow accounts administered by escrow agent
Any guaranty agency or eligible lender (hereafter in this subsection referred to as the "escrow agent") may enter into an agreement with any other eligible lender that is not an eligible institution or an agency or instrumentality of the State (hereafter in this subsection referred to as the "lender") for the purpose of authorizing disbursements of the proceeds of a loan to a student. Such agreement shall provide that the lender will pay the proceeds of such loans into an escrow account to be administered by the escrow agent in accordance with the provisions of paragraph (2) of this subsection. Such agreement may allow the lender to make payments into the escrow account in amounts that do not exceed the sum of the amounts required for disbursement of initial or subsequent installments to borrowers and to make such payments not more than 10 days prior to the date of the disbursement of such installment to such borrowers. Such agreement shall require the lender to notify promptly the eligible institution when funds are escrowed under this subsection for a student at such institution.
(2) Authority of escrow agent
Each escrow agent entering into an agreement under paragraph (1) of this subsection is authorized to—
(A) make the disbursements in accordance with the note evidencing the loan;
(B) commingle the proceeds of all loans paid to the escrow agent pursuant to the escrow agreement entered into under such paragraph (1);
(C) invest the proceeds of such loans in obligations of the Federal Government or obligations which are insured or guaranteed by the Federal Government;
(D) retain interest or other earnings on such investment; and
(E) return to the lender undisbursed funds when the student ceases to carry at an eligible institution at least one-half of the normal full-time academic workload as determined by the institution.
(j) Lenders-of-last-resort
(1) General requirement
In each State, the guaranty agency or an eligible lender in the State described in
(2) Rules and operating procedures
The guaranty agency shall develop rules and operating procedures for the lender-of-last-resort program designed to ensure that—
(A) the program establishes operating hours and methods of application designed to facilitate application by students and ensure a response within 60 days after the student's original complete application is filed under this subsection;
(B) consistent with standards established by the Secretary, students applying for loans under this subsection shall not be subject to additional eligibility requirements or requests for additional information beyond what is required under this subchapter in order to receive a loan under this part from an eligible lender, nor, in the case of students and parents applying for loans under this subsection because of an inability to otherwise obtain loans under this part (except for consolidation loans under
(C) information about the availability of loans under the program is made available to institutions of higher education in the State; and
(D) appropriate steps are taken to ensure that borrowers receiving loans under the program are appropriately counseled on their loan obligation.
(3) Advances to guaranty agencies for lender-of-last-resort services
(A) In order to ensure the availability of loan capital, the Secretary is authorized to provide a guaranty agency designated for a State with additional advance funds in accordance with subparagraph (C) and
(B) Notwithstanding any other provision in this part, a guaranty agency serving as a lender-of-last-resort under this paragraph shall be paid a fee, established by the Secretary, for making such loans in lieu of interest and special allowance subsidies, and shall be required to assign such loans to the Secretary on demand. Upon such assignment, the portion of the advance represented by the loans assigned shall be considered repaid by such guaranty agency.
(C) The Secretary shall exercise the authority described in subparagraph (A) only if the Secretary determines that eligible borrowers are seeking and are unable to obtain loans under this part or designates an institution of higher education for participation in the program under this subsection under paragraph (4), and that the guaranty agency designated for that State has the capability to provide lender-of-last-resort loans in a timely manner, in accordance with the guaranty agency's obligations under paragraph (1), but cannot do so without advances provided by the Secretary under this paragraph. If the Secretary makes the determinations described in the preceding sentence and determines that it would be cost-effective to do so, the Secretary may provide advances under this paragraph to such guaranty agency. If the Secretary determines that such guaranty agency does not have such capability, or will not provide such loans in a timely fashion, the Secretary may provide such advances to enable another guaranty agency, that the Secretary determines to have such capability, to make lender-of-last-resort loans to eligible borrowers in that State who are experiencing loan access problems or to eligible borrowers who attend an institution in the State that is designated under paragraph (4).
(4) Institution-wide student qualification
Upon the request of an institution of higher education and pursuant to standards developed by the Secretary, the Secretary shall designate such institution for participation in the lender-of-last-resort program under this paragraph.5 If the Secretary designates an institution under this paragraph, the guaranty agency designated for the State in which the institution is located shall make loans, in the same manner as such loans are made under paragraph (1), to students and parent borrowers of the designated institution, regardless of whether the students or parent borrowers are otherwise unable to obtain loans under this part (other than a consolidation loan under
(5) Standards developed by the Secretary
In developing standards with respect to paragraph (4), the Secretary may require—
(A) an institution of higher education to demonstrate that, despite due diligence on the part of the institution, the institution has been unable to secure the commitment of eligible lenders willing to make loans under this part to a significant number of students attending the institution;
(B) that, prior to making a request under such paragraph for designation for participation in the lender-of-last-resort program, an institution of higher education shall demonstrate that the institution has met a minimum threshold, as determined by the Secretary, for the number or percentage of students at such institution who have received rejections from eligible lenders for loans under this part; and
(C) any other standards and guidelines the Secretary determines to be appropriate.
(6) Expiration of authority
The Secretary's authority under paragraph (4) to designate institutions of higher education for participation in the program under this subsection shall expire on June 30, 2010.
(7) Expiration of designation
The eligibility of an institution of higher education, or borrowers from such institution, to participate in the program under this subsection pursuant to a designation of the institution by the Secretary under paragraph (4) shall expire on June 30, 2010. After such date, borrowers from an institution designated under paragraph (4) shall be eligible to participate in the program under this subsection as such program existed on the day before May 7, 2008.
(8) Prohibition on inducements and marketing
Each guaranty agency or eligible lender that serves as a lender-of-last-resort under this subsection—
(A) shall be subject to the prohibitions on inducements contained in subsection (b)(3) and the requirements of
(B) shall not advertise, market, or otherwise promote loans under this subsection, except that nothing in this paragraph shall prohibit a guaranty agency from fulfilling its responsibilities under paragraph (2)(C).
(9) Dissemination and reporting
(A) In general
The Secretary shall—
(i) broadly disseminate information regarding the availability of loans made under this subsection;
(ii) during the period beginning July 1, 2008 and ending June 30, 2011, provide to the authorizing committees and make available to the public—
(I) copies of any new or revised plans or agreements made by guaranty agencies or the Department related to the authorities under this subsection;
(II) quarterly reports on—
(aa) the number and amounts of loans originated or approved pursuant to this subsection by each guaranty agency and eligible lender; and
(bb) any related payments by the Department, a guaranty agency, or an eligible lender; and
(III) a budget estimate of the costs to the Federal Government (including subsidy and administrative costs) for each 100 dollars loaned, of loans made pursuant to this subsection between May 7, 2008, and June 30, 2010, disaggregated by type of loan, compared to such costs to the Federal Government during such time period of comparable loans under this part and part D, disaggregated by part and by type of loan; and
(iii) beginning July 1, 2011, provide to the authorizing committees and make available to the public—
(I) copies of any new or revised plans or agreements made by guaranty agencies or the Department related to the authorities under this subsection; and
(II) annual reports on—
(aa) the number and amounts of loans originated or approved pursuant to this subsection by each guaranty agency and eligible lender; and
(bb) any related payments by the Department, a guaranty agency, or an eligible lender.
(B) Separate reporting
The information required to be reported under subparagraph (A)(ii)(II) shall be reported separately for loans originated or approved pursuant to paragraph (4), or payments related to such loans, for the time period in which the Secretary is authorized to make designations under paragraph (4).
(k) Information on defaults
(1) Provision of information to eligible institutions
Notwithstanding any other provision of law, in order to notify eligible institutions of former students who are in default of their continuing obligation to repay student loans, each guaranty agency shall, upon the request of an eligible institution, furnish information with respect to students who were enrolled at the eligible institution and who are in default on the repayment of any loan made, insured, or guaranteed under this part. The information authorized to be furnished under this subsection shall include the names and addresses of such students.
(2) Public dissemination not authorized
Nothing in paragraph (1) of this subsection shall be construed to authorize public dissemination of the information described in paragraph (1).
(3) Borrower location information
Any information provided by the institution relating to borrower location shall be used by the guaranty agency in conducting required skip-tracing activities.
(4) Provision of information to borrowers in default
Each guaranty agency that has received a default claim from a lender regarding a borrower, shall provide the borrower in default, on not less than two separate occasions, with a notice, in simple and understandable terms, of not less than the following information:
(A) The options available to the borrower to remove the borrower's loan from default.
(B) The relevant fees and conditions associated with each option.
(l) Default aversion assistance
(1) Assistance required
Upon receipt of a complete request from a lender received not earlier than the 60th day of delinquency, a guaranty agency having an agreement with the Secretary under subsection (c) shall engage in default aversion activities designed to prevent the default by a borrower on a loan covered by such agreement.
(2) Reimbursement
(A) In general
A guaranty agency, in accordance with the provisions of this paragraph, may transfer from the Federal Student Loan Reserve Fund under
(B) Amount
The default aversion fee shall be equal to 1 percent of the total unpaid principal and accrued interest on the loan at the time the request is submitted by the lender. A guaranty agency may transfer such fees earned under this subsection not more frequently than monthly. Such a fee shall not be paid more than once on any loan for which the guaranty agency averts the default unless—
(i) at least 18 months has elapsed between the date the borrower entered current repayment status and the date the lender filed a subsequent default aversion assistance request; and
(ii) during the period between such dates, the borrower was not more than 30 days past due on any payment of principal and interest on the loan.
(C) Definition
For the purpose of earning the default aversion fee, the term "current repayment status" means that the borrower is not delinquent in the payment of any principal or interest on the loan.
(m) Income contingent and income-based repayment
(1) Authority of Secretary to require
The Secretary may require borrowers who have defaulted on loans made under this part that are assigned to the Secretary under subsection (c)(8) to repay those loans under an income contingent repayment plan or income-based repayment plan, the terms and conditions of which shall be established by the Secretary and the same as, or similar to, an income contingent repayment plan established for purposes of part D of this subchapter or an income-based repayment plan under
(2) Loans for which income contingent or income-based repayment may be required
A loan made under this part may be required to be repaid under this subsection if the note or other evidence of the loan has been assigned to the Secretary pursuant to subsection (c)(8).
(n) Blanket certificate of loan guaranty
(1) In general
Subject to paragraph (3), any guaranty agency that has entered into or enters into any insurance program agreement with the Secretary under this part may—
(A) offer eligible lenders participating in the agency's guaranty program a blanket certificate of loan guaranty that permits the lender to make loans without receiving prior approval from the guaranty agency of individual loans for eligible borrowers enrolled in eligible programs at eligible institutions; and
(B) provide eligible lenders with the ability to transmit electronically data to the agency concerning loans the lender has elected to make under the agency's insurance program via standard reporting formats, with such reporting to occur at reasonable and standard intervals.
(2) Limitations on blanket certificate of guaranty
(A) An eligible lender may not make a loan to a borrower under this section after such lender receives a notification from the guaranty agency that the borrower is not an eligible borrower.
(B) A guaranty agency may establish limitations or restrictions on the number or volume of loans issued by a lender under the blanket certificate of guaranty.
(3) Participation level
During fiscal years 1999 and 2000, the Secretary may permit, on a pilot basis, a limited number of guaranty agencies to offer blanket certificates of guaranty under this subsection. Beginning in fiscal year 2001, any guaranty agency that has an insurance program agreement with the Secretary may offer blanket certificates of guaranty under this subsection.
(4) Report required
The Secretary shall, at the conclusion of the pilot program under paragraph (3), provide a report to the authorizing committees on the impact of the blanket certificates of guaranty on program efficiency and integrity.
(o) Armed Forces and NOAA Commissioned Officer Corps student loan interest payment programs
(1) Authority
Using funds received by transfer to the Secretary under
(2) Forbearance
During the period in which the Secretary is making payments on a loan under paragraph (1), the lender shall grant the borrower forbearance in accordance with the guaranty agreement under subsection (c)(3)(A)(i)(IV).
(3) Special allowance defined
For the purposes of this subsection, the term "special allowance",6 means a special allowance that is payable with respect to a loan under
(
Editorial Notes
References in Text
The National and Community Service Act of 1990, referred to in subsec. (a)(2)(C)(ii)(II)(aa), is
The phrase " '95 percent' ", referred to in subsec. (c)(1)(D)(i), (E)(i), and (F)(i)(I) as appearing in "the fourth sentence of subparagraph (A)", no longer appears in subpar. (A) of subsec. (c)(1) after the amendment by
The Higher Education Amendments of 1992, referred to in subsec. (c)(3)(A)(i)(I), is
The National and Community Service Trust Act of 1993, referred to in subsec. (c)(3)(A)(i)(III), is
Codification
Amendments by section 2(c)(17), (26), (27) of
Prior Provisions
A prior section 1078,
A prior section 1078a,
Amendments
2020—Subsec. (a)(2)(B).
Subsec. (a)(2)(E).
Subsec. (o).
Subsec. (o)(1).
2018—Subsec. (b)(1)(M)(v).
2015—Subsec. (c)(1)(A).
2011—Subsec. (a)(3)(A)(i)(I).
2010—Subsec. (a)(1).
Subsec. (a)(5).
Subsec. (b)(1)(G).
Subsec. (b)(1)(G)(ii).
Subsec. (b)(1)(H)(ii).
Subsec. (f)(1)(A)(ii).
Subsec. (j)(1).
2009—Subsec. (a)(2)(A)(i)(II).
Subsec. (b)(1)(G)(i).
Subsec. (b)(1)(M)(i).
Subsec. (b)(3)(A)(i).
Subsec. (b)(3)(C), (D).
Subsec. (b)(4).
Subsec. (b)(7)(B).
Subsec. (b)(7)(D).
Subsec. (c)(9)(K).
2008—Subsec. (a)(2)(C).
"(i) a student's cost of attendance shall be determined under
"(ii) a student's estimated financial assistance means, for the period for which the loan is sought—
"(I) the amount of assistance such student will receive under subpart 1 of part A of this subchapter (as determined in accordance with
"(II) any veterans' education benefits paid because of enrollment in a postsecondary education institution, including veterans' education benefits (as defined in
"(III) other scholarship, grant, or loan assistance, but excluding any national service education award or post-service benefit under title I of the National and Community Service Act of 1990; and
"(iii) the determination of need and of the amount of a loan by an eligible institution under subparagraph (B) with respect to a student shall be calculated in accordance with part F."
Subsec. (a)(5).
Subsec. (b)(1)(G)(i).
Subsec. (b)(1)(L)(i).
Subsec. (b)(1)(Y)(i).
"(I) a request for deferment from the borrower and documentation of the borrower's eligibility for the deferment;
"(II) a newly completed loan application that documents the borrower's eligibility for a deferment; or
"(III) student status information received by the lender that the borrower is enrolled on at least a half-time basis; and".
Subsec. (b)(1)(Y)(iii).
Subsec. (b)(2)(F)(i)(V) to (VII).
Subsec. (b)(3).
"(A) offer, directly or indirectly, premiums, payments, or other inducements to any educational institution or its employees in order to secure applicants for loans under this part;
"(B) offer, directly or indirectly, any premium, incentive payment, or other inducement to any lender, or any agent, employee, or independent contractor of any lender or guaranty agency, in order to administer or market loans made under this part (other than a loan made under
"(C) conduct unsolicited mailings of student loan application forms to students enrolled in secondary school or a postsecondary institution, or to parents of such students, except that applications may be mailed to borrowers who have previously received loans guaranteed under this part by the guaranty agency; or
"(D) conduct fraudulent or misleading advertising concerning loan availability.
"It shall not be a violation of this paragraph for a guaranty agency to provide assistance to institutions of higher education comparable to the kinds of assistance provided to institutions of higher education by the Department of Education."
Subsec. (b)(7)(C).
Subsec. (b)(9)(A)(v).
Subsec. (c)(2)(H)(i).
Subsec. (c)(3)(A)(iii).
Subsec. (c)(3)(C)(iii), (iv).
Subsec. (c)(9)(K).
Subsec. (d).
Subsec. (e).
"(1) that all borrowers are eligible for income-sensitive repayment, including through loan consolidation under
"(2) the procedures by which the borrower may elect income-sensitive repayment; and
"(3) where and how the borrower may obtain additional information concerning income-sensitive repayment."
Subsec. (g).
Subsec. (h).
Subsec. (j)(1).
Subsec. (j)(2)(B).
Subsec. (j)(2)(C) to (E).
Subsec. (j)(3)(C).
Subsec. (j)(4), (5).
Subsec. (j)(6).
Subsec. (j)(7).
Subsec. (j)(8), (9).
Subsec. (j)(9)(A)(ii).
Subsec. (j)(9)(A)(ii)(III).
Subsec. (j)(9)(A)(iii).
Subsec. (k)(4).
Subsec. (m).
Subsec. (m)(1).
Subsec. (m)(2).
Subsec. (n)(4).
2007—Subsec. (b)(1)(G).
Subsec. (b)(1)(M)(iii).
Subsec. (c)(1)(D) to (H).
Subsec. (c)(6)(A)(ii).
2006—Subsec. (a)(3)(A)(v)(III).
Subsec. (a)(5).
Subsec. (b)(1)(A)(i)(I).
Subsec. (b)(1)(A)(ii)(I).
Subsec. (b)(1)(G).
Subsec. (b)(1)(H).
Subsec. (b)(1)(M)(iii), (iv).
Subsec. (b)(1)(N)(ii), (iii).
Subsec. (b)(7)(A).
"(i) the day after 6 months after the date the student ceases to carry at least one-half the normal full-time academic workload (as determined by the institution); or
"(ii) on an earlier date if the borrower requests and is granted a repayment schedule that provides for repayment to commence at an earlier date."
Subsec. (c)(1)(A).
Subsec. (c)(1)(G), (H).
Subsec. (c)(2)(A).
Subsec. (c)(2)(D).
Subsec. (c)(3)(A)(i).
Subsec. (c)(6).
Subsec. (c)(10).
Subsec. (i)(1).
2002—Subsec. (c)(3)(A)(i)(IV).
Subsec. (c)(3)(A)(ii)(II).
Subsec. (c)(3)(C).
Subsec. (o).
1998—Subsec. (a)(2)(A)(i).
"(I) sets forth such student's estimated cost of attendance (as determined under
"(II) sets forth such student's estimated financial assistance; and
"(III) sets forth a schedule for disbursement of the proceeds of the loan in installments, consistent with the requirements of
Subsec. (a)(2)(B).
Subsec. (a)(2)(C).
"(i) a student's estimated financial assistance means, for the period for which the loan is sought, the amount of assistance such student will receive under subpart 1 of part A of this subchapter (as determined in accordance with
"(ii) the determination of need and of the amount of a loan by an eligible institution under subparagraph (B) with respect to a student shall be calculated in accordance with part F."
Subsec. (a)(2)(F).
Subsec. (a)(5).
Subsec. (b)(1)(A).
Subsec. (b)(1)(A)(i)(I).
Subsec. (b)(1)(A)(i)(II), (III).
"(II) $1,750, if such student is enrolled in a program whose length is less than one academic year, but at least 2/3 of such an academic year; and
"(III) $875, if such student is enrolled in a program whose length is less than 2/3, but at least 1/3, of such an academic year;".
Subsec. (b)(1)(A)(vi).
Subsec. (b)(1)(D)(ii).
Subsec. (b)(1)(E).
"(i) not more than 6 months prior to the date on which the borrower's first payment is due, the lender shall offer the borrower of a loan made, insured, or guaranteed under this section or
"(ii) repayment of loans shall be in installments over a period of not less than 5 years (unless the student, during the 6 months immediately preceding the start of the repayment period, specifically requests that repayment be made over a shorter period) nor more than 10 years commencing at the beginning of the repayment period determined under paragraph (7) of this subsection;".
Subsec. (b)(1)(G).
Subsec. (b)(1)(L)(i).
Subsec. (b)(1)(M)(i)(I).
Subsec. (b)(1)(M)(ii).
Subsec. (b)(1)(U)(i)(I), (ii).
Subsec. (b)(1)(U)(iii)(I).
Subsec. (b)(1)(X).
Subsec. (b)(1)(Y).
Subsec. (b)(3).
Subsec. (b)(3)(C).
Subsec. (b)(7)(D).
Subsec. (b)(9).
Subsec. (c)(1)(A).
Subsec. (c)(1)(B)(i).
Subsec. (c)(1)(B)(ii).
Subsec. (c)(1)(E)(i).
Subsec. (c)(1)(E)(ii).
Subsec. (c)(1)(E)(iii).
Subsec. (c)(1)(F)(i).
Subsec. (c)(1)(F)(ii).
Subsec. (c)(1)(F)(iii).
Subsec. (c)(2)(A).
Subsec. (c)(2)(G).
Subsec. (c)(2)(H)(ii).
Subsec. (c)(3)(A)(i).
Subsec. (c)(3)(D).
Subsec. (c)(6).
Subsec. (c)(8).
Subsec. (c)(9)(A).
Subsec. (c)(9)(C).
Subsec. (c)(9)(E)(iv).
Subsec. (c)(9)(E)(v).
Subsec. (c)(9)(E)(vi).
Subsec. (c)(9)(F)(vii).
Subsec. (c)(9)(I).
Subsec. (c)(9)(K).
Subsec. (e).
Subsec. (f).
Subsec. (g).
Subsec. (j)(3).
Subsec. (j)(3)(A).
Subsec. (j)(3)(C).
Subsec. (l).
"(1)
"(2)
Subsec. (m)(1).
Subsec. (n).
1997—Subsec. (a)(5).
Subsec. (c)(9)(A).
"(i) .7 percent of such total attributable amount for the fiscal year of the agency that begins in 1994;
"(ii) .9 percent of such total attributable amount for the fiscal year of the agency that begins in 1995; and
"(iii) 1.1 percent of such total attributable amount for each fiscal year of the agency that begins on or after January 1, 1996."
1994—Subsec. (c)(1)(G).
1993—Subsec. (a)(2)(C)(i).
Subsec. (a)(2)(E).
Subsec. (b)(1)(A)(ii), (iii).
"(ii) in the case of a student who has successfully completed such first year but has not successfully completed the remainder of a program of undergraduate study—
"(I) $3,500, if such student is enrolled in a program whose length is at least one academic year in length (as determined under
"(II) $2,325, if such student is enrolled in a program whose length is less than one academic year, but at least 2/3 of such academic year; and
"(III) $1,175, if such student is enrolled in a program whose length is less than 2/3, but at least 1/3, of such academic year;
"(iii) in the case of a student at an eligible institution who has successfully completed such first and second year but has not successfully completed the remainder of a program of undergraduate study—
"(I) $5,500, if such student is enrolled in a program whose length is at least one academic year in length (as determined under
"(II) $3,675, if such student is enrolled in a program whose length is less than one academic year, but at least 2/3 of such an academic year; and
"(III) $1,825, if such student is enrolled in a program whose length is less than 2/3, but at least 1/3, of such an academic year; and".
Subsec. (b)(1)(A)(iv), (v).
Subsec. (b)(1)(B).
Subsec. (b)(1)(D).
Subsec. (b)(1)(G).
Subsec. (b)(1)(H).
Subsec. (b)(1)(N).
Subsec. (b)(1)(U).
Subsec. (b)(1)(V).
Subsec. (b)(1)(W).
"(i) provides that, upon written request, a lender shall grant a borrower forbearance on such terms as are otherwise consistent with the regulations of the Secretary, during periods in which the borrower is serving in a national service position, for which the borrower receives a national service educational award under the National and Community Service Trust Act of 1993;
"(ii) provides that clauses (iii) and (iv) of subparagraph (V) shall also apply to a forbearance granted under this subparagraph; and
"(iii) provides that interest shall continue to accrue on a loan for which a borrower receives forbearance under this subparagraph and shall be capitalized or paid by the borrower;". See Codification note above.
Subsec. (b)(1)(X).
Subsec. (b)(1)(Y).
Subsec. (b)(1)(Z).
Subsec. (b)(2)(F)(i).
Subsec. (b)(2)(F)(ii).
Subsec. (b)(7).
"(A) In the case of a loan made under
"(B) In the case of a loan made under
"(C) In the case of a loan made under
Subsec. (b)(8).
Subsec. (c)(1)(A).
Subsec. (c)(1)(B), (E), (F).
Subsec. (c)(2)(G).
Subsec. (c)(3)(A).
Subsec. (c)(6)(A)(ii).
Subsec. (c)(8).
Subsec. (c)(9).
Subsec. (c)(10).
Subsec. (c)(10)(C).
Subsec. (c)(10)(D).
Subsec. (c)(10)(E)(iv) to (vi).
Subsec. (c)(10)(F).
Subsec. (c)(10)(F)(v).
Subsec. (c)(10)(F)(vi), (vii).
Subsec. (c)(10)(G).
Subsec. (c)(10)(H) to (J).
Subsec. (c)(10)(K).
Subsec. (e)(1).
Subsec. (e)(2).
Subsec. (e)(2)(A).
Subsec. (e)(3).
Subsec. (e)(5).
Subsec. (f)(1)(A).
Subsec. (f)(1)(B).
Subsec. (j)(2).
Subsec. (j)(2)(A) to (E).
Subsec. (j)(3).
Subsec. (l)(2).
Subsec. (m).
Subsec. (n).
1992—Subsec. (a)(2)(C).
"(i) a student's estimated financial assistance means, for the period for which the loan is sought, the amount of assistance such student will receive under subpart 1 of part A of this subchapter (as determined in accordance with
"(ii) the determination of need and of the amount of a loan by an eligible institution under subparagraph (B) with respect to a student shall be calculated by subtracting from the estimated cost of attendance at the eligible institution the total of the expected family contribution with respect to such student plus any estimated financial assistance reasonably available to such student."
Subsec. (a)(3)(A)(v).
Subsec. (a)(5).
Subsec. (a)(7).
Subsec. (b)(1)(A).
Subsec. (b)(1)(A)(i) to (iv).
"(i) $2,625, in the case of a student who has not successfully completed the first and second year of a program of undergraduate education;
"(ii) $4,000, in the case of a student who has successfully completed such first and second year but who has not successfully completed the remainder of a program of undergraduate education; and
"(iii) $7,500, in the case of a graduate or professional student (as defined in regulations of the Secretary);".
Subsec. (b)(1)(B).
"(i) $17,250, in the case of any student who has not successfully completed a program of undergraduate education, excluding loans made under
"(ii) $54,750, in the case of any graduate or professional student (as defined by regulations of the Secretary and including any loans which are insured by the Secretary under this part, or by a guaranty agency, made to such student before the student became a graduate or professional student), excluding loans made under
except that the Secretary may increase the limit applicable to students who are pursuing programs which the Secretary determines are exceptionally expensive;".
Subsec. (b)(1)(D), (E).
"(D) provides that (i) the student borrower shall be entitled to accelerate without penalty the whole or any part of an insured loan, (ii) except as provided in subparagraph (M) of this paragraph, the repayment period of any insured loan may not exceed 10 years, and (iii) the note or other written evidence of any loan, may contain such reasonable provisions relating to repayment in the event of default by the borrower as may be authorized by regulations of the Secretary in effect at the time such note or written evidence was executed;
"(E) subject to subparagraphs (D) and (L) of this paragraph and except as provided by subparagraph (M) of this paragraph, provides that repayment of loans shall be in installments over a period of not less than 5 years (unless the student, during the 6 months preceding the start of the repayment period, specifically requests that repayment be made over a shorter period) nor more than 10 years beginning 6 months after the month in which the student ceases to carry at least one-half the normal full-time academic workload as determined by the institution;".
Subsec. (b)(1)(L)(i).
Subsec. (b)(1)(M).
Subsec. (b)(1)(N).
Subsec. (b)(1)(T).
"(i) that institution is ineligible under regulations for the emergency action, limitation, suspension, or termination of eligible institutions under the Federal student loan insurance program or is ineligible pursuant to criteria issued under the student loan insurance program which are substantially the same as regulations with respect to such eligibility issued under the Federal student loan insurance program; or
"(ii) there is a State constitutional prohibition affecting the eligibility of such an institution;".
Subsec. (b)(1)(U)(iii).
Subsec. (b)(1)(V).
Subsec. (b)(1)(W) to (Y).
Subsec. (b)(2)(C).
Subsec. (b)(2)(D)(i).
Subsec. (b)(2)(E).
Subsec. (b)(2)(F).
Subsec. (b)(3)(B) to (D).
Subsec. (b)(4).
Subsec. (b)(5).
Subsec. (b)(6).
Subsec. (b)(7).
Subsec. (c)(1)(A).
Subsec. (c)(1)(D).
Subsec. (c)(2).
Subsec. (c)(3).
Subsec. (c)(7)(A).
Subsec. (c)(7)(B).
Subsec. (c)(7)(C).
Subsec. (c)(8).
Subsec. (c)(10).
Subsec. (f)(1)(A)(i).
Subsec. (f)(1)(C).
Subsec. (j).
Subsec. (k)(3).
Subsec. (m).
1991—Subsec. (a)(2)(A)(iii).
Subsec. (a)(2)(F).
Subsec. (b)(1)(W).
Subsec. (b)(1)(X).
Subsec. (c)(6)(D).
1990—Subsec. (a)(2)(F).
Subsec. (c)(1)(A).
Subsec. (c)(6)(C).
Subsec. (l).
1989—Subsec. (a)(2)(A)(i)(III).
Subsec. (b)(1)(M)(i).
Subsec. (b)(1)(O).
Subsec. (b)(1)(T)(i).
Subsec. (b)(1)(U).
Subsec. (b)(1)(V).
Subsec. (c)(3).
1988—Subsec. (b)(1)(M)(v).
Subsec. (b)(1)(M)(vii).
Subsec. (b)(1)(O).
1987—Subsec. (a)(2)(D).
Subsec. (b)(1)(A)(i).
Subsec. (b)(1)(B)(i).
Subsec. (b)(1)(B)(ii).
Subsec. (b)(1)(M)(vi).
Subsec. (b)(1)(M)(vii).
Subsec. (b)(1)(N).
Subsec. (b)(1)(O).
Subsec. (b)(1)(O)(i).
Subsec. (b)(1)(P).
Subsec. (b)(1)(T).
Subsec. (b)(5).
Subsec. (b)(6)(A).
Subsec. (b)(6)(B)(ii).
Subsec. (c)(1)(A).
Subsec. (c)(6)(C)(iv).
Subsec. (c)(6)(D).
Subsec. (c)(9)(A).
Subsec. (c)(9)(A)(i), (ii).
Subsec. (c)(9)(D).
Subsec. (f)(1)(B).
Subsec. (i)(1).
Subsec. (j).
Subsec. (k)(1).
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Amendment by
Effective Date of 2018 Amendment
Amendment by
Effective Date of 2011 Amendment
Effective Date of 2009 Amendment
Amendment by
Effective Date of 2008 Amendment
Effective Date of 2007 Amendment
Amendment by sections 202(a), (d) and 301 of
Effective Date of 2006 Amendment
Amendment by
Amendment by section 8005(b) of
Effective Date of 2002 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by section 417(a), (b), (c)(2)–(k) of
Effective Date of 1994 Amendment
Effective Date of 1993 Amendments
Amendment by section 2(c)(11), (12), (14)–(17), (22)–(28) of
Amendment by
Effective Date of 1992 Amendment
"(a)
"(1) as otherwise provided in such part B;
"(2) that the changes made in sections 425(a), 428(b)(1)(A), 428(b)(1)(B), 428A(b), 428B(b) [
"(A) the changes made in section 425(a)(1)(A)(i) and 428(b)(1)(A)(i) shall apply with respect to loans for which the first disbursement is made on or after October 1, 1992; and
"(B) the changes made in section 425(a)(1)(A)(iv) and 428(b)(1)(A)(iv) shall apply with respect to loans to cover the costs of instruction for periods of enrollment beginning on or after October 1, 1993;
"(3) that the changes made in sections 427(a)(2)(C), 428(b)(1)(M), and 428B(d)(1) [
"(4) that the changes made in sections 428(a)(7) and 428(f)(1)(C), relating to payments for unconsummated loans, shall apply with respect to loans made on or after October 1, 1992;
"(5) that the changes made in sections 427(a)(2)(H) and 428(b)(1)(E)(i), relating to offering graduated or income sensitive repayment options, shall apply with respect to loans for which the first disbursement is made on or after July 1, 1993, to an individual who is a new borrower on the date such individual applies for a loan;
"(6) that the changes made in section 428(b)(4), relating to teacher deferment, shall apply with respect to loans for which the first disbursement is made on or after July 1, 1993, to an individual who is a new borrower on the date such individual applies for a loan;
"(7) that section 428(c)(2)(H)(i) as added by such amendments shall be effective on and after October 1, 1992;
"(8) that the changes in section 428(c)(3) with respect to forbearance after a default shall be effective on and after October 1, 1992;
"(9) that the changes made in section 428B(a) [
"(10) that section 428B(c) as added by such amendments, relating to disbursement of Federal PLUS Loans, shall apply with respect to loans for which the first disbursement is made on or after October 1, 1992;
"(11) that the changes made in section 428C [
"(12) that section 428H [
"(13) that the changes made in section 438 [
"(14) that the changes in section 439(d)(1) [
"(15) that the changes in the designation or names of loans or programs under part B is [sic] effective with respect to applications or other documents (used in making such loans) that are printed after the date of enactment of this Act.
"(b)
Effective Date of 1989 Amendment
Amendment by section 2002(a)(2) of
Amendment by section 2004(b)(1), (3) of
Effective Date of 1988 Amendment
Amendment by section 11(a) of
Amendment by section 5(b)(2) of
Effective Date of 1987 Amendments
Amendment by section 10(b) of
Amendment by
Effective Date
Section effective Oct. 17, 1987, with subsection (b)(1)(M) (except cls. (viii), (ix), and (x)) applicable only to loans to new borrowers made to cover the costs of instruction for periods of enrollment beginning on or after July 1, 1987, or disbursed on or after July 1, 1987, subsection (b)(1)(A) and (B) applicable with respect only to loans disbursed on or after Jan. 1, 1987, or made to cover the costs of instruction for periods of enrollment beginning on or after Jan. 1, 1987, and subsection (b)(1)(H) applicable with respect only to loans for which the borrower files an application on or after July 1, 1987, see section 402(b) of
Construction of 2006 Amendment
Review of Inducements Limitations
Guaranteed Student Loan Family Contribution Schedule for the Periods of Instruction Beginning After June 30, 1983
1 See References in Text note below.
2 So in original. The period probably should be a semicolon.
4 So in original. No par. (2) has been enacted.
5 So in original. Probably should be "subsection."
6 So in original. The comma probably should not appear.
§1078–1. Voluntary flexible agreements with guaranty agencies
(a) Voluntary agreements
(1) Authority
Subject to paragraph (2),1 the Secretary may enter into a voluntary, flexible agreement with a guaranty agency under this section, in lieu of agreements with a guaranty agency under subsections (b) and (c) of
(A) any statutory requirement pertaining to the terms and conditions attached to student loans or default claim payments made to lenders;
(B) the prohibitions on inducements contained in
(C) the Federal default fee required by
(2) Eligibility
During fiscal years 1999, 2000, and 2001, the Secretary may enter into a voluntary, flexible agreement with not more than 6 guaranty agencies that had 1 or more agreements with the Secretary under subsections (b) and (c) of
(3) Report required
(A) In general
The Secretary, in consultation with the guaranty agencies operating under voluntary flexible agreements, shall report on an annual basis to the authorizing committees regarding the program outcomes that the voluntary flexible agreements have had with respect to—
(i) program integrity and program and cost efficiencies, delinquency prevention, and default aversion, including a comparison of such outcomes to such outcomes for each guaranty agency operating under an agreement under subsection (b) or (c) of
(ii) consumer education programs described in
(iii) the availability and delivery of student financial aid.
(B) Contents
Each report described in subparagraph (A) shall include—
(i) a description of each voluntary flexible agreement and the performance goals established by the Secretary for each agreement;
(ii) a list of—
(I) guaranty agencies operating under voluntary flexible agreements;
(II) the specific statutory or regulatory waivers provided to each such guaranty agency; and
(III) any other waivers provided to other guaranty agencies under paragraph (1);
(iii) a description of the standards by which each guaranty agency's performance under the guaranty agency's voluntary flexible agreement was assessed and the degree to which each guaranty agency achieved the performance standards;
(iv) an analysis of the fees paid by the Secretary, and the costs and efficiencies achieved under each voluntary flexible agreement; and
(v) an identification of promising practices for program improvement that could be replicated by other guaranty agencies.
(b) Terms of agreement
An agreement between the Secretary and a guaranty agency under this section—
(1) shall be developed by the Secretary, in consultation with the guaranty agency, on a case-by-case basis;
(2) may only include provisions—
(A) specifying the responsibilities of the guaranty agency under the agreement, with respect to—
(i) administering the issuance of insurance on loans made under this part on behalf of the Secretary;
(ii) monitoring insurance commitments made under this part;
(iii) default aversion activities;
(iv) review of default claims made by lenders;
(v) payment of default claims;
(vi) collection of defaulted loans;
(vii) adoption of internal systems of accounting and auditing that are acceptable to the Secretary, and reporting the result thereof to the Secretary in a timely manner, and on an accurate, and auditable basis;
(viii) timely and accurate collection and reporting of such other data as the Secretary may require to carry out the purposes of the programs under this subchapter;
(ix) monitoring of institutions and lenders participating in the program under this part; and
(x) informational outreach to schools and students in support of access to higher education;
(B) regarding the fees the Secretary shall pay, in lieu of revenues that the guaranty agency may otherwise receive under this part, to the guaranty agency under the agreement, and other funds that the guaranty agency may receive or retain under the agreement, except that in no case may the cost to the Secretary of the agreement, as reasonably projected by the Secretary, exceed the cost to the Secretary, as similarly projected, in the absence of the agreement;
(C) regarding the use of net revenues, as described in the agreement under this section, for such other activities in support of postsecondary education as may be agreed to by the Secretary and the guaranty agency;
(D) regarding the standards by which the guaranty agency's performance of the agency's responsibilities under the agreement will be assessed, and the consequences for a guaranty agency's failure to achieve a specified level of performance on 1 or more performance standards;
(E) regarding the circumstances in which a guaranty agency's agreement under this section may be ended in advance of the agreement's expiration date;
(F) regarding such other businesses, previously purchased or developed with reserve funds, that relate to the program under this part and in which the Secretary permits the guaranty agency to engage; and
(G) such other provisions as the Secretary may determine to be necessary to protect the United States from the risk of unreasonable loss and to promote the purposes of this part;
(3) shall provide for uniform lender participation with the guaranty agency under the terms of the agreement; and
(4) shall not prohibit or restrict borrowers from selecting a lender of the borrower's choosing, subject to the prohibitions and restrictions applicable to the selection under this chapter.
(c) Public notice
(1) In general
The Secretary shall publish in the Federal Register a notice to all guaranty agencies that sets forth—
(A) an invitation for the guaranty agencies to enter into agreements under this section; and
(B) the criteria that the Secretary will use for selecting the guaranty agencies with which the Secretary will enter into agreements under this section.
(2) Agreement notice
The Secretary shall notify the members of the authorizing committees not later than 30 days prior to concluding an agreement under this section. The notice shall contain—
(A) a description of the voluntary flexible agreement and the performance goals established by the Secretary for the agreement;
(B) a list of participating guaranty agencies and the specific statutory or regulatory waivers provided to each guaranty agency;
(C) a description of the standards by which each guaranty agency's performance under the agreement will be assessed; and
(D) a description of the fees that will be paid to each participating guaranty agency.
(3) Waiver notice
The Secretary shall notify the members of the authorizing committees not later than 30 days prior to the granting of a waiver pursuant to subsection (a)(2) 1 to a guaranty agency that is not a party to a voluntary flexible agreement.
(4) Public availability
The text of any voluntary flexible agreement, and any subsequent revisions, and any waivers related to
(5) Modification notice
The Secretary shall notify the members of the authorizing committees 30 days prior to any modifications to an agreement under this section.
(d) Termination
At the expiration or early termination of an agreement under this section, the Secretary shall reinstate the guaranty agency's prior agreements under subsections (b) and (c) of
(
Editorial Notes
References in Text
Paragraph (2) of subsec. (a) of this section, referred to in subsecs. (a)(1) and (c)(3), was struck out by
Prior Provisions
A prior section 1078–1,
Another prior section 1078–1,
Amendments
2008—Subsec. (a)(3).
Subsec. (c)(2), (3).
Subsec. (c)(5).
2006—Subsec. (a)(1)(B).
Subsec. (a)(1)(C).
Subsec. (a)(2), (3).
Subsec. (a)(4).
Statutory Notes and Related Subsidiaries
Effective Date of 2006 Amendment
Amendment by
Effective Date
Section effective Oct. 1, 1998, see section 3 of
1 See References in Text note below.
§1078–2. Federal PLUS loans
(a) Authority to borrow
(1) Authority and eligibility
Prior to July 1, 2010, a graduate or professional student or the parents of a dependent student shall be eligible to borrow funds under this section in amounts specified in subsection (b), if—
(A) the graduate or professional student or the parents do not have an adverse credit history as determined pursuant to regulations promulgated by the Secretary;
(B) in the case of a graduate or professional student or parent who has been convicted of, or has pled nolo contendere or guilty to, a crime involving fraud in obtaining funds under this subchapter, such graduate or professional student or parent has completed the repayment of such funds to the Secretary, or to the holder in the case of a loan under this subchapter obtained by fraud; and
(C) the graduate or professional student or the parents meet such other eligibility criteria as the Secretary may establish by regulation, after consultation with guaranty agencies, eligible lenders, and other organizations involved in student financial assistance.
(2) Terms, conditions, and benefits
Except as provided in subsections (c), (d), and (e), loans made under this section shall have the same terms, conditions, and benefits as all other loans made under this part.
(3) Special rules
(A) Parent borrowers
Whenever necessary to carry out the provisions of this section, the terms "student" and "borrower" as used in this part shall include a parent borrower under this section.
(B)(i) Extenuating circumstances
An eligible lender may determine that extenuating circumstances exist under the regulations promulgated pursuant to paragraph (1)(A) if, during the period beginning January 1, 2007, and ending December 31, 2009, an applicant for a loan under this section—
(I) is or has been delinquent for 180 days or fewer on mortgage loan payments or on medical bill payments during such period; and
(II) does not otherwise have an adverse credit history, as determined by the lender in accordance with the regulations promulgated pursuant to paragraph (1)(A), as such regulations were in effect on the day before May 7, 2008.
(ii) Definition of mortgage loan
In this subparagraph, the term "mortgage loan" means an extension of credit to a borrower that is secured by the primary residence of the borrower.
(iii) Rule of construction
Nothing in this subparagraph shall be construed to limit an eligible lender's authority under the regulations promulgated pursuant to paragraph (1)(A) to determine that extenuating circumstances exist.
(b) Limitation based on need
Any loan under this section may be counted as part of the student aid index in the determination of need under this subchapter, but no loan may be made to any graduate or professional student or any parent under this section for any academic year in excess of (A) the student's estimated cost of attendance, minus (B) other financial aid as certified by the eligible institution under
(c) PLUS loan disbursement
All loans made under this section shall be disbursed in accordance with the requirements of
(1) an electronic transfer of funds from the lender to the eligible institution; or
(2) a check copayable to the eligible institution and the graduate or professional student or parent borrower.
(d) Payment of principal and interest
(1) Commencement of repayment
Repayment of principal on loans made under this section shall commence not later than 60 days after the date such loan is disbursed by the lender, subject to deferral—
(A)(i) during any period during which the parent borrower or the graduate or professional student borrower meets the conditions required for a deferral under
(ii) upon the request of the parent borrower, during any period during which the student on whose behalf the loan was borrowed by the parent borrower meets the conditions required for a deferral under
(B)(i) in the case of a parent borrower, upon the request of the parent borrower, during the 6-month period beginning on the later of—
(I) the day after the date the student on whose behalf the loan was borrowed ceases to carry at least one-half the normal full-time academic workload (as determined by the institution); or
(II) if the parent borrower is also a student, the day after the date such parent borrower ceases to carry at least one-half such a workload; and
(ii) in the case of a graduate or professional student borrower, during the 6-month period beginning on the day after the date such student ceases to carry at least one-half the normal full-time academic workload (as determined by the institution).
(2) Capitalization of interest
(A) In general
Interest on loans made under this section for which payments of principal are deferred pursuant to paragraph (1) shall, if agreed upon by the borrower and the lender—
(i) be paid monthly or quarterly; or
(ii) be added to the principal amount of the loan not more frequently than quarterly by the lender.
(B) Insurable limits
Capitalization of interest under this paragraph shall not be deemed to exceed the annual insurable limit on account of the borrower.
(3) Subsidies prohibited
No payments to reduce interest costs shall be paid pursuant to
(4) Applicable rates of interest
Interest on loans made pursuant to this section shall be at the applicable rate of interest provided in
(5) Amortization
The amount of the periodic payment and the repayment schedule for any loan made pursuant to this section shall be established by assuming an interest rate equal to the applicable rate of interest at the time the repayment of the principal amount of the loan commences. At the option of the lender, the note or other written evidence of the loan may require that—
(A) the amount of the periodic payment will be adjusted annually, or
(B) the period of repayment of principal will be lengthened or shortened,
in order to reflect adjustments in interest rates occurring as a consequence of
(e) Refinancing
(1) Refinancing to secure combined payment
An eligible lender may at any time consolidate loans held by it which are made under this section to a borrower, including loans which were made under this section as in effect prior to October 17, 1986, under a single repayment schedule which provides for a single principal payment and a single payment of interest, and shall calculate the repayment period for each included loan from the date of the commencement of repayment of the most recent included loan. Unless the consolidated loan is obtained by a borrower who is electing to obtain variable interest under paragraph (2) or (3), such consolidated loan shall bear interest at the weighted average of the rates of all included loans. The extension of any repayment period of an included loan pursuant to this paragraph shall be reported (if required by them) to the Secretary or guaranty agency insuring the loan, as the case may be, but no additional insurance premiums shall be payable with respect to any such extension. The extension of the repayment period of any included loan shall not require the formal extension of the promissory note evidencing the included loan or the execution of a new promissory note, but shall be treated as an administrative forbearance of the repayment terms of the included loan.
(2) Refinancing to secure variable interest rate
An eligible lender may reissue a loan which was made under this section before July 1, 1987, or under this section as in effect prior to October 17, 1986, in order to permit the borrower to obtain the interest rate provided under
(3) Refinancing by discharge of previous loan
A borrower who has applied to an original lender for reissuance of a loan under paragraph (2) and who is denied such reissuance may obtain a loan from another lender for the purpose of discharging the loan from such original lender. A loan made for such purpose—
(A) shall bear interest at the applicable rate of interest provided under
(B) shall not result in the extension of the duration of the note (other than as permitted under subsection (d)(5)(B));
(C) may be subject to an additional insurance fee but shall not be subject to the administrative cost charge permitted by paragraph (2) of this subsection; and
(D) shall be applied to discharge the borrower from any remaining obligation to the original lender with respect to the original loan.
(4) Certification in lieu of promissory note presentation
Each new lender may accept certification from the original lender of the borrower's original loan in lieu of presentation of the original promissory note.
(f) Verification of immigration status and social security number
A parent who wishes to borrow funds under this section shall be subject to verification of the parent's—
(1) immigration status in the same manner as immigration status is verified for students under
(2) social security number in the same manner as social security numbers are verified for students under
(
Editorial Notes
Prior Provisions
A prior section 1078–2,
Amendments
2020—Subsec. (b).
Subsec. (f)(2).
2010—Subsec. (a)(1).
2009—Subsec. (e)(3)(B).
Subsec. (e)(5).
2008—Subsec. (a)(3).
Subsec. (a)(3)(B)(i)(II).
Subsec. (d)(1), (2).
2006—Subsec. (a)(1).
Subsec. (a)(1)(A).
Subsec. (a)(1)(B).
Subsec. (a)(1)(C).
Subsec. (b).
Subsec. (c)(2).
Subsec. (d)(1).
1998—Subsec. (a).
Subsec. (d)(4).
Subsec. (f).
1993—Subsec. (c).
1992—
Subsec. (a).
Subsec. (b).
Subsec. (c).
Subsec. (d).
"(1)
"(2)
Subsec. (e).
1987—Subsec. (a).
Subsec. (b)(3).
Subsec. (c)(1).
Subsec. (c)(2).
Subsec. (d)(1).
Subsec. (d)(2).
Subsec. (d)(5).
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Amendment by
[Effective date of title VII of div. FF of
Effective Date of 2009 Amendment
Amendment by
Effective Date of 2008 Amendment
Amendment by
Amendment by section 3(a) of
Effective Date of 2006 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by section 416(a)(2) of
Amendment by section 419 of
Effective Date of 1993 Amendment
Effective Date of 1992 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
Amendment of Note or Other Written Evidence of Loan by Eligible Lender at Request of Borrower; Circumstances; Denial of Request
§1078–3. Federal consolidation loans
(a) Agreements with eligible lenders
(1) Agreement required for insurance coverage
For the purpose of providing loans to eligible borrowers for consolidation of their obligations with respect to eligible student loans, the Secretary or a guaranty agency shall enter into agreements in accordance with subsection (b) with the following eligible lenders:
(A) the Student Loan Marketing Association or the Holding Company of the Student Loan Marketing Association, including any subsidiary of the Holding Company, created pursuant to
(B) State agencies described in subparagraphs (D) and (F) of
(C) other eligible lenders described in subparagraphs (A), (B), (C), (E), and (J) of such section.
(2) Insurance coverage of consolidation loans
Except as provided in
(3) Definition of eligible borrower
(A) For the purpose of this section, the term "eligible borrower" means a borrower who—
(i) is not subject to a judgment secured through litigation with respect to a loan under this subchapter or to an order for wage garnishment under
(ii) at the time of application for a consolidation loan—
(I) is in repayment status as determined under
(II) is in a grace period preceding repayment; or
(III) is a defaulted borrower who has made arrangements to repay the obligation on the defaulted loans satisfactory to the holders of the defaulted loans.
(B)(i) 1 An individual's status as an eligible borrower under this section or under
(I) an individual who receives eligible student loans after the date of receipt of the consolidation loan may receive a subsequent consolidation loan;
(II) loans received prior to the date of the consolidation loan may be added during the 180-day period following the making of the consolidation loan;
(III) loans received following the making of the consolidation loan may be added during the 180-day period following the making of the consolidation loan;
(IV) loans received prior to the date of the first consolidation loan may be added to a subsequent consolidation loan; and
(V) an individual may obtain a subsequent consolidation loan under
(aa) for the purposes of obtaining income contingent repayment or income-based repayment, and only if the loan has been submitted to the guaranty agency for default aversion or if the loan is already in default;
(bb) for the purposes of using the public service loan forgiveness program under
(cc) for the purpose of using the no accrual of interest for active duty service members benefit offered under
(dd) for the purpose of separating a joint consolidation loan into 2 separate Federal Direct Consolidation Loans under
(4) "Eligible student loans" defined
For the purpose of paragraph (1), the term "eligible student loans" means loans—
(A) made, insured, or guaranteed under this part, and first disbursed before July 1, 2010, including loans on which the borrower has defaulted (but has made arrangements to repay the obligation on the defaulted loans satisfactory to the Secretary or guaranty agency, whichever insured the loans);
(B) made under part E of this subchapter;
(C) made under part D of this subchapter;
(D) made under subpart II of part A of title VII of the Public Health Service Act [
(E) made under part E of title VIII of the Public Health Service Act [
(b) Contents of agreements, certificates of insurance, and loan notes
(1) Agreements with lenders
Any lender described in subparagraph (A), (B), or (C) of subsection (a)(1) who wishes to make consolidation loans under this section shall enter into an agreement with the Secretary or a guaranty agency which provides—
(A) that, in the case of all lenders described in subsection (a)(1), the lender will make a consolidation loan to an eligible borrower (on request of that borrower) only if the borrower certifies that the borrower has no other application pending for a loan under this section;
(B) that each consolidation loan made by the lender will bear interest, and be subject to repayment, in accordance with subsection (c);
(C) that each consolidation loan will be made, notwithstanding any other provision of this part limiting the annual or aggregate principal amount for all insured loans made to a borrower, in an amount (i) which is not less than the minimum amount required for eligibility of the borrower under subsection (a)(3), and (ii) which is equal to the sum of the unpaid principal and accrued unpaid interest and late charges of all eligible student loans received by the eligible borrower which are selected by the borrower for consolidation;
(D) that the proceeds of each consolidation loan will be paid by the lender to the holder or holders of the loans so selected to discharge the liability on such loans;
(E) that the lender shall offer an income-sensitive repayment schedule, established by the lender in accordance with the regulations promulgated by the Secretary, to the borrower of any consolidation loan made by the lender on or after July 1, 1994, and before July 1, 2010;
(F) that the lender shall disclose to a prospective borrower, in simple and understandable terms, at the time the lender provides an application for a consolidation loan—
(i) whether consolidation would result in a loss of loan benefits under this part or part D, including loan forgiveness, cancellation, and deferment;
(ii) with respect to Federal Perkins Loans under part E—
(I) that if a borrower includes a Federal Perkins Loan under part E in the consolidation loan, the borrower will lose all interest-free periods that would have been available for the Federal Perkins Loan, such as—
(aa) the periods during which no interest accrues on such loan while the borrower is enrolled in school at least half-time;
(bb) the grace period under
(cc) the periods during which the borrower's student loan repayments are deferred under
(II) that if a borrower includes a Federal Perkins Loan in the consolidation loan, the borrower will no longer be eligible for cancellation of part or all of the Federal Perkins Loan under
(III) the occupations listed in
(iii) the repayment plans that are available to the borrower;
(iv) the options of the borrower to prepay the consolidation loan, to pay such loan on a shorter schedule, and to change repayment plans;
(v) that borrower benefit programs for a consolidation loan may vary among different lenders;
(vi) the consequences of default on the consolidation loan; and
(vii) that by applying for a consolidation loan, the borrower is not obligated to agree to take the consolidation loan; and
(G) such other terms and conditions as the Secretary or the guaranty agency may specifically require of the lender to carry out this section.
(2) Issuance of certificate of comprehensive insurance coverage
The Secretary shall issue a certificate of comprehensive insurance coverage under
(3) Contents of certificate
A certificate issued under paragraph (2) shall, at a minimum, provide—
(A) that all consolidation loans made by such lender in conformity with the requirements of this section will be insured by the Secretary or the guaranty agency (whichever is applicable) against loss of principal and interest;
(B) that a consolidation loan will not be insured unless the lender has determined to its satisfaction, in accordance with reasonable and prudent business practices, for each loan being consolidated—
(i) that the loan is a legal, valid, and binding obligation of the borrower;
(ii) that each such loan was made and serviced in compliance with applicable laws and regulations; and
(iii) in the case of loans under this part, that the insurance on such loan is in full force and effect;
(C) the effective date and expiration date of the certificate;
(D) the aggregate amount to which the certificate applies;
(E) the reporting requirements of the Secretary on the lender and an identification of the office of the Department of Education or of the guaranty agency which will process claims and perform other related administrative functions;
(F) the alternative repayment terms which will be offered to borrowers by the lender;
(G) that, if the lender prior to the expiration of the certificate no longer proposes to make consolidation loans, the lender will so notify the issuer of the certificate in order that the certificate may be terminated (without affecting the insurance on any consolidation loan made prior to such termination); and
(H) the terms upon which the issuer of the certificate may limit, suspend, or terminate the lender's authority to make consolidation loans under the certificate (without affecting the insurance on any consolidation loan made prior to such limitation, suspension, or termination).
(4) Terms and conditions of loans
A consolidation loan made pursuant to this section shall be insurable by the Secretary or a guaranty agency pursuant to paragraph (2) only if the loan is made to an eligible borrower who has agreed to notify the holder of the loan promptly concerning any change of address and the loan is evidenced by a note or other written agreement which—
(A) is made without security and without endorsement, except that if the borrower is a minor and such note or other written agreement executed by him or her would not, under applicable law, create a binding obligation, endorsement may be required;
(B) provides for the payment of interest and the repayment of principal in accordance with subsection (c) of this section;
(C)(i) provides that periodic installments of principal need not be paid, but interest shall accrue and be paid in accordance with clause (ii), during any period for which the borrower would be eligible for a deferral under
(ii) provides that interest shall accrue and be paid during any such period—
(I) by the Secretary, in the case of a consolidation loan for which the application is received by an eligible lender before November 13, 1997, that consolidated only Federal Stafford Loans for which the student borrower received an interest subsidy under
(II) by the Secretary, in the case of a consolidation loan for which the application is received by an eligible lender on or after November 13, 1997, except that the Secretary shall pay such interest only on that portion of the loan that repays Federal Stafford Loans for which the student borrower received an interest subsidy under
(III) by the borrower, or capitalized, in the case of a consolidation loan other than a loan described in subclause (I) or (II);
(D) entitles the borrower to accelerate without penalty repayment of the whole or any part of the loan; and
(E)(i) contains a notice of the system of disclosure concerning such loan to consumer reporting agencies under
(5) Direct loans
If, before July 1, 2010, a borrower is unable to obtain a consolidation loan from a lender with an agreement under subsection (a)(1), or is unable to obtain a consolidation loan with income-sensitive repayment terms or income-based repayment terms acceptable to the borrower from such a lender, or chooses to obtain a consolidation loan for the purposes of using the public service loan forgiveness program offered under
(6) Nondiscrimination in loan consolidation
An eligible lender that makes consolidation loans under this section shall not discriminate against any borrower seeking such a loan—
(A) based on the number or type of eligible student loans the borrower seeks to consolidate, except that a lender is not required to consolidate loans described in subparagraph (D) or (E) of subsection (a)(4) or subsection (d)(1)(C)(ii);
(B) based on the type or category of institution of higher education that the borrower attended;
(C) based on the interest rate to be charged to the borrower with respect to the consolidation loan; or
(D) with respect to the types of repayment schedules offered to such borrower.
(c) Payment of principal and interest
(1) Interest rate
(A) Notwithstanding subparagraphs (B) and (C), with respect to any loan made under this section for which the application is received by an eligible lender—
(i) on or after October 1, 1998, and before July 1, 2006, the applicable interest rate shall be determined under
(ii) on or after July 1, 2006, and that is disbursed before July 1, 2010, the applicable interest rate shall be determined under
(B) A consolidation loan made before July 1, 1994, shall bear interest at an annual rate on the unpaid principal balance of the loan that is equal to the greater of—
(i) the weighted average of the interest rates on the loans consolidated, rounded to the nearest whole percent; or
(ii) 9 percent.
(C) A consolidation loan made on or after July 1, 1994, and disbursed before July 1, 2010, shall bear interest at an annual rate on the unpaid principal balance of the loan that is equal to the weighted average of the interest rates on the loans consolidated, rounded upward to the nearest whole percent.
(D) A consolidation loan for which the application is received by an eligible lender on or after November 13, 1997, and before October 1, 1998, shall bear interest at an annual rate on the unpaid principal balance of the loan that is equal to the rate specified in
(2) Repayment schedules
(A) Notwithstanding any other provision of this part, to the extent authorized by its certificate of insurance under subsection (b)(2) and approved by the issuer of such certificate, the lender of a consolidation loan shall establish repayment terms as will promote the objectives of this section, which shall include the establishment of graduated, income-sensitive, or income-based repayment schedules, established by the lender in accordance with the regulations of the Secretary. Except as required by such income-sensitive or income-based repayment schedules, or by the terms of repayment pursuant to income contingent repayment offered by the Secretary under subsection (b)(5), such repayment terms shall require that if the sum of the consolidation loan and the amount outstanding on other student loans to the individual—
(i) is less than $7,500, then such consolidation loan shall be repaid in not more than 10 years;
(ii) is equal to or greater than $7,500 but less than $10,000, then such consolidation loan shall be repaid in not more than 12 years;
(iii) is equal to or greater than $10,000 but less than $20,000, then such consolidation loan shall be repaid in not more than 15 years;
(iv) is equal to or greater than $20,000 but less than $40,000, then such consolidation loan shall be repaid in not more than 20 years;
(v) is equal to or greater than $40,000 but less than $60,000, then such consolidation loan shall be repaid in not more than 25 years; or
(vi) is equal to or greater than $60,000, then such consolidation loan shall be repaid in not more than 30 years.
(B) The amount outstanding on other student loans which may be counted for the purpose of subparagraph (A) may not exceed the amount of the consolidation loan.
(3) Additional repayment requirements
Notwithstanding paragraph (2)—
(A) except in the case of an income-based repayment schedule under
(B) except as required by the terms of repayment pursuant to income contingent repayment offered by the Secretary under subsection (b)(5), the lender of a consolidation loan may, with respect to repayment on the loan, when the amount of a monthly or other similar payment on the loan is not a multiple of $5, round the payment to the next highest whole dollar amount that is a multiple of $5; and
(C) an income-based repayment schedule under
(4) Commencement of repayment
Repayment of a consolidation loan shall commence within 60 days after all holders have, pursuant to subsection (b)(1)(D), discharged the liability of the borrower on the loans selected for consolidation.
(5) Insurance premiums prohibited
No insurance premium shall be charged to the borrower on any consolidation loan, and no insurance premium shall be payable by the lender to the Secretary with respect to any such loan, but a fee may be payable by the lender to the guaranty agency to cover the costs of increased or extended liability with respect to such loan.
(d) Special program authorized
(1) General rule and definition of eligible student loan
(A) In general
Subject to the provisions of this subsection, the Secretary or a guaranty agency shall enter into agreements with eligible lenders described in subparagraphs (A), (B), and (C) of subsection (a)(1) for the consolidation of eligible student loans.
(B) Applicability rule
Unless otherwise provided in this subsection, the agreements entered into under subparagraph (A) and the loans made under such agreements for the consolidation of eligible student loans under this subsection shall have the same terms, conditions, and benefits as all other agreements and loans made under this section.
(C) "Eligible student loans" defined
For the purpose of this subsection, the term "eligible student loans" means loans—
(i) of the type described in subparagraphs (A), (B), and (C) of subsection (a)(4); and
(ii) made under subpart I of part A of title VII of the Public Health Service Act [
(2) Interest rate rule
(A) In general
The portion of each consolidated loan that is attributable to an eligible student loan described in paragraph (1)(C)(ii) shall bear interest at a rate not to exceed the rate determined under subparagraph (B).
(B) Determination of the maximum interest rate
For the 12-month period beginning after July 1, 1992, and for each 12-month period thereafter, beginning on July 1 and ending on June 30, the interest rate applicable under subparagraph (A) shall be equal to the average of the bond equivalent rates of the 91-day Treasury bills auctioned for the quarter prior to July 1, for each 12-month period for which the determination is made, plus 3 percent.
(C) Publication of maximum interest rate
The Secretary shall determine the applicable rate of interest under subparagraph (B) after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of such determination.
(3) Special rules
(A) No special allowance rule
No special allowance under
(B) No interest subsidy rule
No interest subsidy under
(C) Additional reserve rule
Notwithstanding any other provision of this chapter, additional reserves shall not be required for any guaranty agency with respect to a loan made under this subsection.
(D) Insurance rule
Any insurance premium paid by the borrower under subpart I of part A of title VII of the Public Health Service Act [
(4) Regulations
The Secretary is authorized to promulgate such regulations as may be necessary to facilitate carrying out the provisions of this subsection.
(e) Termination of authority
The authority to make loans under this section expires at the close of June 30, 2010. No loan may be made under this section for which the disbursement is on or after July 1, 2010. Nothing in this section shall be construed to authorize the Secretary to promulgate rules or regulations governing the terms or conditions of the agreements and certificates under subsection (b). Loans made under this section which are insured by the Secretary shall be considered to be new loans made to students for the purpose of
(f) Interest payment rebate fee
(1) In general
For any month beginning on or after October 1, 1993, each holder of a consolidation loan under this section for which the first disbursement was made on or after October 1, 1993, shall pay to the Secretary, on a monthly basis and in such manner as the Secretary shall prescribe, a rebate fee calculated on an annual basis equal to 1.05 percent of the principal plus accrued unpaid interest on such loan.
(2) Special rule
For consolidation loans based on applications received during the period from October 1, 1998 through January 31, 1999, inclusive, the rebate described in paragraph (1) shall be equal to 0.62 percent of the principal plus accrued unpaid interest on such loan.
(3) Deposit
The Secretary shall deposit all fees collected pursuant to this subsection into the insurance fund established in
(
Editorial Notes
References in Text
The Public Health Service Act, referred to in subsecs. (a)(4)(D), (E) and (d)(1)(C)(ii), (3)(D), is act July 1, 1944, ch. 373,
Codification
Amendments by section 2(c)(33), (36) of
Prior Provisions
A prior section 1078–3,
Amendments
2022—Subsec. (a)(3)(B)(i)(V)(dd).
2010—Subsec. (a)(4)(A).
Subsec. (b)(1)(E).
Subsec. (b)(5).
Subsec. (c)(1)(A)(ii).
Subsec. (c)(1)(C).
Subsec. (e).
2009—Subsec. (a)(4)(E).
Subsec. (c)(2)(A).
Subsec. (c)(3)(A).
Subsec. (d)(3)(D).
Subsec. (f)(3).
2008—Subsec. (a)(3)(B)(i)(V)(cc).
Subsec. (b)(1)(F), (G).
Subsec. (b)(4)(E)(i).
Subsec. (b)(4)(E)(ii).
Subsec. (b)(5).
Subsec. (c)(2)(A).
Subsec. (c)(3).
Subsec. (e).
2007—Subsec. (a)(3)(B)(i)(V).
Subsec. (a)(3)(B)(i)(V)(aa).
Subsec. (b)(5).
2006—Subsec. (a)(3)(A)(ii)(I).
Subsec. (a)(3)(B)(i).
Subsec. (a)(3)(B)(i)(V).
Subsec. (a)(3)(C).
"(C)(i) A married couple, each of whom has eligible student loans, may be treated as if such couple were an individual borrowing under subparagraphs (A) and (B) if such couple agrees to be held jointly and severally liable for the repayment of a consolidation loan, without regard to the amounts of the respective loan obligations that are to be consolidated, and without regard to any subsequent change that may occur in such couple's marital status.
"(ii) Only one spouse in a married couple applying for a consolidation loan under this subparagraph need meet any of the requirements of subsection (b) of this section, except that each spouse shall—
"(I) individually make the initial certification that no other application is pending in accordance with subsection (b)(1)(A) of this section; and
"(II) agree to notify the holder concerning any change of address in accordance with subsection (b)(4) of this section."
Subsec. (b)(1)(A).
Subsec. (b)(5).
Subsec. (e).
2002—Subsec. (c)(1)(A).
1998—Subsec. (a)(3).
Subsec. (a)(4)(C).
Subsec. (b)(1)(A)(i).
Subsec. (b)(4)(C)(ii).
Subsec. (b)(6)(A).
Subsec. (c)(1).
Subsec. (e).
Subsec. (f)(2), (3).
1997—Subsec. (a)(4)(C) to (E).
Subsec. (b)(4)(C)(ii)(I).
Subsec. (b)(4)(C)(ii)(II), (III).
Subsec. (b)(6).
Subsec. (c)(1)(A).
Subsec. (c)(1)(D).
Subsec. (e).
1996—Subsec. (a)(1)(A).
1994—Subsec. (a)(4)(D).
1993—Subsec. (a)(3).
Subsec. (a)(3)(A).
"(i) has an outstanding indebtedness on eligible student loans, at the time of application for a consolidation loan, of not less than $7,500; and
"(ii) is in repayment status, or in a grace period preceding repayment, or is a delinquent or defaulted borrower who will reenter repayment through loan consolidation."
Subsec. (a)(3)(B)(ii).
Subsec. (a)(4)(A).
Subsec. (a)(4)(C).
Subsec. (b)(1)(A), (E), (F).
Subsec. (b)(4)(C).
Subsec. (b)(5).
Subsec. (c)(1)(B), (C).
"(B) Except as provided in subparagraph (C), a consolidation loan shall bear interest at an annual rate on the unpaid principal balance of the loan which is equal to the weighted average of the interest rates on the loans consolidated, rounded to the nearest whole percent.
"(C) A consolidation loan shall bear interest at an annual rate on the unpaid principal balance of the loan equal to not less than 9 percent."
Subsec. (c)(2)(A).
Subsec. (c)(2)(B), (C).
Subsec. (c)(3)(A).
Subsec. (c)(3)(B).
Subsec. (f).
1992—
Subsec. (a)(3)(A)(i).
Subsec. (a)(3)(A)(ii).
Subsec. (a)(3)(B).
Subsec. (a)(3)(C).
Subsec. (a)(4)(A).
Subsec. (b)(4)(C).
Subsec. (c)(2)(A).
"(i) is equal to or greater than $5,000 but less than $7,500, then such consolidation loan shall be repaid in not more than 10 years;
"(ii) is equal to or greater than $7,500 but less than $10,000, then such consolidation loan shall be repaid in not more than 12 years;
"(iii) is equal to or greater than $10,000 but less than $20,000, then such consolidation loan shall be repaid in not more than 15 years;
"(iv) is equal to or greater than $20,000 but less than $45,000, then such consolidation loan shall be repaid in not more than 20 years; or
"(v) is equal to or greater than $45,000, then such consolidation loan shall be repaid in not more than 25 years."
Subsec. (d).
Subsec. (e).
1987—Subsec. (a)(1)(C).
Subsec. (a)(3)(A).
Subsec. (a)(3)(B).
Subsec. (a)(4)(A).
Subsec. (b)(1)(C).
Subsec. (c)(2)(A)(v).
Subsec. (c)(5).
Statutory Notes and Related Subsidiaries
Effective Date of 2009 Amendment
Amendment by
Effective Date of 2008 Amendment
Effective Date of 2007 Amendment
"(1)
"(2)
Effective Date of 2006 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by section 416(b)(2) of
Amendment by section 420 of
Effective Date of 1996 Amendment
Effective Date of 1993 Amendments
Amendment by
Effective Date of 1992 Amendments
Amendment by
Effective Date of 1987 Amendment
Amendment by
Selection of Student Loan Servicer
Pending Applicants
Cost Evaluation Report
1 So in original. No cl. (ii) has been enacted.
§1078–4. Commingling of funds
Notwithstanding any other provision of this part regarding permissible uses of funds from any source, funds received by a guaranty agency under any provision of this part may be commingled with funds received under any other provision of this part and may be used to carry out the purposes of such other provision, except that—
(1) the total amount expended for the purposes of such other provision shall not exceed the amount the guaranty agency would otherwise be authorized to expend; and
(2) the authority to commingle such funds shall not relieve such agency of any accounting or auditing obligations under this part.
(
§1078–5. Repealed. Pub. L. 102–164, title VI, §605(b)(1), Nov. 15, 1991, 105 Stat. 1068
Section,
§1078–6. Default reduction program
(a) Other repayment incentives
(1) Sale or assignment of loan
(A) In general
Each guaranty agency, upon securing 9 payments made within 20 days of the due date during 10 consecutive months of amounts owed on a loan for which the Secretary has made a payment under paragraph (1) of
(i) if practicable, sell the loan to an eligible lender; or
(ii) beginning July 1, 2014, assign the loan to the Secretary if the guaranty agency has been unable to sell the loan under clause (i).
(B) Monthly payments
Neither the guaranty agency nor the Secretary shall demand from a borrower as monthly payment amounts described in subparagraph (A) more than is reasonable and affordable based on the borrower's total financial circumstances.
(C) Consumer reporting agencies
Upon the sale or assignment of the loan, the Secretary, guaranty agency or other holder of the loan shall request any consumer reporting agency to which the Secretary, guaranty agency or holder, as applicable, reported the default of the loan, to remove the record of the default from the borrower's credit history.
(D) Duties upon sale
With respect to a loan sold under subparagraph (A)(i)—
(i) the guaranty agency—
(I) shall, in the case of a sale made on or after July 1, 2014, repay the Secretary 100 percent of the amount of the principal balance outstanding at the time of such sale, multiplied by the reinsurance percentage in effect when payment under the guaranty agreement was made with respect to the loan; and
(II) may, in the case of a sale made on or after July 1, 2014, in order to defray collection costs—
(aa) charge to the borrower an amount not to exceed 16 percent of the outstanding principal and interest at the time of the loan sale; and
(bb) retain such amount from the proceeds of the loan sale; and
(ii) the Secretary shall reinstate the Secretary's obligation to—
(I) reimburse the guaranty agency for the amount that the agency may, in the future, expend to discharge the guaranty agency's insurance obligation; and
(II) pay to the holder of such loan a special allowance pursuant to
(E) Duties upon assignment
With respect to a loan assigned under subparagraph (A)(ii)—
(i) the guaranty agency shall add to the principal and interest outstanding at the time of the assignment of such loan an amount equal to the amount described in subparagraph (D)(i)(II)(aa); and
(ii) the Secretary shall pay the guaranty agency, for deposit in the agency's Operating Fund established pursuant to
(F) Eligible lender limitation
A loan shall not be sold to an eligible lender under subparagraph (A)(i) if such lender has been found by the guaranty agency or the Secretary to have substantially failed to exercise the due diligence required of lenders under this part.
(G) Default due to error
A loan that does not meet the requirements of subparagraph (A) may also be eligible for sale or assignment under this paragraph upon a determination that the loan was in default due to clerical or data processing error and would not, in the absence of such error, be in a delinquent status.
(2) Use of proceeds of sales
Amounts received by the Secretary pursuant to the sale of such loans by a guaranty agency under paragraph (1)(A)(i) shall be deducted from the calculations of the amount of reimbursement for which the agency is eligible under paragraph (1)(D)(ii)(I) for the fiscal year in which the amount was received, notwithstanding the fact that the default occurred in a prior fiscal year.
(3) Borrower eligibility
Any borrower whose loan is sold or assigned under paragraph (1)(A) shall not be precluded by
(4) Applicability of general loan conditions
A loan that is sold or assigned under paragraph (1) shall, so long as the borrower continues to make scheduled repayments thereon, be subject to the same terms and conditions and qualify for the same benefits and privileges as other loans made under this part.
(5) Limitation
A borrower may obtain the benefits available under this subsection with respect to rehabilitating a loan (whether by loan sale or assignment) only one time per loan.
(b) Satisfactory repayment arrangements to renew eligibility
Each guaranty agency shall establish a program which allows a borrower with a defaulted loan or loans to renew eligibility for all subchapter IV student financial assistance (regardless of whether the defaulted loan has been sold to an eligible lender or assigned to the Secretary) upon the borrower's payment of 6 consecutive monthly payments. The guaranty agency shall not demand from a borrower as a monthly payment amount under this subsection more than is reasonable and affordable based upon the borrower's total financial circumstances. A borrower may only obtain the benefit of this subsection with respect to renewed eligibility once.
(c) Financial and economic literacy
Each program described in subsection (b) shall include making available financial and economic education materials for a borrower who has rehabilitated a loan.
(
Editorial Notes
Amendments
2013—Subsec. (a)(1)(A)(ii).
"(I) the Secretary has determined that market conditions unduly limit a guaranty agency's ability to sell loans under clause (i); and
"(II) the guaranty agency has been unable to sell loans under clause (i)."
Subsec. (a)(1)(D)(i).
"(I) shall repay the Secretary 81.5 percent of the amount of the principal balance outstanding at the time of such sale, multiplied by the reinsurance percentage in effect when payment under the guaranty agreement was made with respect to the loan; and
"(II) may, in order to defray collection costs—
"(aa) charge to the borrower an amount not to exceed 18.5 percent of the outstanding principal and interest at the time of the loan sale; and
"(bb) retain such amount from the proceeds of the loan sale; and".
2009—Subsec. (a)(1).
Subsec. (a)(2).
Subsec. (a)(3).
Subsec. (a)(4).
Subsec. (a)(5).
Subsec. (b).
2008—Subsec. (a)(1)(A).
Subsec. (a)(5).
Subsec. (c).
2006—Subsec. (a)(1)(A).
Subsec. (a)(1)(C), (D).
1998—Subsec. (b).
1993—Subsec. (a)(2).
Subsec. (a)(4).
Subsec. (b).
1992—Subsec. (a).
Subsec. (b).
1989—
1987—Subsecs. (b), (c).
Statutory Notes and Related Subsidiaries
Effective Date of 2013 Amendment
Effective Date of 2009 Amendment
Effective Date of 2006 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
Publicity Through Communications Media of Availability of Default Reduction Program
§1078–7. Requirements for disbursement of student loans
(a) Multiple disbursement required
(1) Two disbursements required
The proceeds of any loan made, insured, or guaranteed under this part that is made for any period of enrollment shall be disbursed in 2 or more installments, none of which exceeds one-half of the loan.
(2) Minimum interval required
The interval between the first and second such installments shall be not less than one-half of such period of enrollment, except as necessary to permit the second installment to be disbursed at the beginning of the second semester, quarter, or similar division of such period of enrollment.
(3) Special rule
An institution whose cohort default rate (as determined under
(4) Amendment to special rule
Beginning on October 1, 2011, the special rule under paragraph (3) shall be applied by substituting "15 percent" for "10 percent".
(b) Disbursement and endorsement requirements
(1) First year students
The first installment of the proceeds of any loan made, insured, or guaranteed under this part that is made to a student borrower who is entering the first year of a program of undergraduate education, and who has not previously obtained a loan under this part, shall not (regardless of the amount of such loan or the duration of the period of enrollment) be presented by the institution to the student for endorsement until 30 days after the borrower begins a course of study, but may be delivered to the eligible institution prior to the end of that 30-day period. An institution whose cohort default rate (as determined under
(2) Other students
The proceeds of any loan made, insured, or guaranteed under this part that is made to any student other than a student described in paragraph (1) shall not be disbursed more than 30 days prior to the beginning of the period of enrollment for which the loan is made.
(3) Amendment to cohort default rate exemption
Beginning on October 1, 2011, the exemption to the requirements of paragraph (1) in the second sentence of such paragraph shall be applied by substituting "15 percent" for "10 percent".
(c) Method of multiple disbursement
Disbursements under subsection (a)—
(1) shall be made in accordance with a schedule provided by the institution (under
(2) may be made directly by the lender or, in the case of a loan under sections 1078 and 1078–1 1 of this title, may be disbursed pursuant to the escrow provisions of
(3) notwithstanding subsection (a)(2), may, with the permission of the borrower, be disbursed by the lender on a weekly or monthly basis, provided that the proceeds of the loan are disbursed by the lender in substantially equal weekly or monthly installments, as the case may be, over the period of enrollment for which the loan is made.
(d) Withholding of second disbursement
(1) Withdrawing students
A lender or escrow agent that is informed by the borrower or the institution that the borrower has ceased to be enrolled before the disbursement of the second or any succeeding installment shall withhold such disbursement. Any disbursement which is so withheld shall be credited to the borrower's loan and treated as a prepayment thereon.
(2) Students receiving over-awards
If the sum of a disbursement for any student and the other financial aid obtained by such student exceeds the amount of assistance for which the student is eligible under this subchapter, the institution such student is attending shall withhold and return to the lender or escrow agent the portion (or all) of such installment that exceeds such eligible amount, except that overawards permitted pursuant to
(e) Exclusion of consolidation and foreign study loans
The provisions of this section shall not apply in the case of a loan made under
(f) Beginning of period of enrollment
For purposes of this section, a period of enrollment begins on the first day that classes begin for the applicable period of enrollment.
(g) Sales prior to disbursement prohibited
An eligible lender shall not sell or transfer a promissory note for any loan made, insured, or guaranteed under this part until the final disbursement of such loan has been made, except that the prohibition of this subsection shall not apply if—
(1) the sale of the loan does not result in a change in the identity of the party to whom payments will be made for the loan; and
(2) the first disbursement of such loan has been made.
(
Editorial Notes
References in Text
Section 422(d) of the Higher Education Amendments of 1998, referred to in subsecs. (a)(3) and (b)(1), is section 422(d) of
Codification
Text of subsec. (a)(3) and second sentence of subsec. (b)(1), which was temporarily added by
Amendments
2009—Subsec. (c)(1).
Subsec. (c)(3).
2008—Subsec. (a)(4).
Subsec. (b)(3).
2006—Subsec. (a)(3).
Subsec. (b)(1).
Subsec. (e).
1998—Subsec. (a)(3).
Subsec. (b)(1).
Subsec. (e).
1993—Subsec. (c)(3).
Subsec. (e).
1992—Subsec. (c)(3).
Subsec. (d)(2).
Subsec. (g).
1990—Subsec. (b)(1).
"(A) 30 days after the borrower begins a course of study; and
"(B) the institution certifies that the borrower continues to be enrolled and in attendance at the end of such 30-day period, and is maintaining satisfactory progress;
but may be disbursed to the eligible institution prior to the end of such 30-day period."
Statutory Notes and Related Subsidiaries
Effective Date of 2009 Amendment
Amendment by
Effective Date of 2006 Amendment
Amendment by
Effective and Termination Dates of 1998 Amendment
Amendment by section 422(c) of
Effective Date of 1993 Amendments
Amendment by
Amendment by
Effective Date of 1990 Amendment
Effective Date
Section applicable with respect to loans made to cover cost of instruction for periods of enrollment beginning on or after Jan. 1, 1990, see section 2004(c) of
1 See References in Text note below.
§1078–8. Unsubsidized Stafford loans for middle-income borrowers
(a) In general
It is the purpose of this section to authorize insured loans under this part that are first disbursed before July 1, 2010, for borrowers who do not qualify for Federal interest subsidy payments under
(b) Eligible borrowers
Prior to July 1, 2010, any student meeting the requirements for student eligibility under
(1) determined and documented the student's need for the loan based on the student's estimated cost of attendance (as determined under
(2) provided the lender a statement—
(A) certifying the eligibility of the student to receive a loan under this section and the amount of the loan for which such student is eligible, in accordance with subsection (c); and
(B) setting forth a schedule for disbursement of the proceeds of the loan in installments, consistent with the requirements of
(c) Determination of amount of loan
The determination of the amount of a loan by an eligible institution under subsection (b) shall be calculated by subtracting from the estimated cost of attendance at the eligible institution any estimated financial assistance reasonably available to such student. An eligible institution may not, in carrying out the provisions of subsection (b) of this section, provide a statement which certifies the eligibility of any student to receive any loan under this section in excess of the amount calculated under the preceding sentence.
(d) Loan limits
(1) In general
Except as provided in paragraphs (2), (3), and (4), the annual and aggregate limits for loans under this section shall be the same as those established under
(2) Limits for graduate, professional, and independent postbaccalaureate students
(A) Annual limits
The maximum annual amount of loans under this section a graduate or professional student, or a student described in clause (ii), may borrow in any academic year (as defined in
(i) in the case of such a student who is a graduate or professional student attending an eligible institution, $12,000; and
(ii) notwithstanding paragraph (4), in the case of an independent student, or a dependent student whose parents are unable to borrow under
(I) $7,000 for coursework necessary for enrollment in a graduate or professional program; and
(II) $7,000 for coursework necessary for a professional credential or certification from a State required for employment as a teacher in an elementary or secondary school,
except in cases where the Secretary determines that a higher amount is warranted in order to carry out the purpose of this part with respect to students engaged in specialized training requiring exceptionally high costs of education, but the annual insurable limit per student shall not be deemed to be exceeded by a line of credit under which actual payments by the lender to the borrower will not be made in any years in excess of the annual limit.
(B) Aggregate limit
The maximum aggregate amount of loans under this section a student described in subparagraph (A) may borrow shall be the amount described in paragraph (1), adjusted to reflect the increased annual limits described in subparagraph (A), as prescribed by the Secretary by regulation.
(3) Limits for undergraduate dependent students
(A) Annual limits
The maximum annual amount of loans under this section an undergraduate dependent student (except an undergraduate dependent student whose parents are unable to borrow under
(B) Aggregate limits
The maximum aggregate amount of loans under this section a student described in subparagraph (A) may borrow shall be $31,000.
(4) Limits for undergraduate independent students
(A) Annual limits
The maximum annual amount of loans under this section an undergraduate independent student, or an undergraduate dependent student whose parents are unable to borrow under
(i) in the case of such a student attending an eligible institution who has not completed such student's first 2 years of undergraduate study—
(I) $6,000, if such student is enrolled in a program whose length is at least one academic year in length; or
(II) if such student is enrolled in a program of undergraduate education which is less than one academic year, the maximum annual loan amount that such student may receive may not exceed the amount that bears the same ratio to the amount specified in subclause (I) as the length of such program measured in semester, trimester, quarter, or clock hours bears to one academic year;
(ii) in the case of such a student at an eligible institution who has successfully completed such first and second years but has not successfully completed the remainder of a program of undergraduate education—
(I) $7,000; or
(II) if such student is enrolled in a program of undergraduate education, the remainder of which is less than one academic year, the maximum annual loan amount that such student may receive may not exceed the amount that bears the same ratio to the amount specified in subclause (I) as such remainder measured in semester, trimester, quarter, or clock hours bears to one academic year; and
(iii) in the case of such a student enrolled in coursework specified in—
(I)
(II)
(B) Aggregate limits
The maximum aggregate amount of loans under this section a student described in subparagraph (A) may borrow shall be $57,500.
(5) Capitalized interest
Interest capitalized shall not be deemed to exceed a maximum aggregate amount determined under subparagraph (B) of paragraph (2), (3), or (4).
(e) Payment of principal and interest
(1) Commencement of repayment
Repayment of principal on loans made under this section shall begin at the beginning of the repayment period described in
(2) Capitalization of interest
(A) Except as provided in subparagraph (C), interest on loans made under this section for which payments of principal are not required during the in-school and grace periods or for which payments are deferred under
(i) be paid monthly or quarterly; or
(ii) be added to the principal amount of the loan by the lender only—
(I) when the loan enters repayment;
(II) at the expiration of a grace period, in the case of a loan that qualifies for a grace period;
(III) at the expiration of a period of deferment or forbearance; or
(IV) when the borrower defaults.
(B) The capitalization of interest described in subparagraph (A) shall not be deemed to exceed the annual insurable limit on account of the student.
(C) Interest shall not accrue on a loan deferred under
(3) Subsidies prohibited
No payments to reduce interest costs shall be paid pursuant to
(4) Applicable rates of interest
Interest on loans made pursuant to this section shall be at the applicable rate of interest provided in
(5) Amortization
The amount of the periodic payment and the repayment schedule for any loan made pursuant to this section shall be established by assuming an interest rate equal to the applicable rate of interest at the time the repayment of the principal amount of the loan commences. At the option of the lender, the note or other written evidence of the loan may require that—
(A) the amount of the periodic payment will be adjusted annually; or
(B) the period of repayment of principal will be lengthened or shortened,
in order to reflect adjustments in interest rates occurring as a consequence of
(6) Repayment period
For purposes of calculating the repayment period under
(7) Qualification for forbearance
A lender may grant the borrower of a loan under this section a forbearance for a period not to exceed 60 days if the lender reasonably determines that such a forbearance from collection activity is warranted following a borrower's request for forbearance, deferment, or a change in repayment plan, or a request to consolidate loans in order to collect or process appropriate supporting documentation related to the request. During any such period, interest on the loan shall accrue but not be capitalized.
(f) Repealed. Pub. L. 105–244, title IV, §423(f), Oct. 7, 1998, 112 Stat. 1698
(g) Single application form and loan repayment schedule
A guaranty agency shall use a single application form and a single repayment schedule for subsidized Federal Stafford loans made pursuant to
(h) Insurance premium
Each State or nonprofit private institution or organization having an agreement with the Secretary under
(
Editorial Notes
Codification
Amendments by section 2(c)(42), (45) of
Amendments
2018—Subsec. (e)(2)(A).
Subsec. (e)(2)(C).
2010—Subsec. (a).
Subsec. (b).
Subsec. (h).
2009—Subsec. (d)(2).
Subsec. (e)(6).
2008—Subsec. (d).
Subsec. (d)(2).
Subsec. (d)(2)(A).
Subsec. (d)(2)(A)(ii).
Subsec. (d)(4)(A)(iii).
2006—Subsec. (d)(2)(C).
Subsec. (d)(2)(D).
Subsec. (h).
1998—Subsec. (b).
"(1) sets forth such student's estimated cost of attendance (as determined under
"(2) sets forth such student's estimated financial assistance, including a loan which qualifies for subsidy payments under
"(3) certifies the eligibility of the student to receive a loan under this section and the amount of the loan for which such student is eligible, in accordance with subsection (c) of this section."
Subsec. (d)(2).
Subsec. (d)(2)(A).
"(ii) $2,500, if such student is enrolled in a program whose length is less than one academic year, but at least 2/3 of such an academic year; and
"(iii) $1,500, if such student is enrolled in a program whose length is less than 2/3, but at least 1/3, of such an academic year;".
Subsec. (d)(2)(D).
Subsec. (d)(3).
Subsec. (e)(2).
Subsec. (e)(6).
Subsec. (e)(7).
Subsec. (f).
1996—Subsec. (d)(2).
1993—Subsec. (b).
Subsec. (d).
Subsec. (d)(2)(B).
"(i) $5,000, if such student is enrolled in a program whose length is at least one academic year in length (as determined under section 1088 of this section);
"(ii) $3,325, if such student is enrolled in a program whose length is less than one academic year, but at least 2/3 of such an academic year; and
"(iii) $1,675, if such student is enrolled in a program whose length is less than 2/3, but at least 1/3, of such an academic year; and". See Codification note above.
Subsec. (e)(1).
Subsec. (e)(4).
Subsec. (e)(5), (6).
Subsec. (f).
Subsec. (f)(1).
Subsec. (f)(2).
Subsec. (f)(3).
Subsec. (f)(4).
Subsec. (f)(5).
Subsec. (h).
Subsec. (l).
Statutory Notes and Related Subsidiaries
Effective Date of 2018 Amendment
Amendment by
Effective Date of 2009 Amendment
Amendment by
Effective Date of 2008 Amendment
Effective Date of 2006 Amendment
Amendment by section 8014(b)(2) of
Amendment by section 8005(d) of
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1996 Amendment
Effective Date of 1993 Amendments
Amendment by section 2(c)(42)–(43)(A), (44), (45) of
Amendment by section 4102(b) of
Effective Date
Section effective with respect to loans made to cover the cost of instruction for periods of enrollment beginning on or after Oct. 1, 1992, see section 432(a)(12) of
Student Eligibility
Continuing Applicability of Terms, Conditions, and Benefits of Loans
§1078–9. Repealed. Pub. L. 110–84, title III, §302(a), Sept. 27, 2007, 121 Stat. 796
Section,
Statutory Notes and Related Subsidiaries
Effective Date of Repeal
Repeal effective Oct. 1, 2007, except that section as in effect on the day before Sept. 27, 2005, shall apply to eligible lenders that received a designation under subsec. (a) of this section prior to Oct. 1, 2007, for the remainder of the year for which the designation was made, see section 302(c) of
§1078–10. Loan forgiveness for teachers
(a) Statement of purpose
It is the purpose of this section to encourage individuals to enter and continue in the teaching profession.
(b) Program authorized
The Secretary shall carry out a program, through the holder of the loan, of assuming the obligation to repay a qualified loan amount for a loan made under
(1) has been employed as a full-time teacher for 5 consecutive complete school years—
(A) in a school or location that qualifies under
(B) if employed as an elementary school or secondary school teacher, is highly qualified as defined in section 9101 1 of the Elementary Secondary 2 Education Act of 1965 [
(2) is not in default on a loan for which the borrower seeks forgiveness.
(c) Qualified loans amount
(1) In general
The Secretary shall repay not more than $5,000 in the aggregate of the loan obligation on a loan made under
(2) Treatment of consolidation loans
A loan amount for a loan made under
(3) Additional amounts for teachers in mathematics, science, or special education
Notwithstanding the amount specified in paragraph (1), the aggregate amount that the Secretary shall repay under this section shall be not more than $17,500 in the case of—
(A) a secondary school teacher—
(i) who meets the requirements of subsection (b); and
(ii) whose qualifying employment for purposes of such subsection is teaching mathematics or science on a full-time basis; and
(B) an elementary school or secondary school teacher—
(i) who meets the requirements of subsection (b);
(ii) whose qualifying employment for purposes of such subsection is as a special education teacher whose primary responsibility is to provide special education to children with disabilities (as those terms are defined in
(iii) who, as certified by the chief administrative officer of the public or non-profit private elementary school or secondary school in which the borrower is employed, or, in the case of a teacher who is employed by an educational service agency, as certified by the chief administrative officer of such agency, is teaching children with disabilities that correspond with the borrower's special education training and has demonstrated knowledge and teaching skills in the content areas of the elementary school or secondary school curriculum that the borrower is teaching.
(d) Regulations
The Secretary is authorized to issue such regulations as may be necessary to carry out the provisions of this section.
(e) Construction
Nothing in this section shall be construed to authorize any refunding of any repayment of a loan.
(f) List
If the list of schools in which a teacher may perform service pursuant to subsection (b) is not available before May 1 of any year, the Secretary may use the list for the year preceding the year for which the determination is made to make such service determination.
(g) Additional eligibility provisions
(1) Continued eligibility
Any teacher who performs service in a school that—
(A) meets the requirements of subsection (b)(1)(A) in any year during such service; and
(B) in a subsequent year fails to meet the requirements of such subsection,
may continue to teach in such school and shall be eligible for loan forgiveness pursuant to subsection (b).
(2) Prevention of double benefits
No borrower may, for the same service, receive a benefit under both this section and—
(A)
(B)
(C) subtitle D of title I of the National and Community Service Act of 1990 (
(3) Private school teachers
An individual who is employed as a teacher in a private school and is exempt from State certification requirements (unless otherwise applicable under State law), may, in lieu of the requirement of subsection (b)(1)(B), have such employment treated as qualifying employment under this section if such individual is permitted to and does satisfy rigorous subject knowledge and skills tests by taking competency tests in the applicable grade levels and subject areas. For such purposes, the competency tests taken by such a private school teacher shall be recognized by 5 or more States for the purpose of fulfilling the highly qualified teacher requirements under section 9101 1 of the Elementary and Secondary Education Act of 1965 [
(h) "Year" defined
For purposes of this section, the term "year", where applied to service as a teacher, means an academic year as defined by the Secretary.
(
Editorial Notes
References in Text
Section 9101 of the Elementary and Secondary Education Act of 1965, referred to in subsecs. (b)(1)(B) and (g)(3), was amended by
The National and Community Service Act of 1990, referred to in subsec. (g)(2)(C), is
Amendments
2009—Subsec. (c)(1).
Subsec. (g)(2)(B) to (D).
2008—Subsec. (b)(1)(A).
Subsec. (c)(1).
Subsec. (c)(3)(B)(iii).
Subsec. (g)(2).
2006—Subsec. (b)(1)(B).
Subsec. (g)(3).
2004—Subsec. (b)(1).
"(B) if employed as a secondary school teacher, is teaching a subject area that is relevant to the borrower's academic major as certified by the chief administrative officer of the public or nonprofit private secondary school in which the borrower is employed; and
"(C) if employed as an elementary school teacher, has demonstrated, as certified by the chief administrative officer of the public or nonprofit private elementary school in which the borrower is employed, knowledge and teaching skills in reading, writing, mathematics, and other areas of the elementary school curriculum; and".
Subsec. (c)(3).
1998—
1993—Subsec. (b)(1).
Subsec. (b)(1)(B).
Subsec. (c)(1).
Subsec. (c)(5).
Subsec. (d).
Subsec. (e).
Statutory Notes and Related Subsidiaries
Effective Date of 2009 Amendment
Amendment by
Effective Date of 2006 Amendment
Amendment by
Effective Date of 2004 Amendment; Transition Rule
"(A)
"(B)
[
[Amendment by
[Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendments
Amendment by
Amendment by
Information on Benefits to Rural School Districts
"(1) notify local educational agencies eligible to participate in the Small Rural Achievement Program authorized under subpart 1 of part B of title VI [now V] of the Elementary and Secondary Education Act of 1965 [
"(2) encourage such agencies to notify their teachers of such benefits."
1 See References in Text note below.
2 So in original. Probably should be preceded by "and".
§1078–11. Loan forgiveness for service in areas of national need
(a) Program authorized
(1) Loan forgiveness authorized
The Secretary shall forgive, in accordance with this section, the qualified loan amount described in subsection (c) of the student loan obligation of a borrower who—
(A) is employed full-time in an area of national need, as described in subsection (b); and
(B) is not in default on a loan for which the borrower seeks forgiveness.
(2) Method of loan forgiveness
To provide loan forgiveness under paragraph (1), the Secretary is authorized to carry out a program—
(A) through the holder of the loan, to assume the obligation to repay a qualified loan amount for a loan made, insured, or guaranteed under this part (other than an excepted PLUS loan or an excepted consolidation loan (as such terms are defined in
(B) to cancel a qualified loan amount for a loan made under part D of this subchapter (other than an excepted PLUS loan or an excepted consolidation loan).
(3) Regulations
The Secretary is authorized to issue such regulations as may be necessary to carry out this section.
(b) Areas of national need
For purposes of this section, an individual is employed in an area of national need if the individual meets the requirements of one of the following:
(1) Early childhood educators
The individual is employed full-time as an early childhood educator.
(2) Nurses
The individual is employed full-time—
(A) as a nurse in a clinical setting; or
(B) as a member of the nursing faculty at an accredited school of nursing (as those terms are defined in
(3) Foreign language specialists
The individual—
(A) has obtained a baccalaureate or advanced degree in a critical foreign language; and
(B) is employed full-time—
(i) in an elementary school or secondary school as a teacher of a critical foreign language;
(ii) in an agency of the United States Government in a position that regularly requires the use of such critical foreign language; or
(iii) in an institution of higher education as a faculty member or instructor teaching a critical foreign language.
(4) Librarians
The individual is employed full-time as a librarian in—
(A) a public library that serves a geographic area within which the public schools have a combined average of 30 percent or more of the schools' total student enrollments composed of children meeting a measure of poverty under
(B) a school that qualifies under
(5) Highly qualified teachers serving students who are limited English proficient, low-income communities, and underrepresented populations
The individual—
(A) is highly qualified, as such term is defined in section 9101 1 of the Elementary and Secondary Education Act of 1965 [
(B) is employed full-time—
(i) as a teacher educating students who are limited English proficient;
(ii) as a teacher in a school that qualifies under
(iii) as a teacher and is an individual from an underrepresented population in the teaching profession, as determined by the Secretary; or
(iv) as a teacher in an educational service agency, as such term is defined in
(6) Child welfare workers
The individual—
(A) has obtained a degree in social work or a related field with a focus on serving children and families; and
(B) is employed full-time in public or private child welfare services.
(7) Speech-language pathologists and audiologists
The individual—
(A) is employed full-time as a speech-language pathologist or audiologist in an eligible preschool program or a school that qualifies under
(B) has, at a minimum, a graduate degree in speech-language pathology, audiology, or communication sciences and disorders.
(8) School counselors
The individual—
(A) is employed full-time as a school counselor who has documented competence in counseling children and adolescents in a school setting and who—
(i) is licensed by the State or certified by an independent professional regulatory authority;
(ii) in the absence of such State licensure or certification, possesses national certification in school counseling or a specialty of counseling granted by an independent professional organization; or
(iii) holds a minimum of a master's degree in school counseling from a program accredited by the Council for Accreditation of Counseling and Related Educational Programs or the equivalent; and
(B) is so employed in a school that qualifies under
(9) Public sector employees
The individual is employed full-time in—
(A) public safety (including as a first responder, firefighter, police officer, or other law enforcement or public safety officer);
(B) emergency management (including as an emergency medical technician);
(C) public health (including full-time professionals engaged in health care practitioner occupations and health care support occupations, as such terms are defined by the Bureau of Labor Statistics); or
(D) public interest legal services (including prosecution, public defense, or legal advocacy in low-income communities at a nonprofit organization).
(10) Nutrition professionals
The individual—
(A) is a licensed, certified, or registered dietician who has completed a degree in a relevant field; and
(B) is employed full-time as a dietician with an agency of the special supplemental nutrition program for women, infants, and children under
(11) Medical specialists
The individual—
(A) has received a degree from a medical school at an institution of higher education; and
(B) has been accepted to, or currently participates in, a full-time graduate medical education training program or fellowship (or both) to provide health care services (as recognized by the Accreditation Council for Graduate Medical Education) that—
(i) requires more than five years of total graduate medical training; and
(ii) has fewer United States medical school graduate applicants than the total number of positions available in such program or fellowship.
(12) Mental health professionals
The individual—
(A) has not less than a master's degree in social work, psychology, or psychiatry; and
(B) is employed full-time providing mental health services to children, adolescents, or veterans.
(13) Dentists
The individual—
(A)(i) has received a degree from an accredited dental school (as accredited by the Commission on Dental Accreditation);
(ii) has completed residency training in pediatric dentistry, general dentistry, or dental public health; and
(iii) is employed full-time as a dentist; or
(B) is employed full-time as a member of the faculty at a program or school accredited by the Commission on Dental Accreditation.
(14) STEM employees
The individual is employed full-time in applied sciences, technology, engineering, or mathematics.
(15) Physical therapists
The individual—
(A) is a physical therapist; and
(B) is employed full-time providing physical therapy services to children, adolescents, or veterans.
(16) Superintendents, principals, and other administrators
The individual is employed full-time as a school superintendent, principal, or other administrator in a local educational agency, including in an educational service agency, in which 30 percent or more of the schools are schools that qualify under
(17) Occupational therapists
The individual is an occupational therapist and is employed full-time providing occupational therapy services to children, adolescents, or veterans.
(18) Allied health professionals
The individual is employed full-time as an allied health professional—
(A) in a Federal, State, local, or tribal public health agency; or
(B) in a setting where patients might require health care services, including acute care facilities, ambulatory care facilities, personal residences and other settings located in health professional shortage areas, medically underserved areas, or medically underserved populations, as recognized by the Secretary of Health and Human Services.
(c) Qualified loan amount
(1) In general
Subject to paragraph (2), for each school, academic, or calendar year of full-time employment in an area of national need described in subsection (b) that a borrower completes on or after August 14, 2008, the Secretary shall forgive not more than $2,000 of the student loan obligation of the borrower that is outstanding after the completion of each such school, academic, or calendar year of employment, respectively.
(2) Maximum amount
The Secretary shall not forgive more than $10,000 in the aggregate for any borrower under this section, and no borrower shall receive loan forgiveness under this section for more than five years of service.
(d) Priority
The Secretary shall grant loan forgiveness under this section on a first-come, first-served basis, and subject to the availability of appropriations.
(e) Rule of construction
Nothing in this section shall be construed to authorize the refunding of any repayment of a loan.
(f) Ineligibility for double benefits
No borrower may, for the same service, receive a reduction of loan obligations under both this section and
(g) Definitions
In this section:
(1) Allied health professional
The term "allied health professional" means an allied health professional as defined in
(A) has graduated and received an allied health professions degree or certificate from an institution of higher education; and
(B) is employed with a Federal, State, local or tribal public health agency, or in a setting where patients might require health care services, including acute care facilities, ambulatory care facilities, personal residences and other settings located in health professional shortage areas, medically underserved areas, or medically underserved populations, as recognized by the Secretary of Health and Human Services.
(2) Audiologist
The term "audiologist" means an individual who—
(A) has received, at a minimum, a graduate degree in audiology from an institution of higher education accredited by an agency or association recognized by the Secretary pursuant to
(B)(i) provides audiology services under subsection (ll)(2) of
(ii) meets or exceeds the qualifications for a qualified audiologist under subsection (ll)(4) of such section.
(3) Early childhood educator
The term "early childhood educator" means an individual who—
(A) works directly with children in an eligible preschool program or eligible early childhood education program in a low-income community;
(B) is involved directly in the care, development, and education of infants, toddlers, or young children age five and under; and
(C) has completed a baccalaureate or advanced degree in early childhood development or early childhood education, or in a field related to early childhood education.
(4) Eligible preschool program
The term "eligible preschool program" means a program that—
(A) provides for the care, development, and education of infants, toddlers, or young children age five and under;
(B) meets any applicable State or local government licensing, certification, approval, and registration requirements, and
(C) is operated by—
(i) a public or private school that is supported, sponsored, supervised, or administered by a local educational agency;
(ii) a Head Start agency serving as a grantee designated under the Head Start Act (
(iii) a nonprofit or community based organization; or
(iv) a child care program, including a home.
(5) Eligible early childhood education program
The term "eligible early childhood education program" means—
(A) a family child care program, center-based child care program, State prekindergarten program, school program, or other out-of-home early childhood development care program, that—
(i) is licensed or regulated by the State; and
(ii) serves two or more unrelated children who are not old enough to attend kindergarten;
(B) a Head Start Program carried out under the Head Start Act (
(C) an Early Head Start Program carried out under section 645A of the Head Start Act (
(6) Low-income community
The term "low-income community" means a school attendance area (as defined in
(A) in which 70 percent of households earn less than 85 percent of the State median household income; or
(B) that includes a school that qualifies under
(7) Nurse
The term "nurse" means a nurse who meets all of the following:
(A) The nurse graduated from—
(i) an accredited school of nursing (as those terms are defined in
(ii) a nursing center; or
(iii) an academic health center that provides nurse training.
(B) The nurse holds a valid and unrestricted license to practice nursing in the State in which the nurse practices in a clinical setting.
(C) The nurse holds one or more of the following:
(i) A graduate degree in nursing, or an equivalent degree.
(ii) A nursing degree from a collegiate school of nursing (as defined in
(iii) A nursing degree from an associate degree school of nursing (as defined in such section).
(iv) A nursing degree from a diploma school of nursing (as defined in such section).
(8) Occupational therapist
The term "occupational therapist" means an individual who—
(A) has received, at a minimum, a baccalaureate degree in occupational therapy from an institution of higher education accredited by an agency or association recognized by the Secretary pursuant to
(B)(i) provides occupational therapy services under
(ii) meets or exceeds the qualifications for a qualified occupational therapist, as determined by State law.
(9) Physical therapist
The term "physical therapist" means an individual who—
(A) has received, at a minimum, a graduate degree in physical therapy from an institution of higher education accredited by an agency or association recognized by the Secretary pursuant to
(B)(i) provides physical therapy services under
(ii) meets or exceeds the qualifications for a qualified physical therapist, as determined by State law.
(10) Speech-language pathologist
The term "speech-language pathologist" means a speech-language pathologist who—
(A) has received, at a minimum, a graduate degree in speech-language pathology or communication sciences and disorders from an institution of higher education accredited by an agency or association recognized by the Secretary pursuant to
(B) provides speech-language pathology services under
(h) Authorization of appropriations
There are authorized to be appropriated to carry out this section such sums as may be necessary for fiscal year 2009 and each of the five succeeding fiscal years to provide loan forgiveness in accordance with this section.
(
Editorial Notes
References in Text
Section 9101 of the Elementary and Secondary Education Act of 1965, referred to in subsec. (b)(5)(A), was amended by
The Head Start Act, referred to in subsec. (g)(4)(C)(ii), (5)(B), is subchapter B (§635 et seq.) of
Amendments
2015—Subsec. (b)(5)(B)(iv).
Subsec. (b)(8).
2010—Subsec. (b)(18).
Subsec. (g).
2009—Subsec. (g)(9)(B).
2008—
Statutory Notes and Related Subsidiaries
Effective Date of 2015 Amendment
Amendment by
Effective Date of 2009 Amendment
Amendment by
Effective Date
Section effective Oct. 1, 1998, except as otherwise provided in
Allied Health Workforce Recruitment and Retention Programs
[For definition of "Allied Health Loan Forgiveness Program" as used in section 5205(a) of
1 See References in Text note below.
§1078–12. Loan repayment for civil legal assistance attorneys
(a) Purpose
The purpose of this section is to encourage qualified individuals to enter and continue employment as civil legal assistance attorneys.
(b) Definitions
In this section:
(1) Civil legal assistance attorney
The term "civil legal assistance attorney" means an attorney who—
(A) is a full-time employee of—
(i) a nonprofit organization that provides legal assistance with respect to civil matters to low-income individuals without a fee; or
(ii) a protection and advocacy system or client assistance program that provides legal assistance with respect to civil matters and receives funding under—
(I) subtitle C of title I of the Developmental Disabilities Assistance and Bill of Rights Act of 2000 (
(II)
(III) part A of title I of the Protection and Advocacy for Individuals with Mental Illness Act (
(IV)
(V)
(VI)
(VII)
(B) as such employee, provides civil legal assistance as described in subparagraph (A) on a full-time basis; and
(C) is continually licensed to practice law.
(2) Student loan
(A) In general
Except as provided in subparagraph (B), the term "student loan" means—
(i) subject to clause (ii), a loan made, insured, or guaranteed under this part, part D, or part E; and
(ii) a loan made under
(I) a Federal Direct Stafford Loan, a Federal Direct Unsubsidized Stafford Loan, or a Federal Direct PLUS Loan;
(II) a loan made under
(III) a loan made under part E.
(B) Exclusion of parent plus loans
The term "student loan" does not include any of the following loans:
(i) A loan made to the parents of a dependent student under
(ii) A Federal Direct PLUS Loan made to the parents of a dependent student.
(iii) A loan made under
(I) a loan made to the parents of a dependent student under
(II) a Federal Direct PLUS Loan made to the parents of a dependent student.
(c) Program authorized
From amounts appropriated under subsection (i) for a fiscal year, the Secretary shall carry out a program of assuming the obligation to repay a student loan, by direct payments on behalf of a borrower to the holder of such loan, in accordance with subsection (d), for any borrower who—
(1) is employed as a civil legal assistance attorney; and
(2) is not in default on a loan for which the borrower seeks repayment.
(d) Terms of agreement
(1) In general
To be eligible to receive repayment benefits under subsection (c), a borrower shall enter into a written agreement with the Secretary that specifies that—
(A) the borrower will remain employed as a civil legal assistance attorney for a required period of service of not less than three years, unless involuntarily separated from that employment;
(B) if the borrower is involuntarily separated from employment on account of misconduct, or voluntarily separates from employment, before the end of the period specified in the agreement, the borrower will repay the Secretary the amount of any benefits received by such employee under this agreement;
(C) if the borrower is required to repay an amount to the Secretary under subparagraph (B) and fails to repay such amount, a sum equal to that amount shall be recoverable by the Federal Government from the employee by such methods as are provided by law for the recovery of amounts owed to the Federal Government;
(D) the Secretary may waive, in whole or in part, a right of recovery under this subsection if it is shown that recovery would be contrary to the public interest; and
(E) the Secretary shall make student loan payments under this section for the period of the agreement, subject to the availability of appropriations.
(2) Repayments
(A) In general
Any amount repaid by, or recovered from, an individual under this subsection shall be credited to the appropriation account from which the amount involved was originally paid.
(B) Merger
Any amount credited under subparagraph (A) shall be merged with other sums in such account and shall be available for the same purposes and period, and subject to the same limitations, if any, as the sums with which the amount was merged.
(3) Limitations
(A) Student loan payment amount
Student loan repayments made by the Secretary under this section shall be made subject to such terms, limitations, or conditions as may be mutually agreed upon by the borrower and the Secretary in an agreement under paragraph (1), except that the amount paid by the Secretary under this section shall not exceed—
(i) $6,000 for any borrower in any calendar year; or
(ii) an aggregate total of $40,000 in the case of any borrower.
(B) Beginning of payments
Nothing in this section shall authorize the Secretary to pay any amount to reimburse a borrower for any repayments made by such borrower prior to the date on which the Secretary entered into an agreement with the borrower under this subsection.
(e) Additional agreements
(1) In general
On completion of the required period of service under an agreement under subsection (d), the borrower and the Secretary may, subject to paragraph (2), enter into an additional agreement in accordance with subsection (d).
(2) Term
An agreement entered into under paragraph (1) may require the borrower to remain employed as a civil legal assistance attorney for less than three years.
(f) Award basis; priority
(1) Award basis
Subject to paragraph (2), the Secretary shall provide repayment benefits under this section on a first-come, first-served basis, and subject to the availability of appropriations.
(2) Priority
The Secretary shall give priority in providing repayment benefits under this section in any fiscal year to a borrower who—
(A) has practiced law for five years or less and, for not less than 90 percent of the time in such practice, has served as a civil legal assistance attorney;
(B) received repayment benefits under this section during the preceding fiscal year; and
(C) has completed less than three years of the first required period of service specified for the borrower in an agreement entered into under subsection (d).
(g) Ineligibility for double benefits
No borrower may, for the same service, receive a reduction of loan obligations under both this section and
(h) Regulations
The Secretary is authorized to issue such regulations as may be necessary to carry out this section.
(i) Authorization of appropriations
There are authorized to be appropriated to carry out this section $10,000,000 for fiscal year 2009 and such sums as may be necessary for each of the five succeeding fiscal years.
(
Editorial Notes
References in Text
The Developmental Disabilities Assistance and Bill of Rights Act of 2000, referred to in (b)(1)(A)(ii)(I), is
The Protection and Advocacy for Individuals with Mental Illness Act, referred to in subsec. (b)(1)(A)(ii)(III), is
§1079. Certificate of Federal loan insurance—effective date of insurance
(a) Loan-by-loan insurance
(1) Authority to issue certificates on application
If, upon application by an eligible lender, made upon such form, containing such information, and supported by such evidence as the Secretary may require, and otherwise in conformity with this section, the Secretary finds that the applicant has made a loan to an eligible student which is insurable under the provisions of this part, he may issue to the applicant a certificate of insurance covering the loan and setting forth the amount and terms of the insurance.
(2) Effectiveness of certificate
Insurance evidenced by a certificate of insurance pursuant to subsection (a)(1) shall become effective upon the date of issuance of the certificate, except that the Secretary is authorized, in accordance with regulations, to issue commitments with respect to proposed loans, or with respect to lines (or proposed lines) of credit, submitted by eligible lenders, and in that event, upon compliance with subsection (a)(1) by the lender, the certificate of insurance may be issued effective as of the date when any loan, or any payment by the lender pursuant to a line of credit, to be covered by such insurance was made. Such insurance shall cease to be effective upon 60 days' default by the lender in the payment of any installment of the premiums payable pursuant to subsection (c).
(3) Contents of applications
An application submitted pursuant to subsection (a)(1) shall contain (A) an agreement by the applicant to pay, in accordance with regulations, the premiums fixed by the Secretary pursuant to subsection (c), and (B) an agreement by the applicant that if the loan is covered by insurance the applicant will submit such supplementary reports and statement during the effective period of the loan agreement, upon such forms, at such times, and containing such information as the Secretary may prescribe by or pursuant to regulation.
(b) Comprehensive insurance coverage certificate
(1) Establishment of system by regulation
In lieu of requiring a separate insurance application and issuing a separate certificate of insurance for each student loan made by an eligible lender as provided in subsection (a), the Secretary may, in accordance with regulations consistent with
(2) Uncovered loans
If the holder of a certificate of comprehensive insurance coverage issued under this subsection grants to a student a line of credit extending beyond the cutoff date specified in that certificate, loans or payments thereon made by the holder after that date pursuant to the line of credit shall not be deemed to be included in the coverage of that certificate except as may be specifically provided therein; but, subject to the limitations of
(c) Charges for Federal insurance
The Secretary shall, pursuant to regulations, charge for insurance on each loan under this part a premium in an amount not to exceed one-fourth of 1 percent per year of the unpaid principal amount of such loan (excluding interest added to principal), payable in advance, at such times and in such manner as may be prescribed by the Secretary. Such regulations may provide that such premium shall not be payable, or if paid shall be refundable, with respect to any period after default in the payment of principal or interest or after the borrower has died or becomes totally and permanently disabled, if (1) notice of such default or other event has been duly given, and (2) requests for payment of the loss insured against has been made or the Secretary has made such payment on his own motion pursuant to
(d) Assignability of insurance
The rights of an eligible lender arising under insurance evidenced by a certificate of insurance issued to it under this section may be assigned as security by such lender only to another eligible lender, and subject to regulation by the Secretary.
(e) Consolidation not to affect insurance
The consolidation of the obligations of two or more federally insured loans obtained by a student borrower in any fiscal year into a single obligation evidenced by a single instrument of indebtedness shall not affect the insurance by the United States. If the loans thus consolidated are covered by separate certificates of insurance issued under subsection (a), the Secretary may upon surrender of the original certificates issue a new certificate of insurance in accordance with that subsection upon the consolidated obligation; if they are covered by a single comprehensive certificate issued under subsection (b), the Secretary may amend that certificate accordingly.
(
Editorial Notes
Prior Provisions
A prior section 1079,
§1080. Default of student under Federal loan insurance program
(a) Notice to Secretary and payment of loss
Upon default by the student borrower on any loan covered by Federal loan insurance pursuant to this part, and prior to the commencement of suit or other enforcement proceedings upon security for that loan, the insurance beneficiary shall promptly notify the Secretary, and the Secretary shall if requested (at that time or after further collection efforts) by the beneficiary, or may on the Secretary's own motion, if the insurance is still in effect, pay to the beneficiary the amount of the loss sustained by the insured upon that loan as soon as that amount has been determined. The "amount of the loss" on any loan shall, for the purposes of this subsection and subsection (b), be deemed to be an amount equal to the unpaid balance of the principal amount and accrued interest, including interest accruing from the date of submission of a valid default claim (as determined by the Secretary) to the date on which payment is authorized by the Secretary, reduced to the extent required by
(b) Effect of payment of loss
Upon payment of the amount of the loss pursuant to subsection (a), the United States shall be subrogated for all of the rights of the holder of the obligation upon the insured loan and shall be entitled to an assignment of the note or other evidence of the insured loan by the insurance beneficiary. If the net recovery made by the Secretary on a loan after deduction of the cost of that recovery (including reasonable administrative costs and collection costs, to the extent set forth in regulations issued by the Secretary) exceeds the amount of the loss, the excess shall be paid over to the insured. The Secretary may, in attempting to make recovery on such loans, contract with private business concerns, State student loan insurance agencies, or State guaranty agencies, for payment for services rendered by such concerns or agencies in assisting the Secretary in making such recovery. Any contract under this subsection entered into by the Secretary shall provide that attempts to make recovery on such loans shall be fair and reasonable, and do not involve harassment, intimidation, false or misleading representations, or unnecessary communications concerning the existence of any such loan to persons other than the student borrower.
(c) Forbearance not precluded
Nothing in this section or in this part shall be construed to preclude any forbearance for the benefit of the student borrower which may be agreed upon by the parties to the insured loan and approved by the Secretary, or to preclude forbearance by the Secretary in the enforcement of the insured obligation after payment on that insurance. Any forbearance which is approved by the Secretary under this subsection with respect to the repayment of a loan, including a forbearance during default, shall not be considered as indicating that a holder of a federally insured loan has failed to exercise reasonable care and due diligence in the collection of the loan.
(d) Care and diligence required of holders
Nothing in this section or in this part shall be construed to excuse the holder of a federally insured loan from exercising reasonable care and diligence in the making and collection of loans under the provisions of this part. If the Secretary, after a reasonable notice and opportunity for hearing to an eligible lender, finds that it has substantially failed to exercise such care and diligence or to make the reports and statements required under
(e) Default rate of lenders, holders, and guaranty agencies
(1) In general
The Secretary shall annually publish a list indicating the cohort default rate (determined in accordance with
(2) Regulations
The Secretary shall prescribe regulations designed to prevent an institution from evading the application to that institution of a cohort default rate through the use of such measures as branching, consolidation, change of ownership or control, or any similar device.
(3) Rate establishment and correction
The Secretary shall establish a cohort default rate for lenders, holders, and guaranty agencies (determined consistent with
(
Editorial Notes
Prior Provisions
A prior section 1080,
Amendments
1998—Subsec. (a).
1992—Subsec. (e).
Statutory Notes and Related Subsidiaries
Effective Date of 1998 Amendment
Amendment by
Study of Fraud-Based Defenses
§1080a. Reports to consumer reporting agencies and institutions of higher education
(a) Agreements to exchange information
For the purpose of promoting responsible repayment of loans covered by Federal loan insurance pursuant to this part or covered by a guaranty agreement pursuant to
(1) that the loan is an education loan (as such term is defined in
(2) the total amount of loans made to any borrower under this part and the remaining balance of the loans;
(3) information concerning the repayment status of the loan for inclusion in the file of the borrower, except that nothing in this subsection shall be construed to affect any otherwise applicable provision of the Fair Credit Reporting Act (
(4) information concerning the date of any default on the loan and the collection of the loan, including information concerning the repayment status of any defaulted loan on which the Secretary has made a payment pursuant to
(5) the date of cancellation of the note upon completion of repayment by the borrower of the loan or payment by the Secretary pursuant to
(b) Additional information
Such agreements may also provide for the disclosure by such consumer reporting agencies to the Secretary or a guaranty agency, whichever insures or guarantees a loan, upon receipt of a notice under subsection (a)(4) that such a loan is in default, of information concerning the borrower's location or other information which may assist the Secretary, the guaranty agency, the eligible lender, or the subsequent holder in collecting the loan.
(c) Contents of agreements
Agreements entered into pursuant to this section shall contain such provisions as may be necessary to ensure that—
(1) no information is disclosed by the Secretary or the guaranty agency, eligible lender, or subsequent holder unless its accuracy and completeness have been verified and the Secretary or the guaranty agency has determined that disclosure would accomplish the purpose of this section;
(2) as to any information so disclosed, such consumer reporting agencies will be promptly notified of, and will promptly record, any change submitted by the Secretary, the guaranty agency, eligible lender, or subsequent holder with respect to such information, or any objections by the borrower with respect to any such information, as required by section 611 of the Fair Credit Reporting Act (
(3) no use will be made of any such information which would result in the use of collection practices with respect to such a borrower that are not fair and reasonable or that involve harassment, intimidation, false or misleading representations, or unnecessary communication concerning the existence of such loan or concerning any such information; and
(4) with regard to notices of default under subsection (a)(4) of this section, except for disclosures made to obtain the borrower's location, the Secretary, or the guaranty agency, eligible lender, or subsequent holder whichever is applicable (A) shall not disclose any such information until the borrower has been notified that such information will be disclosed to consumer reporting agencies unless the borrower enters into repayment of his or her loan, but (B) shall, if the borrower has not entered into repayment within a reasonable period of time, but not less than 30 days, from the date such notice has been sent to the borrower, disclose the information required by this subsection.
(d) Contractor status of participants
A guaranty agency, eligible lender, or subsequent holder or consumer reporting agency which discloses or receives information under this section shall not be considered a Government contractor within the meaning of
(e) Disclosure to institutions
The Secretary and each guaranty agency, eligible lender, and subsequent holder of a loan are authorized to disclose information described in subsections (a) and (b) concerning student borrowers to the eligible institutions such borrowers attend or previously attended. To further the purpose of this section, an eligible institution may enter into an arrangement with any or all of the holders of delinquent loans made to borrowers who attend or previously attended such institution for the purpose of providing current information regarding the borrower's location or employment or for the purpose of assisting the holder in contacting and influencing borrowers to avoid default.
(f) Duration of authority
Notwithstanding paragraphs (4) and (5) of subsection (a) of section 605 of the Fair Credit Reporting Act (
(1) 7 years from the date on which the Secretary or the agency paid a claim to the holder on the guaranty;
(2) 7 years from the date the Secretary, guaranty agency, eligible lender, or subsequent holder first reported the account to the consumer reporting agency; or
(3) in the case of a borrower who reenters repayment after defaulting on a loan and subsequently goes into default on such loan, 7 years from the date the loan entered default such subsequent time.
(
Editorial Notes
References in Text
The Fair Credit Reporting Act, referred to in subsec. (a), is title VI of
Prior Provisions
A prior section 1080a,
Amendments
2009—Subsec. (f).
2008—
Subsec. (a).
Subsec. (b).
Subsec. (c)(2).
Subsec. (c)(4).
Subsec. (c)(4)(A).
Subsec. (d).
1993—Subsec. (f)(1).
1992—Subsec. (f).
1987—Subsec. (e).
Statutory Notes and Related Subsidiaries
Effective Date of 2009 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
§1081. Insurance fund
(a) Establishment
There is hereby established a student loan insurance fund (hereinafter in this section called the "fund") which shall be available without fiscal year limitation to the Secretary for making payments in connection with the default of loans insured by the Secretary under this part, or in connection with payments under a guaranty agreement under
(b) Borrowing authority
If at any time the moneys in the fund are insufficient to make payments in connection with the default of any loan insured by the Secretary under this part, or in connection with any guaranty agreement made under
(
Editorial Notes
Codification
In subsec. (b), "
Prior Provisions
A prior section 1081,
Amendments
1987—Subsec. (a).
Statutory Notes and Related Subsidiaries
Effective Date of 1987 Amendment
Amendment by
Federal Family Education Loan Insurance Fund
Transfer of Assets and Liabilities of the Vocational Student Loan Insurance Fund
All assets and liabilities of the vocational student loan insurance fund transferred to the student loan insurance fund, see section 116(c)(2) of
§1082. Legal powers and responsibilities
(a) General powers
In the performance of, and with respect to, the functions, powers, and duties, vested in him by this part, the Secretary may—
(1) prescribe such regulations as may be necessary to carry out the purposes of this part, including regulations applicable to third party servicers (including regulations concerning financial responsibility standards for, and the assessment of liabilities for program violations against, such servicers) to establish minimum standards with respect to sound management and accountability of programs under this part, except that in no case shall damages be assessed against the United States for the actions or inactions of such servicers;
(2) sue and be sued in any court of record of a State having general jurisdiction or in any district court of the United States, and such district courts shall have jurisdiction of civil actions arising under this part without regard to the amount in controversy, and action instituted under this subsection by or against the Secretary shall survive notwithstanding any change in the person occupying the office of Secretary or any vacancy in that office; but no attachment, injunction, garnishment, or other similar process, mesne or final, shall be issued against the Secretary or property under the Secretary's control and nothing herein shall be construed to except litigation arising out of activities under this part from the application of
(3) include in any contract for Federal loan insurance such terms, conditions, and covenants relating to repayment of principal and payment of interest, relating to the Secretary's obligations and rights to those of eligible lenders, and borrowers in case of default, and relating to such other matters as the Secretary determines to be necessary to assure that the purposes of this part will be achieved; and any term, condition, and covenant made pursuant to this paragraph or pursuant to any other provision of this part may be modified by the Secretary, after notice and opportunity for a hearing, if the Secretary finds that the modification is necessary to protect the United States from the risk of unreasonable loss;
(4) subject to the specific limitations in this part, consent to modification, with respect to rate of interest, time of payment of any installment of principal and interest or any portion thereof, or any other provision of any note or other instrument evidencing a loan which has been insured by the Secretary under this part;
(5) enforce, pay, or compromise, any claim on, or arising because of, any such insurance or any guaranty agreement under
(6) enforce, pay, compromise, waive, or release any right, title, claim, lien, or demand, however acquired, including any equity or any right of redemption.
(b) Financial operations responsibilities
The Secretary shall, with respect to the financial operations arising by reason of this part prepare annually and submit a budget program as provided for wholly owned Government corporations by
(1) the Secretary requests a review of the proposed settlement of such claim by the Attorney General; and
(2) the Attorney General responds to such request, which may include, at the Attorney General's discretion, a written opinion related to such proposed settlement.
(c) Data collection
(1) Collection by category of loan
(A) For loans insured after December 31, 1976, or in the case of each insurer after such earlier date where the data required by this subsection are available, the Secretary and all other insurers under this part shall collect and accumulate all data relating to (i) loan volume insured and (ii) defaults reimbursed or default rates according to the categories of loans listed in subparagraph (B) of this paragraph.
(B) The data indicated in subparagraph (A) of this paragraph shall be accumulated according to the category of lender making the loan and shall be accumulated separately for lenders who are (i) eligible institutions, (ii) State or private, nonprofit direct lenders, (iii) commercial financial institutions who are banks, savings and loan associations, or credit unions, and (iv) all other types of institutions or agencies.
(C) The Secretary may designate such additional subcategories within the categories specified in subparagraph (B) of this paragraph as the Secretary deems appropriate.
(D) The category or designation of a loan shall not be changed for any reason, including its purchase or acquisition by a lender of another category.
(2) Collection and reporting requirements
(A) The Secretary shall collect data under this subsection from all insurers under this part and shall publish not less often than once every fiscal year a report showing loan volume guaranteed and default data for each category specified in subparagraph (B) of paragraph (1) of this subsection and for the total of all lenders.
(B) The reports specified in subparagraph (A) of this paragraph shall include a separate report for each insurer under this part including the Secretary, and where an insurer insures loans for lenders in more than one State, such insurer's report shall list all data separately for each State.
(3) Institutional, public, or nonprofit lenders
For purposes of clarity in communications, the Secretary shall separately identify loans made by the lenders referred to in clause (i) and loans made by the lenders referred to in clause (ii) of paragraph (1)(B) of this subsection.
(d) Delegation
(1) Regional offices
The functions of the Secretary under this part listed in paragraph (2) of this subsection may be delegated to employees in the regional office of the Department.
(2) Delegable functions
The functions which may be delegated pursuant to this subsection are—
(A) reviewing applications for loan insurance under
(B) receiving claims for payments under
(C) certifying to the central office when collection of defaulted loans has been completed, compromising or agreeing to the modification of any Federal claim against a borrower (pursuant to regulations of the Secretary issued under subsection (a)), and recommending litigation with respect to any such claim.
(e) Use of information on borrowers
Notwithstanding any other provision of law, the Secretary may provide to eligible lenders, and to any guaranty agency having a guaranty agreement under
(f) Audit of financial transactions
(1) Comptroller General and Inspector General authority
The Comptroller General and the Inspector General of the Department of Education shall each have the authority to conduct an audit of the financial transactions of—
(A) any guaranty agency operating under an agreement with the Secretary pursuant to
(B) any eligible lender as defined in
(C) a representative sample of eligible lenders under this part, upon the request of either of the authorizing committees, with respect to the payment of the special allowance under
(2) Access to records
For the purpose of carrying out this subsection, the records of any entity described in subparagraph (A), (B), (C), or (D) 1 of paragraph (1) shall be available to the Comptroller General and the Inspector General of the Department of Education. For the purpose of
(3) "Record" defined
For the purpose of this subsection, the term "record" includes any information, document, report, answer, account, paper, or other data or documentary evidence.
(4) Audit procedures
In conducting audits pursuant to this subsection, the Comptroller General and the Inspector General of the Department of Education shall audit the records to determine the extent to which they, at a minimum, comply with Federal statutes, and rules and regulations prescribed by the Secretary, in effect at the time that the record was made, and in no case shall the Comptroller General or the Inspector General apply subsequently determined standards, procedures, or regulations to the records of such agency, lender, or Authority.
(g) Civil penalties
(1) Authority to impose penalties
Upon determination, after reasonable notice and opportunity for a hearing, that a lender or a guaranty agency—
(A) has violated or failed to carry out any provision of this part or any regulation prescribed under this part, or
(B) has engaged in substantial misrepresentation of the nature of its financial charges,
the Secretary may impose a civil penalty upon such lender or agency of not to exceed $25,000 for each violation, failure, or misrepresentation.
(2) Limitations
No civil penalty may be imposed under paragraph (1) of this subsection unless the Secretary determines that—
(A) the violation, failure, or substantial misrepresentation referred to in that paragraph resulted from a violation, failure, or misrepresentation that is material; and
(B) the lender or guaranty agency knew or should have known that its actions violated or failed to carry out the provisions of this part or the regulations thereunder.
(3) Correction of failure
A lender or guaranty agency has no liability under paragraph (1) of this subsection if, prior to notification by the Secretary under that paragraph, the lender or guaranty agency cures or corrects the violation or failure or notifies the person who received the substantial misrepresentation of the actual nature of the financial charges involved.
(4) Consideration as single violation
For the purpose of paragraph (1) of this subsection, violations, failures, or substantial misrepresentations arising from a specific practice of a lender or guaranty agency, and occurring prior to notification by the Secretary under that paragraph, shall be deemed to be a single violation, failure, or substantial misrepresentation even if the violation, failure, or substantial misrepresentation affects more than one loan or more than one borrower, or both. The Secretary may only impose a single civil penalty for each such violation, failure, or substantial misrepresentation.
(5) Assignees not liable for violations by others
If a loan affected by a violation, failure, or substantial misrepresentation is assigned to another holder, the lender or guaranty agency responsible for the violation, failure, or substantial misrepresentation shall remain liable for any civil money penalty provided for under paragraph (1) of this subsection, but the assignee shall not be liable for any such civil money penalty.
(6) Compromise
Until a matter is referred to the Attorney General, any civil penalty under paragraph (1) of this subsection may be compromised by the Secretary. In determining the amount of such penalty, or the amount agreed upon in compromise, the Secretary shall consider the appropriateness of the penalty to the resources of the lender or guaranty agency subject to the determination; the gravity of the violation, failure, or substantial misrepresentation; the frequency and persistence of the violation, failure, or substantial misrepresentation; and the amount of any losses resulting from the violation, failure, or substantial misrepresentation. The amount of such penalty, when finally determined, or the amount agreed upon in compromise, may be deducted from any sums owing by the United States to the lender or agency charged, unless the lender or agency has, in the case of a final agency determination, commenced proceedings for judicial review within 90 days of the determination, in which case the deduction may not be made during the pendency of the proceeding.
(h) Authority of the Secretary to impose and enforce limitations, suspensions, and terminations
(1) Imposition of sanctions
(A) If the Secretary, after a reasonable notice and opportunity for hearing to an eligible lender, finds that the eligible lender—
(i) has substantially failed—
(I) to exercise reasonable care and diligence in the making and collecting of loans under the provisions of this part,
(II) to make the reports or statements under
(III) to pay the required loan insurance premiums to any guaranty agency, or
(ii) has engaged in—
(I) fraudulent or misleading advertising or in solicitations that have resulted in the making of loans insured or guaranteed under this part to borrowers who are ineligible; or
(II) the practice of making loans that violate the certification for eligibility provided in
the Secretary shall limit, suspend, or terminate that lender from participation in the insurance programs operated by guaranty agencies under this part.
(B) The Secretary shall not lift any such limitation, suspension, or termination until the Secretary is satisfied that the lender's failure under subparagraph (A)(i) of this paragraph or practice under subparagraph (A)(ii) of this paragraph has ceased and finds that there are reasonable assurances that the lender will—
(i) exercise the necessary care and diligence,
(ii) comply with the requirements described in subparagraph (A)(i), or
(iii) cease to engage in the practices described in subparagraph (A)(ii),
as the case may be.
(2) Review of sanctions on lenders
(A) The Secretary shall review each limitation, suspension, or termination imposed by any guaranty agency pursuant to
(i) if such review is waived; or
(ii) if such review is not waived, unless the Secretary determines that the limitation, suspension, or termination was not imposed in accordance with requirements of such section.
(B) The Secretary's review under this paragraph of the limitation, suspension, or termination imposed by a guaranty agency pursuant to
(i) a review of the written record of the proceedings in which the guaranty agency imposed such sanctions; and
(ii) a determination as to whether the guaranty agency complied with
(C) The Secretary shall not lift any such sanction until the Secretary is satisfied that the lender has corrected the failures which led to the limitation, suspension, or termination, and finds that there are reasonable assurances that the lender will, in the future, comply with the requirements of this part. The Secretary shall notify each guaranty agency of the lifting of any such sanction.
(3) Review of sanctions on eligible institutions
(A) The Secretary shall review each limitation, suspension, or termination imposed by any guaranty agency pursuant to
(i) if such review is waived; or
(ii) if such review is not waived, unless the Secretary determines that the limitation, suspension, or termination was not imposed in accordance with requirements of such section.
(B) The Secretary's review under this paragraph of the limitation, suspension, or termination imposed by a guaranty agency pursuant to
(i) a review of the written record of the proceedings in which the guaranty agency imposed such sanctions; and
(ii) a determination as to whether the guaranty agency complied with
(C) The Secretary shall not lift any such sanction until the Secretary is satisfied that the institution has corrected the failures which led to the limitation, suspension, or termination, and finds that there are reasonable assurances that the institution will, in the future, comply with the requirements of this part. The Secretary shall notify each guaranty agency of the lifting of any such sanction.
(i) Authority to sell defaulted loans
In the event that all other collection efforts have failed, the Secretary is authorized to sell defaulted student loans assigned to the United States under this part to collection agencies, eligible lenders, guaranty agencies, or other qualified purchaser on such terms as the Secretary determines are in the best financial interests of the United States. A loan may not be sold pursuant to this subsection if such loan is in repayment status.
(j) Authority of Secretary to take emergency actions against lenders
(1) Imposition of sanctions
If the Secretary—
(A) receives information, determined by the Secretary to be reliable, that a lender is violating any provision of this subchapter, any regulation prescribed under this subchapter, or any applicable special arrangement, agreement, or limitation;
(B) determines that immediate action is necessary to prevent misuse of Federal funds; and
(C) determines that the likelihood of loss outweighs the importance of following the limitation, suspension, or termination procedures authorized in subsection (h);
the Secretary shall, effective on the date on which a notice and statement of the basis of the action is mailed to the lender (by registered mail, return receipt requested), take emergency action to stop the issuance of guarantee commitments and the payment of interest benefits and special allowance to the lender.
(2) Length of emergency action
An emergency action under this subsection may not exceed 30 days unless a limitation, suspension, or termination proceeding is initiated against the lender under subsection (h) before the expiration of that period.
(3) Opportunity to show cause
The Secretary shall provide the lender, if it so requests, an opportunity to show cause that the emergency action is unwarranted.
(k) Program of assistance for borrowers
(1) In general
The Secretary shall undertake a program to encourage corporations and other private and public employers, including the Federal Government, to assist borrowers in repaying loans received under this subchapter, including providing employers with options for payroll deduction of loan payments and offering loan repayment matching provisions as part of employee benefit packages.
(2) Publication
The Secretary shall publicize models for providing the repayment assistance described in paragraph (1) and each year select entities that deserve recognition, through means devised by the Secretary, for the development of innovative plans for providing such assistance to employees.
(3) Recommendation
The Secretary shall recommend to the appropriate committees in the Senate and House of Representatives changes to statutes that could be made in order to further encourage such efforts.
(l) Uniform administrative and claims procedures
(1) In general
The Secretary shall, by regulation developed in consultation with guaranty agencies, lenders, institutions of higher education, secondary markets, students, third party servicers and other organizations involved in providing loans under this part, prescribe standardized forms and procedures regarding—
(A) origination of loans;
(B) electronic funds transfer;
(C) guaranty of loans;
(D) deferments;
(E) forbearance;
(F) servicing;
(G) claims filing;
(H) borrower status change and anticipated graduation date; and
(I) cures.
(2) Special rules
(A) The forms and procedures described in paragraph (1) shall include all aspects of the loan process as such process involves eligible lenders and guaranty agencies and shall be designed to minimize administrative costs and burdens (other than the costs and burdens involved in the transition to new forms and procedures) involved in exchanges of data to and from borrowers, schools, lenders, secondary markets, and the Department.
(B) Nothing in this paragraph shall be construed to limit the development of electronic forms and procedures.
(3) Simplification requirements
Such regulations shall include—
(A) standardization of computer formats, forms design, and guaranty agency procedures relating to the origination, servicing, and collection of loans made under this part;
(B) authorization of alternate means of document retention, including the use of microfilm, microfiche, laser disc, compact disc, and other methods allowing the production of a facsimile of the original documents;
(C) authorization of the use of computer or similar electronic methods of maintaining records relating to the performance of servicing, collection, and other regulatory requirements under this chapter; and
(D) authorization and implementation of electronic data linkages for the exchange of information to and from lenders, guarantors, institutions of higher education, third party servicers, and the Department of Education for student status confirmation reports, claim filing, interest and special allowance billing, deferment processing, and all other administrative steps relating to loans made pursuant to this part where using electronic data linkage is feasible.
(4) Additional recommendations
The Secretary shall review regulations prescribed pursuant to paragraph (1) and seek additional recommendations from guaranty agencies, lenders, institutions of higher education, students, secondary markets, third party servicers and other organizations involved in providing loans under this part, not less frequently than annually, for additional methods of simplifying and standardizing the administration of the programs authorized by this part.
(m) Common forms and formats
(1) Common guaranteed student loan application form and promissory note
(A) In general
The Secretary, in cooperation with representatives of guaranty agencies, eligible lenders, and organizations involved in student financial assistance, shall prescribe common application forms and promissory notes, or master promissory notes, to be used for applying for loans under this part.
(B) Requirements
The forms prescribed by the Secretary shall—
(i) use clear, concise, and simple language to facilitate understanding of loan terms and conditions by applicants; and
(ii) be formatted to require the applicant to clearly indicate a choice of lender.
(C) Free application form
For academic year 1999–2000 and succeeding academic years, the Secretary shall prescribe the form developed under
(D) Master promissory note
(i) In general
The Secretary shall develop and require the use of master promissory note forms for loans made under this part and part D. Such forms shall be available for periods of enrollment beginning not later than July 1, 2000. Each form shall allow eligible borrowers to receive, in addition to initial loans, additional loans for the same or subsequent periods of enrollment through a student confirmation process approved by the Secretary. Such forms shall be used for loans made under this part or part D as directed by the Secretary. Unless otherwise notified by the Secretary, each institution of higher education that participates in the program under this part or part D may use a master promissory note for loans under this part and part D.
(ii) Consultation
In developing the master promissory note under this subsection, the Secretary shall consult with representatives of guaranty agencies, eligible lenders, institutions of higher education, students, and organizations involved in student financial assistance.
(iii) Sale; assignment; enforceability
Notwithstanding any other provision of law, each loan made under a master promissory note under this subsection may be sold or assigned independently of any other loan made under the same promissory note and each such loan shall be separately enforceable in all Federal and State courts on the basis of an original or copy of the master promissory note in accordance with the terms of the master promissory note.
(E) Perfection of security interests in student loans
(i) In general
Notwithstanding the provisions of any State law to the contrary, including the Uniform Commercial Code as in effect in any State, a security interest in loans made under this part, on behalf of any eligible lender (as defined in
(ii) Collateral description
In addition to any other method for describing collateral in a legally sufficient manner permitted under the laws of the State, the description of collateral in any financing statement filed pursuant to this subparagraph shall be deemed legally sufficient if it lists such loans, or refers to records (identifying such loans) retained by the secured party or any designee of the secured party identified in such financing statement, including the debtor or any loan servicer.
(iii) Sales
Notwithstanding clauses (i) and (ii) and any provisions of any State law to the contrary, other than any such State's law providing for creation of a statutory lien, an outright sale of loans made under this part shall be effective and perfected automatically upon attachment as defined in the Uniform Commercial Code of such State.
(2) Common deferment form
The Secretary, in cooperation with representatives of guaranty agencies, institutions of higher education, and lenders involved in loans made under this part, shall prescribe a common deferment reporting form to be used for the processing of deferments of loans made under this subchapter.
(3) Common reporting formats
The Secretary shall promulgate standards including necessary rules, regulations (including the definitions of all relevant terms), and procedures so as to require all lenders and guaranty agencies to report information on all aspects of loans made under this part in uniform formats, so as to permit the direct comparison of data submitted by individual lenders, servicers, or guaranty agencies.
(4) Electronic forms
Nothing in this section shall be construed to limit the development and use of electronic forms and procedures.
(n) Default reduction management
(1) Authorization
There are authorized to be appropriated $25,000,000 for fiscal year 1999 and each of the four succeeding fiscal years, for the Secretary to expend for default reduction management activities for the purposes of establishing a performance measure that will reduce defaults by 5 percent relative to the prior fiscal year. Such funds shall be in addition to, and not in lieu of, other appropriations made for such purposes.
(2) Allowable activities
Allowable activities for which such funds shall be expended by the Secretary shall include the following: (A) program reviews; (B) audits; (C) debt management programs; (D) training activities; and (E) such other management improvement activities approved by the Secretary.
(3) Plan for use required
The Secretary shall submit a plan, for inclusion in the materials accompanying the President's budget each fiscal year, detailing the expenditure of funds authorized by this section to accomplish the 5 percent reduction in defaults. At the conclusion of the fiscal year, the Secretary shall report the Secretary's findings and activities concerning the expenditure of funds and whether the performance measure was met. If the performance measure was not met, the Secretary shall report the following:
(A) why the goal was not met, including an indication of any managerial deficiencies or of any legal obstacles;
(B) plans and a schedule for achieving the established performance goal;
(C) recommended legislative or regulatory changes necessary to achieve the goal; and
(D) if the performance standard or goal is impractical or infeasible, why that is the case and what action is recommended, including whether the goal should be changed or the program altered or eliminated.
This report shall be submitted to the Appropriations Committees of the House of Representatives and the Senate and to the authorizing committees.
(o) Consequences of guaranty agency insolvency
In the event that the Secretary has determined that a guaranty agency is unable to meet its insurance obligations under this part, the holder of loans insured by the guaranty agency may submit insurance claims directly to the Secretary and the Secretary shall pay to the holder the full insurance obligation of the guaranty agency, in accordance with insurance requirements no more stringent than those of the guaranty agency. Such arrangements shall continue until the Secretary is satisfied that the insurance obligations have been transferred to another guarantor who can meet those obligations or a successor will assume the outstanding insurance obligations.
(p) Reporting requirement
All officers and directors, and those employees and paid consultants of eligible institutions, eligible lenders, guaranty agencies, loan servicing agencies, accrediting agencies or associations, State licensing agencies or boards, and entities acting as secondary markets (including the Student Loan Marketing Association), who are engaged in making decisions as to the administration of any program or funds under this subchapter or as to the eligibility of any entity or individual to participate under this subchapter, shall report to the Secretary, in such manner and at such time as the Secretary shall require, on any financial interest which such individual may hold in any other entity participating in any program assisted under this subchapter.
(
Editorial Notes
References in Text
Subparagraph (D) of paragraph (1) of subsec. (f), referred to in subsec. (f)(2), was repealed by
Prior Provisions
A prior section 1082,
Amendments
2022—Subsec. (f)(2).
2009—Subsec. (b).
Subsec. (m)(1)(B).
2008—Subsec. (b).
Subsec. (f)(1)(C).
Subsec. (m)(1)(D)(i).
Subsec. (n)(3).
2006—Subsec. (l)(1)(H).
2000—Subsec. (m)(1)(D)(iv).
Subsec. (m)(1)(E).
1998—Subsec. (f)(1)(B).
Subsec. (f)(1)(C).
Subsec. (f)(1)(D).
Subsec. (k)(3).
Subsec. (m)(1)(A).
Subsec. (m)(1)(B).
Subsec. (m)(1)(C).
Subsec. (m)(1)(D).
Subsec. (m)(4).
Subsec. (n)(1).
Subsec. (n)(3).
Subsec. (p).
1995—Subsec. (b).
"(1) prepare annually and submit a budget program as provided for wholly owned Government corporations by
"(2) maintain with respect to insurance under this part an integral set of accounts and prepare financial statements in accordance with generally accepted accounting principles, which shall be audited annually by the General Accounting Office in conformity with generally accepted Government auditing standards except that the transactions of the Secretary, including the settlement of insurance claims and of claims for payments pursuant to
1993—Subsec. (h)(2)(A), (3)(A).
1992—Subsec. (a)(1).
Subsecs. (a)(3), (g)(1).
Subsec. (g)(2).
"(A)(i) a clear and consistent pattern or practice of violations, failures, or substantial misrepresentations in which the lender or guaranty agency did not maintain procedures reasonably adapted to avoid the violation, failure, or substantial misrepresentation;
"(ii) gross negligence; or
"(iii) willful actions on the part of the lender or guaranty agency; and
"(B) the violation, failure, or substantial misrepresentation is material."
Subsec. (g)(3).
Subsec. (g)(4).
Subsec. (h)(2)(A).
Subsec. (h)(2)(B), (C).
Subsec. (h)(3)(A).
Subsec. (h)(3)(B), (C).
Subsecs. (k) to (p).
1989—Subsec. (j).
1987—Subsec. (f)(4).
Subsec. (g)(2)(A)(i), (B).
Statutory Notes and Related Subsidiaries
Effective Date of 2009 Amendment
Amendment by
Effective Date of 2006 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
1 See References in Text note below.
§1083. Student loan information by eligible lenders
(a) Required disclosure before disbursement
Each eligible lender, at or prior to the time such lender disburses a loan that is insured or guaranteed under this part (other than a loan made under
(1) a statement prominently and clearly displayed and in bold print that the borrower is receiving a loan that must be repaid;
(2) the name of the eligible lender, and the address to which communications and payments should be sent;
(3) the principal amount of the loan;
(4) the amount of any charges, such as the origination fee and Federal default fee, and whether those fees will be—
(A) collected by the lender at or prior to the disbursal of the loan;
(B) deducted from the proceeds of the loan;
(C) paid separately by the borrower; or
(D) paid by the lender;
(5) the stated interest rate on the loan;
(6) for loans made under
(A) that the borrower has the option to pay the interest that accrues on the loan while the borrower is a student at an institution of higher education; and
(B) if the borrower does not pay such interest while attending an institution, when and how often interest on the loan will be capitalized;
(7) for loans made to a parent borrower on behalf of a student under
(A) that the parent has the option to defer payment on the loan while the student is enrolled on at least a half-time basis in an institution of higher education;
(B) if the parent does not pay the interest on the loan while the student is enrolled in an institution, when and how often interest on the loan will be capitalized; and
(C) that the parent may be eligible for a deferment on the loan if the parent is enrolled on at least a half-time basis in an institution of higher education;
(8) the yearly and cumulative maximum amounts that may be borrowed;
(9) a statement of the total cumulative balance, including the loan being disbursed, owed by the borrower to that lender, and an estimate of the projected monthly payment, given such cumulative balance;
(10) an explanation of when repayment of the loan will be required and when the borrower will be obligated to pay interest that accrues on the loan;
(11) a description of the types of repayment plans that are available for the loan;
(12) a statement as to the minimum and maximum repayment terms which the lender may impose, and the minimum annual payment required by law;
(13) an explanation of any special options the borrower may have for loan consolidation or other refinancing of the loan;
(14) a statement that the borrower has the right to prepay all or part of the loan, at any time, without penalty;
(15) a statement summarizing circumstances in which repayment of the loan or interest that accrues on the loan may be deferred;
(16) a statement summarizing the circumstances in which a borrower may obtain forbearance on the loan;
(17) a description of the options available for forgiveness of the loan, and the requirements to obtain loan forgiveness;
(18) a definition of default and the consequences to the borrower if the borrower defaults, including a statement that the default will be reported to a consumer reporting agency; and
(19) an explanation of any cost the borrower may incur during repayment or in the collection of the loan, including fees that the borrower may be charged, such as late payment fees and collection costs.
(b) Required disclosure before repayment
Each eligible lender shall, at or prior to the start of the repayment period on a loan made, insured, or guaranteed under
(1) the name of the eligible lender or loan servicer, and the address to which communications and payments should be sent;
(2) the scheduled date upon which the repayment period is to begin or the deferment period under
(3) the estimated balance owed by the borrower on the loan or loans covered by the disclosure (including, if applicable, the estimated amount of interest to be capitalized) as of the scheduled date on which the repayment period is to begin or the deferment period under 1078–2(d)(1) of this title is to end, as applicable;
(4) the stated interest rate on the loan or loans, or the combined interest rate of loans with different stated interest rates;
(5) information on loan repayment benefits offered for the loan or loans, including—
(A) whether the lender offers any benefits that are contingent on the repayment behavior of the borrower, such as—
(i) a reduction in interest rate if the borrower repays the loan by automatic payroll or checking account deduction;
(ii) a reduction in interest rate if the borrower makes a specified number of on-time payments; and
(iii) other loan repayment benefits for which the borrower could be eligible that would reduce the amount of repayment or the length of the repayment period;
(B) if the lender provides a loan repayment benefit—
(i) any limitations on such benefit;
(ii) explicit information on the reasons a borrower may lose eligibility for such benefit;
(iii) for a loan repayment benefit that reduces the borrower's interest rate—
(I) examples of the impact the interest rate reduction would have on the length of the borrower's repayment period and the amount of repayment; and
(II) upon the request of the borrower, the effect the reduction in interest rate would have with respect to the borrower's payoff amount and time for repayment; and
(iv) whether and how the borrower can regain eligibility for a benefit if a borrower loses a benefit;
(6) a description of all the repayment plans that are available to the borrower and a statement that the borrower may change from one plan to another during the period of repayment;
(7) the repayment schedule for all loans covered by the disclosure, including—
(A) the date the first installment is due; and
(B) the number, amount, and frequency of required payments, which shall be based on a standard repayment plan or, in the case of a borrower who has selected another repayment plan, on the repayment plan selected by the borrower;
(8) an explanation of any special options the borrower may have for loan consolidation or other refinancing of the loan and of the availability and terms of such other options;
(9) except as provided in subsection (d)—
(A) the projected total of interest charges which the borrower will pay on the loan or loans, assuming that the borrower makes payments exactly in accordance with the repayment schedule; and
(B) if the borrower has already paid interest on the loan or loans, the amount of interest paid;
(10) the nature of any fees which may accrue or be charged to the borrower during the repayment period;
(11) a statement that the borrower has the right to prepay all or part of the loan or loans covered by the disclosure at any time without penalty;
(12) a description of the options by which the borrower may avoid or be removed from default, including any relevant fees associated with such options; and
(13) additional resources, including nonprofit organizations, advocates, and counselors (including the Student Loan Ombudsman of the Department) of which the lender is aware, where borrowers may receive advice and assistance on loan repayment.
(c) Separate notification
Each eligible lender shall, at the time such lender notifies a borrower of approval of a loan which is insured or guaranteed under this part, provide the borrower with a separate notification which summarizes, in simple and understandable terms, the rights and responsibilities of the borrower with respect to the loan, including a statement of the consequences of defaulting on the loan and a statement that each borrower who defaults will be reported to a consumer reporting agency. The requirement of this subsection shall be in addition to the information required by subsection (a) of this section.
(d) Special disclosure rules on PLUS loans, and unsubsidized loans
Loans made under
(1) capitalizing the interest; and
(2) paying the interest as the interest accrues.
(e) Required disclosures during repayment
(1) Pertinent information about a loan provided on a periodic basis
Each eligible lender shall provide the borrower of a loan made, insured, or guaranteed under this part with a bill or statement (as applicable) that corresponds to each payment installment time period in which a payment is due and that includes, in simple and understandable terms—
(A) the original principal amount of the borrower's loan;
(B) the borrower's current balance, as of the time of the bill or statement, as applicable;
(C) the interest rate on such loan;
(D) the total amount the borrower has paid in interest on the loan;
(E) the aggregate amount the borrower has paid for the loan, including the amount the borrower has paid in interest, the amount the borrower has paid in fees, and the amount the borrower has paid against the balance;
(F) a description of each fee the borrower has been charged for the most recently preceding installment time period;
(G) the date by which the borrower needs to make a payment in order to avoid additional fees and the amount of such payment and the amount of such fees;
(H) the lender's or loan servicer's address and toll-free phone number for payment and billing error purposes; and
(I) a reminder that the borrower has the option to change repayment plans, a list of the names of the repayment plans available to the borrower, a link to the appropriate page of the Department's website to obtain a more detailed description of the repayment plans, and directions for the borrower to request a change in repayment plan.
(2) Information provided to a borrower having difficulty making payments
Each eligible lender shall provide to a borrower who has notified the lender that the borrower is having difficulty making payments on a loan made, insured, or guaranteed under this part with the following information in simple and understandable terms:
(A) A description of the repayment plans available to the borrower, including how the borrower should request a change in repayment plan.
(B) A description of the requirements for obtaining forbearance on a loan, including expected costs associated with forbearance.
(C) A description of the options available to the borrower to avoid defaulting on the loan, and any relevant fees or costs associated with such options.
(3) Required disclosures during delinquency
Each eligible lender shall provide to a borrower who is 60 days delinquent in making payments on a loan made, insured, or guaranteed under this part with a notice, in simple and understandable terms, of the following:
(A) The date on which the loan will default if no payment is made.
(B) The minimum payment the borrower must make to avoid default.
(C) A description of the options available to the borrower to avoid default, and any relevant fees or costs associated with such options, including a description of deferment and forbearance and the requirements to obtain each.
(D) Discharge options to which the borrower may be entitled.
(E) Additional resources, including nonprofit organizations, advocates, and counselors (including the Student Loan Ombudsman of the Department), of which the lender is aware, where the borrower can receive advice and assistance on loan repayment.
(f) Cost of disclosure and consequences of nondisclosure
(1) No cost to borrowers
The information required under this section shall be available without cost to the borrower.
(2) Consequences of nondisclosure
The failure of an eligible lender to provide information as required by this section shall not—
(A) relieve a borrower of the obligation to repay a loan in accordance with the loan's terms; or
(B) provide a basis for a claim for civil damages.
(3) Rule of construction
Nothing in this section shall be construed as subjecting the lender to the Truth in Lending Act [
(4) Actions by the Secretary
The Secretary may limit, suspend, or terminate the continued participation of an eligible lender in making loans under this part for failure by that lender to comply with this section.
(
Editorial Notes
References in Text
The Truth in Lending Act, referred to in subsec. (f)(3), is title I of
Prior Provisions
A prior section 1083,
Amendments
2008—
1998—Subsec. (a).
Subsec. (b).
1993—Subsec. (b).
Subsec. (e).
1992—Subsec. (a).
Subsec. (b).
Subsec. (b)(8).
Subsec. (e).
1987—Subsec. (a).
Subsec. (a)(8).
Subsec. (b)(7).
Subsec. (d).
Statutory Notes and Related Subsidiaries
Effective Date of 2008 Amendment
"(1)
"(2)
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by section 2(c)(53) of
Effective Date of 1987 Amendment
Amendment by
Effective Date
Section effective Oct. 17, 1986, with subsecs. (a), (b), and (d) of this section applicable only with respect to loans disbursed on or after Jan. 1, 1987, or made to cover the costs of instruction for periods of enrollment beginning on or after Jan. 1, 1987, see section 402(b) of
§1083a. Consumer education information
(a) In general
Each guaranty agency participating in a program under this part, working with the institutions of higher education served by such guaranty agency, shall develop and make available high-quality educational programs and materials to provide training for students and families in budgeting and financial management, including debt management and other aspects of financial literacy, such as the cost of using high interest loans to pay for postsecondary education, particularly as budgeting and financial management relates to student loan programs authorized by this subchapter. Such programs and materials shall be in formats that are simple and understandable to students and families, and shall be provided before, during, and after the students' enrollment in an institution of higher education. The activities described in this section shall be considered default reduction activities for the purposes of
(b) Rule of construction
Nothing in this section shall be construed to prohibit—
(1) a guaranty agency from using existing activities, programs, and materials in meeting the requirements of this section;
(2) a guaranty agency from providing programs or materials similar to the programs or materials described in subsection (a) to an institution of higher education that provides loans exclusively through part D; or
(3) a lender or loan servicer from providing outreach or financial aid literacy information in accordance with subsection (a).
(
Editorial Notes
Prior Provisions
A prior section 1083a,
§1084. Participation by Federal credit unions in Federal, State, and private student loan insurance programs
Notwithstanding any other provision of law, Federal credit unions shall, pursuant to regulations of the National Credit Union Administration, have power to make insured loans to student members in accordance with the provisions of this part relating to federally insured loans, or in accordance with the provisions of any State or nonprofit private student loan insurance program which meets the requirements of
(
Editorial Notes
Prior Provisions
A prior section 1084,
§1085. Definitions for student loan insurance program
As used in this part:
(a) Eligible institution
(1) In general
Except as provided in paragraph (2), the term "eligible institution" means an institution of higher education, as defined in
(2) Ineligibility based on high default rates
(A) An institution whose cohort default rate is equal to or greater than the threshold percentage specified in subparagraph (B) for each of the three most recent fiscal years for which data are available shall not be eligible to participate in a program under this part for the fiscal year for which the determination is made and for the two succeeding fiscal years, unless, within 30 days of receiving notification from the Secretary of the loss of eligibility under this paragraph, the institution appeals the loss of its eligibility to the Secretary. The Secretary shall issue a decision on any such appeal within 45 days after its submission. Such decision may permit the institution to continue to participate in a program under this part if—
(i) the institution demonstrates to the satisfaction of the Secretary that the Secretary's calculation of its cohort default rate is not accurate, and that recalculation would reduce its cohort default rate for any of the three fiscal years below the threshold percentage specified in subparagraph (B);
(ii) there are exceptional mitigating circumstances within the meaning of paragraph (5); or
(iii) there are, in the judgment of the Secretary, other exceptional mitigating circumstances that would make the application of this paragraph inequitable.
During such appeal, the Secretary may permit the institution to continue to participate in a program under this part. If an institution continues to participate in a program under this part, and the institution's appeal of the loss of eligibility is unsuccessful, the institution shall be required to pay to the Secretary an amount equal to the amount of interest, special allowance, reinsurance, and any related payments made by the Secretary (or which the Secretary is obligated to make) with respect to loans made under this part to students attending, or planning to attend, that institution during the pendency of such appeal.
(B) For purposes of determinations under subparagraph (A), the threshold percentage is—
(i) 35 percent for fiscal year 1991 and 1992;
(ii) 30 percent for fiscal year 1993;
(iii) 25 percent for fiscal year 1994 through fiscal year 2011; and
(iv) 30 percent for fiscal year 2012 and any succeeding fiscal year.
(C) Until July 1, 1999, this paragraph shall not apply to any institution that is—
(i) a part B institution within the meaning of
(ii) a tribally controlled college or university, as defined in
(iii) a Navajo Community College under the Navajo Community College Act.
(D) Notwithstanding the first sentence of subparagraph (A), the Secretary shall restore the eligibility to participate in a program under subpart 1 of part A, part B, or part E of an institution that did not appeal its loss of eligibility within 30 days of receiving notification if the Secretary determines, on a case-by-case basis, that the institution's failure to appeal was substantially justified under the circumstances, and that—
(i) the institution made a timely request that the appropriate guaranty agency correct errors in the draft data used to calculate the institution's cohort default rate;
(ii) the guaranty agency did not correct the erroneous data in a timely fashion; and
(iii) the institution would have been eligible if the erroneous data had been corrected by the guaranty agency.
(3) Appeals for regulatory relief
An institution whose cohort default rate, calculated in accordance with subsection (m), is equal to or greater than the threshold percentage specified in paragraph (2)(B)(iv) for any two consecutive fiscal years may, not later than 30 days after the date the institution receives notification from the Secretary, file an appeal demonstrating exceptional mitigating circumstances, as defined in paragraph (5). The Secretary shall issue a decision on any such appeal not later than 45 days after the date of submission of the appeal. If the Secretary determines that the institution demonstrates exceptional mitigating circumstances, the Secretary may not subject the institution to provisional certification based solely on the institution's cohort default rate.
(4) Appeals based upon allegations of improper loan servicing
An institution that—
(A) is subject to loss of eligibility for the Federal Family Education Loan Program pursuant to paragraph (2)(A) of this subsection;
(B) is subject to loss of eligibility for the Federal Supplemental Loans for Students pursuant to section 1078–1(a)(2) 1 of this title; or
(C) is an institution whose cohort default rate equals or exceeds 20 percent for the most recent year for which data are available;
may include in its appeal of such loss or rate a defense based on improper loan servicing (in addition to other defenses). In any such appeal, the Secretary shall take whatever steps are necessary to ensure that such institution has access for a reasonable period of time, not to exceed 30 days, to a representative sample (as determined by the Secretary) of the relevant loan servicing and collection records used by a guaranty agency in determining whether to pay a claim on a defaulted loan or by the Department in determining an institution's default rate in the loan program under part D of this subchapter. The Secretary shall reduce the institution's cohort default rate to reflect the percentage of defaulted loans in the representative sample that are required to be excluded pursuant to subsection (m)(1)(B).
(5) Definition of mitigating circumstances
(A) For purposes of this subsection, an institution of higher education shall be treated as having exceptional mitigating circumstances that make application of paragraph (2) inequitable, and that provide for regulatory relief under paragraph (3), if such institution, in the opinion of an independent auditor, meets the following criteria:
(i) For a 12-month period that ended during the 6 months immediately preceding the fiscal year for which the cohort of borrowers used to calculate the institution's cohort default rate is determined, at least two-thirds of the students enrolled on at least a half-time basis at the institution—
(I) are eligible to receive a Federal Pell Grant award that is at least equal to one-half the Federal Pell Grant amount, determined under
(II) have an adjusted gross income that when added with the adjusted gross income of the student's parents (unless the student is an independent student), of less than the poverty level, as determined by the Department of Health and Human Services.
(ii) In the case of an institution of higher education that offers an associate, baccalaureate, graduate or professional degree, 70 percent or more of the institution's regular students who were initially enrolled on a full-time basis and were scheduled to complete their programs during the same 12-month period described in clause (i)—
(I) completed the educational programs in which the students were enrolled;
(II) transferred from the institution to a higher level educational program;
(III) at the end of the 12-month period, remained enrolled and making satisfactory progress toward completion of the student's educational programs; or
(IV) entered active duty in the Armed Forces of the United States.
(iii)(I) In the case of an institution of higher education that does not award a degree described in clause (ii), had a placement rate of 44 percent or more with respect to the institution's former regular students who—
(aa) remained in the program beyond the point the students would have received a 100 percent tuition refund from the institution;
(bb) were initially enrolled on at least a half-time basis; and
(cc) were originally scheduled, at the time of enrollment, to complete their educational programs during the same 12-month period described in clause (i).
(II) The placement rate shall not include students who are still enrolled and making satisfactory progress in the educational programs in which the students were originally enrolled on the date following 12 months after the date of the student's last date of attendance at the institution.
(III) The placement rate is calculated by determining the percentage of all those former regular students who—
(aa) are employed, in an occupation for which the institution provided training, on the date following 12 months after the date of their last day of attendance at the institution;
(bb) were employed, in an occupation for which the institution provided training, for at least 13 weeks before the date following 12 months after the date of their last day of attendance at the institution; or
(cc) entered active duty in the Armed Forces of the United States.
(IV) The placement rate shall not include as placements a student or former student for whom the institution is the employer.
(B) For purposes of determining a rate of completion and a placement rate under this paragraph, a student is originally scheduled, at the time of enrollment, to complete the educational program on the date when the student will have been enrolled in the program for the amount of time normally required to complete the program. The amount of time normally required to complete the program for a student who is initially enrolled full-time is the period of time specified in the institution's enrollment contract, catalog, or other materials, for completion of the program by a full-time student. For a student who is initially enrolled less than full-time, the period is the amount of time it would take the student to complete the program if the student remained enrolled at that level of enrollment throughout the program.
(6) Reduction of default rates at certain minority institutions
(A) Beneficiaries of exception required to establish management plan
After July 1, 1999, any institution that has a cohort default rate that equals or exceeds 25 percent for each of the three most recent fiscal years for which data are available and that relies on the exception in subparagraph (B) to continue to be an eligible institution shall—
(i) submit to the Secretary a default management plan which the Secretary, in the Secretary's discretion, after consideration of the institution's history, resources, dollars in default, and targets for default reduction, determines is acceptable and provides reasonable assurance that the institution will, by July 1, 2004, have a cohort default rate that is less than 25 percent;
(ii) engage an independent third party (which may be paid with funds received under
(iii) provide to the Secretary, on an annual basis or at such other intervals as the Secretary may require, evidence of cohort default rate improvement and successful implementation of such default management plan.
(B) Discretionary eligibility conditioned on improvement
Notwithstanding the expiration of the exception in paragraph (2)(C), the Secretary may, in the Secretary's discretion, continue to treat an institution described in subparagraph (A) of this paragraph as an eligible institution for each of the 1-year periods beginning on July 1 of 1999 through 2003, only if the institution submits by the beginning of such period evidence satisfactory to the Secretary that—
(i) such institution has complied and is continuing to comply with the requirements of subparagraph (A); and
(ii) such institution has made substantial improvement, during each of the preceding 1-year periods, in the institution's cohort default rate.
(7) Default prevention and assessment of eligibility based on high default rates
(A) First year
(i) In general
An institution whose cohort default rate is equal to or greater than the threshold percentage specified in paragraph (2)(B)(iv) in any fiscal year shall establish a default prevention task force to prepare a plan to—
(I) identify the factors causing the institution's cohort default rate to exceed such threshold;
(II) establish measurable objectives and the steps to be taken to improve the institution's cohort default rate; and
(III) specify actions that the institution can take to improve student loan repayment, including appropriate counseling regarding loan repayment options.
(ii) Technical assistance
Each institution subject to this subparagraph shall submit the plan under clause (i) to the Secretary, who shall review the plan and offer technical assistance to the institution to promote improved student loan repayment.
(B) Second consecutive year
(i) In general
An institution whose cohort default rate is equal to or greater than the threshold percentage specified in paragraph (2)(B)(iv) for two consecutive fiscal years, shall require the institution's default prevention task force established under subparagraph (A) to review and revise the plan required under such subparagraph, and shall submit such revised plan to the Secretary.
(ii) Review by the Secretary
The Secretary shall review each revised plan submitted in accordance with this subparagraph, and may direct that such plan be amended to include actions, with measurable objectives, that the Secretary determines, based on available data and analyses of student loan defaults, will promote student loan repayment.
(8) Participation rate index
(A) In general
An institution that demonstrates to the Secretary that the institution's participation rate index is equal to or less than 0.0625 for any of the 3 most recent fiscal years for which data is available shall not be subject to paragraph (2). The participation rate index shall be determined by multiplying the institution's cohort default rate for loans under this part or part D, or weighted average cohort default rate for loans under this part and part D, by the percentage of the institution's regular students, enrolled on at least a half-time basis, who received a loan made under this part or part D for a 12-month period ending during the 6 months immediately preceding the fiscal year for which the cohort of borrowers used to calculate the institution's cohort default rate is determined.
(B) Data
An institution shall provide the Secretary with sufficient data to determine the institution's participation rate index within 30 days after receiving an initial notification of the institution's draft cohort default rate.
(C) Notification
Prior to publication of a final cohort default rate for an institution that provides the data described in subparagraph (B), the Secretary shall notify the institution of the institution's compliance or noncompliance with subparagraph (A).
(b), (c) Repealed. Pub. L. 102–325, title IV, §427(b)(1), (c), July 23, 1992, 106 Stat. 549
(d) Eligible lender
(1) In general
Except as provided in paragraphs (2) through (6), the term "eligible lender" means—
(A) a National or State chartered bank, a mutual savings bank, a savings and loan association, a stock savings bank, or a credit union which—
(i) is subject to examination and supervision by an agency of the United States or of the State in which its principal place of operation is established, and
(ii) does not have as its primary consumer credit function the making or holding of loans made to students under this part unless (I) it is a bank which is wholly owned by a State, or a bank which is subject to examination and supervision by an agency of the United States, makes student loans as a trustee pursuant to an express trust, operated as a lender under this part prior to January 1, 1975, and which meets the requirements of this provision prior to July 23, 1992, (II) it is a single wholly owned subsidiary of a bank holding company which does not have as its primary consumer credit function the making or holding of loans made to students under this part, (III) it is a bank (as defined in
(B) a pension fund as defined in the Employee Retirement Income Security Act [
(C) an insurance company which is subject to examination and supervision by an agency of the United States or a State;
(D) in any State, a single agency of the State or a single nonprofit private agency designated by the State;
(E) an eligible institution which meets the requirements of paragraphs (2) through (5) of this subsection;
(F) for purposes only of purchasing and holding loans made by other lenders under this part, the Student Loan Marketing Association or the Holding Company of the Student Loan Marketing Association, including any subsidiary of the Holding Company, created pursuant to
(G) for purposes of making loans under
(H) for purposes of making loans under sections 1078(h) 1 and 1078(j) of this title, a guaranty agency;
(I) a Rural Rehabilitation Corporation, or its successor agency, which has received Federal funds under Public Law 499, Eighty-first Congress (
(J) for purpose of making loans under
(K) a consumer finance company subsidiary of a national bank which, as of October 7, 1998, through one or more subsidiaries: (i) acts as a small business lending company, as determined under regulations of the Small Business Administration under section 120.470 of title 13, Code of Federal Regulations (as such section is in effect on October 7, 1998); and (ii) participates in the program authorized by this part pursuant to subparagraph (C), provided the national bank and all of the bank's direct and indirect subsidiaries taken together as a whole, do not have, as their primary consumer credit function, the making or holding of loans made to students under this part.
(2) Requirements for eligible institutions
(A) In general
To be an eligible lender under this part, an eligible institution—
(i) shall employ at least one person whose full-time responsibilities are limited to the administration of programs of financial aid for students attending such institution;
(ii) shall not be a home study school;
(iii) shall not—
(I) make a loan to any undergraduate student;
(II) make a loan other than a loan under
(III) make a loan to a borrower who is not enrolled at that institution;
(iv) shall award any contract for financing, servicing, or administration of loans under this subchapter on a competitive basis;
(v) shall offer loans that carry an origination fee or an interest rate, or both, that are less than such fee or rate authorized under the provisions of this subchapter;
(vi) shall not have a cohort default rate (as defined in subsection (m)) greater than 10 percent;
(vii) shall, for any year for which the institution engages in activities as an eligible lender, provide for a compliance audit conducted in accordance with
(viii) shall use any proceeds from special allowance payments and interest payments from borrowers, interest subsidies received from the Department of Education, and any proceeds from the sale or other disposition of loans, for need-based grant programs; and
(ix) shall have met the requirements of subparagraphs (A) through (F) of this paragraph as in effect on the day before February 8, 2006, and made loans under this part, on or before April 1, 2006.
(B) Administrative expenses
An eligible lender under subparagraph (A) shall be permitted to use a portion of the proceeds described in subparagraph (A)(viii) for reasonable and direct administrative expenses.
(C) Supplement, not supplant
An eligible lender under subparagraph (A) shall ensure that the proceeds described in subparagraph (A)(viii) are used to supplement, and not to supplant, non-Federal funds that would otherwise be used for need-based grant programs.
(3) Disqualification for high default rates
The term "eligible lender" does not include any eligible institution in any fiscal year immediately after the fiscal year in which the Secretary determines, after notice and opportunity for a hearing, that for each of 2 consecutive years, 15 percent or more of the total amount of such loans as are described in
(4) Waiver of disqualification
Whenever the Secretary determines that—
(A) there is reasonable possibility that an eligible institution may, within 1 year after a determination is made under paragraph (3), improve the collection of loans described in
(B) the termination of the lender's status under paragraph (3) would be a hardship to the present or for prospective students of the eligible institution, after considering the management of that institution, the ability of that institution to improve the collection of loans, the opportunities that institution offers to economically disadvantaged students, and other related factors,
the Secretary shall waive the provisions of paragraph (3) with respect to that institution. Any determination required under this paragraph shall be made by the Secretary prior to the termination of an eligible institution as a lender under the exception of paragraph (3). Whenever the Secretary grants a waiver pursuant to this paragraph, the Secretary shall provide technical assistance to the institution concerned in order to improve the collection rate of such loans.
(5) Disqualification for use of certain incentives
The term "eligible lender" does not include any lender that the Secretary determines, after notice and opportunity for a hearing, has—
(A) offered, directly or indirectly, points, premiums, payments (including payments for referrals and for processing or finder fees), prizes, stock or other securities, travel, entertainment expenses, tuition payment or reimbursement, the provision of information technology equipment at below-market value, additional financial aid funds, or other inducements, to any institution of higher education, any employee of an institution of higher education, or any individual or entity in order to secure applicants for loans under this part;
(B) conducted unsolicited mailings, by postal or electronic means, of student loan application forms to students enrolled in secondary schools or postsecondary institutions, or to family members of such students, except that applications may be mailed, by postal or electronic means, to students or borrowers who have previously received loans under this part from such lender;
(C) entered into any type of consulting arrangement, or other contract to provide services to a lender, with an employee who is employed in the financial aid office of an institution of higher education, or who otherwise has responsibilities with respect to student loans or other financial aid of the institution;
(D) compensated an employee who is employed in the financial aid office of an institution of higher education, or who otherwise has responsibilities with respect to student loans or other financial aid of the institution, and who is serving on an advisory board, commission, or group established by a lender or group of lenders for providing such service, except that the eligible lender may reimburse such employee for reasonable expenses incurred in providing such service;
(E) performed for an institution of higher education any function that such institution of higher education is required to perform under this title, except that a lender shall be permitted to perform functions on behalf of such institution in accordance with
(F) paid, on behalf of an institution of higher education, another person to perform any function that such institution of higher education is required to perform under this subchapter, except that a lender shall be permitted to perform functions on behalf of such institution in accordance with
(G) provided payments or other benefits to a student at an institution of higher education to act as the lender's representative to secure applications under this subchapter from individual prospective borrowers, unless such student—
(i) is also employed by the lender for other purposes; and
(ii) made all appropriate disclosures regarding such employment;
(H) offered, directly or indirectly, loans under this part as an inducement to a prospective borrower to purchase a policy of insurance or other product; or
(I) engaged in fraudulent or misleading advertising.
It shall not be a violation of this paragraph for a lender to provide technical assistance to institutions of higher education comparable to the kinds of technical assistance provided to institutions of higher education by the Department.
(6) Rebate fee requirement
To be an eligible lender under this part, an eligible lender shall pay rebate fees in accordance with
(7) Eligible lender trustees
Notwithstanding any other provision of this subsection, an eligible lender may not make or hold a loan under this part as trustee for an institution of higher education, or for an organization affiliated with an institution of higher education, unless—
(A) the eligible lender is serving as trustee for that institution or organization as of September 30, 2006, under a contract that was originally entered into before September 30, 2006, and that continues in effect or is renewed after September 30, 2006; and
(B) the institution or organization, and the eligible lender, with respect to its duties as trustee, each comply on and after January 1, 2007, with the requirements of paragraph (2), except that—
(i) the requirements of clauses (i), (ii), (vi), and (viii) of paragraph (2)(A) shall, subject to clause (ii) of this subparagraph, only apply to the institution (including both an institution for which the lender serves as trustee and an institution affiliated with an organization for which the lender serves as trustee);
(ii) in the case of an organization affiliated with an institution—
(I) the requirements of clauses (iii) and (v) of paragraph (2)(A) shall apply to the organization; and
(II) the requirements of clause (viii) of paragraph (2)(A) shall apply to the institution or the organization (or both), if the institution or organization receives (directly or indirectly) the proceeds described in such clause;
(iii) the requirements of clauses (iv) and (ix) of paragraph (2)(A) shall not apply to the eligible lender, institution, or organization; and
(iv) the eligible lender, institution, and organization shall ensure that the loans made or held by the eligible lender as trustee for the institution or organization, as the case may be, are included in a compliance audit in accordance with clause (vii) of paragraph (2)(A).
(8) School as lender program audit
Each institution serving as an eligible lender under paragraph (1)(E), and each eligible lender serving as a trustee for an institution of higher education or an organization affiliated with an institution of higher education, shall annually complete and submit to the Secretary a compliance audit to determine whether—
(A) the institution or lender is using all proceeds from special allowance payments and interest payments from borrowers, interest subsidies received from the Department, and any proceeds from the sale or other disposition of loans, for need-based grant programs, in accordance with paragraph (2)(A)(viii);
(B) the institution or lender is using not more than a reasonable portion of the proceeds described in paragraph (2)(A)(viii) for direct administrative expenses; and
(C) the institution or lender is ensuring that the proceeds described in paragraph (2)(A)(viii) are being used to supplement, and not to supplant, Federal and non-Federal funds that would otherwise be used for need-based grant programs.
(e) Line of credit
The term "line of credit" means an arrangement or agreement between the lender and the borrower whereby a loan is paid out by the lender to the borrower in annual installments, or whereby the lender agrees to make, in addition to the initial loan, additional loans in subsequent years.
(f) Due diligence
The term "due diligence" requires the utilization by a lender, in the servicing and collection of loans insured under this part, of servicing and collection practices at least as extensive and forceful as those generally practiced by financial institutions for the collection of consumer loans.
(g), (h) Repealed. Pub. L. 102–325, title IV, §427(f), July 23, 1992, 106 Stat. 550
(i) Holder
The term "holder" means an eligible lender who owns a loan.
(j) Guaranty agency
The term "guaranty agency" means any State or nonprofit private institution or organization with which the Secretary has an agreement under
(k) Insurance beneficiary
The term "insurance beneficiary" means the insured or its authorized representative assigned in accordance with
(l) Default
Except as provided in subsection (m), the term "default" includes only such defaults as have existed for (1) 270 days in the case of a loan which is repayable in monthly installments, or (2) 330 days in the case of a loan which is repayable in less frequent installments.
(m) Cohort default rate
(1) In general
(A) Except as provided in paragraph (2), the term "cohort default rate" means, for any fiscal year in which 30 or more current and former students at the institution enter repayment on loans under section 1078, 1078–1,1 or 1078–8 of this title received for attendance at the institution, the percentage of those current and former students who enter repayment on such loans (or on the portion of a loan made under
(B) In determining the number of students who default before the end of such second fiscal year, the Secretary shall include only loans for which the Secretary or a guaranty agency has paid claims for insurance. In considering appeals with respect to cohort default rates pursuant to subsection (a)(3), the Secretary shall exclude, from the calculation of the number of students who entered repayment and from the calculation of the number of students who default, any loans which, due to improper servicing or collection, would, as demonstrated by the evidence submitted in support of the institution's timely appeal to the Secretary, result in an inaccurate or incomplete calculation of such cohort default rate.
(C) For any fiscal year in which fewer than 30 of the institution's current and former students enter repayment, the term "cohort default rate" means the percentage of such current and former students who entered repayment on such loans (or on the portion of a loan made under
(2) Special rules
(A) In the case of a student who has attended and borrowed at more than one school, the student (and such student's subsequent repayment or default) is attributed to each school for attendance at which the student received a loan that entered repayment in the fiscal year.
(B) A loan on which a payment is made by the school, such school's owner, agent, contractor, employee, or any other entity or individual affiliated with such school, in order to avoid default by the borrower, is considered as in default for purposes of this subsection.
(C) Any loan which has been rehabilitated before the end of the second fiscal year following the year in which the loan entered repayment is not considered as in default for purposes of this subsection. The Secretary may require guaranty agencies to collect data with respect to defaulted loans in a manner that will permit the identification of any defaulted loan for which (i) the borrower is currently making payments and has made not less than 6 consecutive on-time payments by the end of such second fiscal year, and (ii) a guaranty agency has renewed the borrower's subchapter IV eligibility as provided in
(D) For the purposes of this subsection, a loan made in accordance with section 1078–1 1 of this title (or the portion of a loan made under
(3) Regulations to prevent evasions
The Secretary shall prescribe regulations designed to prevent an institution from evading the application to that institution of a default rate determination under this subsection through the use of such measures as branching, consolidation, change of ownership or control, or any similar device.
(4) Collection and reporting of cohort default rates and life of cohort default rates
(A) The Secretary shall publish not less often than once every fiscal year a report showing cohort default data and life of cohort default rates for each category of institution, including: (i) four-year public institutions; (ii) four-year private nonprofit institutions; (iii) two-year public institutions; (iv) two-year private nonprofit institutions; (v) four-year proprietary institutions; (vi) two-year proprietary institutions; and (vii) less than two-year proprietary institutions. For purposes of this subparagraph, for any fiscal year in which one or more current and former students at an institution enter repayment on loans under
(B) The Secretary may designate such additional subcategories within the categories specified in subparagraph (A) as the Secretary deems appropriate.
(C) The Secretary shall publish not less often than once every fiscal year a report showing default data for each institution for which a cohort default rate is calculated under this subsection.
(D) The Secretary shall publish the report described in subparagraph (C) by September 30 of each year.
(n) Repealed. Pub. L. 102–325, title IV, §427(f), July 23, 1992, 106 Stat. 550
(o) Economic hardship
(1) In general
For purposes of this part and part E, a borrower shall be considered to have an economic hardship if—
(A) such borrower is working full-time and is earning an amount which does not exceed the greater of—
(i) the minimum wage rate described in
(ii) an amount equal to 150 percent of the poverty line applicable to the borrower's family size as determined in accordance with
(B) such borrower meets such other criteria as are established by the Secretary by regulation in accordance with paragraph (2).
(2) Considerations
In establishing criteria for purposes of paragraph (1)(B), the Secretary shall consider the borrower's income and debt-to-income ratio as primary factors.
(p) Eligible not-for-profit holder
(1) Definition
Subject to the limitations in paragraph (2) and the prohibition in paragraph (3), the term "eligible not-for-profit holder" means an eligible lender under subsection (d) (except for an eligible lender described in subsection (d)(1)(E)) that requests a special allowance payment under
(A) a State, or a political subdivision, authority, agency, or other instrumentality thereof, including such entities that are eligible to issue bonds described in section 1.103–1 of title 26, Code of Federal Regulations, or
(B) an entity described in section 150(d)(2) of such title that has not made the election described in section 150(d)(3) of such title;
(C) an entity described in section 501(c)(3) of such title; or
(D) acting as a trustee on behalf of a State, political subdivision, authority, agency, instrumentality, or other entity described in subparagraph (A), (B), or (C), regardless of whether such State, political subdivision, authority, agency, instrumentality, or other entity is an eligible lender under subsection (d).
(2) Limitations
(A) Existing on September 27, 2007
(i) In general
An eligible lender shall not be an eligible not-for-profit holder under this chapter unless such lender—
(I) was a State, political subdivision, authority, agency, instrumentality, or other entity described in paragraph (1)(A), (B), or (C) that was, on September 27, 2007, acting as an eligible lender under subsection (d) (other than an eligible lender described in subsection (d)(1)(E)); or
(II) is acting as a trustee on behalf of a State, political subdivision, authority, agency, instrumentality, or other entity described in subparagraph (A), (B), or (C) of paragraph (1), regardless of whether such State, political subdivision, authority, agency, instrumentality, or other entity is an eligible lender under subsection (d), and such State, political subdivision, authority, agency, instrumentality, or other entity, on September 27, 2007, was the sole beneficial owner of a loan eligible for any special allowance payment under
(ii) Exception
Notwithstanding clause (i), a State may elect, in accordance with regulations of the Secretary, to waive the requirements of this subparagraph for a new not-for-profit holder determined by the State to be necessary to carry out a public purpose of such State, except that a State may not make such election with respect the 2 requirements of clause (i)(II).
(B) No for-profit ownership or control
(i) In general
No State, political subdivision, authority, agency, instrumentality, or other entity described in paragraph (1)(A), (B), or (C) shall be an eligible not-for-profit holder under this chapter if such State, political subdivision, authority, agency, instrumentality, or other entity is owned or controlled, in whole or in part, by a for-profit entity.
(ii) Trustees
A trustee described in paragraph (1)(D) shall not be an eligible not-for-profit holder under this chapter with respect to a State, political subdivision, authority, agency, instrumentality, or other entity described in subparagraph (A), (B), or (C) of paragraph (1), regardless of whether such State, political subdivision, authority, agency, instrumentality, or other entity is an eligible lender under subsection (d), if such State, political subdivision, authority, agency, instrumentality, or other entity is owned or controlled, in whole or in part, by a for-profit entity.
(C) Sole ownership of loans and income
No State, political subdivision, authority, agency, instrumentality, trustee, or other entity described in paragraph (1)(A), (B), (C), or (D) shall be an eligible not-for-profit holder under this chapter with respect to any loan, or income from any loan, unless—
(i) such State, political subdivision, authority, agency, instrumentality, or other entity is the sole beneficial owner of such loan and the income from such loan; or
(ii) such trustee holds the loan on behalf of a State, political subdivision, authority, agency, instrumentality, or other entity described in subparagraph (A), (B), or (C) of paragraph (1), regardless of whether such State, political subdivision, authority, agency, instrumentality, or other entity is an eligible lender under subsection (d), and such State, political subdivision, authority, agency, instrumentality, or other entity is the sole beneficial owner of such loan and the income from such loan.
(D) Trustee compensation limitations
A trustee described in paragraph (1)(D) shall not receive compensation as consideration for acting as an eligible lender on behalf of a State, political subdivision, authority, agency, instrumentality, or other entity described in subparagraph (A), (B), or (C) of paragraph (1), regardless of whether such State, political subdivision, authority, agency, instrumentality, or other entity is an eligible lender under subsection (d), in excess of reasonable and customary fees.
(E) Rule of construction
For purposes of subparagraphs (A), (B), (C), and (D) of this paragraph, a State, political subdivision, authority, agency, instrumentality, or other entity described in subparagraph (A), (B), or (C) of paragraph (1), regardless of whether such State, political subdivision, authority, agency, instrumentality, or other entity is an eligible lender under subsection (d), shall not—
(i) be deemed to be owned or controlled, in whole or in part, by a for-profit entity; or
(ii) lose its status as the sole owner of a beneficial interest in a loan and the income from a loan,
by such State, political subdivision, authority, agency, instrumentality, or other entity, or by the trustee described in paragraph (1)(D), granting a security interest in, or otherwise pledging as collateral, such loan, or the income from such loan, to secure a debt obligation for which such State, political subdivision, authority, agency, instrumentality, or other entity is the issuer of the debt obligation.
(3) Prohibition
In the case of a loan for which the special allowance payment is calculated under
(4) Regulations
Not later than 1 year after September 27, 2007, the Secretary shall promulgate regulations in accordance with the provisions of this subsection.
(
Editorial Notes
References in Text
The Navajo Community College Act, referred to in subsec. (a)(2)(C)(iii), is
The Employee Retirement Income Security Act, referred to in subsec. (d)(1)(B), probably means the Employee Retirement Income Security Act of 1974,
Public Law 499, Eighty-first Congress (
Prior Provisions
A prior section 1085,
Amendments
2010—Subsec. (a)(5)(A)(i)(I).
2009—Subsec. (a)(2)(C)(ii).
Subsec. (d)(1).
Subsec. (d)(2)(A)(vi), (3).
Subsec. (d)(5)(A).
Subsec. (d)(5)(E), (F).
Subsec. (o)(1)(A)(ii).
Subsec. (p)(1).
2008—Subsec. (a)(2)(A)(ii).
Subsec. (a)(2)(B)(iii), (iv).
Subsec. (a)(3) to (8).
Subsec. (a)(8)(A).
Subsec. (d)(1)(A)(ii).
Subsec. (d)(1)(G).
Subsec. (d)(5).
Subsec. (d)(8).
Subsec. (m)(1)(A).
Subsec. (m)(1)(B).
Subsec. (m)(1)(C).
Subsec. (m)(2)(C).
Subsec. (m)(4).
Subsec. (m)(4)(A).
2007—Subsec. (o)(1)(A)(ii).
Subsec. (o)(1)(B), (C).
"(i) the annual earnings of an individual earning the minimum wage under
"(ii) the income official poverty line (as defined by the Office of Management and Budget, and revised annually in accordance with
Subsec. (o)(2).
Subsec. (p).
Subsec. (p)(1)(D).
Subsec. (p)(2)(A)(i)(II).
Subsec. (p)(2)(A)(ii).
Subsec. (p)(2)(B).
Subsec. (p)(2)(C).
Subsec. (p)(2)(D).
Subsec. (p)(2)(E).
"(i) be deemed to be owned or controlled, in whole or in part, by a for-profit entity, or
"(ii) lose its status as the sole owner of a beneficial interest in a loan and the income from a loan by that political subdivision, authority, agency, instrumentality, or other entity,
by granting a security interest in, or otherwise pledging as collateral, such loan, or the income from such loan, to secure a debt obligation in the operation of an arrangement described in paragraph (1)(D)."
2006—Subsec. (d)(2).
"(A) shall employ at least one person whose full-time responsibilities are limited to the administration of programs of financial aid for students attending such institution;
"(B) shall not be a home study school;
"(C) shall make loans to not more than 50 percent of the undergraduate students at the institution;
"(D) shall not make a loan, other than a loan to a graduate or professional student, unless the borrower has previously received a loan from the school or has been denied a loan by an eligible lender;
"(E) shall not have a cohort default rate (as defined in subsection (m) of this section) greater than 15 percent; and
"(F) shall use the proceeds from special allowance payments and interest payments from borrowers for need-based grant programs, except for reasonable reimbursement for direct administrative expenses;
except that the requirements of subparagraphs (C) and (D) shall not apply with respect to loans made, and loan commitments made, after October 17, 1986, and prior to July 1, 1987."
Subsec. (d)(7).
2000—Subsec. (a)(2)(D).
Subsec. (a)(5)(A)(i).
Subsec. (a)(5)(B).
1998—Subsec. (a)(1).
Subsec. (a)(2)(A).
Subsec. (a)(2)(C).
Subsec. (a)(2)(C)(ii).
Subsec. (a)(3).
Subsec. (a)(4) to (6).
Subsec. (d)(1)(A)(ii)(III).
Subsec. (d)(1)(K).
Subsec. (d)(5).
Subsec. (l).
Subsec. (m)(1)(B).
Subsec. (m)(2)(C).
Subsec. (m)(4)(D).
1996—Subsec. (d)(1)(F).
Subsec. (d)(1)(G).
1994—Subsec. (a)(2)(C).
Subsec. (o)(1).
Subsec. (o)(2).
1993—Subsec. (a)(3).
Subsec. (d)(1).
Subsec. (d)(2).
Subsec. (d)(2)(D).
Subsec. (d)(3).
Subsec. (d)(6).
Subsec. (m)(1).
Subsec. (m)(1)(A).
Subsec. (m)(1)(B).
Subsec. (m)(1)(C).
Subsec. (m)(2)(D).
Subsec. (m)(4).
1992—Subsec. (a)(1).
"(A) an institution of higher education;
"(B) a vocational school; or
"(C) with respect to students who are nationals of the United States, an institution outside the United States which is comparable to an institution of higher education or to a vocational school and which has been approved by the Secretary for the purpose of this part,
except that such term does not include any such institution or school which employs or uses commissioned salesmen to promote the availability of any loan program described in
Subsec. (a)(2).
Subsec. (a)(3).
Subsec. (b).
Subsec. (c).
Subsec. (d)(1)(A).
Subsec. (d)(2)(E), (F).
Subsec. (f).
Subsecs. (g), (h).
Subsec. (m).
Subsec. (n).
Subsec. (o).
1991—Subsec. (c)(1).
1990—Subsec. (a)(3).
Subsec. (l).
Subsec. (m).
1989—Subsec. (a)(1).
Subsec. (m).
Subsec. (n).
1987—Subsec. (b)(3).
Subsec. (d)(1)(J).
Subsec. (d)(2).
Subsec. (g)(2).
Subsec. (h).
Statutory Notes and Related Subsidiaries
Effective Date of 2010 Amendment
Amendment by
Effective Date of 2009 Amendment
Amendment by
Effective Date of 2008 Amendment
"(A)
"(B)
Effective Date of 2007 Amendment
Amendment by
Effective Date of 2006 Amendment
Amendment by
Effective Date of 2000 Amendment
Effective Date of 1998 Amendment
Amendment by sections 102(b)(2) and 429(a), (b), (d) of
Effective Date of 1996 Amendment
Amendment by
Effective Date of 1993 Amendments
Amendments by section 2(c)(55), (60)(B) of
Amendment by section 4046(b)(1) of
Effective Date of 1991 Amendment
Effective Date of 1990 Amendment
Effective Date of 1987 Amendment
Amendment by
Effective Date
Section effective Oct. 17, 1986, with subsec. (d)(5) of this section effective 30 days after Oct. 17, 1986, see section 402(b) of
Waiver of Mitigating Circumstances Requirement for Student Loan Insurance Program Eligibility
"(a)
"(1) for an institution of higher education that offers an associate degree, is a public institution, and is located in an economically distressed county, defined as a county that ranks in the lowest 5 percent of all counties in the United States based on a national index of county economic status; and
"(2) for an institution—
"(A) that is a public institution of higher education or a Tribal College or University (as defined in section 316(b) of such Act (
"(B) whose fall enrollment for the most recently completed academic year was comprised of a majority of students who are Indian (as defined in such section) or Alaska Natives (as defined in section 317(b) of such Act (
"(b)
"(c)
Definition of Institution of Higher Education
1 See References in Text note below.
2 So in original. Probably should be "with respect to the".
§1086. Delegation of functions
(a) In general
An eligible lender or guaranty agency that contracts with another entity to perform any of the lender's or agency's functions under this subchapter, or otherwise delegates the performance of such functions to such other entity—
(1) shall not be relieved of the lender's or agency's duty to comply with the requirements of this subchapter; and
(2) shall monitor the activities of such other entity for compliance with such requirements.
(b) Special rule
A lender that holds a loan made under this part in the lender's capacity as a trustee is responsible for complying with all statutory and regulatory requirements imposed on any other holder of a loan made under this part.
(
Editorial Notes
Prior Provisions
A prior section 1086,
Amendments
1998—
Statutory Notes and Related Subsidiaries
Effective Date of 1998 Amendment
Amendment by
§1087. Repayment by Secretary of loans of bankrupt, deceased, or disabled borrowers; treatment of borrowers attending schools that fail to provide a refund, attending closed schools, or falsely certified as eligible to borrow
(a) Repayment in full for death and disability
(1) In general
If a student borrower who has received a loan described in subparagraph (A) or (B) of
(A) a borrower received a discharge of liability under this subsection and after the discharge the borrower—
(i) receives a loan made, insured, or guaranteed under this subchapter; or
(ii) has earned income in excess of the poverty line; or
(B) the Secretary determines the reinstatement and resumption to be necessary.
(2) Disability determinations
A borrower who has been determined by the Secretary of Veterans Affairs to be unemployable due to a service-connected condition and who provides documentation of such determination to the Secretary of Education, shall be considered permanently and totally disabled for the purpose of discharging such borrower's loans under this subsection, and such borrower shall not be required to present additional documentation for purposes of this subsection.
(3) Automatic income monitoring
(A) In general
The Secretary shall establish and implement, with respect to any borrower described in subparagraph (B), procedures to—
(i) use return information disclosed under
(ii) allow the borrower, at any time, to opt out of disclosure under such section 6103(l)(13) and instead provide such information as the Secretary may require to determine the borrower's continued eligibility for such loan discharge; and
(iii) provide the borrower with an opportunity to update the return information so disclosed before determination of such borrower's continued eligibility for such loan discharge.
(B) Applicability
Subparagraph (A) shall apply—
(i) to each borrower of a loan that is discharged due to the total and permanent disability (within the meaning of this subsection) of the borrower; and
(ii) during the period beginning on the date on which such loan is so discharged and ending on the first day on which such loan may no longer be reinstated.
(b) Payment of claims on loans in bankruptcy
The Secretary shall pay to the holder of a loan described in section 1078(a)(1)(A) or (B), 1078–1,1 1078–2, 1078–3, or 1078–8 of this title, the amount of the unpaid balance of principal and interest owed on such loan—
(1) when the borrower files for relief under
(2) when the borrower who has filed for relief under
(3) for loans described in section 523(a)(8)(A) of such title, when the borrower files for relief under
(c) Discharge
(1) In general
If a borrower who received, on or after January 1, 1986, a loan made, insured, or guaranteed under this part and the student borrower, or the student on whose behalf a parent borrowed, is unable to complete the program in which such student is enrolled due to the closure of the institution or if such student's eligibility to borrow under this part was falsely certified by the eligible institution or was falsely certified as a result of a crime of identity theft, or if the institution failed to make a refund of loan proceeds which the institution owed to such student's lender, then the Secretary shall discharge the borrower's liability on the loan (including interest and collection fees) by repaying the amount owed on the loan and shall subsequently pursue any claim available to such borrower against the institution and its affiliates and principals or settle the loan obligation pursuant to the financial responsibility authority under subpart 3 of part H. In the case of a discharge based upon a failure to refund, the amount of the discharge shall not exceed that portion of the loan which should have been refunded. The Secretary shall report to the authorizing committees annually as to the dollar amount of loan discharges attributable to failures to make refunds.
(2) Assignment
A borrower whose loan has been discharged pursuant to this subsection shall be deemed to have assigned to the United States the right to a loan refund up to the amount discharged against the institution and its affiliates and principals.
(3) Eligibility for additional assistance
The period of a student's attendance at an institution at which the student was unable to complete a course of study due to the closing of the institution shall not be considered for purposes of calculating the student's period of eligibility for additional assistance under this subchapter.
(4) Special rule
A borrower whose loan has been discharged pursuant to this subsection shall not be precluded from receiving additional grants, loans, or work assistance under this subchapter for which the borrower would be otherwise eligible (but for the default on such discharged loan). The amount discharged under this subsection shall be treated the same as loans under
(5) Reporting
The Secretary shall report to consumer reporting agencies with respect to loans which have been discharged pursuant to this subsection.
(d) Repayment of loans to parents
If a student on whose behalf a parent has received a loan described in
(
Editorial Notes
References in Text
Prior Provisions
A prior section 1087,
Amendments
2019—Subsec. (a)(3).
2009—Subsec. (a)(1).
2008—Subsec. (a).
"(A) a borrower received a discharge of liability under this subsection and after the discharge the borrower—
"(i) receives a loan made, insured, or guaranteed under this subchapter; or
"(ii) has earned income in excess of the poverty line; or
"(B) the Secretary determines necessary."
at the end of subsec. (a), was executed by making the insertion at the end of par. (1) to reflect the probable intent of Congress, notwithstanding the addition of par. (2) prior to the effective date of this amendment.
Subsec. (a)(2).
Subsec. (c)(1).
Subsec. (c)(5).
2006—
Subsec. (c)(1).
1998—Subsec. (c)(1).
1993—Subsec. (b).
Subsec. (c)(1).
Subsec. (c)(4).
1992—
Statutory Notes and Related Subsidiaries
Effective Date of 2009 Amendment
Effective Date of 2008 Amendment
Effective Date of 2006 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Executive Documents
Discharging the Federal Student Loan Debt of Totally and Permanently Disabled Veterans
Memorandum of President of the United States, Aug. 21, 2019, 84 F.R. 44677, provided:
Memorandum for the Secretary of Education [and] the Secretary of Veterans Affairs
Since our Founding, the United States has been blessed with men and women willing to serve in defense of our Nation and our ideals. Many of those answering the call to serve make the ultimate sacrifice for their country, and many others carry physical and emotional scars for the rest of their lives.
The Higher Education Act of 1965 [
For the last decade, veterans seeking loan discharges have been required to submit an application to the Secretary of Education with proof of their disabilities obtained from the Department of Veterans Affairs. The process has been overly complicated and difficult, and prevented too many of our veterans from receiving the relief for which they are eligible. This has inflicted significant hardship and serious harm on these veterans and has frustrated the intent of the Congress that their Federal student loan debt be discharged.
Only half of the approximately 50,000 totally and permanently disabled veterans who currently qualify for the discharge of their Federal student loan debt have availed themselves of the benefits provided to them by the Higher Education Act. This has created a serious and critical problem for disabled veterans, who must deal with the day-to-day consequences of their service-connected injuries, and for our military, as readiness and recruitment suffer when we do not take care of our veterans. There is a pressing need to quickly and effectively resolve this problem. Therefore, my Administration will take prompt action to ensure that all totally and permanently disabled veterans are able to obtain, with minimal burden, the Federal student loan debt discharges to which they are legally entitled.
Accordingly, by the authority vested in me as President by the Constitution and the laws of the United States of America, and to express the gratitude of our Nation for the service of our totally and permanently disabled veterans, I hereby direct the following:
(b) The Secretaries of Education and Veterans Affairs (Secretaries) shall take appropriate action to implement the policy set forth in section 1 of this memorandum as expeditiously as possible. To that end, the Secretaries shall consider all pathways for the Department of Veterans Affairs to share disability determinations with the Department of Education, so that veterans may be relieved of the burdensome administrative impediments to Federal student loan debt discharge.
(a) the term "Federal student loan debt" means liability to repay Federal Family Education Loan (FFEL) Program loans, William D. Ford Federal Direct Loan (Direct Loan) Program loans, and Federal Perkins Loans.
(b) the term "discharge" means discharge of FFEL Program loans and Direct Loan Program loans and cancellation of Federal Perkins Loans.
(i) the authority granted by law to an executive department or agency, or the head thereof; or
(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.
(b) This memorandum shall be implemented consistent with applicable law and subject to the availability of appropriations.
(c) This memorandum is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
(d) The Secretary of Education is hereby authorized and directed to publish this memorandum in the Federal Register.
Donald J. Trump.
1 See References in Text note below.
§1087–0. Repealed. Pub. L. 105–244, title IV, §432, Oct. 7, 1998, 112 Stat. 1710
Section,
Statutory Notes and Related Subsidiaries
Effective Date of Repeal
Repeal effective Oct. 1, 1998, except as otherwise provided in
§1087–1. Special allowances
(a) Findings
In order to assure (1) that the limitation on interest payments or other conditions (or both) on loans made or insured under this part, do not impede or threaten to impede the carrying out of the purposes of this part or do not cause the return to holders of loans to be less than equitable, (2) that incentive payments on such loans are paid promptly to eligible lenders, and (3) that appropriate consideration of relative administrative costs and money market conditions is made in setting the quarterly rate of such payments, the Congress finds it necessary to establish an improved method for the determination of the quarterly rate of the special allowances on such loans, and to provide for a thorough, expeditious, and objective examination of alternative methods for the determination of the quarterly rate of such allowances.
(b) Computation and payment
(1) Quarterly payment based on unpaid balance
A special allowance shall be paid for each of the 3-month periods ending March 31, June 30, September 30, and December 31 of every year and the amount of such allowance paid to any holder with respect to any 3-month period shall be a percentage of the average unpaid balance of principal (not including unearned interest added to principal) of all eligible loans held by such holder during such period.
(2) Rate of special allowance
(A) Subject to subparagraphs (B), (C), (D), (E), (F), (G), (H), and (I) and paragraph (4), the special allowance paid pursuant to this subsection on loans shall be computed (i) by determining the average of the bond equivalent rates of 91-day Treasury bills auctioned for such 3-month period, (ii) by subtracting the applicable interest rate on such loans from such average, (iii) by adding 3.10 percent to the resultant percent, and (iv) by dividing the resultant percent by 4. If such computation produces a number less than zero, such loans shall be subject to
(B)(i) The quarterly rate of the special allowance for holders of loans which were made or purchased with funds obtained by the holder from the issuance of obligations, the income from which is exempt from taxation under title 26 shall be one-half the quarterly rate of the special allowance established under subparagraph (A), except that, in determining the rate for the purpose of this clause, subparagraph (A)(iii) shall be applied by substituting "3.5 percent" for "3.10 percent". Such rate shall also apply to holders of loans which were made or purchased with funds obtained by the holder from collections or default reimbursements on, or interests or other income pertaining to, eligible loans made or purchased with funds described in the preceding sentence of this subparagraph or from income on the investment of such funds. This subparagraph shall not apply to loans which were made or insured prior to October 1, 1980.
(ii) The quarterly rate of the special allowance set under clause (i) of this subparagraph shall not be less than 9.5 percent minus the applicable interest rate on such loans, divided by 4.
(iii) No special allowance may be paid under this subparagraph unless the issuer of such obligations complies with subsection (d) of this section.
(iv) Notwithstanding clauses (i) and (ii), the quarterly rate of the special allowance for holders of loans which are financed with funds obtained by the holder from the issuance of obligations originally issued on or after October 1, 1993, or refunded after September 30, 2004, the income from which is excluded from gross income under title 26, shall be the quarterly rate of the special allowance established under subparagraph (A), (E), (F), (G), (H), or (I) as the case may be. Such rate shall also apply to holders of loans which were made or purchased with funds obtained by the holder from collections or default reimbursements on, or interest or other income pertaining to, eligible loans made or purchased with funds described in the preceding sentence of this subparagraph or from income on the investment of such funds.
(v) Notwithstanding clauses (i) and (ii), the quarterly rate of the special allowance shall be the rate determined under subparagraph (A), (E), (F), (G), (H), or (I) of this paragraph, or paragraph (4), as the case may be, for a holder of loans that—
(I) were made or purchased with funds—
(aa) obtained from the issuance of obligations the income from which is excluded from gross income under title 26 and which obligations were originally issued before October 1, 1993; or
(bb) obtained from collections or default reimbursements on, or interest or other income pertaining to, eligible loans made or purchased with funds described in division (aa), or from income on the investment of such funds; and
(II) are—
(aa) financed by such an obligation that, after September 30, 2004, has matured or been retired or defeased;
(bb) refinanced after September 30, 2004, with funds obtained from a source other than funds described in subclause (I) of this clause; or
(cc) sold or transferred to any other holder after September 30, 2004.
(vi) Notwithstanding clauses (i), (ii), and (v), but subject to clause (vii), the quarterly rate of the special allowance shall be the rate determined under subparagraph (A), (E), (F), (G), (H), or (I) of this paragraph, as the case may be, for a holder of loans—
(I) that were made or purchased on or after February 8, 2006; or
(II) that were not earning a quarterly rate of special allowance determined under clauses (i) or (ii) of subparagraph (B) of this paragraph as of February 8, 2006.
(vii) Clause (vi) shall be applied by substituting "December 31, 2010" for "February 8, 2006" in the case of a holder of loans that—
(I) was, as of February 8, 2006, and during the quarter for which the special allowance is paid, a unit of State or local government or a nonprofit private entity;
(II) was, as of February 8, 2006, and during such quarter, not owned or controlled by, or under common ownership or control with, a for-profit entity; and
(III) held, directly or through any subsidiary, affiliate, or trustee, a total unpaid balance of principal equal to or less than $100,000,000 on loans for which special allowances were paid under this subparagraph in the most recent quarterly payment prior to September 30, 2005.
(C)(i) In the case of loans made before October 1, 1992, pursuant to section 1078–1 1 or 1078–2 of this title for which the interest rate is determined under
(ii) Subject to subparagraphs (G), (H), and (I), in the case of loans disbursed on or after October 1, 1992, pursuant to section 1078–1 1 or 1078–2 of this title for which the interest rate is determined under
(I) 11 percent in the case of a loan under section 1078–1 1 of this title; or
(II) 10 percent in the case of a loan under
(D)(i) In the case of loans made or purchased directly from funds loaned or advanced pursuant to a qualified State obligation, subparagraph (A)(iii) shall be applied by substituting "3.5 percent" for "3.10 percent".
(ii) For the purpose of division (i) of this subparagraph, the term "qualified State obligation" means—
(I) an obligation of the Maine Educational Loan Marketing Corporation to the Student Loan Marketing Association pursuant to an agreement entered into on January 31, 1984; or
(II) an obligation of the South Carolina Student Loan Corporation to the South Carolina National Bank pursuant to an agreement entered into on July 30, 1986.
(E) In the case of any loan for which the applicable rate of interest is described in
(F) Subject to paragraph (4), the special allowance paid pursuant to this subsection on loans for which the applicable rate of interest is determined under
(G)
(i)
(I) by determining the average of the bond equivalent rates of 91-day Treasury bills auctioned for such 3-month period;
(II) by subtracting the applicable interest rates on such loans from such average bond equivalent rate;
(III) by adding 2.8 percent to the resultant percent; and
(IV) by dividing the resultant percent by 4.
(ii)
(iii)
(iv)
(v)
(H)
(i)
(I) by determining the average of the bond equivalent rates of 91-day Treasury bills auctioned for such 3-month period;
(II) by subtracting the applicable interest rates on such loans from such average bond equivalent rate;
(III) by adding 2.8 percent to the resultant percent; and
(IV) by dividing the resultant percent by 4.
(ii)
(iii)
(iv)
(v)
(I) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to such June 1 (as determined by the Secretary for purposes of such section); plus
(II) 3.1 percent,
exceeds 9.0 percent.
(vi)
(I) the average of the bond equivalent rate of 91-day Treasury bills auctioned for such 3-month period; plus
(II) 3.1 percent,
exceeds the rate determined under
(I)
(i)
(I) by determining the average of the bond equivalent rates of the quotes of the 3-month commercial paper (financial) rates in effect for each of the days in such quarter as reported by the Federal Reserve in Publication H–15 (or its successor) for such 3-month period;
(II) by subtracting the applicable interest rates on such loans from the rate determined under subclause (I) (in accordance with clause (vii));
(III) by adding 2.34 percent to the resultant percent; and
(IV) by dividing the resultant percent by 4.
(ii)
(I) for which the first disbursement is made on or after January 1, 2000, and before July 1, 2006, and for which the applicable rate of interest is described in
(II) for which the first disbursement is made on or after July 1, 2006, and before July 1, 2010, and for which the applicable rate of interest is described in section 1077a(l)(1) or (l)(4) of this title, but only with respect to (aa) periods prior to the beginning of the repayment period of the loan; or (bb) during the periods in which principal need not be paid (whether or not such principal is in fact paid) by reason of a provision described in
clause (i)(III) of this subparagraph shall be applied by substituting "1.74 percent" for "2.34 percent".
(iii)
(iv)
(v)
(I)
(II)
(aa) the applicable interest rate minus the special allowance support level determined under this subparagraph; multiplied by
(bb) the average daily principal balance of the loan (not including unearned interest added to principal) during such calendar quarter; divided by
(cc) four.
(III)
(vi)
(I) for loans held by an eligible lender not described in subclause (II)—
(aa) by substituting "1.79 percent" for "2.34 percent" each place the term appears in this subparagraph;
(bb) by substituting "1.19 percent" for "1.74 percent" in clause (ii);
(cc) by substituting "1.79 percent" for "2.64 percent" in clause (iii); and
(dd) by substituting "2.09 percent" for "2.64 percent" in clause (iv); and
(II) for loans held by an eligible not-for-profit holder—
(aa) by substituting "1.94 percent" for "2.34 percent" each place the term appears in this subparagraph;
(bb) by substituting "1.34 percent" for "1.74 percent" in clause (ii);
(cc) by substituting "1.94 percent" for "2.64 percent" in clause (iii); and
(dd) by substituting "2.24 percent" for "2.64 percent" in clause (iv).
(vii)
(I)
(II)
(III)
(aa)
(AA) all loans described in such subclause that the lender holds solely in its own right under any lender identification number associated with the holder (pursuant to
(BB) all loans described in such subclause for which the beneficial owner has the authority to make an election of a waiver under such subclause, regardless of the lender identification number associated with the loan or the lender that holds the loan as eligible lender trustee on behalf of such beneficial owner; and
(CC) all future calculations of the special allowance on loans that, on the date of such waiver, are loans described in subitem (AA) or (BB), or that, after such date, become loans described in subitem (AA) or (BB).
(bb)
(AA) in accordance with an agreement entered into before the date of enactment of this section by which such lender or owner is governed and that applies to such loans, such lender or owner is not legally permitted to make an election of such waiver with respect to such loans without the approval of one or more third parties with an interest in the loans, and that the lender or owner followed all available options under such agreement to obtain such approval, and was unable to do so; or
(BB) such lender or beneficial owner presented the proposal of electing such a waiver applicable to such loans associated with an obligation rated by a nationally recognized statistical rating organization (as defined in
(viii)
(I)
(II)
(III)
(aa) one or more third parties with a legal or beneficial interest in loans eligible for the SOFR-based calculation; or
(bb) a nationally recognized rating organization assigning a rating to a financing secured by loans otherwise eligible for the SOFR-based calculation,
the holder of the loan (or, if the holder acts as an eligible lender trustee for the beneficial owner of the loan, the beneficial owner of the loan) may elect to apply the rate described in subclause (II) to specified loan portfolios established for financing purposes by separate notices with different effective dates. The special allowance rate based on SOFR shall be effective with respect to a portfolio as of the first day of the calendar quarter following the applicable effective date of the waiver received by the Secretary from the holder or beneficial owner and shall permanently and irrevocably continue for all subsequent quarters.
(IV)
(aa) In the event that a holder or beneficial owner has not elected to waive its rights to a special allowance payment under clause (vii) with respect to a portfolio with an effective date of the waiver prior to the first of—
(AA) the date on which the ICE Benchmark Administration ("IBA") has permanently or indefinitely stopped providing the 1-month United States Dollar LIBOR ("1-month USD LIBOR") to the general public;
(BB) the effective date of an official public statement by the IBA or its regulator that the 1-month USD LIBOR is no longer reliable or no longer representative; or
(CC) the LIBOR replacement date, as defined in
the special allowance rate calculation as described in subclause (II) shall, by operation of law, apply to all loans in such portfolio.
(bb) In such event—
(AA) the last determined rate of special allowance based on 1-month USD LIBOR will continue to apply until the end of the then current calendar quarter; and
(BB) the special allowance rate calculation as described in subclause (II) shall become effective as of the first day of the following calendar quarter and remain in effect for all subsequent calendar quarters.
(3) Contractual right of holders to special allowance
The holder of an eligible loan shall be deemed to have a contractual right against the United States, during the life of such loan, to receive the special allowance according to the provisions of this section. The special allowance determined for any such 3-month period shall be paid promptly after the close of such period, and without administrative delay after receipt of an accurate and complete request for payment, pursuant to procedures established by regulations promulgated under this section.
(4) Penalty for late payment
(A) If payments of the special allowances payable under this section or of interest payments under
(B) Such daily interest shall be computed at the daily equivalent rate of the sum of the special allowance rate computed pursuant to paragraph (2) and the interest rate applicable to the loan and shall be paid for the later of (i) the 31st day after the receipt of such request for payment from the holder, or (ii) the 31st day after the final day of the period or periods covered by such request, and shall be paid for each succeeding day until, and including, the date on which the Secretary authorizes payment.
(C) For purposes of reporting to the Congress the amounts of special allowances paid under this section, amounts of special allowances paid pursuant to this paragraph shall be segregated and reported separately.
(5) "Eligible loan" defined
As used in this section, the term "eligible loan" means a loan—
(A)(i) on which a portion of the interest is paid on behalf of the student and for the student's account to the holder of the loan under
(ii) which is made under section 1078–1,1 1078–2, 1078–3, 1078–8, or 1087–2(o) of this title; or
(iii) which was made prior to October 1, 1981; and
(B) which is insured under this part, or made under a program covered by an agreement under
(6) Regulation of time and manner of payment
The Secretary shall pay the holder of an eligible loan, at such time or times as are specified in regulations, a special allowance prescribed pursuant to this subsection subject to the condition that such holder shall submit to the Secretary, at such time or times and in such a manner as the Secretary may deem proper, such information as may be required by regulation for the purpose of enabling the Secretary to carry out his functions under this section and to carry out the purposes of this section.
(7) Use of average quarterly balance
The Secretary shall permit lenders to calculate interest benefits and special allowance through the use of the average quarterly balance method until July 1, 1988.
(c) Origination fees from students
(1) Deduction from interest and special allowance subsidies
(A) Notwithstanding subsection (b), the Secretary shall collect the amount the lender is authorized to charge as an origination fee in accordance with paragraph (2) of this subsection—
(i) by reducing the total amount of interest and special allowance payable under
(ii) directly from the holder of the loan, if the lender fails or is not required to bill the Secretary for interest and special allowance or withdraws from the program with unpaid loan origination fees.
(B) If the Secretary collects the origination fee under this subsection through the reduction of interest and special allowance, and the total amount of interest and special allowance payable under
(2) Amount of origination fees
(A) In general
Subject to paragraph (6) of this subsection, with respect to any loan (including loans made under
(B) Subsequent reductions
Subparagraph (A) shall be applied to loans made under this part (other than loans made under
(i) by substituting "2.0 percent" for "3.0 percent" with respect to loans for which the first disbursement of principal is made on or after July 1, 2006, and before July 1, 2007;
(ii) by substituting "1.5 percent" for "3.0 percent" with respect to loans for which the first disbursement of principal is made on or after July 1, 2007, and before July 1, 2008;
(iii) by substituting "1.0 percent" for "3.0 percent" with respect to loans for which the first disbursement of principal is made on or after July 1, 2008, and before July 1, 2009; and
(iv) by substituting "0.5 percent" for "3.0 percent" with respect to loans for which the first disbursement of principal is made on or after July 1, 2009, and before July 1, 2010.
(3) Relation to applicable interest
Such origination fee shall not be taken into account for purposes of determining compliance with
(4) Disclosure required
The lender shall disclose to the borrower the amount and method of calculating the origination fee.
(5) Prohibition on department compelling origination fee collections by lenders
Nothing in this subsection shall be construed to permit the Secretary to require any lender that is making loans that are insured or guaranteed under this part, but for which no amount will be payable for interest under
(6) SLS and PLUS loans
With respect to any loans made under section 1078–1 1 or 1078–2 of this title on or after October 1, 1992, and first disbursed before July 1, 2010, each eligible lender under this part shall charge the borrower an origination fee of 3.0 percent of the principal amount of the loan, to be deducted proportionately from each installment payment of the proceeds of the loan prior to payments to the borrower.
(7) Distribution of origination fees
All origination fees collected pursuant to this section on loans authorized under section 1078–1 1 or 1078–2 of this title shall be paid to the Secretary by the lender and deposited in the fund authorized under
(8) Exception
Notwithstanding paragraph (2), a lender may assess a lesser origination fee for a borrower demonstrating greater financial need as determined by such borrower's adjusted gross family income.
(d) Loan fees from lenders
(1) Deduction from interest and special allowance subsidies
(A) In general
Notwithstanding subsection (b), the Secretary shall collect a loan fee in an amount determined in accordance with paragraph (2)—
(i) by reducing the total amount of interest and special allowance payable under
(ii) directly from the holder of the loan, if the lender—
(I) fails or is not required to bill the Secretary for interest and special allowance payments; or
(II) withdraws from the program with unpaid loan fees.
(B) Special rule
If the Secretary collects loan fees under this subsection through the reduction of interest and special allowance payments, and the total amount of interest and special allowance payable under
(2) Amount of loan fees
The amount of the loan fee which shall be deducted under paragraph (1), but which may not be collected from the borrower, shall be equal to—
(A) except as provided in subparagraph (B), 0.50 percent of the principal amount of the loan with respect to any loan under this part for which the first disbursement was made on or after October 1, 1993; and
(B) 1.0 percent of the principal amount of the loan with respect to any loan under this part for which the first disbursement was made on or after October 1, 2007, and before July 1, 2010.
(3) Distribution of loan fees
The Secretary shall deposit all fees collected pursuant to paragraph (3) into the insurance fund established in
(e) Nondiscrimination
In order for the holders of loans which were made or purchased with funds obtained by the holder from an Authority issuing obligations, the income from which is exempt from taxation under title 26, to be eligible to receive a special allowance under subsection (b)(2) on any such loans, the Authority shall not engage in any pattern or practice which results in a denial of a borrower's access to loans under this part because of the borrower's race, sex, color, religion, national origin, age, disability status, income, attendance at a particular eligible institution within the area served by the Authority, length of the borrower's educational program, or the borrower's academic year in school.
(f) Regulations to prevent denial of loans to eligible students
The Secretary shall adopt or amend appropriate regulations pertaining to programs carried out under this part to prevent, where practicable, any practices which the Secretary finds have denied loans to a substantial number of eligible students.
(g) Special Rule
With respect to any loan made under this part for which the interest rate is determined under the Servicemembers Civil Relief Act (
(
Editorial Notes
References in Text
The date of enactment of this section, referred to in subsec. (b)(2)(I)(vii)(III)(bb)(AA), probably means the date of enactment of
The Adjustable Interest Rate (LIBOR) Act, referred to in subsec. (b)(2)(I)(viii)(II), is div. U of
The effective date of this clause, referred to in subsec. (b)(2)(I)(viii)(III), probably means the date of enactment of
The Servicemembers Civil Relief Act, referred to in subsec. (g), is act Oct. 17, 1940, ch. 888,
Prior Provisions
A prior section 1087–1,
A prior section 1087–1a,
Amendments
2022—Subsec. (b)(2)(I)(viii).
2011—Subsec. (b)(2)(I)(i)(II).
Subsec. (b)(2)(I)(v)(III).
Subsec. (b)(2)(I)(vii).
2010—Subsec. (b)(2)(I).
Subsec. (b)(2)(I)(i).
Subsec. (b)(2)(I)(ii)(II).
Subsec. (b)(2)(I)(iii).
Subsec. (b)(2)(I)(iv).
Subsec. (b)(2)(I)(v)(I).
Subsec. (b)(2)(I)(vi).
Subsec. (c)(2)(B)(iii) to (v).
Subsec. (c)(6).
Subsec. (d)(2)(B).
2009—Subsec. (b)(2)(A).
Subsec. (b)(2)(B)(i).
Subsec. (b)(2)(F).
2008—Subsec. (g).
2007—Subsec. (b)(2)(I)(i).
Subsec. (b)(2)(I)(ii)(II).
Subsec. (b)(2)(I)(v)(III).
Subsec. (b)(2)(I)(vi).
Subsec. (b)(5).
Subsec. (d)(2).
2006—Subsec. (b)(2)(B).
Subsec. (b)(2)(B)(iv).
Subsec. (b)(2)(B)(v)(II)(aa), (bb).
Subsec. (b)(2)(B)(v)(II)(cc).
Subsec. (b)(2)(B)(vi), (vii).
Subsec. (b)(2)(I)(iii).
Subsec. (b)(2)(I)(iv).
Subsec. (b)(2)(I)(v) to (vii).
Subsec. (c)(2).
2005—Subsec. (b)(2)(B).
Subsec. (b)(2)(B)(iv), (v)(II).
2004—Subsec. (b)(2)(B).
2002—Subsec. (b)(2)(I).
Subsec. (b)(2)(I)(i).
Subsec. (b)(2)(I)(ii).
Subsec. (b)(2)(I)(iii).
Subsec. (b)(2)(I)(iv).
Subsec. (b)(2)(I)(v).
Subsec. (b)(2)(I)(vi).
Subsec. (b)(2)(I)(vii).
1999—Subsec. (b)(2)(A).
Subsec. (b)(2)(B)(iv).
Subsec. (b)(2)(C)(ii).
Subsec. (b)(2)(H).
Subsec. (b)(2)(I).
1998—Subsec. (b)(2)(A).
Subsec. (b)(2)(B)(iv).
Subsec. (b)(2)(C)(ii).
Subsec. (b)(2)(G).
Subsec. (b)(2)(H).
Subsec. (c)(1).
Subsec. (c)(2).
Subsec. (c)(8).
Subsec. (d)(1).
Subsec. (e).
1993—Subsec. (b)(2)(A).
Subsec. (b)(2)(B)(iv).
Subsec. (b)(2)(E), (F).
Subsec. (c).
Subsec. (c)(2).
Subsec. (c)(6).
Subsecs. (d) to (f).
1992—Subsec. (b)(2)(A).
Subsec. (b)(2)(B)(i).
Subsec. (b)(2)(B)(ii).
Subsec. (b)(2)(C).
Subsec. (b)(2)(D)(i).
Subsec. (b)(5).
Subsec. (b)(5)(A)(ii).
Subsec. (c)(2).
Subsec. (c)(6), (7).
Subsec. (d)(2)(C).
1988—Subsecs. (b)(2)(B)(i), (d)(1), (3).
1987—Subsec. (b)(2)(B)(iii).
Subsec. (b)(2)(C).
Subsec. (b)(7).
Subsec. (d)(4)(C).
Statutory Notes and Related Subsidiaries
Effective Date of 2009 Amendment
Amendment by
Effective Date of 2008 Amendment
Amendment by
Effective Date of 2007 Amendment
Amendment by sections 201(a)(2) and 305 of
Amendment by section 302(b)(2) of
Effective Date of 2006 Amendment
Amendment by
Effective Date of 2005 Amendment
"(1)
"(2)
Effective Date of 1999 Amendment
Effective Date of 1998 Amendment
Amendment by section 416(b)(1) and (3) of
Amendment by section 433(a)–(c) of
Effective Date of 1993 Amendment
Amendment by section 4102(a) of
Effective Date of 1992 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
Effective Date
Section effective Oct. 17, 1986, with subsec. (b) of this section effective with respect to loans disbursed on or after 30 days after Oct. 17, 1986, or made to cover the costs of instruction for periods of enrollment beginning on or after 30 days after Oct. 17, 1986, and subsec. (d) of this section effective 30 days after Oct. 17, 1986, see section 402(b) of
1 See References in Text note below.
3 So in original. Probably should be followed by a comma.
§1087–2. Student Loan Marketing Association
(a) Purpose
The Congress hereby declares that it is the purpose of this section (1) to establish a private corporation which will be financed by private capital and which will serve as a secondary market and warehousing facility for student loans, including loans which are insured by the Secretary under this part or by a guaranty agency, and which will provide liquidity for student loan investments; (2) in order to facilitate secured transactions involving student loans, to provide for perfection of security interests in student loans either through the taking of possession or by notice filing; and (3) to assure nationwide the establishment of adequate loan insurance programs for students, to provide for an additional program of loan insurance to be covered by agreements with the Secretary.
(b) Establishment
(1) In general
There is hereby created a body corporate to be known as the Student Loan Marketing Association (hereinafter referred to as the "Association"). The Association shall have succession until dissolved. It shall maintain its principal office in the District of Columbia and shall be deemed, for purposes of venue and jurisdiction in civil actions, to be a resident and citizen thereof. Offices may be established by the Association in such other place or places as it may deem necessary or appropriate for the conduct of its business.
(2) Exemption from State and local taxes
The Association, including its franchise, capital, reserves, surplus, mortgages, or other security holdings, and income shall be exempt from all taxation now or hereafter imposed by any State, territory, possession, Commonwealth, or dependency of the United States, or by the District of Columbia, or by any county, municipality, or local taxing authority, except that any real property of the Association shall be subject to State, territorial, county, municipal, or local taxation to the same extent according to its value as other real property is taxed.
(3) Appropriations authorized for establishment
There is hereby authorized to be appropriated to the Secretary $5,000,000 for making advances for the purpose of helping to establish the Association. Such advances shall be repaid within such period as the Secretary may deem to be appropriate in light of the maturity and solvency of the Association. Such advances shall bear interest at a rate not less than (A) a rate determined by the Secretary of the Treasury taking into consideration the current average market yield on outstanding marketable obligations of the United States with remaining period to maturity comparable to the maturity of such advances, adjusted to the nearest one-eighth of 1 percent, plus (B) an allowance adequate in the judgment of the Secretary to cover administrative costs and probable losses. Repayments of such advances shall be deposited into miscellaneous receipts of the Treasury.
(c) Board of Directors
(1) Composition of Board; Chairman
(A) The Association shall have a Board of Directors which shall consist of 21 persons, 7 of whom shall be appointed by the President and shall be representative of the general public. The remaining 14 directors shall be elected by the common stockholders of the Association entitled to vote pursuant to subsection (f). Commencing with the annual shareholders meeting to be held in 1993—
(i) 7 of the elected directors shall be affiliated with an eligible institution; and
(ii) 7 of the elected directors shall be affiliated with an eligible lender.
(B) The President shall designate 1 of the directors to serve as Chairman.
(2) Terms of appointed and elected members
The directors appointed by the President shall serve at the pleasure of the President and until their successors have been appointed and have qualified. The remaining directors shall each be elected for a term ending on the date of the next annual meeting of the common stockholders of the Association, and shall serve until their successors have been elected and have qualified. Any appointive seat on the Board which becomes vacant shall be filled by appointment of the President. Any elective seat on the Board which becomes vacant after the annual election of the directors shall be filled by the Board, but only for the unexpired portion of the term.
(3) Affiliated members
For the purpose of this subsection, the references to a director "affiliated with the eligible institution" or a director "affiliated with an eligible lender" means an individual who is, or within 5 years of election to the Board has been, an employee, officer, director, or similar official of—
(A) an eligible institution or an eligible lender;
(B) an association whose members consist primarily of eligible institutions or eligible lenders; or
(C) a State agency, authority, instrumentality, commission, or similar institution, the primary purpose of which relates to educational matters or banking matters.
(4) Meetings and functions of the Board
The Board of Directors shall meet at the call of its Chairman, but at least semiannually. The Board shall determine the general policies which shall govern the operations of the Association. The Chairman of the Board shall, with the approval of the Board, select, appoint, and compensate qualified persons to fill the offices as may be provided for in the bylaws, with such functions, powers, and duties as may be prescribed by the bylaws or by the Board of Directors, and such persons shall be the officers of the Association and shall discharge all such functions, powers, and duties.
(d) Authority of Association
(1) In general
The Association is authorized, subject to the provisions of this section—
(A) pursuant to commitments or otherwise to make advances on the security of, purchase, or repurchase, service, sell or resell, offer participations, or pooled interests or otherwise deal in, at prices and on terms and conditions determined by the Association, student loans which are insured by the Secretary under this part or by a guaranty agency;
(B) to buy, sell, hold, underwrite, and otherwise deal in obligations, if such obligations are issued, for the purpose of making or purchasing insured loans, by a guaranty agency or by an eligible lender in a State described in section 1085(d)(1)(D) or (F) of this title;
(C) to buy, sell, hold, insure, underwrite, and otherwise deal in obligations issued for the purpose of financing or refinancing the construction, reconstruction, renovation, improvement, or purchase at institutions of higher education of any of the following facilities (including the underlying property) and materials (including related equipment, instrumentation, and furnishings) at an eligible institution of higher education:
(i) educational and training facilities;
(ii) housing for students and faculties, dining halls, student unions, and facilities specifically designed to promote fitness and health for students, faculty, and staff or for physical education courses; and
(iii) library facilities, including the acquisition of library materials at institutions of higher education;
except that not more than 30 percent of the value of transactions entered into under this subparagraph shall involve transactions of the types described in clause (ii);
(D) to undertake a program of loan insurance pursuant to agreements with the Secretary under
(E) to undertake any other activity which the Board of Directors of the Association determines to be in furtherance of the programs of insured student loans authorized under this part or will otherwise support the credit needs of students, except that—
(i) in carrying out all such activities the purpose shall always be to provide secondary market and other support for lending programs offered by other organizations and not to replace or compete with such other programs;
(ii) nothing in this subparagraph (E) shall be deemed to authorize the Association to acquire, own, operate, or control any bank, savings and loan association, savings bank or credit union; and
(iii) not later than 30 days prior to the initial implementation of a program undertaken pursuant to this subparagraph (E), the Association shall advise the Chairman and the Ranking Member on the Committee on Labor and Human Resources of the Senate and the Chairman and the Ranking Member of the Committee on Education and Labor of the House of Representatives in writing of its plans to offer such program and shall provide information relating to the general terms and conditions of such program.
The Association is further authorized to undertake any activity with regard to student loans which are not insured or guaranteed as provided for in this subsection as it may undertake with regard to insured or guaranteed student loans. Any warehousing advance made on the security of such loans shall be subject to the provisions of paragraph (3) of this subsection to the same extent as a warehousing advance made on the security of insured loans.
(2) Warehousing advances
Any warehousing advance made under paragraph (1)(A) of this subsection shall be made on the security of (A) insured loans, (B) marketable obligations and securities issued, guaranteed, or insured by, the United States, or for which the full faith and credit of the United States is pledged for the repayment of principal and interest thereof, or (C) marketable obligations issued, guaranteed, or insured by any agency, instrumentality, or corporation of the United States for which the credit of such agency, instrumentality, or corporation is pledged for the repayment of principal and interest thereof, in an amount equal to the amount of such advance. The proceeds of any such advance secured by insured loans shall either be invested in additional insured loans or the lender shall provide assurances to the Association that during the period of the borrowing it will maintain a level of insured loans in its portfolio not less than the aggregate outstanding balance of such loans held at the time of the borrowing. The proceeds from any such advance secured by collateral described in clauses (B) and (C) shall be invested in additional insured student loans.
(3) Perfection of security interests in student loans
Notwithstanding the provisions of any State law to the contrary, including the Uniform Commercial Code as in effect in any State, a security interest in insured student loans created on behalf of the Association or any eligible lender as defined in
(4) Form of securities
Securities issued pursuant to the offering of participations or pooled interests under paragraph (1) of this subsection may be in the form of debt obligations, or trust certificates of beneficial ownership, or both. Student loans set aside pursuant to the offering of participations or pooled interests shall at all times be adequate to ensure the timely principal and interest payments on such securities.
(5) Restrictions on facilities and housing activities
Not less than 75 percent of the aggregate dollar amount of obligations bought, sold, held, insured, underwritten, and otherwise supported in accordance with the authority contained in paragraph (1)(C) shall be obligations which are listed by a nationally recognized statistical rating organization at a rating below the second highest rating of such organization.
(e) Advances to lenders that do not discriminate
The Association, pursuant to such criteria as the Board of Directors may prescribe, shall make advances on security or purchase student loans pursuant to subsection (d) only after the Association is assured that the lender (1) does not discriminate by pattern or practice against any particular class or category of students by requiring that, as a condition to the receipt of a loan, the student or his family maintain a business relationship with the lender, except that this clause shall not apply in the case of a loan made by a credit union, savings and loan association, mutual savings bank, institution of higher education, or any other lender with less than $75,000,000 in deposits, and (2) does not discriminate on the basis of race, sex, color, creed, or national origin.
(f) Stock of the Association
(1) Voting common stock
The Association shall have voting common stock having such par value as may be fixed by its Board of Directors from time to time. Each share of voting common stock shall be entitled to one vote with rights of cumulative voting at all elections of directors.
(2) Number of shares; transferability
The maximum number of shares of voting common stock that the Association may issue and have outstanding at any one time shall be fixed by the Board of Directors from time to time. Any voting common stock issued shall be fully transferable, except that, as to the Association, it shall be transferred only on the books of the Association.
(3) Dividends
To the extent that net income is earned and realized, subject to subsection (g)(2), dividends may be declared on voting common stock by the Board of Directors. Such dividends as may be declared by the Board of Directors shall be paid to the holders of outstanding shares of voting common stock, except that no such dividends shall be payable with respect to any share which has been called for redemption past the effective date of such call.
(4) Single class of voting common stock
As of the effective date of the Higher Education Amendments of 1992, all of the previously authorized shares of voting common stock and nonvoting common stock of the Association shall be converted to shares of a single class of voting common stock on a share-for-share basis, without any further action on the part of the Association or any holder. Each outstanding certificate for voting or nonvoting common stock shall evidence ownership of the same number of shares of voting stock into which it is converted. All preexisting rights and obligations with respect to any class of common stock of the Association shall be deemed to be rights and obligations with respect to such converted shares.
(g) Preferred stock
(1) Authority of Board
The Association is authorized to issue nonvoting preferred stock having such par value as may be fixed by its Board of Directors from time to time. Any preferred share issued shall be freely transferable, except that, as to the Association, it shall be transferred only on the books of the Association.
(2) Rights of preferred stock
The holders of the preferred shares shall be entitled to such rate of cumulative dividends and such shares shall be subject to such redemption or other conversion provisions as may be provided for at the time of issuance. No dividends shall be payable on any share of common stock at any time when any dividend is due on any share of preferred stock and has not been paid.
(3) Preference on termination of business
In the event of any liquidation, dissolution, or winding up of the Association's business, the holders of the preferred shares shall be paid in full at par value thereof, plus all accrued dividends, before the holders of the common shares receive any payment.
(h) Debt obligations
(1) Approval by Secretaries of Education and the Treasury
The Association is authorized with the approval of the Secretary of Education and the Secretary of the Treasury to issue and have outstanding obligations having such maturities and bearing such rate or rates of interest as may be determined by the Association. The authority of the Secretary of Education to approve the issuance of such obligations is limited to obligations issued by the Association and guaranteed by the Secretary pursuant to paragraph (2) of this subsection. Such obligations may be redeemable at the option of the Association before maturity in such manner as may be stipulated therein. The Secretary of the Treasury may not direct as a condition of his approval that any such issuance of obligations by the Association be made or sold to the Federal Financing Bank. To the extent that the average outstanding amount of the obligations owned by the Association pursuant to the authority contained in subsection (d)(1)(B) and (C) of this section and as to which the income is exempt from taxation under title 26 does not exceed the average stockholders' equity of the Association, the interest on obligations issued under this paragraph shall not be deemed to be interest on indebtedness incurred or continued to purchase or carry obligations for the purpose of
(2) Guarantee of debt
The Secretary is authorized, prior to October 1, 1984, to guarantee payment when due of principal and interest on obligations issued by the Association in an aggregate amount determined by the Secretary in consultation with the Secretary of the Treasury. Nothing in this section shall be construed so as to authorize the Secretary of Education or the Secretary of the Treasury to limit, control, or constrain programs of the Association or support of the Guaranteed Student Loan Program by the Association.
(3) Borrowing authority to meet guarantee obligations
To enable the Secretary to discharge his responsibilities under guarantees issued by him, he is authorized to issue to the Secretary of the Treasury notes or other obligations in such forms and denominations, bearing such maturities, and subject to such terms and conditions, as may be prescribed by the Secretary with the approval of the Secretary of the Treasury. Such notes or other obligations shall bear interest at a rate determined by the Secretary of the Treasury, taking into consideration the current average market yield on outstanding marketable obligations of the United States of comparable maturities during the months preceding the issuance of the notes or other obligations. The Secretary of the Treasury is authorized and directed to purchase any notes and other obligations issued hereunder and for that purpose he is authorized to use as a public debt transaction the proceeds from the sale of any securities issued under
(4) Action on request for guarantees
Upon receipt of a request from the Association under this subsection requiring approvals by the Secretary of Education or the Secretary of the Treasury, the Secretary of Education or the Secretary of the Treasury shall act promptly either to grant approval or to advise the Association of the reasons for withholding approval. In no case shall such an approval be withheld for a period longer than 60 days unless, prior to the end of such period, the Secretary of Education and the Secretary of the Treasury submit to the Congress a detailed explanation of reasons for doing so.
(5) Authority of Treasury to purchase debt
The Secretary of the Treasury is authorized to purchase any obligations issued by the Association pursuant to this subsection as now or hereafter in force, and for such purpose the Secretary of the Treasury is authorized to use as a public debt transaction the proceeds of the sale of any securities hereafter issued under
(6) Sale of debt to Federal Financing Bank
Notwithstanding any other provision of law the Association is authorized to sell or issue obligations on the security of student loans, the payment of interest or principal of which has at any time been guaranteed under
(7) Offset fee
(A) The Association shall pay to the Secretary, on a monthly basis, an offset fee calculated on an annual basis in an amount equal to 0.30 percent of the principal amount of each loan made, insured or guaranteed under this part that the Association holds (except for loans made pursuant to
(B) If the Secretary determines that the Association has substantially failed to comply with subsection (q), subparagraph (A) shall be applied by substituting "1.0 percent" for "0.3 percent".
(C) The Secretary shall deposit all fees collected pursuant to this paragraph into the insurance fund established in
(i) General corporate powers
The Association shall have power—
(1) to sue and be sued, complain and defend, in its corporate name and through its own counsel;
(2) to adopt, alter, and use the corporate seal, which shall be judicially noticed;
(3) to adopt, amend, and repeal by its Board of Directors, bylaws, rules, and regulations as may be necessary for the conduct of its business;
(4) to conduct its business, carry on its operations, and have officers and exercise the power granted by this section in any State without regard to any qualification or similar statute in any State;
(5) to lease, purchase, or otherwise acquire, own, hold, improve, use, or otherwise deal in and with any property, real, personal, or mixed, or any interest therein, wherever situated;
(6) to accept gifts or donations of services, or of property, real, personal, or mixed, tangible or intangible, in aid of any of the purposes of the Association;
(7) to sell, convey, mortgage, pledge, lease, exchange, and otherwise dispose of its property and assets;
(8) to appoint such officers, attorneys, employees, and agents as may be required, to determine their qualifications, to define their duties, to fix their salaries, require bonds for them, and fix the penalty thereof; and
(9) to enter into contracts, to execute instruments, to incur liabilities, and to do all things as are necessary or incidental to the proper management of its affairs and the proper conduct of its business.
(j) Accounting, auditing, and reporting
The accounts of the Association shall be audited annually. Such audits shall be conducted in accordance with generally accepted auditing standards by independent certified public accountants or by independent licensed public accountants, licensed on or before December 31, 1970, who are certified or licensed by a regulatory authority of a State or other political subdivision of the United States, except that independent public accountants licensed to practice by such regulatory authority after December 31, 1970, and persons who, although not so certified or licensed, meet, in the opinion of the Secretary, standards of education and experience representative of the highest standards prescribed by the licensing authorities of the several States which provide for the continuing licensing of public accountants and which are prescribed by the Secretary in appropriate regulations may perform such audits until December 31, 1975. A report of each such audit shall be furnished to the Secretary of the Treasury. The audit shall be conducted at the place or places where the accounts are normally kept. The representatives of the Secretary shall have access to all books, accounts, financial records, reports, files, and all other papers, things, or property belonging to or in use by the Association and necessary to facilitate the audit, and they shall be afforded full facilities for verifying transactions with the balances or securities held by depositaries, fiscal agents, and custodians.
(k) Report on audits by Treasury
A report of each such audit for a fiscal year shall be made by the Secretary of the Treasury to the President and to the Congress not later than 6 months following the close of such fiscal year. The report shall set forth the scope of the audit and shall include a statement (showing intercorporate relations) of assets and liabilities, capital and surplus or deficit; a statement of surplus or deficit analysis; a statement of income and expense; a statement of sources and application of funds; and such comments and information as may be deemed necessary to keep the President and the Congress informed of the operations and financial condition of the Association, together with such recommendations with respect thereto as the Secretary may deem advisable, including a report of any impairment of capital or lack of sufficient capital noted in the audit. A copy of each report shall be furnished to the Secretary, and to the Association.
(l) Lawful investment instruments; effect of and exemptions from other laws
All obligations issued by the Association including those made under subsection (d)(4) shall be lawful investments, and may be accepted as security for all fiduciary, trust, and public funds, the investment or deposit of which shall be under authority or control of the United States or of any officer or officers thereof. All stock and obligations issued by the Association pursuant to this section shall be deemed to be exempt securities within the meaning of laws administered by the Securities and Exchange Commission, to the same extent as securities which are direct obligations of, or obligations guaranteed as to principal or interest by, the United States. The Association shall, for the purposes of
(m) Preparation of obligations
In order to furnish obligations for delivery by the Association, the Secretary of the Treasury is authorized to prepare such obligations in such form as the Board of Directors may approve, such obligations when prepared to be held in the Treasury subject to delivery upon order by the Association. The engraved plates, dies, bed pieces, and so forth, executed in connection therewith shall remain in the custody of the Secretary of the Treasury. The Association shall reimburse the Secretary of the Treasury for any expenditures made in the preparation, custody, and delivery of such obligations. The Secretary of the Treasury is authorized to promulgate regulations on behalf of the Association so that the Association may utilize the book-entry system of the Federal Reserve Banks.
(n) Report on operations and activities
The Association shall, as soon as practicable after the end of each fiscal year, transmit to the President and the Congress a report of the Association's operations and activities, including a report with respect to all facilities transactions, during each year.
(o) Loan consolidations
(1) In general
The Association or its designated agent may, upon request of a borrower, consolidate loans received under this subchapter in accordance with
(2) Use of existing agencies as agent
The Association in making loans pursuant to this subsection in any State served by a guaranty agency or an eligible lender in a State described in section 1085(d)(1)(D) or (F) of this title may designate as its agent such agency or lender to perform such functions as the Association determines appropriate. Any agreements made pursuant to this subparagraph shall be on such terms and conditions as agreed upon by the Association and such agency or lender.
(p) Advances for direct loans by guaranty agencies
(1) In general
The Association shall make advances in each fiscal year from amounts available to it to each guaranty agency and eligible lender described in subsection 1078(h)(1) 1 of this title which has an agreement with the Association which sets forth that advances are necessary to enable such agency or lender to make student loans in accordance with section 1078(h) 1 of this title and that such advances will be repaid to the Association in accordance with such terms and conditions as may be set forth in the agreement and agreed to by the Association and such agency or lender. Advances made under this subsection shall not be subject to subsection (d)(2) of this section.
(2) Limitation
No advance may be made under this subsection unless the guaranty agency or lender makes an application to the Association, which shall be accompanied by such information as the Association determines to be reasonably necessary.
(q) Lender-of-last-resort
(1) Action at request of Secretary
(A) Whenever the Secretary determines that eligible borrowers are seeking and are unable to obtain loans under this part, the Association or its designated agent shall, not later than 90 days after August 10, 1993, begin making loans to such eligible borrowers in accordance with this subsection at the request of the Secretary. The Secretary may request that the Association make loans to borrowers within a geographic area or for the benefit of students attending institutions of higher education that certify, in accordance with standards established by the Secretary, that their students are seeking and unable to obtain loans.
(B) Loans made pursuant to this subsection shall be insurable by the Secretary under
(2) Issuance and coverage of loans
(A) Whenever the Secretary, after consultation with, and with the agreement of, representatives of the guaranty agency in a State, or an eligible lender in a State described in
(B) Loans made pursuant to this subsection shall be insurable by the agency identified in subparagraph (A) having an agreement pursuant to
(3) Termination of lending
The Association or its designated agent shall cease making loans under this subsection at such time as the Secretary determines that the conditions which caused the implementation of this subsection have ceased to exist.
(r) Safety and soundness of Association
(1) Reports by the Association
The Association shall promptly furnish to the Secretary of Education and Secretary of the Treasury copies of all—
(A) periodic financial reports publicly distributed by the Association;
(B) reports concerning the Association that are received by the Association and prepared by nationally recognized statistical rating organizations; and
(C)(i) financial statements of the Association within 45 days of the end of each fiscal quarter; and
(ii) reports setting forth the calculation of the capital ratio of the Association within 45 days of the end of each fiscal quarter.
(2) Audit by Secretary of the Treasury
(A) The Secretary of the Treasury may—
(i) appoint and fix the compensation of such auditors and examiners as may be necessary to conduct audits of the Association from time to time to determine the condition of the Association for the purpose of assessing the Association's financial safety and soundness and to determine whether the requirements of this section and
(ii) obtain the services of such experts as the Secretary of the Treasury determines necessary and appropriate, as authorized by
(B) Each auditor appointed under this paragraph shall conduct an audit of the Association to the extent requested by the Secretary of the Treasury and shall prepare and submit a report to the Secretary of the Treasury concerning the results of such audit. A copy of such report shall be furnished to the Association and the Secretary of Education on the date on which it is delivered to the Secretary of the Treasury.
(C) The Association shall provide full and prompt access to the Secretary of the Treasury to its books and records and other information requested by the Secretary of the Treasury.
(D)
(i)
(ii)
(E)
(i)
(I) the financial risk to the Association resulting from the activities of any associated person, to the extent such activities are reasonably likely to have a material impact on the financial condition of the Association, including the Association's capital ratio, the Association's liquidity, or the Association's ability to conduct and finance the Association's operations; and
(II) the Association's policies, procedures, and systems for monitoring and controlling any such financial risk.
(ii)
(iii)
(F)
(i)
(ii)
(I)
(II)
(3) Monitoring of safety and soundness
The Secretary of the Treasury shall conduct such studies as may be necessary to monitor the financial safety and soundness of the Association. In the event that the Secretary of the Treasury determines that the financial safety and soundness of the Association is at risk, the Secretary of the Treasury shall inform the Chairman and ranking minority member of the Committee on Labor and Human Resources of the Senate, the Chairman and ranking minority member of the Committee on Education and Labor of the House of Representatives, and the Secretary of Education of such determination and identify any corrective actions that should be taken to ensure the safety and soundness of the Association.
(4) Capital standard
If the capital ratio is less than 2 percent and is greater than or equal to 1.75 percent at the end of the Association's most recent calendar quarter the Association shall, within 60 days of such occurrence, submit to the Secretary of the Treasury a capital restoration plan, in reasonable detail, that the Association believes is adequate to cause the capital ratio to equal or exceed 2 percent within 36 months.
(5) Capital restoration plan
(A) Submission, approval, and implementation
The Secretary of the Treasury and the Association shall consult with respect to any capital restoration plan submitted pursuant to paragraph (4) and the Secretary of the Treasury shall approve such plan (or a modification thereof accepted by the Association) or disapprove such plan within 30 days after such plan is first submitted to the Secretary of the Treasury by the Association, unless the Association and Secretary of the Treasury mutually agree to a longer consideration period. If the Secretary of the Treasury approves a capital restoration plan (including a modification of a plan accepted by the Association), the Association shall forthwith proceed with diligence to implement such plan to the best of its ability.
(B) Disapproval
If the Secretary of the Treasury does not approve a capital restoration plan as provided in subparagraph (A), then not later than the earlier of the date the Secretary of the Treasury disapproves of such plan by written notice to the Association or the expiration of the 30-day consideration period referred to in subparagraph (A) (as such period may have been extended by mutual agreement), the Secretary of the Treasury shall submit the Association's capital restoration plan, in the form most recently proposed to the Secretary of the Treasury by the Association, together with a report on the Secretary of the Treasury's reasons for disapproval of such plan and an alternative capital restoration plan, to the Chairman and ranking minority member of the Senate Committee on Labor and Human Resources and to the Chairman and ranking minority member of the House Committee on Education and Labor. A copy of such submission simultaneously shall be sent to the Association and the Secretary of Education by the Secretary of the Treasury.
(C) Association implementation and response
Upon receipt of the submission by the Association, the Association shall forthwith proceed with diligence to implement the most recently proposed capital restoration plan of the Association. The Association, within 30 days after receipt from the Secretary of the Treasury of such submission, shall submit to such Chairmen and ranking minority members a written response to such submission, setting out fully the nature and extent of the Association's agreement or the disagreement with the Secretary of the Treasury with respect to the capital restoration plan submitted to the Secretary of the Treasury and any findings of the Secretary of the Treasury.
(6) Substantial capital ratio reduction
(A) Additional plan required
If the capital ratio is less than 1.75 percent and is greater than or equal to 1 percent at the end of the Association's most recent calendar quarter, the Association shall submit to the Secretary of the Treasury within 60 days after such occurrence a capital restoration plan (or an appropriate modification of any plan previously submitted or approved under paragraph (4)) to increase promptly its capital ratio to equal or exceed 1.75 percent. The Secretary of the Treasury and the Association shall consult with respect to any plan or modified plan submitted pursuant to this paragraph. The Secretary of the Treasury shall approve such plan or modified plan (or a modification thereof accepted by the Association) or disapprove such plan or modified plan within 30 days after such plan or modified plan is first submitted to the Secretary of the Treasury by the Association, unless the Association and Secretary of the Treasury mutually agree to a longer consideration period. If the Secretary of the Treasury approves a plan or modified plan (including a modification of a plan accepted by the Association), the Association shall forthwith proceed with diligence to implement such plan or modified plan to the best of the Association's ability.
(B) Disapproval
If the Secretary of the Treasury disapproves a capital restoration plan or modified plan submitted pursuant to subparagraph (A), then, not later than the earlier of the date the Secretary of the Treasury disapproves of such plan or modified plan (by written notice to the Association) or the expiration of the 30-day consideration period described in subparagraph (A) (as such period may have been extended by mutual agreement), the Secretary of the Treasury shall prepare and submit an alternative capital restoration plan, together with a report on his reasons for disapproval of the Association's plan or modified plan, to the Chairman and ranking minority member of the Committee on Labor and Human Resources of the Senate and to the Chairman and ranking minority member of the Committee on Education and Labor of the House of Representatives. A copy of such submission simultaneously shall be sent to the Association and the Secretary of Education by the Secretary of the Treasury. The Association, within 5 days after receipt from the Secretary of the Treasury of such submission, shall submit to the Chairmen and ranking minority members of such Committees, and the Secretary of the Treasury, a written response to such submission, setting out fully the nature and extent of the Association's agreement or disagreement with the Secretary of the Treasury with respect to the disapproved plan and the alternative plan of the Secretary of the Treasury and any findings of the Secretary of the Treasury.
(C) Review by Congress; Association implementation
Congress shall have 60 legislative days after the date on which Congress receives the alternative plan under subparagraph (B) from the Secretary of the Treasury to review such plan. If Congress does not take statutory action with respect to any such plan within such 60-day period, the Association shall immediately proceed with diligence to implement the alternative capital restoration plan of the Secretary of the Treasury under subparagraph (B). If Congress is out of session when any such alternative plan is received, such 60-day period shall begin on the first day of the next session of Congress.
(7) Actions by Secretary of the Treasury
If the capital ratio of the Association does not equal or exceed 1.75 percent at the end of the Association's most recent calendar quarter, the Secretary of the Treasury may, until the capital ratio equals or exceeds 1.75 percent, take any one or more of the following actions:
(A) Limit increase in liabilities
Limit any increase in, or order the reduction of, any liabilities of the Association, except as necessary to fund student loan purchases and warehousing advances.
(B) Restrict growth
Restrict or eliminate growth of the Association's assets, other than student loans purchases and warehousing advances.
(C) Restrict distributions
Restrict the Association from making any capital distribution.
(D) Require issuance of new capital
Require the Association to issue new capital in any form and in any amount sufficient to restore at least a 1.75 percent capital ratio.
(E) Limit executive compensation
Prohibit the Association from increasing for any executive officer any compensation including bonuses at a rate exceeding that officer's average rate of compensation during the previous 12 calendar months and prohibiting the Board from adopting any new employment severance contracts.
(8) Critical capital standard
(A) If the capital ratio is less than 1 percent at the end of the Association's most recent calendar quarter and the Association has already submitted a capital restoration plan to the Secretary of the Treasury pursuant to paragraph (4) or (6)(A), the Association shall forthwith proceed with diligence to implement the most recently proposed plan with such modifications as the Secretary of the Treasury determines are necessary to cause the capital ratio to equal or exceed 2 percent within 60 months.
(B) If the capital ratio is less than 1 percent at the end of the Association's most recent calendar quarter and the Association has not submitted a capital restoration plan to the Secretary of the Treasury pursuant to paragraph (4) or (6)(A), the Association shall—
(i) within 14 days of such occurrence submit a capital restoration plan to the Secretary of the Treasury which the Association believes is adequate to cause the capital ratio to equal or exceed 2 percent within 60 months; and
(ii) forthwith proceed with diligence to implement such plan with such modifications as the Secretary of the Treasury determines are necessary to cause the capital ratio to equal or exceed 2 percent within 60 months.
(C) Immediately upon a determination under subparagraph (A) or (B) to implement a capital restoration plan, the Secretary of the Treasury shall submit the capital restoration plan to be implemented to the Chairman and ranking minority member of the Committee on Labor and Human Resources of the Senate, the Chairman and ranking minority member of the Committee on Education and Labor of the House of Representatives, and the Secretary of Education.
(9) Additional reports to committees
The Association shall submit a copy of its capital restoration plan, modifications proposed to the Secretary of the Treasury, and proposed modifications received from the Secretary of the Treasury to the Congressional Budget Office and Government Accountability Office upon their submission to the Secretary of the Treasury or receipt from the Secretary of the Treasury. Notwithstanding any other provision of law, the Congressional Budget Office and Government Accountability Office shall maintain the confidentiality of information received pursuant to the previous sentence. In the event that the Secretary of the Treasury does not approve a capital restoration plan as provided in paragraph (5)(A) or (6)(A), or in the event that a capital restoration plan is modified by the Secretary of the Treasury pursuant to paragraph (6)(B) or (8), the Congressional Budget Office and Government Accountability Office shall each submit a report within 30 days of the Secretary of the Treasury's submission to the Chairmen and ranking minority members as required in paragraphs (5)(B), (6)(B), and (8)(C) to such Chairmen and ranking members—
(A) analyzing the financial condition of the Association;
(B) analyzing the capital restoration plan and reasons for disapproval of the plan contained in the Secretary of the Treasury's submission made pursuant to paragraph (5)(B), or the capital restoration plan proposed by the Association and the modifications made by the Secretary of the Treasury pursuant to paragraph (6)(B) or (8);
(C) analyzing the impact of the capital restoration plan and reasons for disapproval of the plan contained in the Secretary of the Treasury's submission made pursuant to paragraph (5)(B), or the impact of the capital restoration plan proposed by the Association and the modifications made by the Secretary of the Treasury pursuant to paragraph (6)(B) or (8), and analyzing the impact of the recommendations made pursuant to subparagraph (D) of this paragraph, on—
(i) the ability of the Association to fulfill its purpose and authorized activities as provided in this section, and
(ii) the operation of the student loan programs; and
(D) recommending steps which the Association should take to increase its capital ratio without impairing its ability to perform its purpose and authorized activities as provided in this section.
(10) Review by Secretary of Education
The Secretary of Education shall review the Secretary of the Treasury's submission required pursuant to paragraph (5)(B), (6)(B), or (8) and shall submit a report within 30 days to the Chairman and ranking minority member of the Senate Committee on Labor and Human Resources and to the Chairman and ranking minority member of the House Committee on Education and Labor—
(A) describing any administrative or legislative provisions governing the student loan programs which contributed to the decline in the Association's capital ratio; and
(B) recommending administrative and legislative changes in the student loan programs to maintain the orderly operation of such programs and to enable the Association to fulfill its purpose and authorized activities consistent with the capital ratio specified in paragraph (4).
(11) Safe harbor
The Association shall be deemed in compliance with the capital ratios described in paragraphs (4) and (6)(A) if the Association is rated in 1 of the 2 highest full rating categories (such categories to be determined without regard to designations within categories) by 2 nationally recognized statistical rating organizations, determined without regard to the Association's status as a federally chartered corporation.
(12) Treatment of confidential information
Notwithstanding any other provision of law, the Secretary of the Treasury, the Secretary of Education, the Congressional Budget Office, and the Government Accountability Office shall not disclose any information treated as confidential by the Association or the Association's associated persons and obtained pursuant to this subsection. Nothing in this paragraph shall authorize the Secretary of the Treasury, the Secretary of Education, the Congressional Budget Office, and the Government Accountability Office to withhold information from Congress, or prevent the Secretary of Education, the Congressional Budget Office, and the Government Accountability Office from complying with a request for information from any other Federal department or agency requesting the information for purposes within the scope of its jurisdiction, or complying with an order of a court of the United States in an action brought by the United States. For purposes of
(13) Enforcement of safety and soundness requirements
The Secretary of Education or the Secretary of the Treasury, as appropriate, may request that the Attorney General bring an action in the United States District Court for the District of Columbia for the enforcement of any provision of this section, or may, under the direction or control of the Attorney General, bring such an action. Such court shall have jurisdiction and power to order and require compliance with this section.
(14) Actions by Secretary
(A) In general
For any fiscal quarter ending after January 1, 2000, the Association shall have a capital ratio of at least 2.25 percent. The Secretary of the Treasury may, whenever such capital ratio is not met, take any one or more of the actions described in paragraph (7), except that—
(i) the capital ratio to be restored pursuant to paragraph (7)(D) shall be 2.25 percent; and
(ii) if the relevant capital ratio is in excess of or equal to 2 percent for such quarter, the Secretary of the Treasury shall defer taking any of the actions set forth in paragraph (7) until the next succeeding quarter and may then proceed with any such action only if the capital ratio of the Association remains below 2.25 percent.
(B) Applicability
The provisions of paragraphs (4), (5), (6), (8), (9), (10), and (11) shall be of no further application to the Association for any period after January 1, 2000.
(15) Definitions
As used in this subsection:
(A) The term "nationally recognized statistical rating organization" means any nationally recognized statistical rating organization, as that term is defined in
(B) The term "capital ratio" means the ratio of total stockholders' equity, as shown on the Association's most recent quarterly consolidated balance sheet prepared in the ordinary course of its business, to the sum of—
(i) the total assets of the Association, as shown on the balance sheet prepared in the ordinary course of its business; and
(ii) 50 percent of the credit equivalent amount of the following off-balance sheet items of the Association as of the date of such balance sheet—
(I) all financial standby letters of credit and other irrevocable guarantees of the repayment of financial obligations of others; and
(II) all interest rate contracts and exchange rate contracts, including interest exchange agreements, floor, cap, and collar agreements and similar arrangements.
For purposes of this subparagraph, the calculation of the credit equivalent amount of the items set forth in clause (ii) of this subparagraph, the netting of such items and eliminations for the purpose of avoidance of double-counting of such items shall be made in accordance with the measures for computing credit conversion factors for off-balance sheet items for capital maintenance purposes established for commercial banks from time to time by the Federal Reserve Board, but without regard to any risk weighting provisions in such measures.
(C) The term "legislative days" means only days on which either House of Congress is in session.
(16) Dividends
The Association may pay dividends in the form of cash or noncash distributions so long as at the time of the declaration of such dividends, after giving effect to the payment of such dividends as of the date of such declaration by the Board of Directors of the Association, the Association's capital would be in compliance with the capital standards set forth in this section.
(17) Certification prior to payment of dividend
Prior to the payment of any dividend under paragraph (16), the Association shall certify to the Secretary of the Treasury that the payment of the dividend will be made in compliance with paragraph (16) and shall provide copies of all calculations needed to make such certification.
(s) Charter sunset
(1) Application of provisions
This subsection applies beginning 18 months and one day after September 30, 1996, if no reorganization of the Association occurs in accordance with the provisions of
(2) Sunset plan
(A) Plan submission by the Association
Not later than July 1, 2007, the Association shall submit to the Secretary of the Treasury and to the Chairman and Ranking Member of the Committee on Labor and Human Resources of the Senate and the Chairman and Ranking Member of the Committee on Economic and Educational Opportunities of the House of Representatives, a detailed plan for the orderly winding up, by July 1, 2013, of business activities conducted pursuant to the charter set forth in this section. Such plan shall—
(i) ensure that the Association will have adequate assets to transfer to a trust, as provided in this subsection, to ensure full payment of remaining obligations of the Association in accordance with the terms of such obligations;
(ii) provide that all assets not used to pay liabilities shall be distributed to shareholders as provided in this subsection; and
(iii) provide that the operations of the Association shall remain separate and distinct from that of any entity to which the assets of the Association are transferred.
(B) Amendment of the plan by the Association
The Association shall from time to time amend such plan to reflect changed circumstances, and submit such amendments to the Secretary of the Treasury and to the Chairman and Ranking Minority Member of the Committee on Labor and Human Resources of the Senate and Chairman and Ranking Minority Member of the Committee on Economic and Educational Opportunities of the House of Representatives. In no case may any amendment extend the date for full implementation of the plan beyond the dissolution date provided in paragraph (3).
(C) Plan monitoring
The Secretary of the Treasury shall monitor the Association's compliance with the plan and shall continue to review the plan (including any amendments thereto).
(D) Amendment of the plan by the Secretary of the Treasury
The Secretary of the Treasury may require the Association to amend the plan (including any amendments to the plan), if the Secretary of the Treasury deems such amendments necessary to ensure full payment of all obligations of the Association.
(E) Implementation by the Association
The Association shall promptly implement the plan (including any amendments to the plan, whether such amendments are made by the Association or are required to be made by the Secretary of the Treasury).
(3) Dissolution of the Association
The Association shall dissolve and the Association's separate existence shall terminate on July 1, 2013, after discharge of all outstanding debt obligations and liquidation pursuant to this subsection. The Association may dissolve pursuant to this subsection prior to such date by notifying the Secretary of Education and the Secretary of the Treasury of the Association's intention to dissolve, unless within 60 days of receipt of such notice the Secretary of Education notifies the Association that the Association continues to be needed to serve as a lender of last resort pursuant to subsection (q) or continues to be needed to purchase loans under an agreement with the Secretary described in paragraph (4)(A). On the dissolution date, the Association shall take the following actions:
(A) Establishment of a trust
The Association shall, under the terms of an irrevocable trust agreement in form and substance satisfactory to the Secretary of the Treasury, the Association, and the appointed trustee, irrevocably transfer all remaining obligations of the Association to a trust and irrevocably deposit or cause to be deposited into such trust, to be held as trust funds solely for the benefit of holders of the remaining obligations, money or direct noncallable obligations of the United States or any agency thereof for which payment the full faith and credit of the United States is pledged, maturing as to principal and interest in such amounts and at such times as are determined by the Secretary of the Treasury to be sufficient, without consideration of any significant reinvestment of such interest, to pay the principal of, and interest on, the remaining obligations in accordance with their terms.
(B) Use of trust assets
All money, obligations, or financial assets deposited into the trust pursuant to this subsection shall be applied by the trustee to the payment of the remaining obligations assumed by the trust. Upon the fulfillment of the trustee's duties under the trust, any remaining assets of the trust shall be transferred to the persons who, at the time of the dissolution, were the shareholders of the Association, or to the legal successors or assigns of such persons.
(C) Obligations not transferred to the trust
The Association shall make proper provision for all other obligations of the Association, including the repurchase or redemption, or the making of proper provision for the repurchase or redemption, of any preferred stock of the Association outstanding.
(D) Transfer of remaining assets
After compliance with subparagraphs (A) and (C), the Association shall transfer to the shareholders of the Association any remaining assets of the Association.
(4) Restrictions relating to winding up
(A) Restrictions on new business activity or acquisition of assets by the Association
(i) In general
Beginning on July 1, 2009, the Association shall not engage in any new business activities or acquire any additional program assets (including acquiring assets pursuant to contractual commitments) described in subsection (d) other than in connection with the Association—
(I) serving as a lender of last resort pursuant to subsection (q); and
(II) purchasing loans insured under this part, if the Secretary, with the approval of the Secretary of the Treasury, enters into an agreement with the Association for the continuation or resumption of the Association's secondary market purchase program because the Secretary determines there is inadequate liquidity for loans made under this part.
(ii) Agreement
The Secretary is authorized to enter into an agreement described in subclause (II) of clause (i) with the Association covering such secondary market activities. Any agreement entered into under such subclause shall cover a period of 12 months, but may be renewed if the Secretary determines that liquidity remains inadequate. The fee provided under subsection (h)(7) shall not apply to loans acquired under any such agreement with the Secretary.
(B) Issuance of debt obligations during the wind up period; attributes of debt obligations
The Association shall not issue debt obligations which mature later than July 1, 2013, except in connection with serving as a lender of last resort pursuant to subsection (q) or with purchasing loans under an agreement with the Secretary as described in subparagraph (A). Nothing in this subsection shall modify the attributes accorded the debt obligations of the Association by this section, regardless of whether such debt obligations are transferred to a trust in accordance with paragraph (3).
(C) Use of Association name
The Association may not transfer or permit the use of the name "Student Loan Marketing Association", "Sallie Mae", or any variation thereof, to or by any entity other than a subsidiary of the Association.
(
Repeal of Section
Editorial Notes
References in Text
For the effective date of the Higher Education Amendments of 1992, referred to in subsec. (f)(4), see section 2 of
Codification
In subsec. (h)(3) and (5), "
Prior Provisions
A prior section 1087–2,
Amendments
2006—Subsec. (r)(15)(A).
2004—Subsec. (r)(9), (12).
2000—Subsec. (r)(2)(A)(i).
Subsec. (r)(2)(F).
1996—Subsec. (r)(1)(C).
Subsec. (r)(2)(A)(i), (ii).
"(i) appoint auditors to conduct audits of the Association from time to time to determine the condition of the Association for the purpose of assessing its financial safety and soundness; and
"(ii) enter into contracts to obtain the services of such technical experts as the Secretary of the Treasury determines necessary and appropriate to provide technical assistance to any auditor appointed under this paragraph."
Subsec. (r)(2)(D).
Subsec. (r)(2)(E).
Subsec. (r)(12).
Subsec. (r)(13).
Subsec. (r)(14).
Subsec. (r)(15).
Subsec. (r)(16), (17).
Subsec. (s).
1994—Subsec. (d)(1)(C).
Subsec. (d)(1)(C)(ii).
Subsec. (d)(1)(C)(iii), (iv).
Subsec. (n).
1993—Subsec. (h)(7).
Subsec. (q).
Subsec. (r)(12).
1992—Subsec. (c).
Subsec. (d)(1)(C).
Subsec. (d)(5).
Subsec. (f).
Subsec. (r).
1988—Subsec. (h)(1).
1987—Subsec. (d)(1)(E)(iii).
Statutory Notes and Related Subsidiaries
Change of Name
Committee on Education and Labor of House of Representatives changed to Committee on Education and the Workforce of House of Representatives by House Resolution No. 5, One Hundred Eighteenth Congress, Jan. 9, 2023.
Committee on Labor and Human Resources of Senate changed to Committee on Health, Education, Labor, and Pensions of Senate by Senate Resolution No. 20, One Hundred Sixth Congress, Jan. 19, 1999.
Committee on Economic and Educational Opportunities of House of Representatives changed to Committee on Education and the Workforce of House of Representatives by House Resolution No. 5, One Hundred Fifth Congress, Jan. 7, 1997.
Effective Date of 1996 Amendment
"(A) the date on which all of the obligations of the trust established under section 440(d)(1) of the Higher Education Act of 1965 [
"(B) the date on which all of the obligations of the trust established under subsection [sic] 439(s)(3)(A) of such Act [
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
Termination of Reporting Requirements
For termination, effective May 15, 2000, of provisions in subsecs. (k) and (n) of this section relating to transmitting annual reports to Congress, see section 3003 of
Use of Association Names Upon Dissolution; Enforcement
"(e)
"(f)
1 See References in Text note below.
§1087–3. Reorganization of Student Loan Marketing Association through formation of Holding Company
(a) Actions by Association's Board of Directors
The Board of Directors of the Association shall take or cause to be taken all such action as the Board of Directors deems necessary or appropriate to effect, upon the shareholder approval described in subsection (b), a restructuring of the common stock ownership of the Association, as set forth in a plan of reorganization adopted by the Board of Directors (the terms of which shall be consistent with this section) so that all of the outstanding common shares of the Association shall be directly owned by a Holding Company. Such actions may include, in the Board of Director's discretion, a merger of a wholly owned subsidiary of the Holding Company with and into the Association, which would have the effect provided in the plan of reorganization and the law of the jurisdiction in which such subsidiary is incorporated. As part of the restructuring, the Board of Directors may cause—
(1) the common shares of the Association to be converted, on the reorganization effective date, to common shares of the Holding Company on a one for one basis, consistent with applicable State or District of Columbia law; and
(2) Holding Company common shares to be registered with the Securities and Exchange Commission.
(b) Shareholder approval
The plan of reorganization adopted by the Board of Directors pursuant to subsection (a) shall be submitted to common shareholders of the Association for their approval. The reorganization shall occur on the reorganization effective date, provided that the plan of reorganization has been approved by the affirmative votes, cast in person or by proxy, of the holders of a majority of the issued and outstanding shares of the Association common stock.
(c) Transition
In the event the shareholders of the Association approve the plan of reorganization under subsection (b), the following provisions shall apply beginning on the reorganization effective date:
(1) In general
Except as specifically provided in this section, until the dissolution date the Association shall continue to have all of the rights, privileges and obligations set forth in, and shall be subject to all of the limitations and restrictions of,
(2) Transfer of certain property
(A) In general
Except as provided in this section, on the reorganization effective date or as soon as practicable thereafter, the Association shall use the Association's best efforts to transfer to the Holding Company or any subsidiary of the Holding Company (or both), as directed by the Holding Company, all real and personal property of the Association (both tangible and intangible) other than the remaining property. Subject to the preceding sentence, such transferred property shall include all right, title, and interest in—
(i) direct or indirect subsidiaries of the Association (excluding special purpose funding companies in existence on September 30, 1996, and any interest in any government-sponsored enterprise);
(ii) contracts, leases, and other agreements of the Association;
(iii) licenses and other intellectual property of the Association; and
(iv) any other property of the Association.
(B) Construction
Nothing in this paragraph shall be construed to prohibit the Association from transferring remaining property from time to time to the Holding Company or any subsidiary of the Holding Company, subject to the provisions of paragraph (4).
(3) Transfer of personnel
On the reorganization effective date, employees of the Association shall become employees of the Holding Company (or any subsidiary of the Holding Company), and the Holding Company (or any subsidiary of the Holding Company) shall provide all necessary and appropriate management and operational support (including loan servicing) to the Association, as requested by the Association. The Association, however, may obtain such management and operational support from persons or entities not associated with the Holding Company.
(4) Dividends
The Association may pay dividends in the form of cash or noncash distributions so long as at the time of the declaration of such dividends, after giving effect to the payment of such dividends as of the date of such declaration by the Board of Directors of the Association, the Association's capital would be in compliance with the capital standards and requirements set forth in
(5) Certification prior to dividend
Prior to the payment of any dividend under paragraph (4), the Association shall certify to the Secretary of the Treasury that the payment of the dividend will be made in compliance with paragraph (4) and shall provide copies of all calculations needed to make such certification.
(6) Restrictions on new business activity or acquisition of assets by Association
(A) In general
After the reorganization effective date, the Association shall not engage in any new business activities or acquire any additional program assets described in
(i) student loan purchases through September 30, 2007;
(ii) contractual commitments for future warehousing advances, or pursuant to letters of credit or standby bond purchase agreements, which are outstanding as of the reorganization effective date;
(iii) the Association serving as a lender-of-last-resort pursuant to
(iv) the Association's purchase of loans insured under this part, if the Secretary, with the approval of the Secretary of the Treasury, enters into an agreement with the Association for the continuation or resumption of the Association's secondary market purchase program because the Secretary determines there is inadequate liquidity for loans made under this part.
(B) Agreement
The Secretary is authorized to enter into an agreement described in clause (iv) of subparagraph (A) with the Association covering such secondary market activities. Any agreement entered into under such clause shall cover a period of 12 months, but may be renewed if the Secretary determines that liquidity remains inadequate. The fee provided under
(7) Issuance of debt obligations during the transition period; attributes of debt obligations
After the reorganization effective date, the Association shall not issue debt obligations which mature later than September 30, 2008, except in connection with serving as a lender-of-last-resort pursuant to
(8) Monitoring of safety and soundness
(A) Obligation to obtain, maintain, and report information
The Association shall obtain such information and make and keep such records as the Secretary of the Treasury may from time to time prescribe concerning—
(i) the financial risk to the Association resulting from the activities of any associated person, to the extent such activities are reasonably likely to have a material impact on the financial condition of the Association, including the Association's capital ratio, the Association's liquidity, or the Association's ability to conduct and finance the Association's operations; and
(ii) the Association's policies, procedures, and systems for monitoring and controlling any such financial risk.
(B) Summary reports
The Secretary of the Treasury may require summary reports of the information described in subparagraph (A) to be filed no more frequently than quarterly. If, as a result of adverse market conditions or based on reports provided pursuant to this subparagraph or other available information, the Secretary of the Treasury has concerns regarding the financial or operational condition of the Association, the Secretary of the Treasury may, notwithstanding the preceding sentence and subparagraph (A), require the Association to make reports concerning the activities of any associated person whose business activities are reasonably likely to have a material impact on the financial or operational condition of the Association.
(C) Separate operation of corporations
(i) In general
The funds and assets of the Association shall at all times be maintained separately from the funds and assets of the Holding Company or any subsidiary of the Holding Company and may be used by the Association solely to carry out the Association's purposes and to fulfill the Association's obligations.
(ii) Books and records
The Association shall maintain books and records that clearly reflect the assets and liabilities of the Association, separate from the assets and liabilities of the Holding Company or any subsidiary of the Holding Company.
(iii) Corporate office
The Association shall maintain a corporate office that is physically separate from any office of the Holding Company or any subsidiary of the Holding Company.
(iv) Director
No director of the Association who is appointed by the President pursuant to
(v) One officer requirement
At least one officer of the Association shall be an officer solely of the Association.
(vi) Transactions
Transactions between the Association and the Holding Company or any subsidiary of the Holding Company, including any loan servicing arrangements, shall be on terms no less favorable to the Association than the Association could obtain from an unrelated third party offering comparable services.
(vii) Credit prohibition
The Association shall not extend credit to the Holding Company or any subsidiary of the Holding Company nor guarantee or provide any credit enhancement to any debt obligations of the Holding Company or any subsidiary of the Holding Company.
(viii) Amounts collected
Any amounts collected on behalf of the Association by the Holding Company or any subsidiary of the Holding Company with respect to the assets of the Association, pursuant to a servicing contract or other arrangement between the Association and the Holding Company or any subsidiary of the Holding Company, shall be collected solely for the benefit of the Association and shall be immediately deposited by the Holding Company or such subsidiary to an account under the sole control of the Association.
(D) Encumbrance of assets
Notwithstanding any Federal or State law, rule, or regulation, or legal or equitable principle, doctrine, or theory to the contrary, under no circumstances shall the assets of the Association be available or used to pay claims or debts of or incurred by the Holding Company. Nothing in this subparagraph shall be construed to limit the right of the Association to pay dividends not otherwise prohibited under this subparagraph or to limit any liability of the Holding Company explicitly provided for in this section.
(E) Holding Company activities
After the reorganization effective date and prior to the dissolution date, all business activities of the Holding Company shall be conducted through subsidiaries of the Holding Company.
(F) Confidentiality
Any information provided by the Association pursuant to this section shall be subject to the same confidentiality obligations contained in
(G) Definition
For purposes of this paragraph, the term "associated person" means any person, other than a natural person, who is directly or indirectly controlling, controlled by, or under common control with, the Association.
(9) Issuance of stock warrants
(A) In general
On the reorganization effective date, the Holding Company shall issue to the District of Columbia Financial Responsibility and Management Assistance Authority a number of stock warrants that is equal to one percent of the outstanding shares of the Association, determined as of the last day of the fiscal quarter preceding September 30, 1996, with each stock warrant entitling the holder of the stock warrant to purchase from the Holding Company one share of the registered common stock of the Holding Company or the Holding Company's successors or assigns, at any time on or before September 30, 2008. The exercise price for such warrants shall be an amount equal to the average closing price of the common stock of the Association for the 20 business days prior to September 30, 1996, on the exchange or market which is then the primary exchange or market for the common stock of the Association. The number of shares of Holding Company common stock subject to each stock warrant and the exercise price of each stock warrant shall be adjusted as necessary to reflect—
(i) the conversion of Association common stock into Holding Company common stock as part of the plan of reorganization approved by the Association's shareholders; and
(ii) any issuance or sale of stock (including issuance or sale of treasury stock), stock split, recapitalization, reorganization, or other corporate event, if agreed to by the Secretary of the Treasury and the Association.
(B) Authority to sell or exercise stock warrants; deposit of proceeds
The District of Columbia Financial Responsibility and Management Assistance Authority is authorized to sell or exercise the stock warrants described in subparagraph (A). The District of Columbia Financial Responsibility and Management Assistance Authority shall deposit into the account established under section 1155(e) 1 of this title amounts collected from the sale and proceeds resulting from the exercise of the stock warrants pursuant to this subparagraph.
(10) Restrictions on transfer of Association shares and bankruptcy of Association
After the reorganization effective date, the Holding Company shall not sell, pledge, or otherwise transfer the outstanding shares of the Association, or agree to or cause the liquidation of the Association or cause the Association to file a petition for bankruptcy under title 11, without prior approval of the Secretary of the Treasury and the Secretary of Education.
(d) Termination of Association
In the event the shareholders of the Association approve a plan of reorganization under subsection (b), the Association shall dissolve, and the Association's separate existence shall terminate on September 30, 2008, after discharge of all outstanding debt obligations and liquidation pursuant to this subsection. The Association may dissolve pursuant to this subsection prior to such date by notifying the Secretary of Education and the Secretary of the Treasury of the Association's intention to dissolve, unless within 60 days after receipt of such notice the Secretary of Education notifies the Association that the Association continues to be needed to serve as a lender of last resort pursuant to
(1) Establishment of a trust
The Association shall, under the terms of an irrevocable trust agreement that is in form and substance satisfactory to the Secretary of the Treasury, the Association and the appointed trustee, irrevocably transfer all remaining obligations of the Association to the trust and irrevocably deposit or cause to be deposited into such trust, to be held as trust funds solely for the benefit of holders of the remaining obligations, money or direct noncallable obligations of the United States or any agency thereof for which payment the full faith and credit of the United States is pledged, maturing as to principal and interest in such amounts and at such times as are determined by the Secretary of the Treasury to be sufficient, without consideration of any significant reinvestment of such interest, to pay the principal of, and interest on, the remaining obligations in accordance with their terms. To the extent the Association cannot provide money or qualifying obligations in the amount required, the Holding Company shall be required to transfer money or qualifying obligations to the trust in the amount necessary to prevent any deficiency.
(2) Use of trust assets
All money, obligations, or financial assets deposited into the trust pursuant to this subsection shall be applied by the trustee to the payment of the remaining obligations assumed by the trust.
(3) Obligations not transferred to the trust
The Association shall make proper provision for all other obligations of the Association not transferred to the trust, including the repurchase or redemption, or the making of proper provision for the repurchase or redemption, of any preferred stock of the Association outstanding. Any obligations of the Association which cannot be fully satisfied shall become liabilities of the Holding Company as of the date of dissolution.
(4) Transfer of remaining assets
After compliance with paragraphs (1) and (3), any remaining assets of the trust shall be transferred to the Holding Company or any subsidiary of the Holding Company, as directed by the Holding Company.
(e) Operation of Holding Company
In the event the shareholders of the Association approve the plan of reorganization under subsection (b), the following provisions shall apply beginning on the reorganization effective date:
(1) Holding Company Board of Directors
The number of members and composition of the Board of Directors of the Holding Company shall be determined as set forth in the Holding Company's charter or like instrument (as amended from time to time) or bylaws (as amended from time to time) and as permitted under the laws of the jurisdiction of the Holding Company's incorporation.
(2) Holding Company name
The names of the Holding Company and any subsidiary of the Holding Company (other than the Association)—
(A) may not contain the name "Student Loan Marketing Association"; and
(B) may contain, to the extent permitted by applicable State or District of Columbia law, "Sallie Mae" or variations thereof, or such other names as the Board of Directors of the Association or the Holding Company deems appropriate.
(3) Use of Sallie Mae name
Subject to paragraph (2), the Association may assign to the Holding Company, or any subsidiary of the Holding Company, the "Sallie Mae" name as a trademark or service mark, except that neither the Holding Company nor any subsidiary of the Holding Company (other than the Association or any subsidiary of the Association) may use the "Sallie Mae" name on, or to identify the issuer of, any debt obligation or other security offered or sold by the Holding Company or any subsidiary of the Holding Company (other than a debt obligation or other security issued to and held by the Holding Company or any subsidiary of the Holding Company). The Association shall remit to the account established under section 1155(e) 1 of this title, $5,000,000, within 60 days of the reorganization effective date as compensation for the right to assign the "Sallie Mae" name as a trademark or service mark.
(4) Disclosure required
Until 3 years after the dissolution date, the Holding Company, and any subsidiary of the Holding Company (other than the Association), shall prominently display—
(A) in any document offering the Holding Company's securities, a statement that the obligations of the Holding Company and any subsidiary of the Holding Company are not guaranteed by the full faith and credit of the United States; and
(B) in any advertisement or promotional materials which use the "Sallie Mae" name or mark, a statement that neither the Holding Company nor any subsidiary of the Holding Company is a government-sponsored enterprise or instrumentality of the United States.
(f) Strict construction
Except as specifically set forth in this section, nothing in this section shall be construed to limit the authority of the Association as a federally chartered corporation, or of the Holding Company as a State or District of Columbia chartered corporation.
(g) Right to enforce
The Secretary of Education or the Secretary of the Treasury, as appropriate, may request that the Attorney General bring an action in the United States District Court for the District of Columbia for the enforcement of any provision of this section, or may, under the direction or control of the Attorney General, bring such an action. Such court shall have jurisdiction and power to order and require compliance with this section.
(h) Deadline for reorganization effective date
This section shall be of no further force and effect in the event that the reorganization effective date does not occur on or before 18 months after September 30, 1996.
(i) Definitions
For purposes of this section:
(1) Association
The term "Association" means the Student Loan Marketing Association.
(2) Dissolution date
The term "dissolution date" means September 30, 2008, or such earlier date as the Secretary of Education permits the transfer of remaining obligations in accordance with subsection (d).
(3) Holding Company
The term "Holding Company" means the new business corporation established pursuant to this section by the Association under the laws of any State of the United States or the District of Columbia for the purposes of the reorganization and restructuring described in subsection (a).
(4) Remaining obligations
The term "remaining obligations" means the debt obligations of the Association outstanding as of the dissolution date.
(5) Remaining property
The term "remaining property" means the following assets and liabilities of the Association which are outstanding as of the reorganization effective date:
(A) Debt obligations issued by the Association.
(B) Contracts relating to interest rate, currency, or commodity positions or protections.
(C) Investment securities owned by the Association.
(D) Any instruments, assets, or agreements described in
(E) Except as specifically prohibited by this section or
(6) Reorganization
The term "reorganization" means the restructuring event or events (including any merger event) giving effect to the Holding Company structure described in subsection (a).
(7) Reorganization effective date
The term "reorganization effective date" means the effective date of the reorganization as determined by the Board of Directors of the Association, which shall not be earlier than the date that shareholder approval is obtained pursuant to subsection (b) and shall not be later than the date that is 18 months after September 30, 1996.
(8) Subsidiary
The term "subsidiary" means one or more direct or indirect subsidiaries.
(
Repeal of Section
Editorial Notes
References in Text
Prior Provisions
A prior section 1087–3,
A prior section 1087–3a,
1 See References in Text note below.
§1087–4. Discrimination in secondary markets prohibited
The Student Loan Marketing Association (and, if the Association is privatized under
(
Editorial Notes
Prior Provisions
A prior section 1087–4,
Part C—Federal Work-Study Programs
Editorial Notes
Codification
Part C of title IV of the Higher Education Act of 1965,
Part was formerly classified to part C (§2751 et seq.) of subchapter I of
Prior Provisions
A prior part C of this subchapter, consisting of part D of title IV of
A prior part C of title IV of
§1087–51. Purpose; appropriations authorized
(a) Purpose
The purpose of this part is to stimulate and promote the part-time employment of students who are enrolled as undergraduate, graduate, or professional students and who are in need of earnings from employment to pursue courses of study at eligible institutions, and to encourage students receiving Federal student financial assistance to participate in community service activities that will benefit the Nation and engender in the students a sense of social responsibility and commitment to the community.
(b) Authorization of appropriations
There are authorized to be appropriated to carry out this part, such sums as may be necessary for fiscal year 2009 and each of the five succeeding fiscal years.
(c) "Community services" defined
For purposes of this part, the term "community services" means services which are identified by an institution of higher education, through formal or informal consultation with local nonprofit, governmental, and community-based organizations, as designed to improve the quality of life for community residents, particularly low-income individuals, or to solve particular problems related to their needs, including—
(1) such fields as health care, child care (including child care services provided on campus that are open and accessible to the community), literacy training, education (including tutorial services), welfare, social services, transportation, housing and neighborhood improvement, public safety, emergency preparedness and response, crime prevention and control, recreation, rural development, and community improvement;
(2) work in a project, as defined in section 12511(20) 1 of title 42;
(3) support services to students with disabilities, including students with disabilities who are enrolled at the institution; and
(4) activities in which a student serves as a mentor for such purposes as—
(A) tutoring;
(B) supporting educational and recreational activities; and
(C) counseling, including career counseling.
(
Editorial Notes
References in Text
Codification
Section was formerly classified to
Section was originally enacted as section 121 (and later renumbered section 141) of the Economic Opportunity Act of 1964,
Prior Provisions
A prior section 441 of
Another prior section 441 of
Amendments
2008—Subsec. (b).
Subsec. (c)(1).
1998—Subsec. (b).
Subsec. (c)(1).
Subsec. (c)(3).
1993—Subsec. (c)(2).
1992—Subsec. (a).
Subsec. (b).
Subsec. (c).
Statutory Notes and Related Subsidiaries
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
References to Part C of Title I of the Economic Opportunity Act of 1964
1 See References in Text note below.
§1087–52. Allocation of funds
(a) Allocation based on previous allocation
(1) From the amount appropriated pursuant to
(2)(A) From the amount so appropriated, the Secretary shall next allocate to each eligible institution that began participation in the program under this part after fiscal year 1999 but is not a first or second time participant, an amount equal to the greater of—
(i) $5,000; or
(ii) 90 percent of the amount received and used under this part for the first year it participated in the program.
(B) From the amount so appropriated, the Secretary shall next allocate to each eligible institution that began participation in the program under this part after fiscal year 1999 and is a first or second time participant, an amount equal to the greatest of—
(i) $5,000;
(ii) an amount equal to (I) 90 percent of the amount received and used under this part in the second preceding fiscal year by eligible institutions offering comparable programs of instruction, divided by (II) the number of students enrolled at such comparable institutions in such fiscal year, multiplied by (III) the number of students enrolled at the applicant institution in such fiscal year; or
(iii) 90 percent of the institution's allocation under this part for the preceding fiscal year.
(C) Notwithstanding subparagraphs (A) and (B) of this paragraph, the Secretary shall allocate to each eligible institution which—
(i) was a first-time participant in the program in fiscal year 2000 or any subsequent fiscal year, and
(ii) received a larger amount under this subsection in the second year of participation,
an amount equal to 90 percent of the amount it received under this subsection in its second year of participation.
(3)(A) If the amount appropriated for any fiscal year is less than the amount required to be allocated to all institutions under paragraph (1) of this subsection, then the amount of the allocation to each such institution shall be ratably reduced.
(B) If the amount appropriated for any fiscal year is more than the amount required to be allocated to all institutions under paragraph (1) but less than the amount required to be allocated to all institutions under paragraph (2), then—
(i) the Secretary shall allot the amount required to be allocated to all institutions under paragraph (1), and
(ii) the amount of the allocation to each institution under paragraph (2) shall be ratably reduced.
(C) If additional amounts are appropriated for any such fiscal year, such reduced amounts shall be increased on the same basis as they were reduced (until the amount allocated equals the amount required to be allocated under paragraphs (1) and (2) of this subsection).
(4)(A) Notwithstanding any other provision of this section, the Secretary may allocate an amount equal to not more than 10 percent of the amount by which the amount appropriated in any fiscal year to carry out this part exceeds $700,000,000 among eligible institutions described in subparagraph (B).
(B) In order to receive an allocation pursuant to subparagraph (A) an institution shall be an eligible institution from which 50 percent or more of the Pell Grant recipients attending such eligible institution graduate or transfer to a 4-year institution of higher education.
(b) Allocation of excess based on share of excess eligible amounts
(1) From the remainder of the amount appropriated pursuant to
(2) For any eligible institution, the excess eligible amount is the amount, if any, by which—
(A)(i) the amount of that institution's need (as determined under subsection (c) of this section), divided by (ii) the sum of the need of all institutions (as so determined), multiplied by (iii) the amount appropriated pursuant to
(B) the amount required to be allocated to that institution under subsection (a) of this section.
(c) Determination of institution's need
(1) The amount of an institution's need is equal to the sum of the self-help need of the institution's eligible undergraduate students and the self-help need of the institution's eligible graduate and professional students.
(2) To determine the self-help need of an institution's eligible undergraduate students, the Secretary shall—
(A) establish various income categories for dependent and independent undergraduate students;
(B) establish a student aid index for each income category of dependent and independent undergraduate students, determined on the basis of the average student aid index (computed in accordance with part F of this subchapter of a representative sample within each income category for the second preceding fiscal year;
(C) compute 25 percent of the average cost of attendance for all undergraduate students;
(D) multiply the number of eligible dependent students in each income category by the lesser of—
(i) 25 percent of the average cost of attendance for all undergraduate students determined under subparagraph (C); or
(ii) the average cost of attendance for all undergraduate students minus the student aid index determined under subparagraph (B) for that income category, except that the amount computed by such subtraction shall not be less than zero;
(E) add the amounts determined under subparagraph (D) for each income category of dependent students; and
(F) multiply the number of eligible independent students in each income category by the lesser of—
(i) 25 percent of the average cost of attendance for all undergraduate students determined under subparagraph (C); or
(ii) the average cost of attendance for all undergraduate students minus the student aid index determined under subparagraph (B) for that income category, except that the amount computed by such subtraction for any income category shall not be less than zero;
(G) add the amounts determined under subparagraph (F) for each income category of independent students; and
(H) add the amounts determined under subparagraphs (E) and (G).
(3) To determine the self-help need of an institution's eligible graduate and professional students, the Secretary shall—
(A) establish various income categories of graduate and professional students;
(B) establish a student aid index for each income category of graduate and professional students, determined on the basis of the average student aid index (computed in accordance with part F of this subchapter of a representative sample within each income category for the second preceding fiscal year;
(C) determine the average cost of attendance for all graduate and professional students;
(D) subtract from the average cost of attendance for all graduate and professional students (determined under subparagraph (C)), the student aid index (determined under subparagraph (B)) for each income category, except that the amount computed by such subtraction for any income category shall not be less than zero;
(E) multiply the amounts determined under subparagraph (D) by the number of eligible students in each category; and
(F) add the amounts determined under subparagraph (E) of this paragraph for each income category.
(4)(A) For purposes of paragraphs (2) and (3), the term "average cost of attendance" means the average of the attendance costs for undergraduate students and for graduate and professional students, which shall include (i) tuition and fees determined in accordance with subparagraph (B), (ii) standard living expenses determined in accordance with subparagraph (C), and (iii) books and supplies determined in accordance with subparagraph (D).
(B) The average undergraduate and graduate and professional tuition and fees described in subparagraph (A)(i) shall be computed on the basis of information reported by the institution to the Secretary, which shall include (i) total revenue received by the institution from undergraduate and graduate tuition and fees for the second year preceding the year for which it is applying for an allocation, and (ii) the institution's enrollment for such second preceding year.
(C) The standard living expense described in subparagraph (A)(ii) is equal to 150 percent of the difference between the income protection allowance for a family of five with one in college and the income protection allowance for a family of six with one in college for a single independent student.
(D) The allowance for books and supplies described in subparagraph (A)(iii) is equal to $600.
(d) Reallocation of excess allocations
(1) If institutions return to the Secretary any portion of the sums allocated to such institutions under this section for any fiscal year, the Secretary shall reallot such excess to eligible institutions which used at least 5 percent of the total amount of funds granted to such institution under this section to compensate students employed in tutoring in reading and family literacy activities in the preceding fiscal year. Such excess funds shall be reallotted to institutions which qualify under this subsection on the same basis as excess eligible amounts are allocated to institutions pursuant to subsection (b) of this section. Funds received by institutions pursuant to this subsection shall be used to compensate students employed in community service.
(2) If, under paragraph (1) of this subsection, an institution returns more than 10 percent of its allocation, the institution's allocation for the next fiscal year shall be reduced by the amount returned. The Secretary may waive this paragraph for a specific institution if the Secretary finds that enforcing this paragraph would be contrary to the interest of the program.
(e) Filing deadlines
The Secretary shall, from time to time, set dates before which institutions must file applications for allocations under this part.
(
Editorial Notes
Codification
Section was formerly classified to
Section was originally enacted as section 122 (and later renumbered section 142) of the Economic Opportunity Act of 1964,
Prior Provisions
A prior section 442 of
Another prior section 442 of
Amendments
2020—Subsec. (c)(2)(B).
Subsec. (c)(2)(D)(ii), (F)(ii).
Subsec. (c)(3)(B).
Subsec. (c)(3)(D).
2008—Subsec. (c)(4)(D).
1998—Subsec. (a)(1).
Subsec. (a)(2)(A), (B).
Subsec. (a)(2)(C)(i).
Subsec. (b).
Subsec. (b)(1).
Subsec. (b)(2)(A)(i).
Subsec. (c).
Subsec. (c)(3).
Subsec. (d).
Subsec. (d)(1).
Subsecs. (e), (f).
1993—Subsec. (d)(4)(C).
Subsec. (e).
1992—Subsec. (a)(4).
Subsec. (e).
"(1) If an institution returns to the Secretary any portion of the sums allocated to such institution under this section for any fiscal year the Secretary shall reallocate such excess in accordance with paragraph (2). Any sums reallocated under this subsection may be used in accordance with
"(2) The Secretary shall reallot not to exceed 25 percent of the amount available pursuant to paragraph (1) to eligible institutions for use in initiating, improving, and expanding programs of community service-learning conducted in accordance with
1987—Subsec. (e)(2).
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Amendment by
Effective Date of 1998 Amendment
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
Effective Date
§1087–53. Grants for Federal work-study programs
(a) Agreements required
The Secretary is authorized to enter into agreements with institutions of higher education under which the Secretary will make grants to such institutions to assist in the operation of work-study programs as provided in this part.
(b) Contents of agreements
An agreement entered into pursuant to this section shall—
(1) provide for the operation by the institution of a program for the part-time employment, including internships, practica, or research assistantships as determined by the Secretary, of its students in work for the institution itself, work in community service or work in the public interest for a Federal, State, or local public agency or private nonprofit organization under an arrangement between the institution and such agency or organization, and such work—
(A) will not result in the displacement of employed workers or impair existing contracts for services;
(B) will be governed by such conditions of employment as will be appropriate and reasonable in light of such factors as type of work performed, geographical region, and proficiency of the employee;
(C) does not involve the construction, operation, or maintenance of so much of any facility as is used or is to be used for sectarian instruction or as a place for religious worship; and
(D) will not pay any wage to students employed under this subpart 1 that is less than the current Federal minimum wage as mandated by
(2) provide that funds granted an institution of higher education, pursuant to this section, may be used only to make payments to students participating in work-study programs, except that—
(A) for fiscal year 2000 and succeeding fiscal years, an institution shall use at least 7 percent of the total amount of funds granted to such institution under this section for such fiscal year to compensate students employed in community service, and shall ensure that not less than 1 tutoring or family literacy project (as described in subsection (d) of this section) is included in meeting the requirement of this subparagraph, except that the Secretary may waive this subparagraph if the Secretary determines that enforcing this subparagraph would cause hardship for students at the institution; and
(B) an institution may use a portion of the sums granted to it to meet administrative expenses in accordance with
(3) provide that in the selection of students for employment under such work-study program, only students who demonstrate financial need in accordance with part F of this subchapter and meet the requirements of
(4) provide that for a student employed in a work-study program under this part, at the time income derived from any need-based employment is in excess of the determination of the amount of such student's need by more than $300, continued employment shall not be subsidized with funds appropriated under this part;
(5) provide that the Federal share of the compensation of students employed in the work-study program in accordance with the agreement shall not exceed 75 percent, except that—
(A) the Federal share may exceed 75 percent, but not exceed 90 percent, if, consistent with regulations of the Secretary—
(i) the student is employed at a nonprofit private organization or a government agency that—
(I) is not a part of, and is not owned, operated, or controlled by, or under common ownership, operation, or control with, the institution;
(II) is selected by the institution on an individual case-by-case basis for such student; and
(III) would otherwise be unable to afford the costs of such employment; and
(ii) not more than 10 percent of the students compensated through the institution's grant under this part during the academic year are employed in positions for which the Federal share exceeds 75 percent; and
(B) the Federal share may exceed 75 percent if the Secretary determines, pursuant to regulations promulgated by the Secretary establishing objective criteria for such determinations, that a Federal share in excess of such amounts is required in furtherance of the purpose of this part;
(6) include provisions to make employment under such work-study program reasonably available (to the extent of available funds) to all eligible students in the institution in need thereof;
(7) provide assurances that employment made available from funds under this part will, to the maximum extent practicable, complement and reinforce the educational program or vocational goals of each student receiving assistance under this part;
(8) provide assurances, in the case of each proprietary institution, that students attending the proprietary institution receiving assistance under this part who are employed by the institution may be employed in jobs—
(A) that are only on campus and that—
(i) to the maximum extent practicable, complement and reinforce the education programs or vocational goals of such students; and
(ii) furnish student services that are directly related to the student's education, as determined by the Secretary pursuant to regulations, except that no student shall be employed in any position that would involve the solicitation of other potential students to enroll in the school; or
(B) in community service in accordance with paragraph (2)(A) of this subsection;
(9) provide assurances that employment made available from funds under this part may be used to support programs for supportive services to students with disabilities;
(10) provide assurances that the institution will inform all eligible students of the opportunity to perform community service, and will consult with local nonprofit, governmental, and community-based organizations to identify such opportunities; and
(11) include such other reasonable provisions as the Secretary shall deem necessary or appropriate to carry out the purpose of this part.
(c) Private sector employment agreement
As part of its agreement agreement 2 described in subsection (b) of this section, an institution of higher education may, at its option, enter into an additional agreement with the Secretary which shall—
(1) provide for the operation by the institution of a program of part-time employment of its students in work for a private for-profit organization under an arrangement between the institution and such organization that complies with the requirements of subparagraphs (A) through (D) of subsection (b)(1) of this section and subsection (b)(3) of this section;
(2) provide that the institution will use not more than 25 percent of the funds made available to such institution under this part for any fiscal year for the operation of the program described in paragraph (1);
(3) provide that, notwithstanding subsection (b)(5) of this section, the Federal share of the compensation of students employed in such program will not exceed 60 percent for academic years 1987–1988 and 1988–1989, 55 percent for academic year 1989–1990, and 50 percent for academic year 1990–1991 and succeeding academic years, and that the non-Federal share of such compensation will be provided by the private for-profit organization in which the student is employed;
(4) provide that jobs under the work study program will be academically relevant, to the maximum extent practicable; and
(5) provide that the for-profit organization will not use funds made available under this part to pay any employee who would otherwise be employed by the organization.
(d) Tutoring and literacy activities
(1) Use of funds
In any academic year to which subsection (b)(2)(A) applies, an institution shall ensure that funds granted to such institution under this section are used in accordance with such subsection to compensate (including compensation for time spent in training and travel directly related to tutoring in reading and family literacy activities) students—
(A) employed as reading tutors for children who are preschool age or are in elementary school; or
(B) employed in family literacy projects.
(2) Priority for schools
To the extent practicable, an institution shall—
(A) give priority to the employment of students in the provision of tutoring in reading in schools that are participating in a reading reform project that—
(i) is designed to train teachers how to teach reading on the basis of scientifically-based research on reading; and
(ii) is funded under the Elementary and Secondary Education Act of 1965 [
(B) ensure that any student compensated with the funds described in paragraph (1) who is employed in a school participating in a reading reform project described in subparagraph (A) receives training from the employing school in the instructional practices used by the school.
(3) Federal share
The Federal share of the compensation of work-study students compensated under this subsection may exceed 75 percent.
(e) Civic education and participation activities
(1) Use of funds
Funds granted to an institution under this section may be used to compensate (including compensation for time spent in training and travel directly related to civic education and participation activities) students employed in projects that—
(A) teach civics in schools;
(B) raise awareness of government functions or resources; or
(C) increase civic participation.
(2) Priority for schools
To the extent practicable, an institution shall—
(A) give priority to the employment of students participating in projects that educate or train the public about evacuation, emergency response, and injury prevention strategies relating to natural disasters, acts of terrorism, and other emergency situations; and
(B) ensure that any student compensated with the funds described in paragraph (1) receives appropriate training to carry out the educational services required.
(3) Federal share
The Federal share of the compensation of work-study students compensated under this subsection may exceed 75 percent.
(
Editorial Notes
References in Text
The Elementary and Secondary Education Act of 1965, referred to in subsec. (d)(2)(A)(ii), is
Codification
Section was formerly classified to
Section was originally enacted as section 123 (and later renumbered section 143) of the Economic Opportunity Act of 1964,
Prior Provisions
A prior section 443 of
Another prior section 443 of
A prior section 123 of
Amendments
2009—Subsec. (b)(2).
Subsec. (d)(1).
Subsec. (e)(1).
2008—Subsec. (b)(2)(A) to (C).
Subsec. (e).
1998—Subsec. (b)(1).
Subsec. (b)(2)(B), (C).
Subsec. (b)(3).
"(A) if the institution's grant under this part is directly or indirectly based in part on the financial need demonstrated by students who are (i) attending the institution less than full time, or (ii) independent students; and
"(B) if the total financial need of all such less than full-time and independent students at the institution exceeds 5 percent of the total financial need of all students at such institution,
then at least 5 percent of the grant shall be made available to such less than full-time and independent students;".
Subsec. (b)(5).
Subsec. (b)(6).
Subsec. (c)(4).
Subsec. (d).
1993—Subsec. (b)(2)(A).
Subsec. (b)(5).
"(A) the Federal share may exceed such amounts of such compensation if the Secretary determines, pursuant to regulations promulgated by the Secretary establishing objective criteria for such determinations, that a Federal share in excess of such amounts is required in furtherance of the purpose of this part; and
"(B) when a student engaged in work in community service performs such work for a private nonprofit organization other than the eligible institution, the contribution of such agency or organization shall not exceed 40 percent of the institution's share of the compensation of the student, and the eligible institution in its discretion may count such contribution toward satisfaction of the non-Federal share of the compensation of the student;".
Subsec. (b)(8)(A) to (C).
"(A) on campus only, except as required in subparagraph (A) of paragraph (2);
"(B) that, to the maximum extent practicable, complement and reinforce the educational programs or vocational goals of such students; and
"(C) furnishing student services that are directly related to the student's education, as determined by the Secretary pursuant to regulations, except that no student shall be employed in any position that would involve the solicitation of other potential students to enroll in the school;".
1992—
Subsec. (b)(1).
Subsec. (b)(2)(A).
Subsec. (b)(3) to (5).
"(3) provide that in the selection of students for employment under such work-study program, only students who demonstrate financial need in accordance with part F of this title, and who meet the requirements of
"(4) provide that for a student employed in a work-study program under this part, at the time income derived from any employment (including non-work-study or both) is in excess of the determination of the amount of such student's need by more than $200, continued employment shall not be subsidized with funds appropriated under this part;
"(5) provide that the Federal share of the compensation of students employed in the work study program in accordance with the agreement will not exceed 80 percent for academic years 1987–1988 and 1988–1989, 75 percent for academic year 1989–1990, and 70 percent for academic year 1990–1991 and succeeding academic years, except that—
"(A) the Federal share may exceed such amounts of such compensation if the Secretary determines, pursuant to regulations promulgated by the Secretary establishing objective criteria for such determinations, that a Federal share in excess of such amounts is required in furtherance of the purpose of this part; and
"(B) the Federal share of the compensation of the students employed in the work study for community service-learning programs described in
Subsec. (b)(8)(A).
Subsec. (b)(8)(C).
Subsec. (b)(9) to (11).
1987—Subsec. (b).
Subsec. (c).
Statutory Notes and Related Subsidiaries
Effective Date of 2009 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
Effective Date
1 So in original. Probably should be "part".
§1087–54. Sources of matching funds
Nothing in this part shall be construed as restricting the source (other than this part) from which the institution may pay its share of the compensation of a student employed under a work-study program covered by an agreement under this part, and such share may be paid to such student in the form of services and equipment (including tuition, room, board, and books) furnished by such institution.
(
Editorial Notes
Codification
Section was formerly classified to
Section was originally enacted as section 124 (and later renumbered section 144) of the Economic Opportunity Act of 1964,
Prior Provisions
A prior section 444 of
Provisions similar to this section were contained in
§1087–55. Flexible use of funds
(a) Carry-over authority
(1) Of the sums granted to an eligible institution under this part for any fiscal year, 10 percent may, at the discretion of the institution, remain available for expenditure during the succeeding fiscal year to carry out programs under this part.
(2) Any of the sums so granted to an institution for a fiscal year which are not needed by that institution to operate work-study programs during that fiscal year, and which it does not wish to use during the next fiscal year as authorized in the preceding sentence, shall remain available to the Secretary for making grants under
(b) Carry-back authority
(1) Up to 10 percent of the sums the Secretary determines an eligible institution may receive from funds which have been appropriated for a fiscal year may be used by the Secretary to make grants under this part to such institution for expenditure during the fiscal year preceding the fiscal year for which the sums were appropriated.
(2) An eligible institution may make payments to students of wages earned after the end of the academic year, but prior to the beginning of the succeeding fiscal year, from such succeeding fiscal year's appropriations.
(c) Flexible use of funds
An eligible institution may, upon the request of a student, make payments to the student under this part by crediting the student's account at the institution or by making a direct deposit to the student's account at a depository institution. An eligible institution may only credit the student's account at the institution for (1) tuition and fees, (2) in the case of institutionally owned housing, room and board, and (3) other institutionally provided goods and services.
(d) Flexibility in the event of a major disaster
(1) In general
In the event of a major disaster, an eligible institution located in any area affected by such major disaster, as determined by the Secretary, may make payments under this part to disaster-affected students, for the period of time (not to exceed one academic year) in which the disaster-affected students were prevented from fulfilling the students' work-study obligations as described in paragraph (2)(A)(iii), as follows:
(A) Payments may be made under this part to disaster-affected students in an amount equal to or less than the amount of wages such students would have been paid under this part had the students been able to complete the work obligation necessary to receive work study funds.
(B) Payments shall not be made to any student who was not eligible for work study or was not completing the work obligation necessary to receive work study funds under this part prior to the occurrence of the major disaster.
(C) Any payments made to disaster-affected students under this subsection shall meet the matching requirements of
(2) Definitions
In this subsection:
(A) The term "disaster-affected student" means a student enrolled at an eligible institution who—
(i) received a work-study award under this section for the academic year during which a major disaster occurred;
(ii) earned Federal work-study wages from such eligible institution for such academic year;
(iii) was prevented from fulfilling the student's work-study obligation for all or part of such academic year due to such major disaster; and
(iv) was unable to be reassigned to another work-study job.
(B) The term "major disaster" has the meaning given such term in
(
Editorial Notes
Codification
Section was formerly classified to
Section was originally enacted as section 125 (and later renumbered section 145) of the Economic Opportunity Act of 1964,
Prior Provisions
A prior section 445 of
Amendments
2008—Subsec. (d).
1998—Subsec. (c).
1992—Subsec. (b).
Statutory Notes and Related Subsidiaries
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
§1087–56. Job location and development programs
(a) Agreements required
(1) The Secretary is authorized to enter into agreements with eligible institutions under which such institution may use not more than 10 percent or $75,000 of its allotment under
(2) Jobs located and developed under this section shall be jobs that are suitable to the scheduling and other needs of such students and that, to the maximum extent practicable, complement and reinforce the educational programs or vocational goals of such students.
(b) Contents of agreements
Agreements under subsection (a) of this section shall—
(1) provide that the Federal share of the cost of any program under this section will not exceed 80 percent of such cost;
(2) provide satisfactory assurance that funds available under this section will not be used to locate or develop jobs at an eligible institution;
(3) provide satisfactory assurance that funds available under this section will not be used for the location or development of jobs for students to obtain upon graduation, but rather for the location and development of jobs available to students during and between periods of attendance at such institution;
(4) provide satisfactory assurance that the location or development of jobs pursuant to programs assisted under this section will not result in the displacement of employed workers or impair existing contracts for services;
(5) provide satisfactory assurance that Federal funds used for the purpose of this section can realistically be expected to help generate student wages exceeding, in the aggregate, the amount of such funds, and that if such funds are used to contract with another organization, appropriate performance standards are part of such contract; and
(6) provide that the institution will submit to the Secretary an annual report on the uses made of funds provided under this section and an evaluation of the effectiveness of such program in benefiting the students of such institution.
(
Editorial Notes
Codification
Section was formerly classified to
Section was originally enacted as section 126 of the Economic Opportunity Act of 1964,
Prior Provisions
A prior section 446 of
Provisions similar to this section were contained in
Amendments
2008—Subsec. (a)(1).
1992—
1987—Subsec. (b)(3) to (7).
Statutory Notes and Related Subsidiaries
Effective Date of 1992 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
Effective Date
Section applicable to periods of enrollment beginning on or after July 1, 1987, see section 403(b)(2) of
§1087–57. Additional funds to conduct community service work-study programs
(a) Community service-learning
Each institution participating under this part may use up to 10 percent of the funds made available under
(1) development of mechanisms to assure the academic quality of the student experience,
(2) assuring student access to educational resources, expertise, and supervision necessary to achieve community service objectives, and
(3) collaboration with public and private nonprofit agencies, and programs assisted under the National and Community Service Act of 1990 [
(b) Off-campus community service
(1) Grants authorized
In addition to funds made available under
(2) Use of funds
An institution shall ensure that funds granted to such institution under this subsection are used in accordance with
(3) Priority
In awarding grants under this subsection, the Secretary shall give priority to applications that support postsecondary students assisting with early childhood education activities and activities in preparation for emergencies and natural disasters.
(4) Authorization of appropriations
There are authorized to be appropriated to carry out this subsection such sums as may be necessary for fiscal year 2009 and each of the five succeeding fiscal years.
(
Editorial Notes
References in Text
The National and Community Service Act of 1990, referred to in subsec. (a)(3), is
Codification
Section was formerly classified to
Prior Provisions
A prior section 447 of
Provisions similar to this section were contained in
Amendments
2008—
1992—
Statutory Notes and Related Subsidiaries
Effective Date of 1992 Amendment
Amendment by
Effective Date
Section applicable to periods of enrollment beginning on or after July 1, 1987, see section 403(b)(2) of
§1087–58. Work colleges
(a) Purpose
The purpose of this section is to recognize, encourage, and promote the use of comprehensive work-learning-service programs as a valuable educational approach when it is an integral part of the institution's educational program and a part of a financial plan which decreases reliance on grants and loans.
(b) Source and use of funds
(1) Source of funds
In addition to the sums appropriated under subsection (f) of this section, funds allocated to the institution under this part and part E of this subchapter may be transferred for use under this section to provide flexibility in strengthening the self-help-through-work element in financial aid packaging.
(2) Activities authorized
From the sums appropriated pursuant to subsection (f) of this section, and from the funds available under paragraph (1), eligible institutions may, following approval of an application under subsection (c) of this section by the Secretary—
(A) support the educational costs of qualified students through self-help payments or credits provided under the work-learning-service program of the institution within the limits of part F of this subchapter;
(B) promote the work-learning-service experience as a tool of postsecondary education, financial self-help and community service-learning opportunities;
(C) carry out activities described in
(D) be used for the administration, development and assessment of comprehensive work-learning-service programs, including—
(i) community-based work-learning-service alternatives that expand opportunities for community service and career-related work; and
(ii) alternatives that develop sound citizenship, encourage student persistence, and make optimum use of assistance under this part in education and student development;
(E) coordinate and carry out joint projects and activities to promote work service learning; and
(F) carry out a comprehensive, longitudinal study of student academic progress and academic and career outcomes, relative to student self-sufficiency in financing their higher education, repayment of student loans, continued community service, kind and quality of service performed, and career choice and community service selected after graduation.
(c) Application
Each eligible institution may submit an application for funds authorized by subsection (f) of this section to use funds under subsection (b)(1) of this section at such time and in such manner as the Secretary, by regulation, may reasonably require.
(d) Match required
Funds made available to work-colleges pursuant to this section shall be matched on a dollar-for-dollar basis from non-Federal sources.
(e) Definitions
For the purpose of this section—
(1) the term "work college" means an eligible institution that—
(A) has been a public or private nonprofit, four-year, degree-granting institution with a commitment to community service;
(B) has operated a comprehensive work-learning-service program for at least two years;
(C) requires students, including at least one-half of all students who are enrolled on a full-time basis, to participate in a comprehensive work-learning-service program for at least five hours each week, or at least 80 hours during each period of enrollment, except summer school, unless the student is engaged in an institutionally organized or approved study abroad or externship program; and
(D) provides students participating in the comprehensive work-learning-service program with the opportunity to contribute to their education and to the welfare of the community as a whole; and
(2) the term "comprehensive student work-learning-service program" means a student work-learning-service program that—
(A) is an integral and stated part of the institution's educational philosophy and program;
(B) requires participation of all resident students for enrollment and graduation;
(C) includes learning objectives, evaluation, and a record of work performance as part of the student's college record;
(D) provides programmatic leadership by college personnel at levels comparable to traditional academic programs;
(E) recognizes the educational role of work-learning-service supervisors; and
(F) includes consequences for nonperformance or failure in the work-learning-service program similar to the consequences for failure in the regular academic program.
(f) Authorization of appropriations
There are authorized to be appropriated to carry out this section such sums as may be necessary for fiscal year 2009 and each of the five succeeding fiscal years.
(
Editorial Notes
Codification
Section was formerly classified to
Prior Provisions
A prior section 448 of
Amendments
2008—Subsecs. (a), (b)(2)(A), (D).
Subsec. (e).
Subsec. (f).
1998—Subsec. (b)(2)(E), (F).
Subsec. (f).
Statutory Notes and Related Subsidiaries
Effective Date of 1998 Amendment
Amendment by
Effective Date
Section effective Oct. 1, 1992, see section 2 of
Part D—William D. Ford Federal Direct Loan Program
Editorial Notes
Codification
Parts A to J of title IV of the Higher Education Act of 1965,
Prior Provisions
A prior part D, consisting of part E of title IV of
§1087a. Program authority
(a) In general
There are hereby made available, in accordance with the provisions of this part, such sums as may be necessary (1) to make loans to all eligible students (and the eligible parents of such students) in attendance at participating institutions of higher education selected by the Secretary, to enable such students to pursue their courses of study at such institutions during the period beginning July 1, 1994; and (2) for purchasing loans under
(b) Designation
(1) Program
The program established under this part shall be referred to as the "William D. Ford Federal Direct Loan Program".
(2) Direct loans
Notwithstanding any other provision of this part, loans made to borrowers under this part that, except as otherwise specified in this part, have the same terms, conditions, and benefits as loans made to borrowers under
(c) Maximum aid
The maximum dollar amount of financial assistance provided under this part to a student shall not exceed the cost of attendance for such student.
(
Editorial Notes
Prior Provisions
A prior section 1087a,
Amendments
2020—Subsec. (c).
2008—Subsec. (a).
1994—
1993—
1992—
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
Income Contingent Loan Distribution of Funds
"(a)
"(b)
"(1) notify the borrower of such conversion;
"(2) obtain a signed part E promissory note from the borrower for the remaining amount outstanding; and
"(3) provide the borrower in writing with a description of all terms and conditions of the new loan."
§1087b. Funds for origination of direct student loans
(a) In general
The Secretary shall provide, on the basis of the need and the eligibility of students at each participating institution, and parents of such students, for such loans, funds for student and parent loans under this part—
(1) directly to an institution of higher education that has an agreement with the Secretary under
(2) through an alternative originator designated by the Secretary to students (and parents of students) attending institutions of higher education that have an agreement with the Secretary under
(b) No entitlement to participate or originate
No institution of higher education shall have a right to participate in the programs authorized by this part, to originate loans, or to perform any program function under this part. Nothing in this subsection shall be construed so as to limit the entitlement of an eligible student attending a participating institution (or the eligible parent of such student) to borrow under this part.
(c) Delivery of loan funds
Loan funds shall be paid and delivered to an institution by the Secretary prior to the beginning of the payment period established by the Secretary in a manner that is consistent with payment and delivery of Federal Pell Grants under subpart 1 of part A of this subchapter.
(d) Institutions outside the United States
Loan funds for students (and parents of students) attending institutions outside the United States shall be disbursed through a financial institution located or operating in the United States and designated by the Secretary to serve as the agent of such institutions with respect to the receipt of the disbursements of such loan funds and the transfer of such funds to such institutions. To be eligible to receive funds under this part, an institution outside the United States shall make arrangements with the agent designated by the Secretary under this subsection to receive funds under this part.
(
Editorial Notes
Prior Provisions
A prior section 1087b,
Amendments
2010—Subsec. (d).
1998—Subsec. (c).
1997—Subsecs. (b) to (d).
1993—
1992—
Statutory Notes and Related Subsidiaries
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
§1087c. Selection of institutions for participation and origination
(a) General authority
The Secretary shall enter into agreements pursuant to
(b) Selection criteria
(1) Application
Each institution of higher education desiring to participate in the direct student loan program under this part shall submit an application satisfactory to the Secretary containing such information and assurances as the Secretary may require.
(2) Selection procedure
The Secretary shall select institutions for participation in the direct student loan program under this part, and shall enter into agreements with such institutions under
(c) Selection criteria for origination
(1) In general
The Secretary may enter into a supplemental agreement with an institution (or a consortium of such institutions) that—
(A) has an agreement under subsection 1 1087d(a) of this title;
(B) desires to originate loans under this part; and
(C) meets the criteria described in paragraph (2).
(2) Selection criteria
The Secretary may approve an institution to originate loans only if such institution—
(A) is not on the reimbursement system of payment for any of the programs under subpart 1 or 3 of part A, part C, or part E of this subchapter;
(B) is not overdue on program or financial reports or audits required under this subchapter;
(C) is not subject to an emergency action, or a limitation, suspension, or termination under
(D) in the opinion of the Secretary, has not had severe performance deficiencies for any of the programs under this subchapter, including such deficiencies demonstrated by audits or program reviews submitted or conducted during the 5 calendar years immediately preceding the date of application;
(E) provides an assurance that such institution has no delinquent outstanding debts to the Federal Government, unless such debts are being repaid under or in accordance with a repayment arrangement satisfactory to the Federal Government, or the Secretary in the Secretary's discretion determines that the existence or amount of such debts has not been finally determined by the cognizant Federal agency; and
(F) meets such other criteria as the Secretary may establish to protect the financial interest of the United States and to promote the purposes of this part.
(d) Eligible institutions
The Secretary may not select an institution of higher education for participation under this section unless such institution is an eligible institution under
(e) Consortia
Subject to such requirements as the Secretary may prescribe, eligible institutions of higher education (as determined under subsection (d)) with agreements under
(
Editorial Notes
Codification
Amendment by section 2 of
Prior Provisions
A prior section 1087c,
Amendments
2009—Subsec. (c)(3).
1998—Subsec. (a).
Subsec. (b)(2).
"(A)(i) categorizing such institutions according to anticipated loan volume, length of academic program, control of the institution, highest degree offered, size of student enrollment, geographic location, annual loan volume, and default experience; and
"(ii) beginning in academic year 1995–1996 selecting institutions that are reasonably representative of each of the categories described pursuant to clause (i); and
"(B) if the Secretary determines it necessary in order to carry out the purposes of subparagraph (A) and attain such reasonable representation (as required by subparagraph (A)), selecting additional institutions."
Subsec. (c)(2).
Subsec. (c)(2)(A).
Subsec. (c)(2)(B) to (D).
Subsec. (c)(2)(E).
Subsec. (c)(2)(F) to (H).
Subsec. (c)(3).
1993—
Subsec. (b)(2)(B).
1992—
Statutory Notes and Related Subsidiaries
Effective Date of 2009 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
1 So in original. Probably should be "section".
§1087d. Agreements with institutions
(a) Participation agreements
An agreement with any institution of higher education for participation in the direct student loan program under this part shall—
(1) provide for the establishment and maintenance of a direct student loan program at the institution under which the institution will—
(A) identify eligible students who seek student financial assistance at such institution in accordance with
(B) estimate the need of each such student as required by part F of this subchapter for an academic year, except that, any loan obtained by a student under this part with the same terms as loans made under
(C) provide a statement that certifies the eligibility of any student to receive a loan under this part that is not in excess of the annual or aggregate limit applicable to such loan, except that the institution may, in exceptional circumstances identified by the Secretary, refuse to certify a statement that permits a student to receive a loan under this part, or certify a loan amount that is less than the student's determination of need (as determined under part F of this subchapter), if the reason for such action is documented and provided in written form to such student;
(D) set forth a schedule for disbursement of the proceeds of the loan in installments, consistent with the requirements of
(E) provide timely and accurate information—
(i) concerning the status of student borrowers (and students on whose behalf parents borrow under this part) while such students are in attendance at the institution and concerning any new information of which the institution becomes aware for such students (or their parents) after such borrowers leave the institution, to the Secretary for the servicing and collecting of loans made under this part; and
(ii) if the institution does not have an agreement with the Secretary under subsection (b), concerning student eligibility and need, as determined under subparagraphs (A) and (B), to the Secretary as needed for the alternative origination of loans to eligible students and parents in accordance with this part;
(2) provide assurances that the institution will comply with requirements established by the Secretary relating to student loan information with respect to loans made under this part;
(3) provide that the institution accepts responsibility and financial liability stemming from its failure to perform its functions pursuant to the agreement;
(4) provide for the implementation of a quality assurance system, as established by the Secretary and developed in consultation with institutions of higher education, to ensure that the institution is complying with program requirements and meeting program objectives;
(5) provide that the institution will not charge any fees of any kind, however described, to student or parent borrowers for origination activities or the provision of any information necessary for a student or parent to receive a loan under this part, or any benefits associated with such loan; and
(6) include such other provisions as the Secretary determines are necessary to protect the interests of the United States and to promote the purposes of this part.
(b) Origination
An agreement with any institution of higher education, or consortia thereof, for the origination of loans under this part shall—
(1) supplement the agreement entered into in accordance with subsection (a);
(2) include provisions established by the Secretary that are similar to the participation agreement provisions described in paragraphs (1)(E)(ii), (2), (3), (4), (5), and (6) of subsection (a), as modified to relate to the origination of loans by the institution or consortium;
(3) provide that the institution or consortium will originate loans to eligible students and parents in accordance with this part; and
(4) provide that the note or evidence of obligation on the loan shall be the property of the Secretary.
(c) Withdrawal and termination procedures
The Secretary shall establish procedures by which institutions or consortia may withdraw or be terminated from the program under this part.
(
Editorial Notes
Amendments
2020—Subsec. (a)(1)(B).
2010—Subsec. (a)(4) to (7).
Subsec. (b)(2).
1993—
1992—
1987—Subsec. (a)(4).
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Amendment by
Effective Date of 2010 Amendment
Effective Date of 1992 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
§1087e. Terms and conditions of loans
(a) In general
(1) Parallel terms, conditions, benefits, and amounts
Unless otherwise specified in this part, loans made to borrowers under this part shall have the same terms, conditions, and benefits, and be available in the same amounts, as loans made to borrowers, and first disbursed on June 30, 2010, under
(2) Designation of loans
Loans made to borrowers under this part that, except as otherwise specified in this part, have the same terms, conditions, and benefits as loans made to borrowers under—
(A)
(B)
(C)
(D)
(3) Termination of authority to make interest subsidized loans to graduate and professional students
(A) In general
Subject to subparagraph (B) and notwithstanding any provision of this part or part B, for any period of instruction beginning on or after July 1, 2012—
(i) a graduate or professional student shall not be eligible to receive a Federal Direct Stafford loan under this part; and
(ii) the maximum annual amount of Federal Direct Unsubsidized Stafford loans such a student may borrow in any academic year (as defined in
(B) Exception
Subparagraph (A) shall not apply to an individual enrolled in course work specified in paragraph (3)(B) or (4)(B) of
(b) Interest rate
(1) Rates for FDSL and FDUSL
For Federal Direct Stafford Loans and Federal Direct Unsubsidized Stafford Loans for which the first disbursement is made on or after July 1, 1994, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to—
(A) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to such June 1; plus
(B) 3.1 percent,
except that such rate shall not exceed 8.25 percent.
(2) In school and grace period rules
(A) Notwithstanding the provisions of paragraph (1), but subject to paragraph (3), with respect to any Federal Direct Stafford Loan or Federal Direct Unsubsidized Stafford Loan for which the first disbursement is made on or after July 1, 1995, the applicable rate of interest for interest which accrues—
(i) prior to the beginning of the repayment period of the loan; or
(ii) during the period in which principal need not be paid (whether or not such principal is in fact paid) by reason of a provision described in
shall not exceed the rate determined under subparagraph (B).
(B) For the purpose of subparagraph (A), the rate determined under this subparagraph shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to—
(i) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction prior to such June 1; plus
(ii) 2.5 percent,
except that such rate shall not exceed 8.25 percent.
(3) Out-year rule
Notwithstanding paragraphs (1) and (2), for Federal Direct Stafford Loans and Federal Direct Unsubsidized Stafford Loans made on or after July 1, 1998, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to—
(A) the bond equivalent rate of the security with a comparable maturity as established by the Secretary; plus
(B) 1.0 percent,
except that such rate shall not exceed 8.25 percent.
(4) Rates for FDPLUS
(A)(i) For Federal Direct PLUS Loans for which the first disbursement is made on or after July 1, 1994, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on or before June 30, 2001, be determined on the preceding June 1 and be equal to—
(I) the bond equivalent rate of 52-week Treasury bills auctioned at final auction held prior to such June 1; plus
(II) 3.1 percent,
except that such rate shall not exceed 9 percent.
(ii) For any 12-month period beginning on July 1 of 2001 or any succeeding year, the applicable rate of interest determined under this subparagraph shall be determined on the preceding June 26 and be equal to—
(I) the weekly average 1-year constant maturity Treasury yield, as published by the Board of Governors of the Federal Reserve System, for the last calendar week ending on or before such June 26; plus
(II) 3.1 percent,
except that such rate shall not exceed 9 percent.
(B) For Federal Direct PLUS loans made on or after July 1, 1998, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to—
(i) the bond equivalent rate of the security with a comparable maturity as established by the Secretary; plus
(ii) 2.1 percent,
except that such rate shall not exceed 9 percent.
(5) Temporary interest rate provision
(A) Rates for FDSL and FDUSL
Notwithstanding the preceding paragraphs of this subsection, for Federal Direct Stafford Loans and Federal Direct Unsubsidized Stafford Loans for which the first disbursement is made on or after July 1, 1998, and before October 1, 1998, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to—
(i) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to such June 1; plus
(ii) 2.3 percent,
except that such rate shall not exceed 8.25 percent.
(B) In school and grace period rules
Notwithstanding the preceding paragraphs of this subsection, with respect to any Federal Direct Stafford Loan or Federal Direct Unsubsidized Stafford Loan for which the first disbursement is made on or after July 1, 1998, and before October 1, 1998, the applicable rate of interest for interest which accrues—
(i) prior to the beginning of the repayment period of the loan; or
(ii) during the period in which principal need not be paid (whether or not such principal is in fact paid) by reason of a provision described in
shall be determined under subparagraph (A) by substituting "1.7 percent" for "2.3 percent".
(C) PLUS loans
Notwithstanding the preceding paragraphs of this subsection, with respect to Federal Direct PLUS Loan for which the first disbursement is made on or after July 1, 1998, and before October 1, 1998, the applicable rate of interest shall be determined under subparagraph (A)—
(i) by substituting "3.1 percent" for "2.3 percent"; and
(ii) by substituting "9.0 percent" for "8.25 percent".
(6) Interest rate provision for new loans on or after October 1, 1998, and before July 1, 2006
(A) Rates for FDSL and FDUSL
Notwithstanding the preceding paragraphs of this subsection, for Federal Direct Stafford Loans and Federal Direct Unsubsidized Stafford Loans for which the first disbursement is made on or after October 1, 1998, and before July 1, 2006, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to—
(i) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to such June 1; plus
(ii) 2.3 percent,
except that such rate shall not exceed 8.25 percent.
(B) In school and grace period rules
Notwithstanding the preceding paragraphs of this subsection, with respect to any Federal Direct Stafford Loan or Federal Direct Unsubsidized Stafford Loan for which the first disbursement is made on or after October 1, 1998, and before July 1, 2006, the applicable rate of interest for interest which accrues—
(i) prior to the beginning of the repayment period of the loan; or
(ii) during the period in which principal need not be paid (whether or not such principal is in fact paid) by reason of a provision described in
shall be determined under subparagraph (A) by substituting "1.7 percent" for "2.3 percent".
(C) PLUS loans
Notwithstanding the preceding paragraphs of this subsection, with respect to Federal Direct PLUS Loan for which the first disbursement is made on or after October 1, 1998, and before July 1, 2006, the applicable rate of interest shall be determined under subparagraph (A)—
(i) by substituting "3.1 percent" for "2.3 percent"; and
(ii) by substituting "9.0 percent" for "8.25 percent".
(D) Consolidation loans
Notwithstanding the preceding paragraphs of this subsection, any Federal Direct Consolidation loan for which the application is received on or after February 1, 1999, and before July 1, 2006, shall bear interest at an annual rate on the unpaid principal balance of the loan that is equal to the lesser of—
(i) the weighted average of the interest rates on the loans consolidated, rounded to the nearest higher one-eighth of one percent; or
(ii) 8.25 percent.
(E) Temporary rules for consolidation loans
Notwithstanding the preceding paragraphs of this subsection, any Federal Direct Consolidation loan for which the application is received on or after October 1, 1998, and before February 1, 1999, shall bear interest at an annual rate on the unpaid principal balance of the loan that is equal to—
(i) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to such June 1; plus
(ii) 2.3 percent,
except that such rate shall not exceed 8.25 percent.
(7) Interest rate provision for new loans on or after July 1, 2006 and before July 1, 2013
(A) Rates for FDSL and FDUSL
Notwithstanding the preceding paragraphs of this subsection, for Federal Direct Stafford Loans and Federal Direct Unsubsidized Stafford Loans for which the first disbursement is made on or after July 1, 2006, and before July 1, 2013, the applicable rate of interest shall be 6.8 percent on the unpaid principal balance of the loan.
(B) PLUS loans
Notwithstanding the preceding paragraphs of this subsection, with respect to any Federal Direct PLUS loan for which the first disbursement is made on or after July 1, 2006, and before July 1, 2013, the applicable rate of interest shall be 7.9 percent on the unpaid principal balance of the loan.
(C) Consolidation loans
Notwithstanding the preceding paragraphs of this subsection, any Federal Direct Consolidation loan for which the application is received on or after July 1, 2006, and before July 1, 2013, shall bear interest at an annual rate on the unpaid principal balance of the loan that is equal to the lesser of—
(i) the weighted average of the interest rates on the loans consolidated, rounded to the nearest higher one-eighth of one percent; or
(ii) 8.25 percent.
(D) Reduced rates for undergraduate FDSL
Notwithstanding the preceding paragraphs of this subsection and subparagraph (A) of this paragraph, for Federal Direct Stafford Loans made to undergraduate students for which the first disbursement is made on or after July 1, 2006, and before July 1, 2013, the applicable rate of interest shall be as follows:
(i) For a loan for which the first disbursement is made on or after July 1, 2006, and before July 1, 2008, 6.8 percent on the unpaid principal balance of the loan.
(ii) For a loan for which the first disbursement is made on or after July 1, 2008, and before July 1, 2009, 6.0 percent on the unpaid principal balance of the loan.
(iii) For a loan for which the first disbursement is made on or after July 1, 2009, and before July 1, 2010, 5.6 percent on the unpaid principal balance of the loan.
(iv) For a loan for which the first disbursement is made on or after July 1, 2010, and before July 1, 2011, 4.5 percent on the unpaid principal balance of the loan.
(v) For a loan for which the first disbursement is made on or after July 1, 2011, and before July 1, 2013, 3.4 percent on the unpaid principal balance of the loan.
(8) Interest rate provisions for new loans on or after July 1, 2013
(A) Rates for undergraduate FDSL and FDUSL
Notwithstanding the preceding paragraphs of this subsection, for Federal Direct Stafford Loans and Federal Direct Unsubsidized Stafford Loans issued to undergraduate students, for which the first disbursement is made on or after July 1, 2013, the applicable rate of interest shall, for loans disbursed during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to the lesser of—
(i) a rate equal to the high yield of the 10-year Treasury note auctioned at the final auction held prior to such June 1 plus 2.05 percent; or
(ii) 8.25 percent.
(B) Rates for graduate and professional FDUSL
Notwithstanding the preceding paragraphs of this subsection, for Federal Direct Unsubsidized Stafford Loans issued to graduate or professional students, for which the first disbursement is made on or after July 1, 2013, the applicable rate of interest shall, for loans disbursed during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to the lesser of—
(i) a rate equal to the high yield of the 10-year Treasury note auctioned at the final auction held prior to such June 1 plus 3.6 percent; or
(ii) 9.5 percent.
(C) PLUS loans
Notwithstanding the preceding paragraphs of this subsection, for Federal Direct PLUS Loans, for which the first disbursement is made on or after July 1, 2013, the applicable rate of interest shall, for loans disbursed during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to the lesser of—
(i) a rate equal to the high yield of the 10-year Treasury note auctioned at the final auction held prior to such June 1 plus 4.6 percent; or
(ii) 10.5 percent.
(D) Consolidation loans
Notwithstanding the preceding paragraphs of this subsection, any Federal Direct Consolidation Loan for which the application is received on or after July 1, 2013, shall bear interest at an annual rate on the unpaid principal balance of the loan that is equal to the weighted average of the interest rates on the loans consolidated, rounded to the nearest higher one-eighth of one percent.
(E) Consultation
The Secretary shall determine the applicable rate of interest under this paragraph after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of determination.
(F) Rate
The applicable rate of interest determined under this paragraph for a Federal Direct Stafford Loan, a Federal Direct Unsubsidized Stafford Loan, or a Federal Direct PLUS Loan shall be fixed for the period of the loan.
(9) Repayment incentives
(A) Incentives for loans disbursed before July 1, 2012
Notwithstanding any other provision of this part 1 with respect to loans for which the first disbursement of principal is made before July 1, 2012,,2 the Secretary is authorized to prescribe by regulation such reductions in the interest rate or origination fee paid by a borrower of a loan made under this part as the Secretary determines appropriate to encourage on-time repayment of the loan. Such reductions may be offered only if the Secretary determines the reductions are cost neutral and in the best financial interest of the Federal Government. Any increase in subsidy costs resulting from such reductions shall be completely offset by corresponding savings in funds available for the William D. Ford Federal Direct Loan Program in that fiscal year from
(B) Accountability
Prior to publishing regulations proposing repayment incentives with respect to loans for which the first disbursement of principal is made before July 1, 2012, the Secretary shall ensure the cost neutrality of such reductions. The Secretary shall not prescribe such regulations in final form unless an official report from the Director of the Office of Management and Budget to the Secretary and a comparable report from the Director of the Congressional Budget Office to the Congress each certify that any such reductions will be completely cost neutral. Such reports shall be transmitted to the authorizing committees not less than 60 days prior to the publication of regulations proposing such reductions.
(C) No repayment incentives for new loans disbursed on or after July 1, 2012
Notwithstanding any other provision of this part, the Secretary is prohibited from authorizing or providing any repayment incentive not otherwise authorized under this part to encourage on-time repayment of a loan under this part for which the first disbursement of principal is made on or after July 1, 2012, including any reduction in the interest or origination fee rate paid by a borrower of such a loan, except that the Secretary may provide for an interest rate reduction for a borrower who agrees to have payments on such a loan automatically electronically debited from a bank account.
(10) Publication
The Secretary shall determine the applicable rates of interest under this subsection after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of determination.
(c) Loan fee
(1) In general
The Secretary shall charge the borrower of a loan made under this part an origination fee of 4.0 percent of the principal amount of loan.
(2) Subsequent reduction
Paragraph (1) shall be applied to loans made under this part, other than Federal Direct Consolidation loans and Federal Direct PLUS loans—
(A) by substituting "3.0 percent" for "4.0 percent" with respect to loans for which the first disbursement of principal is made on or after February 8, 2006, and before July 1, 2007;
(B) by substituting "2.5 percent" for "4.0 percent" with respect to loans for which the first disbursement of principal is made on or after July 1, 2007, and before July 1, 2008;
(C) by substituting "2.0 percent" for "4.0 percent" with respect to loans for which the first disbursement of principal is made on or after July 1, 2008, and before July 1, 2009;
(D) by substituting "1.5 percent" for "4.0 percent" with respect to loans for which the first disbursement of principal is made on or after July 1, 2009, and before July 1, 2010; and
(E) by substituting "1.0 percent" for "4.0 percent" with respect to loans for which the first disbursement of principal is made on or after July 1, 2010.
(d) Repayment plans
(1) Design and selection
Consistent with criteria established by the Secretary, the Secretary shall offer a borrower of a loan made under this part a variety of plans for repayment of such loan, including principal and interest on the loan. The borrower shall be entitled to accelerate, without penalty, repayment on the borrower's loans under this part. The borrower may choose—
(A) a standard repayment plan, consistent with subsection (a)(1) of this section and with
(B) a graduated repayment plan, consistent with
(C) an extended repayment plan, consistent with
(D) an income contingent repayment plan, with varying annual repayment amounts based on the income of the borrower, paid over an extended period of time prescribed by the Secretary, not to exceed 25 years, except that the plan described in this subparagraph shall not be available to the borrower of a Federal Direct PLUS loan made on behalf of a dependent student; and
(E) beginning on July 1, 2009, an income-based repayment plan that enables borrowers who have a partial financial hardship to make a lower monthly payment in accordance with
(2) Selection by Secretary
If a borrower of a loan made under this part does not select a repayment plan described in paragraph (1), the Secretary may provide the borrower with a repayment plan described in subparagraph (A), (B), or (C) of paragraph (1).
(3) Changes in selections
The borrower of a loan made under this part may change the borrower's selection of a repayment plan under paragraph (1), or the Secretary's selection of a plan for the borrower under paragraph (2), as the case may be, under such terms and conditions as may be established by the Secretary.
(4) Alternative repayment plans
The Secretary may provide, on a case by case basis, an alternative repayment plan to a borrower of a loan made under this part who demonstrates to the satisfaction of the Secretary that the terms and conditions of the repayment plans available under paragraph (1) are not adequate to accommodate the borrower's exceptional circumstances. In designing such alternative repayment plans, the Secretary shall ensure that such plans do not exceed the cost to the Federal Government, as determined on the basis of the present value of future payments by such borrowers, of loans made using the plans available under paragraph (1).
(5) Repayment after default
The Secretary may require any borrower who has defaulted on a loan made under this part to—
(A) pay all reasonable collection costs associated with such loan; and
(B) repay the loan pursuant to an income contingent repayment plan.
(e) Income contingent repayment
(1) Information and procedures
The Secretary may obtain such information as is reasonably necessary regarding the income of a borrower (and the borrower's spouse, if applicable) of a loan made under this part that is, or may be, repaid pursuant to income contingent repayment, for the purpose of determining the annual repayment obligation of the borrower. Returns and return information (as defined in
(2) Repayment based on adjusted gross income
A repayment schedule for a loan made under this part and repaid pursuant to income contingent repayment shall be based on the adjusted gross income (as defined in
(3) Additional documents
A borrower who chooses, or is required, to repay a loan made under this part pursuant to income contingent repayment, and for whom adjusted gross income is unavailable or does not reasonably reflect the borrower's current income, shall provide to the Secretary other documentation of income satisfactory to the Secretary, which documentation the Secretary may use to determine an appropriate repayment schedule.
(4) Repayment schedules
Income contingent repayment schedules shall be established by regulations promulgated by the Secretary and shall require payments that vary in relation to the appropriate portion of the annual income of the borrower (and the borrower's spouse, if applicable) as determined by the Secretary.
(5) Calculation of balance due
The balance due on a loan made under this part that is repaid pursuant to income contingent repayment shall equal the unpaid principal amount of the loan, any accrued interest, and any fees, such as late charges, assessed on such loan. The Secretary may promulgate regulations limiting the amount of interest that may be capitalized on such loan, and the timing of any such capitalization.
(6) Notification to borrowers
The Secretary shall establish procedures under which a borrower of a loan made under this part who chooses or is required to repay such loan pursuant to income contingent repayment is notified of the terms and conditions of such plan, including notification of such borrower, that if a borrower considers that special circumstances, such as a loss of employment by the borrower or the borrower's spouse, warrant an adjustment in the borrower's loan repayment, the borrower may contact the Secretary, who shall determine whether such adjustment is appropriate, in accordance with criteria established by the Secretary.
(7) Maximum repayment period
In calculating the extended period of time for which an income contingent repayment plan under this subsection may be in effect for a borrower, the Secretary shall include all time periods during which a borrower of loans under part B, part D, or part E—
(A) is not in default on any loan that is included in the income contingent repayment plan; and
(B)(i) is in deferment due to an economic hardship described in
(ii) makes monthly payments under paragraph (1) or (6) of
(iii) makes monthly payments of not less than the monthly amount calculated under
(iv) makes payments of not less than the payments required under a standard repayment plan under
(v) makes payments under an income contingent repayment plan under subsection (d)(1)(D).
(8) Automatic recertification
(A) In general
The Secretary shall establish and implement, with respect to any borrower described in subparagraph (B), procedures to—
(i) use return information disclosed under
(ii) allow the borrower (or the spouse of the borrower), at any time, to opt out of disclosure under such section 6103(l)(13) and instead provide such information as the Secretary may require to determine the repayment obligation of the borrower (or withdraw from the repayment plan under this subsection); and
(iii) provide the borrower with an opportunity to update the return information so disclosed before the determination of the repayment obligation of the borrower.
(B) Applicability
Subparagraph (A) shall apply to each borrower of a loan made under this part who, on or after the date on which the Secretary establishes procedures under such subparagraph—
(i) selects, or is required to repay such loan pursuant to, an income-contingent repayment plan; or
(ii) recertifies income or family size under such plan.
(f) Deferment
(1) Effect on principal and interest
A borrower of a loan made under this part who meets the requirements described in paragraph (2) shall be eligible for a deferment, during which periodic installments of principal need not be paid, and interest—
(A) shall not accrue, in the case of a—
(i) Federal Direct Stafford Loan; or
(ii) a Federal Direct Consolidation Loan that consolidated only Federal Direct Stafford Loans, or a combination of such loans and Federal Stafford Loans for which the student borrower received an interest subsidy under
(B) shall accrue and be capitalized or paid by the borrower, in the case of a Federal Direct PLUS Loan, a Federal Direct Unsubsidized Stafford Loan, or a Federal Direct Consolidation Loan not described in subparagraph (A)(ii).
(2) Eligibility
A borrower of a loan made under this part shall be eligible for a deferment during any period—
(A) during which the borrower—
(i) is carrying at least one-half the normal full-time work load for the course of study that the borrower is pursuing, as determined by the eligible institution (as such term is defined in
(ii) is pursuing a course of study pursuant to a graduate fellowship program approved by the Secretary, or pursuant to a rehabilitation training program for individuals with disabilities approved by the Secretary,
except that no borrower shall be eligible for a deferment under this subparagraph, or a loan made under this part (other than a Federal Direct PLUS Loan or a Federal Direct Consolidation Loan), while serving in a medical internship or residency program;
(B) not in excess of 3 years during which the borrower is seeking and unable to find full-time employment;
(C) during which the borrower—
(i) is serving on active duty during a war or other military operation or national emergency; or
(ii) is performing qualifying National Guard duty during a war or other military operation or national emergency,
and for the 180-day period following the demobilization date for the service described in clause (i) or (ii); or
(D) not in excess of 3 years during which the Secretary determines, in accordance with regulations prescribed under
(3) Deferment for borrowers receiving cancer treatment
(A) Effect on principal and interest
A borrower of a loan made under this part who meets the requirements of subparagraph (B) shall be eligible for a deferment, during which periodic installments of principal need not be paid, and interest shall not accrue.
(B) Eligibility
A borrower of a loan made under this part shall be eligible for a deferment during—
(i) any period in which such borrower is receiving treatment for cancer; and
(ii) the 6 months after such period.
(C) Applicability
This paragraph shall apply with respect to loans—
(i) made on or after September 28, 2018; or
(ii) in repayment on September 28, 2018.
(4) Deferment for dislocated military spouses
(A) Duration and effect on principal and interest
A borrower of a loan made under this part who meets the requirements of subparagraph (B) shall be eligible for a deferment for an aggregate period of 180 days, during which periodic installments of principal need not be paid, and interest—
(i) shall not accrue, in the case of a—
(I) Federal Direct Stafford Loan; or
(II) a Federal Direct Consolidation Loan that consolidated only Federal Direct Stafford Loans, or a combination of such loans and Federal Stafford Loans for which the student borrower received an interest subsidy under
(ii) shall accrue and be capitalized or paid by the borrower, in the case of a Federal Direct PLUS Loan, a Federal Direct Unsubsidized Stafford Loan, or a Federal Direct Consolidation Loan not described in clause (i)(II).
(B) Eligibility
A borrower of a loan made under this part shall be eligible for a deferment under subparagraph (A) if the borrower—
(i) is the spouse of a member of the Armed Forces serving on active duty; and
(ii) has experienced a loss of employment as a result of relocation to accommodate a permanent change in duty station of such member.
(C) Documentation and approval
(i) In general
A borrower may establish eligibility for a deferment under subparagraph (A) by providing to the Secretary—
(I) the documentation described in clause (ii); or
(II) such other documentation as the Secretary determines appropriate.
(ii) Documentation
The documentation described in this clause is—
(I) evidence that the borrower is the spouse of a member of the Armed Forces serving on active duty;
(II) evidence that a military permanent change of station order was issued to such member; and
(III)(aa) evidence that the borrower is eligible for unemployment benefits due to a loss of employment resulting from relocation to accommodate such permanent change in duty station; or
(bb) a written certification, or an equivalent as approved by the Secretary, that the borrower is registered with a public or private employment agency due to a loss of employment resulting from relocation to accommodate such permanent change in duty station.
(5) "Borrower" defined
For the purpose of this subsection, the term "borrower" means an individual who is a new borrower on the date such individual applies for a loan under this part for which the first disbursement is made on or after July 1, 1993.
(6) Deferments for previous part B loan borrowers
A borrower of a loan made under this part, who at the time such individual applies for such loan, has an outstanding balance of principal or interest owing on any loan made, insured, or guaranteed under part B of this subchapter prior to July 1, 1993, shall be eligible for a deferment under
(g) Federal Direct Consolidation Loans
(1) In general
A borrower of a loan made under this part may consolidate such loan with the loans described in
(2) Separating joint consolidation loans
(A) In general
(i) Authorization
A married couple, or 2 individuals who were previously a married couple, and who received a joint consolidation loan as such married couple under subparagraph (C) of
(ii) Eligibility for borrowers in default
Notwithstanding any other provision of this chapter, a married couple, or 2 individuals who were previously a married couple, who are in default on a joint consolidation loan may be eligible to receive a separate Federal Direct Consolidation Loan under this part in accordance with this paragraph.
(B) Secretarial requirements
Notwithstanding
(i) make a separate Federal Direct Consolidation Loan under this part that—
(I) shall be for an amount equal to the product of—
(aa) the unpaid principal and accrued unpaid interest of the joint consolidation loan (as of the date that is the day before such separate consolidation loan is made) and any outstanding charges and fees with respect to such loan; and
(bb) the percentage of the joint consolidation loan attributable to the loans of the individual borrower for whom such separate consolidation loan is being made, as determined—
(AA) on the basis of the loan obligations of such borrower with respect to such joint consolidation loan (as of the date such joint consolidation loan was made); or
(BB) in the case in which both borrowers request, on the basis of proportions outlined in a divorce decree, court order, or settlement agreement; and
(II) has the same rate of interest as the joint consolidation loan (as of the date that is the day before such separate consolidation loan is made); and
(ii) in a timely manner, notify each individual borrower that the joint consolidation loan had been repaid and of the terms and conditions of their new loans.
(C) Application for separate direct consolidation loan
(i) Joint application
Except as provided in clause (ii), to receive separate consolidation loans under this part, both individual borrowers in a married couple (or previously married couple) shall jointly apply under subparagraph (A).
(ii) Separate application
An individual borrower in a married couple (or previously married couple) may apply for a separate consolidation loan under subparagraph (A) separately and without regard to whether or when the other individual borrower in the married couple (or previously married couple) applies under subparagraph (A), in a case in which—
(I) the individual borrower certifies to the Secretary that such borrower—
(aa) has experienced an act of domestic violence (as defined in
(bb) has experienced economic abuse (as defined in
(cc) is unable to reasonably reach or access the loan information of the other individual borrower; or
(II) the Secretary determines that authorizing each individual borrower to apply separately under subparagraph (A) would be in the best fiscal interests of the Federal Government.
(iii) Remaining obligation from separate application
In the case of an individual borrower who receives a separate consolidation loan due to the circumstances described in clause (ii), the other non-applying individual borrower shall become solely liable for the remaining balance of the joint consolidation loan.
(h) Borrower defenses
Notwithstanding any other provision of State or Federal law, the Secretary shall specify in regulations which acts or omissions of an institution of higher education a borrower may assert as a defense to repayment of a loan made under this part, except that in no event may a borrower recover from the Secretary, in any action arising from or relating to a loan made under this part, an amount in excess of the amount such borrower has repaid on such loan.
(i) Loan application and promissory note
The common financial reporting form required in
(j) Loan disbursement
(1) In general
Proceeds of loans to students under this part shall be applied to the student's account for tuition and fees, and, in the case of institutionally owned housing, to room and board. Loan proceeds that remain after the application of the previous sentence shall be delivered to the borrower by check or other means that is payable to and requires the endorsement or other certification by such borrower.
(2) Payment periods
The Secretary shall establish periods for the payments described in paragraph (1) in a manner consistent with payment of Federal Pell Grants under subpart 1 of part A of this subchapter.
(k) Fiscal control and fund accountability
(1) In general
(A) An institution shall maintain financial records in a manner consistent with records maintained for other programs under this subchapter.
(B) Except as otherwise required by regulations of the Secretary 1 an institution may maintain loan funds under this part in the same account as other Federal student financial assistance.
(2) Payments and refunds
Payments and refunds shall be reconciled in a manner consistent with the manner set forth for the submission of a payment summary report required of institutions participating in the program under subpart 1 of part A, except that nothing in this paragraph shall prevent such reconciliations on a monthly basis.
(3) Transaction histories
All transaction histories under this part shall be maintained using the same system designated by the Secretary for the provision of Federal Pell Grants under subpart 1 of part A of this subchapter.
(l) Armed Forces and NOAA Commissioned Officer Corps student loan interest payment programs
(1) Authority
Using funds received by transfer to the Secretary under
(2) Forbearance
During the period in which the Secretary is making payments on a loan under paragraph (1), the Secretary shall grant the borrower forbearance, in the form of a temporary cessation of all payments on the loan other than the payments of interest on the loan that are made under that paragraph.
(m) Repayment plan for public service employees
(1) In general
The Secretary shall cancel the balance of interest and principal due, in accordance with paragraph (2), on any eligible Federal Direct Loan not in default for a borrower who—
(A) has made 120 monthly payments on the eligible Federal Direct Loan after October 1, 2007, pursuant to any one or a combination of the following—
(i) payments under an income-based repayment plan under
(ii) payments under a standard repayment plan under subsection (d)(1)(A), based on a 10-year repayment period;
(iii) monthly payments under a repayment plan under subsection (d)(1) or (g) of not less than the monthly amount calculated under subsection (d)(1)(A), based on a 10-year repayment period; or
(iv) payments under an income contingent repayment plan under subsection (d)(1)(D); and
(B)(i) is employed in a public service job at the time of such forgiveness; and
(ii) has been employed in a public service job during the period in which the borrower makes each of the 120 payments described in subparagraph (A).
(2) Loan cancellation amount
After the conclusion of the employment period described in paragraph (1), the Secretary shall cancel the obligation to repay the balance of principal and interest due as of the time of such cancellation, on the eligible Federal Direct Loans made to the borrower under this part.
(3) Definitions
In this subsection:
(A) Eligible Federal Direct Loan
The term "eligible Federal Direct Loan" means a Federal Direct Stafford Loan, Federal Direct PLUS Loan, or Federal Direct Unsubsidized Stafford Loan, or a Federal Direct Consolidation Loan.
(B) Public service job
The term "public service job" means—
(i) a full-time job in emergency management, government (excluding time served as a member of Congress), military service, public safety, law enforcement, public health (including nurses, nurse practitioners, nurses in a clinical setting, and full-time professionals engaged in health care practitioner occupations and health care support occupations, as such terms are defined by the Bureau of Labor Statistics), public education, social work in a public child or family service agency, public interest law services (including prosecution or public defense or legal advocacy on behalf of low-income communities at a nonprofit organization), early childhood education (including licensed or regulated childcare, Head Start, and State funded prekindergarten), public service for individuals with disabilities, public service for the elderly, public library sciences, school-based library sciences and other school-based services, or at an organization that is described in
(ii) teaching as a full-time faculty member at a Tribal College or University as defined in
(4) Ineligibility for double benefits
No borrower may, for the same service, receive a reduction of loan obligations under both this subsection and
(n) Identity fraud protection
The Secretary shall take such steps as may be necessary to ensure that monthly Federal Direct Loan statements and other publications of the Department do not contain more than four digits of the Social Security number of any individual.
(o) No accrual of interest for active duty service members
(1) In general
Notwithstanding any other provision of this part and in accordance with paragraphs (2) and (4), interest shall not accrue for an eligible military borrower on a loan made under this part for which the first disbursement is made on or after October 1, 2008.
(2) Consolidation loans
In the case of any consolidation loan made under this part that is disbursed on or after October 1, 2008, interest shall not accrue pursuant to this subsection only on such portion of such loan as was used to repay a loan made under this part for which the first disbursement is made on or after October 1, 2008.
(3) Eligible military borrower
In this subsection, the term "eligible military borrower" means an individual who—
(A)(i) is serving on active duty during a war or other military operation or national emergency; or
(ii) is performing qualifying National Guard duty during a war or other military operation or national emergency; and
(B) is serving in an area of hostilities in which service qualifies for special pay under section 310, or paragraph (1) or (3) of
(4) Limitation
An individual who qualifies as an eligible military borrower under this subsection may receive the benefit of this subsection for not more than 60 months.
(p) Disclosures
Each institution of higher education with which the Secretary has an agreement under
(
Editorial Notes
References in Text
Subparagraph (C) of
Amendments
2023—Subsec. (f)(4) to (6).
2022—Subsec. (g).
2020—Subsec. (l).
Subsec. (l)(1).
Subsec. (q).
2019—Subsec. (e)(6).
"(A) that the Internal Revenue Service will disclose to the Secretary tax return information as authorized under
"(B) that if a borrower"
and struck out "as determined using the information described in subparagraph (A), or the alternative documentation described in paragraph (3)" after "borrower's loan repayment".
Subsec. (e)(8).
2018—Subsec. (f)(3) to (5).
2016—Subsec. (o)(3)(B).
2013—Subsec. (b)(7).
Subsec. (b)(7)(A) to (C).
Subsec. (b)(8) to (10).
2012—Subsec. (b)(7)(D).
Subsec. (b)(7)(D)(v).
Subsec. (q).
2011—Subsec. (a)(3).
Subsec. (b)(8)(A).
Subsec. (b)(8)(B).
Subsec. (b)(8)(C).
2010—Subsec. (a)(1).
Subsec. (g).
2009—Subsec. (d)(1)(C).
Subsec. (h).
Subsec. (k)(1)(B).
2008—Subsec. (b)(8)(B).
Subsec. (d)(1)(E).
Subsec. (g).
Subsec. (m)(3)(B).
"(i) a full-time job in emergency management, government, military service, public safety, law enforcement, public health, public education (including early childhood education), social work in a public child or family service agency, public interest law services (including prosecution or public defense or legal advocacy in low-income communities at a nonprofit organization), public child care, public service for individuals with disabilities, public service for the elderly, public library sciences, school-based library sciences and other school-based services, or at an organization that is described in
"(ii) teaching as a full-time faculty member at a Tribal College or University as defined in
Subsec. (m)(4).
Subsec. (n).
Subsec. (o).
Subsec. (p).
2007—Subsec. (b)(7)(D).
Subsec. (d)(1)(D).
Subsec. (e)(7).
Subsec. (f)(2)(C).
Subsec. (m).
2006—Subsec. (a)(1).
Subsec. (a)(2)(C), (D).
Subsec. (b)(8)(A).
Subsec. (c).
Subsec. (d)(1)(A) to (C).
"(A) a standard repayment plan, with a fixed annual repayment amount paid over a fixed period of time, consistent with subsection (a)(1) of this section;
"(B) an extended repayment plan, with a fixed annual repayment amount paid over an extended period of time, except that the borrower shall annually repay a minimum amount determined by the Secretary in accordance with
"(C) a graduated repayment plan, with annual repayment amounts established at 2 or more graduated levels and paid over a fixed or extended period of time, except that the borrower's scheduled payments shall not be less than 50 percent, nor more than 150 percent, of what the amortized payment on the amount owed would be if the loan were repaid under the standard repayment plan; and".
Subsec. (f)(2)(C), (D).
Subsec. (g).
2002—Subsec. (b)(6) to (9).
Subsec. (l).
2000—Subsec. (b)(4)(A).
"(i) the bond equivalent rate of 52-week Treasury bills auctioned at final auction held prior to such June 1; plus
"(ii) 3.1 percent,
except that such rate shall not exceed 9 percent."
1998—Subsec. (b)(5).
Subsec. (b)(6).
Subsec. (b)(7).
Subsec. (g).
Subsecs. (j)(2), (k)(3).
1994—Subsec. (f)(3), (4).
1993—
1992—
Statutory Notes and Related Subsidiaries
Effective Date of 2023 Amendment
Effective Date of 2020 Amendment
Amendment by
[Effective date of title VII of div. FF of
Effective Date of 2018 Amendment
Amendment by
Effective Date of 2013 Amendment
Effective Date of 2010 Amendment
Effective Date of 2009 Amendment
Amendment by
Effective Date of 2007 Amendment
Amendment by sections 201(b), 202(b), 205, and 401 of
Amendment by section 203(b)(3) of
Effective Date of 2006 Amendment
Amendment by
Amendment by section 8007(b) of
Effective Date of 2002 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by sections 401(g)(6) and 452(b), (c) of
Effective Date of 1992 Amendment
Amendment by
Construction of 2006 Amendment
Nothing in amendment by section 8007(b) of
Limitation on Consolidation Loans During Temporary Interest Rate
Executive Documents
Continued Student Loan Payment Relief During the COVID–19 Pandemic
Memorandum of President of the United States, Aug. 8, 2020, 85 F.R. 49585, provided:
Memorandum for the Secretary of Education
By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered as follows:
On March 20, 2020, my Administration took action to provide immediate relief to tens of millions of student loan borrowers during the pandemic caused by COVID–19 by both suspending loan payments and temporarily setting interest rates to 0 percent. This relief has helped many students and parents retain financial stability. And many other Americans have continued to routinely pay down their student loan balances, to more quickly eliminate their loans in the long run. During this time, borrowers have been able to determine the best path forward for themselves.
The original announcement of this policy specified that it would continue for at least 60 days. In the interim, the Coronavirus Aid, Relief, and Economic Security Act [
(b) All persons who wish to continue making student loan payments shall be allowed to do so, notwithstanding the deferments provided pursuant to subsection (a) of this section.
(i) the authority granted by law to an executive department or agency, or the head thereof; or
(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.
(b) This memorandum shall be implemented consistent with applicable law and subject to the availability of appropriations.
(c) This memorandum is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
(d) You are authorized and directed to publish this memorandum in the Federal Register.
Donald J. Trump.
1 So in original. Probably should be followed by a comma.
2 So in original. The second comma probably should not appear.
§1087f. Contracts
(a) Contracts for supplies and services
(1) In general
The Secretary shall, to the extent practicable, award contracts for origination, servicing, and collection described in subsection (b). In awarding such contracts, the Secretary shall ensure that such services and supplies are provided at competitive prices.
(2) Entities
The entities with which the Secretary may enter into contracts shall include only entities which the Secretary determines are qualified to provide such services and supplies and will comply with the procedures applicable to the award of such contracts. In the case of awarding contracts for the origination, servicing, and collection of loans under this part, the Secretary shall enter into contracts only with entities that have extensive and relevant experience and demonstrated effectiveness. The entities with which the Secretary may enter into such contracts shall include, where practicable, agencies with agreements with the Secretary under sections 1078(b) and (c) of this title, if such agencies meet the qualifications as determined by the Secretary under this subsection and if those agencies have such experience and demonstrated effectiveness. In awarding contracts to such State agencies, the Secretary shall, to the extent practicable and consistent with the purposes of this part, give special consideration to State agencies with a history of high quality performance to perform services for institutions of higher education within their State.
(3) Rule of construction
Nothing in this section shall be construed as a limitation of the authority of any State agency to enter into an agreement for the purposes of this section as a member of a consortium of State agencies.
(b) Contracts for origination, servicing, and data systems
The Secretary may enter into contracts for—
(1) the alternative origination of loans to students attending institutions of higher education with agreements to participate in the program under this part (or their parents), if such institutions do not have agreements with the Secretary under
(2) the servicing and collection of loans made or purchased under this part;
(3) the establishment and operation of 1 or more data systems for the maintenance of records on all loans made or purchased under this part; and
(4) such other aspects of the direct student loan program as the Secretary determines are necessary to ensure the successful operation of the program.
(
Editorial Notes
Amendments
2013—Subsec. (a)(4).
Subsec. (c).
2010—Subsec. (a)(4).
Subsec. (c).
2008—Subsec. (b)(2), (3).
1998—Subsec. (b)(3).
Subsec. (b)(4), (5).
1993—
Statutory Notes and Related Subsidiaries
Effective Date of 1998 Amendment
Amendment by
Effective Date
Section effective Oct. 1, 1992, see section 2 of
Selection of Student Loan Servicer
Similar provisions were contained in the following prior appropriation acts:
§1087g. Repealed. Pub. L. 111–39, title IV, §404(b)(3), July 1, 2009, 123 Stat. 1946
Section,
Statutory Notes and Related Subsidiaries
Effective Date of Repeal
Repeal effective as if enacted on the date of enactment of
§1087h. Funds for administrative expenses
(a) Administrative expenses
(1) Mandatory funds for fiscal year 2006
For fiscal year 2006, there shall be available to the Secretary, from funds not otherwise appropriated, funds to be obligated for—
(A) administrative costs under this part and part B, including the costs of the direct student loan programs under this part; and
(B) account maintenance fees payable to guaranty agencies under part B and calculated in accordance with subsections (b) and (c),
not to exceed (from such funds not otherwise appropriated) $820,000,000 in fiscal year 2006.
(2) Repealed. Pub. L. 113–67, div. A, title V, §502(2), Dec. 26, 2013, 127 Stat. 1187
(3) Authorization for administrative costs beginning in fiscal years 2007 through 2014
For each of the fiscal years 2007 through 2014, there are authorized to be appropriated such sums as may be necessary for administrative costs under this part and part B, including the costs of the direct student loan programs under this part.
(4) Continuing mandatory funds for account maintenance fees
For each of the fiscal years 2007 through 2021,1 there shall be available to the Secretary, from funds not otherwise appropriated, funds to be obligated for account maintenance fees payable to guaranty agencies under part B and calculated in accordance with subsection (b).
(5) Account maintenance fees
Account maintenance fees under paragraph (3) 2 shall be paid quarterly and deposited in the Agency Operating Fund established under
(6) Technical assistance to institutions of higher education
(A) Provision of assistance
The Secretary shall provide institutions of higher education participating, or seeking to participate, in the loan programs under this part with technical assistance in establishing and administering such programs.
(B) Funds
There are authorized to be appropriated, and there are appropriated, to carry out this paragraph (in addition to any other amounts appropriated to carry out this paragraph and out of any money in the Treasury not otherwise appropriated), $50,000,000 for fiscal year 2010.
(C) Definition
In this paragraph, the term "assistance" means the provision of technical support, training, materials, technical assistance, and financial assistance.
(7) Additional payments
(A) Provision of assistance
The Secretary shall provide payments to loan servicers for retaining jobs at locations in the United States where such servicers were operating under part B on January 1, 2010.
(B) Funds
There are authorized to be appropriated, and there are appropriated, to carry out this paragraph (in addition to any other amounts appropriated to carry out this paragraph and out of any money in the Treasury not otherwise appropriated), $25,000,000 for each of the fiscal years 2010 and 2011.
(8) Carryover
The Secretary may carry over funds made available under this section to a subsequent fiscal year.
(b) Calculation basis
Account maintenance fees payable to guaranty agencies under subsection (a)(4) shall be calculated on the basis of 0.06 percent of the original principal amount of outstanding loans on which insurance was issued under part B.
(c) Budget justification
No funds may be expended under this section unless the Secretary includes in the Department of Education's annual budget justification to Congress a detailed description of the specific activities for which the funds made available by this section have been used in the prior and current years (if applicable), the activities and costs planned for the budget year, and the projection of activities and costs for each remaining year for which administrative expenses under this section are made available.
(
Editorial Notes
References in Text
Paragraph (3), referred to in subsec. (a)(5), was redesignated par. (4) by
Amendments
2020—Subsec. (a)(4).
2019—Subsec. (a)(4).
2018—Subsec. (a)(4).
2017—Subsec. (a)(4).
2015—Subsec. (a)(4).
2013—Subsec. (a)(2).
2010—Subsec. (a)(2) to (8).
Subsec. (b).
2008—Subsec. (a)(2).
Subsec. (a)(3).
2007—Subsec. (b).
2006—
Subsec. (b).
1998—Subsec. (a).
Subsec. (b).
Subsec. (c).
Subsec. (d).
1997—Subsec. (a).
Subsec. (a)(1).
1995—Subsec. (a).
1993—
Statutory Notes and Related Subsidiaries
Effective Date of 2007 Amendment
Amendment by
Effective Date of 2006 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date
Section effective Oct. 1, 1992, see section 2 of
Construction
Funds for Account Maintenance Fees
Similar provisions were contained in the following prior appropriation acts:
Use of Funds for Administrative Expenses of William D. Ford Direct Loan Program Prohibited
Similar provisions were contained in the following prior appropriation act:
1 See Funds for Account Maintenance Fees note below.
2 See References in Text note below.
§1087i. Authority to sell loans
The Secretary, in consultation with the Secretary of the Treasury, is authorized to sell loans made under this part on such terms as the Secretary determines are in the best interest of the United States, except that any such sale shall not result in any cost to the Federal Government. Notwithstanding any other provision of law, the proceeds of any such sale may be used by the Secretary to offer reductions in the interest rate paid by a borrower of a loan made under this part as the Secretary determines appropriate to encourage on-time repayment in accordance with
(
Editorial Notes
Prior Provisions
A prior section 1087i,
Statutory Notes and Related Subsidiaries
Effective Date
Section effective Oct. 1, 1998, except as otherwise provided in
§1087i–1. Temporary authority to purchase student loans
(a) Authority to purchase
(1) Authority; determination required
Upon a determination by the Secretary that there is an inadequate availability of loan capital to meet the demand for loans under
(2) Federal Register notice
The Secretary, the Secretary of the Treasury, and the Director of the Office of Management and Budget, shall jointly publish a notice in the Federal Register prior to any purchase of loans under paragraph (1) that—
(A) establishes the terms and conditions governing the purchases authorized by paragraph (1);
(B) includes an outline of the methodology and factors that the Secretary, the Secretary of the Treasury, and the Director of the Office of Management and Budget, will jointly consider in evaluating the price at which to purchase loans made under
(C) describes how the use of such methodology and consideration of such factors used to determine purchase price will ensure that loan purchases do not result in any net cost to the Federal Government (including the cost of servicing the loans purchased).
(3) Temporary authority to purchase rehabilitated loans
(A) Authority
In addition to the authority described in paragraph (1), the Secretary, in consultation with the Secretary of the Treasury, is authorized to purchase, or enter into forward commitments to purchase, from any eligible lender (as defined in
(B) Federal Register notice
The Secretary, the Secretary of the Treasury, and the Director of the Office of Management and Budget shall jointly publish a notice in the Federal Register prior to any purchase of loans under this paragraph that—
(i) establishes the terms and conditions governing the purchases authorized by this paragraph;
(ii) includes an outline of the methodology and factors that the Secretary, the Secretary of the Treasury, and the Director of the Office of Management and Budget will jointly consider in evaluating the price at which to purchase loans rehabilitated pursuant to
(iii) describes how the use of such methodology and consideration of such factors used to determine purchase price will ensure that loan purchases do not result in any net cost to the Federal Government (including the cost of servicing the loans purchased).
(b) Proceeds
The Secretary shall require, as a condition of any purchase under subsection (a), that the funds paid by the Secretary to any eligible lender under this section be used—
(1) to ensure continued participation of such lender in the Federal student loan programs authorized under part B of this subchapter; and
(2)(A) in the case of loans purchased pursuant to subsection (a)(1), to originate new Federal loans to students, as authorized under part B of this subchapter; or
(B) in the case of loans purchased pursuant to subsection (a)(3), to originate such new Federal loans to students, or to purchase loans in accordance with
(c) Maintaining servicing arrangements
The Secretary may, if agreed upon by an eligible lender selling loans under this section, contract with such lender for the servicing of the loans purchased, provided that—
(1) the cost of such servicing arrangement does not exceed the cost the Federal Government would otherwise incur for the servicing of loans purchased, as determined under subsection (a); and
(2) such servicing arrangement is in the best interest of the borrowers whose loans are purchased.
(d) Guaranty agency responsibilities and payments
Notwithstanding any other provision of this chapter, beginning on the date on which the Secretary purchases a loan under this section—
(1) the guaranty agency that insured such loan shall cease to have any obligations, responsibilities, or rights (including rights to any payment) under this chapter for any activity related to the administration of such loan that is carried out or required to be carried out on or after the date of such purchase; and
(2) the insurance issued by such agency pursuant to
(e) Reports and cost estimates
The Secretary shall prepare, transmit to the authorizing committees, and make available to the public, the following:
(1) Quarterly reports
(A) Contents
Not later than 60 days after the end of each quarter during the period beginning July 1, 2008, and ending September 30, 2010, a quarterly report on—
(i) the number of loans the Secretary has agreed to purchase, or has purchased, using the authority provided under this section, and the total amount of outstanding principal and accrued interest of such loans, during such period; and
(ii) the number of loans in which the Secretary has purchased a participation interest, and the total amount of outstanding principal and accrued interest of such loans, during such period.
(B) Disaggregated information
For each quarterly report, the information described in clauses (i) and (ii) of subparagraph (A) shall be disaggregated by lender and, for each lender, by category of institution (using the categories described in
(2) Estimates of purchase program costs
Not later than February 15, 2011, an estimate of the costs associated with the program of purchasing loans described in paragraph (1)(A)(i) during the period beginning July 1, 2008, and ending September 30, 2010, and an estimate of the costs associated with the program of purchasing a participation interest in loans described in paragraph (1)(A)(ii) during such period. Each such estimate shall—
(A) contain the same level of detail, and be reported in a similar manner, as the budget estimates provided for the loan program under part B and the direct student loan program under this part in the President's annual budget submission to Congress, except that current and future administrative costs shall also be reported;
(B) include an estimate of the gross and net outlays that have been, or will be, incurred by the Federal Government (including subsidy and administrative costs, and any payments made by the Department to lenders, trusts, or other entities related to such activities) in purchasing such loans or purchasing a participation interest in such loans during such period (as applicable); and
(C) include a comparison of—
(i) the average amount of the gross and net outlays (including costs and payments) described in subparagraph (B) for each $100 of loans purchased or for which a participation interest was purchased (as applicable) during such period, disaggregated by type of loan; with
(ii) the average amount of such gross and net outlays (including costs and payments) to the Federal Government for each $100 of comparable loans made under this part and part B during such period, disaggregated by part and by type of loan.
(3) Annual cost estimates
Not later than February 15 of the fiscal year following each of the fiscal years 2008, 2009, 2010, and 2011, an annual estimate of the costs associated with the program of purchasing loans described in paragraph (1)(A)(i), and an annual estimate of the costs associated with the program of purchasing a participation interest in loans described in paragraph (1)(A)(ii), that includes the information described in paragraph (2) for such fiscal year.
(f) Expiration of authority
The Secretary's authority to purchase loans under this section shall expire on July 1, 2010.
(
Editorial Notes
Amendments
2009—Subsec. (a)(2).
Subsec. (a)(3).
Subsec. (b).
2008—Subsec. (a)(1).
Subsecs. (d), (e).
Subsec. (e)(1)(A).
Subsec. (e)(2).
Subsec. (e)(3).
Subsec. (f).
Statutory Notes and Related Subsidiaries
Effective Date of 2009 Amendment
Amendment by
§1087i–2. Temporary loan consolidation authority
(a) Temporary loan consolidation authority
(1) In general
A borrower who has 1 or more loans in 2 or more of the categories described in paragraph (2), and who has not yet entered repayment on 1 or more of those loans in any of the categories, may consolidate all of the loans of the borrower that are described in paragraph (2) into a Federal Direct Consolidation Loan during the period described in paragraph (3).
(2) Categories of loans that may be consolidated
The categories of loans that may be consolidated under paragraph (1) are—
(A) loans made under this part;
(B) loans purchased by the Secretary pursuant to
(C) loans made under part B that are held by an eligible lender, as such term is defined in
(3) Time period in which loans may be consolidated
The Secretary may make a Federal Direct Consolidation Loan under this section to a borrower whose application for such Federal Direct Consolidation Loan is received on or after July 1, 2010, and before July 1, 2011.
(b) Terms of loans
A Federal Direct Consolidation Loan made under this section shall have the same terms and conditions as a Federal Direct Consolidation Loan made under
(1) in determining the applicable rate of interest on the Federal Direct Consolidation Loan made under this section (other than on a Federal Direct Consolidation Loan described in paragraph (2)),
(2) if a Federal Direct Consolidation Loan made under this section that repays a loan which is subject to an interest rate determined under
(A) by using the applicable rate of interest described in
(B) in accordance with
(
§1087j. Loan cancellation for teachers
(a) Statement of purpose
It is the purpose of this section to encourage individuals to enter and continue in the teaching profession.
(b) Program authorized
The Secretary shall carry out a program of canceling the obligation to repay a qualified loan amount in accordance with subsection (c) for Federal Direct Stafford Loans and Federal Direct Unsubsidized Stafford Loans made under this part for any new borrower on or after October 1, 1998, who—
(1) has been employed as a full-time teacher for 5 consecutive complete school years—
(A) in a school or location that qualifies under
(B) if employed as an elementary school or secondary school teacher, is highly qualified as defined in section 9101 1 of the Elementary and Secondary Education Act of 1965 [
(2) is not in default on a loan for which the borrower seeks forgiveness.
(c) Qualified loan amounts
(1) In general
The Secretary shall cancel not more than $5,000 in the aggregate of the loan obligation on a Federal Direct Stafford Loan or a Federal Direct Unsubsidized Stafford Loan that is outstanding after the completion of the fifth complete school year of teaching described in subsection (b)(1). No borrower may receive a reduction of loan obligations under both this section and
(2) Treatment of consolidation loans
A loan amount for a Federal Direct Consolidation Loan may be a qualified loan amount for the purposes of this subsection only to the extent that such loan amount was used to repay a Federal Direct Stafford Loan, a Federal Direct Unsubsidized Stafford Loan, or a loan made under
(3) Additional amounts for teachers in mathematics, science, or special education
Notwithstanding the amount specified in paragraph (1), the aggregate amount that the Secretary shall cancel under this section shall be not more than $17,500 in the case of—
(A) a secondary school teacher—
(i) who meets the requirements of subsection (b); and
(ii) whose qualifying employment for purposes of such subsection is teaching mathematics or science on a full-time basis; and
(B) an elementary school or secondary school teacher—
(i) who meets the requirements of subsection (b);
(ii) whose qualifying employment for purposes of such subsection is as a special education teacher whose primary responsibility is to provide special education to children with disabilities (as those terms are defined in
(iii) who, as certified by the chief administrative officer of the public or non-profit private elementary school or secondary school in which the borrower is employed, or, in the case of a teacher who is employed by an educational service agency, as certified by the chief administrative officer of such agency, is teaching children with disabilities that correspond with the borrower's special education training and has demonstrated knowledge and teaching skills in the content areas of the elementary school or secondary school curriculum that the borrower is teaching.
(d) Regulations
The Secretary is authorized to issue such regulations as may be necessary to carry out the provisions of this section.
(e) Construction
Nothing in this section shall be construed to authorize any refunding of any canceled loan.
(f) List
If the list of schools in which a teacher may perform service pursuant to subsection (b) is not available before May 1 of any year, the Secretary may use the list for the year preceding the year for which the determination is made to make such service determination.
(g) Additional eligibility provisions
(1) Continued eligibility
Any teacher who performs service in a school that—
(A) meets the requirements of subsection (b)(1)(A) in any year during such service; and
(B) in a subsequent year fails to meet the requirements of such subsection, may continue to teach in such school and shall be eligible for loan cancellation pursuant to subsection (b).
(2) Prevention of double benefits
No borrower may, for the same voluntary service, receive a benefit under both this section and—
(A)
(B)
(C) subtitle D of title I of the National and Community Service Act of 1990 (
(3) Private school teachers
An individual who is employed as a teacher in a private school and is exempt from State certification requirements (unless otherwise applicable under State law), may, in lieu of the requirement of subsection (b)(1)(B), have such employment treated as qualifying employment under this section if such individual is permitted to and does satisfy rigorous subject knowledge and skills tests by taking competency tests in the applicable grade levels and subject areas. For such purposes, the competency tests taken by such a private school teacher shall be recognized by 5 or more States for the purpose of fulfilling the highly qualified teacher requirements under section 9101 1 of the Elementary and Secondary Education Act of 1965 [
(h) "Year" defined
For the purpose of this section, the term "year" where applied to service as a teacher means an academic year as defined by the Secretary.
(
Editorial Notes
References in Text
Section 9101 of the Elementary and Secondary Education Act of 1965, referred to in subsecs. (b)(1)(B) and (g)(3), was amended by
The National and Community Service Act of 1990, referred to in subsec. (g)(2)(D), is
Prior Provisions
A prior section 1087j,
Amendments
2009—Subsec. (c)(1).
Subsec. (g)(2).
2008—Subsec. (b).
Subsec. (b)(1)(A)(i).
Subsec. (c)(1).
Subsec. (c)(3)(A)(i), (B)(i).
Subsec. (c)(3)(B)(iii).
Subsec. (g)(2).
Subsec. (g)(3).
2006—Subsec. (b)(1)(A)(ii).
Subsec. (g)(3).
2004—Subsec. (b)(1)(A).
"(ii) if employed as a secondary school teacher, is teaching a subject area that is relevant to the borrower's academic major as certified by the chief administrative officer of the public or non-profit private secondary school in which the borrower is employed; and
"(iii) if employed as an elementary school teacher, has demonstrated, as certified by the chief administrative officer of the public or nonprofit private elementary school in which the borrower is employed, knowledge and teaching skills in reading, writing, mathematics and other areas of the elementary school curriculum; and".
Subsec. (c)(3).
Statutory Notes and Related Subsidiaries
Effective Date of 2009 Amendment
Amendment by
Effective Date of 2006 Amendment
Amendment by
Effective Date of 2004 Amendment; Transition Rule
Amendment by section 3(b)(2) of
For transition rules relating to amendments made by section 3(a)(1)(B) of
Effective Date
Section effective Oct. 1, 1998, except as otherwise provided in
1 See References in Text note below.
Part E—Federal Perkins Loans
Editorial Notes
Codification
This part was added as part E of title IV of
Part E of title IV of the Higher Education Act of 1965,
Prior Provisions
A prior part E, consisting of part F of title IV of
§1087aa. Appropriations authorized
(a) Program authority
The Secretary shall carry out a program assisting in the maintenance of funds at institutions of higher education for the making of loans to undergraduate students in need to pursue their courses of study in such institutions or while engaged in programs of study abroad approved for credit by such institutions. Loans made under this part shall be known as "Federal Perkins Loans".
(b) Authority to make loans
(1) In general
(A) Loans for new undergraduate Federal Perkins Loan borrowers
Through September 30, 2017, an institution of higher education may make a loan under this part to an eligible undergraduate student who, on the date of disbursement of a loan made under this part, has no outstanding balance of principal or interest on a loan made under this part from the student loan fund established under this part by the institution, but only if the institution has awarded all Federal Direct Loans, as referenced under subparagraphs (A) and (D) of
(B) Loans for current undergraduate Federal Perkins Loan borrowers
Through September 30, 2017, an institution of higher education may make a loan under this part to an eligible undergraduate student who, on the date of disbursement of a loan made under this part, has an outstanding balance of principal or interest on a loan made under this part from the student loan fund established under this part by the institution, but only if the institution has awarded all Federal Direct Stafford Loans as referenced under
(C) Loans for certain graduate borrowers
Through September 30, 2016, with respect to an eligible graduate student who has received a loan made under this part prior to October 1, 2015, an institution of higher education that has most recently made such a loan to the student for an academic program at such institution may continue making loans under this part from the student loan fund established under this part by the institution to enable the student to continue or complete such academic program.
(2) No additional loans
An institution of higher education shall not make loans under this part after September 30, 2017.
(3) Prohibition on additional appropriations
No funds are authorized to be appropriated under this chapter or any other Act to carry out the functions described in paragraph (1) for any fiscal year following fiscal year 2015.
(
Editorial Notes
Prior Provisions
A prior section 1087aa,
Another prior section 461 of
Amendments
2015—Subsec. (a).
Subsec. (b).
"(1) For the purpose of enabling the Secretary to make contributions to student loan funds established under this part, there are authorized to be appropriated $300,000,000 for fiscal year 2009 and for each of the five succeeding fiscal years.
"(2) In addition to the funds authorized under paragraph (1), there are hereby authorized to be appropriated such sums for fiscal year 2015 and each of the 5 succeeding fiscal years as may be necessary to enable students who have received loans for academic years ending prior to October 1, 2015, to continue or complete courses of study."
Subsec. (c).
2008—Subsec. (b)(1).
Subsec. (b)(2).
1998—Subsec. (b)(1).
Subsec. (b)(2).
1992—Subsec. (a).
Subsec. (b).
"(1) For the purpose of enabling the Secretary to make contributions to student loan funds established under this part, there are authorized to be appropriated $268,000,000 for fiscal year 1987 and such sums as may be necessary for each of the 4 succeeding fiscal years.
"(2) In addition there are hereby authorized to be appropriated such sums for fiscal year 1991 and each of the five succeeding fiscal years as may be necessary to enable students who have received loans for academic years ending prior to October 1, 1991, to continue or complete courses of study."
Statutory Notes and Related Subsidiaries
Effective Date of 1998 Amendment
Amendment by
Construction of 2015 Amendment
§1087bb. Allocation of funds
(a) Allocation based on previous allocation
(1) From the amount appropriated pursuant to section 1087aa(b) 1 of this title for each fiscal year, the Secretary shall first allocate to each eligible institution an amount equal to—
(A) 100 percent of the amount received under subsections (a) and (b) of this section for fiscal year 1999 (as such subsections were in effect with respect to allocations for such fiscal year), multiplied by
(B) the institution's default penalty, as determined under subsection (e),
except that if the institution has a cohort default rate in excess of the applicable maximum cohort default rate under subsection (f), the institution may not receive an allocation under this paragraph.
(2)(A) From the amount so appropriated, the Secretary shall next allocate to each eligible institution that began participation in the program under this part after fiscal year 1999 but is not a first or second time participant, an amount equal to the greater of—
(i) $5,000; or
(ii) 100 percent of the amount received and expended under this part for the first year it participated in the program.
(B) From the amount so appropriated, the Secretary shall next allocate to each eligible institution that began participation in the program under this part after fiscal year 1999 and is a first or second time participant, an amount equal to the greatest of—
(i) $5,000;
(ii) an amount equal to (I) 90 percent of the amount received and used under this part in the second preceding fiscal year by eligible institutions offering comparable programs of instruction, divided by (II) the number of students enrolled at such comparable institutions in such fiscal year, multiplied by (III) the number of students enrolled at the applicant institution in such fiscal year; or
(iii) 90 percent of the institution's allocation under this part for the preceding fiscal year.
(C) Notwithstanding subparagraphs (A) and (B) of this paragraph, the Secretary shall allocate to each eligible institution which—
(i) was a first-time participant in the program in fiscal year 2000 or any subsequent fiscal year, and
(ii) received a larger amount under this subsection in the second year of participation,
an amount equal to 90 percent of the amount it received under this subsection in its second year of participation.
(D) For any fiscal year after a fiscal year in which an institution receives an allocation under subparagraph (A), (B), or (C), the Secretary shall allocate to such institution an amount equal to the product of—
(i) the amount determined under subparagraph (A), (B), or (C), multiplied by
(ii) the institution's default penalty, as determined under subsection (e),
except that if the institution has a cohort default rate in excess of the applicable maximum cohort default rate under subsection (f), the institution may not receive an allocation under this paragraph.
(3)(A) If the amount appropriated for any fiscal year is less than the amount required to be allocated to all institutions under paragraph (1) of this subsection, then the amount of the allocation to each such institution shall be ratably reduced.
(B) If the amount appropriated for any fiscal year is more than the amount required to be allocated to all institutions under paragraph (1) but less than the amount required to be allocated to all institutions under paragraph (2), then—
(i) the Secretary shall allot the amount required to be allocated to all institutions under paragraph (1), and
(ii) the amount of the allocation to each institution under paragraph (2) shall be ratably reduced.
(C) If additional amounts are appropriated for any such fiscal year, such reduced amounts shall be increased on the same basis as they were reduced (until the amount allocated equals the amount required to be allocated under paragraphs (1) and (2) of this subsection).
(b) Allocation of excess based on share of excess eligible amounts
(1) From the remainder of the amount appropriated pursuant to section 1087aa(b) 1 of this title after making the allocations required by subsection (a) of this section, the Secretary shall allocate to each eligible institution which has an excess eligible amount an amount which bears the same ratio to such remainder as such excess eligible amount bears to the sum of the excess eligible amounts of all such eligible institutions (having such excess eligible amounts).
(2) For any eligible institution, the excess eligible amount is the amount, if any, by which—
(A)(i) that institution's eligible amount (as determined under paragraph (3)), divided by (ii) the sum of the eligible amounts of all institutions (as so determined), multiplied by (iii) the amount appropriated pursuant to section 1087aa(b) 1 of this title for the fiscal year; exceeds
(B) the amount required to be allocated to that institution under subsection (a),
except that an eligible institution which has a cohort default rate in excess of the applicable maximum cohort default rate under subsection (f) may not receive an allocation under this paragraph.
(3) For any eligible institution, the eligible amount of that institution is equal to—
(A) the amount of the institution's self-help need, as determined under subsection (c); minus
(B) the institution's anticipated collections; multiplied by
(C) the institution's default penalty, as determined under subsection (e);
except that, if the institution has a cohort default rate in excess of the applicable maximum cohort default rate under subsection (f), the eligible amount of that institution is zero.
(c) Determination of institution's self-help need
(1) The amount of an institution's self-help need is equal to the sum of the self-help need of the institution's eligible undergraduate students and the self-help need of the institution's eligible graduate and professional students.
(2) To determine the self-help need of an institution's eligible undergraduate students, the Secretary shall—
(A) establish various income categories for dependent and independent undergraduate students;
(B) establish a student aid index for each income category of dependent and independent undergraduate students, determined on the basis of the average student aid index (computed in accordance with part F of this subchapter) of a representative sample within each income category for the second preceding fiscal year;
(C) compute 25 percent of the average cost of attendance for all undergraduate students;
(D) multiply the number of eligible dependent students in each income category by the lesser of—
(i) 25 percent of the average cost of attendance for all undergraduate students determined under subparagraph (C); or
(ii) the average cost of attendance for all undergraduate students minus the student aid index determined under subparagraph (B) for that income category, except that the amount computed by such subtraction shall not be less than zero;
(E) add the amounts determined under subparagraph (D) for each income category of dependent students;
(F) multiply the number of eligible independent students in each income category by the lesser of—
(i) 25 percent of the average cost of attendance for all undergraduate students determined under subparagraph (C); or
(ii) the average cost of attendance for all undergraduate students minus the student aid index determined under subparagraph (B) for that income category, except that the amount computed by such subtraction for any income category shall not be less than zero;
(G) add the amounts determined under subparagraph (F) for each income category of independent students; and
(H) add the amounts determined under subparagraphs (E) and (G).
(3) To determine the self-help need of an institution's eligible graduate and professional students, the Secretary shall—
(A) establish various income categories for graduate and professional students;
(B) establish a student aid index for each income category of graduate and professional students, determined on the basis of the average student aid index (computed in accordance with part F of this subchapter) of a representative sample within each income category for the second preceding fiscal year;
(C) determine the average cost of attendance for all graduate and professional students;
(D) subtract from the average cost of attendance for all graduate and professional students (determined under subparagraph (C)), the student aid index (determined under subparagraph (B)) for each income category, except that the amount computed by such subtraction for any income category shall not be less than zero;
(E) multiply the amounts determined under subparagraph (D) by the number of eligible students in each category;
(F) add the amounts determined under subparagraph (E) for each income category.
(4)(A) For purposes of paragraphs (2) and (3), the term "average cost of attendance" means the average of the attendance costs for undergraduate students and for graduate and professional students, which shall include (i) tuition and fees determined in accordance with subparagraph (B), (ii) standard living expenses determined in accordance with subparagraph (C), and (iii) books and supplies determined in accordance with subparagraph (D).
(B) The average undergraduate and graduate and professional tuition and fees described in subparagraph (A)(i) shall be computed on the basis of information reported by the institution to the Secretary, which shall include (i) total revenue received by the institution from undergraduate and graduate tuition and fees for the second year preceding the year for which it is applying for an allocation, and (ii) the institution's enrollment for such second preceding year.
(C) The standard living expense described in subparagraph (A)(ii) is equal to 150 percent of the difference between the income protection allowance for a family of five with one in college and the income protection allowance for a family of six with one in college for a single independent student.
(D) The allowance for books and supplies described in subparagraph (A)(iii) is equal to $600.
(d) Anticipated collections
(1) An institution's anticipated collections are equal to the amount which was collected during the second year preceding the beginning of the award period, multiplied by 1.21.
(2) The Secretary shall establish an appeals process by which the anticipated collections required in paragraph (1) may be waived for institutions with low cohort default rates in the program assisted under this part.
(e) Default penalties
(1) Years preceding fiscal year 2000
For any fiscal year preceding fiscal year 2000, any institution with a cohort default rate that—
(A) equals or exceeds 15 percent, shall establish a default reduction plan pursuant to regulations prescribed by the Secretary, except that such plan shall not be required with respect to an institution that has a default rate of less than 20 percent and that has less than 100 students who have loans under this part in such academic year;
(B) equals or exceeds 20 percent, but is less than 25 percent, shall have a default penalty of 0.9;
(C) equals or exceeds 25 percent, but is less than 30 percent, shall have a default penalty of 0.7; and
(D) equals or exceeds 30 percent shall have a default penalty of zero.
(2) Years following fiscal year 2000
For fiscal year 2000 and any succeeding fiscal year, any institution with a cohort default rate (as defined under subsection (g)) that equals or exceeds 25 percent shall have a default penalty of zero.
(3) Ineligibility
(A) In general
For fiscal year 2000 and any succeeding fiscal year, any institution with a cohort default rate (as defined in subsection (g)) that equals or exceeds 50 percent for each of the 3 most recent years for which data are available shall not be eligible to participate in a program under this part for the fiscal year for which the determination is made and the 2 succeeding fiscal years, unless, within 30 days of receiving notification from the Secretary of the loss of eligibility under this paragraph, the institution appeals the loss of eligibility to the Secretary. The Secretary shall issue a decision on any such appeal within 45 days after the submission of the appeal. Such decision may permit the institution to continue to participate in a program under this part if—
(i) the institution demonstrates to the satisfaction of the Secretary that the calculation of the institution's cohort default rate is not accurate, and that recalculation would reduce the institution's cohort default rate for any of the 3 fiscal years below 50 percent; or
(ii) there are, in the judgment of the Secretary, such a small number of borrowers entering repayment that the application of this subparagraph would be inequitable.
(B) Continued participation
During an appeal under subparagraph (A), the Secretary may permit the institution to continue to participate in a program under this part.
(C) Return of funds
Within 90 days after the date of any termination pursuant to subparagraph (A), or the conclusion of any appeal pursuant to subparagraph (B), whichever is later, the balance of the student loan fund established under this part by the institution that is the subject of the termination shall be distributed as follows:
(i) The Secretary shall first be paid an amount which bears the same ratio to such balance (as of the date of such distribution) as the total amount of Federal capital contributions to such fund by the Secretary under this part bears to the sum of such Federal capital contributions and the capital contributions to such fund made by the institution.
(ii) The remainder of such student loan fund shall be paid to the institution.
(D) Use of returned funds
Any funds returned to the Secretary under this paragraph shall be reallocated to institutions of higher education pursuant to subsection (i).
(E) Definition
For the purposes of subparagraph (A), the term "loss of eligibility" shall be defined as the mandatory liquidation of an institution's student loan fund, and assignment of the institution's outstanding loan portfolio to the Secretary.
(f) Applicable maximum cohort default rate
(1) Award years prior to 2000
For award years prior to award year 2000, the applicable maximum cohort default rate is 30 percent.
(2) Award year 2000 and succeeding award years
For award year 2000 and subsequent years, the applicable maximum cohort default rate is 25 percent.
(g) "Cohort default rate" defined
(1)(A) The term "cohort default rate" means, for any award year in which 30 or more current and former students at the institution enter repayment on loans under this part (received for attendance at the institution), the percentage of those current and former students who enter repayment on such loans (received for attendance at that institution) in that award year who default before the end of the following award year.
(B) For any award year in which less than 30 of the institution's current and former students enter repayment, the term "cohort default rate" means the percentage of such current and former students who entered repayment on such loans in any of the three most recent award years and who default before the end of the award year immediately following the year in which they entered repayment.
(C) A loan on which a payment is made by the institution of higher education, its owner, agency, contractor, employee, or any other entity or individual affiliated with such institution, in order to avoid default by the borrower, is considered as in default for the purposes of this subsection.
(D) In the case of a student who has attended and borrowed at more than one school, the student (and his or her subsequent repayment or default) is attributed to the school for attendance at which the student received the loan that entered repayment in the award year.
(E) In determining the number of students who default before the end of such award year, the institution, in calculating the cohort default rate, shall exclude—
(i) any loan on which the borrower has, after the time periods specified in paragraph (2)—
(I) voluntarily made 6 consecutive payments;
(II) voluntarily made all payments currently due;
(III) repaid in full the amount due on the loan; or
(IV) received a deferment or forbearance, based on a condition that began prior to such time periods;
(ii) any loan which has, after the time periods specified in paragraph (2), been rehabilitated or canceled; and
(iii) any other loan that the Secretary determines should be excluded from such determination.
(F) The Secretary shall prescribe regulations designed to prevent an institution from evading the application to that institution of a cohort default rate determination under this subsection through the use of such measures as branching, consolidation, change of ownership or control or other means as determined by the Secretary.
(2) For purposes of calculating the cohort default rate under this subsection, a loan shall be considered to be in default—
(A) 240 days (in the case of a loan repayable monthly), or
(B) 270 days (in the case of a loan repayable quarterly),
after the borrower fails to make an installment payment when due or to comply with other terms of the promissory note.
(h) Filing deadlines
The Secretary shall, from time to time, set dates before which institutions must file applications for allocations under this part.
(i) Reallocation of excess allocations
(1) In general
(A) If an institution of higher education returns to the Secretary any portion of the sums allocated to such institution under this section for any fiscal year, the Secretary shall reallocate 80 percent of such returned portions to participating institutions in an amount not to exceed such participating institution's excess eligible amounts as determined under paragraph (2).
(B) For the purpose of this subsection, the term "participating institution" means an institution of higher education that—
(i) was a participant in the program assisted under this part in fiscal year 1999; and
(ii) did not receive an allocation under subsection (a) in the fiscal year for which the reallocation determination is made.
(2) Excess eligible amount
For any participating institution, the excess eligible amount is the amount, if any, by which—
(A)(i) that institution's eligible amount (as determined under subsection (b)(3)), divided by (ii) the sum of the eligible amounts of all participating institutions (as determined under paragraph (3)), multiplied by (iii) the amount of funds available for reallocation under this subsection; exceeds
(B) the amount required to be allocated to that institution under subsection (b).
(3) Remainder
The Secretary shall reallocate the remainder of such returned portions in accordance with regulations of the Secretary.
(4) Allocation reductions
If under paragraph (1) of this subsection an institution returns more than 10 percent of its allocation, the institution's allocation for the next fiscal year shall be reduced by the amount returned. The Secretary may waive this paragraph for a specific institution if the Secretary finds that enforcing it is contrary to the interest of the program.
(
Editorial Notes
References in Text
Prior Provisions
A prior section 1087bb,
Amendments
2020—Subsec. (c)(2)(B).
Subsec. (c)(2)(D)(ii), (F)(ii).
Subsec. (c)(3)(B).
Subsec. (c)(3)(D).
2009—Subsec. (a)(1)(A).
2008—Subsec. (c)(4)(D).
1998—Subsec. (a)(1).
Subsec. (a)(1)(A).
Subsec. (a)(1)(B).
Subsec. (a)(2)(A), (B).
Subsec. (a)(2)(C)(i).
Subsec. (a)(2)(D).
Subsec. (a)(2)(D)(ii).
Subsec. (b).
"(1) the amount the eligible institution receives for such fiscal year under subsection (a) of this section, bears to
"(2) the amount all such institutions receive under such subsection (a) of this section."
Subsec. (b)(2).
Subsec. (b)(3).
Subsec. (c).
Subsec. (c)(1).
Subsec. (c)(2).
Subsec. (c)(3).
Subsec. (c)(3)(A).
Subsec. (c)(3)(C).
Subsec. (d).
Subsec. (d)(2).
Subsec. (e).
"(1) For any fiscal year prior to fiscal year 1994, any institution which has a default rate which equals or exceeds 7.5 percent but does not exceed the maximum default rate applicable to the award year under subsection (g) of this section, the institution's default penalty is a percentage equal to the complement of such default rate. For any institution which has a default rate that does not exceed 7.5 percent, the institution's default penalty is equal to one.
"(2) For fiscal year 1994 and any succeeding fiscal year, any institution with a cohort default rate (as defined under subsection (h) of this section) which—
"(A) equals or exceeds 15 percent, shall establish a default reduction plan pursuant to regulations issued by the Secretary;
"(B) equals or exceeds 20 percent, but is less than 25 percent, shall have a default penalty of 0.9;
"(C) equals or exceeds 25 percent, but is less than 30 percent, shall have a default penalty of 0.7; and
"(D) equals or exceeds 30 percent shall have a default penalty of zero."
Subsec. (f).
"(1) For award years 1992 and 1993, the applicable maximum default rate is 15 percent.
"(2) For award year 1994 and subsequent years, the maximum cohort default rate is 30 percent."
Subsec. (g).
Subsec. (g)(1).
"(A) the total principal amount of defaulted loans; by
"(B) the total principal amount of loans made under this part, less the principal amount of all loans made to borrowers who are eligible for deferment under
Subsec. (g)(1)(B).
Subsec. (g)(1)(C), (D).
Subsec. (g)(1)(E).
Subsec. (g)(1)(F).
Subsec. (g)(1)(G).
Subsec. (g)(2).
"(A) amounts that have been repaid or cancelled on such loans;
"(B) loans discharged in bankruptcy;
"(C) loans referred or assigned to the Secretary for collection under paragraph (5)(A), (5)(B)(i), or (6) of
"(D) loans that are in default but on which the borrowers have made satisfactory arrangements to resume payment."
Subsec. (g)(3).
Subsec. (g)(4).
"(A) 240 days (in the case of a loan repayable monthly), or
"(B) 270 days (in the case of a loan repayable quarterly), after the borrower fails to make an installment payment when due or to comply with other terms of the promissory note,
after the borrower fails to make an installment payment when due or to comply with other terms of the promissory note."
Subsecs. (h), (i).
Subsec. (j).
Subsec. (j)(1)(B)(i).
Subsec. (j)(2)(A)(i).
Subsec. (j)(2)(B).
1993—Subsec. (a)(1), (2)(D).
Subsec. (d)(4)(C).
Subsecs. (e)(2), (h)(4)(B).
1992—Subsec. (a)(1)(A).
Subsec. (e).
Subsec. (f).
Subsec. (g).
"(1) For award years 1988, 1989, and 1990, the applicable maximum default rate is 20 percent.
"(2) For award year 1991 and subsequent years, the applicable maximum default rate is 15 percent."
Subsec. (h).
Subsec. (j).
1987—Subsec. (a)(1)(A).
Subsec. (d)(3), (4).
Subsec. (e).
Subsec. (f).
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Amendment by
Effective Date of 2009 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by section 462(b)–(e) of
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
Effective Date
Section applicable with respect to academic year 1988-1989 and succeeding academic years, see section 405(b) of
1 See References in Text note below.
§1087cc. Agreements with institutions of higher education
(a) Contents of agreements
An agreement with any institution of higher education for the payment of Federal capital contributions under this part shall—
(1) provide for the establishment and maintenance of a student loan fund for the purpose of this part;
(2) provide for the deposit in such fund of—
(A) Federal capital contributions from funds appropriated under
(B) a capital contribution by an institution in an amount equal to one-third of the Federal capital contributions described in subparagraph (A);
(C) collections of principal and interest on student loans made from deposited funds;
(D) charges collected pursuant to regulations under
(E) any other earnings of the funds;
(3) provide that such student loan fund shall be used only for—
(A) loans to students, in accordance with the provisions of this part;
(B) administrative expenses, as provided in subsection (b);
(C) capital distributions, as provided in
(D) costs of litigation, and other collection costs agreed to by the Secretary in connection with the collection of a loan from the fund (and interest thereon) or a charge assessed pursuant to regulations under
(4) provide that where a note or written agreement evidencing a loan has been in default despite due diligence on the part of the institution in attempting collection thereon—
(A) if the institution has knowingly failed to maintain an acceptable collection record with respect to such loan, as determined by the Secretary in accordance with criteria established by regulation, the Secretary may—
(i) require the institution to assign such note or agreement to the Secretary, without recompense; and
(ii) apportion any sums collected on such a loan, less an amount not to exceed 30 percent of any sums collected to cover the Secretary's collection costs, among other institutions in accordance with
(B) if the institution is not one described in subparagraph (A), the Secretary may allow such institution to refer such note or agreement to the Secretary, without recompense, except that, once every six months, any sums collected on such a loan (less an amount not to exceed 30 percent of any such sums collected to cover the Secretary's collection costs) shall be repaid to such institution and treated as an additional capital contribution under
(5) provide that, if an institution of higher education determines not to service and collect student loans made available from funds under this part, the institution will assign, at the beginning of the repayment period, notes or evidence of obligations of student loans made from such funds to the Secretary and the Secretary shall apportion any sums collected on such notes or obligations (less an amount not to exceed 30 percent of any such sums collected to cover that Secretary's collection costs) among other institutions in accordance with
(6) provide that, notwithstanding any other provision of law, the Secretary will provide to the institution any information with respect to the names and addresses of borrowers or other relevant information which is available to the Secretary, from whatever source such information may be derived;
(7) provide assurances that the institution will comply with the provisions of
(8) provide that the institution of higher education will make loans first to students with exceptional need; and
(9) include such other reasonable provisions as may be necessary to protect the United States from unreasonable risk of loss and as are agreed to by the Secretary and the institution, except that nothing in this paragraph shall be construed to permit the Secretary to require the assignment of loans to the Secretary other than as is provided for in paragraphs (4) and (5).
(b) Administrative expenses
An institution which has entered into an agreement under subsection (a) shall be entitled, for each fiscal year during which it makes student loans from a student loan fund established under such agreement, to a payment in lieu of reimbursement for its expenses in administering its student loan program under this part during such year. Such payment shall be made in accordance with
(c) Cooperative agreements with consumer reporting agencies
(1) For the purpose of promoting responsible repayment of loans made pursuant to this part, the Secretary and each institution of higher education participating in the program under this part shall enter into cooperative agreements with consumer reporting agencies to provide for the exchange of information concerning student borrowers concerning whom the Secretary has received a referral pursuant to
(2) Each cooperative agreement made pursuant to paragraph (1) shall be made in accordance with the requirements of
(A) the date of disbursement and the amount of such loans made to any borrower under this part at the time of disbursement of the loan;
(B) information concerning the repayment and collection of any such loan, including information concerning the status of such loan; and
(C) the date of cancellation of the note upon completion of repayment by the borrower of any such loan, or upon cancellation or discharge of the borrower's obligation on the loan for any reason.
(3) Notwithstanding paragraphs (4) and (5) of subsection (a) of
(4)(A) Except as provided in subparagraph (B), an institution of higher education, after consultation with the Secretary and pursuant to the agreements entered into under paragraph (1), shall disclose at least annually to any consumer reporting agency with which the Secretary has such an agreement the information set forth in paragraph (2), and shall disclose promptly to such consumer reporting agency any changes to the information previously disclosed.
(B) The Secretary may promulgate regulations establishing criteria under which an institution of higher education may cease reporting the information described in paragraph (2) before a loan is paid in full.
(5) Each institution of higher education shall notify the appropriate consumer reporting agencies whenever a borrower of a loan that is made and held by the institution and that is in default makes 6 consecutive monthly payments on such loan, for the purpose of encouraging such consumer reporting agencies to update the status of information maintained with respect to that borrower.
(d) Limitation on use of interest bearing accounts
In carrying out the provisions of subsection (a)(9), the Secretary may not require that any collection agency, collection attorney, or loan servicer collecting loans made under this part deposit amounts collected on such loans in interest bearing accounts, unless such agency, attorney, or servicer holds such amounts for more than 45 days.
(e) Special due diligence rule
In carrying out the provisions of subsection (a)(5) 1 relating to due diligence, the Secretary shall make every effort to ensure that institutions of higher education may use Internal Revenue Service skip-tracing collection procedures on loans made under this part.
(
Editorial Notes
References in Text
Subsection (a)(5) relating to due diligence, referred to in subsec. (e), was redesignated subsec. (a)(4), by
Prior Provisions
A prior section 1087cc,
Amendments
2009—Subsec. (c)(2)(A).
Subsec. (c)(2)(B).
Subsec. (c)(3).
2008—Subsec. (a)(4)(B).
"(i) allow such institution to transfer its interest in such loan to the Secretary, for collection, and the Secretary may use any collections thereon (less an amount not to exceed 30 percent of any such sums collected to cover the Secretary's collection costs) to make allocations to institutions of additional capital contributions in accordance with
"(ii) allow such institution to refer such note or agreement to the Secretary, without recompense, except that any sums collected on such a loan (less an amount not to exceed 30 percent of any such sums collected to cover the Secretary's collection costs) shall be repaid to such institution no later than 180 days after collection by the Secretary and treated as an additional capital contribution;".
Subsec. (a)(9).
Subsec. (c).
Subsec. (c)(1).
Subsec. (c)(2).
Subsec. (c)(4)(A).
Subsec. (c)(5).
1998—Subsec. (a)(2)(B).
"(i) by an institution that—
"(I) is granted permission by the Secretary to participate in an Expanded Lending Option under the program, and
"(II) has a default rate which does not exceed 7.5 percent for award year 1993–1994 and has a cohort default rate which does not exceed 15 percent for award year 1994–1995 or for any succeeding award year,
in an amount not less than the amount of the Federal capital contributions described in subparagraph (A); or
"(ii) by any other institution, in an amount not less than three-seventeenths of such Federal capital contribution in fiscal year 1993, and one-third of such Federal capital contribution in each of the succeeding fiscal years, of the amount of the Federal capital contributions described in subparagraph (A);".
Subsec. (a)(4) to (10).
Subsec. (c)(1).
Subsec. (c)(2).
Subsec. (c)(2)(A).
Subsec. (c)(2)(B).
Subsec. (c)(2)(C).
Subsec. (c)(3).
Subsec. (c)(3)(A), (B).
"(A) 7 years from the date on which the Secretary accepted an assignment or referral of a loan, or
"(B) 7 years from the date the Secretary first reports the account to a consumer reporting agency."
Subsec. (c)(4).
"(A) the amount of loans made to any borrower under this part at the time of the disbursement of the loan; and
"(B) the information set forth in
Subsec. (c)(5).
Subsec. (d).
1993—Subsec. (a)(2)(B)(i)(II).
Subsec. (c)(4).
Subsecs. (d), (e).
1992—Subsec. (a)(2)(B).
Subsec. (c)(3)(B).
Subsec. (c)(4).
1987—Subsec. (a)(4).
Subsec. (b).
Statutory Notes and Related Subsidiaries
Effective Date of 2009 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
Effective Date
Section effective Oct. 17, 1986, except as otherwise provided, see section 2 of
Subsection (a)(9) of this section applicable only to loans made for periods of enrollment beginning on or after July 1, 1987, see section 405(b) of
1 See References in Text note below.
§1087cc–1. Student loan information by eligible institutions
(a) Disclosure required prior to disbursement
Each institution of higher education shall, at or prior to the time such institution makes a loan to a student borrower which is made under this part, provide thorough and adequate loan information on such loan to the student borrower. Any disclosure required by this subsection may be made by an institution of higher education as part of the written application material provided to the borrower, or as part of the promissory note evidencing the loan, or on a separate written form provided to the borrower. The disclosures shall include—
(1) the name of the institution of higher education, and the address to which communications and payments should be sent;
(2) the principal amount of the loan;
(3) the amount of any charges collected by the institution at or prior to the disbursal of the loan and whether such charges are deducted from the proceeds of the loan or paid separately by the borrower;
(4) the stated interest rate on the loan;
(5) the yearly and cumulative maximum amounts that may be borrowed;
(6) an explanation of when repayment of the loan will be required and when the borrower will be obligated to pay interest that accrues on the loan;
(7) a statement as to the minimum and maximum repayment term which the institution may impose, and the minimum monthly payment required by law and a description of any penalty imposed as a consequence of default, such as liability for expenses reasonably incurred in attempts by the Secretary or institutions to collect on a loan;
(8) a statement of the total cumulative balance, including the loan applied for, owed by the student to that lender, and an estimate of the projected monthly payment, given such cumulative balance;
(9) an explanation of any special options the borrower may have for loan consolidation or other refinancing of the loan;
(10) a statement that the borrower has the right to prepay all or part of the loan, at any time, without penalty, a statement summarizing circumstances in which repayment of the loan or interest that accrues on the loan may be deferred, and a brief notice of the program for repayment of loans, on the basis of military service, pursuant to the Department of Defense educational loan repayment program (
(11) a definition of default and the consequences to the borrower if the borrower defaults, together with a statement that the disbursement of, and the default on, a loan under this part, shall be reported to a consumer reporting agency;
(12) to the extent practicable, the effect of accepting the loan on the eligibility of the borrower for other forms of student assistance;
(13) an explanation of any cost the borrower may incur in the making or collection of the loan;
(14) a notice and explanation regarding the end to future availability of loans made under this part;
(15) a notice and explanation that repayment and forgiveness benefits available to borrowers of loans made under part D are not available to borrowers participating in the loan program under this part;
(16) a notice and explanation regarding a borrower's option to consolidate a loan made under this part into a Federal Direct Loan under part D, including any benefit of such consolidation;
(17) with respect to new undergraduate Federal Perkins loan borrowers, as described in
(18) with respect to current undergraduate Federal Perkins loan borrowers, as described in
(b) Disclosure required prior to repayment
Each institution of higher education shall enter into an agreement with the Secretary under which the institution will, prior to the start of the repayment period of the student borrower on loans made under this part, disclose to the student borrower the information required under this subsection. Any disclosure required by this subsection may be made by an institution of higher education either in a promissory note evidencing the loan or loans or in a written statement provided to the borrower. The disclosures shall include—
(1) the name of the institution of higher education, and the address to which communications and payments should be sent;
(2) the scheduled date upon which the repayment period is to begin;
(3) the estimated balance owed by the borrower on the loan or loans covered by the disclosure as of the scheduled date on which the repayment period is to begin (including, if applicable, the estimated amount of interest to be capitalized);
(4) the stated interest rate on the loan or loans, or the combined interest rate of loans with different stated interest rates;
(5) the nature of any fees which may accrue or be charged to the borrower during the repayment period;
(6) the repayment schedule for all loans covered by the disclosure including the date the first installment is due, and the number, amount, and frequency of required payments;
(7) an explanation of any special options the borrower may have for loan consolidation or other refinancing of the loan;
(8) the projected total of interest charges which the borrower will pay on the loan or loans, assuming that the borrower makes payments exactly in accordance with the repayment schedule; and
(9) a statement that the borrower has the right to prepay all or part of the loan or loans covered by the disclosure at any time without penalty.
(c) Costs and effects of disclosures
Such information shall be available without cost to the borrower. The failure of an eligible institution to provide information as required by this section shall not (1) relieve a borrower of the obligation to repay a loan in accordance with its terms, (2) provide a basis for a claim for civil damages, or (3) be deemed to abrogate the obligation of the Secretary to make payments with respect to such loan.
(
Editorial Notes
Prior Provisions
A prior section 1087cc–1,
Amendments
2015—Subsec. (a)(14) to (18).
2009—Subsec. (a).
2008—Subsec. (a)(11).
1996—Subsec. (a)(10).
1993—Subsecs. (d), (e).
"(d)
"(e)
1992—Subsec. (a)(11).
Subsecs. (d), (e).
1987—Subsec. (a)(8).
Subsec. (a)(10).
Statutory Notes and Related Subsidiaries
Effective Date of 2009 Amendment
Amendment by
Effective Date of 1996 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
Effective Date
Section applicable only to loans made for periods of enrollment beginning on or after July 1, 1987, see section 405(b) of
§1087dd. Terms of loans
(a) Terms and conditions
(1) Loans from any student loan fund established pursuant to an agreement under
(2)(A) Except as provided in paragraph (4), the total of loans made to a student in any academic year or its equivalent by an institution of higher education from a loan fund established pursuant to an agreement under this part shall not exceed—
(i) $5,500, in the case of a student who has not successfully completed a program of undergraduate education; or
(ii) $8,000, in the case of a graduate or professional student (as defined in regulations issued by the Secretary).
(B) Except as provided in paragraph (4), the aggregate unpaid principal amount for all loans made to a student by institutions of higher education from loan funds established pursuant to agreements under this part may not exceed—
(i) $60,000, in the case of any graduate or professional student (as defined by regulations issued by the Secretary, and including any loans from such funds made to such person before such person became a graduate or professional student);
(ii) $27,500, in the case of a student who has successfully completed 2 years of a program of education leading to a bachelor's degree but who has not completed the work necessary for such a degree (determined under regulations issued by the Secretary), and including any loans from such funds made to such person before such person became such a student; and
(iii) $11,000, in the case of any other student.
(3) Regulations of the Secretary under paragraph (1) shall be designed to prevent the impairment of the capital student loan funds to the maximum extent practicable and with a view toward the objective of enabling the student to complete his course of study.
(4) In the case of a program of study abroad that is approved for credit by the home institution at which a student is enrolled and that has reasonable costs in excess of the home institution's budget, the annual and aggregate loan limits for the student may exceed the amounts described in paragraphs (2)(A) and (2)(B) by 20 percent.
(b) Demonstration of need and eligibility required
(1) A loan from a student loan fund assisted under this part may be made only to a student who demonstrates financial need in accordance with part F of this subchapter, who meets the requirements of
(2) If the institution's capital contribution under
(c) Contents of loan agreement
(1) Any agreement between an institution and a student for a loan from a student loan fund assisted under this part—
(A) shall be evidenced by note or other written instrument which, except as provided in paragraph (2), provides for repayment of the principal amount of the loan, together with interest thereon, in equal installments (or, if the borrower so requests, in graduated periodic installments determined in accordance with such schedules as may be approved by the Secretary) payable quarterly, bimonthly, or monthly, at the option of the institution, over a period beginning nine months after the date on which the student ceases to carry, at an institution of higher education or a comparable institution outside the United States approved for this purpose by the Secretary, at least one-half the normal full-time academic workload, and ending 10 years and 9 months after such date except that such period may begin earlier than 9 months after such date upon the request of the borrower;
(B) shall include provision for acceleration of repayment of the whole, or any part, of such loan, at the option of the borrower;
(C)(i) may provide, at the option of the institution, in accordance with regulations of the Secretary, that during the repayment period of the loan, payments of principal and interest by the borrower with respect to all outstanding loans made to the student from a student loan fund assisted under this part shall be at a rate equal to not less than $40 per month, except that the institution may, subject to such regulations, permit a borrower to pay less than $40 per month for a period of not more than one year where necessary to avoid hardship to the borrower, but without extending the 10-year maximum repayment period provided for in subparagraph (A) of this paragraph; and
(ii) may provide that the total payments by a borrower for a monthly or similar payment period with respect to the aggregate of all loans held by the institution may, when the amount of a monthly or other similar payment is not a multiple of $5, be rounded to the next highest whole dollar amount that is a multiple of $5;
(D) shall provide that the loan shall bear interest, on the unpaid balance of the loan, at the rate of 5 percent per year in the case of any loan made on or after October 1, 1981, except that no interest shall accrue (i) prior to the beginning date of repayment determined under paragraph (2)(A)(i), or (ii) during any period in which repayment is suspended by reason of paragraph (2);
(E) shall provide that the loan shall be made without security and without endorsement;
(F) shall provide that the liability to repay the loan shall be cancelled—
(i) upon the death of the borrower;
(ii) if the borrower becomes permanently and totally disabled as determined in accordance with regulations of the Secretary;
(iii) if the borrower is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death, has lasted for a continuous period of not less than 60 months, or can be expected to last for a continuous period of not less than 60 months; or
(iv) if the borrower is determined by the Secretary of Veterans Affairs to be unemployable due to a service-connected disability;
(G) shall provide that no note or evidence of obligation may be assigned by the lender, except upon the transfer of the borrower to another institution participating under this part (or, if not so participating, is eligible to do so and is approved by the Secretary for such purpose), to such institution, and except as necessary to carry out section 1087cc(a)(6) 1 of this title;
(H) pursuant to regulations of the Secretary, shall provide for an assessment of a charge with respect to the loan for failure of the borrower to pay all or part of an installment when due, which shall include the expenses reasonably incurred in attempting collection of the loan, to the extent permitted by the Secretary, except that no charge imposed under this subparagraph shall exceed 20 percent of the amount of the monthly payment of the borrower; and
(I) shall contain a notice of the system of disclosure of information concerning default on such loan to consumer reporting agencies under
(2)(A) No repayment of principal of, or interest on, any loan from a student loan fund assisted under this part shall be required during any period—
(i) during which the borrower—
(I) is pursuing at least a half-time course of study as determined by an eligible institution; or
(II) is pursuing a course of study pursuant to a graduate fellowship program approved by the Secretary, or pursuant to a rehabilitation training program for disabled individuals approved by the Secretary,
except that no borrower shall be eligible for a deferment under this clause, or loan made under this part while serving in a medical internship or residency program;
(ii) not in excess of 3 years during which the borrower is seeking and unable to find full-time employment;
(iii) during which the borrower—
(I) is serving on active duty during a war or other military operation or national emergency; or
(II) is performing qualifying National Guard duty during a war or other military operation or national emergency,
and for the 180-day period following the demobilization date for the service described in subclause (I) or (II);
(iv) not in excess of 3 years for any reason which the lender determines, in accordance with regulations prescribed by the Secretary under
(v) during which the borrower is engaged in service described in
(vi) during which the borrower is receiving treatment for cancer and the 6 months after such period;
and provides that any such period shall not be included in determining the 10-year period described in subparagraph (A) of paragraph (1).
(B) No repayment of principal of, or interest on, any loan for any period described in subparagraph (A) shall begin until 6 months after the completion of such period.
(C) An individual with an outstanding loan balance who meets the eligibility criteria for a deferment described in subparagraph (A) as in effect on October 7, 1998, shall be eligible for deferment under this paragraph notwithstanding any contrary provision of the promissory note under which the loan or loans were made, and notwithstanding any amendment (or effective date provision relating to any amendment) to this section made prior to the date of such deferment.
(3)(A) The Secretary is authorized, when good cause is shown, to extend, in accordance with regulations, the 10-year maximum repayment period provided for in subparagraph (A) of paragraph (1) with respect to individual loans.
(B) Pursuant to uniform criteria established by the Secretary, the repayment period for any student borrower who during the repayment period is a low-income individual may be extended for a period not to exceed 10 years and the repayment schedule may be adjusted to reflect the income of that individual.
(4) The repayment period for a loan made under this part shall begin on the day immediately following the expiration of the period, specified in paragraph (1)(A), after the student ceases to carry the required academic workload, unless the borrower requests and is granted a repayment schedule that provides for repayment to commence at an earlier point in time, and shall exclude any period of authorized deferment, forbearance, or cancellation.
(5) The institution may elect—
(A) to add the amount of any charge imposed under paragraph (1)(H) to the principal amount of the loan as of the first day after the day on which the installment was due and to notify the borrower of the assessment of the charge; or
(B) to make the amount of the charge payable to the institution not later than the due date of the next installment.
(6) Requests for deferment of repayment of loans under this part by students engaged in graduate or post-graduate fellowship-supported study (such as pursuant to a Fulbright grant) outside the United States shall be approved until completion of the period of the fellowship.
(7) There shall be excluded from the 9-month period that begins on the date on which a student ceases to carry at least one-half the normal full-time academic workload (as described in paragraph (1)(A)) any period not to exceed 3 years during which a borrower who is a member of a reserve component of the Armed Forces named in
(d) Availability of loan fund to all eligible students
An agreement under this part for payment of Federal capital contributions shall include provisions designed to make loans from the student loan fund established pursuant to such agreement reasonably available (to the extent of the available funds in such fund) to all eligible students in such institutions in need thereof.
(e) Forbearance
(1) The Secretary shall ensure that, as documented in accordance with paragraph (2), an institution of higher education shall grant a borrower forbearance of principal and interest or principal only, renewable at 12-month intervals for a period not to exceed 3 years, on such terms as are otherwise consistent with the regulations issued by the Secretary and agreed upon in writing by the parties to the loan, if—
(A) the borrower's debt burden equals or exceeds 20 percent of such borrower's gross income;
(B) the institution determines that the borrower should qualify for forbearance for other reasons; or
(C) the borrower is eligible for interest payments to be made on such loan for service in the Armed Forces under
(2) For the purpose of paragraph (1), the terms of forbearance agreed to by the parties shall be documented by—
(A) confirming the agreement of the borrower by notice to the borrower from the institution of higher education; and
(B) recording the terms in the borrower's file.
(f) Special repayment rule authority
(1) Subject to such restrictions as the Secretary may prescribe to protect the interest of the United States, in order to encourage repayment of loans made under this part which are in default, the Secretary may, in the agreement entered into under this part, authorize an institution of higher education to compromise on the repayment of such defaulted loans in accordance with paragraph (2). The Federal share of the compromise repayment shall bear the same relation to the institution's share of such compromise repayment as the Federal capital contribution to the institution's loan fund under this part bears to the institution's capital contribution to such fund.
(2) No compromise repayment of a defaulted loan as authorized by paragraph (1) may be made unless the student borrower pays—
(A) 90 percent of the loan under this part;
(B) the interest due on such loan; and
(C) any collection fees due on such loan;
in a lump sum payment.
(g) Discharge
(1) In general
If a student borrower who received a loan made under this part on or after January 1, 1986, is unable to complete the program in which such student is enrolled due to the closure of the institution, then the Secretary shall discharge the borrower's liability on the loan (including the interest and collection fees) and shall subsequently pursue any claim available to such borrower against the institution and the institution's affiliates and principals, or settle the loan obligation pursuant to the financial responsibility standards described in
(2) Assignment
A borrower whose loan has been discharged pursuant to this subsection shall be deemed to have assigned to the United States the right to a loan refund in an amount that does not exceed the amount discharged against the institution and the institution's affiliates and principals.
(3) Eligibility for additional assistance
The period during which a student was unable to complete a course of study due to the closing of the institution shall not be considered for purposes of calculating the student's period of eligibility for additional assistance under this subchapter.
(4) Special rule
A borrower whose loan has been discharged pursuant to this subsection shall not be precluded, because of that discharge, from receiving additional grant, loan, or work assistance under this subchapter for which the borrower would be otherwise eligible (but for the default on the discharged loan). The amount discharged under this subsection shall be treated as an amount canceled under
(5) Reporting
The Secretary or institution, as the case may be, shall report to consumer reporting agencies with respect to loans that have been discharged pursuant to this subsection.
(h) Rehabilitation of loans
(1) Rehabilitation
(A) In general
If the borrower of a loan made under this part who has defaulted on the loan makes 9 on-time, consecutive, monthly payments of amounts owed on the loan, as determined by the institution, or by the Secretary in the case of a loan held by the Secretary, the loan shall be considered rehabilitated, and the institution that made that loan (or the Secretary, in the case of a loan held by the Secretary) shall request that any consumer reporting agency to which the default was reported remove the default from the borrower's credit history.
(B) Comparable conditions
As long as the borrower continues to make scheduled repayments on a loan rehabilitated under this paragraph, the rehabilitated loan shall be subject to the same terms and conditions, and qualify for the same benefits and privileges, as other loans made under this part.
(C) Additional assistance
The borrower of a rehabilitated loan shall not be precluded by
(D) Limitations
A borrower only once may obtain the benefit of this paragraph with respect to rehabilitating a loan under this part.
(2) Restoration of eligibility
If the borrower of a loan made under this part who has defaulted on that loan makes 6 ontime, consecutive, monthly payments of amounts owed on such loan, the borrower's eligibility for grant, loan, or work assistance under this subchapter shall be restored to the extent that the borrower is otherwise eligible. A borrower only once may obtain the benefit of this paragraph with respect to restored eligibility.
(i) Incentive repayment program
(1) In general
Each institution of higher education may establish, with the approval of the Secretary, an incentive repayment program designed to reduce default and to replenish student loan funds established under this part. Each such incentive repayment program may—
(A) offer a reduction of the interest rate on a loan on which the borrower has made 48 consecutive, monthly repayments, but in no event may the rate be reduced by more than 1 percent;
(B) provide for a discount on the balance owed on a loan on which the borrower pays the principal and interest in full prior to the end of the applicable repayment period, but in no event may the discount exceed 5 percent of the unpaid principal balance due on the loan at the time the early repayment is made; and
(C) include such other incentive repayment options as the institution determines will carry out the objectives of this subsection.
(2) Limitation
No incentive repayment option under an incentive repayment program authorized by this subsection may be paid for with Federal funds, including any Federal funds from the student loan fund, or with institutional funds from the student loan fund.
(j) Armed Forces and NOAA Commissioned Officer Corps student loan interest payment programs
(1) Authority
Using funds received by transfer to the Secretary under
(2) Forbearance
During the period in which the Secretary is making payments on a loan under paragraph (1), the institution of higher education shall grant the borrower forbearance in accordance with subsection (e)(1)(C).
(k) Additional safeguards
The Secretary may develop such additional safeguards as the Secretary determines necessary to prevent fraud and abuse in the cancellation of liability under subsection (c)(1)(F). Notwithstanding subsection (c)(1)(F), the Secretary may promulgate regulations to resume collection on loans cancelled under subsection (c)(1)(F) in any case in which—
(1) a borrower received a cancellation of liability under subsection (c)(1)(F) and after the cancellation the borrower—
(A) receives a loan made, insured, or guaranteed under this subchapter; or
(B) has earned income in excess of the poverty line; or
(2) the Secretary determines necessary.
(
Editorial Notes
References in Text
Prior Provisions
A prior section 1087dd,
Amendments
2020—Subsec. (j).
Subsec. (j)(1).
2018—Subsec. (c)(2)(A)(vi).
2009—Subsec. (c).
Subsec. (g)(5).
2008—Subsec. (a)(2)(A).
Subsec. (a)(2)(B).
Subsec. (c)(1)(F).
Subsec. (c)(1)(I).
Subsec. (e).
Subsec. (h)(1)(A).
Subsec. (j)(2).
Subsec. (k).
2007—Subsec. (c)(2)(A)(iii).
2006—Subsec. (c)(2)(A)(iii) to (v).
2002—Subsec. (e)(3).
Subsec. (j).
1998—Subsec. (a)(2).
Subsec. (b)(1).
Subsec. (b)(2).
Subsec. (c)(1)(D).
Subsec. (c)(2)(A).
Subsec. (c)(2)(C).
Subsec. (c)(7).
Subsecs. (g) to (i).
1993—Subsec. (c)(2)(B).
Subsec. (c)(6).
Subsec. (e).
1992—Subsec. (a)(2).
"(A) $18,000 in the case of any graduate or professional student (as defined by regulations of the Secretary, and including any loans from such funds made to such person before he became a graduate or professional student);
"(B) $9,000 in the case of a student who has successfully completed 2 years of a program of education leading to a bachelor's degree, but who has not completed the work necessary for such a degree (determined under regulations of the Secretary, and including any loans from such funds made to such person before he became such a student); and
"(C) $4,500 in the case of any other student."
Subsec. (a)(4).
Subsec. (b)(1).
Subsec. (b)(2).
Subsec. (c)(1)(C)(i).
Subsec. (c)(1)(E).
Subsec. (c)(2)(A).
Subsec. (c)(2)(B), (C).
"(B) Any period during which repayment is deferred under subparagraph (A) shall not be included in computing the 10-year maximum period provided for in subparagraph (A) of paragraph (1).
"(C) No repayment of principal of, or interest on, any loan for any period of study, service, or disability described in subparagraph (A) or any combination thereof shall begin until 6 months after the completion of such period of study, service, disability, or combination thereof."
Subsec. (c)(4) to (6).
Subsecs. (e), (f).
1989—Subsec. (c)(2)(A)(i).
1988—Subsec. (c)(2)(A)(v).
1987—Subsec. (c)(2)(A)(vi).
Statutory Notes and Related Subsidiaries
Effective Date of 2018 Amendment
Amendment by
Effective Date of 2009 Amendment
Amendment by
Effective Date of 2008 Amendment
Effective Date of 2007 Amendment
Amendment by
Effective Date of 2006 Amendment
Amendment by
Amendment by
Effective Date of 2002 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1992 Amendment
"(1) the changes in section 463(a)(2)(B) [
"(2) the changes made in section 464(c)(1)(C) [
"(3) the changes made in section 464(c)(2)(A), relating to deferments, shall apply with respect to loans for which the first disbursement is made on or after July 1, 1993;
"(4) the changes made in section 467 [
"(5) the changes in section 464(a)(2)(A), (B) and (C) shall not apply to any loan made for the award year beginning July 1, 1992 provided that the loan does not result in a violation of section 464(a)(2)(A), (B) and (C) as in effect prior to such date of enactment."
[
Effective Date of 1989 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
Effective Date
Section effective Oct. 17, 1986, except as otherwise provided, see section 2 of
"(1) Section 462 of the Act [
"(2) The changes made in sections 464(c)(1)(A), 464(c)(2), and 465(a)(2)(E) of the Act [
"(3) Section 463(a)(9) and section 463A of the Act [
"(4) For the purpose of this subsection, the term 'new borrower' means, with respect to any date, an individual who on that date has no outstanding balance of principal or interest owing on any loan made under part E of title IV of the Act [this part]."
Construction of 2006 Amendment
Nothing in amendment by
1 See References in Text note below.
§1087ee. Cancellation of loans for certain public service
(a) Cancellation of percentage of debt based on years of qualifying service
(1) The percent specified in paragraph (3) of this subsection of the total amount of any loan made after June 30, 1972, from a student loan fund assisted under this part shall be canceled for each complete year of service after such date by the borrower under circumstances described in paragraph (2).
(2) Loans shall be canceled under paragraph (1) for service—
(A) as a full-time teacher for service in an academic year (including such a teacher employed by an educational service agency)—
(i) in a public or other nonprofit private elementary school or secondary school, which, for the purpose of this paragraph and for that year—
(I) has been determined by the Secretary (pursuant to regulations of the Secretary and after consultation with the State educational agency of the State in which the school is located) to be a school in which the number of children meeting a measure of poverty under section 1113(a)(5) of the Elementary and Secondary Education Act of 1965 [
(II) is in the school district of a local educational agency which is eligible in such year for assistance pursuant to part A of title I of the Elementary and Secondary Education Act of 1965 [
(ii) in one or more public, or nonprofit private, elementary schools or secondary schools or locations operated by an educational service agency that have been determined by the Secretary (pursuant to regulations of the Secretary and after consultation with the State educational agency of the State in which the educational service agency operates) to be a school or location at which the number of children taught who meet a measure of poverty under section 1113(a)(5) of the Elementary and Secondary Education Act of 1965 [
(B) as a full-time staff member in a preschool program carried on under the Head Start Act [
(C) as a full-time special education teacher, including teachers of infants, toddlers, children, or youth with disabilities in a public or other nonprofit elementary or secondary school system, including a system administered by an educational service agency, or as a full-time qualified professional provider of early intervention services in a public or other nonprofit program under public supervision by the lead agency as authorized in
(D) as a member of the Armed Forces of the United States, for service that qualifies for special pay under section 310, or paragraph (1) or (3) of
(E) as a volunteer under the Peace Corps Act [
(F) as a full-time law enforcement officer or corrections officer for service to local, State, or Federal law enforcement or corrections agencies, or as a full-time attorney employed in a defender organization established in accordance with
(G) as a full-time teacher of mathematics, science, foreign languages, bilingual education, or any other field of expertise where the State educational agency determines there is a shortage of qualified teachers;
(H) as a full-time nurse or medical technician providing health care services;
(I) as a full-time employee of a public or private nonprofit child or family service agency who is providing, or supervising the provision of, services to high-risk children who are from low-income communities and the families of such children;
(J) as a full-time fire fighter for service to a local, State, or Federal fire department or fire district;
(K) as a full-time faculty member at a Tribal College or University, as that term is defined in
(L) as a librarian, if the librarian has a master's degree in library science and is employed in—
(i) an elementary school or secondary school that is eligible for assistance under part A of title I of the Elementary and Secondary Education Act of 1965 [
(ii) a public library that serves a geographic area that contains one or more schools eligible for assistance under part A of title I of the Elementary and Secondary Education Act of 1965; or
(M) as a full-time speech language pathologist, if the pathologist has a masters degree and is working exclusively with schools that are eligible for assistance under title I of the Elementary and Secondary Education Act of 1965 [
For the purpose of this paragraph, the term "children with disabilities" has the meaning set forth in
(3)(A) The percent of a loan which shall be canceled under paragraph (1) of this subsection is—
(i) in the case of service described in subparagraph (A), (C), (D), (F), (G), (H), (I), (J), (K), (L), or (M) of paragraph (2), at the rate of 15 percent for the first or second year of such service, 20 percent for the third or fourth year of such service, and 30 percent for the fifth year of such service;
(ii) in the case of service described in subparagraph (B) of paragraph (2), at the rate of 15 percent for each year of such service; or
(iii) in the case of service described in subparagraph (E) of paragraph (2) at the rate of 15 percent for the first or second year of such service and 20 percent for the third or fourth year of such service.
(B) If a portion of a loan is canceled under this subsection for any year, the entire amount of interest on such loan which accrues for such year shall be canceled.
(C) Nothing in this subsection shall be construed to authorize refunding of any repayment of a loan.
(4) For the purpose of this subsection, the term "year" where applied to service as a teacher means academic year as defined by the Secretary.
(5) The amount of a loan, and interest on a loan, which is canceled under this section shall not be considered income for purposes of title 26.
(6) No borrower may, for the same volunteer service, receive a benefit under both this section and subtitle D of title I of the National and Community Service Act of 1990 (
(7) An individual with an outstanding loan obligation under this part who performs service of any type that is described in paragraph (2) as in effect on October 7, 1998, shall be eligible for cancellation under this section for such service notwithstanding any contrary provision of the promissory note under which the loan or loans were made, and notwithstanding any amendment (or effective date provision relating to any amendment) to this section made prior to the date of such service.
(b) Reimbursement for cancellation
The Secretary shall pay to each institution for each fiscal year an amount equal to the aggregate of the amounts of loans from its student loan fund which are canceled pursuant to this section for such year, minus an amount equal to the aggregate of the amounts of any such loans so canceled which were made from Federal capital contributions to its student loan fund provided by the Secretary under
(c) Special rules
(1) List
If the list of schools in which a teacher may perform service pursuant to subsection (a)(2)(A) is not available before May 1 of any year, the Secretary may use the list for the year preceding the year for which the determination is made to make such service determination.
(2) Continuing eligibility
Any teacher who performs service in a school which—
(A) meets the requirements of subsection (a)(2)(A) in any year; and
(B) in a subsequent year fails to meet the requirements of such subsection,
may continue to teach in such school and shall be eligible for loan cancellation pursuant to subsection (a)(1) such 2 subsequent years.
(
Editorial Notes
References in Text
The Elementary and Secondary Education Act of 1965, referred to in subsec. (a)(2)(A)(i), (L), (M), is
The Head Start Act, referred to in subsec. (a)(2)(B), is subchapter B (§§635 to 657) of
The Peace Corps Act, referred to in subsec. (a)(2)(E), is
The Domestic Volunteer Service Act of 1973, referred to in subsec. (a)(2)(E), is
The National and Community Service Act of 1990, referred to in subsec. (a)(6), is
Codification
Amendment by section 2(f)(14) of
Prior Provisions
A prior section 1087ee,
Amendments
2016—Subsec. (a)(2)(D).
2009—Subsec. (a)(6).
2008—Subsec. (a)(2)(A).
Subsec. (a)(2)(B).
Subsec. (a)(2)(C).
Subsec. (a)(2)(F).
Subsec. (a)(2)(J) to (M).
Subsec. (a)(3)(A)(i).
Subsec. (a)(3)(A)(iii), (iv).
2004—Subsec. (a)(2)(C).
1998—Subsec. (a)(2).
Subsec. (a)(2)(C).
Subsec. (a)(7).
Subsec. (b).
1994—Subsec. (a)(2)(A).
1993—Subsec. (a)(2)(A).
Subsec. (a)(2)(D).
Subsec. (a)(2)(F).
Subsec. (a)(6).
1992—Subsec. (a)(2)(A).
Subsec. (a)(2)(C).
Subsec. (a)(2)(G) to (I).
Subsec. (a)(3)(A)(i).
Subsec. (c).
1991—Subsec. (a)(2).
1990—Subsec. (a)(2).
Subsec. (a)(2)(F).
Subsec. (a)(3)(A)(i).
1988—Subsec. (a)(5).
1987—Subsec. (a)(2)(A).
Subsec. (a)(2)(B).
Statutory Notes and Related Subsidiaries
Effective Date of 2009 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendments
Amendment by
Amendment by
Effective Date of 1990 Amendments
Effective Date of 1987 Amendment
Amendment by
Effective Date
Section effective Oct. 17, 1986, except as otherwise provided, see section 2 of
Subsection (a)(2)(E) of this section applicable only to loans made to cover the costs of instruction for periods of enrollment beginning on or after July 1, 1987, to individuals who are new borrowers on that date, see section 405(b) of
1 See References in Text note below.
2 So in original. Probably should be "in such".
§1087ff. Distribution of assets from student loan funds
(a) In general
Beginning October 1, 2017, there shall be a capital distribution of the balance of the student loan fund established under this part by each institution of higher education as follows:
(1) The Secretary shall first be paid an amount which bears the same ratio to the balance in such fund at the close of September 30, 2017, as the total amount of the Federal capital contributions to such fund by the Secretary under this part bears to the sum of such Federal contributions and the institution's capital contributions to such fund.
(2) The remainder of such balance shall be paid to the institution.
(b) Distribution of late collections
Beginning October 1, 2017, each institution with which the Secretary has made an agreement under this part, shall pay to the Secretary the same proportionate share of amounts received by this institution after September 30, 2017, in payment of principal and interest on student loans made from the student loan fund established pursuant to such agreement (which amount shall be determined after deduction of any costs of litigation incurred in collection of the principal or interest on loans from the fund and not already reimbursed from the fund or from such payments of principal or interest), as was determined for the Secretary under subsection (a).
(c) Distribution of excess capital
(1) Upon a finding by the institution or the Secretary prior to October 1, 2017, that the liquid assets of a student loan fund established pursuant to an agreement under this part exceed the amount required for loans or otherwise in the foreseeable future, and upon notice to such institution or to the Secretary, as the case may be, there shall be, subject to such limitations as may be included in regulations of the Secretary or in such agreement, a capital distribution from such fund. Such capital distribution shall be made as follows:
(A) The Secretary shall first be paid an amount which bears the same ratio to the total to be distributed as the Federal capital contributions by the Secretary to the student loan fund prior to such distribution bear to the sum of such Federal capital contributions and the capital contributions to the fund made by the institution.
(B) The remainder of the capital distribution shall be paid to the institution.
(2) No finding that the liquid assets of a student loan fund established under this part exceed the amount required under paragraph (1) may be made prior to a date which is 2 years after the date on which the institution of higher education received the funds from such institution's allocation under
(
Editorial Notes
Prior Provisions
A prior section 1087ff,
Amendments
2015—Subsec. (a).
Subsec. (a)(1).
Subsec. (b).
Subsec. (c)(1).
2007—Subsec. (b).
1998—Subsec. (a).
Subsec. (a)(1).
Subsec. (b).
Subsec. (c)(1).
1993—Subsec. (c)(2).
1992—Subsec. (b).
Subsec. (c).
Statutory Notes and Related Subsidiaries
Effective Date of 2007 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
§1087gg. Collection of defaulted loans: Perkins Loan Revolving Fund
(a) Authority of Secretary to collect referred, transferred, or assigned loans
With respect to any loan—
(1) which was made under this part, and
(2) which is referred, transferred, or assigned to the Secretary by an institution with an agreement under
the Secretary is authorized to attempt to collect such loan by any means authorized by law for collecting claims of the United States (including referral to the Attorney General for litigation) and under such terms and conditions as the Secretary may prescribe, including reimbursement for expenses reasonably incurred in attempting such collection.
(b) Collection of referred, transferred, or assigned loans
The Secretary shall continue to attempt to collect any loan referred, transferred, or assigned under paragraph (4) or (5) of
(
Editorial Notes
Prior Provisions
A prior section 1087gg,
Amendments
2009—Subsec. (b).
1998—Subsec. (c).
1992—
Statutory Notes and Related Subsidiaries
Effective Date of 2009 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
Transfer of Balance
§1087hh. General authority of Secretary
In carrying out the provisions of this part, the Secretary is authorized—
(1) to consent to modification, with respect to rate of interest, time of payment of any installment of principal and interest or any portion thereof, or any other provision of any note evidencing a loan which has been made under this part;
(2) to enforce, pay, compromise, waive, or release any right, title, claim, lien, or demand, however acquired, including any equity or any right of redemption;
(3) to conduct litigation in accordance with the provisions of
(4) to enter into a contract or other arrangement with State or nonprofit agencies and, on a competitive basis, with collection agencies for servicing and collection of loans under this part.
(
Editorial Notes
Prior Provisions
A prior section 1087hh,
A prior section 1087ii,
§1087ii. Definitions
(a) Low-income communities
For the purpose of this part, the term "low-income communities" means communities in which there is a high concentration of children eligible to be counted under
(b) High-risk children
For the purposes of this part, the term "high-risk children" means individuals under the age of 21 who are low-income or at risk of abuse or neglect, have been abused or neglected, have serious emotional, mental, or behavioral disturbances, reside in placements outside their homes, or are involved in the juvenile justice system.
(c) Infants, toddlers, children, and youth with disabilities
For purposes of this part, the term "infants, toddlers, children, and youth with disabilities" means children with disabilities and infants and toddlers with disabilities as defined in
(
Editorial Notes
Amendments
2015—Subsec. (a).
2009—Subsec. (c).
2004—Subsec. (c).
1994—Subsec. (a).
Statutory Notes and Related Subsidiaries
Effective Date of 2015 Amendment
Amendment by
Effective Date of 2009 Amendment
Amendment by
Part F—Need Analysis
Editorial Notes
Codification
Part F of title IV of the Higher Education Act of 1965,
Prior Provisions
A prior part F, consisting of part G of title IV of
§1087kk. Amount of need
Except as otherwise provided therein, for award year 2024–2025 and each subsequent award year, the amount of need of any student for financial assistance under this subchapter (except subpart 1 or 2 of part A) is equal to—
(1) the cost of attendance of such student, minus
(2) the student aid index (as defined in
(3) other financial assistance not received under this subchapter (as defined in
(
Editorial Notes
Amendments
2022—
2020—
"(1) the cost of attendance of such student, minus
"(2) the expected family contribution for such student, minus
"(3) estimated financial assistance not received under this subchapter (as defined in
1998—
1992—
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Amendment by
Effective Date of 1998 Amendment
"(a)
"(b)
Effective Date of 1992 Amendment
Effective Date
"(1) Except as provided in paragraphs (2) through (4)—
"(A) part F of title IV of the Act [this part] shall apply with respect to determinations of need under such title for academic years beginning with academic year 1988–1989 and succeeding academic years; and
"(B) for any preceding academic year, determinations of need shall be made in accordance with regulations prescribed by the Secretary of Education in accordance with the Student Financial Assistance Technical Amendments Act of 1982 [
"(2) With respect to an application filed after the date of enactment of this Act [Oct. 17, 1986] for a loan under part B of such title [part B of this subchapter] for any academic year preceding academic year 1988–1989, any determination of expected family contribution shall be made using the system of financial need analysis approved by the Secretary of Education for use under subpart 2 of part A and parts C and E of such title [subpart 2 of part A of this subchapter and parts C and E of this subchapter].
"(3) For purposes of sections 413D(d)(2)(B) [now 413D(c)(2)(B)], 442(d)(2)(B) and 462(d)(2)(B) [
"(4) Section 479B of the Act [
[References to subpart 2 of part A of title IV of
Special Study of Simplification of Need Analysis and Application for Title IV Aid
"(a)
"(b)
"(1) whether the methodology used to calculate the expected family contribution can be simplified without significant adverse effects on program intent, costs, integrity, delivery, and distribution of awards;
"(2) whether the number of data elements, and, accordingly, the number and complexity of questions asked of students and families, used to calculate the expected family contribution can be reduced without such adverse effects;
"(3) whether the procedures for determining such data elements, including determining and updating offsets and allowances, is the most efficient, effective, and fair means to determine a family's available income and assets;
"(4) whether the methodology used to calculate the expected family contribution, specifically the consideration of income earned by a dependent student and its effect on Pell grant eligibility, is an effective and fair means to determine a family's available income and a student's need;
"(5) whether the nature and timing of the application required in section 483 (a)(1) of the Higher Education Act of 1965 (
"(6) whether it is feasible to allow students to complete only those limited sections of the financial aid application that apply to their specific circumstances and the State in which they reside;
"(7) whether a widely disseminated printed form, or the use of an Internet or other electronic means, can be developed to notify individuals of an estimation of their approximate eligibility for grant, work-study, and loan assistance upon completion and verification of the simplified application form;
"(8) whether information provided on other Federal forms (such as the form applying for supplemental security income under title XVI of the Social Security Act [
"(9) whether any proposed changes to data elements collected, in addition to those used to calculate expected family contribution, or any proposed changes to the form's design or the process of applying for aid, may have adverse effects on program costs, integrity, delivery, or distribution of awards, as well as, application development or application processing.
"(c)
"(d)
"(1)
"(2)
"(3)
"(4)
"(e)
"(1)
"(2)
"(f)
"(g)
§1087ll. Cost of attendance
(a) In general
For the purpose of this subchapter, the term "cost of attendance" means—
(1) tuition and fees normally assessed a student carrying the same academic workload as determined by the institution;
(2) an allowance for books, course materials, supplies, and equipment, which shall include all such costs required of all such students in the same course of study, including a reasonable allowance for the documented rental or upfront purchase of a personal computer, as determined by the institution;
(3) an allowance for transportation, which may include transportation between campus, residences, and place of work, as determined by the institution;
(4) an allowance for miscellaneous personal expenses, for a student attending the institution on at least a half-time basis, as determined by the institution;
(5) an allowance for living expenses, including food and housing costs, to be incurred by the student attending the institution on at least a half-time basis, as determined by the institution, which shall include—
(A) for a student electing institutionally owned or operated food services, such as board or meal plans, a standard allowance for such services that provides the equivalent of three meals each day;
(B) for a student not electing institutionally owned or operated food services, such as board or meal plans, a standard allowance for purchasing food off campus that provides the equivalent of three meals each day;
(C) for a student without dependents residing in institutionally owned or operated housing, a standard allowance determined by the institution based on the average or median amount assessed to such residents for housing charges, whichever is greater;
(D) for a student with dependents residing in institutionally owned or operated housing, a standard allowance determined by the institution based on the average or median amount assessed to such residents for housing charges, whichever is greater;
(E) for a student living off campus, and not in institutionally owned or operated housing, a standard allowance for rent or other housing costs;
(F) for a dependent student residing at home with parents, a standard allowance that shall not be zero determined by the institution;
(G) for a student living in housing located on a military base or for which a basic allowance is provided under
(H) for all other students, an allowance based on the expenses reasonably incurred by such students for housing and food;
(6) for a student engaged in a program of study by correspondence, only tuition and fees and, if required, books and supplies, travel, and housing and food costs incurred specifically in fulfilling a required period of residential training;
(7) for a confined or incarcerated student, only tuition, fees, books, course materials, supplies, equipment, and the cost of obtaining a license, certification, or a first professional credential in accordance with paragraph (14);
(8) for a student enrolled in an academic program in a program of study abroad approved for credit by the student's home institution, reasonable costs associated with such study (as determined by the institution at which such student is enrolled);
(9) for a student with one or more dependents, an allowance based on the estimated actual expenses incurred for such dependent care, based on the number and age of such dependents, except that—
(A) such allowance shall not exceed the reasonable cost in the community in which such student resides for the kind of care provided; and
(B) the period for which dependent care is required includes, but is not limited to, class-time, study-time, field work, internships, and commuting time;
(10) for a student with a disability, an allowance (as determined by the institution) for those expenses related to the student's disability, including special services, personal assistance, transportation, equipment, and supplies that are reasonably incurred and not provided for by other assisting agencies;
(11) for a student receiving all or part of the student's instruction by means of telecommunications technology, no distinction shall be made with respect to the mode of instruction in determining costs;
(12) for a student engaged in a work experience under a cooperative education program, an allowance for reasonable costs associated with such employment (as determined by the institution);
(13) for a student who receives a Federal student loan made under this subchapter or any other Federal law, to cover a student's cost of attendance at the institution, an allowance for the actual cost of any loan fee, origination fee, or insurance premium charged to such student or the parent of such student on such loan, or the average cost of any such fee or premium, as applicable; and
(14) for a student in a program requiring professional licensure, certification, or a first professional credential, the cost of obtaining the license, certification, or a first professional credential.
(b) Special rule for living expenses for less-than-half-time students
For students attending an institution of higher education less than half-time, an institution of higher education may include an allowance for living expenses, including food and housing costs in accordance with subsection (a)(4) for up to three semesters, or the equivalent, with no more than two semesters being consecutive.
(c) Disclosure of cost of attendance elements
Each institution shall make publicly available on the institution's website a list of all the elements of cost of attendance described in paragraphs (1) through (14) of subsection (a), and shall disclose such elements on any portion of the website describing tuition and fees of the institution.
(
Editorial Notes
Amendments
2022—Subsec. (a)(13).
2020—
2008—Par. (3)(C), (D).
2006—Par. (4).
Par. (13).
1998—Par. (2).
Par. (3)(A).
Par. (3)(C).
Par. (10).
Par. (11).
1993—Par. (12).
1992—
Statutory Notes and Related Subsidiaries
Effective Date of 2022 Amendment
Amendment by
Effective Date of 2020 Amendment
Amendment by
Effective Date of 2008 Amendment
Effective Date of 2006 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
§1087mm. Special rules for student aid index
(a) In general
For the purpose of this chapter, the term "student aid index" means, with respect to a student, an index that reflects an evaluation of a student's approximate financial resources to contribute toward the student's postsecondary education for the academic year, as determined in accordance with this part.
(b) Special rule for students eligible for the total maximum Pell Grant
The Secretary shall consider an applicant to automatically have a student aid index equal to zero if the applicant is eligible for the total maximum Federal Pell Grant under
(c) Special rule for nonfilers
Notwithstanding subsection (b), for an applicant (or, as applicable, an applicant and spouse, or an applicant's parents) who is not required to file a Federal tax return for the second preceding tax year, the Secretary shall for the purposes of this subchapter consider the student aid index as equal to − $1,500 for the applicant.
(
Editorial Notes
Amendments
2020—
2018—Subsec. (b)(2).
Subsec. (b)(2)(B).
Subsec. (b)(3).
Subsec. (b)(4), (5).
2009—
1998—
1992—
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Amendment by
Effective Date of 2009 Amendment
"(1) paragraph (1) of subsection (a) [amending this section] shall take effect on July 1, 2009; and
"(2) paragraph (4) of such subsection [amending
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
§1087nn. Determination of student aid index
The student aid index—
(1) for a dependent student shall be determined in accordance with
(2) for a single independent student or a married independent student without dependents (other than a spouse) shall be determined in accordance with
(3) for an independent student with dependents other than a spouse shall be determined in accordance with
(
Editorial Notes
Amendments
2020—
1998—Subsec. (b)(3).
1992—
1988—Par. (8).
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
§1087oo. Student aid index for dependent students
(a) Computation of student aid index
(1) In general
Except as provided in paragraph (2), for each dependent student, the student aid index is equal to the sum of—
(A) the assessment of the parents' adjusted available income (determined in accordance with subsection (b));
(B) the assessment of the student's available income (determined in accordance with subsection (g)); and
(C) the student's available assets (determined in accordance with subsection (h)).
(2) Exception
If the sum determined under paragraph (1) with respect to a dependent student is less than − $1,500, the student aid index for the dependent student shall be − $1,500.
(b) Assessment of parents' adjusted available income
The assessment of parents' adjusted available income is equal to the amount determined by—
(1) computing adjusted available income by adding—
(A) the parents' available income (determined in accordance with subsection (c)); and
(B) the parents' available assets (determined in accordance with subsection (d));
(2) assessing such adjusted available income in accordance with the assessment schedule set forth in subsection (e); and
(3) considering such assessment resulting under paragraph (2) as the amount determined under this subsection.
(c) Parents' available income
(1) In general
The parents' available income is determined by subtracting from total income (as defined in
(A) Federal income taxes;
(B) an allowance for payroll taxes, determined in accordance with paragraph (2);
(C) an income protection allowance, determined in accordance with paragraph (3); and
(D) an employment expense allowance, determined in accordance with paragraph (4).
(2) Allowance for payroll taxes
The allowance for payroll taxes is equal to the sum of—
(A) the total amount earned by the parents, multiplied by the rate of tax under
(B) the amount earned by the parents that does not exceed such contribution and benefit base (twice such contribution and benefit base, in the case of a joint return) for the year of the earnings, multiplied by the rate of tax applicable to such earnings under
(3) Income protection allowance
The income protection allowance shall equal the amount determined in the following table, as adjusted by the Secretary pursuant to
| Family Size (including student) | Amount |
|---|---|
| 2 | $23,330 |
| 3 | $29,040 |
| 4 | $35,870 |
| 5 | $42,320 |
| 6 | $49,500 |
| For each additional add | $5,590. |
(4) Employment expense allowance
The employment expense allowance is equal to the lesser of $4,000 or 35 percent of the single parent's earned income or married parents' combined earned income (as adjusted by the Secretary pursuant to
(d) Parents' available assets
(1) In general
(A) Determination
Except as provided in subparagraph (B), the parents' available assets are equal to—
(i) the difference between the parents' assets and the asset protection allowance (determined in accordance with paragraph (2)); multiplied by
(ii) 12 percent.
(B) Not less than zero
The parents' available assets under this subsection shall not be less than zero.
(2) Asset protection allowance
The asset protection allowance is calculated based on the following table (as revised by the Secretary pursuant to
| If the age of the oldest parent is— | And there are | |
|---|---|---|
| two parents | one parent | |
| (1)then the allowance is— | ||
| 25 or less | $ 0 | $0 |
| 26 | $400 | $100 |
| 27 | $700 | $300 |
| 28 | $1,100 | $400 |
| 29 | $1,500 | $600 |
| 30 | $1,800 | $700 |
| 31 | $2,200 | $800 |
| 32 | $2,600 | $1,000 |
| 33 | $2,900 | $1,100 |
| 34 | $3,300 | $1,300 |
| 35 | $3,700 | $1,400 |
| 36 | $4,000 | $1,500 |
| 37 | $4,400 | $1,700 |
| 38 | $4,800 | $1,800 |
| 39 | $5,100 | $2,000 |
| 40 | $5,500 | $2,100 |
| 41 | $5,600 | $2,200 |
| 42 | $5,700 | $2,200 |
| 43 | $5,900 | $2,300 |
| 44 | $6,000 | $2,300 |
| 45 | $6,200 | $2,400 |
| 46 | $6,300 | $2,400 |
| 47 | $6,500 | $2,500 |
| 48 | $6,600 | $2,500 |
| 49 | $6,800 | $2,600 |
| 50 | $7,000 | $2,700 |
| 51 | $7,100 | $2,700 |
| 52 | $7,300 | $2,800 |
| 53 | $7,500 | $2,900 |
| 54 | $7,700 | $2,900 |
| 55 | $7,900 | $3,000 |
| 56 | $8,100 | $3,100 |
| 57 | $8,400 | $3,100 |
| 58 | $8,600 | $3,200 |
| 59 | $8,800 | $3,300 |
| 60 | $9,100 | $3,400 |
| 61 | $9,300 | $3,500 |
| 62 | $9,600 | $3,600 |
| 63 | $9,900 | $3,700 |
| 64 | $10,200 | $3,800 |
| 65 or more | $10,500 | $3,900. |
(e) Assessment schedule
The assessment of the parents' adjusted available income (as determined under subsection (b)(1) and hereafter in this subsection referred to as "AAI") is calculated based on the following table (as revised by the Secretary pursuant to
| If the parents' AAI is— | Then the parents' contribution from AAI is— |
|---|---|
| Less than − $6,820 | − $1,500 |
| − $6,820 to $17,400 | 22% of AAI |
| $17,401 to $21,800 | $3,828 + 25% of AAI over $17,400 |
| $21,801 to $26,200 | $4,928 + 29% of AAI over $21,800 |
| $26,201 to $30,700 | $6,204 + 34% of AAI over $26,200 |
| $30,701 to $35,100 | $7,734 + 40% of AAI over $30,700 |
| $35,101 or more | $9,494 + 47% of AAI over $35,100. |
(f) Consideration of parental income
(1) Parents who live together
Parental income and assets in the case of student whose parents are married and not separated, or who are unmarried but live together, shall include the income and assets of both parents.
(2) Divorced or separated parents
Parental income and assets for a student whose parents are divorced or separated, but not remarried, is determined by including only the income and assets of the parent who provides the greater portion of the student's financial support.
(3) Death of a parent
Parental income and assets in the case of the death of any parent is determined as follows:
(A) If either of the parents has died, the surviving parent shall be considered a single parent, until that parent has remarried.
(B) If both parents have died, the student shall not report any parental income or assets.
(4) Remarried parents
If a parent whose income and assets are taken into account under paragraph (2), or if a parent who is a widow or widower and whose income is taken into account under paragraph (3), has remarried, the income of that parent's spouse shall be included in determining the parent's assessment of adjusted available income if the student's parent and the stepparent are married as of the date of application for the award year concerned.
(5) Single parent who is not divorced or separated
Parental income and assets in the case of a student whose parent is not described in paragraph (1) and is a single parent who is not divorced, separated, or remarried, shall include the income and assets of such single parent.
(g) Student's available income
(1) In general
The student's available income is equal to—
(A) the difference between the student's total income (determined in accordance with section 480) and the adjustment to student income (determined in accordance with paragraph (2)); multiplied by
(B) 50 percent,
except that the amount determined under this paragraph shall not be less than − $1,500 for award year 2024–2025 and not less than zero for award year 2025–2026 and each award year thereafter.
(2) Adjustment to student income
The adjustment to student income is equal to the sum of—
(A) Federal income taxes;
(B) an allowance for payroll taxes determined in accordance with paragraph (3);
(C) an income protection allowance that is equal to $9,410, as adjusted pursuant to
(D) an allowance for parents' negative available income, determined in accordance with paragraph (4).
(3) Allowance for payroll taxes
The allowance for payroll taxes is equal to the sum of—
(A) the total amount earned by the student, multiplied by the rate of tax under
(B) the amount earned by the student that does not exceed such contribution and benefit base for the year of the earnings, multiplied by the rate of tax applicable to such earnings under
(4) Allowance for parents' negative available income
The allowance for parents' negative available income is the amount, if any, by which the sum of the amounts deducted under subsection (c)(1) exceeds the sum of the parents' total income (as defined in
(h) Student's assets
The student's assets are determined by calculating the assets of the student and multiplying such amount by 20 percent, except that the result shall not be less than zero.
(
Editorial Notes
Amendments
2024—Subsec. (g)(1).
"(A) the difference between the student's total income (determined in accordance with
"(B) 50 percent."
2020—
2009—Subsec. (c)(5)(B).
2007—Subsec. (g)(2)(D).
2006—Subsec. (g)(2)(D).
Subsec. (h).
1998—Subsec. (b)(3).
Subsec. (g)(2)(D).
Subsec. (g)(2)(F).
Subsec. (g)(6).
Subsec. (j).
1997—Subsec. (c)(1)(F).
Subsec. (g)(2)(E).
1993—Subsec. (c)(4).
Subsec. (f)(3).
Subsec. (g)(1)(B).
Subsec. (g)(3).
1992—
1987—Subsec. (c)(2), (4).
Subsec. (c)(7).
Subsec. (d)(2)(B).
Subsec. (d)(2)(C).
| If the net worth of a business or farm is— | Then the adjusted net worth is: |
|---|---|
| Less than $1 | $0 |
| $1–$65,000 | 40 percent of NW |
| $65,001–$195,000 | $26,000 plus 50 percent of NW over $65,000 |
| $195,001–$325,000 | $91,000 plus 60 percent of NW over $195,000 |
| $325,001 or more | $169,000 plus 100 percent of NW over $325,000". |
Subsec. (d)(4)(B).
Subsec. (d)(4)(C).
Subsec. (d)(4)(D).
Subsec. (e).
Subsec. (g)(1)(C).
Subsec. (g)(3).
Subsec. (h).
"(1) the current balance of checking and savings accounts and cash on hand; and
"(2) the net value of investments and real estate, including the net value in the principal place of residence except in the case of a dislocated worker (certified in accordance with title III of the Job Training Partnership Act) or a dislocated homemaker (as defined in
Subsec. (i).
Statutory Notes and Related Subsidiaries
Effective Date of 2024 Amendment
Amendment by
Effective Date of 2020 Amendment
Amendment by
Effective Date of 2009 Amendment
Amendment by
Effective Date of 2007 Amendment
Effective Date of 2006 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
§1087pp. Student aid index for independent students without dependents other than a spouse
(a) Computation of student aid index
(1) In general
For each independent student without dependents other than a spouse, the student aid index is equal to (except as provided in paragraph (2)) the sum of—
(A) the family's available income (determined in accordance with subsection (b)); and
(B) the family's available assets (determined in accordance with subsection (c)).
(2) Exception
If the sum determined under paragraph (1) with respect to an independent student without dependents other than a spouse is less than − $1,500, the student aid index for the independent student shall be − $1,500.
(b) Family's available income
(1) In general
The family's available income is determined by—
(A) deducting from total income (as defined in
(i) Federal income taxes;
(ii) an allowance for payroll taxes, determined in accordance with paragraph (2);
(iii) an income protection allowance that is equal to—
(I) in the case of a single independent student without dependents, $14,630, as adjusted pursuant to
(II) in the case of a married independent student without dependents, $23,460, as adjusted pursuant to
(iv) in the case of a married independent student, an employment expense allowance, as determined in accordance with paragraph (3); and
(B) multiplying the amount determined under subparagraph (A) by 50 percent.
(2) Allowance for payroll taxes
The allowance for payroll taxes is equal to the sum of—
(A) the total amount earned by the student (and spouse, if appropriate), multiplied by the rate of tax under
(B) the amount earned by the student (and spouse, if appropriate) that does not exceed such contribution and benefit base (twice such contribution and benefit base, in the case of a joint return) for the year of the earnings, multiplied by the rate of tax applicable to such earnings under
(3) Employment expense allowance
The employment expense allowance is equal to the following:
(A) If the student is married, such allowance is equal to the lesser of $4,000 or 35 percent of the couple's combined earned income (as adjusted by the Secretary pursuant to
(B) If the student is not married, the employment expense allowance is zero.
(c) Family's available assets
(1) In general
(A) Determination
Except as provided in subparagraph (B), the family's available assets are equal to—
(i) the difference between the family's assets (as defined in
(ii) 20 percent.
(B) Not less than zero
The family's available assets under this subsection shall not be less than zero.
(2) Asset protection allowance
The asset protection allowance is calculated based on the following table (as revised by the Secretary pursuant to
| If the age of the student is— | And the student is | |
|---|---|---|
| married | single | |
| (1)then the allowance is— | ||
| 25 or less | $ 0 | $0 |
| 26 | $400 | $100 |
| 27 | $700 | $300 |
| 28 | $1,100 | $400 |
| 29 | $1,500 | $600 |
| 30 | $1,800 | $700 |
| 31 | $2,200 | $800 |
| 32 | $2,600 | $1,000 |
| 33 | $2,900 | $1,100 |
| 34 | $3,300 | $1,300 |
| 35 | $3,700 | $1,400 |
| 36 | $4,000 | $1,500 |
| 37 | $4,400 | $1,700 |
| 38 | $4,800 | $1,800 |
| 39 | $5,100 | $2,000 |
| 40 | $5,500 | $2,100 |
| 41 | $5,600 | $2,200 |
| 42 | $5,700 | $2,200 |
| 43 | $5,900 | $2,300 |
| 44 | $6,000 | $2,300 |
| 45 | $6,200 | $2,400 |
| 46 | $6,300 | $2,400 |
| 47 | $6,500 | $2,500 |
| 48 | $6,600 | $2,500 |
| 49 | $6,800 | $2,600 |
| 50 | $7,000 | $2,700 |
| 51 | $7,100 | $2,700 |
| 52 | $7,300 | $2,800 |
| 53 | $7,500 | $2,900 |
| 54 | $7,700 | $2,900 |
| 55 | $7,900 | $3,000 |
| 56 | $8,100 | $3,100 |
| 57 | $8,400 | $3,100 |
| 58 | $8,600 | $3,200 |
| 59 | $8,800 | $3,300 |
| 60 | $9,100 | $3,400 |
| 61 | $9,300 | $3,500 |
| 62 | $9,600 | $3,600 |
| 63 | $9,900 | $3,700 |
| 64 | $10,200 | $3,800 |
| 65 or more | $10,500 | $3,900. |
(d) Computations in case of separation, divorce, or death
In the case of a student who is divorced or separated, or whose spouse has died, the spouse's income and assets shall not be considered in determining the family's available income or assets.
(
Editorial Notes
Amendments
2020—
2007—Subsec. (b)(1)(A)(iv).
"(I) $6,050 for single students;
"(II) $6,050 for married students where both are enrolled pursuant to subsection (a)(2) of this section; and
"(III) $9,700 for married students where one is enrolled pursuant to subsection (a)(2) of this section;".
2006—Subsec. (b)(1)(A)(iv).
Subsec. (c)(4).
1998—Subsec. (a)(3).
Subsec. (b)(1)(A)(iv).
Subsec. (b)(1)(A)(iv)(I), (II).
Subsec. (b)(1)(A)(iv)(III).
1997—Subsec. (b)(1)(A)(vi).
1993—Subsec. (d).
1992—
1987—Subsec. (b)(1)(A), (B).
Subsec. (b)(1)(C).
Subsec. (b)(1)(D).
Subsec. (b)(2).
Subsec. (b)(4)(A).
Subsec. (b)(4)(B).
Subsec. (c)(1).
Subsec. (c)(2)(B).
Subsec. (c)(2)(C).
| If the net worth of a business or farm is— | Then the adjusted net worth is— |
|---|---|
| Less than $1 | $0 |
| $1–$65,000 | 40 percent of NW |
| $65,001–$195,000 | $26,000 plus 50 percent of NW over $65,000 |
| $195,001–$325,000 | $91,000 plus 60 percent of NW over $195,000 |
| $325,001 or more | $169,000 plus 100 percent of NW over $325,000". |
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Amendment by
Effective Date of 2007 Amendment
Amendment by
Effective Date of 2006 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
§1087qq. Student aid index for independent students with dependents other than a spouse
(a) Computation of student aid index
(1) In general
For each independent student with dependents other than a spouse, the student aid index is equal to the amount determined by—
(A) computing adjusted available income by adding—
(i) the family's available income (determined in accordance with subsection (b)); and
(ii) the family's available assets (determined in accordance with subsection (c));
(B) assessing such adjusted available income in accordance with an assessment schedule set forth in subsection (d); and
(C) considering such assessment resulting under subparagraph (B) as the amount determined under this subsection.
(2) Exception
If the sum determined under paragraph (1) with respect to an independent student with dependents other than a spouse is less than − $1,500, the student aid index for the independent student shall be − $1,500.
(b) Family's available income
(1) In general
The family's available income is determined by deducting from total income (as defined in
(A) Federal income taxes;
(B) an allowance for payroll taxes, determined in accordance with paragraph (2);
(C) an income protection allowance, determined in accordance with paragraph (3); and
(D) an employment expense allowance, determined in accordance with paragraph (4).
(2) Allowance for payroll taxes
The allowance for payroll taxes is equal to the sum of—
(A) the total amount earned by the student (and spouse, if appropriate), multiplied by the rate of tax under
(B) the amount earned by the student (and spouse, if appropriate) that does not exceed such contribution and benefit base (twice such contribution and benefit base, in the case of a joint return) for the year of the earnings, multiplied by the rate of tax applicable to such earnings under
(3) Income protection allowance
The income protection allowance shall equal the amount determined in the following table, as adjusted by the Secretary pursuant to
(A) In the case of a married independent student with dependents:
| Family Size (including student) | Amount |
|---|---|
| 3 | $46,140 |
| 4 | $56,970 |
| 5 | $67,230 |
| 6 | $78,620 |
| For each additional add | $8,880. |
(B) In the case of a single independent student with dependents:
| Family Size (including student) | Amount |
|---|---|
| 2 | $43,920 |
| 3 | $54,690 |
| 4 | $67,520 |
| 5 | $79,680 |
| 6 | $93,180 |
| For each additional add | $10,530. |
(4) Employment expense allowance
The employment expense allowance is equal to the lesser of $4,000 or 35 percent of the student's earned income or the combined earned income of the student and the student's spouse, if applicable (as adjusted by the Secretary pursuant to
(c) Family's available assets
(1) In general
(A) Determination
Except as provided in subparagraph (B), the family's available assets are equal to—
(i) the difference between the family's assets (as defined in 1087vv(f) of this title) and the asset protection allowance (determined in accordance with paragraph (2)); multiplied by
(ii) 7 percent.
(B) Not less than zero
The family's available assets under this subsection shall not be less than zero.
(2) Asset protection allowance
The asset protection allowance is calculated based on the following table (as revised by the Secretary pursuant to
| If the age of the student is— | And the student is | |
|---|---|---|
| married | single | |
| (1)then the allowance is— | ||
| 25 or less | $ 0 | $0 |
| 26 | $400 | $100 |
| 27 | $700 | $300 |
| 28 | $1,100 | $400 |
| 29 | $1,500 | $600 |
| 30 | $1,800 | $700 |
| 31 | $2,200 | $800 |
| 32 | $2,600 | $1,000 |
| 33 | $2,900 | $1,100 |
| 34 | $3,300 | $1,300 |
| 35 | $3,700 | $1,400 |
| 36 | $4,000 | $1,500 |
| 37 | $4,400 | $1,700 |
| 38 | $4,800 | $1,800 |
| 39 | $5,100 | $2,000 |
| 40 | $5,500 | $2,100 |
| 41 | $5,600 | $2,200 |
| 42 | $5,700 | $2,200 |
| 43 | $5,900 | $2,300 |
| 44 | $6,000 | $2,300 |
| 45 | $6,200 | $2,400 |
| 46 | $6,300 | $2,400 |
| 47 | $6,500 | $2,500 |
| 48 | $6,600 | $2,500 |
| 49 | $6,800 | $2,600 |
| 50 | $7,000 | $2,700 |
| 51 | $7,100 | $2,700 |
| 52 | $7,300 | $2,800 |
| 53 | $7,500 | $2,900 |
| 54 | $7,700 | $2,900 |
| 55 | $7,900 | $3,000 |
| 56 | $8,100 | $3,100 |
| 57 | $8,400 | $3,100 |
| 58 | $8,600 | $3,200 |
| 59 | $8,800 | $3,300 |
| 60 | $9,100 | $3,400 |
| 61 | $9,300 | $3,500 |
| 62 | $9,600 | $3,600 |
| 63 | $9,900 | $3,700 |
| 64 | $10,200 | $3,800 |
| 65 or more | $10,500 | $3,900. |
(d) Assessment schedule
The assessment of adjusted available income (as determined under subsection (a)(1) and hereafter in this subsection referred to as "AAI") is calculated based on the following table (as revised by the Secretary pursuant to
| If AAI is— | Then the assessment is— |
|---|---|
| Less than − $6,820 | − $1,500 |
| − $6,820 to $17,400 | 22% of AAI |
| $17,401 to $21,800 | $3,828 + 25% of AAI over $17,400 |
| $21,801 to $26,200 | $4,928 + 29% of AAI over $21,800 |
| $26,201 to $30,700 | $6,204 + 34% of AAI over $26,200 |
| $30,701 to $35,100 | $7,734 + 40% of AAI over $30,700 |
| $35,101 or more | $9,494 + 47% of AAI over $35,100. |
(e) Computations in case of separation, divorce, or death
In the case of a student who is divorced or separated, or whose spouse has died, the spouse's income and assets shall not be considered in determining the family's available income or assets.
(
Editorial Notes
Amendments
2020—
2009—Subsec. (b)(5)(B).
2007—Subsec. (b)(4).
2006—Subsec. (c)(4).
1998—Subsec. (a)(4).
1997—Subsec. (b)(1)(F).
1993—Subsec. (b)(4).
Subsec. (e).
1992—
1987—Subsec. (a)(1)(C).
Subsec. (b)(2).
Subsec. (b)(5)(A).
Subsec. (b)(7).
Subsec. (c)(2)(B).
Subsec. (c)(2)(C).
| If the net worth of a business or farm is— | Then the adjusted net worth is: |
|---|---|
| Less than $1 | $0 |
| $1–$65,000 | 40 percent of NW |
| $65,001–$195,000 | $26,000 plus 50 percent of NW over $65,000 |
| $195,001–$325,000 | $91,000 plus 60 percent of NW over $195,000 |
| $325,001 or more | $169,000 plus 100 percent of NW over $325,000". |
Subsec. (c)(4)(B).
Subsec. (c)(4)(C).
Subsec. (d).
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Amendment by
Effective Date of 2009 Amendment
Amendment by
Effective Date of 2007 Amendment
Amendment by
Effective Date of 2006 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
§1087rr. Regulations; updated tables
(a) Authority to prescribe regulations restricted
Notwithstanding any other provision of law, the Secretary shall not have the authority to prescribe regulations to carry out this part except—
(1) to prescribe updated tables in accordance with subsections (b) through (g); and
(2) with respect to the definition of cost of attendance under
(b) Income protection allowance adjustments
For award year 2023–2024 and each subsequent award year, the Secretary shall publish in the Federal Register revised income protection allowances for the purposes of subsections (c)(3) and (g)(2)(C) of
(c) Adjusted net worth of a farm or business
(1) Table
The table of the net worth of a farm or business for purposes of making determinations of assets as defined under
| If the net worth of a farm or business is— | Then the adjusted net worth is— |
|---|---|
| Less than $1 | $0 |
| $1 to $140,000 | 40% of net worth of farm/business |
| $140,001 to $415,000 | $56,000 + 50% of net worth over $140,000 |
| $415,001 to $695,000 | $193,500 + 60% of net worth over $415,000 |
| $695,001 or more | $361,500 + 100% of net worth over $695,000. |
(2) Revised tables
For award year 2023–2024 and each subsequent award year, the Secretary shall publish in the Federal Register a revised table of the adjusted net worth of a farm or business for purposes of
(A) by increasing each dollar amount that refers to net worth of a farm or business by a percentage equal to the percentage increase in the Consumer Price Index between April 2020 and the April in the year prior to the beginning of such award year, and rounding the result to the nearest $5,000; and
(B) by adjusting the dollar amounts in the column referring to the adjusted net worth to reflect the changes made pursuant to subparagraph (A).
(d) Asset protection allowance
For award year 2023–2024 and each subsequent award year, the Secretary shall publish in the Federal Register a revised table of allowances for the purpose of
(1) the tables of allowances specified in
(2) inflation shall be presumed to be 6 percent per year;
(3) the rate of return of an annuity shall be presumed to be 8 percent; and
(4) the sales commission on an annuity shall be presumed to be 6 percent.
(e) Assessment schedules and rates
For award year 2023–2024 and each subsequent award year, the Secretary shall publish in the Federal Register a revised table of assessments from adjusted available income for the purpose of
(1) by increasing each dollar amount that refers to adjusted available income by a percentage equal to the percentage increase in the Consumer Price Index between April 2020 and the April in the year prior to the beginning of such academic year, rounded to the nearest $100; and
(2) by adjusting the other dollar amounts to reflect the changes made pursuant to paragraph (1).
(f) Consumer price index defined
In this section, the term "Consumer Price Index" means the Consumer Price Index for All Urban Consumers published by the Department of Labor. Each annual update of tables to reflect changes in the Consumer Price Index shall be corrected for misestimation of actual changes in such Index in previous years.
(g) Employment expense allowance
For award year 2023–2024 and each succeeding award year, the Secretary shall publish in the Federal Register a revised table of employment expense allowances for the purpose of
(h) Clarification for award year 2023–2024
For award year 2023–2024, the Secretary shall determine adjusted amounts and prescribe revised tables with respect to the income protection, employment expense, and asset protection allowances and the assessment schedules under
(
Editorial Notes
Amendments
2020—
2007—Subsec. (b)(1).
Subsec. (b)(2).
2006—Subsec. (b)(1).
Subsec. (b)(2).
Subsec. (h).
1998—Subsec. (b).
1993—Subsec. (b).
Subsec. (c).
Subsecs. (d), (e), (g).
Subsec. (h).
1992—
1987—Subsec. (c)(2).
Subsec. (d).
Subsec. (f).
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Amendment by
Effective Date of 2007 Amendment
Amendment by
Effective Date of 2006 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
§1087ss. Eligible applicants exempt from asset reporting
(a) In general
Notwithstanding any other provision of law, this section shall be effective for each individual seeking to apply for Federal financial aid under this subchapter, as part of the simplified application for Federal student financial aid under
(b) Applicants exempt from asset reporting
(1) In general
Except as provided in paragraph (3), in carrying out
(2) Eligible applicants
In this subsection, the term "eligible applicant" means an applicant who meets at least one of the following criteria:
(A) Is an applicant who qualifies for an automatic zero student aid index or negative student aid index under subsection (b) or (c) of
(B) Is an applicant who is a dependent student and the student's parents have a total adjusted gross income (excluding any income of the dependent student) that is less than $60,000 and do not file a Schedule A, B, D, E, F, or H (or equivalent successor schedules) with the Federal income tax return for the second preceding tax year, and—
(i) do not file a Schedule C (or the equivalent successor schedule) with the Federal income tax return for the second preceding tax year; or
(ii) file a Schedule C (or the equivalent successor schedule) with net business income of not more than a $10,000 loss or gain with the Federal income tax return for the second preceding tax year.
(C) Is an applicant who is an independent student and the student (including the student's spouse, if any) has a total adjusted gross income that is less than $60,000 and does not file a Schedule A, B, D, E, F, or H (or equivalent successor schedules), with the Federal income tax return for the second preceding tax year, and—
(i) does not file a Schedule C (or the equivalent successor schedule) with the Federal income tax return for the second preceding tax year; or
(ii) files a Schedule C (or the equivalent successor schedule) with net business income of not more than a $10,000 loss or gain with the Federal income tax return for the second preceding tax year.
(D) Is an applicant who, at any time during the previous 24-month period, received a benefit under a means-tested Federal benefit program (or whose parent or spouse received such a benefit, as applicable).
(3) Special rule
An eligible applicant shall not be exempt from asset reporting under this section if the applicant is a dependent student and the students' parents do not—
(A) reside in the United States or a United States territory; or
(B) file taxes in the United States or a United States territory, except if such nonfiling is due to not being required to file a Federal tax return for the applicable tax year due to a low income.
(4) Definitions
In this section:
(A) Schedule A
The term "Schedule A" means a form or information by a taxpayer to report itemized deductions.
(B) Schedule B
The term "Schedule B" means a form or information filed by a taxpayer to report interest and ordinary dividend income.
(C) Schedule C
The term "Schedule C" means a form or information filed by a taxpayer to report income or loss from a business operated or a profession practiced as a sole proprietor.
(D) Schedule D
The term "Schedule D" means a form or information filed by a taxpayer to report sales, exchanges or some involuntary conversions of capital assets, certain capital gain distributions, and nonbusiness bad debts.
(E) Schedule E
The term "Schedule E" means a form or information filed by a taxpayer to report income from rental properties, royalties, partnerships, S corporations, estates, trusts, and residual interests in real estate mortgage investment conduits.
(F) Schedule F
The term "Schedule F" means a form or information filed by a taxpayer to report farm income and expenses.
(G) Schedule H
The term "Schedule H" means a form or information filed by a taxpayer to report household employment taxes.
(H) Means-tested Federal benefit program
The term "means-tested Federal benefit program" means any of the following:
(i) The supplemental security income program under title XVI of the Social Security Act (
(ii) The supplemental nutrition assistance program under the Food and Nutrition Act of 2008 (
(iii) The program of block grants for States for temporary assistance for needy families established under part A of title IV of the Social Security Act (
(iv) The special supplemental nutrition program for women, infants, and children established by
(v) The Medicaid program under title XIX of the Social Security Act (
(vi) Federal housing assistance programs, including tenant-based assistance under
(vii) Other means-tested programs determined by the Secretary to be approximately consistent with the income eligibility requirements of the means-tested programs under clauses (i) through (vi).
(
Editorial Notes
References in Text
The Social Security Act, referred to in subsec. (b)(4)(H)(i), (iii), (v), is act Aug. 14, 1935, ch. 531,
The Food and Nutrition Act of 2008, referred to in subsec. (b)(4)(H)(ii), is
Codification
Amendments
2022—Subsec. (a).
2020—
2014—Subsec. (d)(1).
2011—Subsec. (c)(1)(B).
Subsec. (c)(2)(B).
2009—Subsec. (b)(1)(A)(i)(III).
Subsec. (b)(1)(B)(i)(III).
Subsec. (c)(1)(A)(iii).
Subsec. (c)(2)(A)(iii).
2008—Subsec. (d)(2).
2007—Subsec. (b)(1)(A)(i), (B)(i).
Subsec. (c).
Subsec. (c)(1)(A).
Subsec. (c)(1)(B).
Subsec. (c)(2)(A).
Subsec. (c)(2)(B).
Subsec. (d).
2006—Subsec. (b)(1)(A)(i).
Subsec. (b)(1)(B)(i).
Subsec. (b)(3).
Subsec. (c)(1)(A).
Subsec. (c)(1)(B).
Subsec. (c)(2)(A).
Subsec. (c)(2)(B).
Subsec. (d).
1998—Subsec. (b)(3).
Subsec. (b)(3)(A).
Subsec. (b)(3)(B), (C).
Subsec. (c)(1)(A).
Subsec. (c)(2)(A).
1993—Subsec. (a)(1).
Subsec. (b)(1)(B)(i).
Subsec. (b)(2).
Subsec. (b)(3)(A).
Subsec. (b)(3)(B).
Subsec. (c)(1)(A).
Subsec. (c)(1)(B).
Subsec. (c)(2)(A).
Subsec. (c)(2)(B).
1992—
1991—Subsec. (a).
1988—Subsec. (a).
1987—Subsec. (a).
Subsec. (b)(2).
Subsec. (b)(6).
Subsec. (c).
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Amendment by
Effective Date of 2014 Amendment
Amendment by
Effective Date of 2011 Amendment
Amendment by
Effective Date of 2009 Amendment
Amendment by
Effective Date of 2008 Amendment
Amendment of this section and repeal of
Amendment by section 4002(b)(1)(A), (B), (2)(N) of
Effective Date of 2007 Amendment
Effective Date of 2006 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
Evaluation of Simplified Needs Test
"(1)
"(2)
§1087tt. Discretion of student financial aid administrators
(a) In general
(1) Authority of financial aid administrators
A financial aid administrator shall have the authority to, on the basis of adequate documentation, make adjustments to any or all of the following on a case-by-case basis:
(A) For an applicant with special circumstances under subsection (b) to—
(i) the cost of attendance;
(ii) the values of the data used to calculate the student aid index; or
(iii) the values of the data used to calculate the Federal Pell Grant award.
(B) For an applicant with unusual circumstances under subsection (c), to the dependency status of such applicant.
(2) Limitations on authority
(A) Use of authority
No institution of higher education or financial aid administrator shall maintain a policy of denying all requests for adjustments under this section.
(B) No additional fee
No student or parent shall be charged a fee for a documented interview of the student by the financial aid administrator or for the review of a student or parent's request for adjustments under this section including the review of any supplementary information or documentation of a student or parent's special circumstances or a student's unusual circumstances.
(C) Rule of construction
The authority to make adjustments under paragraph (1)(A) shall not be construed to permit financial aid administrators to deviate from the cost of attendance, the values of data used to calculate the student aid index or the values of data used to calculate the Federal Pell Grant award (or both) for awarding aid under this subchapter in the absence of special circumstances.
(3) Adequate documentation
Adequate documentation for adjustments under this section must substantiate the special circumstances or unusual circumstances of an individual student, and may include, to the extent relevant and appropriate—
(A) a documented interview between the student and the financial aid administrator;
(B) for the purposes of determining that a student qualifies for an adjustment under paragraph (1)(B)—
(i) submission of a court order or official Federal or State documentation that the student or the student's parents or legal guardians are incarcerated in any Federal or State penal institution;
(ii) a documented phone call or a written statement, which confirms the specific unusual circumstances with—
(I) a child welfare agency authorized by a State or county;
(II) a Tribal welfare authority or agency;
(III) an independent living case worker, such as a case worker who supports current and former foster youth with the transition to adulthood; or
(IV) a public or private agency, facility, or program servicing the victims of abuse, neglect, assault, or violence, which may include domestic violence;
(iii) a documented phone call or a written statement from an attorney, a guardian ad litem, or a court-appointed special advocate, or a person serving in a similar capacity which confirms the specific unusual circumstances and documents the person's relationship to the student;
(iv) a documented phone call or written statement from a representative under division 1 or 2 of subpart 2 of part A, which confirms the specific unusual circumstances and documents the representative's relationship to the student;
(v) documents, such as utility bills or health insurance documentation, that demonstrate a separation from parents or legal guardians; and
(vi) in the absence of documentation described in this subparagraph, other documentation the financial aid administrator determines is adequate to confirm the unusual circumstances, pursuant to
(C) supplementary information, as necessary, about the financial status or personal circumstances of eligible applicants as it relates to the special circumstances or unusual circumstances based on which the applicant is requesting an adjustment.
(4) Special rule
In making adjustments under paragraph (1), a financial aid administrator may offer a dependent student financial assistance under a Federal Direct Unsubsidized Stafford Loan without requiring the parents of such student to provide their parent information on the Free Application for Federal Student Aid if the student does not qualify for, or does not choose to use, the unusual circumstance option described in
(5) Public disclosure
Each institution of higher education shall make publicly available information that students applying for aid under this subchapter have the opportunity to pursue adjustments under this section.
(b) Adjustments for students with special circumstances
(1) Special circumstances for adjustments related to Pell Grants
Special circumstances for adjustments to calculate a Federal Pell Grant award—
(A) shall be conditions that differentiate an individual student from a group of students rather than conditions that exist across a group of students; and
(B) may include—
(i) recent unemployment of a family member or student;
(ii) a student or family member who is a dislocated worker (as defined in
(iii) a change in housing status that results in an individual being a homeless youth;
(iv) an unusual amount of claimed losses against income on the Federal tax return that substantially lower adjusted gross income, such as business, investment, or real estate losses;
(v) receipt of foreign income of permanent residents or United States citizens exempt from Federal taxation, or the foreign income for which a permanent resident or citizen received a foreign tax credit;
(vi) in the case of an applicant who does not qualify for the exemption from asset reporting under
(vii) other changes or adjustments in the income, assets, or size of a family, or a student's dependency status.
(2) Special circumstances for adjustments related to cost of attendance and student aid index
Special circumstances for adjustments to the cost of attendance or the values of the data used to calculate the student aid index—
(A) shall be conditions that differentiate an individual student from a group of students rather than conditions that exist across a group of students, except as provided in
(B) may include—
(i) tuition expenses at an elementary school or secondary school;
(ii) medical, dental, or nursing home expenses not covered by insurance;
(iii) child care or dependent care costs not covered by the dependent care cost allowance calculated in accordance with
(iv) recent unemployment of a family member or student;
(v) a student or family member who is a dislocated worker (as defined in
(vi) the existence of additional family members enrolled in a degree, certificate, or other program leading to a recognized educational credential at an institution with a program participation agreement under
(vii) a change in housing status that results in an individual being a homeless youth;
(viii) a condition of severe disability of the student, or in the case of a dependent student, the dependent student's parent or guardian, or in the case of an independent student, the independent student's dependent or spouse;
(ix) unusual amount of claimed losses against income on the Federal tax return that substantially lower adjusted gross income, such as business, investment, or real estate losses; or
(x) other changes or adjustments in the income, assets, or size of a family, or a student's dependency status.
(c) Unusual circumstances adjustments
(1) In general
Unusual circumstances for adjustments to the dependency status of an applicant shall be—
(A) conditions that differentiate an individual student from a group of students; and
(B) based on unusual circumstances, pursuant to
(2) Provisional independent students
(A) Requirements for the Secretary
The Secretary shall—
(i) enable each student who, based on an unusual circumstance described in
(ii) upon completion of the Free Application for Federal Student Aid provide an estimate of the student's Federal Pell Grant award, and other information as specified in
(iii) specify, on the Free Application for Federal Student Aid, the consequences under
(B) Requirements for financial aid administrators
With respect to a student accepted for admission who completes the Free Application for Federal Student Aid as an independent student under subparagraph (A), a financial aid administrator shall—
(i) notify the student of the institutional process, requirements, and timeline for an adjustment under this section and
(ii) provide the student a final determination of the student's dependency status and Federal financial aid award as soon as practicable after all requested documentation is provided;
(iii) retain all documents related to the adjustment under this section and
(iv) presume that any student who has obtained an adjustment under this section and
(I) the student informs the institution that circumstances have changed; or
(II) the institution has specific conflicting information about the student's independence.
(C) Eligibility
If a student pursues provisional independent student status and is not determined to be an independent student by a financial aid administrator, such student shall only be eligible for a Federal Direct Unsubsidized Stafford Loan for that award year unless such student subsequently completes the Free Application for Federal Student Aid as a dependent student.
(d) Adjustments to assets or income taken into account
A financial aid administrator shall be considered to be making a necessary adjustment in accordance with this section if—
(1) the administrator makes adjustments excluding from family income or assets any proceeds or losses from a sale of farm or business assets of a family if such sale results from a voluntary or involuntary foreclosure, forfeiture, or bankruptcy or a voluntary or involuntary liquidation; or
(2) the administrator makes adjustments for a condition of disability of a student, or in the case of a dependent student, the dependent student's parent or guardian, or in the case of an independent student, the independent student's dependent or spouse, so as to take into consideration the additional costs incurred as a result of such disability.
(e) Refusal or adjustment of loan certifications
On a case-by-case basis, an eligible institution may refuse to use the authority provided under this section, certify a statement that permits a student to receive a loan under part D, certify a loan amount, or make a loan that is less than the student's determination of need (as determined under this part), if the reason for the action is documented and provided in writing to the student. No eligible institution shall discriminate against any borrower or applicant in obtaining a loan on the basis of race, ethnicity, national origin, religion, sex, marital status, age, or disability status.
(f) Special rule regarding professional judgment during a disaster, emergency, or economic downturn
(1) In general
For the purposes of making a professional judgment under this section, financial aid administrators may, during a qualifying emergency—
(A) determine that the income earned from work for an applicant is zero, if the applicant can provide paper or electronic documentation of receipt of unemployment benefits or confirmation that an application for unemployment benefits was submitted; and
(B) make additional appropriate adjustments to the income earned from work for a student, parent, or spouse, as applicable, based on the totality of the family's situation, including consideration of unemployment benefits.
(2) Documentation
For the purposes of documenting unemployment under paragraph (1), documentation shall be accepted if such documentation is submitted not more than 90 days from the date on which such documentation was issued, except if a financial aid administrator knows that the student, parent, or spouse, as applicable, has already obtained other employment.
(3) Program reviews
The Secretary shall make adjustments to the model used to select institutions of higher education participating under this subchapter for program reviews in order to account for any rise in the use of professional judgment under this section during the award years applicable to the qualifying emergency, as determined by the Secretary.
(4) Qualifying emergency
In this subsection, the term "qualifying emergency" means—
(A) an event for which the President declared a major disaster or an emergency under section 5170 or 5191, respectively, of title 42;
(B) a national emergency related to the coronavirus declared by the President under
(C) a period of recession or economic downturn as determined by the Secretary, in consultation with the Secretary of Labor.
(
Editorial Notes
Prior Provisions
A prior section 1087tt,
Amendments
2020—
2014—Subsec. (a).
2008—Subsec. (a).
2007—Subsec. (a).
1998—Subsec. (a).
Subsec. (c).
1993—Subsec. (c).
1992—
1989—Subsec. (a).
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Amendment by
Effective Date of 2014 Amendment
Amendment by
Effective Date of 2007 Amendment
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
Effective Date
Section effective as if enacted as part of the Higher Education Amendments of 1986,
§1087uu. Disregard of student aid in other programs
Notwithstanding any other provision of law, student financial assistance received under this subchapter, Bureau of Indian Education student assistance programs, and employment and training programs under
(
Editorial Notes
Prior Provisions
A prior section 1087uu,
Amendments
2020—
1992—
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
Effective Date
Section effective as if enacted as part of the Higher Education Amendments of 1986,
Section applicable with respect to financial assistance provided for any academic year beginning after Oct. 17, 1986, see section 406(b)(4) of
§1087uu–1. Native American students
(a) In general
In determining the student aid index for Native American students, computations performed pursuant to this part shall exclude—
(1) any income and assets of $2,000 or less per individual payment received by the student (and spouse) and student's parents under
(2) any income received by the student (and spouse) and student's parents under the Alaska Native Claims Settlement Act (
(b) Guidance
The Secretary shall develop guidance, in consultation with Tribal Colleges and Universities (as defined in
(
Editorial Notes
References in Text
The Indian Tribal Judgment Funds Use or Distribution Act, referred to in subsec. (a)(1), is
The Alaska Native Claims Settlement Act, referred to in subsec. (a)(2), is
The Maine Indian Claims Settlement Act of 1980, referred to in subsec. (a)(2), is
Amendments
2020—
"(1) any income and assets of $2,000 or less per individual payment received by the student (and spouse) and student's parents under
"(2) any income received by the student (and spouse) and student's parents under the Alaska Native Claims Settlement Act (
2009—Par. (1).
Par. (2).
1992—
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Amendment by
Effective Date of 2009 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
Effective Date
Section effective as if enacted as part of the Higher Education Amendments of 1986,
1 See References in Text note below.
§1087uu–2. Special rules for independent students
(a) Determination process for unaccompanied homeless youth
In making a determination of independence under
(1) Consider documentation of the student's circumstance to be adequate in the absence of documented conflicting information, if such documentation is provided through a documented phone call, written statement, or verifiable electronic data match by—
(A) a local educational agency homeless liaison, designated pursuant to
(B) the director of an emergency or transitional shelter, street outreach program, homeless youth drop-in center, or other program serving individuals who are experiencing homelessness, or a designee of the director;
(C) the director of a project supported by a Federal TRIO program or a Gaining Early Awareness and Readiness for Undergraduate program grant under division 1 or 2 of subpart 2 of part A, or a designee of the director; or
(D) a financial aid administrator at another institution who documented the student's circumstance in the same or a prior award year.
(2) If a student is unable to provide documentation from any individual described in paragraph (1), make a case-by-case determination, which shall be—
(A) based on a written statement from, or a documented interview with, the student that confirms that the student is an unaccompanied homeless youth, or unaccompanied, at risk of homelessness, and self-supporting; and
(B) made without regard to the reasons that the student is an unaccompanied homeless youth, or unaccompanied, at risk of homelessness, and self-supporting.
(3) Consider a determination made under this subsection as distinct from a determination of independence under
(b) Documentation process for foster care youth
If an institution requires that a student provide documentation that the student was in foster care when the student was age 13 or older, a financial aid administrator shall consider any of the following as adequate documentation, in the absence of documented conflicting information:
(1) Submission of a court order or official State documentation that the student received Federal or State support in foster care.
(2) A documented phone call, written statement, or verifiable electronic data match, which confirms the student was in foster care at an applicable age, from—
(A) a State, county, or tribal agency administering a program under part B or E of title IV of the Social Security Act (
(B) a State Medicaid agency; or
(C) a public or private foster care placing agency or foster care facility or placement.
(3) A documented phone call or a written statement from an attorney, a guardian ad litem, or a Court Appointed Special Advocate that confirms that the student was in foster care at an applicable age and documents the person's relationship to the student.
(4) Verification of the student's eligibility for an education and training voucher under the John H. Chafee Foster Care Program under section 477 of the Social Security Act (
(5) A documented phone call or written statement from a financial aid administrator who documented the student's circumstance in the same or a prior award year.
(c) Timing
A determination of independence under paragraph (2), (8), or (9) of
(1) shall be made as quickly as practicable;
(2) may be made as early as the year before the award year for which the student initially submits an application; and
(3) shall be made not later than 60 days after the date of the student's enrollment during the award year for which the student initially submits an application.
(d) Use of earlier determinations
(1) Earlier determination by the institution
Any student who is determined to be independent under paragraph (2), (8), or (9) of
(A) the student informs the institution that circumstances have changed; or
(B) the institution has specific conflicting information about the student's independence and has informed the student of this information.
(2) Earlier determination by another institution
A financial aid administrator may make a determination of independence pursuant to
(e) Retention of documents
A financial aid administrator shall retain all documents related to any determination of independence, including documented interviews, for at least the duration of the student's enrollment and an additional period prescribed by the Secretary to enable a student to utilize the documents for the purposes of subsection (a)(1)(D), (b)(5), or (d) of this section.
(
Editorial Notes
References in Text
The Social Security Act, referred to in subsec. (b)(2)(A), is act Aug. 14, 1935, ch. 531,
Amendments
2022—Subsec. (a)(1)(D).
Subsec. (b)(5).
Subsec. (d)(2).
Statutory Notes and Related Subsidiaries
Effective Date of 2022 Amendment
Amendment by
Effective Date
Section effective July 1, 2024, except as otherwise expressly provided, and applicable with respect to award year 2024–2025 and each subsequent award year, as determined under this chapter, see section 701(b) of
§1087vv. Definitions
In this part:
(a) Total income
The term "total income" means the amount equal to adjusted gross income for the second preceding tax year plus untaxed income and benefits for the second preceding tax year minus excludable income for the second preceding tax year. The factors used to determine total income shall be derived from the Federal income tax return, if available, except for the applicant's ability to indicate a qualified rollover in the second preceding tax year as outlined in
(b) Untaxed income and benefits
The term "untaxed income and benefits" means—
(1) deductions and payments to self-employed SEP, SIMPLE, Keogh, and other qualified individual retirement accounts excluded from income for Federal tax purposes, except such term shall not include payments made to tax-deferred pension and retirement plans, paid directly or withheld from earnings, that are not delineated on the Federal tax return;
(2) tax-exempt interest income;
(3) untaxed portion of individual retirement account distributions;
(4) untaxed portion of pensions; and
(5) foreign income of permanent residents of the United States or United States citizens exempt from Federal taxation, or the foreign income for which such a permanent resident or citizen receives a foreign tax credit.
(c) Veterans and veterans' education benefits
(1) The term "veteran" has the meaning given the term in
(2) The term "veterans' education benefits" means veterans' benefits under the following provisions of law:
(A)
(B)
(C)
(D)
(E)
(F)
(G)
(H)
(I)
(J) Section 903 of the Department of Defense Authorization Act, 1981 (
(K) Section 156(b) of the "Joint Resolution making further continuing appropriations and providing for productive employment for the fiscal year 1983, and for other purposes" (
(L) The provisions of
(d) Independent students and determinations
The term "independent", when used with respect to a student, means any individual who—
(1) is 24 years of age or older by December 31 of the award year;
(2) is, or was at any time when the individual was 13 years of age or older—
(A) an orphan;
(B) a ward of the court; or
(C) in foster care;
(3) is, or was immediately prior to attaining the age of majority, an emancipated minor or in legal guardianship as determined by a court of competent jurisdiction in the individual's State of legal residence;
(4) is a veteran of the Armed Forces of the United States (as defined in subsection (c)) or is currently serving on active duty in the Armed Forces for other than training purposes;
(5) is a graduate or professional student;
(6) is married and not separated;
(7) has legal dependents other than a spouse;
(8) is an unaccompanied homeless youth or is unaccompanied, at risk of homelessness, and self-supporting, without regard to such individual's age; and
(9) is a student for whom a financial aid administrator makes a documented determination of independence by reason of other unusual circumstances pursuant to
(A) human trafficking, as described in the Trafficking Victims Protection Act of 2000 (
(B) legally granted refugee or asylum status;
(C) parental abandonment or estrangement; or
(D) student or parental incarceration.
(e) Excludable income
The term "excludable income" means—
(1) an amount equal to the education credits described in paragraphs (1) and (2) of
(2) if an applicant elects to report it, college grant and scholarship aid included in gross income on a Federal tax return, including amounts attributable to grant and scholarship portions of fellowships and assistantships and any national service educational award or post-service benefit received by an individual under title I of the National and Community Service Act of 1990 (
(3) income earned from work under part C of this subchapter.
(f) Assets
(1) In general
The term "assets" means the amount in checking and savings accounts, time deposits, money market funds, investments, trusts, stocks, bonds, derivatives, securities, mutual funds, tax shelters, qualified education benefits (except as provided in paragraph (3)), the annual amount of child support received and the net value of real estate, vacation homes, income producing property, and business and farm assets, determined in accordance with
(2) Exclusions
With respect to determinations of need under this subchapter, the term "assets" shall not include the net value of the family's principal place of residence.
(3) Consideration of qualified education benefit
A qualified education benefit shall be considered an asset of—
(A) the student if the student is an independent student; or
(B) the parent if the student is a dependent student and the account is designated for the student, regardless of whether the owner of the account is the student or the parent.
(4) Definition of qualified education benefit
In this subsection, the term "qualified education benefit" means—
(A) a qualified tuition program (as defined in
(B) a Coverdell education savings account (as defined in
(g) Net value
The term "net value" means the market value at the time of application of the assets (as defined in subsection (f)), minus the outstanding liabilities or indebtedness against the assets.
(h) Treatment of income taxes paid to other jurisdictions
(1) The tax on income paid to the Governments of the Commonwealth of Puerto Rico, Guam, American Samoa, the Virgin Islands, or the Commonwealth of the Northern Mariana Islands, the Republic of the Marshall Islands, the Federated States of Micronesia, or Palau under the laws applicable to those jurisdictions, or the comparable tax paid to the central government of a foreign country, shall be treated as Federal income taxes.
(2) References in this part to title 26, Federal income tax forms, and the Internal Revenue Service shall, for purposes of the tax described in paragraph (1), be treated as references to the corresponding laws, tax forms, and tax collection agencies of those jurisdictions, respectively, subject to such adjustments as the Secretary may provide by regulation.
(i) Other financial assistance
(1) For purposes of determining a student's eligibility for funds under this subchapter, other financial assistance not received under this subchapter shall include all scholarships, grants, loans, or other assistance known to the institution at the time the determination of the student's need is made, including national service educational awards or post-service benefits under title I of the National and Community Service Act of 1990 (
(2) Notwithstanding paragraph (1), a tax credit taken under
(3) Notwithstanding paragraph (1) and
(4) Notwithstanding paragraph (1), payments made and services provided under part E of title IV of the Social Security Act [
(5) Notwithstanding paragraph (1), emergency financial assistance provided to the student for unexpected expenses that are a component of the student's cost of attendance, and not otherwise considered when the determination of the student's need is made, shall not be treated as other financial assistance for purposes of section 1087kk(a)(3) 1 of this title.
(j) Dependents
(1) Except as otherwise provided, the term "dependent of the parent" means the student who is deemed to be a dependent student when applying for aid under this subchapter, and any other person who lives with and receives more than one-half of their support from the parent (or parents) and will continue to receive more than half of their support from the parent (or parents) during the award year.
(2) Except as otherwise provided, the term "dependent of the student" means the student's dependent children and other persons (except the student's spouse) who live with and receive more than one-half of their support from the student and will continue to receive more than half of their support from the student during the award year.
(k) Family size
(1) Dependent student
Except as provided in paragraph (3), in determining family size in the case of a dependent student—
(A) if the parents are not divorced or separated, family members include the student's parents, and any dependent (within the meaning of
(B) if the parents are divorced or separated, family members include the parent whose income is included in computing available income and any dependent (within the meaning of
(C) if the parents are divorced and the parents whose income is so included are remarried, or if the parent was a widow or widower who has remarried, family members also include, in addition to those individuals referred to in subparagraph (B), the new spouse and any dependent (within the meaning of
(D) if the student is not considered as a dependent (within the meaning of
(2) Independent student
Except as provided in paragraph (3), in determining family size in the case of an independent student—
(A) family members include the student, the student's spouse, and any dependent (within the meaning of
(B) if the student is divorced or separated, family members do not include the spouse (or ex-spouse), but do include the student and any dependent (within the meaning of
(3) Procedures and modification
The Secretary shall provide procedures for determining family size in cases in which information for the taxable year used in determining the amount of need of the student for financial assistance under this subchapter has changed or does not accurately reflect the applicant's current household size, including when a divorce settlement only allows a parent to file for the Earned Income Tax Credit available under
(l) Business assets
The term "business assets" means property that is used in the operation of a trade or business, including real estate, inventories, buildings, machinery, and other equipment, patents, franchise rights, and copyrights.
(m) Homeless youth
The term "homeless youth" has the meaning given the term "homeless children and youths" in
(n) Unaccompanied
The terms "unaccompanied", "unaccompanied youth", or "unaccompanied homeless youth" have the meaning given the term "unaccompanied youth" in
(
Editorial Notes
References in Text
Section 903 of the Department of Defense Authorization Act, 1981, referred to in subsec. (c)(2)(J), is section 903 of
Section 156(b) of the "Joint Resolution making further continuing appropriations and providing for productive employment for the fiscal year 1983, and for other purposes", referred to in subsec. (c)(2)(K), is section 156(b) of
The Trafficking Victims Protection Act of 2000, referred to in subsec. (d)(9)(A), is div. A of
The National and Community Service Act of 1990, referred to in subsecs. (e)(2) and (i)(1), is
The Social Security Act, referred to in subsec. (i)(4), is act Aug. 14, 1935, ch. 531,
Codification
Amendment by section 2(g)(19) of
Amendments
2020—
2014—Subsec. (b)(1)(I).
2009—Subsec. (a)(2).
Subsec. (c)(2).
Subsec. (j)(1).
2008—Subsec. (a)(1).
Subsec. (a)(2).
Subsec. (b)(1)(E).
Subsec. (d)(1)(B), (C).
"(B) is an orphan, in foster care, or a ward of the court, at any time when the individual is 13 years of age or older;
"(C) is an emancipated minor or is in legal guardianship as determined by a court of competent jurisdiction in the individual's State of legal residence;".
Subsec. (e)(2) to (6).
Subsec. (j)(1).
2007—Subsec. (a)(2).
Subsec. (b).
Subsec. (b)(2).
Subsec. (d).
Subsec. (d)(1)(B), (C).
Subsec. (d)(1)(H).
Subsec. (d)(2).
Subsec. (e)(5).
Subsec. (f)(3).
Subsec. (j)(2).
Subsec. (j)(4).
Subsec. (n).
2006—Subsec. (d)(3).
Subsec. (f)(1).
Subsec. (f)(2)(C).
Subsec. (f)(3) to (5).
Subsec. (j).
Subsec. (j)(2), (3).
"(2)(A) Except as provided in subparagraph (B), for purposes of determining a student's eligibility for funds under this subchapter, tuition prepayment plans shall reduce the cost of attendance (as determined under
"(B) If the institutional expense covered by the prepayment must be part of the student's cost of attendance for accounting purposes, the prepayment shall be considered estimated financial assistance."
1998—Subsec. (b)(14).
Subsec. (j)(1).
Subsec. (j)(3), (4).
1997—Subsec. (a)(2).
Subsec. (j)(4).
1996—Subsec. (b)(2).
1993—Subsec. (a)(2).
Subsec. (c)(2).
Subsec. (d)(2).
Subsec. (j)(3).
Subsecs. (k) to (m).
1992—
1990—Subsec. (d)(2)(F).
Subsec. (f)(3).
1988—Subsec. (i).
1987—Subsec. (a)(1).
Subsec. (a)(2).
Subsec. (a)(4).
Subsecs. (b), (c).
Subsec. (d)(2)(F).
Subsecs. (f) to (h).
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Amendment by
Effective Date of 2014 Amendment
Amendment by
Effective Date of 2009 Amendment
Amendment by
Effective Date of 2008 Amendment
Effective Date of 2007 Amendment
Effective Date of 2006 Amendment
Amendment by
Effective Date of 1998 Amendments
Amendment by
Amendment by section 101(f) [title VIII, §405(d)(15)(B)] of
Effective Date of 1996 Amendment
Amendment by
Effective Date of 1993 Amendments
Amendment by
Amendment by
Effective Date of 1992 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
Transfer of Functions
For transfer of authorities, functions, personnel, and assets of the Coast Guard, including the authorities and functions of the Secretary of Transportation relating thereto, to the Department of Homeland Security, and for treatment of related references, see
Definition of "Independent Student"; Application to Specified Periods of Enrollment
[References to subpart 2 of part A of title IV of
1 So in original. Probably should be "section 1087kk(3)".
Part G—General Provisions Relating to Student Assistance Programs
Editorial Notes
Codification
Part G of title IV of the Higher Education Act of 1965, comprising this part, was originally enacted by
Part G of title IV of the Higher Education Act of 1965,
Prior Provisions
A prior part G, consisting of part H of title IV of
§1088. Definitions
(a) Academic and award year
(1) For the purpose of any program under this subchapter, the term "award year" shall be defined as the period beginning July 1 and ending June 30 of the following year.
(2)(A) For the purpose of any program under this subchapter, the term "academic year" shall—
(i) require a minimum of 30 weeks of instructional time for a course of study that measures its program length in credit hours; or
(ii) require a minimum of 26 weeks of instructional time for a course of study that measures its program length in clock hours; and
(iii) require an undergraduate course of study to contain an amount of instructional time whereby a full-time student is expected to complete at least—
(I) 24 semester or trimester hours or 36 quarter credit hours in a course of study that measures its program length in credit hours; or
(II) 900 clock hours in a course of study that measures its program length in clock hours.
(B) The Secretary may reduce such minimum of 30 weeks to not less than 26 weeks for good cause, as determined by the Secretary on a case-by-case basis, in the case of an institution of higher education that provides a 2-year or 4-year program of instruction for which the institution awards an associate or baccalaureate degree and that measures program length in credit hours or clock hours.
(b) Eligible program
(1) For purposes of this subchapter, the term "eligible program" means a program of at least—
(A) 600 clock hours of instruction, 16 semester hours, or 24 quarter hours, offered during a minimum of 15 weeks, in the case of a program that—
(i) provides a program of training to prepare students for gainful employment in a recognized profession; and
(ii) admits students who have not completed the equivalent of an associate degree; or
(B) 300 clock hours of instruction, 8 semester hours, or 12 hours, offered during a minimum of 10 weeks, in the case of—
(i) an undergraduate program that requires the equivalent of an associate degree for admissions; or
(ii) a graduate or professional program.
(2)(A) A program is an eligible program for purposes of part B of this subchapter if it is a program of at least 300 clock hours of instruction, but less than 600 clock hours of instruction, offered during a minimum of 10 weeks, that—
(i) has a verified completion rate of at least 70 percent, as determined in accordance with the regulations of the Secretary;
(ii) has a verified placement rate of at least 70 percent, as determined in accordance with the regulations of the Secretary; and
(iii) satisfies such further criteria as the Secretary may prescribe by regulation.
(B) In the case of a program being determined eligible for the first time under this paragraph, such determination shall be made by the Secretary before such program is considered to have satisfied the requirements of this paragraph.
(3) An otherwise eligible program that is offered in whole or in part through telecommunications is eligible for the purposes of this subchapter if the program is offered by an institution, other than a foreign institution, that has been evaluated and determined (before or after February 8, 2006) to have the capability to effectively deliver distance education programs by an accrediting agency or association that—
(A) is recognized by the Secretary under subpart 2 of part H; and
(B) has evaluation of distance education programs within the scope of its recognition, as described in
(4) For purposes of this subchapter, the term "eligible program" includes an instructional program that, in lieu of credit hours or clock hours as the measure of student learning, utilizes direct assessment of student learning, or recognizes the direct assessment of student learning by others, if such assessment is consistent with the accreditation of the institution or program utilizing the results of the assessment. In the case of a program being determined eligible for the first time under this paragraph, such determination shall be made by the Secretary before such program is considered to be an eligible program.
(c) Third party servicer
For purposes of this subchapter, the term "third party servicer" means any individual, any State, or any private, for-profit or nonprofit organization, which enters into a contract with—
(1) any eligible institution of higher education to administer, through either manual or automated processing, any aspect of such institution's student assistance programs under this subchapter; or
(2) any guaranty agency, or any eligible lender, to administer, through either manual or automated processing, any aspect of such guaranty agency's or lender's student loan programs under part B of this subchapter, including originating, guaranteeing, monitoring, processing, servicing, or collecting loans.
(d) Definitions for military deferments
For purposes of parts B, D, and E of this subchapter:
(1) Active duty
The term "active duty" has the meaning given such term in
(2) Military operation
The term "military operation" means a contingency operation as such term is defined in
(3) National emergency
The term "national emergency" means the national emergency by reason of certain terrorist attacks declared by the President on September 14, 2001, or subsequent national emergencies declared by the President by reason of terrorist attacks.
(4) Serving on active duty
The term "serving on active duty during a war or other military operation or national emergency" means service by an individual who is—
(A) a Reserve of an Armed Force ordered to active duty under
(B) any other member of an Armed Force on active duty in connection with such emergency or subsequent actions or conditions who has been assigned to a duty station at a location other than the location at which such member is normally assigned.
(5) Qualifying National Guard duty
The term "qualifying National Guard duty during a war or other military operation or national emergency" means service as a member of the National Guard on full-time National Guard duty (as defined in
(e) Consumer reporting agency
For purposes of this subchapter, the term "consumer reporting agency" has the meaning given the term "consumer reporting agency that compiles and maintains files on consumers on a nationwide basis" in Section 1 1681a(p) of title 15.
(f) Definition of educational service agency
For purposes of parts B, D, and E, the term "educational service agency" has the meaning given the term in
(
Editorial Notes
Prior Provisions
A prior section 1088,
Another prior section 1088,
Amendments
2015—Subsec. (f).
2009—Subsec. (c).
2008—Subsec. (a)(2)(B).
Subsecs. (e), (f).
2006—Subsec. (a)(2).
Subsec. (b)(3), (4).
Subsec. (d).
1998—
Subsec. (a)(4).
1993—Subsec. (a)(3)(B).
Subsec. (a)(3)(D).
Subsec. (a)(4)(A).
Subsec. (d)(2).
Subsec. (e)(2).
Subsec. (f).
1992—
Subsec. (a).
Subsec. (b).
Subsec. (b)(1).
Subsec. (b)(4).
Subsec. (b)(5), (6).
Subsec. (c)(1).
Subsec. (d).
Subsec. (e).
Subsec. (f).
1991—Subsec. (b).
Subsec. (c).
1990—Subsec. (b).
1989—Subsec. (a)(1).
Subsec. (a)(3).
Subsec. (e).
1987—Subsec. (c).
Statutory Notes and Related Subsidiaries
Effective Date of 2015 Amendment
Amendment by
Effective Date of 2009 Amendment
Amendment by
Effective Date of 2006 Amendment
Amendment by
Amendment by section 8007(d) of
Effective Date of 1998 Amendments
Amendment by
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1992 Amendment
"(1) as otherwise provided in such part G;
"(2) the changes in section 481(a) [
"(3) section 481(e) as added by such amendments, relating to the definition of eligible program, shall be effective on and after July 1, 1993;
"(4) section 484(m)(1) [
"(5) the changes in section 485 [
"(6) the changes in section 488 [
"(7) the changes in section 489 [
Effective Date of 1991 Amendment
Amendment by
Effective Date of 1990 Amendment
Section 3005(c) of
Effective Date of 1987 Amendment
Amendment by
Construction of 2006 Amendment
Nothing in amendment by section 8007(d) of
Construction of 1991 Amendment
Need-Based Aid
1 So in original. Probably should not be capitalized.
§1088a. Clock and credit hour treatment of diploma nursing schools
Notwithstanding any other provision of this chapter, any regulations promulgated by the Secretary concerning the relationship between clock hours and semester, trimester, or quarter hours in calculating student grant, loan, or work assistance under this subchapter, shall not apply to a public or private nonprofit hospital-based school of nursing that awards a diploma at the completion of the school's program of education.
(
Editorial Notes
Prior Provisions
Prior sections 1088a to 1088g were omitted in the general amendment of this part by
Section 1088a,
Section 1088b,
Section 1088b–1,
Section 1088b–2,
Section 1088b–3,
Section 1088c,
Section 1088d,
Section 1088e,
Section 1088f,
Section 1088f–1,
Section 1088g,
Statutory Notes and Related Subsidiaries
Effective Date
§1089. Master calendar
(a) Secretary required to comply with schedule
To assure adequate notification and timely delivery of student aid funds under this subchapter, the Secretary shall adhere to the following calendar dates in the year preceding the award year:
(1) Development and distribution of Federal and multiple data entry forms—
(A) by February 1: first meeting of the technical committee on forms design of the Department;
(B) by March 1: proposed modifications, updates, and notices pursuant to sections 1087rr and 1090(a)(5) 1 of this title published in the Federal Register;
(C) by June 1: final modifications, updates, and notices pursuant to sections 1087rr and 1090(a)(5) 1 of this title published in the Federal Register;
(D) by August 15: application for Federal student assistance and multiple data entry data elements and instructions approved;
(E) by August 30: final approved forms delivered to servicers and printers;
(F) by October 1: Federal and multiple data entry forms and instructions printed; and
(G) by November 1: Federal and multiple data entry forms, instructions, and training materials distributed.
(2) Allocations of campus-based and Pell Grant funds—
(A) by August 1: distribution of institutional application for campus-based funds (FISAP) to institutions;
(B) by October 1: final date for submission of FISAP by institutions to the Department;
(C) by November 15: edited FISAP and computer printout received by institutions;
(D) by December 1: appeals procedures received by institutions;
(E) by December 15: edits returned by institutions to the Department;
(F) by February 1: tentative award levels received by institutions and final Pell Grant payment schedule;
(G) by February 15: closing date for receipt of institutional appeals by the Department;
(H) by March 1: appeals process completed;
(I) by April 1: final award notifications sent to institutions; and
(J) by June 1: Pell Grant authorization levels sent to institutions.
(3) The Secretary shall, to the extent practicable, notify eligible institutions, guaranty agencies, lenders, interested software providers, and, upon request, other interested parties, by December 1 prior to the start of an award year of minimal hardware and software requirements necessary to administer programs under this subchapter.
(4) The Secretary shall attempt to conduct training activities for financial aid administrators and others in an expeditious and timely manner prior to the start of an award year in order to ensure that all participants are informed of all administrative requirements.
(b) Timing for reallocations
With respect to any funds reallocated under
(c) Delay of effective date of late publications
(1) Except as provided in paragraph (2), any regulatory changes initiated by the Secretary affecting the programs under this subchapter that have not been published in final form by November 1 prior to the start of the award year shall not become effective until the beginning of the second award year after such November 1 date.
(2)(A) The Secretary may designate any regulatory provision that affects the programs under this subchapter and is published in final form after November 1 as one that an entity subject to the provision may, in the entity's discretion, choose to implement prior to the effective date described in paragraph (1). The Secretary may specify in the designation when, and under what conditions, an entity may implement the provision prior to that effective date. The Secretary shall publish any designation under this subparagraph in the Federal Register.
(B) If an entity chooses to implement a regulatory provision prior to the effective date described in paragraph (1), as permitted by subparagraph (A), the provision shall be effective with respect to that entity in accordance with the terms of the Secretary's designation.
(d) Notice to Congress
The Secretary shall notify the authorizing committees when a deadline included in the calendar described in subsection (a) is not met. Nothing in this section shall be interpreted to penalize institutions or deny them the specified times allotted to enable them to return information to the Secretary based on the failure of the Secretary to adhere to the dates specified in this section.
(e) Compliance calendar
Prior to the beginning of each award year, the Secretary shall provide to institutions of higher education a list of all the reports and disclosures required under this chapter. The list shall include—
(1) the date each report or disclosure is required to be completed and to be submitted, made available, or disseminated;
(2) the required recipients of each report or disclosure;
(3) any required method for transmittal or dissemination of each report or disclosure;
(4) a description of the content of each report or disclosure sufficient to allow the institution to identify the appropriate individuals to be assigned the responsibility for such report or disclosure;
(5) references to the statutory authority, applicable regulations, and current guidance issued by the Secretary regarding each report or disclosure; and
(6) any other information which is pertinent to the content or distribution of the report or disclosure.
(
Editorial Notes
References in Text
Prior Provisions
A prior section 1089,
Another prior section 1089,
Amendments
2009—Subsec. (b).
2008—Subsec. (a)(1)(B), (C).
"(B) by March 1: proposed modifications and updates pursuant to
"(C) by June 1: final modifications and updates pursuant to
Subsec. (d).
Subsec. (e).
1998—Subsec. (a)(3), (4).
Subsec. (c).
1995—Subsec. (d).
1993—Subsec. (c).
1992—Subsec. (a)(1)(B), (C).
Subsec. (b).
Subsec. (c).
1987—Subsec. (b).
Statutory Notes and Related Subsidiaries
Effective Date of 2009 Amendment
Amendment by
Effective Date of 2008 Amendment
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
Inapplicability of Master Calendar and Negotiated Rulemaking Requirements
[
Establishment of Separate Systems of Need Analysis for Academic Years 1983–1984 Through 1987–1988
Determination of Independent Student Status for Academic Years 1982–1983 Through 1987–1988
1 See References in Text note below.
§1090. Free Application for Federal Student Aid
(a) Simplified application for Federal student financial aid
(1) In general
Each individual seeking to apply for Federal financial aid under this subchapter for award year 2024–2025 and any subsequent award year shall file a free application with the Secretary, known as the "Free Application for Federal Student Aid", to determine eligibility for such aid, as described in paragraph (2), and in accordance with
(2) Free application
(A) In general
The Secretary shall make available, for the purposes of paragraph (1), a free application to determine the eligibility of a student for Federal financial aid under this subchapter.
(B) Information required by the applicant
(i) In general
The applicant, and, if necessary, the parents or spouse of the applicant, shall provide the Secretary with the applicable information described in clause (ii) in order to be eligible for Federal financial aid under this subchapter.
(ii) Information to be provided
The information described in this clause is the following:
(I) Name.
(II) Contact information, including address, phone number, email address, or other electronic address.
(III) Social security number.
(IV) Date of birth.
(V) Marital status.
(VI) Citizenship status, including alien registration number, if applicable.
(VII) Sex.
(VIII) Race or ethnicity, using categories developed in consultation with the Bureau of the Census and the Director of the Institute of Education Sciences that, to the greatest extent practicable, separately capture the racial groups specified in the American Community Survey of the Bureau of the Census.
(IX) State of legal residence and date of residency.
(X) The following information on secondary school completion:
(aa) Name and location of the high school from which the applicant received, or will receive prior to the period of enrollment for which aid is sought, a regular high school diploma;
(bb) name and location of the entity from which the applicant received, or will receive prior to the period of enrollment for which aid is sought, a recognized equivalent of a regular high school diploma; or
(cc) if the applicant completed or will complete prior to the period of enrollment for which aid is sought, a secondary school education in a home school setting that is treated as a home school or private school under State law.
(XI) Name of each institution where the applicant intends to apply for enrollment or continue enrollment.
(XII) Year in school for period of enrollment for which aid is sought, including whether applicant will have finished first bachelor's degree prior to the period of enrollment for which aid is sought.
(XIII) Whether one or both of the applicant's parents attended college.
(XIV) Any required asset information, unless exempt under
(aa) the annual amount of child support received, if applicable; and
(bb) all required asset information not described in item (aa).
(XV) The number of members of the applicant's family who will also be enrolled in an eligible institution of higher education on at least a half-time basis during the same enrollment period as the applicant.
(XVI) If the applicant meets any of the following designations:
(aa) Is an unaccompanied homeless youth, or is unaccompanied, at risk of homelessness, and self-supporting.
(bb) Is an emancipated minor.
(cc) Is in legal guardianship.
(dd) Has been a dependent ward of the court at any time since the applicant turned 13.
(ee) Has been in foster care at any time since the applicant turned 13.
(ff) Both parents have died since the applicant turned 13.
(gg) Is a veteran of the Armed Forces of the United States or is serving (on the date of the application) on active duty in the Armed Forces for other than training purposes.
(hh) Is under the age of 24 and has a dependent child or relative.
(ii) Does not have access to parental information due to an unusual circumstance described in
(XVII) If the applicant receives or has received any of the following means-tested Federal benefits within the last two years:
(aa) The supplemental security income program under title XVI of the Social Security Act (
(bb) The supplemental nutrition assistance program under the Food and Nutrition Act of 2008 (
(cc) The free and reduced price school lunch program established under the Richard B. Russell National School Lunch Act (
(dd) The program of block grants for States for temporary assistance for needy families established under part A of title IV of the Social Security Act (
(ee) The special supplemental nutrition program for women, infants, and children established by
(ff) The Medicaid program under title XIX of the Social Security Act (
(gg) Federal housing assistance programs, including tenant-based assistance under
(hh) Refundable credit for coverage under a qualified health plan under
(ii) The Earned Income Tax Credit under
(jj) Any other means-tested program determined by the Secretary to be appropriate.
(XVIII) If the applicant, or, if necessary, the parents or spouse of the applicant, reported receiving tax exempt payments from an individual retirement plan (as defined in
(XIX) If the applicant, or, if necessary, the parents or spouse of the applicant, reported receiving foreign income that is exempt from Federal taxation or for which a permanent resident of the United States or United States citizen receives a foreign tax credit, information regarding the amount of such foreign income.
(XX) If the applicant, or, if applicable, the parents or spouse of the applicant, elects to report receiving college grant and scholarship aid included in gross income on a Federal tax return described in
(iii) Prohibition against requesting information more than once
Any information requested during the process of creating an account for completing the free application under this subsection, shall, to the fullest extent possible, not be required a second time for the same award year, or in a duplicative manner, when completing such free application except in the case of an unusual situation, such as a temporary inability to access an account for completing such free application.
(iv) Change in family size
The Secretary shall provide a process by which an applicant shall confirm the accuracy of family size or update the family size with respect to such applicant for purposes of determining the need of such applicant for financial assistance under this subchapter based on a change in family size from the tax year data used for such determination.
(v) Single question for homeless status
The Secretary shall ensure that—
(I) on the form developed under this section for which the information is applicable, there is a single, easily understood screening question to identify an applicant who is an unaccompanied homeless youth or is unaccompanied, at risk of homelessness, and self-supporting; and
(II) such question is distinct from those relating to an individual who does not have access to parental income due to an unusual circumstance.
(vi) Adjustments
The Secretary shall disclose on the FAFSA that the student may, on a case-by-case basis, qualify for an adjustment under
(C) Notification and approval of request for tax return information
The Secretary shall notify students and borrowers who wish to submit an application for Federal student financial aid under this subchapter (as well as parents and spouses who must sign such an application or request or a Master Promissory Note on behalf of those students and borrowers) of the authority of the Secretary to require that such persons affirmatively approve that the Internal Revenue Service disclose their tax return information as described in
(D) Authorizations available to the applicant
(i) Authorization to disclose FAFSA information, including a redisclosure of tax return information, to institution, State higher education agency, and designated scholarship organizations
An applicant and, if necessary, the parents or spouse of the applicant shall provide the Secretary with authorization to disclose to an institution, State higher education agency, and scholarship organizations (designated (prior to December 19, 2019) by the Secretary under subsection (a)(3)(E)) 2 as in effect on such date 3, as specified by the applicant and in accordance with
(I) Information described under
(II) All information provided by the applicant on the application described by this subsection to determine the applicant's eligibility for Federal financial aid under this subchapter and for the application, award, and administration of such Federal financial aid, except the name of an institution to which an applicant selects to redisclose information shall not be disclosed to any other institution.
(ii) Authorization to disclose to benefits programs
An applicant and, if necessary, the parents or spouse of the applicant may provide the Secretary with authorization to disclose to applicable agencies that handle applications for means-tested Federal benefit programs, as defined in
(E) Action by the Secretary
Upon receiving—
(i) an application under this section, the Secretary shall, as soon as practicable, perform the necessary functions with the Commissioner of Internal Revenue to calculate the applicant's student aid index and scheduled award for a Federal Pell Grant, if applicable, assuming full-time enrollment for an academic year, and note to the applicant the assumptions relationship to the scheduled award; and
(ii) an authorization under subparagraph (D), the Secretary shall, as soon as practicable, disclose the information described under such subparagraph, as specified by the applicant, in order for the applicant's eligibility for Federal, State, or institutional student financial aid programs or means-tested Federal benefit programs to be estimated or determined.
(F) Work study wages
With respect to an applicant who has received income earned from work under part C of this subchapter, the Secretary shall take the steps necessary to collect information on the amount of such income for the purposes of calculating such applicant's student aid index and scheduled award for a Federal Pell Grant, if applicable, without adding additional questions to the FAFSA, including by collecting such information from institutions of higher education participating in work-study programs under part C of this subchapter.
(3) Information to be supplied by the Secretary of Education
(A) In general
Upon receiving and timely processing a free application that contains the information described in paragraph (2), the Secretary shall provide to the applicant the following information based on full-time attendance for an academic year:
(i) The estimated dollar amount of a Federal Pell Grant scheduled award for which the applicant is eligible for such award year.
(ii) Information on other types of Federal financial aid for which the applicant may be eligible (including situations in which the applicant could qualify for 150 percent of a scheduled Federal Pell Grant award and loans made under this subchapter) and how the applicant can find additional information regarding such aid.
(iii) Consumer-tested information regarding each institution selected by the applicant in accordance with paragraph (2)(B)(ii)(XI), which may include the following:
(I) The following information, as collected through the Integrated Postsecondary Education Data System or a successor Federal data system as designated by the Secretary:
(aa) Net price by the income categories, as described under
(bb) Graduation rate.
(cc) Retention rate.
(dd) Transfer rate, if available.
(II) Median debt of students upon completion.
(III) Institutional default rate, as calculated under
(iv) If the student is eligible for a student aid index of less than or equal to zero under
(v) Information on education tax benefits described in paragraphs (1) and (2) of
(vi) If the individual identified as a veteran, or as serving (on the date of the application) on active duty in the Armed Forces for other than training purposes, information on benefits administered by the Department of Veteran Affairs or Department of Defense, respectively.
(vii) If applicable, the applicant's current outstanding balance of loans under this subchapter.
(B) Information provided to the State
(i) In general
The Secretary shall redisclose, with authorization from the applicant in accordance with paragraph (2)(D)(i), to a State higher education agency administering State-based financial aid and serving the applicant's State of residence, the information described under
(ii) Use of information
A State agency administering State-based financial aid—
(I) shall use the information provided under clause (i) solely for the application, award, and administration of State-based financial aid for which the applicant is eligible;
(II) may use the information, except for the information described under
(III) may use identifying information provided by student applicants on the FAFSA to determine whether or not a graduating secondary student has filed the application in coordination with local educational agencies or secondary schools to encourage students to complete the application; and
(IV) may share the application information, excluding the information described under
(iii) Limitation on consent process
A State may provide a consent process whereby an applicant may elect to share the information described in clause (i), except for the information described in
(iv) Prohibition
Any entity that receives applicant information under clause (iii) shall not sell, share, or otherwise use applicant information other than for the purposes outlined in clause (iii).
(C) Use of information provided to the institution
An institution—
(i) shall use the information provided to it solely for the application, award, and administration of financial aid to the applicant;
(ii) may use the information provided, excluding the information described under section 6013(l)(13) 4 of title 26, for research that does not release any individually identifiable information on any applicant, to promote college attendance, persistence, and completion; and
(iii) shall not share such educational record information with any other entity without the explicit written consent of the applicant.
(D) Prohibition
Any entity that receives applicant information under subparagraph (C)(iii) shall not sell, share, or otherwise use applicant information other than for the purposes outlined in subparagraph (C).
(E) FAFSA information that includes tax return information
An applicant's FAFSA information that includes return or return information as described in
(4) Development of form and information exchange
Prior to the design of the free application under this subsection, the Secretary shall, to the maximum extent practicable, on an annual basis—
(A) consult with stakeholders to gather information about innovations and technology available to—
(i) ensure an efficient and effective process;
(ii) mitigate unintended consequences; and
(iii) determine the best practices for outreach to students and families during the transition to the streamlined process for the determination of Federal financial aid and Federal Pell Grant eligibility while reducing the data burden on applicants and families; and
(B) solicit public comments for the format of the free application that provides for adequate time to incorporate feedback prior to development of the application for the succeeding award year.
(5) No additional information requests permitted
In carrying out this subsection, the Secretary may not require additional information to be submitted by an applicant (or the parents or spouse of an applicant) for Federal financial aid through other requirements or reporting, except as required under a process or procedure exercised in accordance with the authority under
(6) State-run programs
(A) In general
The Secretary shall conduct outreach to States in order to research the benefits to students of States relying solely on the student aid index, scheduled Pell Grant Award, or the financial data made available, upon authorization by the applicant, as a result of an application for aid under this subsection for determining the eligibility of the applicant for State provided financial aid.
(B) Secretarial review
If a State determines that there is a need for additional data elements beyond those provided pursuant to this subsection for determining the eligibility of an applicant for State provided financial aid, the State shall forward a list of those additional data elements determined necessary, but not provided by virtue of the application under this subsection, to the Secretary. The Secretary shall make readily available to the public through the Department's websites and other means—
(i) a list of States that do not require additional financial information separate from the Free Application for Federal Student Aid and do not require asset information from students who qualify for the exemption from asset reporting under
(ii) a list of States that require asset information from students who qualify for the exemption from asset reporting under
(iii) a list of States that have indicated that they require additional financial information separate from the Free Application for Federal Student Aid for purposes of awarding State scholarships and grant aid; and
(iv) with the publication of the lists under this subparagraph, information about additional resources available to applicants, including links to such State websites.
(7) Institution-run financial aid
(A) In general
The Secretary shall conduct outreach to institutions of higher education to describe the benefits to students of relying solely on the student aid index, scheduled Pell Grant Award, or the financial data made available, upon authorization for release by the applicant, as a result of an application for aid under this subsection for determining the eligibility of the applicant for institutional financial aid. The Secretary shall make readily available to the public through its websites and other means—
(i) a list of institutions that do not require additional financial information separate from the Free Application for Federal Student Aid and do not require asset information from students who qualify for the exemption from asset reporting under
(ii) a list of institutions that require asset information from students who qualify for the exemption from asset reporting under
(iii) a list of institutions that require additional financial information separate from the Free Application for Federal Student Aid for the purpose of awarding institution-run financial aid; and
(iv) with the publication of the list in clause (iii), information about additional resources available to applicants.
(8) Security of data
The Secretary shall, in consultation with the Secretary of the Treasury—
(A) take all necessary steps to safeguard the data required to be transmitted for the purpose of this section between Federal agencies and to States and institutions of higher education and secure the transmittal of such data;
(B) provide guidance to States and institutions of higher education regarding their obligation to ensure the security of the data provided under this section and
(C) provide guidance on the implementation of
(9) Report to Congress
(A) In general
Not later than 1 year after December 27, 2020, the Secretary shall report to the authorizing committees on the progress of the Secretary in carrying out this subsection, including planning and stakeholder consultation. Such report shall include—
(i) benchmarks for implementation;
(ii) entities and organizations that the Secretary consulted;
(iii) system requirements for such implementation and how they will be addressed;
(iv) any areas of concern and potential problem issues uncovered that may hamper such implementation; and
(v) solutions determined to address such issues.
(B) Updates
The Secretary shall provide updates to the authorizing committees—
(i) as to the progress and planning described in subparagraph (A) prior to implementation of the revisions to the Free Application for Federal Student Aid under this subsection not less often than quarterly; and
(ii) at least 6 months and 1 year after implementation of the revisions to the Free Application for Federal Student Aid.
(b) Adjustments and improvements
(1) In general
The Secretary shall disclose in a consumer-tested format, upon completion of the Free Application for Federal Student Aid under this section, that the student may, on a case-by-case basis, qualify for an adjustment under
(A) examples of the special circumstances under which a student or family member may qualify for such adjustment or determination of independence; and
(B) additional information regarding the steps a student or family member may take in order to seek an adjustment under
(2) Consumer testing
(A) In general
Not later than 9 months after December 27, 2020, the Secretary shall begin consumer testing the design of the Free Application for Federal Student Aid under this section with prospective first-generation college students, representatives of students (including low-income students, English learners, first-generation college students, adult students, veterans, servicemembers, and prospective students), students' families (including low-income families, families with English learners, families with first-generation college students, and families with prospective students), institutions of higher education, secondary school and postsecondary counselors, and nonprofit consumer groups.
(B) Updates
For award year 2024–2025 and at least each fourth succeeding award year thereafter, the Secretary shall update the design of the Free Application for Federal Student Aid based on additional consumer testing with the populations described in subparagraph (A) in order to improve the usability and accessibility of the application.
(3) Accessibility of the FAFSA
The Secretary shall—
(A) in conjunction with the Bureau of the Census, determine the most common languages spoken by English learner students and their parents in the United States;
(B) develop and make publicly available versions of the Free Application for Federal Student Aid form in not fewer than 11 of the most common languages determined under subparagraph (A) and make such versions available and accessible to applicants in paper and electronic formats; and
(C) ensure that the Free Application for Federal Student Aid is available in formats accessible to individuals with disabilities and compliant with the most recent Web Content Accessibility Guidelines, or successor guidelines.
(4) Reapplication in a succeeding academic year
In order to streamline an applicant's experience in applying for financial aid, the Secretary shall allow an applicant who electronically applies for financial assistance under this subchapter for an academic year subsequent to an academic year for which such applicant applied for financial assistance under this subchapter to automatically electronically import all of the applicant's (including parents', guardians', or spouses', as applicable) identifying, demographic, and school data from the previous application and to update such information to reflect any circumstances that have changed.
(5) Technology accessibility
The Secretary shall make the application under this section available through prevalent technology. Such technology shall, at a minimum, enable applicants to—
(A) save data; and
(B) submit the application under this subchapter to the Secretary through such technology.
(6) Verification burden
The Secretary shall—
(A) to the maximum extent practicable, streamline and simplify the process of verification for applicants for Federal financial aid;
(B) in establishing policies and procedures to verify applicants' eligibility for Federal financial aid, consider—
(i) the burden placed on low-income applicants;
(ii) the risk to low-income applicants of failing to complete the application, enroll in college, or complete a postsecondary credential as a result of being selected for verification;
(iii) the effectiveness of the policies and procedures in preventing overpayments; and
(iv) the reasons for the source of any improper payments; and
(C) issue a public report not less often than annually that includes the number and percentage of applicants subject to verification, whether the applicants ultimately received Federal financial aid disbursements, the extent to which the student aid index changed for such applicants as a result of verification, and the extent to which such applicants' eligibility for Federal financial aid under this subchapter changed.
(7) Studies
The Secretary shall periodically conduct studies on—
(A) whether the Free Application for Federal Student Aid is a barrier to college enrollment by examining—
(i) the effect of States requiring additional information specified in clauses (ii) and (iii) of subsection (a)(6)(B) on the determination of State financial aid awards, including—
(I) how much financial aid awards would change if the additional information were not required; and
(II) the number of students who started but did not finish the Free Application for Federal Student Aid, compared to the baseline year of 2021; and
(ii) the number of students who—
(I) started a Free Application for Federal Student Aid but did not receive financial assistance under this subchapter for the applicable academic year; and
(II) if available, did not enroll in an institution of higher education in the applicable academic year;
(B) the most common barriers faced by applicants in completing the Free Application for Federal Student Aid; and
(C) the most common reasons that students and families do not fill out the Free Applications for Federal Student Aid.
(c) Data and information
(1) In general
The Secretary shall publish data in a publicly accessible manner—
(A) annually on the total number of Free Applications for Federal Student Aid submitted by application cycle, disaggregated by demographic characteristics, type of institution or institutions of higher education to which the applicant applied, the applicant's State of legal residence, and high school and public school district;
(B) quarterly on the total number of Free Applications for Federal Student Aid submitted by application cycle, disaggregated by type of institution or institutions of higher education to which the applicant applied, the applicant's State of legal residence, and high school and public school district;
(C) weekly on the total number of Free Applications for Federal Student Aid submitted, disaggregated by high school and public school district; and
(D) annually on the number of individuals who apply for federal financial aid pursuant to this section who indicated that they are—
(i) an unaccompanied homeless youth or unaccompanied, at risk of homelessness, and self-supporting; or
(ii) a foster care youth.
(2) Contents
The data described in paragraph (1)(D) with respect to homeless youth shall include, at a minimum, for each application cycle—
(A) the total number of all applicants who were determined to be individuals described in
(B) the number of applicants described in subparagraph (A), disaggregated—
(i) by State; and
(ii) by the sources of determination as described in
(3) Data sharing
The Secretary may enter into data sharing agreements with the appropriate Federal or State agencies to conduct outreach regarding, and connect applicants directly with, the means-tested Federal benefit programs described in subsection (a)(2)(B)(ii)(XVII) for which the applicants may be eligible.
(d) Ensuring form usability
(1) Signature
Notwithstanding any other provision of this subchapter, the Secretary may permit the Free Application for Federal Student Aid to be submitted without a signature, if a signature is subsequently submitted by the applicant, or if the applicant uses an access device provided by the Secretary.
(2) Free preparation authorized
Notwithstanding any other provision of this subchapter, an applicant may use a preparer for consultative or preparation services for the completion of the Free Application for Federal Student Aid without charging a fee to the applicant if the preparer—
(A) includes, at the time the application is submitted to the Department, the name, address or employer's address, social security number or employer identification number, and organizational affiliation of the preparer on the applicant's form;
(B) is subject to the same penalties as an applicant for purposely giving false or misleading information in the application;
(C) clearly informs each individual upon initial contact, that the Free Application for Federal Student Aid is a free form that may be completed without professional assistance; and
(D) does not produce, use, or disseminate any other form for the purpose of applying for Federal financial aid other than the Free Application for Federal Student Aid developed by the Secretary under this section.
(3) Charges to students and parents for use of forms prohibited
The need for and eligibility of a student for financial assistance under this subchapter may be determined only by using the Free Application for Federal Student Aid developed by the Secretary under this section. Such application shall be produced, distributed, and processed by the Secretary, and no parent or student shall be charged a fee by the Secretary, a contractor, a third-party servicer or private software provider, or any other public or private entity for the collection, processing, or delivery of Federal financial aid through the use of such application. No data collected on a form for which a fee is charged shall be used to complete the Free Application for Federal Student Aid prescribed under this section, except that a Federal or State income tax form prepared by a paid income tax preparer or preparer service for the primary purpose of filing a Federal or State income tax return may be used to complete the Free Application for Federal Student Aid prescribed under this section.
(4) Application processing cycle
(A) In general
The Secretary shall enable applicants to submit a Free Application for Federal Student Aid developed under this section and initiate the processing of such application, not later than October 1 prior to the applicant's planned year of enrollment.
(B) Certification and testimony requirements
The Secretary shall, with respect to each application processing cycle, prior to the initiation of such processing cycle—
(i) on a date that is not later than September 1—
(I) certify to the authorizing committees that the Department will meet the October 1 deadline specified in subparagraph (A) for such processing cycle; or
(II) certify to such committees that the Department will not meet such deadline; and
(ii) in the case of a certification described in clause (i)(II), on a date that is not later than September 30, testify before the authorizing committees on—
(I) the anticipated failure to meet such deadline; and
(II) the financial impact such failure will have on students and families.
(5) Early estimates
The Secretary shall maintain an electronic method for applicants to enter income and family size information to calculate a non-binding estimate of the applicant's Federal financial aid available under this subchapter and shall place such calculator on a prominent location at the beginning of the Free Application for Federal Student Aid.
(6) Additional forms
Notwithstanding any other provision of this subchapter, an institution may not condition the packaging or receipt of Federal financial aid on the completion of additional requests for financial information beyond the Free Application for Federal Student Aid, unless such information is required for verification, a determination of independence, or professional judgement.
(
Editorial Notes
References in Text
The Social Security Act, referred to in subsec. (a)(2)(B)(ii)(XVII)(aa), (dd), (ff), is act Aug. 14, 1935, ch. 531,
The Food and Nutrition Act of 2008, referred to in subsec. (a)(2)(B)(ii)(XVII)(bb), is
The Richard B. Russell National School Lunch Act, referred to in subsec. (a)(2)(B)(ii)(XVII)(cc), is act June 4, 1946, ch. 281,
Prior Provisions
A prior section 1090,
Amendments
2024—Subsec. (d)(4).
2022—Subsecs. (a)(1), (b)(2)(B).
2020—
2010—Subsec. (e)(3)(A)(ii).
2009—Subsec. (a)(3)(C).
Subsec. (e)(8)(A).
2008—Subsec. (a).
Subsec. (b).
Subsec. (c).
Subsec. (d).
Subsec. (e).
Subsecs. (f) to (h).
1998—Subsec. (a).
Subsec. (a)(1).
Subsec. (a)(2).
Subsec. (a)(3).
Subsec. (a)(5) to (7).
Subsec. (b)(1).
Subsec. (c).
Subsec. (d).
Subsec. (f).
1993—Subsec. (a)(1).
Subsec. (a)(2).
Subsec. (a)(3).
Subsecs. (d), (e).
Subsec. (f).
Subsec. (g).
1992—Subsec. (a).
Subsec. (b).
Subsec. (d).
Subsec. (e).
Subsecs. (f), (g).
1987—Subsec. (a)(1).
Subsec. (a)(2).
Subsecs. (b) to (f).
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Amendment by
Effective Date of 2010 Amendment
Amendment by
Effective Date of 2009 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
Effective Date
Section effective Oct. 17, 1986, except as otherwise provided, see section 2 of
Subsec. (e) of this section applicable to student assistance awarded for periods of enrollment beginning on or after July 1, 1987, see section 407(b) of
Reports
[Effective date of title VII of div. FF of
Identification of Foster Youth on FAFSA
"(1) modify the Free Application for Federal Student Aid described in section 483 of the HEA [Higher Education Act of 1965,
"(2) utilize such identification as a tool to notify students who are foster youth or were in the foster care system of their potential eligibility for Federal student aid, including postsecondary education programs through the John H. Chafee Foster Care Independence Program and any other Federal programs under which such students may be eligible to receive assistance."
Similar provisions were contained in the following prior appropriation act:
Delayed Implementation of EZ FAFSA
"(1) In subsection (a) of such section—
"(A) subparagraphs (A)(i) and (B) of paragraph (2);
"(B) in paragraph (3)—
"(i) the second sentence of subparagraph (A);
"(ii) clauses (i) and (ii) of subparagraph (B); and
"(iii) subparagraph (C);
"(C) paragraph (4)(A)(iv); and
"(D) paragraph (5)(E).
"(2) Subsection (h) of such section."
1 So in original. Probably should be followed by a period.
2 So in original. The second closing parenthesis probably should not appear.
3 So in original. Probably should be followed by a closing parenthesis.
4 So in original. Probably should be "section 6103(l)(13)".
§1091. Student eligibility
(a) In general
In order to receive any grant, loan, or work assistance under this subchapter, a student must—
(1) be enrolled or accepted for enrollment in a degree, certificate, or other program (including a program of study abroad approved for credit by the eligible institution at which such student is enrolled) leading to a recognized educational credential at an institution of higher education that is an eligible institution in accordance with the provisions of
(2) if the student is presently enrolled at an institution, be maintaining satisfactory progress in the course of study the student is pursuing in accordance with the provisions of subsection (c);(q)
(3) not owe a refund on grants previously received at any institution under this subchapter, or be in default on any loan from a student loan fund at any institution provided for in part E, or a loan made, insured, or guaranteed by the Secretary under this subchapter for attendance at any institution;
(4) file with the Secretary, as part of the original financial aid application process, a certification, which need not be notarized, but which shall include—
(A) a statement of educational purpose stating that the money attributable to such grant, loan, or loan guarantee will be used solely for expenses related to attendance or continued attendance at such institution; and
(B) such student's social security number;
(5) be a citizen or national of the United States, a permanent resident of the United States, or able to provide evidence from the Immigration and Naturalization Service that he or she is in the United States for other than a temporary purpose with the intention of becoming a citizen or permanent resident; and
(6) if the student has been convicted of, or has pled nolo contendere or guilty to, a crime involving fraud in obtaining funds under this subchapter, have completed the repayment of such funds to the Secretary, or to the holder in the case of a loan under this subchapter obtained by fraud.
(b) Eligibility for student loans
(1) In order to be eligible to receive any loan under this subchapter (other than a loan under
(A)(i) have received a determination of eligibility or ineligibility for a Pell Grant under such subpart 1 for such period of enrollment; and (ii) if determined to be eligible, have filed an application for a Pell Grant for such enrollment period; or
(B) have (i) filed an application with the Pell Grant processor for such institution for such enrollment period, and (ii) received from the financial aid administrator of the institution a preliminary determination of the student's eligibility or ineligibility for a grant under such subpart 1.
(2) In order to be eligible to receive any loan under section 1078–1 1 of this title for any period of enrollment, a student shall—
(A) have received a determination of need for a loan under
(B) if determined to have need for a loan under
(C) has applied for a loan under
(3) A student who—
(A) is carrying at least one-half the normal full-time work load for the course of study that the student is pursuing, as determined by an eligible institution, and
(B) is enrolled in a course of study necessary for enrollment in a program leading to a degree or certificate,
shall be, notwithstanding paragraph (1) of subsection (a), eligible to apply for loans under part B or D of this subchapter. The eligibility described in this paragraph shall be restricted to one 12-month period.
(4) A student who—
(A) is carrying at least one-half the normal full-time work load for the course of study the student is pursuing, as determined by the institution, and
(B) is enrolled or accepted for enrollment in a program at an eligible institution necessary for a professional credential or certification from a State that is required for employment as a teacher in an elementary or secondary school in that State,
shall be, notwithstanding paragraph (1) of subsection (a), eligible to apply for loans under part B, D, or E or work-study assistance under part C of this subchapter.
(5) Notwithstanding any other provision of this subsection, no incarcerated student is eligible to receive a loan under this subchapter.
(c) Satisfactory progress
(1) For the purpose of subsection (a)(2), a student is maintaining satisfactory progress if—
(A) the institution at which the student is in attendance, reviews the progress of the student at the end of each academic year, or its equivalent, as determined by the institution, and
(B) the student has a cumulative C average, or its equivalent or academic standing consistent with the requirements for graduation, as determined by the institution, at the end of the second such academic year.
(2) Whenever a student fails to meet the eligibility requirements of subsection (a)(2) as a result of the application of this subsection and subsequent to that failure the student has academic standing consistent with the requirements for graduation, as determined by the institution, for any grading period, the student may, subject to this subsection, again be eligible under subsection (a)(2) for a grant, loan, or work assistance under this subchapter.
(3) Any institution of higher education at which the student is in attendance may waive the provisions of paragraph (1) or paragraph (2) of this subsection for undue hardship based on—
(A) the death of a relative of the student,
(B) the personal injury or illness of the student, or
(C) special circumstances as determined by the institution.
(d) Students who are not high school graduates
(1) Student eligibility
In order for a student who does not have a certificate of graduation from a school providing secondary education, or the recognized equivalent of such certificate, to be eligible for any assistance under subparts 1, 3, and 4 of part A and parts B, C, D, and E of this subchapter, the student shall meet the requirements of one of the following subparagraphs:
(A) The student is enrolled in an eligible career pathway program and meets one of the following standards:
(i) The student shall take an independently administered examination and shall achieve a score, specified by the Secretary, demonstrating that such student can benefit from the education or training being offered. Such examination shall be approved by the Secretary on the basis of compliance with such standards for development, administration, and scoring as the Secretary may prescribe in regulations.
(ii) The student shall be determined as having the ability to benefit from the education or training in accordance with such process as the State shall prescribe. Any such process described or approved by a State for the purposes of this section shall be effective 6 months after the date of submission to the Secretary unless the Secretary disapproves such process. In determining whether to approve or disapprove such process, the Secretary shall take into account the effectiveness of such process in enabling students without secondary school diplomas or the equivalent thereof to benefit from the instruction offered by institutions utilizing such process, and shall also take into account the cultural diversity, economic circumstances, and educational preparation of the populations served by the institutions.
(iii) The student shall be determined by the institution of higher education as having the ability to benefit from the education or training offered by the institution of higher education upon satisfactory completion of 6 credit hours or the equivalent coursework that are applicable toward a degree or certificate offered by the institution of higher education.
(B) The student has completed a secondary school education in a home school setting that is treated as a home school or private school under State law.
(2) Eligible career pathway program
In this subsection, the term "eligible career pathway program" means a program that combines rigorous and high-quality education, training, and other services that—
(A) aligns with the skill needs of industries in the economy of the State or regional economy involved;
(B) prepares an individual to be successful in any of a full range of secondary or postsecondary education options, including apprenticeships registered under the Act of August 16, 1937 (commonly known as the "National Apprenticeship Act";
(C) includes counseling to support an individual in achieving the individual's education and career goals;
(D) includes, as appropriate, education offered concurrently with and in the same context as workforce preparation activities and training for a specific occupation or occupational cluster;
(E) organizes education, training, and other services to meet the particular needs of an individual in a manner that accelerates the educational and career advancement of the individual to the extent practicable;
(F) enables an individual to attain a secondary school diploma or its recognized equivalent, and at least 1 recognized postsecondary credential; and
(G) helps an individual enter or advance within a specific occupation or occupational cluster.
(e) Certification for GSL eligibility
Each eligible institution may certify student eligibility for a loan by an eligible lender under part B of this subchapter prior to completing the review for accuracy of the information submitted by the applicant required by regulations issued under this subchapter, if—
(1) checks for the loans are mailed to the eligible institution prior to disbursements;
(2) the disbursement is not made until the review is complete; and
(3) the eligible institution has no evidence or documentation on which the institution may base a determination that the information submitted by the applicant is incorrect.
(f) Loss of eligibility for violation of loan limits
(1) No student shall be eligible to receive any grant, loan, or work assistance under this subchapter if the eligible institution determines that the student fraudulently borrowed in violation of the annual loan limits under part B, part D, or part E of this subchapter in the same academic year, or if the student fraudulently borrowed in excess of the aggregate maximum loan limits under such part B, part D, or part E.
(2) If the institution determines that the student inadvertently borrowed amounts in excess of such annual or aggregate maximum loan limits, such institution shall allow the student to repay any amount borrowed in excess of such limits prior to certifying the student's eligibility for further assistance under this subchapter.
(g) Verification of immigration status
(1) In general
The Secretary shall implement a system under which the statements and supporting documentation, if required, of an individual declaring that such individual is in compliance with the requirements of subsection (a)(5) shall be verified prior to the individual's receipt of a grant, loan, or work assistance under this subchapter.
(2) Special rule
The documents collected and maintained by an eligible institution in the admission of a student to the institution may be used by the student in lieu of the documents used to establish both employment authorization and identity under
(3) Verification mechanisms
The Secretary is authorized to verify such statements and supporting documentation through a data match, using an automated or other system, with other Federal agencies that may be in possession of information relevant to such statements and supporting documentation.
(4) Review
In the case of such an individual who is not a citizen or national of the United States, if the statement described in paragraph (1) is submitted but the documentation required under paragraph (2) is not presented or if the documentation required under paragraph (2)(A) is presented but such documentation is not verified under paragraph (3)—
(A) the institution—
(i) shall provide a reasonable opportunity to submit to the institution evidence indicating a satisfactory immigration status, and
(ii) may not delay, deny, reduce, or terminate the individual's eligibility for the grant, loan, or work assistance on the basis of the individual's immigration status until such a reasonable opportunity has been provided; and
(B) if there are submitted documents which the institution determines constitute reasonable evidence indicating such status—
(i) the institution shall transmit to the Immigration and Naturalization Service either photostatic or other similar copies of such documents, or information from such documents, as specified by the Immigration and Naturalization Service, for official verification,
(ii) pending such verification, the institution may not delay, deny, reduce, or terminate the individual's eligibility for the grant, loan, or work assistance on the basis of the individual's immigration status, and
(iii) the institution shall not be liable for the consequences of any action, delay, or failure of the Service to conduct such verification.
(h) Limitations of enforcement actions against institutions
The Secretary shall not take any compliance, disallowance, penalty, or other regulatory action against an institution of higher education with respect to any error in the institution's determination to make a student eligible for a grant, loan, or work assistance based on citizenship or immigration status—
(1) if the institution has provided such eligibility based on a verification of satisfactory immigration status by the Immigration and Naturalization Service,
(2) because the institution, under subsection (g)(4)(A)(i), was required to provide a reasonable opportunity to submit documentation, or
(3) because the institution, under subsection (g)(4)(B)(i), was required to wait for the response of the Immigration and Naturalization Service to the institution's request for official verification of the immigration status of the student.
(i) Validity of loan guarantees for loan payments made before immigration status verification completed
Notwithstanding subsection (h),1 if—
(1) a guaranty is made under this subchapter for a loan made with respect to an individual,
(2) at the time the guaranty is entered into, the provisions of subsection (h) 1 had been complied with,
(3) amounts are paid under the loan subject to such guaranty, and
(4) there is a subsequent determination that, because of an unsatisfactory immigration status, the individual is not eligible for the loan,
the official of the institution making the determination shall notify and instruct the entity making the loan to cease further payments under the loan, but such guaranty shall not be voided or otherwise nullified with respect to such payments made before the date the entity receives the notice.
(j) Repealed. Pub. L. 110–315, title IV, §485(a)(4), Aug. 14, 2008, 122 Stat. 3288
(k) Special rule for correspondence courses
A student shall not be eligible to receive grant, loan, or work assistance under this subchapter for a correspondence course unless such course is part of a program leading to an associate, bachelor or graduate degree.
(l) Courses offered through distance education
(1) Relation to correspondence courses
(A) In general
A student enrolled in a course of instruction at an institution of higher education that is offered principally through distance education and leads to a recognized certificate, or recognized associate, recognized baccalaureate, or recognized graduate degree, conferred by such institution, shall not be considered to be enrolled in correspondence courses.
(B) Exception
An institution of higher education referred to in subparagraph (A) shall not include an institution or school described in
(2) Reductions of financial aid
A student's eligibility to receive grants, loans, or work assistance under this subchapter shall be reduced if a financial aid officer determines under the discretionary authority provided in
(3) Special rule
For award years beginning prior to July 1, 2008, the Secretary shall not take any compliance, disallowance, penalty, or other action based on a violation of this subsection against a student or an eligible institution when such action arises out of such institution's prior award of student assistance under this subchapter if the institution demonstrates to the satisfaction of the Secretary that its course of instruction would have been in conformance with the requirements of this subsection.
(m) Students with a first baccalaureate or professional degree
A student shall not be ineligible for assistance under parts B, C, D, and E of this subchapter because such student has previously received a baccalaureate or professional degree.
(n) Study abroad
Nothing in this chapter shall be construed to limit or otherwise prohibit access to study abroad programs approved by the home institution at which a student is enrolled. An otherwise eligible student who is engaged in a program of study abroad approved for academic credit by the home institution at which the student is enrolled shall be eligible to receive grant, loan, or work assistance under this subchapter, without regard to whether such study abroad program is required as part of the student's degree program.
(o) Verification of social security number
The Secretary of Education, in cooperation with the Commissioner of the Social Security Administration, shall verify any social security number provided by a student to an eligible institution under subsection (a)(4) and shall enforce the following conditions:
(1) Except as provided in paragraphs (2) and (3), an institution shall not deny, reduce, delay, or terminate a student's eligibility for assistance under this part because social security number verification is pending.
(2) If there is a determination by the Secretary that the social security number provided to an eligible institution by a student is incorrect, the institution shall deny or terminate the student's eligibility for any grant, loan, or work assistance under this subchapter until such time as the student provides documented evidence of a social security number that is determined by the institution to be correct.
(3) If there is a determination by the Secretary that the social security number provided to an eligible institution by a student is incorrect, and a correct social security number cannot be provided by such student, and a loan has been guaranteed for such student under part B of this subchapter, the institution shall notify and instruct the lender and guaranty agency making and guaranteeing the loan, respectively, to cease further disbursements of the loan, but such guaranty shall not be voided or otherwise nullified with respect to such disbursements made before the date that the lender and the guaranty agency receives such notice.
(4) Nothing in this subsection shall permit the Secretary to take any compliance, disallowance, penalty, or other regulatory action against—
(A) any institution of higher education with respect to any error in a social security number, unless such error was a result of fraud on the part of the institution; or
(B) any student with respect to any error in a social security number, unless such error was a result of fraud on the part of the student.
(p) Use of income data with IRS
The Secretary, in cooperation with the Secretary of the Treasury, shall fulfill the data transfer requirements under
(q) Students with intellectual disabilities
(1) Definitions
In this subsection the terms "comprehensive transition and postsecondary program for students with intellectual disabilities" and "student with an intellectual disability" have the meanings given the terms in
(2) Requirements
Notwithstanding subsections (a), (c), and (d), in order to receive any grant or work assistance under
(A) be enrolled or accepted for enrollment in a comprehensive transition and postsecondary program for students with intellectual disabilities at an institution of higher education;
(B) be maintaining satisfactory progress in the program as determined by the institution, in accordance with standards established by the institution; and
(C) meet the requirements of paragraphs (3), (4), (5), and (6) of subsection (a).
(3) Authority
Notwithstanding any other provision of law unless such provision is enacted with specific reference to this section, the Secretary is authorized to waive any statutory provision applicable to the student financial assistance programs under
(4) Regulations
Notwithstanding regulations applicable to grant or work assistance awards made under
(r) Data analysis on access to Federal student aid for certain populations
(1) Development of the system
Within one year of August 14, 2008, the Secretary shall analyze data from the FAFSA containing information regarding the number, characteristics, and circumstances of students denied Federal student aid based on a drug conviction while receiving Federal aid.
(2) Results from analysis
The results from the analysis of such information shall be made available on a continuous basis via the Department website and the Digest of Education Statistics.
(3) Data updating
The data analyzed under this subsection shall be updated at the beginning of each award year and at least one additional time during such award year.
(4) Report to Congress
The Secretary shall prepare and submit to the authorizing committees, in each fiscal year, a report describing the results obtained by the establishment and operation of the data system authorized by this subsection.
(s) Exception to required registration with the Selective Service System
Notwithstanding
(t) Confined or incarcerated individuals
(1) Definitions
In this subsection:
(A) Confined or incarcerated individual
The term "confined or incarcerated individual"—
(i) means an individual who is serving a criminal sentence in a Federal, State, or local penal institution, prison, jail, reformatory, work farm, or other similar correctional institution; and
(ii) does not include an individual who is in a halfway house or home detention or is sentenced to serve only weekends.
(B) Prison education program
The term "prison education program" means an education or training program that—
(i) is an eligible program under this subchapter offered by an institution of higher education (as defined in
(ii) is offered by an institution that has been approved to operate in a correctional facility by the appropriate State department of corrections or other entity that is responsible for overseeing correctional facilities, or by the Bureau of Prisons;
(iii) has been determined by the appropriate State department of corrections or other entity that is responsible for overseeing correctional facilities, or by the Bureau of Prisons, to be operating in the best interest of students, the determination of which shall be made by the State department of corrections or other entity or by the Bureau of Prisons, respectively, and may be based on—
(I) rates of confined or incarcerated individuals continuing their education post-release;
(II) job placement rates for such individuals;
(III) earnings for such individuals;
(IV) rates of recidivism for such individuals;
(V) the experience, credentials, and rates of turnover or departure of instructors;
(VI) the transferability of credits for courses available to confined or incarcerated individuals and the applicability of such credits toward related degree or certificate programs; or
(VII) offering relevant academic and career advising services to participating confined or incarcerated individuals while they are confined or incarcerated, in advance of reentry, and upon release;
(iv) offers transferability of credits to at least 1 institution of higher education (as defined in
(v) is offered by an institution that has not been subject, during the 5 years preceding the date of the determination, to—
(I) any suspension, emergency action, or termination of programs under this subchapter;
(II) any adverse action by the institution's accrediting agency or association; or
(III) any action by the State to revoke a license or other authority to operate;
(vi) satisfies any applicable educational requirements for professional licensure or certification, including licensure or certification examinations needed to practice or find employment in the sectors or occupations for which the program prepares the individual, in the State in which the correctional facility is located or, in the case of a Federal correctional facility, in the State in which most of the individuals confined or incarcerated in such facility will reside upon release; and
(vii) does not offer education that is designed to lead to licensure or employment for a specific job or occupation in the State if such job or occupation typically involves prohibitions on the licensure or employment of formerly incarcerated individuals in the State in which the correctional facility is located, or, in the case of a Federal correctional facility, in the State in which most of the individuals confined or incarcerated in such facility will reside upon release.
(2) Technical assistance
The Secretary, in collaboration with the Attorney General, shall provide technical assistance and guidance to the Bureau of Prisons, State departments of corrections, and other entities that are responsible for overseeing correctional facilities in making determinations under paragraph (1)(B)(iii).
(3) Federal Pell Grant eligibility
Notwithstanding subsection (a), in order for a confined or incarcerated individual who otherwise meets the eligibility requirements of this subchapter to be eligible to receive a Federal Pell Grant under
(4) Evaluation
(A) In general
Not later than 1 year after December 27, 2020, in order to evaluate and improve the impact of activities supported under this subsection, the Secretary, in partnership with the Director of the Institute of Education Sciences, shall award 1 or more grants or contracts to, or enter into cooperative agreements with, experienced public and private institutions and organizations to enable the institutions and organizations to conduct an external evaluation that shall—
(i) assess the ability of confined or incarcerated individuals to access and complete the Free Application for Federal Student Aid;
(ii) examine in-custody outcomes and post-release outcomes related to providing Federal Pell Grants to confined or incarcerated individuals, including—
(I) attainment of a postsecondary degree or credential;
(II) safety in penal institutions with prison education programs;
(III) the size of waiting lists for prison education programs;
(IV) the extent to which such individuals continue their education post-release;
(V) employment and earnings outcomes for such individuals; and
(VI) rates of recidivism for such individuals;
(iii) track individuals who received Federal Pell Grants under subpart 1 of part A at 1, 3, and 5 years after the individuals' release from confinement or incarceration; and
(iv) examine the extent to which institutions provide re-entry or relevant career services to participating confined or incarcerated individuals as part of the prison education program and the efficacy of such services, if offered.
(B) Report
Beginning not later than 1 year after the Secretary awards the grant, contract, or cooperative agreement described in subparagraph (A) and annually thereafter, each institution of higher education operating a prison education program under this subsection shall submit a report to the Secretary on activities assisted and students served under this subsection, which shall include the information, as applicable, contained in clauses (i) through (iv) of subparagraph (A).
(5) Report
Not later than 1 year after December 27, 2020, and on at least an annual basis thereafter, the Secretary shall submit to the authorizing committees, and make publicly available on the website of the Department, a report on the—
(A) impact of this subsection which shall include, at a minimum—
(i) the names and types of institutions of higher education offering prison education programs at which confined or incarcerated individuals are enrolled and receiving Federal Pell Grants;
(ii) the number of confined or incarcerated individuals receiving Federal Pell Grants through each prison education program;
(iii) the amount of Federal Pell Grant expenditures for each prison education program;
(iv) the average amount of Federal Pell Grant expenditures per full-time equivalent students in a prison education program compared to the average amount of Federal Pell Grant expenditures per full-time equivalent students not in prison education programs;
(v) the demographics of confined or incarcerated individuals receiving Federal Pell Grants;
(vi) the cost of attendance for such individuals;
(vii) the mode of instruction (such as distance education, in-person instruction, or a combination of such modes) for each prison education program;
(viii) information on the academic outcomes of such individuals (such as credits attempted and earned, and credential and degree completion) and any information available from student satisfaction surveys conducted by the applicable institution or correctional facility;
(ix) information on post-release outcomes of such individuals, including, to the extent practicable, continued postsecondary enrollment, earnings, credit transfer, and job placement;
(x) rates of recidivism for confined or incarcerated individuals receiving Federal Pell Grants;
(xi) information on transfers of confined or incarcerated individuals between prison education programs;
(xii) the most common programs and courses offered in prison education programs; and
(xiii) rates of instructor turnover or departure for courses offered in prison education programs;
(B) results of each prison education program at each institution of higher education, including the information described in clauses (ii) through (xiii) of subparagraph (A); and
(C) findings regarding best practices with respect to prison education programs.
(
Editorial Notes
References in Text
Act of August 16, 1937, commonly known as the National Apprenticeship Act, referred to in subsec. (d)(2)(B), is act Aug. 16, 1937, ch. 663,
Section 171, referred to in subsec. (d)(2)(B), may have been intended as a reference to section 171 of the Workforce Innovation and Opportunity Act,
Subsection (h), referred to in subsec. (i), was redesignated subsec. (g) of this section by
Prior Provisions
A prior section 1091,
Another prior section 1091,
Amendments
2020—Subsecs. (n) to (t).
2019—Subsec. (q).
2015—Subsec. (d)(2).
2014—Subsec. (d).
2011—Subsec. (d).
2009—Subsec. (a)(4).
Subsec. (b)(1)(B).
Subsec. (f)(1).
Subsec. (h)(2), (3).
Subsec. (n).
2008—Subsec. (a)(4)(B).
Subsec. (a)(5).
Subsec. (b)(1).
Subsec. (d)(4).
Subsec. (j).
"(1) is a citizen of any one of the Freely Associated States and attends an institution of higher education in a State or a public or nonprofit private institution of higher education in the Freely Associated States; or
"(2) meets the requirements of subsection (a)(5) of this section and attends a public or nonprofit private institution of higher education in any one of the Freely Associated States."
Subsec. (l).
Subsec. (q).
Subsec. (r)(2)(B), (C).
Subsec. (s).
Subsec. (t).
2006—Subsec. (a)(6).
Subsec. (l)(1)(A).
Subsec. (l)(1)(B).
"(i) that is not an institute or school described in
"(ii) for which at least 50 percent of the programs of study offered by the institution lead to the award of a recognized associate, baccalaureate, or graduate degree."
Subsec. (l)(1)(B)(i).
Subsec. (q)(1).
Subsec. (r)(1).
1998—Subsec. (a)(4).
Subsec. (a)(5).
Subsec. (d).
Subsec. (j).
"(1) is a citizen of the Federated States of Micronesia, the Republic of the Marshall Islands, or the Republic of Palau, and attends an institution of higher education in a State or a public or nonprofit private institution of higher education in the Federated States of Micronesia, the Republic of the Marshall Islands, or the Republic of Palau; or
"(2) meets the requirements of subsection (a)(5) of this section and attends a public or nonprofit private institution of higher education in the Federated States of Micronesia, the Republic of the Marshall Islands, or the Republic of Palau."
Subsec. (l)(1).
Subsec. (q).
Subsec. (r).
1996—Subsec. (g)(4)(B)(i).
1994—Subsec. (j).
1993—Subsec. (a)(4)(B).
Subsec. (a)(5).
Subsec. (b)(2)(C).
Subsec. (b)(3).
Subsec. (f).
Subsec. (g).
Subsec. (h).
Subsec. (i).
Subsecs. (j) to (m).
Subsec. (n).
Subsecs. (o), (p).
Subsec. (q).
1992—Subsec. (a)(1).
Subsec. (a)(4).
Subsec. (b)(4).
Subsec. (b)(5).
Subsec. (d).
Subsec. (f).
Subsec. (g).
Subsec. (h).
Subsec. (k).
Subsecs. (l) to (q).
1991—Subsec. (a)(1).
Subsec. (d).
"(1) receive the general education diploma prior to the student's certification or graduation from the program of study, or by the end of the first year of the course of study, whichever is earlier;
"(2) be counseled prior to admission and be enrolled in and successfully complete the institutionally prescribed program of remedial or developmental education not to exceed one academic year or its equivalent; or
"(3)(A) be administered a nationally recognized, standardized, or industry developed test, subject to criteria developed by the appropriate accrediting association, measuring the applicant's aptitude to complete successfully the program to which the applicant has applied; and
"(B) with respect to applicants who are unable to satisfy the institutions' admissions testing requirements specified in subparagraph (A), be enrolled in and successfully complete an institutionally prescribed program or course of remedial or developmental education not to exceed one academic year or its equivalent.
In order to be eligible for assistance a student cannot be enrolled in either an elementary or a secondary school."
Subsec. (k).
1990—Subsec. (d).
1988—Subsec. (a)(1).
Subsec. (b)(1).
Subsec. (b)(1)(A).
Subsec. (b)(2), (3).
Subsec. (b)(4).
Subsecs. (c) to (e), (h) to (j).
1987—Subsec. (a)(1).
Subsec. (b).
Subsec. (d).
"(A) be counseled prior to admissions or be administered a nationally recognized standardized or industry developed test, subject to criteria developed by the appropriate accrediting association, measuring the applicant's aptitude to complete successfully the program to which he has applied; and
"(B) with respect to applicants who are unable to satisfy the institution's admissions testing requirements specified in subparagraph (A), be enrolled in an institutionally prescribed program or course of remedial or developmental education, not to exceed one academic year or its equivalent."
Subsec. (f).
1986—Subsec. (c).
Subsec. (d).
Subsec. (e).
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Amendment by
Amendment by
Effective Date of 2014 Amendment
Effective Date of 2011 Amendment
Amendment by
Effective Date of 2009 Amendment
Amendment by
Effective Date of 2008 Amendment
Effective Date of 2006 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by section 483(a)–(e) of
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by section 484(a), (b)(1)(B), and (c) to (h) of
Section 484(i) of
Effective Date of 1991 Amendment
Amendment by
Effective Date of 1988 Amendments
Amendment by
"(a)
"(b)
"(2) The amendments made by sections 6, 7, 8, 9, 10, 11, and 12 [amending this section,
Effective Date of 1987 Amendment
Amendment by
Effective Date of 1986 Amendment
Amendment by
Effective Date
Section effective Oct. 17, 1986, except as otherwise provided, see section 2 of
"(1) Sections 483(e) and 484(d) of the Act [
"(2) The changes made in section 484(a)(1) of the Act [
"(3) Section 484(c) of the Act [
"(4) Sections 484(f), 485(b), and 487(a)(10) of the Act [
Construction of 1991 Amendment
For repeal of section 3005 of
Abolition of Immigration and Naturalization Service and Transfer of Functions
For abolition of Immigration and Naturalization Service, transfer of functions, and treatment of related references, see note set out under
Satisfactory Progress
Denial of Student Assistance to Certain Noncitizens
Financial Aid to Students Not Deemed Income or Resources for Purposes of Certain Social Security Act Programs
1 See References in Text note below.
§1091a. Statute of limitations, and State court judgments
(a) In general
(1) It is the purpose of this subsection to ensure that obligations to repay loans and grant overpayments are enforced without regard to any Federal or State statutory, regulatory, or administrative limitation on the period within which debts may be enforced.
(2) Notwithstanding any other provision of statute, regulation, or administrative limitation, no limitation shall terminate the period within which suit may be filed, a judgment may be enforced, or an offset, garnishment, or other action initiated or taken by—
(A) an institution that receives funds under this subchapter that is seeking to collect a refund due from a student on a grant made, or work assistance awarded, under this subchapter;
(B) a guaranty agency that has an agreement with the Secretary under
(C) an institution that has an agreement with the Secretary pursuant to
(D) the Secretary, the Attorney General, or the administrative head of another Federal agency, as the case may be, for payment of a refund due from a student on a grant made under this subchapter, or for the repayment of the amount due from a borrower on a loan made under this subchapter that has been assigned to the Secretary under this subchapter.
(b) Assessment of costs and other charges
Notwithstanding any provision of State law to the contrary—
(1) a borrower who has defaulted on a loan made under this subchapter shall be required to pay, in addition to other charges specified in this subchapter reasonable collection costs;
(2) in collecting any obligation arising from a loan made under part B of this subchapter, a guaranty agency or the Secretary shall not be subject to a defense raised by any borrower based on a claim of infancy; and
(3) in collecting any obligation arising from a loan made under part E, an institution of higher education that has an agreement with the Secretary pursuant to
(c) State court judgments
A judgment of a State court for the recovery of money provided as grant, loan, or work assistance under this subchapter that has been assigned or transferred to the Secretary under this subchapter may be registered in any district court of the United States by filing a certified copy of the judgment and a copy of the assignment or transfer. A judgment so registered shall have the same force and effect, and may be enforced in the same manner, as a judgment of the district court of the district in which the judgment is registered.
(d) Special rule
This section shall not apply in the case of a student who is deceased, or to a deceased student's estate or the estate of such student's family. If a student is deceased, then the student's estate or the estate of the student's family shall not be required to repay any financial assistance under this subchapter, including interest paid on the student's behalf, collection costs, or other charges specified in this subchapter.
(
Editorial Notes
Prior Provisions
A prior section 1091a,
Another prior section 1091a,
Amendments
2008—Subsec. (b)(3).
Subsec. (d).
1998—
Subsec. (c).
1991—Subsec. (a).
Statutory Notes and Related Subsidiaries
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1991 Amendment
§1091b. Institutional refunds
(a) Return of subchapter IV funds
(1) In general
If a recipient of assistance under this subchapter withdraws from an institution during a payment period or period of enrollment in which the recipient began attendance, the amount of grant or loan assistance (other than assistance received under part C) to be returned to the subchapter IV programs is calculated according to paragraph (3) and returned in accordance with subsection (b).
(2) Leave of absence
(A) Leave not treated as withdrawal
In the case of a student who takes 1 or more leaves of absence from an institution for not more than a total of 180 days in any 12-month period, the institution may consider the student as not having withdrawn from the institution during the leave of absence, and not calculate the amount of grant and loan assistance provided under this subchapter that is to be returned in accordance with this section if—
(i) the institution has a formal policy regarding leaves of absence;
(ii) the student followed the institution's policy in requesting a leave of absence; and
(iii) the institution approved the student's request in accordance with the institution's policy.
(B) Consequences of failure to return
If a student does not return to the institution at the expiration of an approved leave of absence that meets the requirements of subparagraph (A), the institution shall calculate the amount of grant and loan assistance provided under this subchapter that is to be returned in accordance with this section based on the day the student withdrew (as determined under subsection (c)).
(3) Calculation of amount of subchapter IV assistance earned
(A) In general
The amount of grant or loan assistance under this subchapter that is earned by the recipient for purposes of this section is calculated by—
(i) determining the percentage of grant and loan assistance under this subchapter that has been earned by the student, as described in subparagraph (B); and
(ii) applying such percentage to the total amount of such grant and loan assistance that was disbursed (and that could have been disbursed) to the student, or on the student's behalf, for the payment period or period of enrollment for which the assistance was awarded, as of the day the student withdrew.
(B) Percentage earned
For purposes of subparagraph (A)(i), the percentage of grant or loan assistance under this subchapter that has been earned by the student is—
(i) equal to the percentage of the payment period or period of enrollment for which assistance was awarded that was completed (as determined in accordance with subsection (d)) as of the day the student withdrew, provided that such date occurs on or before the completion of 60 percent of the payment period or period of enrollment; or
(ii) 100 percent, if the day the student withdrew occurs after the student has completed (as determined in accordance with subsection (d)) 60 percent of the payment period or period of enrollment.
(C) Percentage and amount not earned
For purposes of subsection (b), the amount of grant and loan assistance awarded under this subchapter that has not been earned by the student shall be calculated by—
(i) determining the complement of the percentage of grant assistance under subparts 1 and 3 of part A, or loan assistance under parts B, D, and E, that has been earned by the student described in subparagraph (B); and
(ii) applying the percentage determined under clause (i) to the total amount of such grant and loan assistance that was disbursed (and that could have been disbursed) to the student, or on the student's behalf, for the payment period or period of enrollment, as of the day the student withdrew.
(4) Differences between amounts earned and amounts received
(A) In general
After determining the eligibility of the student for a late disbursement or post-withdrawal disbursement (as required in regulations prescribed by the Secretary), the institution of higher education shall contact the borrower and obtain confirmation that the loan funds are still required by the borrower. In making such contact, the institution shall explain to the borrower the borrower's obligation to repay the funds following any such disbursement. The institution shall document in the borrower's file the result of such contact and the final determination made concerning such disbursement.
(B) Return
If the student has received more grant or loan assistance than the amount earned as calculated under paragraph (3)(A), the unearned funds shall be returned by the institution or the student, or both, as may be required under paragraphs (1) and (2) of subsection (b), to the programs under this subchapter in the order specified in subsection (b)(3).
(b) Return of subchapter IV program funds
(1) Responsibility of the institution
The institution shall return not later than 45 days from the determination of withdrawal, in the order specified in paragraph (3), the lesser of—
(A) the amount of grant and loan assistance awarded under this subchapter that has not been earned by the student, as calculated under subsection (a)(3)(C); or
(B) an amount equal to—
(i) the total institutional charges incurred by the student for the payment period or period of enrollment for which such assistance was awarded; multiplied by
(ii) the percentage of grant and loan assistance awarded under this subchapter that has not been earned by the student, as described in subsection (a)(3)(C)(i).
(2) Responsibility of the student
(A) In general
The student shall return assistance that has not been earned by the student as described in subsection (a)(3)(C)(ii) in the order specified in paragraph (3) minus the amount the institution is required to return under paragraph (1).
(B) Special rule
The student (or parent in the case of funds due to a loan borrowed by a parent under part B or D) shall return or repay, as appropriate, the amount determined under subparagraph (A) to—
(i) a loan program under this subchapter in accordance with the terms of the loan; and
(ii) a grant program under this subchapter, as an overpayment of such grant and shall be subject to—
(I) repayment arrangements satisfactory to the institution; or
(II) overpayment collection procedures prescribed by the Secretary.
(C) Grant overpayment requirements
(i) In general
Notwithstanding subparagraphs (A) and (B), a student shall only be required to return grant assistance in the amount (if any) by which—
(I) the amount to be returned by the student (as determined under subparagraphs (A) and (B)), exceeds
(II) 50 percent of the total grant assistance received by the student under this subchapter for the payment period or period of enrollment.
(ii) Minimum
A student shall not be required to return amounts of $50 or less.
(D) Waivers of Federal Pell Grant repayment by students affected by disasters
The Secretary may waive the amounts that students are required to return under this section with respect to Federal Pell Grants if the withdrawals on which the returns are based are withdrawals by students—
(i) who were residing in, employed in, or attending an institution of higher education that is located in an area in which the President has declared that a major disaster exists, in accordance with
(ii) whose attendance was interrupted because of the impact of the disaster on the student or the institution; and
(iii) whose withdrawal ended within the academic year during which the designation occurred or during the next succeeding academic year.
(E) Waivers of grant assistance repayment by students affected by disasters
In addition to the waivers authorized by subparagraph (D), the Secretary may waive the amounts that students are required to return under this section with respect to any other grant assistance under this subchapter if the withdrawals on which the returns are based are withdrawals by students—
(i) who were residing in, employed in, or attending an institution of higher education that is located in an area in which the President has declared that a major disaster exists, in accordance with
(ii) whose attendance was interrupted because of the impact of the disaster on the student or the institution; and
(iii) whose withdrawal ended within the academic year during which the designation occurred or during the next succeeding academic year.
(3) Order of return of subchapter IV funds
(A) In general
Excess funds returned by the institution or the student, as appropriate, in accordance with paragraph (1) or (2), respectively, shall be credited to outstanding balances on loans made under this subchapter to the student or on behalf of the student for the payment period or period of enrollment for which a return of funds is required. Such excess funds shall be credited in the following order:
(i) To outstanding balances on loans made under
(ii) To outstanding balances on loans made under
(iii) To outstanding balances on unsubsidized loans (other than parent loans) made under part D for the payment period or period of enrollment for which a return of funds is required.
(iv) To outstanding balances on subsidized loans made under part D for the payment period or period of enrollment for which a return of funds is required.
(v) To outstanding balances on loans made under part E for the payment period or period of enrollment for which a return of funds is required.
(vi) To outstanding balances on loans made under
(vii) To outstanding balances on parent loans made under part D for the payment period or period of enrollment for which a return of funds is required.
(B) Remaining excesses
If excess funds remain after repaying all outstanding loan amounts, the remaining excess shall be credited in the following order:
(i) To awards under subpart 1 of part A for the payment period or period of enrollment for which a return of funds is required.
(ii) To awards under subpart 3 of part A for the payment period or period of enrollment for which a return of funds is required.
(iii) To other assistance awarded under this subchapter for which a return of funds is required.
(c) Withdrawal date
(1) In general
In this section, the term "day the student withdrew"—
(A) is the date that the institution determines—
(i) the student began the withdrawal process prescribed by the institution;
(ii) the student otherwise provided official notification to the institution of the intent to withdraw; or
(iii) in the case of a student who does not begin the withdrawal process or otherwise notify the institution of the intent to withdraw, the date that is the mid-point of the payment period for which assistance under this subchapter was disbursed or a later date documented by the institution; or
(B) for institutions required to take attendance, is determined by the institution from such attendance records.
(2) Special rule
Notwithstanding paragraph (1), if the institution determines that a student did not begin the withdrawal process, or otherwise notify the institution of the intent to withdraw, due to illness, accident, grievous personal loss, or other such circumstances beyond the student's control, the institution may determine the appropriate withdrawal date.
(d) Percentage of the payment period or period of enrollment completed
For purposes of subsection (a)(3)(B), the percentage of the payment period or period of enrollment for which assistance was awarded that was completed, is determined—
(1) in the case of a program that is measured in credit hours, by dividing the total number of calendar days comprising the payment period or period of enrollment for which assistance is awarded into the number of calendar days completed in that period as of the day the student withdrew; and
(2) in the case of a program that is measured in clock hours, by dividing the total number of clock hours comprising the payment period or period of enrollment for which assistance is awarded into the number of clock hours scheduled to be completed by the student in that period as of the day the student withdrew.
(e) Effective date
The provisions of this section shall take effect 2 years after October 7, 1998. An institution of higher education may choose to implement such provisions prior to that date.
(
Editorial Notes
Prior Provisions
A prior section 1091b,
Amendments
2006—Subsec. (a)(2)(A).
Subsec. (a)(3)(B)(ii).
Subsec. (a)(3)(C)(i).
Subsec. (a)(4)(A).
Subsec. (b)(1).
Subsec. (b)(2)(C).
Subsec. (d).
"(A) completed by the student in that period as of the day the student withdrew; or
"(B) scheduled to be completed as of the day the student withdrew, if the clock hours completed in the period are not less than a percentage, to be determined by the Secretary in regulations, of the hours that were scheduled to be completed by the student in the period."
2005—Subsec. (b)(2)(D).
Subsec. (b)(2)(E).
1998—
1993—Subsec. (a).
Subsec. (b)(3).
Statutory Notes and Related Subsidiaries
Effective Date of 2006 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
§1091c. Readmission requirements for servicemembers
(a) Definition of service in the uniformed services
In this section, the term "service in the uniformed services" means service (whether voluntary or involuntary) on active duty in the Armed Forces, including such service by a member of the National Guard or Reserve, for a period of more than 30 days under a call or order to active duty of more than 30 days.
(b) Discrimination against students who serve in the uniformed services prohibited
A person who is a member of, applies to be a member of, performs, has performed, applies to perform, or has an obligation to perform, service in the uniformed services shall not be denied readmission to an institution of higher education on the basis of that membership, application for membership, performance of service, application for service, or obligation.
(c) Readmission procedures
(1) In general
Any student whose absence from an institution of higher education is necessitated by reason of service in the uniformed services shall be entitled to readmission to the institution of higher education if—
(A) the student (or an appropriate officer of the Armed Forces or official of the Department of Defense) gives advance written or verbal notice of such service to the appropriate official at the institution of higher education;
(B) the cumulative length of the absence and of all previous absences from that institution of higher education by reason of service in the uniformed services does not exceed five years; and
(C) except as otherwise provided in this section, the student submits a notification of intent to reenroll in the institution of higher education in accordance with the provisions of paragraph (4).
(2) Exceptions
(A) Military necessity
No notice is required under paragraph (1)(A) if the giving of such notice is precluded by military necessity, such as—
(i) a mission, operation, exercise, or requirement that is classified; or
(ii) a pending or ongoing mission, operation, exercise, or requirement that may be compromised or otherwise adversely affected by public knowledge.
(B) Failure to give advance notice
Any student (or an appropriate officer of the Armed Forces or official of the Department of Defense) who did not give advance written or verbal notice of service to the appropriate official at the institution of higher education in accordance with paragraph (1)(A) may meet the notice requirement by submitting, at the time the student seeks readmission, an attestation to the student's institution of higher education that the student performed service in the uniformed services that necessitated the student's absence from the institution of higher education.
(3) Applicability
This section shall apply to a student who is absent from an institution of higher education by reason of service in the uniformed services if such student's cumulative period of service in the Armed Forces (including the National Guard or Reserve), with respect to the institution of higher education for which a student seeks readmission, does not exceed five years, except that any such period of service shall not include any service—
(A) that is required, beyond five years, to complete an initial period of obligated service;
(B) during which such student was unable to obtain orders releasing such student from a period of service in the uniformed services before the expiration of such five-year period and such inability was through no fault of such student; or
(C) performed by a member of the Armed Forces (including the National Guard and Reserves) who is—
(i) ordered to or retained on active duty under
(ii) ordered to or retained on active duty (other than for training) under any provision of law because of a war or national emergency declared by the President or the Congress, as determined by the Secretary concerned;
(iii) ordered to active duty (other than for training) in support, as determined by the Secretary concerned, of an operational mission for which personnel have been ordered to active duty under
(iv) ordered to active duty in support, as determined by the Secretary concerned, of a critical mission or requirement of the Armed Forces (including the National Guard or Reserve); or
(v) called into Federal service as a member of the National Guard under
(4) Notification of intent to return
(A) In general
Except as provided in subparagraph (B), a student referred to in subsection (a) shall, upon the completion of a period of service in the uniformed services, notify the institution of higher education of the student's intent to return to the institution not later than three years after the completion of the period of service.
(B) Hospitalization or convalescence
A student who is hospitalized for or convalescing from an illness or injury incurred in or aggravated during the performance of service in the uniformed services shall notify the institution of higher education of the student's intent to return to the institution not later than two years after the end of the period that is necessary for recovery from such illness or injury.
(C) Special rule
A student who fails to apply for readmission within the period described in this section shall not automatically forfeit such eligibility for readmission to the institution of higher education, but shall be subject to the institution of higher education's established leave of absence policy and general practices.
(5) Documentation
(A) In general
A student who submits an application for readmission to an institution of higher education under this section shall provide to the institution of higher education documentation to establish that—
(i) the student has not exceeded the service limitations established under this section; and
(ii) the student's eligibility for readmission has not been terminated due to an exception in subsection (d).
(B) Prohibited documentation demands
An institution of higher education may not delay or attempt to avoid a readmission of a student under this section by demanding documentation that does not exist, or is not readily available, at the time of readmission.
(6) No change in academic status
A student who is readmitted to an institution of higher education under this section shall be readmitted with the same academic status as such student had when such student last attended the institution of higher education.
(d) Exception from readmission eligibility
A student's eligibility for readmission to an institution of higher education under this section by reason of such student's service in the uniformed services terminates upon the occurrence of any of the following events:
(1) A separation of such person from the Armed Forces (including the National Guard and Reserves) with a dishonorable or bad conduct discharge.
(2) A dismissal of such person permitted under
(3) A dropping of such person from the rolls pursuant to
(
Editorial Notes
References in Text
Prior Provisions
Prior sections 1091c to 1091f were repealed, effective Sept. 30, 1976, by
Section 1091c,
Section 1091d,
Section 1091e,
Section 1091f,
Amendments
2018—Subsec. (c)(3)(C)(i).
Subsec. (c)(3)(C)(v).
1 See References in Text note below.
§1092. Institutional and financial assistance information for students
(a) Information dissemination activities
(1) Each eligible institution participating in any program under this subchapter shall carry out information dissemination activities for prospective and enrolled students (including those attending or planning to attend less than full time) regarding the institution and all financial assistance under this subchapter. The information required by this section shall be produced and be made readily available upon request, through appropriate publications, mailings, and electronic media, to an enrolled student and to any prospective student. Each eligible institution shall, on an annual basis, provide to all enrolled students a list of the information that is required to be provided by institutions to students by this section and section 444 of the General Education Provisions Act [
(A) the student financial assistance programs available to students who enroll at such institution;
(B) the methods by which such assistance is distributed among student recipients who enroll at such institution;
(C) any means, including forms, by which application for student financial assistance is made and requirements for accurately preparing such application;
(D) the rights and responsibilities of students receiving financial assistance under this subchapter;
(E) the cost of attending the institution, including (i) tuition and fees, (ii) books and supplies, (iii) estimates of typical student room and board costs or typical commuting costs, and (iv) any additional cost of the program in which the student is enrolled or expresses a specific interest;
(F) a statement of—
(i) the requirements of any refund policy with which the institution is required to comply;
(ii) the requirements under
(iii) the requirements for officially withdrawing from the institution;
(G) the academic program of the institution, including (i) the current degree programs and other educational and training programs, (ii) the instructional, laboratory, and other physical plant facilities which relate to the academic program, (iii) the faculty and other instructional personnel, and (iv) any plans by the institution for improving the academic program of the institution;
(H) each person designated under subsection (c) of this section, and the methods by which and locations in which any person so designated may be contacted by students and prospective students who are seeking information required by this subsection;
(I) special facilities and services available to students with disabilities;
(J) the names of associations, agencies, or governmental bodies which accredit, approve, or license the institution and its programs, and the procedures under which any current or prospective student may obtain or review upon request a copy of the documents describing the institution's accreditation, approval, or licensing;
(K) the standards which the student must maintain in order to be considered to be making satisfactory progress, pursuant to
(L) the completion or graduation rate of certificate- or degree-seeking, full-time, undergraduate students entering such institutions;
(M) the terms and conditions of the loans that students receive under parts B, D, and E;
(N) that enrollment in a program of study abroad approved for credit by the home institution may be considered enrollment in the home institution for purposes of applying for Federal student financial assistance;
(O) the campus crime report prepared by the institution pursuant to subsection (f), including all required reporting categories;
(P) institutional policies and sanctions related to copyright infringement, including—
(i) an annual disclosure that explicitly informs students that unauthorized distribution of copyrighted material, including unauthorized peer-to-peer file sharing, may subject the students to civil and criminal liabilities;
(ii) a summary of the penalties for violation of Federal copyright laws; and
(iii) a description of the institution's policies with respect to unauthorized peer-to-peer file sharing, including disciplinary actions that are taken against students who engage in unauthorized distribution of copyrighted materials using the institution's information technology system;
(Q) student body diversity at the institution, including information on the percentage of enrolled, full-time students who—
(i) are male;
(ii) are female;
(iii) receive a Federal Pell Grant; and
(iv) are a self-identified member of a major racial or ethnic group;
(R) the placement in employment of, and types of employment obtained by, graduates of the institution's degree or certificate programs, gathered from such sources as alumni surveys, student satisfaction surveys, the National Survey of Student Engagement, the Community College Survey of Student Engagement, State data systems, or other relevant sources;
(S) the types of graduate and professional education in which graduates of the institution's four-year degree programs enrolled, gathered from such sources as alumni surveys, student satisfaction surveys, the National Survey of Student Engagement, State data systems, or other relevant sources;
(T) the fire safety report prepared by the institution pursuant to subsection (i);
(U) the retention rate of certificate- or degree-seeking, first-time, full-time, undergraduate students entering such institution; and
(V) institutional policies regarding vaccinations.
(2) For the purpose of this section, the term "prospective student" means any individual who has contacted an eligible institution requesting information concerning admission to that institution.
(3) In calculating the completion or graduation rate under subparagraph (L) of paragraph (1) of this subsection or under subsection (e), a student shall be counted as a completion or graduation if, within 150 percent of the normal time for completion of or graduation from the program, the student has completed or graduated from the program, or enrolled in any program of an eligible institution for which the prior program provides substantial preparation. The information required to be disclosed under such subparagraph—
(A) shall be made available by July 1 each year to enrolled students and prospective students prior to the students enrolling or entering into any financial obligation; and
(B) shall cover the one-year period ending on August 31 of the preceding year.
(4) For purposes of this section, institutions may—
(A) exclude from the information disclosed in accordance with subparagraph (L) of paragraph (1) the completion or graduation rates of students who leave school to serve in the Armed Forces, on official church missions, or with a recognized foreign aid service of the Federal Government; or
(B) in cases where the students described in subparagraph (A) represent 20 percent or more of the certificate- or degree-seeking, full-time, undergraduate students at the institution, recalculate the completion or graduation rates of such students by excluding from the calculation described in paragraph (3) the time period during which such students were not enrolled due to their service in the Armed Forces, on official church missions, or with a recognized foreign aid service of the Federal Government.
(5) The Secretary shall permit any institution of higher education that is a member of an athletic association or athletic conference that has voluntarily published completion or graduation rate data or has agreed to publish data that, in the opinion of the Secretary, is substantially comparable to the information required under this subsection, to use such data to satisfy the requirements of this subsection.
(6) Each institution may provide supplemental information to enrolled and prospective students showing the completion or graduation rate for students described in paragraph (4) or for students transferring into the institution or information showing the rate at which students transfer out of the institution.
(7)(A)(i) Subject to clause (ii), the information disseminated under paragraph (1)(L), or reported under subsection (e), shall be disaggregated by gender, by each major racial and ethnic subgroup, by recipients of a Federal Pell Grant, by recipients of a loan made under part B or D (other than a loan made under
(ii) The requirements of clause (i) shall not apply to two-year, degree-granting institutions of higher education until academic year 2011-2012.
(B)(i) In order to assist two-year degree-granting institutions of higher education in meeting the requirements of paragraph (1)(L) and subsection (e), the Secretary, in consultation with the Commissioner for Education Statistics, shall, not later than 90 days after August 14, 2008, convene a group of representatives from diverse institutions of higher education, experts in the field of higher education policy, state 1 higher education officials, students, and other stakeholders in the higher education community, to develop recommendations regarding the accurate calculation and reporting of the information required to be disseminated or reported under paragraph (1)(L) and subsection (e) by two-year, degree-granting institutions of higher education. In developing such recommendations, the group of representatives shall consider the mission and role of two-year degree-granting institutions of higher education, and may recommend additional or alternative measures of student success for such institutions in light of the mission and role of such institutions.
(ii) The Secretary shall widely disseminate the recommendations required under this subparagraph to two-year, degree-granting institutions of higher education, the public, and the authorizing committees not later than 18 months after the first meeting of the group of representatives convened under clause (i).
(iii) The Secretary shall use the recommendations from the group of representatives convened under clause (i) to provide technical assistance to two-year, degree-granting institutions of higher education in meeting the requirements of paragraph (1)(L) and subsection (e).
(iv) The Secretary may modify the information required to be disseminated or reported under paragraph (1)(L) or subsection (e) by a two-year, degree-granting institution of higher education—
(I) based on the recommendations received under this subparagraph from the group of representatives convened under clause (i);
(II) to include additional or alternative measures of student success if the goals of the provisions of paragraph (1)(L) and subsection (e) can be met through additional means or comparable alternatives; and
(III) during the period beginning on August 14, 2008, and ending on June 30, 2011.
(b) Exit counseling for borrowers
(1)(A) Each eligible institution shall, through financial aid offices or otherwise, provide counseling to borrowers of loans that are made, insured, or guaranteed under part B (other than loans made pursuant to
(i) information on the repayment plans available, including a description of the different features of each plan and sample information showing the average anticipated monthly payments, and the difference in interest paid and total payments, under each plan;
(ii) debt management strategies that are designed to facilitate the repayment of such indebtedness;
(iii) an explanation that the borrower has the options to prepay each loan, pay each loan on a shorter schedule, and change repayment plans;
(iv) for any loan forgiveness or cancellation provision of this subchapter, a general description of the terms and conditions under which the borrower may obtain full or partial forgiveness or cancellation of the principal and interest, and a copy of the information provided by the Secretary under
(v) for any forbearance provision of this subchapter, a general description of the terms and conditions under which the borrower may defer repayment of principal or interest or be granted forbearance, and a copy of the information provided by the Secretary under
(vi) the consequences of defaulting on a loan, including adverse credit reports, delinquent debt collection procedures under Federal law, and litigation;
(vii) information on the effects of using a consolidation loan under
(I) the effects of consolidation on total interest to be paid, fees to be paid, and length of repayment;
(II) the effects of consolidation on a borrower's underlying loan benefits, including grace periods, loan forgiveness, cancellation, and deferment opportunities;
(III) the option of the borrower to prepay the loan or to change repayment plans; and
(IV) that borrower benefit programs may vary among different lenders;
(viii) a general description of the types of tax benefits that may be available to borrowers;
(ix) a notice to borrowers about the availability of the National Student Loan Data System and how the system can be used by a borrower to obtain information on the status of the borrower's loans; and
(x) an explanation that—
(I) the borrower may be contacted during the repayment period by third-party student debt relief companies;
(II) the borrower should use caution when dealing with those companies; and
(III) the services that those companies typically provide are already offered to borrowers free of charge through the Department or the borrower's servicer; and
(B) In the case of borrower who leaves an institution without the prior knowledge of the institution, the institution shall attempt to provide the information described in subparagraph (A) to the student in writing.
(2)(A) Each eligible institution shall require that the borrower of a loan made under part B, D, or E submit to the institution, during the exit interview required by this subsection—
(i) the borrower's expected permanent address after leaving the institution (regardless of the reason for leaving);
(ii) the name and address of the borrower's expected employer after leaving the institution;
(iii) the address of the borrower's next of kin; and
(iv) any corrections in the institution's records relating the borrower's name, address, social security number, references, and driver's license number.
(B) The institution shall, within 60 days after the interview, forward any corrected or completed information received from the borrower to the guaranty agency indicated on the borrower's student aid records.
(C) Nothing in this subsection shall be construed to prohibit an institution of higher education from utilizing electronic means to provide personalized exit counseling.
(c) Financial assistance information personnel
Each eligible institution shall designate an employee or group of employees who shall be available on a full-time basis to assist students or potential students in obtaining information as specified in subsection (a). The Secretary may, by regulation, waive the requirement that an employee or employees be available on a full-time basis for carrying out responsibilities required under this section whenever an institution in which the total enrollment, or the portion of the enrollment participating in programs under this subchapter at that institution, is too small to necessitate such employee or employees being available on a full-time basis. No such waiver may include permission to exempt any such institution from designating a specific individual or a group of individuals to carry out the provisions of this section.
(d) Departmental publication of descriptions of assistance programs
(1) The Secretary shall make available to eligible institutions, eligible lenders, and secondary schools descriptions of Federal student assistance programs including the rights and responsibilities of student and institutional participants, in order to (A) assist students in gaining information through institutional sources, and (B) assist institutions in carrying out the provisions of this section, so that individual and institutional participants will be fully aware of their rights and responsibilities under such programs. In particular, such information shall include information to enable students and prospective students to assess the debt burden and monthly and total repayment obligations that will be incurred as a result of receiving loans of varying amounts under this subchapter. Such information shall also include information on the various payment options available for student loans, including income-sensitive and income-based repayment plans for loans made, insured, or guaranteed under part B and income-contingent and income-based repayment plans for loans made under part D. In addition, such information shall include information to enable borrowers to assess the practical consequences of loan consolidation, including differences in deferment eligibility, interest rates, monthly payments, and finance charges, and samples of loan consolidation profiles to illustrate such consequences. The Secretary shall provide information concerning the specific terms and conditions under which students may obtain partial or total cancellation or defer repayment of loans for service, shall indicate (in terms of the Federal minimum wage) the maximum level of compensation and allowances that a student borrower may receive from a tax-exempt organization to qualify for a deferment, and shall explicitly state that students may qualify for such partial cancellations or deferments when they serve as a paid employee of a tax-exempt organization. The Secretary shall also provide information on loan forbearance, including the increase in debt that results from capitalization of interest. Such information shall be provided by eligible institutions and eligible lenders at any time that information regarding loan availability is provided to any student.
(2) The Secretary, to the extent the information is available, shall compile information describing State and other prepaid tuition programs and savings programs and disseminate such information to States, eligible institutions, students, and parents in departmental publications.
(3) The Secretary, to the extent practicable, shall update the Department's Internet site to include direct links to databases that contain information on public and private financial assistance programs. The Secretary shall only provide direct links to databases that can be accessed without charge and shall make reasonable efforts to verify that the databases included in a direct link are not providing fraudulent information. The Secretary shall prominently display adjacent to any such direct link a disclaimer indicating that a direct link to a database does not constitute an endorsement or recommendation of the database, the provider of the database, or any services or products of such provider. The Secretary shall provide additional direct links to information resources from which students may obtain information about fraudulent and deceptive practices in the provision of services related to student financial aid.
(4) The Secretary shall widely publicize the location of the information described in paragraph (1) among the public, eligible institutions, and eligible lenders, and promote the use of such information by prospective students, enrolled students, families of prospective and enrolled students, and borrowers.
(e) Disclosures required with respect to athletically related student aid
(1) Each institution of higher education which participates in any program under this subchapter and is attended by students receiving athletically related student aid shall annually submit a report to the Secretary which contains—
(A) the number of students at the institution of higher education who received athletically related student aid broken down by race and sex in the following sports: basketball, football, baseball, cross country/track, and all other sports combined;
(B) the number of students at the institution of higher education, broken down by race and sex;
(C) the completion or graduation rate for students at the institution of higher education who received athletically related student aid broken down by race and sex in the following sports: basketball, football, baseball, cross country/track and all other sports combined;
(D) the completion or graduation rate for students at the institution of higher education, broken down by race and sex;
(E) the average completion or graduation rate for the 4 most recent completing or graduating classes of students at the institution of higher education who received athletically related student aid broken down by race and sex in the following categories: basketball, football, baseball, cross country/track, and all other sports combined; and
(F) the average completion or graduation rate for the 4 most recent completing or graduating classes of students at the institution of higher education broken down by race and sex.
(2) When an institution described in paragraph (1) of this subsection offers a potential student athlete athletically related student aid, such institution shall provide to the student and the student's parents, guidance counselor, and coach the information contained in the report submitted by such institution pursuant to paragraph (1). If the institution is a member of a national collegiate athletic association that compiles graduation rate data on behalf of the association's member institutions that the Secretary determines is substantially comparable to the information described in paragraph (1), the distribution of the compilation of such data to all secondary schools in the United States shall fulfill the responsibility of the institution to provide information to a prospective student athlete's guidance counselor and coach.
(3) For purposes of this subsection, institutions may—
(A) exclude from the reporting requirements under paragraphs (1) and (2) the completion or graduation rates of students and student athletes who leave school to serve in the Armed Forces, on official church missions, or with a recognized foreign aid service of the Federal Government; or
(B) in cases where the students described in subparagraph (A) represent 20 percent or more of the certificate- or degree-seeking, full-time, undergraduate students at the institution, calculate the completion or graduation rates of such students by excluding from the calculations described in paragraph (1) the time period during which such students were not enrolled due to their service in the Armed Forces, on official church missions, or with a recognized foreign aid service of the Federal Government.
(4) Each institution of higher education described in paragraph (1) may provide supplemental information to students and the Secretary showing the completion or graduation rate when such completion or graduation rate includes students transferring into and out of such institution.
(5) The Secretary, using the reports submitted under this subsection, shall compile and publish a report containing the information required under paragraph (1) broken down by—
(A) individual institutions of higher education; and
(B) athletic conferences recognized by the National Collegiate Athletic Association and the National Association of Intercollegiate Athletics.
(6) The Secretary shall waive the requirements of this subsection for any institution of higher education that is a member of an athletic association or athletic conference that has voluntarily published completion or graduation rate data or has agreed to publish data that, in the opinion of the Secretary, is substantially comparable to the information required under this subsection.
(7) The Secretary, in conjunction with the National Junior College Athletic Association, shall develop and obtain data on completion or graduation rates from two-year colleges that award athletically related student aid. Such data shall, to the extent practicable, be consistent with the reporting requirements set forth in this section.
(8) For purposes of this subsection, the term "athletically related student aid" means any scholarship, grant, or other form of financial assistance the terms of which require the recipient to participate in a program of intercollegiate athletics at an institution of higher education in order to be eligible to receive such assistance.
(9) The reports required by this subsection shall be due each July 1 and shall cover the 1-year period ending August 31 of the preceding year.
(f) Disclosure of campus security policy and campus crime statistics
(1) Each eligible institution participating in any program under this subchapter, other than a foreign institution of higher education, shall on August 1, 1991, begin to collect the following information with respect to campus crime statistics and campus security policies of that institution, and beginning September 1, 1992, and each year thereafter, prepare, publish, and distribute, through appropriate publications or mailings, to all current students and employees, and to any applicant for enrollment or employment upon request, an annual security report containing at least the following information with respect to the campus security policies and campus crime statistics of that institution:
(A) A statement of current campus policies regarding procedures and facilities for students and others to report criminal actions or other emergencies occurring on campus and policies concerning the institution's response to such reports.
(B) A statement of current policies concerning security and access to campus facilities, including campus residences, and security considerations used in the maintenance of campus facilities.
(C) A statement of current policies concerning campus law enforcement, including—
(i) the law enforcement authority of campus security personnel;
(ii) the working relationship of campus security personnel with State and local law enforcement agencies, including whether the institution has agreements with such agencies, such as written memoranda of understanding, for the investigation of alleged criminal offenses; and
(iii) policies which encourage accurate and prompt reporting of all crimes to the campus police and the appropriate law enforcement agencies, when the victim of such crime elects or is unable to make such a report.
(D) A description of the type and frequency of programs designed to inform students and employees about campus security procedures and practices and to encourage students and employees to be responsible for their own security and the security of others.
(E) A description of programs designed to inform students and employees about the prevention of crimes.
(F) Statistics concerning the occurrence on campus, in or on noncampus buildings or property, and on public property during the most recent calendar year, and during the 2 preceding calendar years for which data are available—
(i) of the following criminal offenses reported to campus security authorities or local police agencies:
(I) murder;
(II) sex offenses, forcible or nonforcible;
(III) robbery;
(IV) aggravated assault;
(V) burglary;
(VI) motor vehicle theft;
(VII) manslaughter;
(VIII) arson;
(IX) arrests or persons referred for campus disciplinary action for liquor law violations, drug-related violations, and weapons possession; and
(ii) of the crimes described in subclauses (I) through (VIII) of clause (i), of larceny-theft, simple assault, intimidation, and destruction, damage, or vandalism of property, and of other crimes involving bodily injury to any person, in which the victim is intentionally selected because of the actual or perceived race, gender, religion, national origin, sexual orientation, gender identity,,2 ethnicity, or disability of the victim that are reported to campus security authorities or local police agencies, which data shall be collected and reported according to category of prejudice; and
(iii) of domestic violence, dating violence, and stalking incidents that were reported to campus security authorities or local police agencies.
(G) A statement of policy concerning the monitoring and recording through local police agencies of criminal activity at off-campus student organizations which are recognized by the institution and that are engaged in by students attending the institution, including those student organizations with off-campus housing facilities.
(H) A statement of policy regarding the possession, use, and sale of alcoholic beverages and enforcement of State underage drinking laws and a statement of policy regarding the possession, use, and sale of illegal drugs and enforcement of Federal and State drug laws and a description of any drug or alcohol abuse education programs as required under
(I) A statement advising the campus community where law enforcement agency information provided by a State under section 14071(j) 3 of title 42, concerning registered sex offenders may be obtained, such as the law enforcement office of the institution, a local law enforcement agency with jurisdiction for the campus, or a computer network address.
(J) A statement of current campus policies regarding immediate emergency response and evacuation procedures, including the use of electronic and cellular communication (if appropriate), which policies shall include procedures to—
(i) immediately notify the campus community upon the confirmation of a significant emergency or dangerous situation involving an immediate threat to the health or safety of students or staff occurring on the campus, as defined in paragraph (6), unless issuing a notification will compromise efforts to contain the emergency;
(ii) publicize emergency response and evacuation procedures on an annual basis in a manner designed to reach students and staff; and
(iii) test emergency response and evacuation procedures on an annual basis.
(2) Nothing in this subsection shall be construed to authorize the Secretary to require particular policies, procedures, or practices by institutions of higher education with respect to campus crimes or campus security.
(3) Each institution participating in any program under this subchapter, other than a foreign institution of higher education, shall make timely reports to the campus community on crimes considered to be a threat to other students and employees described in paragraph (1)(F) that are reported to campus security or local law police agencies. Such reports shall be provided to students and employees in a manner that is timely, that withholds the names of victims as confidential, and that will aid in the prevention of similar occurrences.
(4)(A) Each institution participating in any program under this subchapter, other than a foreign institution of higher education, that maintains a police or security department of any kind shall make, keep, and maintain a daily log, written in a form that can be easily understood, recording all crimes reported to such police or security department, including—
(i) the nature, date, time, and general location of each crime; and
(ii) the disposition of the complaint, if known.
(B)(i) All entries that are required pursuant to this paragraph shall, except where disclosure of such information is prohibited by law or such disclosure would jeopardize the confidentiality of the victim, be open to public inspection within two business days of the initial report being made to the department or a campus security authority.
(ii) If new information about an entry into a log becomes available to a police or security department, then the new information shall be recorded in the log not later than two business days after the information becomes available to the police or security department.
(iii) If there is clear and convincing evidence that the release of such information would jeopardize an ongoing criminal investigation or the safety of an individual, cause a suspect to flee or evade detection, or result in the destruction of evidence, such information may be withheld until that damage is no longer likely to occur from the release of such information.
(5) On an annual basis, each institution participating in any program under this subchapter, other than a foreign institution of higher education, shall submit to the Secretary a copy of the statistics required to be made available under paragraph (1)(F). The Secretary shall—
(A) review such statistics and report to the authorizing committees on campus crime statistics by September 1, 2000;
(B) make copies of the statistics submitted to the Secretary available to the public; and
(C) in coordination with representatives of institutions of higher education, identify exemplary campus security policies, procedures, and practices and disseminate information concerning those policies, procedures, and practices that have proven effective in the reduction of campus crime.
(6)(A) In this subsection:
(i) The terms "dating violence", "domestic violence", and "stalking" have the meaning given such terms in
(ii) The term "campus" means—
(I) any building or property owned or controlled by an institution of higher education within the same reasonably contiguous geographic area of the institution and used by the institution in direct support of, or in a manner related to, the institution's educational purposes, including residence halls; and
(II) property within the same reasonably contiguous geographic area of the institution that is owned by the institution but controlled by another person, is used by students, and supports institutional purposes (such as a food or other retail vendor).
(iii) The term "noncampus building or property" means—
(I) any building or property owned or controlled by a student organization recognized by the institution; and
(II) any building or property (other than a branch campus) owned or controlled by an institution of higher education that is used in direct support of, or in relation to, the institution's educational purposes, is used by students, and is not within the same reasonably contiguous geographic area of the institution.
(iv) The term "public property" means all public property that is within the same reasonably contiguous geographic area of the institution, such as a sidewalk, a street, other thoroughfare, or parking facility, and is adjacent to a facility owned or controlled by the institution if the facility is used by the institution in direct support of, or in a manner related to the institution's educational purposes.
(v) The term "sexual assault" means an offense classified as a forcible or nonforcible sex offense under the uniform crime reporting system of the Federal Bureau of Investigation.
(B) In cases where branch campuses of an institution of higher education, schools within an institution of higher education, or administrative divisions within an institution are not within a reasonably contiguous geographic area, such entities shall be considered separate campuses for purposes of the reporting requirements of this section.
(7) The statistics described in clauses (i) and (ii) of paragraph (1)(F) shall be compiled in accordance with the definitions used in the uniform crime reporting system of the Department of Justice, Federal Bureau of Investigation, and the modifications in such definitions as implemented pursuant to the Hate Crime Statistics Act. For the offenses of domestic violence, dating violence, and stalking, such statistics shall be compiled in accordance with the definitions used in
(8)(A) Each institution of higher education participating in any program under this subchapter and title IV of the Economic Opportunity Act of 1964,3 other than a foreign institution of higher education, shall develop and distribute as part of the report described in paragraph (1) a statement of policy regarding—
(i) such institution's programs to prevent domestic violence, dating violence, sexual assault, and stalking; and
(ii) the procedures that such institution will follow once an incident of domestic violence, dating violence, sexual assault, or stalking has been reported, including a statement of the standard of evidence that will be used during any institutional conduct proceeding arising from such a report.
(B) The policy described in subparagraph (A) shall address the following areas:
(i) Education programs to promote the awareness of rape, acquaintance rape, domestic violence, dating violence, sexual assault, and stalking, which shall include—
(I) primary prevention and awareness programs for all incoming students and new employees, which shall include—
(aa) a statement that the institution of higher education prohibits the offenses of domestic violence, dating violence, sexual assault, and stalking;
(bb) the definition of domestic violence, dating violence, sexual assault, and stalking in the applicable jurisdiction;
(cc) the definition of consent, in reference to sexual activity, in the applicable jurisdiction;
(dd) safe and positive options for bystander intervention that may be carried out by an individual to prevent harm or intervene when there is a risk of domestic violence, dating violence, sexual assault, or stalking against a person other than such individual;
(ee) information on risk reduction to recognize warning signs of abusive behavior and how to avoid potential attacks; and
(ff) the information described in clauses (ii) through (vii); and
(II) ongoing prevention and awareness campaigns for students and faculty, including information described in items (aa) through (ff) of subclause (I).
(ii) Possible sanctions or protective measures that such institution may impose following a final determination of an institutional disciplinary procedure regarding rape, acquaintance rape, domestic violence, dating violence, sexual assault, or stalking.
(iii) Procedures victims should follow if a sex offense, domestic violence, dating violence, sexual assault, or stalking has occurred, including information in writing about—
(I) the importance of preserving evidence as may be necessary to the proof of criminal domestic violence, dating violence, sexual assault, or stalking, or in obtaining a protection order;
(II) to whom the alleged offense should be reported;
(III) options regarding law enforcement and campus authorities, including notification of the victim's option to—
(aa) notify proper law enforcement authorities, including on-campus and local police;
(bb) be assisted by campus authorities in notifying law enforcement authorities if the victim so chooses; and
(cc) decline to notify such authorities; and
(IV) where applicable, the rights of victims and the institution's responsibilities regarding orders of protection, no contact orders, restraining orders, or similar lawful orders issued by a criminal, civil, or tribal court.
(iv) Procedures for institutional disciplinary action in cases of alleged domestic violence, dating violence, sexual assault, or stalking, which shall include a clear statement that—
(I) such proceedings shall—
(aa) provide a prompt, fair, and impartial investigation and resolution; and
(bb) be conducted by officials who receive annual training on the issues related to domestic violence, dating violence, sexual assault, and stalking and how to conduct an investigation and hearing process that protects the safety of victims and promotes accountability;
(II) the accuser and the accused are entitled to the same opportunities to have others present during an institutional disciplinary proceeding, including the opportunity to be accompanied to any related meeting or proceeding by an advisor of their choice; and
(III) both the accuser and the accused shall be simultaneously informed, in writing, of—
(aa) the outcome of any institutional disciplinary proceeding that arises from an allegation of domestic violence, dating violence, sexual assault, or stalking;
(bb) the institution's procedures for the accused and the victim to appeal the results of the institutional disciplinary proceeding;
(cc) of any change to the results that occurs prior to the time that such results become final; and
(dd) when such results become final.
(v) Information about how the institution will protect the confidentiality of victims, including how publicly-available recordkeeping will be accomplished without the inclusion of identifying information about the victim, to the extent permissible by law.
(vi) Written notification of students and employees about existing counseling, health, mental health, victim advocacy, legal assistance, and other services available for victims both on-campus and in the community.
(vii) Written notification of victims about options for, and available assistance in, changing academic, living, transportation, and working situations, if so requested by the victim and if such accommodations are reasonably available, regardless of whether the victim chooses to report the crime to campus police or local law enforcement.
(C) A student or employee who reports to an institution of higher education that the student or employee has been a victim of domestic violence, dating violence, sexual assault, or stalking, whether the offense occurred on or off campus, shall be provided with a written explanation of the student or employee's rights and options, as described in clauses (ii) through (vii) of subparagraph (B).
(9) The Secretary, in consultation with the Attorney General of the United States, shall provide technical assistance in complying with the provisions of this section to an institution of higher education who requests such assistance.
(10) Nothing in this section shall be construed to require the reporting or disclosure of privileged information.
(11) The Secretary shall report to the appropriate committees of Congress each institution of higher education that the Secretary determines is not in compliance with the reporting requirements of this subsection.
(12) For purposes of reporting the statistics with respect to crimes described in paragraph (1)(F), an institution of higher education shall distinguish, by means of separate categories, any criminal offenses that occur—
(A) on campus;
(B) in or on a noncampus building or property;
(C) on public property; and
(D) in dormitories or other residential facilities for students on campus.
(13) Upon a determination pursuant to
(14)(A) Nothing in this subsection may be construed to—
(i) create a cause of action against any institution of higher education or any employee of such an institution for any civil liability; or
(ii) establish any standard of care.
(B) Notwithstanding any other provision of law, evidence regarding compliance or noncompliance with this subsection shall not be admissible as evidence in any proceeding of any court, agency, board, or other entity, except with respect to an action to enforce this subsection.
(15) The Secretary shall annually report to the authorizing committees regarding compliance with this subsection by institutions of higher education, including an up-to-date report on the Secretary's monitoring of such compliance.
(16)(A) The Secretary shall seek the advice and counsel of the Attorney General of the United States concerning the development, and dissemination to institutions of higher education, of best practices information about campus safety and emergencies.
(B) The Secretary shall seek the advice and counsel of the Attorney General of the United States and the Secretary of Health and Human Services concerning the development, and dissemination to institutions of higher education, of best practices information about preventing and responding to incidents of domestic violence, dating violence, sexual assault, and stalking, including elements of institutional policies that have proven successful based on evidence-based outcome measurements.
(17) No officer, employee, or agent of an institution participating in any program under this subchapter shall retaliate, intimidate, threaten, coerce, or otherwise discriminate against any individual for exercising their rights or responsibilities under any provision of this subsection.
(18) This subsection may be cited as the "Jeanne Clery Disclosure of Campus Security Policy and Campus Crime Statistics Act".
(g) Data required
(1) In general
Each coeducational institution of higher education that participates in any program under this subchapter, and has an intercollegiate athletic program, shall annually, for the immediately preceding academic year, prepare a report that contains the following information regarding intercollegiate athletics:
(A) The number of male and female full-time undergraduates that attended the institution.
(B) A listing of the varsity teams that competed in intercollegiate athletic competition and for each such team the following data:
(i) The total number of participants, by team, as of the day of the first scheduled contest for the team.
(ii) Total operating expenses attributable to such teams, except that an institution may also report such expenses on a per capita basis for each team and expenditures attributable to closely related teams such as track and field or swimming and diving, may be reported together, although such combinations shall be reported separately for men's and women's teams.
(iii) Whether the head coach is male or female and whether the head coach is assigned to that team on a full-time or part-time basis. Graduate assistants and volunteers who serve as head coaches shall be considered to be head coaches for the purposes of this clause.
(iv) The number of assistant coaches who are male and the number of assistant coaches who are female for each team and whether a particular coach is assigned to that team on a full-time or part-time basis. Graduate assistants and volunteers who serve as assistant coaches shall be considered to be assistant coaches for the purposes of this clause.
(C) The total amount of money spent on athletically related student aid, including the value of waivers of educational expenses, separately for men's and women's teams overall.
(D) The ratio of athletically related student aid awarded male athletes to athletically related student aid awarded female athletes.
(E) The total amount of expenditures on recruiting, separately for men's and women's teams overall.
(F) The total annual revenues generated across all men's teams and across all women's teams, except that an institution may also report such revenues by individual team.
(G) The average annual institutional salary of the head coaches of men's teams, across all offered sports, and the average annual institutional salary of the head coaches of women's teams, across all offered sports.
(H) The average annual institutional salary of the assistant coaches of men's teams, across all offered sports, and the average annual institutional salary of the assistant coaches of women's teams, across all offered sports.
(I)(i) The total revenues, and the revenues from football, men's basketball, women's basketball, all other men's sports combined and all other women's sports combined, derived by the institution from the institution's intercollegiate athletics activities.
(ii) For the purpose of clause (i), revenues from intercollegiate athletics activities allocable to a sport shall include (without limitation) gate receipts, broadcast revenues, appearance guarantees and options, concessions, and advertising, but revenues such as student activities fees or alumni contributions not so allocable shall be included in the calculation of total revenues only.
(J)(i) The total expenses, and the expenses attributable to football, men's basketball, women's basketball, all other men's sports combined, and all other women's sports combined, made by the institution for the institution's intercollegiate athletics activities.
(ii) For the purpose of clause (i), expenses for intercollegiate athletics activities allocable to a sport shall include (without limitation) grants-in-aid, salaries, travel, equipment, and supplies, but expenses such as general and administrative overhead not so allocable shall be included in the calculation of total expenses only.
(2) Special rule
For the purposes of paragraph (1)(G), if a coach has responsibilities for more than one team and the institution does not allocate such coach's salary by team, the institution should divide the salary by the number of teams for which the coach has responsibility and allocate the salary among the teams on a basis consistent with the coach's responsibilities for the different teams.
(3) Disclosure of information to students and public
An institution of higher education described in paragraph (1) shall make available to students and potential students, upon request, and to the public, the information contained in the report described in paragraph (1), except that all students shall be informed of their right to request such information.
(4) Submission; report; information availability
(A) On an annual basis, each institution of higher education described in paragraph (1) shall provide to the Secretary, within 15 days of the date that the institution makes available the report under paragraph (1), the information contained in the report.
(B) The Secretary shall ensure that the reports described in subparagraph (A) are made available to the public within a reasonable period of time.
(C) Not later than 180 days after October 7, 1998, the Secretary shall notify all secondary schools in all States regarding the availability of the information made available under paragraph (1), and how such information may be accessed.
(5) "Operating expenses" defined
For the purposes of this subsection, the term "operating expenses" means expenditures on lodging and meals, transportation, officials, uniforms and equipment.
(h) Transfer of credit policies
(1) Disclosure
Each institution of higher education participating in any program under this subchapter shall publicly disclose, in a readable and comprehensible manner, the transfer of credit policies established by the institution which shall include a statement of the institution's current transfer of credit policies that includes, at a minimum—
(A) any established criteria the institution uses regarding the transfer of credit earned at another institution of higher education; and
(B) a list of institutions of higher education with which the institution has established an articulation agreement.
(2) Rule of construction
Nothing in this subsection shall be construed to—
(A) authorize the Secretary or the National Advisory Committee on Institutional Quality and Integrity to require particular policies, procedures, or practices by institutions of higher education with respect to transfer of credit;
(B) authorize an officer or employee of the Department to exercise any direction, supervision, or control over the curriculum, program of instruction, administration, or personnel of any institution of higher education, or over any accrediting agency or association;
(C) limit the application of the General Education Provisions Act [
(D) create any legally enforceable right on the part of a student to require an institution of higher education to accept a transfer of credit from another institution.
(i) Disclosure of fire safety standards and measures
(1) Annual fire safety reports on student housing required
Each eligible institution participating in any program under this subchapter that maintains on-campus student housing facilities shall, on an annual basis, publish a fire safety report, which shall contain information with respect to the campus fire safety practices and standards of that institution, including—
(A) statistics concerning the following in each on-campus student housing facility during the most recent calendar years for which data are available:
(i) the number of fires and the cause of each fire;
(ii) the number of injuries related to a fire that result in treatment at a medical facility;
(iii) the number of deaths related to a fire; and
(iv) the value of property damage caused by a fire;
(B) a description of each on-campus student housing facility fire safety system, including the fire sprinkler system;
(C) the number of regular mandatory supervised fire drills;
(D) policies or rules on portable electrical appliances, smoking, and open flames (such as candles), procedures for evacuation, and policies regarding fire safety education and training programs provided to students, faculty, and staff; and
(E) plans for future improvements in fire safety, if determined necessary by such institution.
(2) Report to the Secretary
Each institution described in paragraph (1) shall, on an annual basis, submit to the Secretary a copy of the statistics required to be made available under paragraph (1)(A).
(3) Current information to campus community
Each institution described in paragraph (1) shall—
(A) make, keep, and maintain a log, recording all fires in on-campus student housing facilities, including the nature, date, time, and general location of each fire; and
(B) make annual reports to the campus community on such fires.
(4) Responsibilities of the Secretary
The Secretary shall—
(A) make the statistics submitted under paragraph (1)(A) to the Secretary available to the public; and
(B) in coordination with nationally recognized fire organizations and representatives of institutions of higher education, representatives of associations of institutions of higher education, and other organizations that represent and house a significant number of students—
(i) identify exemplary fire safety policies, procedures, programs, and practices, including the installation, to the technical standards of the National Fire Protection Association, of fire detection, prevention, and protection technologies in student housing, dormitories, and other buildings;
(ii) disseminate the exemplary policies, procedures, programs and practices described in clause (i) to the Administrator of the United States Fire Administration;
(iii) make available to the public information concerning those policies, procedures, programs, and practices that have proven effective in the reduction of fires; and
(iv) develop a protocol for institutions to review the status of their fire safety systems.
(5) Rules of construction
Nothing in this subsection shall be construed to—
(A) authorize the Secretary to require particular policies, procedures, programs, or practices by institutions of higher education with respect to fire safety, other than with respect to the collection, reporting, and dissemination of information required by this subsection;
(B) affect section 444 of the General Education Provisions Act [
(C) create a cause of action against any institution of higher education or any employee of such an institution for any civil liability; or
(D) establish any standard of care.
(6) Compliance report
The Secretary shall annually report to the authorizing committees regarding compliance with this subsection by institutions of higher education, including an up-to-date report on the Secretary's monitoring of such compliance.
(7) Evidence
Notwithstanding any other provision of law, evidence regarding compliance or noncompliance with this subsection shall not be admissible as evidence in any proceeding of any court, agency, board, or other entity, except with respect to an action to enforce this subsection.
(j) Missing person procedures
(1) Option and procedures
Each institution of higher education that provides on-campus housing and participates in any program under this subchapter shall—
(A) establish a missing student notification policy for students who reside in on-campus housing that—
(i) informs each such student that such student has the option to identify an individual to be contacted by the institution not later than 24 hours after the time that the student is determined missing in accordance with official notification procedures established by the institution under subparagraph (B);
(ii) provides each such student a means to register confidential contact information in the event that the student is determined to be missing for a period of more than 24 hours;
(iii) advises each such student who is under 18 years of age, and not an emancipated individual, that the institution is required to notify a custodial parent or guardian not later 24 hours after the time that the student is determined to be missing in accordance with such procedures;
(iv) informs each such residing student that the institution will notify the appropriate law enforcement agency not later than 24 hours after the time that the student is determined missing in accordance with such procedures; and
(v) requires, if the campus security or law enforcement personnel has been notified and makes a determination that a student who is the subject of a missing person report has been missing for more than 24 hours and has not returned to the campus, the institution to initiate the emergency contact procedures in accordance with the student's designation; and
(B) establish official notification procedures for a missing student who resides in on-campus housing that—
(i) includes procedures for official notification of appropriate individuals at the institution that such student has been missing for more than 24 hours;
(ii) requires any official missing person report relating to such student be referred immediately to the institution's police or campus security department; and
(iii) if, on investigation of the official report, such department determines that the missing student has been missing for more than 24 hours, requires—
(I) such department to contact the individual identified by such student under subparagraph (A)(i);
(II) if such student is under 18 years of age, and not an emancipated individual, the institution to immediately contact the custodial parent or legal guardian of such student; and
(III) if subclauses (I) or (II) do not apply to a student determined to be a missing person, inform the appropriate law enforcement agency.
(2) Rule of construction
Nothing in this subsection shall be construed—
(A) to provide a private right of action to any person to enforce any provision of this subsection; or
(B) to create a cause of action against any institution of higher education or any employee of the institution for any civil liability.
(k) Repealed. Pub. L. 116–260, div. FF, title VII, §702(n)(1)(C), Dec. 27, 2020, 134 Stat. 3186
(l) Entrance counseling for borrowers
(1) Disclosure required prior to disbursement
(A) In general
Each eligible institution shall, at or prior to the time of a disbursement to a first-time borrower of a loan made, insured, or guaranteed under part B (other than a loan made pursuant to
(i) shall be provided in a simple and understandable manner; and
(ii) may be provided—
(I) during an entrance counseling session conduction in person;
(II) on a separate written form provided to the borrower that the borrower signs and returns to the institution; or
(III) online, with the borrower acknowledging receipt of the information.
(B) Use of interactive programs
The Secretary shall encourage institutions to carry out the requirements of subparagraph (A) through the use of interactive programs that test the borrower's understanding of the terms and conditions of the borrower's loans under part B or D, using simple and understandable language and clear formatting.
(2) Information to be provided
The information to be provided to the borrower under paragraph (1)(A) shall include the following:
(A) To the extent practicable, the effect of accepting the loan to be disbursed on the eligibility of the borrower for other forms of student financial assistance.
(B) An explanation of the use of the master promissory note.
(C) Information on how interest accrues and is capitalized during periods when the interest is not paid by either the borrower or the Secretary.
(D) In the case of a loan made under
(E) The definition of half-time enrollment at the institution, during regular terms and summer school, if applicable, and the consequences of not maintaining half-time enrollment.
(F) An explanation of the importance of contacting the appropriate offices at the institution of higher education if the borrower withdraws prior to completing the borrower's program of study so that the institution can provide exit counseling, including information regarding the borrower's repayment options and loan consolidation.
(G) Sample monthly repayment amounts based on—
(i) a range of levels of indebtedness of—
(I) borrowers of loans under
(II) as appropriate, graduate borrowers of loans under
(ii) the average cumulative indebtedness of other borrowers in the same program as the borrower at the same institution.
(H) The obligation of the borrower to repay the full amount of the loan, regardless of whether the borrower completes or does not complete the program in which the borrower is enrolled within the regular time for program completion.
(I) The likely consequences of default on the loan, including adverse credit reports, delinquent debt collection procedures under Federal law, and litigation.
(J) Information on the National Student Loan Data System and how the borrower can access the borrower's records.
(K) The name of and contact information for the individual the borrower may contact if the borrower has any questions about the borrower's rights and responsibilities or the terms and conditions of the loan.
(m) Disclosures of reimbursements for service on advisory boards
(1) Disclosure
Each institution of higher education participating in any program under this subchapter shall report, on an annual basis, to the Secretary, any reasonable expenses paid or provided under
(A) the amount for each specific instance of reasonable expenses paid or provided;
(B) the name of the financial aid official, other employee, or agent to whom the expenses were paid or provided;
(C) the dates of the activity for which the expenses were paid or provided; and
(D) a brief description of the activity for which the expenses were paid or provided.
(2) Report to Congress
The Secretary shall summarize the information received from institutions of higher education under paragraph (1) in a report and transmit such report annually to the authorizing committees.
(
Editorial Notes
References in Text
The Hate Crime Statistics Act, referred to in subsec. (f)(7), is
Title IV of the Economic Opportunity Act of 1964, referred to in subsec. (f)(8)(A), is title IV of
The General Education Provisions Act, referred to in subsec. (h)(2)(C), is title IV of
Section 264 of the Health Insurance Portability and Accountability Act of 1996, referred to in subsec. (i)(5)(B), is section 264 of title II of
Prior Provisions
A prior section 1092,
Another prior section 1092,
Amendments
2020—Subsec. (b)(1)(A)(viii), (x).
Subsec. (k).
2013—Subsec. (f)(1)(C)(iii).
Subsec. (f)(1)(F)(i)(VIII).
Subsec. (f)(1)(F)(ii).
Subsec. (f)(1)(F)(iii).
Subsec. (f)(3).
Subsec. (f)(6)(A).
Subsec. (f)(7).
Subsec. (f)(8).
Subsec. (f)(9).
Subsec. (f)(16).
Subsec. (f)(17).
2009—Subsec. (a)(1).
Subsec. (a)(1)(I).
Subsec. (a)(4)(B).
Subsec. (a)(7)(B)(iv).
Subsec. (e)(3)(B).
Subsec. (f)(1).
Subsec. (f)(3), (4)(A), (5), (8)(A).
Subsec. (g)(2).
Subsec. (i)(2), (3).
Subsec. (i)(5)(B).
Subsec. (k)(2).
Subsec. (l)(1)(A).
2008—Subsec. (a)(1)(G)(iv).
Subsec. (a)(1)(M).
"(i) obtain deferral of the repayment of the principal and interest for service under the Peace Corps Act (as established by the Peace Corps Act (
"(ii) obtain partial cancellation of the student loan for service under the Peace Corps Act (as established by the Peace Corps Act (
Subsec. (a)(1)(P) to (V).
Subsec. (a)(4).
Subsec. (a)(7).
Subsec. (b)(1)(A).
"(i) the average anticipated monthly repayments, a review of the repayment options available, and such debt and management strategies as the institution determines are designed to facilitate the repayment of such indebtedness; and
"(ii) the terms and conditions under which the student may obtain partial cancellation or defer repayment of the principal and interest pursuant to
Subsec. (d)(1).
Subsec. (d)(4).
Subsec. (e)(3).
Subsec. (f)(1).
Subsec. (f)(1)(C)(i) to (iii).
"(i) the enforcement authority of security personnel, including their working relationship with State and local police agencies; and
"(ii) policies which encourage accurate and prompt reporting of all crimes to the campus police and the appropriate police agencies."
Subsec. (f)(1)(F)(ii).
Subsec. (f)(1)(J).
Subsec. (f)(5)(A).
Subsec. (f)(15) to (18).
Subsec. (g)(4)(B) to (D).
"(i) summarize the information and identify trends in the information;
"(ii) aggregate the information by divisions of the National Collegiate Athletic Association; and
"(iii) contain information on each individual institution of higher education."
Subsecs. (h) to (l).
Subsec. (m).
2000—Subsec. (f)(1)(I).
1998—Subsec. (a)(1).
Subsec. (a)(1)(F).
"(i) to outstanding balances on loans under part B of this subchapter for the period of enrollment for which a refund is required,
"(ii) to outstanding balances on loans under part D of this subchapter for the period of enrollment for which a refund is required,
"(iii) to outstanding balances on loans under part E of this subchapter for the period of enrollment for which a refund is required,
"(iv) to awards under subpart 1 of part A of this subchapter,
"(v) to awards under subpart 3 of part A of this subchapter,
"(vi) to other student assistance, and
"(vii) to the student;".
Subsec. (a)(1)(O).
Subsec. (a)(3)(A).
Subsec. (a)(6).
Subsec. (b)(1)(A).
Subsec. (b)(2)(C).
Subsec. (d).
Subsec. (e)(2).
Subsec. (e)(9).
Subsec. (f)(1)(F).
"(i) murder;
"(ii) sex offenses, forcible or nonforcible;
"(iii) robbery;
"(iv) aggravated assault;
"(v) burglary; and
"(vi) motor vehicle theft."
Subsec. (f)(1)(H).
"(i) liquor law violations;
"(ii) drug abuse violations; and
"(iii) weapons possessions."
Subsec. (f)(1)(I).
Subsec. (f)(4).
Subsec. (f)(4)(A).
Subsec. (f)(4)(B), (C).
Subsec. (f)(5).
Subsec. (f)(5)(A).
"(i) any building or property owned or controlled by the institution of higher education within the same reasonably contiguous geographic area and used by the institution in direct support of, or related to its educational purposes; or
"(ii) any building or property owned or controlled by student organizations recognized by the institution."
Subsec. (f)(6).
Subsec. (f)(7), (8).
Subsec. (f)(9) to (15).
Subsec. (g)(1)(I), (J).
Subsec. (g)(4), (5).
1997—Subsec. (a)(3)(B).
Subsec. (e)(9).
1996—Subsec. (e)(9).
1994—Subsec. (g).
1993—Subsec. (a)(1)(F)(i) to (iii).
Subsec. (a)(1)(F)(iv).
Subsec. (a)(1)(F)(vi).
Subsec. (a)(1)(F)(vii).
Subsec. (a)(1)(F)(viii).
Subsec. (a)(1)(L).
Subsec. (a)(3)(A).
Subsec. (b)(1)(A), (2)(A).
Subsec. (d).
Subsec. (e)(9).
1992—Subsec. (a)(1)(F).
Subsec. (a)(1)(K).
Subsec. (a)(1)(L).
Subsec. (a)(1)(M).
Subsec. (a)(1)(N).
Subsec. (b).
Subsec. (f)(1)(F).
"(i) murder;
"(ii) rape;
"(iii) robbery;
"(iv) aggravated assault;
"(v) burglary; and
"(vi) motor vehicle theft."
Subsec. (f)(7).
1991—Subsec. (a)(1)(L).
Subsec. (a)(3)(A) to (C).
Subsec. (a)(5).
Subsec. (b).
Subsec. (f)(1).
1990—Subsec. (a)(1)(L).
Subsec. (a)(3), (4).
Subsec. (b)(3).
Subsec. (d).
Subsec. (e).
Subsec. (f).
1987—Subsec. (b).
Subsec. (d).
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Amendment by
Amendment by
Amendment by
Effective Date of 2013 Amendment
Effective Date of 2009 Amendment
Amendment by
Effective Date of 2000 Amendment
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1997 Amendment
"(1)
"(2)
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by section 486(a), (b), and (c)(2) of
"(A) in the report required on September 1, 1992, include statistics concerning the occurrence on campus of offenses during the period from August 1, 1991, to July 31, 1992;
"(B) in the report required on September 1, 1993, include statistics concerning the occurrence on campus of offenses during (i) the period from August 1, 1991, to December 31, 1991, and (ii) the calendar year 1992;
"(C) in the report required on September 1, 1994, include statistics concerning the occurrence on campus of offenses during (i) the period from August 1, 1991, to December 31, 1991, and (ii) the calendar years 1992 and 1993; and
"(D) in the report required on September 1 of 1995 and each succeeding year, include statistics concerning the occurrence on campus of offenses during the three calendar years preceding the year in which the report is made."
Effective Date of 1990 Amendment
Effective Date of 1987 Amendment
Amendment by
Effective Date
Section effective Oct. 17, 1986, except as otherwise provided, see section 2 of
Subsec. (b) of this section applicable only to periods of enrollment beginning on or after July 1, 1987, see section 407(b) of
Regulations
Model Institution Financial Aid Offer Form
"(a)
"(1) not later than six months after the date of enactment of the Higher Education Opportunity Act [Aug. 14, 2008], convene a group of students, families of students, secondary school guidance counselors, representatives of institutions of higher education (including financial aid administrators, registrars, and business officers), and nonprofit consumer groups for the purpose of offering recommendations for improvements that—
"(A) can be made to financial aid offer forms; and
"(B) include the information described in subsection (b);
"(2) develop a model format for financial aid offer forms based on the recommendations of the group; and
"(3) not later than one year after the date of enactment of the Higher Education Opportunity Act—
"(A) submit recommendations to the authorizing committees (as defined in section 103 of the Higher Education Act of 1965 (
"(B) make the recommendations and model format widely available.
"(b)
"(1) Information on the student's cost of attendance, including the following:
"(A) Tuition and fees.
"(B) Room and board costs.
"(C) Books and supplies.
"(D) Transportation.
"(2) The amount of financial aid that the student does not have to repay, such as scholarships, grants, and work-study assistance, offered to the student for such year, and the conditions of such financial aid.
"(3) The types and amounts of loans under part B, D, or E of title IV of the Higher Education Act of 1965 (
"(4) The net amount that the student, or the student's family on behalf of the student, will have to pay for the student to attend the institution for such year, equal to—
"(A) the cost of attendance for the student for such year; minus
"(B) the amount of financial aid described in paragraphs (2) and (3) that is offered in the financial aid offer form.
"(5) Where a student or the student's family can seek additional information regarding the financial aid offered.
"(6) Any other information the Secretary of Education determines necessary so that students and parents can make informed student loan borrowing decisions."
Congressional Findings
"(1) participation in athletic pursuits plays an important role in teaching young Americans how to work on teams, handle challenges and overcome obstacles;
"(2) participation in athletic pursuits plays an important role in keeping the minds and bodies of young Americans healthy and physically fit;
"(3) there is increasing concern among citizens, educators, and public officials regarding the athletic opportunities for young men and women at institutions of higher education;
"(4) a recent study by the National Collegiate Athletic Association found that in Division I–A institutions, only 20 percent of the average athletic department operations budget of $1,310,000 is spent on women's athletics; 15 percent of the average recruiting budget of $318,402 is spent on recruiting female athletes; the average scholarship expenses for men is $1,300,000 and $505,246 for women; and an average of 143 grants are awarded to male athletes and 59 to women athletes;
"(5) female college athletes receive less than 18 percent of the athletics recruiting dollar and less than 24 percent of the athletics operating dollar;
"(6) male college athletes receive approximately $179,000,000 more per year in athletic scholarship grants than female college athletes;
"(7) prospective students and prospective student athletes should be aware of the commitments of an institution to providing equitable athletic opportunities for its men and women students; and
"(8) knowledge of an institution's expenditures for women's and men's athletic programs would help prospective students and prospective student athletes make informed judgments about the commitments of a given institution of higher education to providing equitable athletic benefits to its men and women students."
"(1) education is fundamental to the development of individual citizens and the progress of the Nation as a whole;
"(2) there is increasing concern among citizens, educators, and public officials regarding the academic performance of students at institutions of higher education;
"(3) a recent study by the National Institute of Independent Colleges and Universities found that just 43 percent of students attending 4-year public colleges and universities and 54 percent of students entering private institutions graduated within 6 years of enrolling;
"(4) the academic performance of student athletes, especially student athletes receiving football and basketball scholarships, has been a source of great concern in recent years;
"(5) more than 10,000 athletic scholarships are provided annually by institutions of higher education;
"(6) prospective students and prospective student athletes should be aware of the educational commitments of an institution of higher education; and
"(7) knowledge of graduation rates would help prospective students and prospective student athletes make an informed judgment about the educational benefits available at a given institution of higher education."
"(1) the reported incidence of crime, particularly violent crime, on some college campuses has steadily risen in recent years;
"(2) although annual 'National Campus Violence Surveys' indicate that roughly 80 percent of campus crimes are committed by a student upon another student and that approximately 95 percent of the campus crimes that are violent are alcohol- or drug-related, there are currently no comprehensive data on campus crimes;
"(3) out of 8,000 postsecondary institutions participating in Federal student aid programs, only 352 colleges and universities voluntarily provide crime statistics directly through the Uniform Crime Report of the Federal Bureau of Investigation, and other institutions report data indirectly, through local police agencies or States, in a manner that does not permit campus statistics to be separated;
"(4) several State legislatures have adopted or are considering legislation to require reporting of campus crime statistics and dissemination of security practices and procedures, but the bills are not uniform in their requirements and standards;
"(5) students and employees of institutions of higher education should be aware of the incidence of crime on campus and policies and procedures to prevent crime or to report occurrences of crime;
"(6) applicants for enrollment at a college or university, and their parents, should have access to information about the crime statistics of that institution and its security policies and procedures; and
"(7) while many institutions have established crime preventive measures to increase the safety of campuses, there is a clear need—
"(A) to encourage the development on all campuses of security policies and procedures;
"(B) for uniformity and consistency in the reporting of crimes on campus; and
"(C) to encourage the development of policies and procedures to address sexual assaults and racial violence on college campuses."
Executive Documents
Improving Repayment Options for Federal Student Loan Borrowers
Memorandum of President of the United States, June 7, 2012, 77 F.R. 35241, provided:
Memorandum for the Secretary of Education [and] the Secretary of the Treasury
More individuals than ever before are using student loans to finance college. Nearly two-thirds of college graduates borrow to pay for college, with an average debt upon graduation of about $26,300. While a college education remains an excellent investment, this debt can be overly burdensome, especially for recent graduates during the first few years of their careers.
The Income-Based Repayment (IBR) plan for Federal student loans currently allows former students to cap their student loan payments at 15 percent of their current discretionary income. This plan can be an effective tool for helping individuals to manage their debt, especially during challenging economic times.
Over the past several years, my Administration has worked to improve repayment options available to borrowers, including through passage of an enhanced Income-Based Repayment plan, which will cap a Federal student loan borrower's monthly payments at 10 percent of his or her discretionary income starting in 2014. And we are pursuing administrative action that may extend these lower payments to some students as soon as the end of this calendar year.
However, too few borrowers are aware of the options available to them to help manage their student loan debt, including reducing their monthly payment through IBR. Additionally, too many borrowers have had difficulties navigating and completing the IBR application process once they have started it.
For many borrowers, the most significant challenge in completing the IBR application has been the income-verification process, which, until recently, required borrowers to provide a signed copy of their income tax return. Although the Department of Education has recently removed some of the hurdles to completing the process, too many borrowers are still struggling to access this important repayment option due to difficulty in applying.
Therefore, by the authority vested in me as President by the Constitution and the laws of the United States of America, I hereby direct the following:
(a) create integrated online and mobile resources for students and former students to use in learning about Federal student aid, including an explanation of (1) the current IBR plan, which allows student loan borrowers to cap their monthly loan payments at 15 percent of their discretionary income and be eligible to have their remaining loan balances forgiven after 25 years of responsible payments; and (2) the proposed Pay As You Earn plan, which will allow many students to cap their monthly loan repayments at 10 percent of their discretionary income and be eligible for loan forgiveness after 20 years of responsible repayment; and
(b) develop and make available to borrowers an online tool to help students make better financial decisions, including understanding their loan debt and its impact on their everyday lives. This tool should incorporate key elements of best practices in financial literacy and link to students' actual Federal loan data to help them understand their individual circumstances and options for repayment.
(i) the authority granted by law to an agency, or the head thereof; or
(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.
(b) This memorandum shall be implemented consistent with applicable law and subject to the availability of appropriations.
(c) This memorandum is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
The Secretary of Education is hereby authorized and directed to publish this memorandum in the Federal Register.
Barack Obama.
Establishing a White House Task Force To Protect Students From Sexual Assault
Memorandum for the Heads of Executive Departments and Agencies
Memorandum of President of the United States, Jan. 22, 2014, 79 F.R. 4385, provided:
The prevalence of rape and sexual assault at our Nation's institutions of higher education is both deeply troubling and a call to action. Studies show that about one in five women is a survivor of attempted or completed sexual violence while in college. In addition, a substantial number of men experience sexual violence during college. Although schools have made progress in addressing rape and sexual assault, more needs to be done to ensure safe, secure environments for students of higher education.
There are a number of Federal laws aimed at making our campuses safer, and the Departments of Education and Justice have been working to enforce them. Among other requirements, institutions of higher education participating in Federal student financial assistance programs (institutions), including colleges, universities, community colleges, graduate and professional schools, for-profit schools, trade schools, and career and technical schools, must provide students with information on programs aimed at preventing rape and sexual assault, and on procedures for students to reporting rape and sexual assault. Institutions must also adopt and publish grievance procedures that provide for the prompt and equitable resolution of rape and sexual assault complaints, and investigate reports of rape and sexual assault and take swift action to prevent their recurrence. Survivors of rape and sexual assault must also be provided with information on how to access the support and services they need. Reports show, however, that institutions' compliance with these Federal laws is uneven and, in too many cases, inadequate. Building on existing enforcement efforts, we must strengthen and address compliance issues and provide institutions with additional tools to respond to and address rape and sexual assault.
Therefore, I am directing the Office of the Vice President and the White House Council on Women and Girls to lead an interagency effort to address campus rape and sexual assault, including coordinating Federal enforcement efforts by executive departments and agencies (agencies) and helping institutions meet their obligations under Federal law. To these ends, it is hereby ordered as follows:
(a) Membership of the Task Force. In addition to the Co-Chairs, the Task Force shall consist of the following members:
(i) the Attorney General;
(ii) the Secretary of the Interior;
(iii) the Secretary of Health and Human Services;
(iv) the Secretary of Education;
(v) the Director of the Office of Science and Technology Policy;
(vi) the Director of the Domestic Policy Council;
(vii) the Cabinet Secretary; and
(viii) the heads of agencies or offices as the Co-Chairs may designate.
(b) A member of the Task Force may designate, to perform the Task Force functions of the member, senior officials who are part of the member's agency or office, and who are full-time officers or employees of the Federal Government.
(i) providing institutions with evidence-based best and promising practices for preventing and responding to rape and sexual assault;
(ii) building on the Federal Government's existing enforcement efforts to ensure that institutions comply fully with their legal obligations to prevent and respond to rape and sexual assault;
(iii) increasing the transparency of the Federal Government's enforcement activities concerning rape and sexual assault, consistent with applicable law and the interests of affected students;
(iv) broadening the public's awareness of individual institutions' compliance with their legal obligation to address rape and sexual assault; and
(v) facilitating coordination among agencies engaged in addressing rape and sexual assault and those charged with helping bring institutions into compliance with the law.
(b) In accordance with applicable law and in addition to regular meetings, the Task Force shall consult with external stakeholders, including institution officials, student groups, parents, athletic and educational associations, local rape crisis centers, and law enforcement agencies.
(c) Because rape and sexual assault also occur in the elementary and secondary school context, the Task Force shall evaluate how its proposals and recommendations may apply to, and may be implemented by, schools, school districts, and other elementary and secondary educational entities receiving Federal financial assistance.
(i) providing examples of instructions, policies, and protocols for institutions, including: rape and sexual assault policies; prevention programs; crisis intervention and advocacy services; complaint and grievance procedures; investigation protocols; adjudicatory procedures; disciplinary sanctions; and training and orientation modules for students, staff, and faculty;
(ii) measuring the success of prevention and response efforts at institutions, whether through compliance with individual policies or through broader assessments of campus climate, attitudes and safety, and providing the public with this information;
(iii) maximizing the Federal Government's effectiveness in combatting campus rape and sexual assault by, among other measures, making its enforcement activities transparent and accessible to students and prospective students nationwide; and
(iv) promoting greater coordination and consistency among the agencies and offices that enforce the Federal laws addressing campus rape and sexual assault and support improved campus responses to sexual violence.
(b) Within 1 year of the date of this memorandum, and then on an annual basis, the Task Force shall provide a report to the President on implementation efforts with respect to this memorandum.
(b) Nothing in this memorandum shall be construed to impair or otherwise affect:
(i) the authority granted by law to an agency or the head thereof; or
(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.
(c) The heads of agencies and offices shall assist and provide information to the Task Force, consistent with applicable law, as may be necessary to carry out the functions of the Task Force. Each agency and office shall bear its own expenses of participating in the Task Force.
(d) This memorandum shall be implemented consistent with applicable law and subject to the availability of appropriations.
(e) The Secretary of Education is authorized and directed to publish this memorandum in the Federal Register.
Barack Obama.
Helping Struggling Federal Student Loan Borrowers Manage Their Debt
Memorandum of President of the United States, June 9, 2014, 79 F.R. 33843, provided:
Memorandum for the Secretary of the Treasury[, and] the Secretary of Education
A college education is the single most important investment that Americans can make in their futures. College remains a good investment, resulting in higher earnings and a lower risk of unemployment. Unfortunately, for many low- and middle-income families, college is slipping out of reach. Over the past three decades, the average tuition at a public four-year college has more than tripled, while a typical family's income has increased only modestly. More students than ever are relying on loans to pay for college. Today, 71 percent of those earning a bachelor's degree graduate with debt, which averages $29,400. While most students are able to repay their loans, many feel burdened by debt, especially as they seek to start a family, buy a home, launch a business, or save for retirement.
Over the past several years, my Administration has worked to ensure that college remains affordable and student debt is manageable, including through raising the maximum Pell Grant award by nearly $1,000, creating the American Opportunity Tax Credit, and expanding access to student loan repayment plans, where monthly obligations are calibrated to a borrower's income and debt. These income-driven repayment plans, like my Pay As You Earn plan, which caps a Federal student loan borrower's payments at 10 percent of income, can be an effective tool to help individuals manage their debt, and pursue their careers while avoiding consequences of defaulting on a Federal student loan, such as a damaged credit rating, a tax refund offset, or garnished wages.
While my Administration has made significant strides in expanding repayment options available to borrowers and building awareness of income-driven repayment plans, more needs to be done. Currently, not all student borrowers of Federal Direct Loans can cap their monthly loan payments at 10 percent of income, and too many struggling borrowers are still unaware of the options available to them to help responsibly manage their debt.
Therefore, by the authority vested in me as President by the Constitution and the laws of the United States of America, I hereby direct the following:
(i) the authority granted by law to an agency, or the head thereof; or
(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.
(b) This memorandum shall be implemented consistent with applicable law and subject to the availability of appropriations.
(c) This memorandum is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
(d) The Secretary of Education is hereby authorized and directed to publish this memorandum in the Federal Register.
Barack Obama.
Student Aid Bill of Rights To Help Ensure Affordable Loan Repayment
Memorandum of President of the United States, Mar. 10, 2015, 80 F.R. 13475, provided:
Memorandum for the Secretary of the Treasury[,] the Secretary of Education[,] the Commissioner of Social Security[,] the Director of the Consumer Financial Protection Bureau[,] the Director of the Office of Management and Budget[,] the Director of the Office of Science and Technology Policy[, and] the Director of the Domestic Policy Council
America thrived in the 20th century in large part because we had the most educated workforce in the world. Today, more than ever, Americans need knowledge and skills to meet the demands of a growing global economy. Since many students borrow to pay for postsecondary education, it is imperative they be able to manage their debt as they embark on their careers.
My Administration has taken historic action to ensure that college remains affordable and student debt remains manageable. We have eliminated tens of billions of dollars in student loan subsidies paid to banks in order to increase the maximum Pell grant by nearly $1,000 and provide a path for borrowers to limit payments on many student loans to 10 percent of income, and we have worked with the Congress to enact the American Opportunity Tax Credit, worth $10,000 over 4 years of college. We have promoted innovation and competition to bring down college costs, increased completion rates, and given consumers clear, transparent information on college performance.
College remains an excellent investment, and student loans enable many who could not otherwise do so to access further education. However, there is more work to do to help students repay their loans responsibly. In 2013, college graduates owed an average of $28,400 in Federal and private loans. More than one in eight Federal borrowers default on their loans within 3 years of leaving school. My Administration has already put in place significant protections that ensure borrowers with credit cards and mortgages are treated fairly. We can and should do much more to give students affordable ways to meet their responsibilities and repay their loans.
Now is the time for stronger protections for the more than 40 million Americans with student loan debt. All student loan borrowers should have access to an efficient and responsive complaint and feedback system that holds loan servicers accountable and promotes transparency, the information and flexibility they need to repay their loan responsibly and avoid default, and protections to ensure that they will be treated fairly even if they struggle to repay their loans.
Therefore, by the authority vested in me as President by the Constitution and the laws of the United States of America, I hereby direct the following:
(a) Complaints and Feedback Regarding Federal Financial Aid. By July 1, 2016, the Secretary of Education shall develop and implement a simple process for borrowers to file complaints regarding Federal financial aid, including those pertaining to lenders, loan servicers, private collection agencies, and institutions of higher education. The process shall allow people to file a complaint and monitor its progress toward resolution. In addition, the Department of Education will provide data from the complaint system to other enforcement agencies that are responsible for oversight of Federal student loan lenders, loan servicers, private collection agencies, and institutions of higher education. By October 1, 2017, and annually thereafter, the Department of Education shall publish a report summarizing and analyzing the content in and resolution of borrower complaints and feedback received through the process. By October 1, 2015, the Secretary of Education shall report to the President, through the Director of the Domestic Policy Council and the Director of the Office of Management and Budget, on the optimal way to address other student complaints regarding institutions of higher education that participate in Federal student financial aid programs.
(b) Coordination Among Other Enforcement Agencies. By October 1, 2015, the Secretary of Education shall, in consultation with the Director of the Consumer Financial Protection Bureau, recommend to the President, through the Director of the Domestic Policy Council and the Director of the Office of Management and Budget, a process for sharing information with relevant enforcement agencies so that those enforcement agencies may refer matters where there may be violations of consumer protection law.
(a) Higher Standards for Federal Direct Loan Servicing. By January 1, 2016, the Secretary of Education shall require all Federal Direct student loan servicers to provide enhanced disclosures to borrowers and strengthened consumer protections. These disclosures and consumer protections shall be improved throughout the loan repayment process, and shall include disclosures to borrowers regarding loan transfers from one servicer to another and notifications when borrowers become delinquent or have incomplete applications to change repayment plans. As soon as practicable, the Secretary shall direct all Federal Direct student loan servicers to apply prepayments to loans with the highest interest rate to ensure consistency across servicers, unless otherwise instructed by borrowers.
(b) Regular Review of Student Loan Performance and Borrower Trends. The Director of the Office of Management and Budget and the Secretary of Education shall convene quarterly an interagency task force consisting of the Department of the Treasury, Department of Education, Office of Management and Budget, and Domestic Policy Council to monitor trends in the student loan portfolio, budget costs, and borrower assistance efforts. No later than August 1, 2015, the task force shall review recommendations for the Department of Education from its members and the Consumer Financial Protection Bureau on best practices in performance-based contracting to better ensure that servicers help borrowers responsibly make affordable monthly payments on their student loans.
(c) Additional Protections for Student Loan Borrowers. By October 1, 2015, the Secretary of Education, in consultation with the Secretary of the Treasury and the Director of the Consumer Financial Protection Bureau, shall issue a report to the President, through the Director of the Domestic Policy Council and the Director of the Office of Management and Budget, on (i) whether statutory or regulatory changes are needed to current provisions that permit the Secretary of Education to specify acts or omissions at institutions of higher education that borrowers may assert as a defense to repayment of a direct loan; and (ii) after assessing the potential applicability of consumer protections in the mortgage and credit card markets to student loans, recommendations for statutory or regulatory changes in this area, including, where appropriate, strong servicing standards, flexible repayment opportunities for all student loan borrowers, and changes to bankruptcy laws.
(d) Higher Customer Service Standards in Income-Driven Repayment Plans. By October 1, 2015, the Secretary of Education and the Secretary of the Treasury shall report to the President, through the Director of the Domestic Policy Council and the Director of the Office of Management and Budget, on the feasibility of developing a system to give borrowers the opportunity to authorize the Internal Revenue Service to release income information for multiple years for the purposes of automatically determining monthly payments under income-driven repayment plans.
(e) Finding New and Better Ways to Communicate with Student Loan Borrowers. By January 1, 2016, the Secretary of Education shall report to the President, through the Director of the Domestic Policy Council, on the findings of a pilot program to test new methods for communicating with borrowers who have Federal Direct student loans on which they are at least 140 days delinquent but which have not entered default. By January 1, 2017, the Secretary shall also, in consultation with the Director of the White House Office of Science and Technology Policy, develop and implement at least five behaviorally designed pilot programs to identify the most effective ways to communicate with borrowers to maximize successful borrower repayment and help reduce delinquency and default and report to the President, through the Director of the Domestic Policy Council, on the status and results of those pilot programs.
(f) Making it Easier for Federal Direct Student Loan Borrowers to Repay Their Student Loans. As soon as practicable, the Secretary of Education shall establish a centralized point of access for all Federal student loan borrowers in repayment, including a central location for account information and payment processing for all Federal student loan servicing, regardless of the specific servicer.
(a) Raising Standards for Student Loan Debt Collectors. By July 1, 2015, the Secretary of Education shall implement actions to ensure that the debt collection process for defaulted Federal student loans is fair, transparent, charges reasonable fees to defaulted borrowers, and effectively assists borrowers in meeting their obligations and returning to good standing. By January 1, 2016, the Secretary of Education shall publish a quarterly performance report on the Department's private debt collection agency contractors that includes the underlying data, disaggregated by contractor.
(b) Providing Clarity on the Rights of Borrowers in Bankruptcy. By July 1, 2015, the Secretary of Education shall issue information highlighting factors the courts have used in their determination of undue hardship, to assist parties who must determine whether to contest an undue hardship discharge in bankruptcy of a Federal student loan.
(c) Protecting Social Security Benefits for Borrowers with Disabilities. By July 1, 2015, the Secretary of Education and the Director of the Office of Management and Budget, in consultation with the Commissioner of Social Security, shall develop a plan to identify Federal student loan borrowers who receive Social Security Disability Insurance (SSDI) and determine which beneficiaries qualify for a total and permanent disability discharge of their student loans under the Higher Education Act of 1965. The plan shall specify a process for the Secretary of Education to stop collection on qualified borrowers in order to ensure that SSDI benefits are not reduced to repay student loans that are eligible for discharge. In addition, the Secretary of Education and the Director of the Office of Management and Budget, in consultation with the Commissioner of Social Security, shall identify the best way to communicate with other SSDI recipients who hold student loans about their repayment options, including income-driven plans, and assist them in entering those plans.
(d) Debt Collection Pilot Program. By July 1, 2016, the Secretary of the Treasury, in consultation with the Secretary of Education, shall report to the President, through the Director of the Domestic Policy Council and the Director of the Office of Management and Budget, on the initial findings of an ongoing pilot program that uses the Department of the Treasury's Bureau of the Fiscal Service to collect on a sample of defaulted Federal student loan debts to help determine how to improve the collection process for defaulted Federal student loans.
(i) the authority granted by law to an agency, or the head thereof; or
(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.
(b) This memorandum shall be implemented consistent with applicable law and subject to the availability of appropriations.
(c) This memorandum is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
(d) The Secretary of Education is hereby authorized and directed to publish this memorandum in the Federal Register.
Barack Obama.
1 So in original. Probably should be capitalized.
3 See References in Text note below.
§1092a. Combined payment plan
(a) Eligibility for plan
Upon the request of the borrower, a lender described in subparagraph (A), (B), or (C) of
(b) Applicability of other requirements
A lender offering a combined payment plan shall comply with all provisions of
(c) Lender eligibility
Such lender may offer a combined payment plan only if—
(1) the lender holds an outstanding loan of that borrower which is selected by the borrower for incorporation into a combined payment plan pursuant to this section (including loans which are selected by the borrower for consolidation under this section); or
(2) the borrower certifies that the borrower has sought and has been unable to obtain a combined payment plan from the holders of the outstanding loans of that borrower.
(d) Borrower selection of competing offers
In the case of multiple offers by lenders to administer a combined payment plan for a borrower, the borrower shall select from among them the lender to administer the combined payment plan including its loan consolidation component.
(e) Effect of plan
Upon selection of a lender to administer the combined payment plan, the lender may reissue any loan under part A of title VII of the Public Health Service Act (
(1) the lender selected to administer the combined payment plan has determined to its satisfaction, in accordance with reasonable and prudent business practices, for each loan being reissued (A) that the loan is a legal, valid, and binding obligation of the borrower; (B) that each such loan was made and serviced in compliance with applicable laws and regulations; and (C) the insurance on such loan is in full force and effect; and
(2) the loan being reissued was not in default (as defined in section 707(e)(3) of the Public Health Service Act [
(f) Notes and insurance certificates
(1) Each loan reissued under subsection (e) shall be evidenced by a note executed by the borrower. The Secretary of Health and Human Services shall insure such loan under a certificate of comprehensive insurance with no insurance limit, but any such certificate shall only be issued to an authorized holder of loans insured under part A of title VII of the Public Health Service Act (
(2) Except as otherwise specifically provided for under the provisions of this section, the terms of any reissued loan shall be the same as the terms of the original loan. The maximum repayment period for a loan reissued under this section shall not exceed the remainder of the period which would have been permitted on the original loan. If the lender holds more than one loan insured under part A of title VII of the Public Health Service Act (
(g) Termination of borrower eligibility
The status of an individual as an eligible combined payment plan borrower terminates upon receipt of a combined payment plan.
(h) Fees and premiums
No origination fee or insurance premium shall be charged to the borrower on any combined payment plan, and no origination fee or insurance premium shall be payable by the lender to the Secretary of Health and Human Services.
(i) Commencement of repayment
Repayment of a combined payment plan shall commence within 60 days after the later of the date of acceptance of the lender's offer to administer a combined payment plan, the making of the consolidation loan or the reissuance of any Health Education Assistance Loans pursuant to subsection (e).
(
Editorial Notes
References in Text
The Public Health Service Act, referred to in subsecs. (a), (b), (e), and (f), is act July 1, 1944, ch. 373,
Amendments
2009—Subsec. (a).
Subsec. (b).
Subsec. (e).
Subsec. (e)(2).
Subsec. (f)(1).
Subsec. (f)(2).
1987—Subsec. (a).
Statutory Notes and Related Subsidiaries
Effective Date of 2009 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
1 See References in Text note below.
§1092b. National Student Loan Data System
(a) Development of System
The Secretary shall consult with a representative group of guaranty agencies, eligible lenders, and eligible institutions to develop a mutually agreeable proposal for the establishment of a National Student Loan Data System containing information regarding loans made, insured, or guaranteed under part B and loans made under parts D and E, and for allowing the electronic exchange of data between program participants and the system. In establishing such data system, the Secretary shall place a priority on providing for the monitoring of enrollment, student status, information about current loan holders and servicers, and internship and residency information. Such data system shall also permit borrowers to use the system to identify the current loan holders and servicers of such borrower's loan not later than one year after October 7, 1998. The information in the data system shall include (but is not limited to)—
(1) the amount and type of each such loan made;
(2) the names and social security numbers of the borrowers;
(3) the guaranty agency responsible for the guarantee of the loan;
(4) the institution of higher education or organization responsible for loans made under parts D and E;
(5) the exact amount of loans partially or totally canceled or in deferment for service under the Peace Corps Act (
(6) the eligible institution in which the student was enrolled or accepted for enrollment at the time the loan was made, and any additional institutions attended by the borrower;
(7) the total amount of loans made to any borrower and the remaining balance of the loans;
(8) the lender, holder, and servicer of such loans;
(9) information concerning the date of any default on the loan and the collection of the loan, including any information concerning the repayment status of any defaulted loan on which the Secretary has made a payment pursuant to
(10) information regarding any deferments or forbearance granted on such loans; and
(11) the date of cancellation of the note upon completion of repayment by the borrower of the loan or payment by the Secretary pursuant to
(b) Additional information
For the purposes of research and policy analysis, the proposal shall also contain provisions for obtaining additional data concerning the characteristics of borrowers and the extent of student loan indebtedness on a statistically valid sample of borrowers under part B. Such data shall include—
(1) information concerning the income level of the borrower and his family and the extent of the borrower's need for student financial assistance, including loans;
(2) information concerning the type of institution attended by the borrower and the year of the program of education for which the loan was obtained;
(3) information concerning other student financial assistance received by the borrower; and
(4) information concerning Federal costs associated with the student loan program under part B, including the costs of interest subsidies, special allowance payments, and other subsidies.
(c) Verification
The Secretary may require lenders, guaranty agencies, or institutions of higher education to verify information or obtain eligibility or other information through the National Student Loan Data System prior to making, guaranteeing, or certifying a loan made under part B, D, or E.
(d) Principles for administering the data system
In managing the National Student Loan Data System, the Secretary shall take actions necessary to maintain confidence in the data system, including, at a minimum—
(1) ensuring that the primary purpose of access to the data system by guaranty agencies, eligible lenders, and eligible institutions of higher education is for legitimate program operations, such as the need to verify the eligibility of a student, potential student, or parent for loans under part B, D, or E;
(2) prohibiting nongovernmental researchers and policy analysts from accessing personally identifiable information;
(3) creating a disclosure form for students and potential students that is distributed when such students complete the common financial reporting form under
(A) informs the students that any subchapter IV grant or loan the students receive will be included in the National Student Loan Data System, and instructs the students on how to access that information;
(B) describes the categories of individuals or entities that may access the data relating to such grant or loan through the data system, and for what purposes access is allowed;
(C) defines and explains the categories of information included in the data system;
(D) provides a summary of the provisions of
(E) explains the measures taken by the Department to safeguard the students' data; and
(F) includes other information as determined appropriate by the Secretary;
(4) requiring guaranty agencies, eligible lenders, and eligible institutions of higher education that enter into an agreement with a potential student, student, or parent of such student regarding a loan under part B, D, or E, to inform the student or parent that such loan shall be—
(A) submitted to the data system; and
(B) accessible to guaranty agencies, eligible lenders, and eligible institutions of higher education determined by the Secretary to be authorized users of the data system;
(5) regularly reviewing the data system to—
(A) delete inactive users from the data system;
(B) ensure that the data in the data system are not being used for marketing purposes; and
(C) monitor the use of the data system by guaranty agencies and eligible lenders to determine whether an agency or lender is accessing the records of students in which the agency or lender has no existing financial interest;
(6) developing standardized protocols for limiting access to the data system that include—
(A) collecting data on the usage of the data system to monitor whether access has been or is being used contrary to the purposes of the data system;
(B) defining the steps necessary for determining whether, and how, to deny or restrict access to the data system; and
(C) determining the steps necessary to reopen access to the data system following a denial or restriction of access; and
(7) preventing access to the data system and any other system used to administer a program under this subchapter by any person or entity for the purpose of assisting a student in managing loan repayment or applying for any repayment plan, consolidation loan, or other benefit authorized by this subchapter, unless such access meets the requirements described in subsection (e).
(e) Requirements for third-party data system access
(1) In general
As provided in paragraph (7) of subsection (d), an authorized person or entity described in paragraph (2) may access the data system and any other system used to administer a program under this subchapter if that access—
(A) is in compliance with terms of service, information security standards, and a code of conduct which shall be established by the Secretary and published in the Federal Register;
(B) is obtained using an access device (as defined in
(C) is obtained without using any access device (as defined in
(2) Authorized person or entity
An authorized person or entity described in this paragraph means—
(A) a guaranty agency, eligible lender, or eligible institution, or a third-party organization acting on behalf of a guaranty agency, eligible lender, or eligible institution, that is in compliance with applicable Federal law (including regulations and guidance); or
(B) a licensed attorney representing a student, borrower, or parent, or another individual who works for a Federal, State, local, or Tribal government or agency, or for a nonprofit organization, providing financial or student loan repayment counseling to a student, borrower, or parent, if—
(i) that attorney or other individual has never engaged in unfair, deceptive, or abusive practices, as determined by the Secretary;
(ii) that attorney or other individual does not work for an entity that has engaged in unfair, deceptive, or abusive practices (including an entity that is owned or operated by a person or entity that engaged in such practices), as determined by the Secretary;
(iii) system access is provided only through a separate point of entry; and
(iv) the attorney or other individual has consent from the relevant student, borrower, or parent to access the system.
(f) Reports to Congress
(1) Annual report
Not later than September 30 of each fiscal year, the Secretary shall prepare and submit to the authorizing committees a report describing—
(A) the effectiveness of existing privacy safeguards in protecting student, borrower, and parent information in the data system;
(B) the success of any new authorization protocols in more effectively preventing abuse of the data system;
(C) the reduction in improper data system access as described in subsection (d)(7);
(D) the ability of the Secretary to monitor how the system is being used, relative to the intended purposes of the data system; and
(E) any protocols, codes of conduct, terms of service, or information security standards developed under paragraphs (6) or (7) of subsection (d) during the preceding fiscal year.
(2) Study
(A) In general
The Secretary shall conduct a study regarding—
(i) available mechanisms for providing students and parents with the ability to opt in or opt out of allowing eligible lenders to access their records in the National Student Loan Data System; and
(ii) appropriate protocols for limiting access to the data system, based on the risk assessment required under subchapter III of
(B) Submission of study
Not later than three years after August 14, 2008, the Secretary shall prepare and submit a report on the findings of the study under subparagraph (A) to the authorizing committees.
(g) Standardization of data reporting
(1) In general
The Secretary shall by regulation prescribe standards and procedures (including relevant definitions) that require all lenders and guaranty agencies to report information on all aspects of loans made under this subchapter in uniform formats in order to permit the direct comparison of data submitted by individual lenders, servicers or guaranty agencies.
(2) Activities
For the purpose of establishing standards under this section, the Secretary shall—
(A) consult with guaranty agencies, lenders, institutions of higher education, and organizations representing the groups described in paragraph (1);
(B) develop standards designed to be implemented by all guaranty agencies and lenders with minimum modifications to existing data processing hardware and software; and
(C) publish the specifications selected to be used to encourage the automation of exchanges of information between all parties involved in loans under this subchapter.
(h) Common identifiers
The Secretary shall, not later than July 1, 1993—
(1) revise the codes used to identify institutions and students in the student loan data system authorized by this section to make such codes consistent with the codes used in each database used by the Department of Education that contains information of participation in programs under this subchapter; and
(2) modify the design or operation of the system authorized by this section to ensure that data relating to any institution is readily accessible and can be used in a form compatible with the integrated postsecondary education data system (IPEDS).
(i) Integration of databases
The Secretary shall integrate the National Student Loan Data System with the Pell Grant applicant and recipient databases as of January 1, 1994, and any other databases containing information on participation in programs under this subchapter.
(
Editorial Notes
References in Text
The Peace Corps Act, referred to in subsec. (a)(5), is
The Domestic Volunteer Service Act of 1973, referred to in subsec. (a)(5), is
Amendments
2020—Subsec. (d)(7).
Subsec. (e).
Subsec. (f).
Subsec. (f)(1)(A).
Subsec. (f)(1)(C), (D).
Subsec. (f)(1)(E).
Subsecs. (g), (h).
2009—Subsec. (a)(5).
Subsec. (d)(3)(D).
2008—Subsec. (a)(5).
Subsec. (a)(6).
Subsec. (a)(7) to (11).
Subsec. (d).
Subsec. (e).
Subsecs. (f) to (h).
1998—Subsec. (a).
1993—Subsec. (a).
Subsec. (a)(4).
Subsec. (c).
Subsec. (e)(1), (2)(C).
1992—Subsec. (a).
Subsecs. (e) to (g).
1990—Subsec. (a)(5).
1989—
1987—Subsec. (b)(1).
Subsec. (b)(2)(D).
Subsec. (b)(3).
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Amendment by
Effective Date of 2009 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
§1092c. Simplification of lending process for borrowers
(a) All like loans treated as one
To the extent practicable, and with the cooperation of the borrower, eligible lenders shall treat all loans made to a borrower under the same section of part B as one loan and shall submit one bill to the borrower for the repayment of all such loans for the monthly or other similar period of repayment. Any deferments on one such loan will be considered a deferment on the total amount of all such loans.
(b) One lender, one guaranty agency
To the extent practicable, and with the cooperation of the borrower, the guaranty agency shall ensure that a borrower only have one lender, one holder, one guaranty agency, and one servicer with which to maintain contact.
(
§1092d. Scholarship fraud assessment and awareness activities
(a) Annual report on scholarship fraud
(1) Requirement
The Attorney General and the Secretary of Education, in conjunction with the Federal Trade Commission, shall jointly submit to Congress each year a report on fraud in the offering of financial assistance for purposes of financing an education at an institution of higher education. Each report shall contain an assessment of the nature and quantity of incidents of such fraud during the one-year period ending on the date of such report.
(2) Initial report
The first report under paragraph (1) shall be submitted not later than 18 months after November 1, 2000.
(b) National awareness activities
The Secretary of Education shall, in conjunction with the Federal Trade Commission, maintain a scholarship fraud awareness site on the Internet web site of the Department of Education. The scholarship fraud awareness site may include the following:
(1) Appropriate materials from the Project Scholarscam awareness campaign of the Commission, including examples of common fraudulent schemes.
(2) A list of companies and individuals who have been convicted of scholarship fraud in Federal or State court.
(3) An Internet-based message board to provide a forum for public complaints and experiences with scholarship fraud.
(4) An electronic comment form for individuals who have experienced scholarship fraud or have questions about scholarship fraud, with appropriate mechanisms for the transfer of comments received through such forms to the Department and the Commission.
(5) Internet links to other sources of information on scholarship fraud, including Internet web sites of appropriate nongovernmental organizations, colleges and universities, and government agencies.
(6) An Internet link to the Better Business Bureau in order to assist individuals in assessing the business practices of other persons and entities.
(7) Information on means of communicating with the Federal Student Aid Information Center, including telephone and Internet contact information.
(
Editorial Notes
Codification
Section was enacted as part of the College Scholarship Fraud Prevention Act of 2000, and not as part of title IV of the Higher Education Act of 1965 which comprises this subchapter.
Statutory Notes and Related Subsidiaries
Findings
"(1) A substantial amount of fraud occurs in the offering of college education financial assistance services to consumers.
"(2) Such fraud includes the following:
"(A) Misrepresentations regarding the provision of sources from which consumers may obtain financial assistance (including scholarships, grants, loans, tuition, awards, and other assistance) for purposes of financing a college education.
"(B) Misrepresentations regarding the provision of portfolios of such assistance tailored to the needs of specific consumers.
"(C) Misrepresentations regarding the pre-selection of students as eligible to receive such assistance.
"(D) Misrepresentations that such assistance will be provided to consumers who purchase specified services from specified entities.
"(E) Misrepresentations regarding the business relationships between particular entities and entities that award or may award such assistance.
"(F) Misrepresentations regarding refunds of processing fees if consumers are not provided specified amounts of such assistance, and other misrepresentations regarding refunds.
"(3) In 1996, the Federal Trade Commission launched 'Project Scholarscam', a joint law enforcement and consumer education campaign directed at fraudulent purveyors of so-called 'scholarship services'.
"(4) Despite the efforts of the Federal Trade Commission, colleges and universities, and nongovernmental organizations, the continued lack of awareness about scholarship fraud permits a significant amount of fraudulent activity to occur."
§1092e. College access initiative
(a) State-by-State information
The Secretary shall direct each guaranty agency with which the Secretary has an agreement under
(b) Guaranty agency activities
(1) Plan and activity required
Each guaranty agency with which the Secretary has an agreement under
(2) Activities
Each guaranty agency shall undertake such activities as are necessary to promote access to postsecondary education for students through providing information on college planning, career preparation, and paying for college. The guaranty agency shall publicize such information and coordinate such activities with other entities that either provide or distribute such information in the States for which such guaranty agency serves as the designated guarantor.
(3) Funding
The activities required by this section may be funded from the guaranty agency's Operating Fund established pursuant to
(4) Rule of construction
Nothing in this subsection shall be construed to require a guaranty agency to duplicate any efforts under way on February 8, 2006, that meet the requirements of this section.
(c) Access to information
(1) Secretary's responsibility
The Secretary shall ensure the availability of the information provided, by the guaranty agencies in accordance with this section, to students, parents, and other interested individuals, through Internet web links or other methods prescribed by the Secretary.
(2) Guaranty agency responsibility
The guaranty agencies shall ensure that the information required by this section is available without charge in printed format for students and parents requesting such information.
(3) Publicity
Not later than 270 days after February 8, 2006, the Secretary and guaranty agencies shall publicize the availability of the information required by this section, with special emphasis on ensuring that populations that are traditionally underrepresented in postsecondary education are made aware of the availability of such information.
(
Statutory Notes and Related Subsidiaries
Effective Date
Section effective July 1, 2006, except as otherwise provided, see section 8001(c) of
§1092f. Early awareness and outreach of financial aid eligibility
(a) In general
The Secretary shall implement early outreach activities in order to provide prospective students and their families with information about financial aid and estimates of financial aid. Such early outreach activities shall include the activities described in subsections (b), (c), and (d).
(b) Pell Grant early awareness estimates
(1) In general
The Secretary shall produce a consumer-tested method of estimating student eligibility for Federal Pell Grants under
(A) a single-parent household;
(B) a household with two parents; or
(C) a household with no children or dependents.
(2) Consumer testing
(A) In general
The method of estimating eligibility described in paragraph (1) shall be consumer tested with prospective first-generation students and families as well as low-income individuals and families.
(B) Updates
For award year 2024–2025 and each fourth succeeding award year thereafter, the design of the method of estimating eligibility shall be updated based on additional consumer testing with the populations described in subparagraph (A).
(3) Distribution
The method of estimating eligibility described in paragraph (1) shall be—
(A) made publicly and prominently available on the Department's website; and
(B) actively shared by the Secretary with—
(i) institutions of higher education participating in programs under this subchapter;
(ii) all middle and secondary schools eligible for funds under part A of title I of the Elementary and Secondary Education Act of 1965 [
(iii) local educational agencies and middle schools and high schools that serve students not less than 25 percent of whom meet a measure of poverty as described in section 1113(a)(5) of the Elementary and Secondary Education Act of 1965 [
(iv) agencies responsible for administering means-tested Federal benefit programs, as defined in
(4) Electronic estimator on FAFSA
In accordance with subsection (d)(5) of
(c) Early awareness plans
The Secretary shall establish and implement early awareness and outreach plans to provide early information about the availability of Federal financial aid and estimates of prospective students' eligibility for Federal financial aid as well as to promote the attainment of postsecondary education specifically among prospective first-generation students and families as well as low-income individuals and families, as follows:
(1) Outreach plans for low-income families
(A) In general
The Secretary shall develop plans for each population described in this subparagraph to disseminate information about the availability of Federal financial aid under this subchapter, in addition to and in coordination with the distribution of the method of estimating eligibility under subsection (b), to—
(i) all middle schools and secondary schools eligible for funds under part A of title I of the Elementary and Secondary Education Act of 1965 [
(ii) local educational agencies and middle schools and high schools that serve students not less than 25 percent of whom meet a measure of poverty as described in section 1113(a)(5) of the Elementary and Secondary Education Act [
(iii) households receiving assistance under the supplemental nutrition assistance program established under the Food and Nutrition Act of 2008 (
(iv) agencies responsible for administering means-tested Federal benefit programs, as defined in
(B) Content of plans
The plans described in paragraph (A) shall—
(i) provide students and their families with information on—
(I) the availability of the College Scorecard or any similar successor website;
(II) the electronic estimates of financial aid available under subsection (b);
(III) Federal financial aid available to students, including eligibility criteria for the Federal financial aid and an explanation of the Federal financial aid programs (including applicable Federal educational tax credits); and
(IV) resources that can inform students of financial aid that may be available from state-based financial aid, state-based college savings programs, and scholarships and other non-governmental sources;
(ii) describe how the dissemination of information will be conducted by the Secretary.
(C) Reporting and updates
The Secretary shall post the information about the plans under subparagraph (A) and associated goals publicly on the Department's website. On an annual basis, the Secretary shall report qualitative and quantitative outcomes regarding the implementation of the plans under subparagraph (A). The Secretary shall review and update such plans not less often than every 4 award years with the goal of progressively increasing the impact of the activities under this paragraph.
(D) Partnership
The Secretary may partner with States, State systems of higher education, institutions of higher education, or college access organizations to carry out this paragraph.
(2) Interagency coordination plans
(A) In general
The Secretary shall develop interagency coordination plans in order to inform more students and families, including low-income individuals or families and recipients of means-tested Federal benefits, about the availability of Federal financial aid under this subchapter through participation in existing Federal programs or tax benefits that serve low-income individuals or families, in coordination with the following Secretaries:
(i) The Secretary of the Treasury.
(ii) The Secretary of Labor.
(iii) The Secretary of Health and Human Services.
(iv) The Secretary of Agriculture.
(v) The Secretary of Housing and Urban Development.
(vi) The Secretary of Commerce.
(vii) The Secretary of Veterans Affairs.
(viii) The Secretary of the Interior.
(B) Process, activities, and goals
Each interagency coordination plan under subparagraph (A) shall—
(i) identify opportunities in which low-income individuals and families could be informed of the availability of Federal financial aid under this subchapter through access to other Federal programs that serve low-income individuals and families;
(ii) identify methods to effectively inform low-income individuals and families of the availability of Federal financial aid for postsecondary education under this subchapter and assist such individuals in completing the Free Application for Federal Student Aid;
(iii) develop early awareness and FAFSA completion activities that align with the opportunities and methods identified under clauses (i) and (ii);
(iv) establish goals regarding the effects of the activities to be implemented under clause (iii); and
(v) provide information on how students and families can maintain access to Federal programs that serve low-income individuals and families operated by the agencies identified under subsection (A) while attending an institution of higher education.
(C) Plan with Secretary of the Treasury
The interagency coordination plan under subparagraph (A)(i) between the Secretary and the Secretary of the Treasury shall further include specific methods to increase the application for Federal financial aid under this subchapter from individuals who file Federal tax returns, including collaboration with tax preparation entities or other third parties, as appropriate.
(D) Reporting and updates
The Secretary shall post the information about the interagency coordination plans under this paragraph and associated goals publicly on the Department's website. The plans shall have the goal of progressively increasing the impact of the activities under this paragraph by increasing the number of low-income applicants for, and recipients of, Federal financial aid. The plans shall be updated not less than once every 4 years.
(3) Nationwide participation in early awareness plans
(A) In general
The Secretary shall solicit voluntary public commitments from entities, such as States, State systems of higher education, institutions of higher education, and other interested organizations, to carry out early awareness plans, which shall include goals, to—
(i) notify prospective and existing students who are low-income individuals and families about their eligibility for Federal aid under this subchapter, as well as State-based financial aid, if applicable, on an annual basis;
(ii) increase the number of prospective and current students who are low-income individuals and families filing the Free Application for Federal Student Aid; and
(iii) increase the number of prospective and current students who are low-income individuals and families enrolling in postsecondary education.
(B) Reporting and updates
Each entity that makes a voluntary public commitment to carry out an early awareness plan may submit quantitative and qualitative data based on the entity's progress toward the goals of the plan annually prior to a date selected by the Secretary.
(C) Early awareness champions
Based on data submitted by entities, the Secretary shall select and designate entities submitting public commitments, plans, and goals, as Early Awareness Champions on an annual basis. Those entities designated as Early Awareness Champions shall provide one or more case studies regarding the activities the entity undertook under this paragraph which shall be made public by the Secretary on the Department of Education website to promote best practices.
(d) Public awareness campaign
(1) In general
The Secretary shall develop and implement a public awareness campaign designed using current and relevant independent research regarding strategies and media platforms found to be most effective in communicating with low-income populations in order to increase national awareness regarding the availability of Federal Pell Grants and financial aid under this subchapter and, at the option of the Secretary, potential availability of state need-based financial aid.
(2) Coordination
The public awareness campaign described in paragraph (1) shall leverage the activities in subsections (b) and (c) to highlight eligibility among low-income populations. In developing and implementing the campaign, the Secretary may work in coordination with States, institutions of higher education, early intervention and outreach programs under this subchapter, other Federal agencies, agencies responsible for administering means-tested Federal benefit programs (as defined in
(3) Reporting
The Secretary shall report on the success of the public awareness campaign described in paragraph (1) annually regarding the extent to which the public and target populations were reached using data commonly used to evaluate advertising and outreach campaigns and data regarding whether the campaign produced any increase in applicants for Federal aid under this subchapter publicly on the Department of Education website.
(
Editorial Notes
References in Text
The Elementary and Secondary Education Act of 1965, referred to in subsecs. (b)(3)(B)(ii) and (c)(1)(A)(i), is
The Food and Nutrition Act of 2008, referred to in subsec. (c)(1)(A)(iii), is
Amendments
2022—Subsec. (b)(2)(B).
2020—
2010—Subsec. (b)(1)(A).
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Amendment by
Effective Date of 2010 Amendment
Amendment by
§1093. Distance education demonstration programs
(a) Purpose
It is the purpose of this section—
(1) to allow demonstration programs that are strictly monitored by the Department of Education to test the quality and viability of expanded distance education programs currently restricted under this chapter;
(2) to provide for increased student access to higher education through distance education programs; and
(3) to help determine—
(A) the most effective means of delivering quality education via distance education course offerings;
(B) the specific statutory and regulatory requirements which should be altered to provide greater access to high quality distance education programs; and
(C) the appropriate level of Federal assistance for students enrolled in distance education programs.
(b) Demonstration programs authorized
(1) In general
In accordance with the provisions of subsection (d), the Secretary is authorized to select institutions of higher education, systems of such institutions, or consortia of such institutions for voluntary participation in a Distance Education Demonstration Program that provides participating institutions with the ability to offer distance education programs that do not meet all or a portion of the sections or regulations described in paragraph (2).
(2) Waivers
The Secretary is authorized to waive for any institution of higher education, system of institutions of higher education, or consortium participating in a Distance Education Demonstration Program, the requirements of section 1087ll(5) 1 of this title as the section relates to computer costs,
(3) Eligible applicants
(A) Eligible institutions
Except as provided in subparagraphs (B), (C), and (D), only an institution of higher education that is eligible to participate in programs under this subchapter shall be eligible to participate in the demonstration program authorized under this section.
(B) Prohibition
An institution of higher education described in
(C) Special rule
Subject to subparagraph (B), an institution of higher education that meets the requirements of subsection (a) of
(D) Requirement
Notwithstanding any other provision of this paragraph, Western Governors University shall be considered eligible to participate in the demonstration program authorized under this section. In addition to the waivers described in paragraph (2), the Secretary may waive the provisions of subchapter I and this part and part H of this subchapter for such university that the Secretary determines to be appropriate because of the unique characteristics of such university. In carrying out the preceding sentence, the Secretary shall ensure that adequate program integrity and accountability measures apply to such university's participation in the demonstration program authorized under this section.
(c) Application
(1) In general
Each institution, system, or consortium of institutions desiring to participate in a demonstration program under this section shall submit an application to the Secretary at such time and in such manner as the Secretary may require.
(2) Contents
Each application shall include—
(A) a description of the institution, system, or consortium's consultation with a recognized accrediting agency or association with respect to quality assurances for the distance education programs to be offered;
(B) a description of the statutory and regulatory requirements described in subsection (b)(2) or, if applicable, subsection (b)(3)(D) for which a waiver is sought and the reasons for which the waiver is sought;
(C) a description of the distance education programs to be offered;
(D) a description of the students to whom distance education programs will be offered;
(E) an assurance that the institution, system, or consortium will offer full cooperation with the ongoing evaluations of the demonstration program provided for in this section; and
(F) such other information as the Secretary may require.
(d) Selection
(1) In general
For the first year of the demonstration program authorized under this section, the Secretary is authorized to select for participation in the program not more than 15 institutions, systems of institutions, or consortia of institutions. For the third year of the demonstration program authorized under this section, the Secretary may select not more than 35 institutions, systems, or consortia, in addition to the institutions, systems, or consortia selected pursuant to the preceding sentence, to participate in the demonstration program if the Secretary determines that such expansion is warranted based on the evaluations conducted in accordance with subsections (f) and (g).
(2) Considerations
In selecting institutions to participate in the demonstration program in the first or succeeding years of the program, the Secretary shall take into account—
(A) the number and quality of applications received;
(B) the Department's capacity to oversee and monitor each institution's participation;
(C) an institution's—
(i) financial responsibility;
(ii) administrative capability; and
(iii) program or programs being offered via distance education; and
(D) ensuring the participation of a diverse group of institutions with respect to size, mission, and geographic distribution.
(e) Notification
The Secretary shall make available to the public and to the authorizing committees a list of institutions, systems or consortia selected to participate in the demonstration program authorized by this section. Such notice shall include a listing of the specific statutory and regulatory requirements being waived for each institution, system or consortium and a description of the distance education courses to be offered.
(f) Evaluations and reports
(1) Evaluation
The Secretary shall evaluate the demonstration programs authorized under this section on an annual basis. Such evaluations specifically shall review—
(A) the extent to which the institution, system or consortium has met the goals set forth in its application to the Secretary, including the measures of program quality assurance;
(B) the number and types of students participating in the programs offered, including the progress of participating students toward recognized certificates or degrees and the extent to which participation in such programs increased;
(C) issues related to student financial assistance for distance education;
(D) effective technologies for delivering distance education course offerings; and
(E) the extent to which statutory or regulatory requirements not waived under the demonstration program present difficulties for students or institutions.
(2) Policy analysis
The Secretary shall review current policies and identify those policies that present impediments to the development and use of distance education and other nontraditional methods of expanding access to education.
(3) Annual reports
The Secretary shall provide reports to the authorizing committees on an annual basis regarding—
(A) the demonstration programs authorized under this section; and
(B) the number and types of students receiving assistance under this subchapter for instruction leading to a recognized certificate, as provided for in
(g) Oversight
In conducting the demonstration program authorized under this section, the Secretary shall, on a continuing basis—
(1) assure compliance of institutions, systems or consortia with the requirements of this subchapter (other than the sections and regulations that are waived under subsections (b)(2) and (b)(3)(D));
(2) provide technical assistance;
(3) monitor fluctuations in the student population enrolled in the participating institutions, systems or consortia; and
(4) consult with appropriate accrediting agencies or associations and appropriate State regulatory authorities.
(h) "Distance education" defined
For the purpose of this section, the term "distance education" means an educational process that is characterized by the separation, in time or place, between instructor and student. Such term may include courses offered principally through the use of—
(1) television, audio, or computer transmission, such as open broadcast, closed circuit, cable, microwave, or satellite transmission;
(2) audio or computer conferencing;
(3) video cassettes or discs; or
(4) correspondence.
(
Editorial Notes
References in Text
Prior Provisions
A prior section 1093,
Amendments
2008—Subsec. (e).
Subsec. (f)(3).
1998—
1992—
Statutory Notes and Related Subsidiaries
Effective Date of 1998 Amendment
Amendment by
1 See References in Text note below.
§1093a. Articulation agreements
(a) Definition
In this section, the term "articulation agreement" means an agreement between or among institutions of higher education that specifies the acceptability of courses in transfer toward meeting specific degree or program requirements.
(b) Program to encourage articulation agreements
(1) Program established
The Secretary shall carry out a program for States, in cooperation with public institutions of higher education, to develop, enhance, and implement comprehensive articulation agreements between or among such institutions in a State, and (to the extent practicable) across State lines, by 2010. Such articulation agreements shall be made widely and publicly available on the websites of States and such institutions. In developing, enhancing, and implementing articulation agreements, States and public institutions of higher education may employ strategies, where applicable, including—
(A) common course numbering;
(B) a general education core curriculum;
(C) management systems regarding course equivalency, transfer of credit, and articulation; and
(D) other strategies identified by the Secretary.
(2) Technical assistance provided
The Secretary shall provide technical assistance to States and public institutions of higher education for the purposes of developing and implementing articulation agreements in accordance with this subsection.
(3) Rule of construction
Nothing in this subsection shall be construed to authorize the Secretary to require particular policies, procedures, or practices by institutions of higher education with respect to articulation agreements.
(
§1094. Program participation agreements
(a) Required for programs of assistance; contents
In order to be an eligible institution for the purposes of any program authorized under this subchapter, an institution must be an institution of higher education or an eligible institution (as that term is defined for the purpose of that program) and shall, except with respect to a program under subpart 4 of part A, enter into a program participation agreement with the Secretary. The agreement shall condition the initial and continuing eligibility of an institution to participate in a program upon compliance with the following requirements:
(1) The institution will use funds received by it for any program under this subchapter and any interest or other earnings thereon solely for the purpose specified in and in accordance with the provision of that program.
(2) The institution shall not charge any student a fee for processing or handling any application, form, or data required to determine the student's eligibility for assistance under this subchapter or the amount of such assistance.
(3) The institution will establish and maintain such administrative and fiscal procedures and records as may be necessary to ensure proper and efficient administration of funds received from the Secretary or from students under this subchapter, together with assurances that the institution will provide, upon request and in a timely fashion, information relating to the administrative capability and financial responsibility of the institution to—
(A) the Secretary;
(B) the appropriate guaranty agency; and
(C) the appropriate accrediting agency or association.
(4) The institution will comply with the provisions of subsection (c) of this section and the regulations prescribed under that subsection, relating to fiscal eligibility.
(5) The institution will submit reports to the Secretary and, in the case of an institution participating in a program under part B or part E, to holders of loans made to the institution's students under such parts at such times and containing such information as the Secretary may reasonably require to carry out the purpose of this subchapter.
(6) The institution will not provide any student with any statement or certification to any lender under part B that qualifies the student for a loan or loans in excess of the amount that student is eligible to borrow in accordance with sections 1075(a), 1078(a)(2), and 1078(b)(1)(A) and (B) of this title.
(7) The institution will comply with the requirements of
(8) In the case of an institution that advertises job placement rates as a means of attracting students to enroll in the institution, the institution will make available to prospective students, at or before the time of application (A) the most recent available data concerning employment statistics, graduation statistics, and any other information necessary to substantiate the truthfulness of the advertisements, and (B) relevant State licensing requirements of the State in which such institution is located for any job for which the course of instruction is designed to prepare such prospective students.
(9) In the case of an institution participating in a program under part B or D, the institution will inform all eligible borrowers enrolled in the institution about the availability and eligibility of such borrowers for State grant assistance from the State in which the institution is located, and will inform such borrowers from another State of the source for further information concerning such assistance from that State.
(10) The institution certifies that it has in operation a drug abuse prevention program that is determined by the institution to be accessible to any officer, employee, or student at the institution.
(11) In the case of any institution whose students receive financial assistance pursuant to
(12) The institution certifies that—
(A) the institution has established a campus security policy; and
(B) the institution has complied with the disclosure requirements of
(13) The institution will not deny any form of Federal financial aid to any student who meets the eligibility requirements of this subchapter on the grounds that the student is participating in a program of study abroad approved for credit by the institution.
(14)(A) The institution, in order to participate as an eligible institution under part B or D, will develop a Default Management Plan for approval by the Secretary as part of its initial application for certification as an eligible institution and will implement such Plan for two years thereafter.
(B) Any institution of higher education which changes ownership and any eligible institution which changes its status as a parent or subordinate institution shall, in order to participate as an eligible institution under part B or D, develop a Default Management Plan for approval by the Secretary and implement such Plan for two years after its change of ownership or status.
(C) This paragraph shall not apply in the case of an institution in which (i) neither the parent nor the subordinate institution has a cohort default rate in excess of 10 percent, and (ii) the new owner of such parent or subordinate institution does not, and has not, owned any other institution with a cohort default rate in excess of 10 percent.
(15) The institution acknowledges the authority of the Secretary, guaranty agencies, lenders, accrediting agencies, the Secretary of Veterans Affairs, and the State agencies under subpart 1 of part H to share with each other any information pertaining to the institution's eligibility to participate in programs under this subchapter or any information on fraud and abuse.
(16)(A) The institution will not knowingly employ an individual in a capacity that involves the administration of programs under this subchapter, or the receipt of program funds under this subchapter, who has been convicted of, or has pled nolo contendere or guilty to, a crime involving the acquisition, use, or expenditure of funds under this subchapter, or has been judicially determined to have committed fraud involving funds under this subchapter or contract with an institution or third party servicer that has been terminated under
(B) The institution will not knowingly contract with or employ any individual, agency, or organization that has been, or whose officers or employees have been—
(i) convicted of, or pled nolo contendere or guilty to, a crime involving the acquisition, use, or expenditure of funds under this subchapter; or
(ii) judicially determined to have committed fraud involving funds under this subchapter.
(17) The institution will complete surveys conducted as a part of the Integrated Postsecondary Education Data System (IPEDS) or any other Federal postsecondary institution data collection effort, as designated by the Secretary, in a timely manner and to the satisfaction of the Secretary.
(18) The institution will meet the requirements established pursuant to
(19) The institution will not impose any penalty, including the assessment of late fees, the denial of access to classes, libraries, or other institutional facilities, or the requirement that the student borrow additional funds, on any student because of the student's inability to meet his or her financial obligations to the institution as a result of the delayed disbursement of the proceeds of a loan made under this subchapter due to compliance with the provisions of this subchapter, or delays attributable to the institution.
(20) The institution will not provide any commission, bonus, or other incentive payment based directly or indirectly on success in securing enrollments or financial aid to any persons or entities engaged in any student recruiting or admission activities or in making decisions regarding the award of student financial assistance, except that this paragraph shall not apply to the recruitment of foreign students residing in foreign countries who are not eligible to receive Federal student assistance.
(21) The institution will meet the requirements established by the Secretary and accrediting agencies or associations, and will provide evidence to the Secretary that the institution has the authority to operate within a State.
(22) The institution will comply with the refund policy established pursuant to
(23)(A) The institution, if located in a State to which
(B) The institution shall request the forms from the State 120 days prior to the deadline for registering to vote within the State. If an institution has not received a sufficient quantity of forms to fulfill this section from the State within 60 days prior to the deadline for registering to vote in the State, the institution shall not be held liable for not meeting the requirements of this section during that election year.
(C) This paragraph shall apply to general and special elections for Federal office, as defined in
(D) The institution shall be considered in compliance with the requirements of subparagraph (A) for each student to whom the institution electronically transmits a message containing a voter registration form acceptable for use in the State in which the institution is located, or an Internet address where such a form can be downloaded, if such information is in an electronic message devoted exclusively to voter registration.
(24) In the case of a proprietary institution of higher education (as defined in
(25) In the case of an institution that participates in a loan program under this subchapter, the institution will—
(A) develop a code of conduct with respect to such loans with which the institution's officers, employees, and agents shall comply, that—
(i) prohibits a conflict of interest with the responsibilities of an officer, employee, or agent of an institution with respect to such loans; and
(ii) at a minimum, includes the provisions described in subsection (e);
(B) publish such code of conduct prominently on the institution's website; and
(C) administer and enforce such code by, at a minimum, requiring that all of the institution's officers, employees, and agents with responsibilities with respect to such loans be annually informed of the provisions of the code of conduct.
(26) The institution will, upon written request, disclose to the alleged victim of any crime of violence (as that term is defined in
(27) In the case of an institution that has entered into a preferred lender arrangement, the institution will at least annually compile, maintain, and make available for students attending the institution, and the families of such students, a list, in print or other medium, of the specific lenders for loans made, insured, or guaranteed under this subchapter or private education loans that the institution recommends, promotes, or endorses in accordance with such preferred lender arrangement. In making such list, the institution shall comply with the requirements of subsection (h).
(28)(A) The institution will, upon the request of an applicant for a private education loan, provide to the applicant the form required under
(B) For purposes of this paragraph, the term "private education loan" has the meaning given such term in
(29) The institution certifies that the institution—
(A) has developed plans to effectively combat the unauthorized distribution of copyrighted material, including through the use of a variety of technology-based deterrents; and
(B) will, to the extent practicable, offer alternatives to illegal downloading or peer-to-peer distribution of intellectual property, as determined by the institution in consultation with the chief technology officer or other designated officer of the institution.
(b) Hearings
(1) An institution that has received written notice of a final audit or program review determination and that desires to have such determination reviewed by the Secretary shall submit to the Secretary a written request for review not later than 45 days after receipt of notification of the final audit or program review determination.
(2) The Secretary shall, upon receipt of written notice under paragraph (1), arrange for a hearing and notify the institution within 30 days of receipt of such notice the date, time, and place of such hearing. Such hearing shall take place not later than 120 days from the date upon which the Secretary notifies the institution.
(c) Audits; financial responsibility; enforcement of standards
(1) Notwithstanding any other provisions of this subchapter, the Secretary shall prescribe such regulations as may be necessary to provide for—
(A)(i) except as provided in clauses (ii) and (iii), a financial audit of an eligible institution with regard to the financial condition of the institution in its entirety, and a compliance audit of such institution with regard to any funds obtained by it under this subchapter or obtained from a student or a parent who has a loan insured or guaranteed by the Secretary under this subchapter, on at least an annual basis and covering the period since the most recent audit, conducted by a qualified, independent organization or person in accordance with standards established by the Comptroller General for the audit of governmental organizations, programs, and functions, and as prescribed in regulations of the Secretary, the results of which shall be submitted to the Secretary and shall be available to cognizant guaranty agencies, eligible lenders, State agencies, and the appropriate State agency notifying the Secretary under subpart 1 of part H, except that the Secretary may modify the requirements of this clause with respect to institutions of higher education that are foreign institutions, and may waive such requirements with respect to a foreign institution whose students receive less than $500,000 in loans under this subchapter during the award year preceding the audit period;
(ii) with regard to an eligible institution which is audited under
(iii) at the discretion of the Secretary, with regard to an eligible institution (other than an eligible institution described in
(B) in matters not governed by specific program provisions, the establishment of reasonable standards of financial responsibility and appropriate institutional capability for the administration by an eligible institution of a program of student financial aid under this subchapter, including any matter the Secretary deems necessary to the sound administration of the financial aid programs, such as the pertinent actions of any owner, shareholder, or person exercising control over an eligible institution;
(C)(i) except as provided in clause (ii), a compliance audit of a third party servicer (other than with respect to the servicer's functions as a lender if such functions are otherwise audited under this part and such audits meet the requirements of this clause), with regard to any contract with an eligible institution, guaranty agency, or lender for administering or servicing any aspect of the student assistance programs under this subchapter, at least once every year and covering the period since the most recent audit, conducted by a qualified, independent organization or person in accordance with standards established by the Comptroller General for the audit of governmental organizations, programs, and functions, and as prescribed in regulations of the Secretary, the results of which shall be submitted to the Secretary; or
(ii) with regard to a third party servicer that is audited under
(D)(i) a compliance audit of a secondary market with regard to its transactions involving, and its servicing and collection of, loans made under this subchapter, at least once a year and covering the period since the most recent audit, conducted by a qualified, independent organization or person in accordance with standards established by the Comptroller General for the audit of governmental organizations, programs, and functions, and as prescribed in regulations of the Secretary, the results of which shall be submitted to the Secretary; or
(ii) with regard to a secondary market that is audited under
(E) the establishment, by each eligible institution under part B responsible for furnishing to the lender the statement required by
(F) the limitation, suspension, or termination of the participation in any program under this subchapter of an eligible institution, or the imposition of a civil penalty under paragraph (3)(B) whenever the Secretary has determined, after reasonable notice and opportunity for hearing, that such institution has violated or failed to carry out any provision of this subchapter, any regulation prescribed under this subchapter, or any applicable special arrangement, agreement, or limitation, except that no period of suspension under this section shall exceed 60 days unless the institution and the Secretary agree to an extension or unless limitation or termination proceedings are initiated by the Secretary within that period of time;
(G) an emergency action against an institution, under which the Secretary shall, effective on the date on which a notice and statement of the basis of the action is mailed to the institution (by registered mail, return receipt requested), withhold funds from the institution or its students and withdraw the institution's authority to obligate funds under any program under this subchapter, if the Secretary—
(i) receives information, determined by the Secretary to be reliable, that the institution is violating any provision of this subchapter, any regulation prescribed under this subchapter, or any applicable special arrangement, agreement, or limitation,
(ii) determines that immediate action is necessary to prevent misuse of Federal funds, and
(iii) determines that the likelihood of loss outweighs the importance of the procedures prescribed under subparagraph (D) for limitation, suspension, or termination,
except that an emergency action shall not exceed 30 days unless limitation, suspension, or termination proceedings are initiated by the Secretary against the institution within that period of time, and except that the Secretary shall provide the institution an opportunity to show cause, if it so requests, that the emergency action is unwarranted;
(H) the limitation, suspension, or termination of the eligibility of a third party servicer to contract with any institution to administer any aspect of an institution's student assistance program under this subchapter, or the imposition of a civil penalty under paragraph (3)(B), whenever the Secretary has determined, after reasonable notice and opportunity for a hearing, that such organization, acting on behalf of an institution, has violated or failed to carry out any provision of this subchapter, any regulation prescribed under this subchapter, or any applicable special arrangement, agreement, or limitation, except that no period of suspension under this subparagraph shall exceed 60 days unless the organization and the Secretary agree to an extension, or unless limitation or termination proceedings are initiated by the Secretary against the individual or organization within that period of time; and
(I) an emergency action against a third party servicer that has contracted with an institution to administer any aspect of the institution's student assistance program under this subchapter, under which the Secretary shall, effective on the date on which a notice and statement of the basis of the action is mailed to such individual or organization (by registered mail, return receipt requested), withhold funds from the individual or organization and withdraw the individual or organization's authority to act on behalf of an institution under any program under this subchapter, if the Secretary—
(i) receives information, determined by the Secretary to be reliable, that the individual or organization, acting on behalf of an institution, is violating any provision of this subchapter, any regulation prescribed under this subchapter, or any applicable special arrangement, agreement, or limitation,
(ii) determines that immediate action is necessary to prevent misuse of Federal funds, and
(iii) determines that the likelihood of loss outweighs the importance of the procedures prescribed under subparagraph (F), for limitation, suspension, or termination,
except that an emergency action shall not exceed 30 days unless the limitation, suspension, or termination proceedings are initiated by the Secretary against the individual or organization within that period of time, and except that the Secretary shall provide the individual or organization an opportunity to show cause, if it so requests, that the emergency action is unwarranted.
(2) If an individual who, or entity that, exercises substantial control, as determined by the Secretary in accordance with the definition of substantial control in subpart 3 of part H, over one or more institutions participating in any program under this subchapter, or, for purposes of paragraphs (1)(H) and (I), over one or more organizations that contract with an institution to administer any aspect of the institution's student assistance program under this subchapter, is determined to have committed one or more violations of the requirements of any program under this subchapter, or has been suspended or debarred in accordance with the regulations of the Secretary, the Secretary may use such determination, suspension, or debarment as the basis for imposing an emergency action on, or limiting, suspending, or terminating, in a single proceeding, the participation of any or all institutions under the substantial control of that individual or entity.
(3)(A) Upon determination, after reasonable notice and opportunity for a hearing, that an eligible institution has engaged in substantial misrepresentation of the nature of its educational program, its financial charges, or the employability of its graduates, the Secretary may suspend or terminate the eligibility status for any or all programs under this subchapter of any otherwise eligible institution, in accordance with procedures specified in paragraph (1)(D) of this subsection, until the Secretary finds that such practices have been corrected.
(B)(i) Upon determination, after reasonable notice and opportunity for a hearing, that an eligible institution—
(I) has violated or failed to carry out any provision of this subchapter or any regulation prescribed under this subchapter; or
(II) has engaged in substantial misrepresentation of the nature of its educational program, its financial charges, and the employability of its graduates,
the Secretary may impose a civil penalty upon such institution of not to exceed $25,000 for each violation or misrepresentation.
(ii) Any civil penalty may be compromised by the Secretary. In determining the amount of such penalty, or the amount agreed upon in compromise, the appropriateness of the penalty to the size of the institution of higher education subject to the determination, and the gravity of the violation, failure, or misrepresentation shall be considered. The amount of such penalty, when finally determined, or the amount agreed upon in compromise, may be deducted from any sums owing by the United States to the institution charged.
(4) The Secretary shall publish a list of State agencies which the Secretary determines to be reliable authority as to the quality of public postsecondary vocational education in their respective States for the purpose of determining eligibility for all Federal student assistance programs.
(5) The Secretary shall make readily available to appropriate guaranty agencies, eligible lenders, State agencies notifying the Secretary under subpart 1 of part H, and accrediting agencies or associations the results of the audits of eligible institutions conducted pursuant to paragraph (1)(A).
(6) The Secretary is authorized to provide any information collected as a result of audits conducted under this section, together with audit information collected by guaranty agencies, to any Federal or State agency having responsibilities with respect to student financial assistance, including those referred to in subsection (a)(15) of this section.
(7) Effective with respect to any audit conducted under this subsection after December 31, 1988, if, in the course of conducting any such audit, the personnel of the Department of Education discover, or are informed of, grants or other assistance provided by an institution in accordance with this subchapter for which the institution has not received funds appropriated under this subchapter (in the amount necessary to provide such assistance), including funds for which reimbursement was not requested prior to such discovery or information, such institution shall be permitted to offset that amount against any sums determined to be owed by the institution pursuant to such audit, or to receive reimbursement for that amount (if the institution does not owe any such sums).
(d) Implementation of non-Federal revenue requirement
(1) Calculation
In making calculations under subsection (a)(24), a proprietary institution of higher education shall—
(A) use the cash basis of accounting, except in the case of loans described in subparagraph (D)(i) that are made by the proprietary institution of higher education;
(B) consider as revenue only those funds generated by the institution from—
(i) tuition, fees, and other institutional charges for students enrolled in programs eligible for assistance under this subchapter;
(ii) activities conducted by the institution that are necessary for the education and training of the institution's students, if such activities are—
(I) conducted on campus or at a facility under the control of the institution;
(II) performed under the supervision of a member of the institution's faculty; and
(III) required to be performed by all students in a specific educational program at the institution; and
(iii) funds paid by a student, or on behalf of a student by a party other than the institution, for an education or training program that is not eligible for funds under this subchapter, if the program—
(I) is approved or licensed by the appropriate State agency;
(II) is accredited by an accrediting agency recognized by the Secretary; or
(III) provides an industry-recognized credential or certification;
(C) presume that any Federal education assistance funds that are disbursed or delivered to or on behalf of a student will be used to pay the student's tuition, fees, or other institutional charges, regardless of whether the institution credits those funds to the student's account or pays those funds directly to the student, except to the extent that the student's tuition, fees, or other institutional charges are satisfied by—
(i) grant funds provided by non-Federal public agencies or private sources independent of the institution;
(ii) funds provided under a contractual arrangement with a Federal, State, or local government agency for the purpose of providing job training to low-income individuals who are in need of that training;
(iii) funds used by a student from savings plans for educational expenses established by or on behalf of the student and which qualify for special tax treatment under title 26; or
(iv) institutional scholarships described in subparagraph (D)(iii);
(D) include institutional aid as revenue to the school only as follows:
(i) in the case of loans made by a proprietary institution of higher education on or after July 1, 2008 and prior to July 1, 2012, the net present value of such loans made by the institution during the applicable institutional fiscal year accounted for on an accrual basis and estimated in accordance with generally accepted accounting principles and related standards and guidance, if the loans—
(I) are bona fide as evidenced by enforceable promissory notes;
(II) are issued at intervals related to the institution's enrollment periods; and
(III) are subject to regular loan repayments and collections;
(ii) in the case of loans made by a proprietary institution of higher education on or after July 1, 2012, only the amount of loan repayments received during the applicable institutional fiscal year, excluding repayments on loans made and accounted for as specified in clause (i); and
(iii) in the case of scholarships provided by a proprietary institution of higher education, only those scholarships provided by the institution in the form of monetary aid or tuition discounts based upon the academic achievements or financial need of students, disbursed during each fiscal year from an established restricted account, and only to the extent that funds in that account represent designated funds from an outside source or from income earned on those funds;
(E) in the case of each student who receives a loan on or after July 1, 2008, and prior to July 1, 2011, that is authorized under
(F) exclude from revenues—
(i) the amount of funds the institution received under part C, unless the institution used those funds to pay a student's institutional charges;
(ii) the amount of funds the institution received under subpart 4 of part A;
(iii) the amount of funds provided by the institution as matching funds for a program under this subchapter;
(iv) the amount of funds provided by the institution for a program under this subchapter that are required to be refunded or returned; and
(v) the amount charged for books, supplies, and equipment, unless the institution includes that amount as tuition, fees, or other institutional charges.
(2) Sanctions
(A) Ineligibility
A proprietary institution of higher education that fails to meet a requirement of subsection (a)(24) for two consecutive institutional fiscal years shall be ineligible to participate in the programs authorized by this subchapter for a period of not less than two institutional fiscal years. To regain eligibility to participate in the programs authorized by this subchapter, a proprietary institution of higher education shall demonstrate compliance with all eligibility and certification requirements under
(B) Additional enforcement
In addition to such other means of enforcing the requirements of this subchapter as may be available to the Secretary, if a proprietary institution of higher education fails to meet a requirement of subsection (a)(24) for any institutional fiscal year, then the institution's eligibility to participate in the programs authorized by this subchapter becomes provisional for the two institutional fiscal years after the institutional fiscal year in which the institution failed to meet the requirement of subsection (a)(24), except that such provisional eligibility shall terminate—
(i) on the expiration date of the institution's program participation agreement under this subsection that is in effect on the date the Secretary determines that the institution failed to meet the requirement of subsection (a)(24); or
(ii) in the case that the Secretary determines that the institution failed to meet a requirement of subsection (a)(24) for two consecutive institutional fiscal years, on the date the institution is determined ineligible in accordance with subparagraph (A).
(3) Publication on college navigator website
The Secretary shall publicly disclose on the College Navigator website—
(A) the identity of any proprietary institution of higher education that fails to meet a requirement of subsection (a)(24); and
(B) the extent to which the institution failed to meet such requirement.
(4) Report to Congress
Not later than July 1, 2009, and July 1 of each succeeding year, the Secretary shall submit to the authorizing committees a report that contains, for each proprietary institution of higher education that receives assistance under this subchapter, as provided in the audited financial statements submitted to the Secretary by each institution pursuant to the requirements of subsection (a)(24)—
(A) the amount and percentage of such institution's revenues received from sources under this subchapter; and
(B) the amount and percentage of such institution's revenues received from other sources.
(e) Code of conduct requirements
An institution of higher education's code of conduct, as required under subsection (a)(25), shall include the following requirements:
(1) Ban on revenue-sharing arrangements
(A) Prohibition
The institution shall not enter into any revenue-sharing arrangement with any lender.
(B) Definition
For purposes of this paragraph, the term "revenue-sharing arrangement" means an arrangement between an institution and a lender under which—
(i) a lender provides or issues a loan that is made, insured, or guaranteed under this subchapter to students attending the institution or to the families of such students; and
(ii) the institution recommends the lender or the loan products of the lender and in exchange, the lender pays a fee or provides other material benefits, including revenue or profit sharing, to the institution, an officer or employee of the institution, or an agent.
(2) Gift ban
(A) Prohibition
No officer or employee of the institution who is employed in the financial aid office of the institution or who otherwise has responsibilities with respect to education loans, or agent who has responsibilities with respect to education loans, shall solicit or accept any gift from a lender, guarantor, or servicer of education loans.
(B) Definition of gift
(i) In general
In this paragraph, the term "gift" means any gratuity, favor, discount, entertainment, hospitality, loan, or other item having a monetary value of more than a de minimus amount. The term includes a gift of services, transportation, lodging, or meals, whether provided in kind, by purchase of a ticket, payment in advance, or reimbursement after the expense has been incurred.
(ii) Exceptions
The term "gift" shall not include any of the following:
(I) Standard material, activities, or programs on issues related to a loan, default aversion, default prevention, or financial literacy, such as a brochure, a workshop, or training.
(II) Food, refreshments, training, or informational material furnished to an officer or employee of an institution, or to an agent, as an integral part of a training session that is designed to improve the service of a lender, guarantor, or servicer of education loans to the institution, if such training contributes to the professional development of the officer, employee, or agent.
(III) Favorable terms, conditions, and borrower benefits on an education loan provided to a student employed by the institution if such terms, conditions, or benefits are comparable to those provided to all students of the institution.
(IV) Entrance and exit counseling services provided to borrowers to meet the institution's responsibilities for entrance and exit counseling as required by subsections (b) and (l) of
(aa) the institution's staff are in control of the counseling, (whether in person or via electronic capabilities); and
(bb) such counseling does not promote the products or services of any specific lender.
(V) Philanthropic contributions to an institution from a lender, servicer, or guarantor of education loans that are unrelated to education loans or any contribution from any lender, guarantor, or servicer that is not made in exchange for any advantage related to education loans.
(VI) State education grants, scholarships, or financial aid funds administered by or on behalf of a State.
(iii) Rule for gifts to family members
For purposes of this paragraph, a gift to a family member of an officer or employee of an institution, to a family member of an agent, or to any other individual based on that individual's relationship with the officer, employee, or agent, shall be considered a gift to the officer, employee, or agent if—
(I) the gift is given with the knowledge and acquiescence of the officer, employee, or agent; and
(II) the officer, employee, or agent has reason to believe the gift was given because of the official position of the officer, employee, or agent.
(3) Contracting arrangements prohibited
(A) Prohibition
An officer or employee who is employed in the financial aid office of the institution or who otherwise has responsibilities with respect to education loans, or an agent who has responsibilities with respect to education loans, shall not accept from any lender or affiliate of any lender any fee, payment, or other financial benefit (including the opportunity to purchase stock) as compensation for any type of consulting arrangement or other contract to provide services to a lender or on behalf of a lender relating to education loans.
(B) Exceptions
Nothing in this subsection shall be construed as prohibiting—
(i) an officer or employee of an institution who is not employed in the institution's financial aid office and who does not otherwise have responsibilities with respect to education loans, or an agent who does not have responsibilities with respect to education loans, from performing paid or unpaid service on a board of directors of a lender, guarantor, or servicer of education loans;
(ii) an officer or employee of the institution who is not employed in the institution's financial aid office but who has responsibility with respect to education loans as a result of a position held at the institution, or an agent who has responsibility with respect to education loans, from performing paid or unpaid service on a board of directors of a lender, guarantor, or servicer of education loans, if the institution has a written conflict of interest policy that clearly sets forth that officers, employees, or agents must recuse themselves from participating in any decision of the board regarding education loans at the institution; or
(iii) an officer, employee, or contractor of a lender, guarantor, or servicer of education loans from serving on a board of directors, or serving as a trustee, of an institution, if the institution has a written conflict of interest policy that the board member or trustee must recuse themselves from any decision regarding education loans at the institution.
(4) Interaction with borrowers
The institution shall not—
(A) for any first-time borrower, assign, through award packaging or other methods, the borrower's loan to a particular lender; or
(B) refuse to certify, or delay certification of, any loan based on the borrower's selection of a particular lender or guaranty agency.
(5) Prohibition on offers of funds for private loans
(A) Prohibition
The institution shall not request or accept from any lender any offer of funds to be used for private education loans (as defined in
(i) a specified number of loans made, insured, or guaranteed under this subchapter;
(ii) a specified loan volume of such loans; or
(iii) a preferred lender arrangement for such loans.
(B) Definition of opportunity pool loan
In this paragraph, the term "opportunity pool loan" means a private education loan made by a lender to a student attending the institution or the family member of such a student that involves a payment, directly or indirectly, by such institution of points, premiums, additional interest, or financial support to such lender for the purpose of such lender extending credit to the student or the family.
(6) Ban on staffing assistance
(A) Prohibition
The institution shall not request or accept from any lender any assistance with call center staffing or financial aid office staffing.
(B) Certain assistance permitted
Nothing in paragraph (1) shall be construed to prohibit the institution from requesting or accepting assistance from a lender related to—
(i) professional development training for financial aid administrators;
(ii) providing educational counseling materials, financial literacy materials, or debt management materials to borrowers, provided that such materials disclose to borrowers the identification of any lender that assisted in preparing or providing such materials; or
(iii) staffing services on a short-term, nonrecurring basis to assist the institution with financial aid-related functions during emergencies, including State-declared or federally declared natural disasters, federally declared national disasters, and other localized disasters and emergencies identified by the Secretary.
(7) Advisory board compensation
Any employee who is employed in the financial aid office of the institution, or who otherwise has responsibilities with respect to education loans or other student financial aid of the institution, and who serves on an advisory board, commission, or group established by a lender, guarantor, or group of lenders or guarantors, shall be prohibited from receiving anything of value from the lender, guarantor, or group of lenders or guarantors, except that the employee may be reimbursed for reasonable expenses incurred in serving on such advisory board, commission, or group.
(f) Institutional requirements for teach-outs
(1) In general
In the event the Secretary initiates the limitation, suspension, or termination of the participation of an institution of higher education in any program under this subchapter under the authority of subsection (c)(1)(F) or initiates an emergency action under the authority of subsection (c)(1)(G) and its prescribed regulations, the Secretary shall require that institution to prepare a teach-out plan for submission to the institution's accrediting agency or association in compliance with
(2) Teach-out plan defined
In this subsection, the term "teach-out plan" means a written plan that provides for the equitable treatment of students if an institution of higher education ceases to operate before all students have completed their program of study, and may include, if required by the institution's accrediting agency or association, an agreement between institutions for such a teach-out plan.
(g) Inspector General report on gift ban violations
The Inspector General of the Department shall—
(1) submit an annual report to the authorizing committees identifying all violations of an institution's code of conduct that the Inspector General has substantiated during the preceding year relating to the gift ban provisions described in subsection (e)(2); and
(2) make the report available to the public through the Department's website.
(h) Preferred lender list requirements
(1) In general
In compiling, maintaining, and making available a preferred lender list as required under subsection (a)(27), the institution will—
(A) clearly and fully disclose on such preferred lender list—
(i) not less than the information required to be disclosed under
(ii) why the institution has entered into a preferred lender arrangement with each lender on the preferred lender list, particularly with respect to terms and conditions or provisions favorable to the borrower; and
(iii) that the students attending the institution, or the families of such students, do not have to borrow from a lender on the preferred lender list;
(B) ensure, through the use of the list of lender affiliates provided by the Secretary under paragraph (2), that—
(i) there are not less than three lenders of loans made under part B that are not affiliates of each other included on the preferred lender list and, if the institution recommends, promotes, or endorses private education loans, there are not less than two lenders of private education loans that are not affiliates of each other included on the preferred lender list; and
(ii) the preferred lender list under this paragraph—
(I) specifically indicates, for each listed lender, whether the lender is or is not an affiliate of each other lender on the preferred lender list; and
(II) if a lender is an affiliate of another lender on the preferred lender list, describes the details of such affiliation;
(C) prominently disclose the method and criteria used by the institution in selecting lenders with which to enter into preferred lender arrangements to ensure that such lenders are selected on the basis of the best interests of the borrowers, including—
(i) payment of origination or other fees on behalf of the borrower;
(ii) highly competitive interest rates, or other terms and conditions or provisions of loans under this subchapter or private education loans;
(iii) high-quality servicing for such loans; or
(iv) additional benefits beyond the standard terms and conditions or provisions for such loans;
(D) exercise a duty of care and a duty of loyalty to compile the preferred lender list under this paragraph without prejudice and for the sole benefit of the students attending the institution, or the families of such students;
(E) not deny or otherwise impede the borrower's choice of a lender or cause unnecessary delay in loan certification under this subchapter for those borrowers who choose a lender that is not included on the preferred lender list; and
(F) comply with such other requirements as the Secretary may prescribe by regulation.
(2) Lender affiliates list
(A) In general
The Secretary shall maintain and regularly update a list of lender affiliates of all eligible lenders, and shall provide such list to institutions for use in carrying out paragraph (1)(B).
(B) Use of most recent list
An institution shall use the most recent list of lender affiliates provided by the Secretary under subparagraph (A) in carrying out paragraph (1)(B).
(i) Definitions
For the purpose of this section:
(1) Agent
The term "agent" has the meaning given the term in
(2) Affiliate
The term "affiliate" means a person that controls, is controlled by, or is under common control with another person. A person controls, is controlled by, or is under common control with another person if—
(A) the person directly or indirectly, or acting through one or more others, owns, controls, or has the power to vote five percent or more of any class of voting securities of such other person;
(B) the person controls, in any manner, the election of a majority of the directors or trustees of such other person; or
(C) the Secretary determines (after notice and opportunity for a hearing) that the person directly or indirectly exercises a controlling interest over the management or policies of such other person's education loans.
(3) Education loan
The term "education loan" has the meaning given the term in
(4) Eligible institution
The term "eligible institution" means any such institution described in
(5) Officer
The term "officer" has the meaning given the term in
(6) Preferred lender arrangement
The term "preferred lender arrangement" has the meaning given the term in
(j) Construction
Nothing in the amendments made by the Higher Education Amendments of 1992 shall be construed to prohibit an institution from recording, at the cost of the institution, a hearing referred to in subsection (b)(2), subsection (c)(1)(D), or subparagraph (A) or (B)(i) of subsection (c)(2), of this section to create a record of the hearing, except the unavailability of a recording shall not serve to delay the completion of the proceeding. The Secretary shall allow the institution to use any reasonable means, including stenographers, of recording the hearing.
(
Editorial Notes
References in Text
The Higher Education Amendments of 1992, referred to in subsec. (j), is
Prior Provisions
A prior section 1094,
Amendments
2021—Subsec. (a)(24).
Subsec. (d).
Subsec. (d)(1)(C).
2009—Subsec. (a)(23)(A).
Subsec. (c)(1)(A)(i), (F), (H).
Subsec. (f)(1).
Subsec. (g)(1).
2008—Subsec. (a)(23)(C), (D).
Subsec. (a)(24) to (29).
Subsec. (c)(1)(A)(i).
Subsecs. (d) to (h).
Subsec. (i).
Subsec. (j).
1999—Subsec. (a)(23)(C).
1998—Subsec. (a)(3)(B) to (D).
Subsec. (a)(4).
Subsec. (a)(9).
Subsec. (a)(14)(A), (B).
Subsec. (a)(14)(C).
Subsec. (a)(15).
Subsec. (a)(18).
Subsec. (a)(21).
Subsec. (a)(23).
Subsec. (c)(1)(A)(i).
Subsec. (c)(1)(A)(iii).
Subsec. (c)(4).
Subsec. (c)(5).
Subsec. (d).
1993—Subsec. (a)(2).
Subsec. (c)(1)(F).
1992—Subsec. (a).
Subsec. (a)(2).
Subsec. (a)(3).
Subsec. (a)(8).
Subsec. (a)(13) to (22).
Subsec. (b)(2).
Subsec. (c)(1).
Subsec. (c)(1)(A)(i).
Subsec. (c)(1)(B).
Subsec. (c)(1)(C).
Subsec. (c)(1)(D).
Subsec. (c)(1)(E).
Subsec. (c)(1)(F).
Subsec. (c)(1)(G).
Subsec. (c)(1)(H).
Subsec. (c)(1)(I).
Subsec. (c)(2).
Subsec. (c)(3).
Subsec. (c)(4).
Subsec. (c)(5) to (7).
Subsec. (d).
Subsec. (e).
1991—Subsec. (a)(11).
1990—Subsec. (a)(12).
1989—Subsec. (a)(11).
Subsec. (c)(1)(D).
Subsec. (c)(1)(E) to (G).
Statutory Notes and Related Subsidiaries
Effective Date of 2021 Amendment
"(1) be subject to the master calendar requirements under section 482 of the Higher Education Act of 1965 (
"(2) apply to institutional fiscal years beginning on or after January 1, 2023."
Effective Date of 2009 Amendment
Amendment by
Effective Date of 2008 Amendment
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1991 Amendment
Amendment by
Effective Date of 1989 Amendment
Effective Date
Section effective Oct. 17, 1986, except as otherwise provided, see section 2 of
Subsec. (a)(10) of this section applicable only to periods of enrollment beginning on or after July 1, 1987, see section 407(b) of
Regulation Prohibited
1 So in original. The closing parenthesis probably should not appear.
§1094a. Regulatory relief and improvement
(a) Quality Assurance Program
(1) In general
The Secretary is authorized to select institutions for voluntary participation in a Quality Assurance Program that provides participating institutions with an alternative management approach through which individual schools develop and implement their own comprehensive systems, related to processing and disbursement of student financial aid, verification of student financial aid application data, and entrance and exit interviews, thereby enhancing program integrity within the student aid delivery system.
(2) Criteria and consideration
The Quality Assurance Program authorized by this section shall be based on criteria that include demonstrated institutional performance, as determined by the Secretary, and shall take into consideration current quality assurance goals, as determined by the Secretary. The selection criteria shall ensure the participation of a diverse group of institutions of higher education with respect to size, mission, and geographical distribution.
(3) Waiver
The Secretary is authorized to waive for any institution participating in the Quality Assurance Program any regulations dealing with reporting or verification requirements in this subchapter that are addressed by the institution's alternative management system, and may substitute such quality assurance reporting as the Secretary determines necessary to ensure accountability and compliance with the purposes of the programs under this subchapter. The Secretary shall not modify or waive any statutory requirements pursuant to this paragraph.
(4) Determination
The Secretary is authorized to determine—
(A) when an institution that is unable to administer the Quality Assurance Program shall be removed from such program; and
(B) when institutions desiring to cease participation in such program will be required to complete the current award year under the requirements of the Quality Assurance Program.
(5) Review and evaluation
The Secretary shall review and evaluate the Quality Assurance Program conducted by each participating institution and, on the basis of that evaluation, make recommendations regarding amendments to this chapter that will streamline the administration and enhance the integrity of Federal student assistance programs. Such recommendations shall be submitted to the authorizing committees.
(b) Regulatory improvement and streamlining experiments
(1) In general
The Secretary shall continue the voluntary participation of any experimental sites in existence as of July 1, 2007, unless the Secretary determines that such site's participation has not been successful in carrying out the purposes of this section. Any experimental sites approved by the Secretary prior to such date that have not been successful in carrying out the purposes of this section shall be discontinued not later than June 30, 2010.
(2) Report
The Secretary shall review and evaluate the experience of institutions participating as experimental sites and shall, on a biennial basis, submit a report based on the review and evaluation to the authorizing committees. Such report shall include—
(A) a list of participating institutions and the specific statutory or regulatory waivers granted to each institution;
(B) the findings and conclusions reached regarding each of the experiments conducted; and
(C) recommendations for amendments to improve and streamline this chapter, based on the results of the experiment.
(3) Selection
(A) In general
The Secretary is authorized to periodically select a limited number of additional institutions for voluntary participation as experimental sites to provide recommendations to the Secretary on the impact and effectiveness of proposed regulations or new management initiatives.
(B) Waivers
The Secretary is authorized to waive, for any institution participating as an experimental site under subparagraph (A), any requirements in this subchapter, including requirements related to the award process and disbursement of student financial aid (such as innovative delivery systems for modular or compressed courses, or other innovative systems), verification of student financial aid application data, entrance and exit interviews, or other management procedures or processes as determined in the negotiated rulemaking process under
(4) Determination of success
For the purposes of paragraph (1), the Secretary shall make a determination of success regarding an institution's participation as an experimental site based on—
(A) the ability of the experimental site to reduce administrative burdens to the institution, as documented in the Secretary's biennial report under paragraph (2), without creating costs for the taxpayer; and
(B) whether the experimental site has improved the delivery of services to, or otherwise benefitted, students.
(c) "Current award year" defined
For purposes of this section, the term "current award year" means the award year during which the participating institution indicates the institution's intention to cease participation.
(
Editorial Notes
Amendments
2009—Subsec. (b)(1).
Subsec. (b)(4).
2008—Subsec. (a)(5).
Subsec. (b)(1).
Subsec. (b)(2).
Subsec. (b)(3)(A).
Subsec. (b)(3)(B).
"(i) a list of institutions proposed for participation in the experiment and the specific statutory or regulatory waivers proposed to be granted to each institution;
"(ii) a statement of the objectives to be achieved through the experiment; and
"(iii) an identification of the period of time over which the experiment is to be conducted."
Subsec. (b)(3)(C).
1998—
Statutory Notes and Related Subsidiaries
Effective Date of 2009 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
§1094b. Assignment of identification numbers
The Secretary shall assign to each participant in subchapter IV programs, including institutions, lenders, and guaranty agencies, a single Department of Education identification number to be used to identify its participation in each of the subchapter IV programs.
(
§1095. Transfer of allotments
In order to offer an arrangement of types of aid, including institutional and State aid which best fits the needs of each individual student, an institution may (1) transfer a total of 25 percent of the institutions 1 allotment under
(
Editorial Notes
Prior Provisions
A prior section 1095,
Amendments
2008—
1992—
1987—
Statutory Notes and Related Subsidiaries
Effective Date of 1992 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
1 So in original. Probably should be "institution's".
§1095a. Wage garnishment requirement
(a) Garnishment requirements
Notwithstanding any provision of State law, a guaranty agency, or the Secretary in the case of loans made, insured or guaranteed under this subchapter that are held by the Secretary, may garnish the disposable pay of an individual to collect the amount owed by the individual, if he or she is not currently making required repayment under a repayment agreement with the Secretary, or, in the case of a loan guaranteed under part B on which the guaranty agency received reimbursement from the Secretary under
(1) the amount deducted for any pay period may not exceed 15 percent of disposable pay, except that a greater percentage may be deducted with the written consent of the individual involved;
(2) the individual shall be provided written notice, sent by mail to the individual's last known address, a minimum of 30 days prior to the initiation of proceedings, from the guaranty agency or the Secretary, as appropriate, informing such individual of the nature and amount of the loan obligation to be collected, the intention of the guaranty agency or the Secretary, as appropriate, to initiate proceedings to collect the debt through deductions from pay, and an explanation of the rights of the individual under this section;
(3) the individual shall be provided an opportunity to inspect and copy records relating to the debt;
(4) the individual shall be provided an opportunity to enter into a written agreement with the guaranty agency or the Secretary, under terms agreeable to the Secretary, or the head of the guaranty agency or his designee, as appropriate, to establish a schedule for the repayment of the debt;
(5) the individual shall be provided an opportunity for a hearing in accordance with subsection (b) on the determination of the Secretary or the guaranty agency, as appropriate, concerning the existence or the amount of the debt, and, in the case of an individual whose repayment schedule is established other than by a written agreement pursuant to paragraph (4), concerning the terms of the repayment schedule;
(6) the employer shall pay to the Secretary or the guaranty agency as directed in the withholding order issued in this action, and shall be liable for, and the Secretary or the guaranty agency, as appropriate, may sue the employer in a State or Federal court of competent jurisdiction to recover, any amount that such employer fails to withhold from wages due an employee following receipt of such employer of notice of the withholding order, plus attorneys' fees, costs, and, in the court's discretion, punitive damages, but such employer shall not be required to vary the normal pay and disbursement cycles in order to comply with this paragraph;
(7) if an individual has been reemployed within 12 months after having been involuntarily separated from employment, no amount may be deducted from the disposable pay of such individual until such individual has been reemployed continuously for at least 12 months; and
(8) an employer may not discharge from employment, refuse to employ, or take disciplinary action against an individual subject to wage withholding in accordance with this section by reason of the fact that the individual's wages have been subject to garnishment under this section, and such individual may sue in a State or Federal court of competent jurisdiction any employer who takes such action. The court shall award attorneys' fees to a prevailing employee and, in its discretion, may order reinstatement of the individual, award punitive damages and back pay to the employee, or order such other remedy as may be reasonably necessary.
(b) Hearing requirements
A hearing described in subsection (a)(5) shall be provided prior to issuance of a garnishment order if the individual, on or before the 15th day following the mailing of the notice described in subsection (a)(2), and in accordance with such procedures as the Secretary or the head of the guaranty agency, as appropriate, may prescribe, files a petition requesting such a hearing. If the individual does not file a petition requesting a hearing prior to such date, the Secretary or the guaranty agency, as appropriate, shall provide the individual a hearing under subsection (a)(5) upon request, but such hearing need not be provided prior to issuance of a garnishment order. A hearing under subsection (a)(5) may not be conducted by an individual under the supervision or control of the head of the guaranty agency, except that nothing in this sentence shall be construed to prohibit the appointment of an administrative law judge. The hearing official shall issue a final decision at the earliest practicable date, but not later than 60 days after the filing of the petition requesting the hearing.
(c) Notice requirements
The notice to the employer of the withholding order shall contain only such information as may be necessary for the employer to comply with the withholding order.
(d) No attachment of student assistance
Except as authorized in this section, notwithstanding any other provision of Federal or State law, no grant, loan, or work assistance awarded under this subchapter, or property traceable to such assistance, shall be subject to garnishment or attachment in order to satisfy any debt owed by the student awarded such assistance, other than a debt owed to the Secretary and arising under this subchapter.
(e) "Disposable pay" defined
For the purpose of this section, the term "disposable pay" means that part of the compensation of any individual from an employer remaining after the deduction of any amounts required by law to be withheld.
(
Editorial Notes
Amendments
2006—Subsec. (a)(1).
1998—Subsecs. (d), (e).
Statutory Notes and Related Subsidiaries
Effective Date of 2006 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
§1096. Administrative expenses
(a) Amount of payments
From the sums appropriated for any fiscal year for the purpose of the program authorized under subpart 1 of part A of this subchapter, the Secretary shall reserve such sums as may be necessary to pay to each institution with which he has an agreement under
(b) Purpose of payments
(1) The sums paid to institutions under this part are for the sole purpose of administering the programs described in subsection (a).
(2) If the institution enrolls a significant number of students who are (A) attending the institution less than full time, or (B) independent students, the institution shall use a reasonable proportion of the funds available under this section for financial aid services during times and in places that will most effectively accommodate the needs of such students.
(
Editorial Notes
Prior Provisions
A prior section 1096,
Amendments
2009—Subsec. (a).
2008—Subsec. (b)(1).
1993—Subsec. (a).
1992—Subsec. (a).
Subsec. (b).
1987—Subsec. (a).
1986—Subsec. (a).
Statutory Notes and Related Subsidiaries
Effective Date of 2009 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by section 446(c) of
Amendment by section 493 of
Effective Date of 1987 Amendment
Amendment by
Effective Date of 1986 Amendment
Amendment by
§1096a. Repealed. Pub. L. 102–325, title IV, §494, July 23, 1992, 106 Stat. 631
Section,
§1097. Criminal penalties
(a) In general
Any person who knowingly and willfully embezzles, misapplies, steals, obtains by fraud, false statement, or forgery, or fails to refund any funds, assets, or property provided or insured under this subchapter or attempts to so embezzle, misapply, steal, obtain by fraud, false statement or forgery, or fail to refund any funds, assets, or property, shall be fined not more than $20,000 or imprisoned for not more than 5 years, or both, except if the amount so embezzled, misapplied, stolen, obtained by fraud, false statement, or forgery, or failed to be refunded does not exceed $200, then the fine shall not be more than $5,000 and imprisonment shall not exceed one year, or both.
(b) Assignment of loans
Any person who knowingly and willfully makes any false statement, furnishes any false information, or conceals any material information in connection with the assignment of a loan which is made or insured under this subchapter or attempts to so make any false statement, furnish any false information, or conceal any material information in connection with such assignment shall, upon conviction thereof, be fined not more than $10,000 or imprisoned for not more than one year, or both.
(c) Inducements to lend or assign
Any person who knowingly and willfully makes an unlawful payment to an eligible lender under part B or attempts to make such unlawful payment as an inducement to make, or to acquire by assignment, a loan insured under such part shall, upon conviction thereof, be fined not more than $10,000 or imprisoned for not more than one year, or both.
(d) Obstruction of justice
Any person who knowingly and willfully destroys or conceals any record relating to the provision of assistance under this subchapter or attempts to so destroy or conceal with intent to defraud the United States or to prevent the United States from enforcing any right obtained by subrogation under this part, shall upon conviction thereof, be fined not more than $20,000 or imprisoned not more than 5 years, or both.
(e) Access to Department of Education information technology systems for fraud, commercial advantage, or private financial gain
Any person who knowingly uses an access device, as defined in
(
Editorial Notes
Prior Provisions
A prior section 1097,
Amendments
2020—Subsec. (e).
1992—
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Amendment by
Guidance
Effective Date of Penalties
§1097a. Administrative subpoenas
(a) Authority
To assist the Secretary in the conduct of investigations of possible violations of the provisions of this subchapter, the Secretary is authorized to require by subpoena the production of information, documents, reports, answers, records, accounts, papers, and other documentary evidence pertaining to participation in any program under this subchapter. The production of any such records may be required from any place in a State.
(b) Enforcement
In case of contumacy by, or refusal to obey a subpoena issued to, any person, the Secretary may request the Attorney General to invoke the aid of any court of the United States where such person resides or transacts business for a court order for the enforcement of this section.
(
Statutory Notes and Related Subsidiaries
Effective Date
Section effective Oct. 1, 1998, except as otherwise provided in
§1098. Advisory Committee on Student Financial Assistance
(a) Establishment and purpose
(1) There is established in the Department an independent Advisory Committee on Student Financial Assistance (hereafter in this section referred to as the "Advisory Committee") which shall provide advice and counsel to the authorizing committees and to the Secretary on student financial aid matters.
(2) The purpose of the Advisory Committee is—
(A) to provide extensive knowledge and understanding of the Federal, State, and institutional programs of postsecondary student assistance;
(B) to provide technical expertise with regard to systems of needs analysis and application forms;
(C) to make recommendations that will result in the maintenance of access to postsecondary education for low- and middle-income students;
(D) to provide knowledge and understanding of early intervention programs, and to make recommendations that will result in early awareness by low- and moderate-income students and families—
(i) of their eligibility for assistance under this subchapter; and
(ii) to the extent practicable, of their eligibility for other forms of State and institutional need-based student assistance;
(E) to make recommendations that will expand and improve partnerships among the Federal Government, States, institutions of higher education, and private entities to increase the awareness and the total amount of need-based student assistance available to low- and moderate-income students; and
(F) to collect information on Federal regulations, and on the impact of Federal regulations on student financial assistance and on the cost of receiving a postsecondary education, and to make recommendations to help streamline the regulations for institutions of higher education from all sectors.
(b) Independence of Advisory Committee
In the exercise of its functions, powers, and duties, the Advisory Committee shall be independent of the Secretary and the other offices and officers of the Department. Notwithstanding Department of Education policies and regulations, the Advisory Committee shall exert independent control of its budget allocations, expenditures and staffing levels, personnel decisions and processes, procurements, and other administrative and management functions. The Advisory Committee's administration and management shall be subject to the usual and customary Federal audit procedures. Reports, publications, and other documents of the Advisory Committee, including such reports, publications, and documents in electronic form, shall not be subject to review by the Secretary. The recommendations of the Committee shall not be subject to review or approval by any officer in the executive branch, but may be submitted to the Secretary for comment prior to submission to the authorizing committees in accordance with subsection (f). The Secretary's authority to terminate advisory committees of the Department pursuant to section 1233g(b) 1 of this title ceased to be effective on June 23, 1983.
(c) Membership
(1) The Advisory Committee shall consist of 11 members appointed as follows:
(A) Four members shall be appointed by the President pro tempore of the Senate, of whom two members shall be appointed from recommendations by the Majority Leader of the Senate, and two members shall be appointed from recommendations by the Minority Leader of the Senate.
(B) Four members shall be appointed by the Speaker of the House of Representatives, of whom two members shall be appointed from recommendations by the Majority Leader of the House of Representatives, and two members shall be appointed from recommendations by the Minority Leader of the House of Representatives.
(C) Three members shall be appointed by the Secretary, of whom at least one member shall be a student.
(2) Each member of the Advisory Committee, with the exception of a student member, shall be appointed on the basis of technical qualifications, professional experience, and demonstrated knowledge in the fields of higher education, student financial aid, financing post-secondary education, and the operations and financing of student loan guarantee agencies.
(3) The appointment of a member under subparagraph (A) or (B) of paragraph (1) shall be effective upon publication of such appointment in the Congressional Record.
(d) Functions of the Committee
The Advisory Committee shall—
(1) develop, review, and comment annually upon the system of needs analysis established under part F of this subchapter;
(2) monitor, apprise, and evaluate the effectiveness of student aid delivery and recommend improvements;
(3) recommend data collection needs and student information requirements which would improve access and choice for eligible students under this subchapter and assist the Department of Education in improving the delivery of student aid;
(4) assess the impact of legislative and administrative policy proposals;
(5) review and comment upon, prior to promulgation, all regulations affecting programs under this subchapter, including proposed regulations;
(6) recommend to the authorizing committees and to the Secretary such studies, surveys, and analyses of student financial assistance programs, policies, and practices, including the special needs of low-income, disadvantaged, and nontraditional students, and the means by which the needs may be met;
(7) review and comment upon standards by which financial need is measured in determining eligibility for Federal student assistance programs;
(8) appraise the adequacies and deficiencies of current student financial aid information resources and services and evaluate the effectiveness of current student aid information programs;
(9) provide an annual report to the authorizing committees that provides analyses and policy recommendations regarding—
(A) the adequacy of need-based grant aid for low- and moderate-income students; and
(B) the postsecondary enrollment and graduation rates of low- and moderate-income students;
(10) develop and maintain an information clearinghouse to help institutions of higher education understand the regulatory impact of the Federal Government on institutions of higher education from all sectors, in order to raise awareness of institutional legal obligations and provide information to improve compliance with, and to reduce the duplication and inefficiency of, Federal regulations; and
(11) make special efforts to advise Members of Congress and such Members' staff of the findings and recommendations made pursuant to this paragraph.
(e) Operations of the Committee
(1) Each member of the Advisory Committee shall be appointed for a term of 4 years, except that, of the members first appointed—
(A) 4 shall be appointed for a term of 1 year;
(B) 4 shall be appointed for a term of 2 years; and
(C) 3 shall be appointed for a term of 3 years,
as designated at the time of appointment by the Secretary.
(2) Any member appointed to fill a vacancy occurring prior to the expiration of the term of a predecessor shall be appointed only for the remainder of such term. A member of the Advisory Committee serving on August 14, 2008, shall be permitted to serve the duration of the member's term, regardless of whether the member was previously appointed to more than one term.
(3) No officers or full-time employees of the Federal Government shall serve as members of the Advisory Committee.
(4) The Advisory Committee shall elect a Chairman and a Vice Chairman from among its members.
(5) Six members of the Advisory Committee shall constitute a quorum.
(6) The Advisory Committee shall meet at the call of the Chairman or a majority of its members.
(f) Submission to Department for comment
The Advisory Committee may submit its proposed recommendations to the Department of Education for comment for a period not to exceed 30 days in each instance.
(g) Compensation and expenses
Members of the Advisory Committee may each receive reimbursement for travel expenses incident to attending Advisory Committee meetings, including per diem in lieu of subsistence, as authorized by
(h) Personnel and resources
(1) The Advisory Committee may appoint such personnel as may be determined necessary by the Chairman without regard to the provisions of title 5 governing appointments in the competitive service, and may be paid without regard to the provisions of
(2) In carrying out its duties under this chapter, the Advisory Committee shall consult with other Federal agencies, representatives of State and local governments, and private organizations to the extent feasible.
(3)(A) The Advisory Committee is authorized to secure directly from any executive department, bureau, agency, board, commission, office, independent establishment, or instrumentality information, suggestions, estimates, and statistics for the purpose of this section and each such department, bureau, agency, board, commission, office, independent establishment, or instrumentality is authorized and directed, to the extent permitted by law, to furnish such information, suggestions, estimates, and statistics directly to the Advisory Committee, upon request made by the Chairman.
(B) The Advisory Committee may enter into contracts for the acquisition of information, suggestions, estimates, and statistics for the purpose of this section.
(4) The Advisory Committee is authorized to obtain the services of experts and consultants without regard to
(5) The head of each Federal agency shall, to the extent not prohibited by law, cooperate with the Advisory Committee in carrying out this section.
(6) The Advisory Committee is authorized to utilize, with their consent, the services, personnel, information, and facilities of other Federal, State, local, and private agencies with or without reimbursement.
(i) Availability of funds
In each fiscal year not less than $800,000, shall be available from the amount appropriated for each such fiscal year from salaries and expenses of the Department for the costs of carrying out the provisions of this section.
(j) Special analyses and activities
The Advisory Committee shall—
(1) monitor and evaluate the modernization of student financial aid systems and delivery processes and simplifications, including recommendations for improvement;
(2) assess the adequacy of current methods for disseminating information about programs under this subchapter and recommend improvements, as appropriate, regarding early needs assessment and information for first-year secondary school students;
(3) assess and make recommendations concerning the feasibility and degree of use of appropriate technology in the application for, and delivery and management of, financial assistance under this subchapter, as well as policies that promote use of such technology to reduce cost and enhance service and program integrity, including electronic application and reapplication, just-in-time delivery of funds, reporting of disbursements and reconciliation;
(4) conduct a review and analysis of regulations in accordance with subsection (l); and
(5) conduct a study in accordance with subsection (m).
(k) Term of Committee
Notwithstanding the sunset and charter provisions of
(l) Review and analysis of regulations
(1) Recommendations
The Advisory Committee shall make recommendations to the Secretary and the authorizing committees for consideration of future legislative action regarding redundant or outdated regulations consistent with the Secretary's requirements under
(2) Review and analysis of regulations
(A) Review of current regulations
To meet the requirements of subsection (d)(10), the Advisory Committee shall conduct a review and analysis of the regulations issued by Federal agencies that are in effect at the time of the review and that apply to the operations or activities of institutions of higher education from all sectors. The review and analysis may include a determination of whether the regulation is duplicative, is no longer necessary, is inconsistent with other Federal requirements, or is overly burdensome. In conducting the review, the Advisory Committee shall pay specific attention to evaluating ways in which regulations under this subchapter affecting institutions of higher education (other than institutions described in
(B) Review and collection of future regulations
The Advisory Committee shall—
(i) monitor all Federal regulations, including notices of proposed rulemaking, for their impact or potential impact on higher education; and
(ii) provide a succinct description of each regulation or proposed regulation that is generally relevant to institutions of higher education from all sectors.
(C) Maintenance of public website
The Advisory Committee shall develop and maintain an easy to use, searchable, and regularly updated website that—
(i) provides information collected in subparagraph (B);
(ii) provides an area for the experts and members of the public to provide recommendations for ways in which the regulations may be streamlined; and
(iii) publishes the study conducted by the National Research Council of the National Academy of Sciences under section 1106 of the Higher Education Opportunity Act.
(3) Consultation
(A) In general
In carrying out the review, analysis, and development of the website required under paragraph (2), the Advisory Committee shall consult with the Secretary, other Federal agencies, relevant representatives of institutions of higher education, individuals who have expertise and experience with Federal regulations, and the review panels described in subparagraph (B).
(B) Review panels
The Advisory Committee shall convene not less than two review panels of representatives of the groups involved in higher education, including individuals involved in student financial assistance programs under this subchapter, who have experience and expertise in the regulations issued by the Federal Government that affect all sectors of higher education, in order to review the regulations and to provide recommendations to the Advisory Committee with respect to the review and analysis under paragraph (2). The panels shall be made up of experts in areas such as the operations of the financial assistance programs, the institutional eligibility requirements for the financial assistance programs, regulations not directly related to the operations or the institutional eligibility requirements of the financial assistance programs, and regulations for dissemination of information to students about the financial assistance programs.
(4) Periodic updates to the authorizing committees
The Advisory Committee shall—
(A) submit, not later than two years after the completion of the negotiated rulemaking process required under
(B) provide periodic updates to the authorizing committees regarding—
(i) the impact of all Federal regulations on all sectors of higher education; and
(ii) suggestions provided through the website for streamlining or eliminating duplicative regulations.
(5) Additional support
The Secretary and the Inspector General of the Department shall provide such assistance and resources to the Advisory Committee as the Secretary and Inspector General determine are necessary to conduct the review and analysis required by this subsection.
(m) Study of innovative pathways to baccalaureate degree attainment
(1) Study required
The Advisory Committee shall conduct a study of the feasibility of increasing baccalaureate degree attainment rates by reducing the costs and financial barriers to attaining a baccalaureate degree through innovative programs.
(2) Scope of study
The Advisory Committee shall examine new and existing programs that promote baccalaureate degree attainment through innovative ways, such as dual or concurrent enrollment programs, changes made to the Federal Pell Grant program, simplification of the needs analysis process, compressed or modular scheduling, articulation agreements, and programs that allow two-year institutions of higher education to offer baccalaureate degrees.
(3) Required aspects of the study
In performing the study described in this subsection, the Advisory Committee shall examine the following aspects of such innovative programs:
(A) The impact of such programs on baccalaureate attainment rates.
(B) The degree to which a student's total cost of attaining a baccalaureate degree can be reduced by such programs.
(C) The ways in which low- and moderate-income students can be specifically targeted by such programs.
(D) The ways in which nontraditional students can be specifically targeted by such programs.
(E) The cost-effectiveness for the Federal Government, States, and institutions of higher education to implement such programs.
(4) Consultation
(A) In general
In performing the study described in this subsection, the Advisory Committee shall consult with a broad range of interested parties in higher education, including parents, students, appropriate representatives of secondary schools and institutions of higher education, appropriate State administrators, administrators of dual or concurrent enrollment programs, and appropriate Department officials.
(B) Consultation with the authorizing committees
The Advisory Committee shall consult on a regular basis with the authorizing committees in carrying out the study required by this subsection.
(5) Reports to authorizing committees
(A) Interim report
The Advisory Committee shall prepare and submit to the authorizing committees and the Secretary an interim report, not later than one year after August 14, 2008, describing the progress made in conducting the study required by this subsection and any preliminary findings on the topics identified under paragraph (2).
(B) Final report
The Advisory Committee shall, not later than three years after August 14, 2008, prepare and submit to the authorizing committees and the Secretary a final report on the study, including recommendations for legislative, regulatory, and administrative changes based on findings related to the topics identified under paragraph (2).
(
Editorial Notes
References in Text
The Higher Education Opportunity Act, referred to in subsec. (l)(4)(A), is
Prior Provisions
A prior section 1098,
Another prior section 491 of
Amendments
2022—Subsec. (k).
2014—Subsec. (k).
2009—Subsec. (l)(2)(A).
2008—Subsec. (a)(1).
Subsec. (a)(2)(D) to (F).
Subsec. (b).
Subsec. (c).
Subsec. (d)(6).
Subsec. (d)(9) to (11).
Subsec. (e)(1).
Subsec. (e)(2).
Subsec. (j)(1).
Subsec. (j)(4), (5).
"(4) assess the implications of distance education on student eligibility and other requirements for financial assistance under this subchapter, and make recommendations that will enhance access to postsecondary education through distance education while maintaining access, through on-campus instruction at eligible institutions, and program integrity; and
"(5) make recommendations to the Secretary regarding redundant or outdated provisions of and regulations under this chapter, consistent with the Secretary's requirements under
Subsec. (k).
Subsecs. (l), (m).
1998—Subsec. (b).
Subsec. (e)(3) to (6).
Subsec. (g).
"(1) Members of the Advisory Committee who are officers or full-time employees of the United States shall serve without compensation in addition to that received for their services as officers or employees of the United States; but they may be allowed travel expenses, including per diem in lieu of subsistence, as authorized by
"(2) Members of the Advisory Committee who are not officers or full-time employees of the United States may each".
Subsec. (h)(1).
Subsec. (i).
Subsec. (j).
"(1) monitor and evaluate the program modifications resulting from the enactment of the Higher Education Amendments of 1992, especially as such amendments relate to the need analysis;
"(2) monitor and evaluate the implementation, pursuant to
"(3) assess the adequacy of current methods for disseminating information about programs under this subchapter and recommend improvements, as appropriate, regarding early needs assessment and information for first-year high school students; and
"(4) assess the adequacy of methods of monitoring student debt burden."
Subsec. (k).
Subsec. (l).
1993—Subsec. (d)(1).
Subsec. (h)(1).
1992—Subsec. (b).
Subsec. (d)(3).
Subsec. (d)(4) to (9).
Subsec. (h)(4).
Subsec. (i).
Subsecs. (j) to (l).
1987—Subsec. (b).
Subsec. (i).
Subsec. (j).
Statutory Notes and Related Subsidiaries
Effective Date of 2009 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
References in Other Laws to GS–16, 17, or 18 Pay Rates
References in laws to the rates of pay for GS–16, 17, or 18, or to maximum rates of pay under the General Schedule, to be considered references to rates payable under specified sections of Title 5, Government Organization and Employees, see section 529 [title I, §101(c)(1)] of
1 See References in Text note below.
§1098a. Regional meetings and negotiated rulemaking
(a) Meetings
(1) In general
The Secretary shall obtain public involvement in the development of proposed regulations for this subchapter. The Secretary shall obtain the advice of and recommendations from individuals and representatives of the groups involved in student financial assistance programs under this subchapter, such as students, legal assistance organizations that represent students, institutions of higher education, State student grant agencies, guaranty agencies, lenders, secondary markets, loan servicers, guaranty agency servicers, and collection agencies.
(2) Issues
The Secretary shall provide for a comprehensive discussion and exchange of information concerning the implementation of this subchapter through such mechanisms as regional meetings and electronic exchanges of information. The Secretary shall take into account the information received through such mechanisms in the development of proposed regulations and shall publish a summary of such information in the Federal Register together with such proposed regulations.
(b) Draft regulations
(1) In general
After obtaining the advice and recommendations described in subsection (a)(1) and before publishing proposed regulations in the Federal Register, the Secretary shall prepare draft regulations implementing this subchapter and shall submit such regulations to a negotiated rulemaking process. Participants in the negotiations process shall be chosen by the Secretary from individuals nominated by groups described in subsection (a)(1), and shall include both representatives of such groups from Washington, D.C., and industry participants. The Secretary shall select individuals with demonstrated expertise or experience in the relevant subjects under negotiation, reflecting the diversity in the industry, representing both large and small participants, as well as individuals serving local areas and national markets. The negotiation process shall be conducted in a timely manner in order that the final regulations may be issued by the Secretary within the 360-day period described in
(2) Expansion of negotiated rulemaking
All regulations pertaining to this subchapter that are promulgated after October 7, 1998, shall be subject to a negotiated rulemaking (including the selection of the issues to be negotiated), unless the Secretary determines that applying such a requirement with respect to given regulations is impracticable, unnecessary, or contrary to the public interest (within the meaning of
(c) Applicability of chapter 10 of title 5
(d) Authorization of appropriations
There are authorized to be appropriated in any fiscal year or made available from funds appropriated to carry out this part in any fiscal year such sums as may be necessary to carry out the provisions of this section, except that if no funds are appropriated pursuant to this subsection, the Secretary shall make funds available to carry out this section from amounts appropriated for the operations and expenses of the Department of Education.
(
Editorial Notes
Amendments
2022—Subsec. (c).
2009—Subsec. (a)(1).
Subsec. (a)(2).
2008—Subsec. (a)(1).
Subsec. (a)(2).
Subsec. (b)(1).
1998—Subsec. (a)(1).
Subsec. (a)(2).
Subsec. (b).
Statutory Notes and Related Subsidiaries
Effective Date of 2009 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Inapplicability of Master Calendar and Negotiated Rulemaking Requirements
This section inapplicable to amendment made by section 100302(a) of
This section inapplicable to amendments made by section 309 of
This section inapplicable to amendments made by title V of
This section inapplicable to amendments made by section 1860(a)(2) of
This section inapplicable to amendments made by title IV of
This section inapplicable to amendments made by section 402(a) of
This section inapplicable to amendments made by
§1098b. Authorization of appropriations for administrative expenses
There are authorized to be appropriated such sums as may be necessary for fiscal year 1993 and for each succeeding fiscal year thereafter for administrative expenses necessary for carrying out this subchapter, including expenses for staff personnel, program reviews, and compliance activities.
(
§1098c. Repealed. Pub. L. 110–315, title IV, §494E, Aug. 14, 2008, 122 Stat. 3324
Section,
§1098d. Procedures for cancellations and deferments for eligible disabled veterans
The Secretary, in consultation with the Secretary of Veterans Affairs, shall develop and implement a procedure to permit Department of Veterans Affairs physicians to provide the certifications and affidavits needed to enable disabled veterans enrolled in the Department of Veterans Affairs health care system to document such veterans' eligibility for deferments or cancellations of student loans made, insured, or guaranteed under this subchapter. Not later than 6 months after October 7, 1998, the Secretary and the Secretary of Veterans Affairs jointly shall report to Congress on the progress made in developing and implementing the procedure.
(
Statutory Notes and Related Subsidiaries
Effective Date
Section effective Oct. 1, 1998, except as otherwise provided in
§1098e. Income-based repayment
(a) Definitions
In this section:
(1) Excepted PLUS loan
The term "excepted PLUS loan" means a loan under
(2) Excepted consolidation loan
The term "excepted consolidation loan" means a consolidation loan under
(3) Partial financial hardship
The term "partial financial hardship", when used with respect to a borrower, means that for such borrower—
(A) the annual amount due on the total amount of loans made, insured, or guaranteed under part B or D (other than an excepted PLUS loan or excepted consolidation loan) to a borrower as calculated under the standard repayment plan under
(B) 15 percent of the result obtained by calculating, on at least an annual basis, the amount by which—
(i) the borrower's, and the borrower's spouse's (if applicable), adjusted gross income; exceeds
(ii) 150 percent of the poverty line applicable to the borrower's family size as determined under
(b) Income-based repayment program authorized
Notwithstanding any other provision of this chapter, the Secretary shall carry out a program under which—
(1) a borrower of any loan made, insured, or guaranteed under part B or D (other than an excepted PLUS loan or excepted consolidation loan) who has a partial financial hardship (whether or not the borrower's loan has been submitted to a guaranty agency for default aversion or had been in default) may elect, during any period the borrower has the partial financial hardship, to have the borrower's aggregate monthly payment for all such loans not exceed the result described in subsection (a)(3)(B) divided by 12;
(2) the holder of such a loan shall apply the borrower's monthly payment under this subsection first toward interest due on the loan, next toward any fees due on the loan, and then toward the principal of the loan;
(3) any interest due and not paid under paragraph (2)—
(A) shall, on subsidized loans, be paid by the Secretary for a period of not more than 3 years after the date of the borrower's election under paragraph (1), except that such period shall not include any period during which the borrower is in deferment due to an economic hardship described in
(B) be capitalized—
(i) in the case of a subsidized loan, subject to subparagraph (A), at the time the borrower—
(I) ends the election to make income-based repayment under this subsection; or
(II) begins making payments of not less than the amount specified in paragraph (6)(A); or
(ii) in the case of an unsubsidized loan, at the time the borrower—
(I) ends the election to make income-based repayment under this subsection; or
(II) begins making payments of not less than the amount specified in paragraph (6)(A);
(4) any principal due and not paid under paragraph (2) shall be deferred;
(5) the amount of time the borrower makes monthly payments under paragraph (1) may exceed 10 years;
(6) if the borrower no longer has a partial financial hardship or no longer wishes to continue the election under this subsection, then—
(A) the maximum monthly payment required to be paid for all loans made to the borrower under part B or D (other than an excepted PLUS loan or excepted consolidation loan) shall not exceed the monthly amount calculated under
(B) the amount of time the borrower is permitted to repay such loans may exceed 10 years;
(7) the Secretary shall repay or cancel any outstanding balance of principal and interest due on all loans made under part B or D (other than a loan under
(A) at any time, elected to participate in income-based repayment under paragraph (1); and
(B) for a period of time prescribed by the Secretary, not to exceed 25 years, meets 1 or more of the following requirements—
(i) has made reduced monthly payments under paragraph (1) or paragraph (6);
(ii) has made monthly payments of not less than the monthly amount calculated under
(iii) has made payments of not less than the payments required under a standard repayment plan under
(iv) has made payments under an income-contingent repayment plan under
(v) has been in deferment due to an economic hardship described in
(8) a borrower who is repaying a loan made under part B or D pursuant to income-based repayment may elect, at any time, to terminate repayment pursuant to income-based repayment and repay such loan under the standard repayment plan; and
(9) the special allowance payment to a lender calculated under
(c) Eligibility determinations
(1) In general
The Secretary shall establish procedures for annually determining the borrower's eligibility for income-based repayment, including verification of a borrower's annual income and the annual amount due on the total amount of loans made, insured, or guaranteed under part B or D (other than an excepted PLUS loan or excepted consolidation loan), and such other procedures as are necessary to effectively implement income-based repayment under this section.
(2) Procedures for eligibility
The Secretary shall—
(A) consider, but is not limited to, the procedures established in accordance with
(B) carry out, with respect to borrowers of any loan made under part D (other than an excepted PLUS loan or excepted consolidation loan), procedures for income-based repayment plans that are equivalent to the procedures carried out under
(d) Special rule for married borrowers filing separately
In the case of a married borrower who files a separate Federal income tax return, the Secretary shall calculate the amount of the borrower's income-based repayment under this section solely on the basis of the borrower's student loan debt and adjusted gross income.
(e) Special terms for new borrowers on and after July 1, 2014
With respect to any loan made to a new borrower on or after July 1, 2014—
(1) subsection (a)(3)(B) shall be applied by substituting "10 percent" for "15 percent"; and
(2) subsection (b)(7)(B) shall be applied by substituting "20 years" for "25 years".
(
Editorial Notes
Amendments
2019—Subsec. (c)(1).
Subsec. (c)(2).
2010—Subsec. (e).
2008—Subsec. (b)(1).
2007—Subsec. (d).
Statutory Notes and Related Subsidiaries
Effective Date
Section effective July 1, 2009, see section 203(c)(1) of
§1098f. Deferral of loan repayment following active duty
(a) Deferral of loan repayment following active duty
In addition to any deferral of repayment of a loan made under this subchapter pursuant to
(b) Active duty
Notwithstanding
(1) does not include active duty for training or attendance at a service school; but
(2) includes, in the case of members of the National Guard, active State duty.
(
Statutory Notes and Related Subsidiaries
Effective Date
Section effective Oct. 1, 2007, see section 1(c) of
§1098g. Exemption from State disclosure requirements
Loans made, insured, or guaranteed pursuant to a program authorized by title IV of the Higher Education Act of 1965 (
(
Editorial Notes
References in Text
The Higher Education Act of 1965, referred to in text, is
Codification
Section was formerly classified to
Section was enacted as part of the Garn-St Germain Depository Institutions Act of 1982, and not as part of title IV of the Higher Education Act of 1965 which comprises this subchapter.
Statutory Notes and Related Subsidiaries
Effective Date
Section effective both with respect to loans made prior to and after Oct. 15, 1982, see section 701(c) of
§1098h. Procedure and requirements for requesting tax return information from the Internal Revenue Service
(a) Notification and approval requirements
(1) Federal student financial aid
In the case of any written or electronic application under
(A) notify such individuals that—
(i) if such individuals provide approval under subparagraph (B)—
(I) the Secretary will have the authority to request that the Secretary of the Treasury disclose return information of such individuals to authorized persons (as defined in
(II) the return information of such individuals may be redisclosed pursuant to clauses (iii), (iv), (v), and (vi) of section 6103(l)(13)(D) of the Internal Revenue Code of 1986, for the relevant purposes described in such section; and
(ii) the failure to provide such approval for the disclosures described in subclauses (I) and (II) of clause (i) will result in the Secretary being unable to calculate eligibility for such aid to such individual;
(B) require, as a condition of eligibility for such aid, that such individuals affirmatively approve the disclosures described in subclauses (I) and (II) of subparagraph (A)(i); and
(C) if an individual is pursuing provisional independent student status due to an unusual circumstance, as described in
(2) Income-contingent and income-based repayment
(A) New applicants
In the case of any written or electronic application by an individual for an income-contingent or income-based repayment plan for a loan under part D, the Secretary, with respect to such individual and any spouse of such individual, shall—
(i) provide to such individuals the notification described in paragraph (1)(A)(i);
(ii) require, as a condition of eligibility for such repayment plan, that such individuals—
(I) affirmatively approve the disclosures described in subclauses (I) and (II) of paragraph (1)(A)(i), to the extent applicable, and agree that such approval shall serve as an ongoing approval of such disclosures until the date on which the individual elects to opt out of such disclosures under
(II) provide such information as the Secretary may require to confirm the eligibility of such individual for such repayment plan.
(B) Recertifications
With respect to the first written or electronic recertification (after December 19, 2019) of an individual's income or family size for purposes of an income-contingent or income-based repayment plan (entered into before December 19, 2019) for a loan under part D, the Secretary, with respect to such individual and any spouse of such individual, shall meet the requirements of clauses (i) and (ii) of subparagraph (A) with respect to such recertification.
(3) Total and permanent disability
In the case of any written or electronic application by an individual for a discharge of a loan under this subchapter based on total and permanent disability (within the meaning of
(A) provide to such individual the notification described in paragraph (1)(A)(i)(I); and
(B) require, as a condition of eligibility for such discharge, that such individual—
(i) affirmatively approve the disclosure described in paragraph (1)(A)(i)(I) and agree that such approval shall serve as an ongoing approval of such disclosure until the earlier of—
(I) the date on which the individual elects to opt out of such disclosure under
(II) the first day on which such loan may no longer be reinstated; or
(ii) provide such information as the Secretary may require to confirm the eligibility of such individual for such discharge.
(b) Limit on authority
The Secretary shall only have authority to request that the Secretary of the Treasury disclose return information under
(c) Access to FAFSA information
(1) Redisclosure of information
The information in a complete, unredacted Student Aid Report (including any return information disclosed under
(A) upon request for such information by such applicant, shall be provided to such applicant by—
(i) the Secretary; or
(ii) in a case in which the Secretary has requested that institutions of higher education carry out the requirements of this subparagraph, an institution of higher education that has received such information; and
(B) with the written consent by the applicant to an institution of higher education, may be provided by such institution of higher education as is necessary to a scholarship granting organization (including a tribal organization (defined in
(2) Discussion of information
A discussion of the information in an application described in subsection (a)(1) (including any return information disclosed under
(3) Restriction on disclosing information
A person receiving information under paragraph (1)(B) or (2) with respect to an applicant shall not use the information for any purpose other than the express purpose for which consent was granted by the applicant and shall not disclose such information to any other person without the express permission of, or request by, the applicant.
(4) Definitions
In this subsection:
(A) Student Aid Report
The term "Student Aid Report" has the meaning given the term in section 668.2 of title 34, Code of Federal Regulations (or successor regulations).
(B) Written consent
The term "written consent" means a separate, written document that is signed and dated (which may include by electronic format) by an applicant, which—
(i) indicates that the information being disclosed includes return information disclosed under
(ii) states the purpose for which the information is being disclosed; and
(iii) states that the information may only be used for the specific purpose and no other purposes.
(5) Record keeping requirement
An institution of higher education shall—
(A) keep a record of each written consent made under this subsection for a period of at least 3 years from the date of the student's last date of attendance at the institution; and
(B) make each such record readily available for review by the Secretary.
(
Editorial Notes
Amendments
2020—Subsec. (a)(1).
Subsec. (a)(1)(A)(i).
Subsec. (a)(1)(A)(ii).
Subsec. (a)(1)(B).
Subsec. (a)(1)(C).
Subsec. (a)(2)(A)(ii)(I).
Subsec. (a)(3).
Subsec. (c).
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Amendment by section 702(p) of
Part G– 1—Higher Education Relief Opportunities for Students
Editorial Notes
Codification
This part, comprised of
§1098aa. Short title; findings; reference
(a) Short title
This part may be cited as the "Higher Education Relief Opportunities for Students Act of 2003".
(b) Findings
The Congress finds the following:
(1) There is no more important cause than that of our nation's defense.
(2) The United States will protect the freedom and secure the safety of its citizens.
(3) The United States military is the finest in the world and its personnel are determined to lead the world in pursuit of peace.
(4) Hundreds of thousands of Army, Air Force, Marine Corps, Navy, and Coast Guard reservists and members of the National Guard have been called to active duty or active service.
(5) The men and women of the United States military put their lives on hold, leave their families, jobs, and postsecondary education in order to serve their country and do so with distinction.
(6) There is no more important cause for this Congress than to support the members of the United States military and provide assistance with their transition into and out of active duty and active service.
(c) Reference
References in this part to "the Act" are references to the Higher Education Act of 1965 (
(
Editorial Notes
References in Text
The Higher Education Act of 1965, referred to in subsec. (c), is
Codification
Section was formerly set out in a note under
Section was enacted as part of the Higher Education Relief Opportunities for Students Act of 2003, and not as part of title IV of the Higher Education Act of 1965 which comprises this subchapter.
Statutory Notes and Related Subsidiaries
Sense of Congress
"(1) the Higher Education Relief Opportunities for Students Act of 2003 [this part] addresses the unique situations that active duty military personnel and other affected individuals may face in connection with their enrollment in postsecondary institutions and their Federal student loans; and
"(2) the provisions authorized by such Act should be made permanent, thereby allowing the Secretary of Education to continue providing assistance to active duty service members and other affected individuals and their families."
§1098bb. Waiver authority for response to military contingencies and national emergencies
(a) Waivers and modifications
(1) In general
Notwithstanding any other provision of law, unless enacted with specific reference to this section, the Secretary of Education (referred to in this part as the "Secretary") may waive or modify any statutory or regulatory provision applicable to the student financial assistance programs under title IV of the Act [
(2) Actions authorized
The Secretary is authorized to waive or modify any provision described in paragraph (1) as may be necessary to ensure that—
(A) recipients of student financial assistance under title IV of the Act who are affected individuals are not placed in a worse position financially in relation to that financial assistance because of their status as affected individuals;
(B) administrative requirements placed on affected individuals who are recipients of student financial assistance are minimized, to the extent possible without impairing the integrity of the student financial assistance programs, to ease the burden on such students and avoid inadvertent, technical violations or defaults;
(C) the calculation of "annual adjusted family income" and "available income", as used in the determination of need for student financial assistance under title IV of the Act for any such affected individual (and the determination of such need for his or her spouse and dependents, if applicable), may be modified to mean the sums received in the first calendar year of the award year for which such determination is made, in order to reflect more accurately the financial condition of such affected individual and his or her family;
(D) the calculation under section 484B(b)(2) of the Act (
(E) institutions of higher education, eligible lenders, guaranty agencies, and other entities participating in the student assistance programs under title IV of the Act that are located in areas that are declared disaster areas by any Federal, State or local official in connection with a national emergency, or whose operations are significantly affected by such a disaster, may be granted temporary relief from requirements that are rendered infeasible or unreasonable by a national emergency, including due diligence requirements and reporting deadlines.
(b) Notice of waivers or modifications
(1) In general
Notwithstanding
(2) Terms and conditions
The notice under paragraph (1) shall include the terms and conditions to be applied in lieu of such statutory and regulatory provisions.
(3) Case-by-case basis
The Secretary is not required to exercise the waiver or modification authority under this section on a case-by-case basis.
(c) Impact report
The Secretary shall, not later than 15 months after first exercising any authority to issue a waiver or modification under subsection (a), report to the Committee on Education and the Workforce of the House of Representatives and the Committee on Health, Education, Labor and Pensions of the Senate on the impact of any waivers or modifications issued pursuant to subsection (a) on affected individuals and the programs under title IV of the Act [
(d) No delay in waivers and modifications
Sections 482(c) and 492 of the Higher Education Act of 1965 (
(
Editorial Notes
References in Text
The Higher Education Act of 1965, referred to in subsecs. (a) and (c), is
Codification
Section was formerly set out in a note under
Section was enacted as part of the Higher Education Relief Opportunities for Students Act of 2003, and not as part of title IV of the Higher Education Act of 1965 which comprises this subchapter.
§1098cc. Tuition refunds or credits for members of armed forces
(a) Sense of Congress
It is the sense of Congress that—
(1) all institutions offering postsecondary education should provide a full refund to students who are affected individuals for that portion of a period of instruction such student was unable to complete, or for which such individual did not receive academic credit, because he or she was called up for active duty or active service; and
(2) if affected individuals withdraw from a course of study as a result of such active duty or active service, such institutions should make every effort to minimize deferral of enrollment or reapplication requirements and should provide the greatest flexibility possible with administrative deadlines related to those applications.
(b) Definition of full refund
For purposes of this section, a full refund includes a refund of required tuition and fees, or a credit in a comparable amount against future tuition and fees.
(
Editorial Notes
Codification
Section was formerly set out in a note under
Section was enacted as part of the Higher Education Relief Opportunities for Students Act of 2003, and not as part of title IV of the Higher Education Act of 1965 which comprises this subchapter.
§1098dd. Use of professional judgment
A financial aid administrator shall be considered to be making a necessary adjustment in accordance with
(
Editorial Notes
Codification
Section was formerly set out in a note under
Section was enacted as part of the Higher Education Relief Opportunities for Students Act of 2003, and not as part of title IV of the Higher Education Act of 1965 which comprises this subchapter.
§1098ee. Definitions
In this part:
(1) Active duty
The term "active duty" has the meaning given such term in
(2) Affected individual
The term "affected individual" means an individual who—
(A) is serving on active duty during a war or other military operation or national emergency;
(B) is performing qualifying National Guard duty during a war or other military operation or national emergency;
(C) resides or is employed in an area that is declared a disaster area by any Federal, State, or local official in connection with a national emergency; or
(D) suffered direct economic hardship as a direct result of a war or other military operation or national emergency, as determined by the Secretary.
(3) Military operation
The term "military operation" means a contingency operation as such term is defined in
(4) National emergency
The term "national emergency" means a national emergency declared by the President of the United States.
(5) Serving on active duty
The term "serving on active duty during a war or other military operation or national emergency" shall include service by an individual who is—
(A) a Reserve of an Armed Force ordered to active duty under
(B) any other member of an Armed Force on active duty in connection with such war, operation, or emergency or subsequent actions or conditions who has been assigned to a duty station at a location other than the location at which such member is normally assigned.
(6) Qualifying National Guard duty
The term "qualifying National Guard duty during a war or other military operation or national emergency" means service as a member of the National Guard on full-time National Guard duty (as defined in
(
Editorial Notes
Codification
Section was formerly set out in a note under
Section was enacted as part of the Higher Education Relief Opportunities for Students Act of 2003, and not as part of title IV of the Higher Education Act of 1965 which comprises this subchapter.
§1099. Transferred
Editorial Notes
Codification
Section,
Part H—Program Integrity
Editorial Notes
Codification
Part H of title IV of the Higher Education Act of 1965,
Prior Provisions
A prior part H, consisting of part I of title IV of
subpart 1—state role
Editorial Notes
Codification
Subpart 1 of part H of title IV of the Higher Education Act of 1965, comprising this subpart, was originally added to
§1099a. State responsibilities
(a) State responsibilities
As part of the integrity program authorized by this part, each State, through one State agency or several State agencies selected by the State, shall—
(1) furnish the Secretary, upon request, information with respect to the process for licensing or other authorization for institutions of higher education to operate within the State;
(2) notify the Secretary promptly whenever the State revokes a license or other authority to operate an institution of higher education; and
(3) notify the Secretary promptly whenever the State has credible evidence that an institution of higher education within the State—
(A) has committed fraud in the administration of the student assistance programs authorized by this subchapter; or
(B) has substantially violated a provision of this subchapter.
(b) Institutional responsibility
Each institution of higher education shall provide evidence to the Secretary that the institution has authority to operate within a State at the time the institution is certified under subpart 3 of this part.
(
Editorial Notes
Prior Provisions
Prior sections 1099a to 1099a–3 were omitted in the general amendment of this subpart by
Section 1099a,
Section 1099a–1,
Section 1099a–2,
Section 1099a–3,
subpart 2—accrediting agency recognition
Editorial Notes
Codification
§1099b. Recognition of accrediting agency or association
(a) Criteria required
No accrediting agency or association may be determined by the Secretary to be a reliable authority as to the quality of education or training offered for the purposes of this chapter or for other Federal purposes, unless the agency or association meets criteria established by the Secretary pursuant to this section. The Secretary shall, after notice and opportunity for a hearing, establish criteria for such determinations. Such criteria shall include an appropriate measure or measures of student achievement. Such criteria shall require that—
(1) the accrediting agency or association shall be a State, regional, or national agency or association and shall demonstrate the ability and the experience to operate as an accrediting agency or association within the State, region, or nationally, as appropriate;
(2) such agency or association—
(A)(i) for the purpose of participation in programs under this chapter, has a voluntary membership of institutions of higher education and has as a principal purpose the accrediting of institutions of higher education; or
(ii) for the purpose of participation in other programs administered by the Department of Education or other Federal agencies, has a voluntary membership and has as its principal purpose the accrediting of institutions of higher education or programs;
(B) is a State agency approved by the Secretary for the purpose described in subparagraph (A); or
(C) is an agency or association that, for the purpose of determining eligibility for student assistance under this subchapter, conducts accreditation through (i) a voluntary membership organization of individuals participating in a profession, or (ii) an agency or association which has as its principal purpose the accreditation of programs within institutions, which institutions are accredited by another agency or association recognized by the Secretary;
(3) if such agency or association is an agency or association described in—
(A) subparagraph (A)(i) of paragraph (2), then such agency or association is separate and independent, both administratively and financially of any related, associated, or affiliated trade association or membership organization;
(B) subparagraph (B) of paragraph (2), then such agency or association has been recognized by the Secretary on or before October 1, 1991; or
(C) subparagraph (C) of paragraph (2) and such agency or association has been recognized by the Secretary on or before October 1, 1991, then the Secretary may waive the requirement that such agency or association is separate and independent, both administratively and financially of any related, associated, or affiliated trade association or membership organization upon a demonstration that the existing relationship has not served to compromise the independence of its accreditation process;
(4)(A) such agency or association consistently applies and enforces standards that respect the stated mission of the institution of higher education, including religious missions, and that ensure that the courses or programs of instruction, training, or study offered by the institution of higher education, including distance education or correspondence courses or programs, are of sufficient quality to achieve, for the duration of the accreditation period, the stated objective for which the courses or the programs are offered; and
(B) if such agency or association has or seeks to include within its scope of recognition the evaluation of the quality of institutions or programs offering distance education or correspondence education, such agency or association shall, in addition to meeting the other requirements of this subpart, demonstrate to the Secretary that—
(i) the agency or association's standards effectively address the quality of an institution's distance education or correspondence education in the areas identified in paragraph (5), except that—
(I) the agency or association shall not be required to have separate standards, procedures, or policies for the evaluation of distance education or correspondence education institutions or programs in order to meet the requirements of this subparagraph; and
(II) in the case that the agency or association is recognized by the Secretary, the agency or association shall not be required to obtain the approval of the Secretary to expand its scope of accreditation to include distance education or correspondence education, provided that the agency or association notifies the Secretary in writing of the change in scope; and
(ii) the agency or association requires an institution that offers distance education or correspondence education to have processes through which the institution establishes that the student who registers in a distance education or correspondence education course or program is the same student who participates in and completes the program and receives the academic credit;
(5) the standards for accreditation of the agency or association assess the institution's—
(A) success with respect to student achievement in relation to the institution's mission, which may include different standards for different institutions or programs, as established by the institution, including, as appropriate, consideration of State licensing examinations, consideration of course completion, and job placement rates;
(B) curricula;
(C) faculty;
(D) facilities, equipment, and supplies;
(E) fiscal and administrative capacity as appropriate to the specified scale of operations;
(F) student support services;
(G) recruiting and admissions practices, academic calendars, catalogs, publications, grading and advertising;
(H) measures of program length and the objectives of the degrees or credentials offered;
(I) record of student complaints received by, or available to, the agency or association; and
(J) record of compliance with its program responsibilities under this subchapter based on the most recent student loan default rate data provided by the Secretary, the results of financial or compliance audits, program reviews, and such other information as the Secretary may provide to the agency or association;
except that subparagraphs (A), (H), and (J) shall not apply to agencies or associations described in paragraph (2)(A)(ii) of this subsection;
(6) such an agency or association shall establish and apply review procedures throughout the accrediting process, including evaluation and withdrawal proceedings, which comply with due process procedures that provide—
(A) for adequate written specification of—
(i) requirements, including clear standards for an institution of higher education or program to be accredited; and
(ii) identified deficiencies at the institution or program examined;
(B) for sufficient opportunity for a written response, by an institution or program, regarding any deficiencies identified by the agency or association to be considered by the agency or association—
(i) within a timeframe determined by the agency or association; and
(ii) prior to final action in the evaluation and withdrawal proceedings;
(C) upon the written request of an institution or program, for an opportunity for the institution or program to appeal any adverse action under this section, including denial, withdrawal, suspension, or termination of accreditation, taken against the institution or program, prior to such action becoming final at a hearing before an appeals panel that—
(i) shall not include current members of the agency's or association's underlying decisionmaking body that made the adverse decision; and
(ii) is subject to a conflict of interest policy;
(D) for the right to representation and participation by counsel for an institution or program during an appeal of the adverse action;
(E) for a process, in accordance with written procedures developed by the agency or association, through which an institution or program, before a final adverse action based solely upon a failure to meet a standard or criterion pertaining to finances, may on one occasion seek review of significant financial information that was unavailable to the institution or program prior to the determination of the adverse action, and that bears materially on the financial deficiencies identified by the agency or association;
(F) in the case that the agency or association determines that the new financial information submitted by the institution or program under subparagraph (E) meets the criteria of significance and materiality described in such subparagraph, for consideration by the agency or association of the new financial information prior to the adverse action described in such subparagraph becoming final; and
(G) that any determination by the agency or association made with respect to the new financial information described in subparagraph (E) shall not be separately appealable by the institution or program;
(7) such agency or association shall notify the Secretary and the appropriate State licensing or authorizing agency within 30 days of the accreditation of an institution or any final denial, withdrawal, suspension, or termination of accreditation or placement on probation of an institution, together with any other adverse action taken with respect to an institution; and
(8) such agency or association shall make available to the public, upon request, and to the Secretary, and the State licensing or authorizing agency a summary of any review resulting in a final accrediting decision involving denial, termination, or suspension of accreditation, together with the comments of the affected institution.
(b) "Separate and independent" defined
For the purpose of subsection (a)(3), the term "separate and independent" means that—
(1) the members of the postsecondary education governing body of the accrediting agency or association are not elected or selected by the board or chief executive officer of any related, associated, or affiliated trade association or membership organization;
(2) among the membership of the board of the accrediting agency or association there shall be one public member (who is not a member of any related trade or membership organization) for each six members of the board, with a minimum of one such public member, and guidelines are established for such members to avoid conflicts of interest;
(3) dues to the accrediting agency or association are paid separately from any dues paid to any related, associated, or affiliated trade association or membership organization; and
(4) the budget of the accrediting agency or association is developed and determined by the accrediting agency or association without review or resort to consultation with any other entity or organization.
(c) Operating procedures required
No accrediting agency or association may be recognized by the Secretary as a reliable authority as to the quality of education or training offered by an institution seeking to participate in the programs authorized under this subchapter, unless the agency or association—
(1) performs, at regularly established intervals, on-site inspections and reviews of institutions of higher education (which may include unannounced site visits) with particular focus on educational quality and program effectiveness, and ensures that accreditation team members are well-trained and knowledgeable with respect to their responsibilities, including those regarding distance education;
(2) monitors the growth of programs at institutions that are experiencing significant enrollment growth;
(3) requires an institution to submit for approval to the accrediting agency a teach-out plan upon the occurrence of any of the following events:
(A) the Department notifies the accrediting agency of an action against the institution pursuant to
(B) the accrediting agency acts to withdraw, terminate, or suspend the accreditation of the institution; or
(C) the institution notifies the accrediting agency that the institution intends to cease operations;
(4) requires that any institution of higher education subject to its jurisdiction which plans to establish a branch campus submit a business plan, including projected revenues and expenditures, prior to opening the branch campus;
(5) agrees to conduct, as soon as practicable, but within a period of not more than 6 months of the establishment of a new branch campus or a change of ownership of an institution of higher education, an on-site visit of that branch campus or of the institution after a change of ownership;
(6) requires that teach-out agreements among institutions are subject to approval by the accrediting agency or association consistent with standards promulgated by such agency or association;
(7) makes available to the public and the State licensing or authorizing agency, and submits to the Secretary, a summary of agency or association actions, including—
(A) the award of accreditation or reaccreditation of an institution;
(B) final denial, withdrawal, suspension, or termination of accreditation of an institution, and any findings made in connection with the action taken, together with the official comments of the affected institution; and
(C) any other adverse action taken with respect to an institution or placement on probation of an institution;
(8) discloses publicly whenever an institution of higher education subject to its jurisdiction is being considered for accreditation or reaccreditation; and
(9) confirms, as a part of the agency's or association's review for accreditation or reaccreditation, that the institution has transfer of credit policies—
(A) that are publicly disclosed; and
(B) that include a statement of the criteria established by the institution regarding the transfer of credit earned at another institution of higher education.
(d) Length of recognition
No accrediting agency or association may be recognized by the Secretary for the purpose of this chapter for a period of more than 5 years.
(e) Initial arbitration rule
The Secretary may not recognize the accreditation of any institution of higher education unless the institution of higher education agrees to submit any dispute involving the final denial, withdrawal, or termination of accreditation to initial arbitration prior to any other legal action.
(f) Jurisdiction
Notwithstanding any other provision of law, any civil action brought by an institution of higher education seeking accreditation from, or accredited by, an accrediting agency or association recognized by the Secretary for the purpose of this subchapter and involving the denial, withdrawal, or termination of accreditation of the institution of higher education, shall be brought in the appropriate United States district court.
(g) Limitation on scope of criteria
Nothing in this chapter shall be construed to permit the Secretary to establish criteria for accrediting agencies or associations that are not required by this section. Nothing in this chapter shall be construed to prohibit or limit any accrediting agency or association from adopting additional standards not provided for in this section. Nothing in this section shall be construed to permit the Secretary to establish any criteria that specifies, defines, or prescribes the standards that accrediting agencies or associations shall use to assess any institution's success with respect to student achievement.
(h) Change of accrediting agency
The Secretary shall not recognize the accreditation of any otherwise eligible institution of higher education if the institution of higher education is in the process of changing its accrediting agency or association, unless the eligible institution submits to the Secretary all materials relating to the prior accreditation, including materials demonstrating reasonable cause for changing the accrediting agency or association.
(i) Dual accreditation rule
The Secretary shall not recognize the accreditation of any otherwise eligible institution of higher education if the institution of higher education is accredited, as an institution, by more than one accrediting agency or association, unless the institution submits to each such agency and association and to the Secretary the reasons for accreditation by more than one such agency or association and demonstrates to the Secretary reasonable cause for its accreditation by more than one agency or association. If the institution is accredited, as an institution, by more than one accrediting agency or association, the institution shall designate which agency's accreditation shall be utilized in determining the institution's eligibility for programs under this chapter.
(j) Impact of loss of accreditation
An institution may not be certified or recertified as an institution of higher education under
(1) is not currently accredited by any agency or association recognized by the Secretary;
(2) has had its accreditation withdrawn, revoked, or otherwise terminated for cause during the preceding 24 months, unless such withdrawal, revocation, or termination has been rescinded by the same accrediting agency; or
(3) has withdrawn from accreditation voluntarily under a show cause or suspension order during the preceding 24 months, unless such order has been rescinded by the same accrediting agency.
(k) Religious institution rule
Notwithstanding subsection (j), the Secretary shall allow an institution that has had its accreditation withdrawn, revoked, or otherwise terminated, or has voluntarily withdrawn from an accreditation agency, to remain certified as an institution of higher education under
(1) is related to the religious mission or affiliation of the institution; and
(2) is not related to the accreditation criteria provided for in this section.
(l) Limitation, suspension, or termination of recognition
(1) If the Secretary determines that an accrediting agency or association has failed to apply effectively the criteria in this section, or is otherwise not in compliance with the requirements of this section, the Secretary shall—
(A) after notice and opportunity for a hearing, limit, suspend, or terminate the recognition of the agency or association; or
(B) require the agency or association to take appropriate action to bring the agency or association into compliance with such requirements within a timeframe specified by the Secretary, except that—
(i) such timeframe shall not exceed 12 months unless the Secretary extends such period for good cause; and
(ii) if the agency or association fails to bring the agency or association into compliance within such timeframe, the Secretary shall, after notice and opportunity for a hearing, limit, suspend, or terminate the recognition of the agency or association.
(2) The Secretary may determine that an accrediting agency or association has failed to apply effectively the standards provided in this section if an institution of higher education seeks and receives accreditation from the accrediting agency or association during any period in which the institution is the subject of any interim action by another accrediting agency or association, described in paragraph (2)(A)(i), (2)(B), or (2)(C) of subsection (a) of this section, leading to the suspension, revocation, or termination of accreditation or the institution has been notified of the threatened loss of accreditation, and the due process procedures required by such suspension, revocation, termination, or threatened loss have not been completed.
(m) Limitation on Secretary's authority
The Secretary may only recognize accrediting agencies or associations which accredit institutions of higher education for the purpose of enabling such institutions to establish eligibility to participate in the programs under this chapter or which accredit institutions of higher education or higher education programs for the purpose of enabling them to establish eligibility to participate in other programs administered by the Department of Education or other Federal agencies.
(n) Independent evaluation
(1) The Secretary shall conduct a comprehensive review and evaluation of the performance of all accrediting agencies or associations which seek recognition by the Secretary in order to determine whether such accrediting agencies or associations meet the criteria established by this section. The Secretary shall conduct an independent evaluation of the information provided by such agency or association. Such evaluation shall include—
(A) the solicitation of third-party information concerning the performance of the accrediting agency or association; and
(B) site visits, including unannounced site visits as appropriate, at accrediting agencies and associations, and, at the Secretary's discretion, at representative member institutions.
(2) The Secretary shall place a priority for review of accrediting agencies or associations on those agencies or associations that accredit institutions of higher education that participate most extensively in the programs authorized by this subchapter and on those agencies or associations which have been the subject of the most complaints or legal actions.
(3) The Secretary shall consider all available relevant information concerning the compliance of the accrediting agency or association with the criteria provided for in this section, including any complaints or legal actions against such agency or association. In cases where deficiencies in the performance of an accreditation agency or association with respect to the requirements of this section are noted, the Secretary shall take these deficiencies into account in the recognition process. The Secretary shall not, under any circumstances, base decisions on the recognition or denial of recognition of accreditation agencies or associations on criteria other than those contained in this section. When the Secretary decides to recognize an accrediting agency or association, the Secretary shall determine the agency or association's scope of recognition. If the agency or association reviews institutions offering distance education courses or programs and the Secretary determines that the agency or association meets the requirements of this section, then the agency shall be recognized and the scope of recognition shall include accreditation of institutions offering distance education courses or programs.
(4) The Secretary shall maintain sufficient documentation to support the conclusions reached in the recognition process, and, if the Secretary does not recognize any accreditation agency or association, shall make publicly available the reason for denying recognition, including reference to the specific criteria under this section which have not been fulfilled.
(o) Regulations
The Secretary shall by regulation provide procedures for the recognition of accrediting agencies or associations and for the appeal of the Secretary's decisions. Notwithstanding any other provision of law, the Secretary shall not promulgate any regulation with respect to the standards of an accreditation agency or association described in subsection (a)(5).
(p) Rule of construction
Nothing in subsection (a)(5) shall be construed to restrict the ability of—
(1) an accrediting agency or association to set, with the involvement of its members, and to apply, accreditation standards for or to institutions or programs that seek review by the agency or association; or
(2) an institution to develop and use institutional standards to show its success with respect to student achievement, which achievement may be considered as part of any accreditation review.
(q) Review of scope changes
The Secretary shall require a review, at the next available meeting of the National Advisory Committee on Institutional Quality and Integrity, of any change in scope undertaken by an agency or association under subsection (a)(4)(B)(i)(II) if the enrollment of an institution that offers distance education or correspondence education that is accredited by such agency or association increases by 50 percent or more within any one institutional fiscal year.
(
Editorial Notes
Amendments
2009—Subsec. (a)(6)(G).
2008—Subsec. (a)(4).
Subsec. (a)(5)(A).
Subsec. (a)(6).
"(A) adequate specification of requirements and deficiencies at the institution of higher education or program being examined;
"(B) notice of an opportunity for a hearing by any such institution;
"(C) the right to appeal any adverse action against any such institution; and
"(D) the right to representation by counsel for any such institution;".
Subsec. (c)(1).
Subsec. (c)(2) to (8).
Subsec. (c)(9).
Subsec. (g).
Subsec. (o).
Subsecs. (p), (q).
1998—
Subsec. (a).
Subsec. (a)(4).
Subsec. (a)(5).
Subsec. (a)(5)(A) to (G).
Subsec. (a)(5)(H).
Subsec. (a)(5)(I).
Subsec. (a)(5)(J).
Subsec. (a)(5)(K), (L).
Subsec. (a)(7).
Subsec. (a)(8).
Subsec. (c).
Subsec. (c)(1).
Subsec. (d).
Subsec. (f).
Subsec. (g).
Subsec. (j).
Subsec. (k).
Subsec. (k)(2).
Subsec. (l).
Subsec. (n)(1).
Subsec. (n)(3).
Subsec. (n)(4).
1993—Subsec. (a)(2)(A)(i).
Subsec. (a)(3)(A).
Subsec. (a)(5).
Subsec. (c).
Subsec. (l)(2).
Subsec. (n)(1)(B).
Statutory Notes and Related Subsidiaries
Effective Date of 2009 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date
Section effective Oct. 1, 1992, see section 2 of
Study of Transfer of Credits
subpart 3—eligibility and certification procedures
§1099c. Eligibility and certification procedures
(a) General requirement
For purposes of qualifying institutions of higher education for participation in programs under this subchapter, the Secretary shall determine the legal authority to operate within a State, the accreditation status, and the administrative capability and financial responsibility of an institution of higher education in accordance with the requirements of this section.
(b) Single application form
The Secretary shall prepare and prescribe a single application form which—
(1) requires sufficient information and documentation to determine that the requirements of eligibility, accreditation, financial responsibility, and administrative capability of the institution of higher education are met;
(2) requires a specific description of the relationship between a main campus of an institution of higher education and all of its branches, including a description of the student aid processing that is performed by the main campus and that which is performed at its branches;
(3) requires—
(A) a description of the third party servicers of an institution of higher education; and
(B) the institution to maintain a copy of any contract with a financial aid service provider or loan servicer, and provide a copy of any such contract to the Secretary upon request;
(4) requires such other information as the Secretary determines will ensure compliance with the requirements of this subchapter with respect to eligibility, accreditation, administrative capability and financial responsibility; and
(5) provides, at the option of the institution, for participation in one or more of the programs under part B or D.
(c) Financial responsibility standards
(1) The Secretary shall determine whether an institution has the financial responsibility required by this subchapter on the basis of whether the institution is able—
(A) to provide the services described in its official publications and statements;
(B) to provide the administrative resources necessary to comply with the requirements of this subchapter; and
(C) to meet all of its financial obligations, including (but not limited to) refunds of institutional charges and repayments to the Secretary for liabilities and debts incurred in programs administered by the Secretary.
(2) Notwithstanding paragraph (1), if an institution fails to meet criteria prescribed by the Secretary regarding ratios that demonstrate financial responsibility, then the institution shall provide the Secretary with satisfactory evidence of its financial responsibility in accordance with paragraph (3). Such criteria shall take into account any differences in generally accepted accounting principles, and the financial statements required thereunder, that are applicable to for-profit, public, and nonprofit institutions. The Secretary shall take into account an institution's total financial circumstances in making a determination of its ability to meet the standards herein required.
(3) The Secretary shall determine an institution to be financially responsible, notwithstanding the institution's failure to meet the criteria under paragraphs (1) and (2), if—
(A) such institution submits to the Secretary third-party financial guarantees that the Secretary determines are reasonable, such as performance bonds or letters of credit payable to the Secretary, which third-party financial guarantees shall equal not less than one-half of the annual potential liabilities of such institution to the Secretary for funds under this subchapter, including loan obligations discharged pursuant to
(B) such institution has its liabilities backed by the full faith and credit of a State, or its equivalent;
(C) such institution establishes to the satisfaction of the Secretary, with the support of a financial statement audited by an independent certified public accountant in accordance with generally accepted auditing standards, that the institution has sufficient resources to ensure against the precipitous closure of the institution, including the ability to meet all of its financial obligations (including refunds of institutional charges and repayments to the Secretary for liabilities and debts incurred in programs administered by the Secretary); or
(D) such institution has met standards of financial responsibility, prescribed by the Secretary by regulation, that indicate a level of financial strength not less than those required in paragraph (2).
(4) If an institution of higher education that provides a 2-year or 4-year program of instruction for which the institution awards an associate or baccalaureate degree fails to meet the criteria imposed by the Secretary pursuant to paragraph (2), the Secretary shall waive that particular requirement for that institution if the institution demonstrates to the satisfaction of the Secretary that—
(A) there is no reasonable doubt as to its continued solvency and ability to deliver quality educational services;
(B) it is current in its payment of all current liabilities, including student refunds, repayments to the Secretary, payroll, and payment of trade creditors and withholding taxes; and
(C) it has substantial equity in school-occupied facilities, the acquisition of which was the direct cause of its failure to meet the criteria.
(5) The determination as to whether an institution has met the standards of financial responsibility provided for in paragraphs (2) and (3)(C) shall be based on an audited and certified financial statement of the institution. Such audit shall be conducted by a qualified independent organization or person in accordance with standards established by the American Institute of Certified Public Accountants. Such statement shall be submitted to the Secretary at the time such institution is considered for certification or recertification under this section. If the institution is permitted to be certified (provisionally or otherwise) and such audit does not establish compliance with paragraph (2), the Secretary may require that additional audits be submitted.
(6)(A) The Secretary shall establish requirements for the maintenance by an institution of higher education of sufficient cash reserves to ensure repayment of any required refunds.
(B) The Secretary shall provide for a process under which the Secretary shall exempt an institution of higher education from the requirements described in subparagraph (A) if the Secretary determines that the institution—
(i) is located in a State that has a tuition recovery fund that ensures that the institution meets the requirements of subparagraph (A);
(ii) contributes to the fund; and
(iii) otherwise has legal authority to operate within the State.
(d) Administrative capacity standard
The Secretary is authorized—
(1) to establish procedures and requirements relating to the administrative capacities of institutions of higher education, including—
(A) consideration of past performance of institutions or persons in control of such institutions with respect to student aid programs; and
(B) maintenance of records; and
(2) to establish such other reasonable procedures as the Secretary determines will contribute to ensuring that the institution of higher education will comply with administrative capability required by this subchapter.
(e) Financial guarantees from owners
(1) Notwithstanding any other provision of law, the Secretary may, to the extent necessary to protect the financial interest of the United States, require—
(A) financial guarantees from an institution participating, or seeking to participate, in a program under this subchapter, or from one or more individuals who the Secretary determines, in accordance with paragraph (2), exercise substantial control over such institution, or both, in an amount determined by the Secretary to be sufficient to satisfy the institution's potential liability to the Federal Government, student assistance recipients, and other program participants for funds under this subchapter; and
(B) the assumption of personal liability, by one or more individuals who exercise substantial control over such institution, as determined by the Secretary in accordance with paragraph (2), for financial losses to the Federal Government, student assistance recipients, and other program participants for funds under this subchapter, and civil and criminal monetary penalties authorized under this subchapter.
(2)(A) The Secretary may determine that an individual exercises substantial control over one or more institutions participating in a program under this subchapter if the Secretary determines that—
(i) the individual directly or indirectly controls a substantial ownership interest in the institution;
(ii) the individual, either alone or together with other individuals, represents, under a voting trust, power of attorney, proxy, or similar agreement, one or more persons who have, individually or in combination with the other persons represented or the individual representing them, a substantial ownership interest in the institution; or
(iii) the individual is a member of the board of directors, the chief executive officer, or other executive officer of the institution or of an entity that holds a substantial ownership interest in the institution.
(B) The Secretary may determine that an entity exercises substantial control over one or more institutions participating in a program under this subchapter if the Secretary determines that the entity directly or indirectly holds a substantial ownership interest in the institution.
(3) For purposes of this subsection, an ownership interest is defined as a share of the legal or beneficial ownership or control of, or a right to share in the proceeds of the operation of, an institution or institution's parent corporation. An ownership interest may include, but is not limited to—
(A) a sole proprietorship;
(B) an interest as a tenant-in-common, joint tenant, or tenant by the entireties;
(C) a partnership; or
(D) an interest in a trust.
(4) The Secretary shall not impose the requirements described in subparagraphs (A) and (B) of paragraph (1) on an institution that—
(A) has not been subjected to a limitation, suspension, or termination action by the Secretary or a guaranty agency within the preceding 5 years;
(B) has not had, during its 2 most recent audits of the institutions conduct of programs under this subchapter, an audit finding that resulted in the institution being required to repay an amount greater than 5 percent of the funds the institution received from programs under this subchapter for any year;
(C) meets and has met, for the preceding 5 years, the financial responsibility standards under subsection (c); and
(D) has not been cited during the preceding 5 years for failure to submit audits required under this subchapter in a timely fashion.
(5) For purposes of
(6) Notwithstanding any other provision of law, any individual who—
(A) the Secretary determines, in accordance with paragraph (2), exercises substantial control over an institution participating in, or seeking to participate in, a program under this subchapter;
(B) is required to pay, on behalf of a student or borrower, a refund of unearned institutional charges to a lender, or to the Secretary; and
(C) willfully fails to pay such refund or willfully attempts in any manner to evade payment of such refund,
shall, in addition to other penalties provided by law, be liable to the Secretary for the amount of the refund not paid, to the same extent with respect to such refund that such an individual would be liable as a responsible person for a penalty under
(f) Actions on applications and site visits
The Secretary shall ensure that prompt action is taken by the Department on any application required under subsection (b). The personnel of the Department of Education may conduct a site visit at each institution before certifying or recertifying its eligibility for purposes of any program under this subchapter. The Secretary shall establish priorities by which institutions are to receive site visits, and shall, to the extent practicable, coordinate such visits with site visits by States, guaranty agencies, and accrediting bodies in order to eliminate duplication, and reduce administrative burden.
(g) Time limitations on, and renewal of, eligibility
(1) General rule
After the expiration of the certification of any institution under the schedule prescribed under this section (as this section was in effect prior to October 7, 1998), or upon request for initial certification from an institution not previously certified, the Secretary may certify the eligibility for the purposes of any program authorized under this subchapter of each such institution for a period not to exceed 6 years.
(2) Notification
The Secretary shall notify each institution of higher education not later than 6 months prior to the date of the expiration of the institution's certification.
(3) Institutions outside the United States
The Secretary shall promulgate regulations regarding the recertification requirements applicable to an institution of higher education outside of the United States that meets the requirements of
(h) Provisional certification of institutional eligibility
(1) Notwithstanding subsections (d) and (g), the Secretary may provisionally certify an institution's eligibility to participate in programs under this subchapter—
(A) for not more than one complete award year in the case of an institution of higher education seeking an initial certification; and
(B) for not more than 3 complete award years if—
(i) the institution's administrative capability and financial responsibility is being determined for the first time;
(ii) there is a complete or partial change of ownership, as defined under subsection (i), of an eligible institution; or
(iii) the Secretary determines that an institution that seeks to renew its certification is, in the judgment of the Secretary, in an administrative or financial condition that may jeopardize its ability to perform its financial responsibilities under a program participation agreement.
(2) Whenever the Secretary withdraws the recognition of any accrediting agency, an institution of higher education which meets the requirements of accreditation, eligibility, and certification on the day prior to such withdrawal, the Secretary may, notwithstanding the withdrawal, continue the eligibility of the institution of higher education to participate in the programs authorized by this subchapter for a period not to exceed 18 months from the date of the withdrawal of recognition.
(3) If, prior to the end of a period of provisional certification under this subsection, the Secretary determines that the institution is unable to meet its responsibilities under its program participation agreement, the Secretary may terminate the institution's participation in programs under this subchapter.
(i) Treatment of changes of ownership
(1) An eligible institution of higher education that has had a change in ownership resulting in a change of control shall not qualify to participate in programs under this subchapter after the change in control (except as provided in paragraph (3)) unless it establishes that it meets the requirements of
(2) An action resulting in a change in control may include (but is not limited to)—
(A) the sale of the institution or the majority of its assets;
(B) the transfer of the controlling interest of stock of the institution or its parent corporation;
(C) the merger of two or more eligible institutions;
(D) the division of one or more institutions into two or more institutions;
(E) the transfer of the controlling interest of stock of the institutions to its parent corporation; or
(F) the transfer of the liabilities of the institution to its parent corporation.
(3) An action that may be treated as not resulting in a change in control includes (but is not limited to)—
(A) the sale or transfer, upon the death of an owner of an institution, of the ownership interest of the deceased in that institution to a family member or to a person holding an ownership interest in that institution; or
(B) another action determined by the Secretary to be a routine business practice.
(4)(A) The Secretary may provisionally certify an institution seeking approval of a change in ownership based on the preliminary review by the Secretary of a materially complete application that is received by the Secretary within 10 business days of the transaction for which the approval is sought.
(B) A provisional certification under this paragraph shall expire not later than the end of the month following the month in which the transaction occurred, except that if the Secretary has not issued a decision on the application for the change of ownership within that period, the Secretary may continue such provisional certification on a month-to-month basis until such decision has been issued.
(j) Treatment of branches
(1) A branch of an eligible institution of higher education, as defined pursuant to regulations of the Secretary, shall be certified under this subpart before it may participate as part of such institution in a program under this subchapter, except that such branch shall not be required to meet the requirements of
(2) The Secretary may waive the requirement of
(k) Treatment of teach-outs at additional locations
(1) In general
A location of a closed institution of higher education shall be eligible as an additional location of an eligible institution of higher education, as defined pursuant to regulations of the Secretary, for the purposes of a teach-out described in
(2) Special rule
An institution of higher education that conducts a teach-out through the establishment of an additional location described in paragraph (1) shall be permitted to establish a permanent additional location at a closed institution and shall not be required—
(A) to meet the requirements of
(B) to assume the liabilities of the closed institution.
(
Editorial Notes
References in Text
Subsections (b)(5) and (c)(3), referred to in subsec. (i)(1), originally meant subsections (b)(5) and (c)(3) of
Amendments
2009—Subsec. (c)(2).
2008—Subsec. (d)(1)(B).
Subsec. (k).
1998—Subsec. (b)(1).
Subsec. (b)(3).
Subsec. (b)(5).
Subsec. (c)(2).
Subsec. (c)(3)(A).
Subsec. (c)(4).
Subsec. (c)(4)(C).
Subsec. (e)(6).
Subsec. (f).
Subsec. (g).
"(1) The eligibility for the purposes of any program authorized under this subchapter of any institution that is participating in any such program on July 23, 1992, shall expire in accordance with the schedule prescribed by the Secretary in accordance with paragraph (2), but not later than 5 years after July 23, 1992.
"(2) The Secretary shall establish a schedule for the expiration of the eligibility for purposes of any such program of all institutions of higher education within the 5-year period specified in paragraph (1). Such schedule shall place a priority for the expiration of the certification of institutions on those that meet the following criteria:
"(A) institutions subject to review by a State postsecondary review entity pursuant to subpart 1 of this part; or
"(B) other categories of institutions which the Secretary deems necessary.
"(3) After the expiration of the certification of any institution under the schedule prescribed under this subsection, or upon request for initial certification from an institution not previously certified, the Secretary may certify the eligibility for the purposes of any program authorized under this subchapter of each such institution for a period not to exceed 4 years."
Subsec. (h)(2).
Subsec. (i)(1).
Subsec. (i)(4).
Subsec. (j)(1).
Subsec. (j)(2).
1993—Subsec. (c)(2).
Subsec. (c)(3).
Subsec. (c)(3)(C).
Subsec. (c)(4) to (6).
Subsec. (f).
Subsec. (h)(1)(B)(iii).
Subsec. (i)(1).
Subsec. (i)(3)(A).
Subsec. (j)(1).
Statutory Notes and Related Subsidiaries
Effective Date of 2009 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by sections 102(a)(6)(B), (b)(6), (7) and 493(a), (b), (d)–(h) of
Effective Date of 1993 Amendment
Amendment by
Effective Date
Subpart effective Oct. 1, 1992, see section 2 of
1 See References in Text note below.
§1099c–1. Program review and data
(a) General authority
In order to strengthen the administrative capability and financial responsibility provisions of this subchapter, the Secretary—
(1) shall provide for the conduct of program reviews on a systematic basis designed to include all institutions of higher education participating in programs authorized by this subchapter;
(2) shall give priority for program review to institutions of higher education that are—
(A) institutions with a cohort default rate for loans under part B of this subchapter in excess of 25 percent or which places such institutions in the highest 25 percent of such institutions;
(B) institutions with a default rate in dollar volume for loans under part B of this subchapter which places the institutions in the highest 25 percent of such institutions;
(C) institutions with a significant fluctuation in Federal Stafford Loan volume, Federal Direct Stafford/Ford Loan volume, or Federal Pell Grant award volume, or any combination thereof, in the year for which the determination is made, compared to the year prior to such year, that are not accounted for by changes in the Federal Stafford Loan program, the Federal Direct Stafford/Ford Loan program, or the Pell Grant program, or any combination thereof;
(D) institutions reported to have deficiencies or financial aid problems by the State licensing or authorizing agency, or by the appropriate accrediting agency or association;
(E) institutions with high annual dropout rates; and
(F) such other institutions that the Secretary determines may pose a significant risk of failure to comply with the administrative capability or financial responsibility provisions of this subchapter; and
(3) shall establish and operate a central data base of information on institutional accreditation, eligibility, and certification that includes—
(A) all relevant information available to the Department;
(B) all relevant information made available by the Secretary of Veterans Affairs;
(C) all relevant information from accrediting agencies or associations;
(D) all relevant information available from a guaranty agency; and
(E) all relevant information available from States under subpart 1 of this part.
(b) Special administrative rules
In carrying out paragraphs (1) and (2) of subsection (a) and any other relevant provisions of this subchapter, the Secretary shall—
(1) establish guidelines designed to ensure uniformity of practice in the conduct of program reviews of institutions of higher education;
(2) make available to each institution participating in programs authorized under this subchapter complete copies of all review guidelines and procedures used in program reviews;
(3) permit the institution to correct or cure an administrative, accounting, or recordkeeping error if the error is not part of a pattern of error and there is no evidence of fraud or misconduct related to the error;
(4) base any civil penalty assessed against an institution of higher education resulting from a program review or audit on the gravity of the violation, failure, or misrepresentation;
(5) inform the appropriate State and accrediting agency or association whenever the Secretary takes action against an institution of higher education under this section,
(6) provide to an institution of higher education an adequate opportunity to review and respond to any program review report and relevant materials related to the report before any final program review report is issued;
(7) review and take into consideration an institution of higher education's response in any final program review report or audit determination, and include in the report or determination—
(A) a written statement addressing the institution of higher education's response;
(B) a written statement of the basis for such report or determination; and
(C) a copy of the institution's response; and
(8) maintain and preserve at all times the confidentiality of any program review report until the requirements of paragraphs (6) and (7) are met, and until a final program review is issued, other than to the extent required to comply with paragraph (5), except that the Secretary shall promptly disclose any and all program review reports to the institution of higher education under review.
(c) Data collection rules
The Secretary shall develop and carry out a plan for the data collection responsibilities described in paragraph (3) of subsection (a). The Secretary shall make the information obtained under such paragraph (3) readily available to all institutions of higher education, guaranty agencies, States, and other organizations participating in the programs authorized by this subchapter.
(d) Training
The Secretary shall provide training to personnel of the Department, including criminal investigative training, designed to improve the quality of financial and compliance audits and program reviews conducted under this subchapter.
(e) Special rule
The provisions of
(
Editorial Notes
Amendments
2008—Subsec. (b)(6) to (8).
1998—Subsec. (a)(2).
Subsec. (a)(2)(C).
Subsec. (a)(2)(D).
Subsec. (a)(2)(E).
Subsec. (a)(2)(F), (G).
"(F) any institution which is required to be reviewed by a State postsecondary review entity pursuant to subpart 1 of this part under
"(G) such other institutions as the Secretary deems necessary; and".
Subsec. (a)(3)(A).
Subsec. (b).
"(1) In carrying out paragraphs (1) and (2) of subsection (a) of this section, the Secretary shall establish guidelines designed to ensure uniformity of practice in the conduct of program reviews of institutions of higher education.
"(2) The Secretary shall review the regulations of the Department and the application of such regulations to ensure the uniformity of interpretation and application of the regulations."
1993—Subsec. (e).
Statutory Notes and Related Subsidiaries
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
§1099c–2. Review of regulations
(a) Review required
The Secretary shall review each regulation issued under this subchapter that is in effect at the time of the review and applies to the operations or activities of any participant in the programs assisted under this subchapter. The review shall include a determination of whether the regulation is duplicative, or is no longer necessary. The review may involve one or more of the following:
(1) An assurance of the uniformity of interpretation and application of such regulations.
(2) The establishment of a process for ensuring that eligibility and compliance issues, such as institutional audit, program review, and recertification, are considered simultaneously.
(3) A determination of the extent to which unnecessary costs are imposed on institutions of higher education as a consequence of the applicability to the facilities and equipment of such institutions of regulations prescribed for purposes of regulating industrial and commercial enterprises.
(b) Regulatory and statutory relief for small volume institutions
The Secretary shall review and evaluate ways in which regulations under and provisions of this chapter affecting institution of higher education (other than institutions described in
(c) Consultation
In carrying out subsections (a) and (b), the Secretary shall consult with relevant representatives of institutions participating in the programs authorized by this subchapter.
(
Editorial Notes
Amendments
2008—Subsec. (d).
Statutory Notes and Related Subsidiaries
Effective Date
Section effective Oct. 1, 1998, except as otherwise provided in
Part I—Competitive Loan Auction Pilot Program
Editorial Notes
Codification
Part I of title IV of the Higher Education Act of 1965,
Prior Provisions
A prior part I (§1099e), consisting of part J of title IV of
§1099d. Competitive loan auction pilot program
(a) Definitions
In this section:
(1) Eligible Federal PLUS Loan
The term "eligible Federal PLUS Loan" means a loan described in
(2) Eligible lender
The term "eligible lender" has the meaning given the term in
(b) Pilot program
The Secretary shall carry out a pilot program under which the Secretary establishes a mechanism for an auction of eligible Federal PLUS Loans in accordance with this subsection. The pilot program shall meet the following requirements:
(1) Planning and implementation
During the period beginning on September 27, 2007, and ending on June 30, 2009, the Secretary shall plan and implement the pilot program under this subsection. During the planning and implementation, the Secretary shall consult with other Federal agencies with knowledge of, and experience with, auction programs, including the Federal Communication Commission and the Department of the Treasury.
(2) Origination and disbursement; applicability of section 1078–2
Beginning on July 1, 2009, the Secretary shall arrange for the origination and disbursement of all eligible Federal PLUS Loans in accordance with the provisions of this subsection and the provisions of
(3) Loan origination mechanism
The Secretary shall establish a loan origination auction mechanism that meets the following requirements:
(A) Auction for each State
The Secretary administers an auction under this paragraph for each State, under which eligible lenders compete to originate eligible Federal PLUS Loans under this paragraph at all institutions of higher education within such State.
(B) Prequalification process
The Secretary establishes a prequalification process for eligible lenders desiring to participate in an auction under this paragraph that contains, at a minimum—
(i) a set of borrower benefits and servicing requirements each eligible lender shall meet in order to participate in such an auction;
(ii) an assessment of each such eligible lender's capacity, including capital capacity, to participate effectively; and
(iii) a commitment from such eligible lender that, if the lender has a winning bid under subparagraph (F), the lender will enter into the agreement required under subparagraph (G).
(C) Timing and origination
Each State auction takes place every 2 years, and the eligible lenders with the winning bids for the State are the only eligible lenders permitted to originate eligible Federal PLUS Loans made under this paragraph for the cohort of students at the institutions of higher education within the State until the students graduate from or leave the institutions of higher education.
(D) Bids
Each eligible lender's bid consists of the amount of the special allowance payment (after the application of
(E) Maximum bid
The maximum bid allowable under this paragraph shall not exceed the amount of the special allowance payable on eligible Federal PLUS Loans made under this paragraph computed under
(F) Winning bids
The winning bids for each State auction shall be the 2 bids containing the lowest and the second lowest proposed special allowance payments, subject to subparagraph (E).
(G) Agreement with Secretary; compliance
(i) Agreement
Each eligible lender having a winning bid under subparagraph (F) shall enter into an agreement with the Secretary under which the eligible lender—
(I) agrees to originate eligible Federal PLUS Loans under this paragraph to each borrower who—
(aa) seeks an eligible Federal PLUS Loan under this paragraph to enable a dependent student to attend an institution of higher education within the State;
(bb) is eligible for an eligible Federal PLUS Loan; and
(cc) elects to borrow from the eligible lender; and
(II) agrees to accept a special allowance payment (after the application of
(ii) Compliance
If an eligible lender with a winning bid under subparagraph (F) fails to enter into the agreement required under clause (i), or fails to comply with the terms of such agreement, the Secretary may sanction such eligible lender through one or more of the following:
(I) The assessment of a penalty on such eligible lender for any eligible Federal PLUS Loans that such eligible lender fails to originate under this paragraph in accordance with the agreement required under clause (i), in the amount of the additional costs (including the amounts of any increase in special allowance payments) incurred by the Secretary in obtaining another eligible lender to originate such eligible Federal PLUS Loans. The Secretary shall collect such penalty by—
(aa) reducing the amount of any payments otherwise due to such eligible lender from the Secretary by the amount of the penalty; or
(bb) requesting any other Federal agency to reduce the amount of any payments due to such eligible lender from such agency by the amount of the penalty, in accordance with
(II) A prohibition of bidding by such lender in other auctions under this section.
(III) The limitation, suspension, or termination of such eligible lender's participation in the loan program under part B.
(IV) Any other enforcement action the Secretary is authorized to take under part B.
(H) Sealed bids; confidentiality
All bids are sealed and the Secretary keeps the bids confidential, including following the announcement of the winning bids.
(I) Eligible lender of last resort
(i) In general
In the event that there is no winning bid under subparagraph (F), the students at the institutions of higher education within the State that was the subject of the auction shall be served by an eligible lender of last resort, as determined by the Secretary.
(ii) Determination of eligible lender of last resort
Prior to the start of any auction under this paragraph, eligible lenders that desire to serve as an eligible lender of last resort shall submit an application to the Secretary at such time and in such manner as the Secretary may determine. Such application shall include an assurance that the eligible lender will meet the prequalification requirements described in subparagraph (B).
(iii) Geographic location
The Secretary shall identify an eligible lender of last resort for each State.
(iv) Notification timing
The Secretary shall not identify any eligible lender of last resort until after the announcement of all the winning bids for a State auction for any year.
(v) Maximum special allowance
The Secretary is authorized to set a special allowance payment that shall be payable to a lender of last resort for a State under this subparagraph, which special allowance payment shall be kept confidential, including following the announcement of winning bids. The Secretary shall set such special allowance payment so that it incurs the lowest possible cost to the Federal Government, taking into consideration the lowest bid that was submitted in an auction for such State and the lowest bid submitted in a similar State, as determined by the Secretary.
(J) Guarantee against losses
Each eligible Federal PLUS Loan originated under this paragraph shall be insured by a guaranty agency in accordance with part B, except that, notwithstanding
(K) Loan fees
The Secretary shall not collect a loan fee under
(L) Consolidation
(i) In general
An eligible lender who is permitted to originate eligible Federal PLUS Loans for a borrower under this paragraph shall have the option to consolidate such loans into 1 loan.
(ii) Notification
In the event a borrower with eligible Federal PLUS Loans made under this paragraph wishes to consolidate the loans, the borrower shall notify the eligible lender who originated the loans under this paragraph.
(iii) Limitation on eligible lender option to consolidate
The option described in clause (i) shall not apply if—
(I) the borrower includes in the notification in clause (ii) verification of consolidation terms and conditions offered by an eligible lender other than the eligible lender described in clause (i); and
(II) not later than 10 days after receiving such notification from the borrower, the eligible lender described in clause (i) does not agree to match such terms and conditions, or provide more favorable terms and conditions to such borrower than the offered terms and conditions described in subclause (I).
(iv) Consolidation of additional loans
If a borrower has a Federal Direct PLUS Loan or a loan made on behalf of a dependent student under
(I) in the case of a Federal Direct PLUS Loan, the eligible lender agrees, not later than 10 days after the borrower requests such consolidation from the lender, to match the consolidation terms and conditions that would otherwise be available to the borrower if the borrower consolidated such loans in the loan program under part D; or
(II) in the case of a loan made on behalf of a dependent student under
(v) Special allowance on consolidation loans that include loans made under this paragraph
The applicable special allowance payment for loans consolidated under this paragraph shall be equal to the lesser of—
(I) the weighted average of the special allowance payment on such loans, except that in calculating such weighted average the Secretary shall exclude any Federal Direct PLUS Loan included in the consolidation; or
(II) the result of—
(aa) the average of the bond equivalent rates of the quotes of the 3-month commercial paper (financial) rates in effect for each of the days in such quarter as reported by the Federal Reserve in Publication H–15 (or its successor) for such 3-month period; plus
(bb) 1.59 percent.
(vi) Interest payment rebate fee
Any loan under
(c) Required initial evaluation
The Secretary and Secretary of the Treasury shall jointly conduct an evaluation, in consultation with the Office of Management and Budget, the Congressional Budget Office, and the Comptroller General, of the pilot program carried out by the Secretary under this section. The evaluation shall determine—
(1) the extent of the savings to the Federal Government that are generated through the pilot program, compared to the cost the Federal Government would have incurred in operating the PLUS loan program under
(2) the number of lenders that participated in the pilot program, and the extent to which the pilot program generated competition among lenders to participate in the auctions under the pilot program;
(3) the number and volume of loans made under the pilot program in each State;
(4) the effect of the transition to and operation of the pilot program on the ability of—
(A) lenders participating in the pilot program to originate loans made through the pilot program smoothly and efficiently;
(B) institutions of higher education participating in the pilot program to disburse loans made through the pilot program smoothly and efficiently; and
(C) parents to obtain loans made through the pilot program in a timely and efficient manner;
(5) the differential impact, if any, of the auction among the States, including between rural and non-rural States; and
(6) the feasibility of using the mechanism piloted to operate the other loan programs under part B of this subchapter.
(d) Reports
(1) In general
The Secretary and the Secretary of the Treasury shall submit to the authorizing committees—
(A) not later than September 1, 2010, a preliminary report regarding the findings of the evaluation described in subsection (c);
(B) not later than September 1, 2012, an interim report regarding such findings; and
(C) not later than September 1, 2013, a final report regarding such findings.
(2) Contents
The Secretary shall include, in each report required under subparagraphs (A), (B), and (C) of paragraph (1), any recommendations, that are based on the findings of the evaluation under subsection (c), for—
(A) improving the operation and administration of the auction; and
(B) improving the operation and administration of other loan programs under part B.
(
Editorial Notes
Prior Provisions
A prior section 1099e,
Amendments
2008—Subsec. (b)(3)(B)(iii).
Subsec. (b)(3)(G).
"(i) agrees to originate eligible Federal PLUS Loans under this paragraph to each borrower who—
"(I) seeks an eligible Federal PLUS Loan under this paragraph to enable a dependent student to attend an institution of higher education within the State;
"(II) is eligible for an eligible Federal PLUS Loan; and
"(III) elects to borrow from the eligible lender; and
"(ii) agrees to accept a special allowance payment (after the application of
Subsec. (b)(3)(J).
Subsecs. (c), (d).
Statutory Notes and Related Subsidiaries
Effective Date
Section effective Oct. 1, 2007, see section 1(c) of