---
kind: "range"
citation: "20 U.S.C. §§ 1070–1099d"
title: "20"
from: "1070"
to: "1099d"
count: 188
release: "119-102"
url: "https://uscodex.org/usc/20/1070..1099d"
---
# §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 [section 1091 of this title](/usc/20/1091.md)) in institutions of higher education by—
- (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](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=17) shall, in accordance with subparts 1 through 9 of this part, carry out programs to achieve the purposes of this part.
# §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](/usc/20/1161a.md?p=b-1).
- (2) **Definitions—** In this section—
- (A) the term “adjusted gross income” means—
- (i) in the case of a dependent student, for the second tax year preceding the [academic year](/usc/20/1088.md?p=a-2-A)—
- (I) the [adjusted gross income](#a-2-A) (as defined in [section 62 of title 26](/usc/26/62.md)) of the student’s [parents](/usc/20/1021.md?p=16); plus
- (II) for Federal Pell Grant determinations made for [academic years](/usc/20/1088.md?p=a-2-A) beginning on or after July 1, 2026, the foreign income (as described in [section 1087vv(b)(5) of this title](/usc/20/1087vv.md?p=b-5)) of the student’s [parents](/usc/20/1021.md?p=16); and
- (ii) in the case of an independent student, for the second tax year preceding the [academic year](/usc/20/1088.md?p=a-2-A)—
- (I) the [adjusted gross income](#a-2-A) (as defined in [section 62 of title 26](/usc/26/62.md)) of the student (and the student’s spouse, if applicable); plus
- (II) for Federal Pell Grant determinations made for [academic years](/usc/20/1088.md?p=a-2-A) beginning on or after July 1, 2026, the foreign income (as described in [section 1087vv(b)(5) of this title](/usc/20/1087vv.md?p=b-5)) of the student (and the student’s spouse, if applicable);
- (B) the term “family size” has the meaning given the term in [section 1087vv(k) of this title](/usc/20/1087vv.md?p=k);
- (C) the term “poverty line” means the poverty line (as determined under the poverty guidelines updated periodically in the Federal Register by the [Department](/usc/20/1003.md?p=4) of Health and Human Services under the authority of [section 9902(2) of title 42](/usc/42/9902.md?p=2)) applicable to the student’s [family size](#a-2-B) and applicable to the second tax year preceding the [academic year](/usc/20/1088.md?p=a-2-A);
- (D) the term “single parent” means—
- (i) a [parent](/usc/20/1021.md?p=16) of a dependent student who was a head of household (as defined in [section 2(b) of title 26](/usc/26/2.md?p=b)) or a surviving spouse (as defined in [section 2(a) of title 26](/usc/26/2.md?p=a)) or was an eligible individual for purposes of the credit under [section 32](/usc/26/32.md) of such title, in the second tax year preceding the [academic year](/usc/20/1088.md?p=a-2-A); or
- (ii) an independent student who is a [parent](/usc/20/1021.md?p=16) and was a head of household (as defined in [section 2(b) of title 26](/usc/26/2.md?p=b)) or a surviving spouse (as defined in [section 2(a) of title 26](/usc/26/2.md?p=a)) or was an eligible individual for purposes of the credit under [section 32](/usc/26/32.md) of such title, in the second tax year preceding the [academic year](/usc/20/1088.md?p=a-2-A);
- (E) the term “total maximum Federal Pell Grant” means the total maximum Federal Pell Grant award per student for any [academic year](/usc/20/1088.md?p=a-2-A) described under [subsection (b)(5)](#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](/usc/20/1088.md?p=a-2-A) in which that student is attending full time, which shall be equal to 10 percent of the [total maximum Federal Pell Grant](#a-2-E) for such [academic year](/usc/20/1088.md?p=a-2-A).
- (b) **Amount and distribution of grants—**
- (1) **Determination of amount of a Federal Pell Grant—** Subject to paragraphs [(2)](#b-2) and [(3)](#b-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](#a-2-E) for an [academic year](/usc/20/1088.md?p=a-2-A) in which the student is enrolled in an [eligible program](/usc/20/1088.md?p=b-1) 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](/usc/20/1021.md?p=16) (or [single parent](#a-2-D)), is not required to file a Federal income tax return in the second year preceding the [academic year](/usc/20/1088.md?p=a-2-A);
- (ii) if the student or, in the case of a dependent student, the dependent student’s [parent](/usc/20/1021.md?p=16), is a [single parent](#a-2-D), and the [adjusted gross income](#a-2-A) is greater than zero and equal to or less than 225 percent of the [poverty line](#a-2-C); or
- (iii) if the student or, in the case of a dependent student, the dependent student’s [parent](/usc/20/1021.md?p=16), is not a [single parent](#a-2-D), and the [adjusted gross income](#a-2-A) is greater than zero and equal to or less than 175 percent of the [poverty line](#a-2-C).
- (B) A student who is not eligible for a [total maximum Federal Pell Grant](#a-2-E) under [subparagraph (A)](#b-1-A) for an [academic year](/usc/20/1088.md?p=a-2-A), shall be eligible for a Federal Pell Grant for an [academic year](/usc/20/1088.md?p=a-2-A) in which the student is enrolled in an [eligible program](/usc/20/1088.md?p=b-1) full time if such student’s student aid index in such [award year](/usc/20/1088.md?p=a-1) is less than the [total maximum Federal Pell Grant](#a-2-E) for that [award year](/usc/20/1088.md?p=a-1). The amount of the Federal Pell Grant for a student eligible under this subparagraph shall be—
- (i) the [total maximum Federal Pell Grant](#a-2-E) as calculated under [paragraph (5)(A)](#b-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](#a-2-F) 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)](#b-1-A) or [(B)](#b-1-B) shall be eligible for the [minimum Federal Pell Grant](#a-2-F) for an [academic year](/usc/20/1088.md?p=a-2-A) in which the student is enrolled in an [eligible program](/usc/20/1088.md?p=b-1) full time—
- (i) in the case of a dependent student—
- (I) if the student’s [parent](/usc/20/1021.md?p=16) is a [single parent](#a-2-D), and the [adjusted gross income](#a-2-A) is equal to or less than 325 percent of the [poverty line](#a-2-C); or
- (II) if the student’s [parent](/usc/20/1021.md?p=16) is not a [single parent](#a-2-D), and the [adjusted gross income](#a-2-A) is equal to or less than 275 percent of the [poverty line](#a-2-C); or
- (ii) in the case of an independent student—
- (I) if the student is a [single parent](#a-2-D), and the [adjusted gross income](#a-2-A) is equal to or less than 400 percent of the [poverty line](#a-2-C);
- (II) if the student is a [parent](/usc/20/1021.md?p=16) and is not a [single parent](#a-2-D), and the [adjusted gross income](#a-2-A) is equal to or less than 350 percent of the [poverty line](#a-2-C); or
- (III) if the student is not a [parent](/usc/20/1021.md?p=16), and the [adjusted gross income](#a-2-A) is equal to or less than 275 percent of the [poverty line](#a-2-C).
- (D) For each [academic year](/usc/20/1088.md?p=a-2-A) beginning before July 1, 2026, a student eligible for the [total maximum Federal Pell Grant](#a-2-E) under [subparagraph (A)](#b-1-A) who has (or whose spouse or [parent](/usc/20/1021.md?p=16), as applicable based on whose information is used under such subparagraph, has) foreign income that would, if added to [adjusted gross income](#a-2-A), result in the student no longer being eligible for such [total maximum Federal Pell Grant](#a-2-E), 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 [section 1087tt(b)(1)(B)(v) of this title](/usc/20/1087tt.md?p=b-1-B-v), as in effect for such [academic year](/usc/20/1088.md?p=a-2-A), to account for such foreign income when determining the student’s eligibility for such [total maximum Federal Pell Grant](#a-2-E).
- (E) With respect to a student who is not eligible for the [total maximum Federal Pell Grant](#a-2-E) under [subparagraph (A)](#b-1-A) or a [minimum Federal Pell Grant](#a-2-F) under [subparagraph (C)](#b-1-C), the [Secretary](/usc/20/1003.md?p=17) shall subtract from the student or [parents](/usc/20/1021.md?p=16)’ [adjusted gross income](#a-2-A), 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](#a-2-A) for purposes of determining the student’s eligibility for such Federal Pell Grant award under such subparagraph:
- (i) If the [applicant](/usc/20/3982.md?p=1), or, if applicable, the [parents](/usc/20/1021.md?p=16) or spouse of the [applicant](/usc/20/3982.md?p=1), elects to report receiving college grant and scholarship aid included in gross income on a Federal tax return described in [section 1087vv(e)(2) of this title](/usc/20/1087vv.md?p=e-2), the amount of such aid.
- (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](/usc/20/1088.md?p=b-1) of an [institution of higher education](/usc/20/1001.md?p=a) on less than a full-time basis (including a student who attends an [institution of higher education](/usc/20/1001.md?p=a) on less than a half-time basis) during any [academic year](/usc/20/1088.md?p=a-2-A), 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](/usc/20/1003.md?p=17) computed in accordance with this subpart. Such schedule of reductions shall be published in the Federal Register in accordance with [section 1089 of this title](/usc/20/1089.md). Such reduced Federal Pell Grant for a student enrolled on a less than full-time basis shall also apply proportionally to students who are otherwise eligible to receive the [minimum Federal Pell Grant](#a-2-F), if enrolled full-time.
- (3) **Award may not exceed cost of attendance—** No Federal Pell Grant under this subpart shall exceed the [cost of attendance](/usc/20/1087ll.md?p=a) (as defined in [section 1087ll](/usc/20/1087ll.md) of this title) at the institution at which that student is in attendance. If, with respect to any student, it is determined that the amount of a Federal Pell Grant for that student exceeds the [cost of attendance](/usc/20/1087ll.md?p=a) for that year, the amount of the Federal Pell Grant shall be reduced until the Federal Pell Grant does not exceed the [cost of attendance](/usc/20/1087ll.md?p=a) at such institution.
- (4) **Study abroad—** Notwithstanding any other provision of this subpart, the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1087ll.md?p=a) 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)](#b-1) or [(2)](#b-2) during such [award year](/usc/20/1088.md?p=a-1). 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](/usc/20/1087ll.md?p=a) of the student.
- (5) **Total maximum Federal Pell Grant—**
- (A) **In general—** For [award year](/usc/20/1088.md?p=a-1) 2024–2025, and each subsequent [award year](/usc/20/1088.md?p=a-1), the [total maximum Federal Pell Grant](#a-2-E) 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](/usc/20/1088.md?p=a-1).
- (B) **Rounding—** The [total maximum Federal Pell Grant](#a-2-E) for any [award year](/usc/20/1088.md?p=a-1) 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)](#b-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)](#b-5-A-ii) for each of the fiscal years 2024 through 2034.
- (B) **Availability of funds—** The amounts made available by [subparagraph (A)](#b-6-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](/usc/20/4702.md?p=3) appropriated under [paragraph (6)](#b-6) and any [funds](/usc/20/4702.md?p=3) 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) $12,670,000,000 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](/usc/20/1003.md?p=17) shall pay to each [eligible institution](/usc/20/1066a.md?p=1) such sums as may be necessary to pay each eligible student for each [academic year](/usc/20/1088.md?p=a-2-A) during which that student is in attendance at an [institution of higher education](/usc/20/1001.md?p=a) 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](/usc/20/1003.md?p=17) 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](/usc/20/1066a.md?p=1) does not participate in the disbursement system under [subparagraph (A)](#b-8-A).
- (9) **Additional payment periods in same award year—**
- (A) Effective in the 2017–2018 [award year](/usc/20/1088.md?p=a-1) and thereafter, the [Secretary](/usc/20/1003.md?p=17) shall award an eligible student not more than one and one-half Federal Pell Grants during a single [award year](/usc/20/1088.md?p=a-1) to permit such student to work toward completion of an [eligible program](/usc/20/1088.md?p=b-1) if, during that single [award year](/usc/20/1088.md?p=a-1), the student has received a Federal Pell Grant for an [award year](/usc/20/1088.md?p=a-1) and is enrolled in an [eligible program](/usc/20/1088.md?p=b-1) for one or more additional payment periods during the same [award year](/usc/20/1088.md?p=a-1) 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](/usc/20/1088.md?p=a-1) under [subparagraph (A)](#b-9-A), the total amount of Federal Pell Grants awarded to such student for the [award year](/usc/20/1088.md?p=a-1) may exceed the [total maximum Federal Pell Grant](#a-2-E) available for an [award year](/usc/20/1088.md?p=a-1).
- (C) Any period of study covered by a Federal Pell Grant awarded under [subparagraph (A)](#b-9-A) shall be included in determining a student’s duration limit under [subsection (d)(5)](#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](/usc/20/1088.md?p=a-1), the [Secretary](/usc/20/1003.md?p=17) shall allow the [eligible institution](/usc/20/1066a.md?p=1) in which the student is enrolled to determine the [award year](/usc/20/1088.md?p=a-1) 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)](#c-2) shall be eligible for the [total maximum Federal Pell Grant](#a-2-E).
- (2) **Applicability—** [Paragraph (1)](#c-1) shall apply to any dependent or independent student—
- (A) whose [parent](/usc/20/1021.md?p=16) or guardian was—
- (i) an individual who, on or after September 11, 2001, died in the line of duty while serving on [active duty](/usc/20/1088.md?p=d-1) as a member of the Armed Forces; or
- (ii) actively serving as a [public safety officer](#c-7) and died in the line of duty while performing as a [public safety officer](#c-7); and
- (B) who is less than 33 years of age.
- (3) **Information—** Notwithstanding any other provision of law—
- (A) the [Secretary](/usc/20/1003.md?p=17) shall establish the necessary data-sharing agreements with the [Secretary](/usc/20/1003.md?p=17) of Veterans Affairs and the [Secretary](/usc/20/1003.md?p=17) of Defense, as applicable, to provide the information necessary to determine which students meet the requirements of [paragraph (2)(A)(i)](#c-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](/usc/20/1003.md?p=17) 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 ([34 U.S.C. 10302](/usc/34/10302.md)), in the case of a student who receives an increased Federal Pell Grant amount under this section, the total amount of such Federal Pell Grant, including the increase under this subsection, shall not be considered in calculating that student’s educational assistance benefits under the [Public Safety Officers](#c-7)’ Benefits program under subpart 2 of part L of title I of such Act.
- (5) **Prevention of double benefits—** No eligible student described in [paragraph (2)](#c-2) may concurrently receive a grant under both this subsection and [subsection (b)](#b).
- (6) **Terms and conditions—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) awards Federal Pell Grants under [subsection (b)](#b), except that—
- (A) the award rules and determination of need applicable to the calculation of Federal Pell Grants under [subsection (b)(1)](#b-1) shall not apply to grants made under this subsection; and
- (B) the maximum period determined under [subsection (d)(5)](#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](#c-7), as defined in [section 1204](/usc/20/1204.md) of title I of the Omnibus Crime Control and Safe Streets Act of 1968 ([34 U.S.C. 10284](/usc/34/10284.md)); or
- (B) a fire police [officer](/usc/20/1094.md?p=i-5), defined as an individual who—
- (i) is serving in accordance with [State](/usc/20/1003.md?p=21-A) or local law as an officially recognized or designated member of a legally organized public safety agency;
- (ii) is not a law enforcement [officer](/usc/20/1094.md?p=i-5), 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)](#d-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](/usc/20/1003.md?p=17) and an institution.
- (4) **Postbaccalaureate program—** Notwithstanding [paragraph (1)](#d-1), the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1001.md?p=a); 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](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=9) or [secondary school](/usc/20/1003.md?p=16) in that [State](/usc/20/1003.md?p=21-A),
except that this paragraph shall not apply to a student who is enrolled in an [institution of higher education](/usc/20/1001.md?p=a) that offers a baccalaureate degree in education.
- (5) **Maximum period—**
- (A) **In general—** Except as provided in [subparagraph (B)](#d-5-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](/usc/20/1003.md?p=17) 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)](#d-5-B-ii-I) or [(II)](#d-5-B-ii-II) of clause (ii) shall not count towards the student’s duration limits under this paragraph.
- (ii) **Applicable periods—** [Clause (i)](#d-5-B-i) shall apply with respect to any Federal Pell Grant awarded to a student to enroll in an [eligible program](/usc/20/1088.md?p=b-1) 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)](#d-5-B-ii-II-aa) is discharged under—
- (AA) [section 1087(c)(1) of this title](/usc/20/1087.md?p=c-1) or [section 1087dd(g)(1) of this title](/usc/20/1087dd.md?p=g-1);
- (BB) [section 1082(a)(6) of this title](/usc/20/1082.md?p=a-6); or
- (CC) [section 1087e(h) of this title](/usc/20/1087e.md?p=h) due to the student’s successful assertion of a defense to repayment of the loan, including defenses provided to any applicable groups of students.
- (6) **Exclusion—** Beginning on July 1, 2026, and notwithstanding this subsection or [subsection (b)](#b), a student shall not be eligible for a Federal Pell Grant under [subsection (b)](#b) during any period for which the student receives grant aid from non-Federal sources, including [States](/usc/20/1003.md?p=21-A), institutions of higher education, or private sources, in an amount that equals or exceeds the student’s [cost of attendance](/usc/20/1087ll.md?p=a) for such period.
- (e) **Applications for grants—**
- (1) **Deadlines—** The [Secretary](/usc/20/1003.md?p=17) shall from time to time set dates by which students shall file the Free Application for Federal Student Aid under [section 1090 of this title](/usc/20/1090.md).
- (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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/4702.md?p=3) appropriated for payments under this subpart are insufficient to satisfy fully all entitlements, as calculated under subsections [(b)](#b) and [(c)](#c) (but at the maximum grant level specified in such appropriation), the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/4702.md?p=3) 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](/usc/20/4702.md?p=3) 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](/usc/20/4702.md?p=3) 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](/usc/20/4702.md?p=3) 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](/usc/20/1001.md?p=a) which enters into an agreement with the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17). Recipients of Pell Grants shall not be considered to be individual grantees for purposes of [chapter 81](/usc/41/chstIV-ch81.md) of title 41.
- (j) **Institutional ineligibility based on default rates—**
- (1) **In general—** No [institution of higher education](/usc/20/1001.md?p=a) shall be an [eligible institution](/usc/20/1066a.md?p=1) for purposes of this subpart if such [institution of higher education](/usc/20/1001.md?p=a) 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](/usc/20/1003.md?p=17) under part B or D after the final publication of [cohort default rates](/usc/20/1085.md?p=m-1-A) 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](/usc/20/1003.md?p=17) 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.
# [§1070a–1. Omitted — omitted]
# [§§1070a–2 to 1070a–6. Repealed. Pub. L. 102–325, title IV, § 401(i), July 23, 1992, 106 Stat. 482 — repealed]
# §1070a–11. Program authority; authorization of appropriations
- (a) **Grants and contracts authorized—** The [Secretary](/usc/20/1003.md?p=17) 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)](#a), the [Secretary](/usc/20/1003.md?p=17) is authorized, without regard to [section 6101 of title 41](/usc/41/6101.md), to make grants to, and contracts with, institutions of higher education, public and private agencies and organizations, including community-based organizations with experience in serving disadvantaged youth, combinations of such institutions, agencies and organizations, and, as appropriate to the purposes of the program, [secondary schools](/usc/20/1003.md?p=16), for planning, developing, or carrying out one or more of the services assisted under this division.
- (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](/usc/20/1003.md?p=17) 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 [section 1070a–17 of this title](/usc/20/1070a–17.md) shall be awarded for a period of 2 years; and
- (C) grants under [section 1070a–18 of this title](/usc/20/1070a–18.md) shall be awarded for a period determined by the [Secretary](/usc/20/1003.md?p=17).
- (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 [section 1070a–17 of this title](/usc/20/1070a–17.md) shall be awarded in an amount that is not less than $170,000.
- (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](/usc/20/1003.md?p=17) in such manner and form, and containing such information and assurances, as the [Secretary](/usc/20/1003.md?p=17) may reasonably require.
- (2) **Considerations—**
- (A) **Prior experience—** In making grants under this division, the [Secretary](/usc/20/1003.md?p=17) shall consider each [applicant](/usc/20/3982.md?p=1)’s prior experience of high quality service delivery, as determined under [subsection (f)](#f), under the particular program for which [funds](/usc/20/4702.md?p=3) 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 [section 1070a–18 of this title](/usc/20/1070a–18.md) shall not be given prior experience consideration.
- (B) **Participant need—** In making grants under this division, the [Secretary](/usc/20/1003.md?p=17) shall consider the number, percentages, and needs of eligible participants in the area, [institution of higher education](/usc/20/1001.md?p=a), or [secondary school](/usc/20/1003.md?p=16) 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 sections [1070a–17](/usc/20/1070a–17.md) and [1070a–18](/usc/20/1070a–18.md) of this title and as provided in [subparagraph (B)](#c-3-B), the [Secretary](/usc/20/1003.md?p=17) shall award grants and contracts under this division in the order of the scores received by the application for such grant or contract in the peer review process required under [paragraph (4)](#c-4) and adjusted for prior experience in accordance with paragraph (2) of this subsection.
- (B) The [Secretary](/usc/20/1003.md?p=17) shall not provide assistance to a program otherwise eligible for assistance under this division, if the [Secretary](/usc/20/1003.md?p=17) has determined that such program has involved the fraudulent use of [funds](/usc/20/4702.md?p=3) under this division.
- (4) **Peer review process—**
- (A) The [Secretary](/usc/20/1003.md?p=17) shall ensure that, to the extent practicable, members of groups underrepresented in higher education, including African Americans, Hispanics, Native Americans, [Alaska Natives](/usc/20/1059d.md?p=b-1), Asian Americans, and Native American Pacific Islanders (including [Native Hawaiians](/usc/20/1059d.md?p=b-3)), are represented as readers of applications submitted under this division. The [Secretary](/usc/20/1003.md?p=17) shall also ensure that persons from urban and rural backgrounds are represented as readers.
- (B) The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](#h-2) or [different campuses](#h-1).
- (6) **Coordination with other programs for disadvantaged students—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) shall not limit an entity’s eligibility to receive [funds](/usc/20/4702.md?p=3) 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](/usc/20/1003.md?p=17) shall permit the [Director](/usc/20/9101.md?p=3) of a program receiving [funds](/usc/20/4702.md?p=3) 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](/usc/20/1003.md?p=17) shall, as appropriate, require each [applicant](/usc/20/3982.md?p=1) for [funds](/usc/20/4702.md?p=3) 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 [section 11434a of title 42](/usc/42/11434a.md).
- (7) **Application status—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17), 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) shall issue nonregulatory guidance regarding the rights and responsibilities of [applicants](/usc/20/3982.md?p=1) with respect to the application and evaluation process for programs and projects assisted under this division, including [applicant](/usc/20/3982.md?p=1) 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](/usc/20/3982.md?p=1) to submit materials in a timely manner and in accordance with the processes established by the [Secretary](/usc/20/1003.md?p=17) under the authority of the General Education Provisions Act [[20 U.S.C. 1221](/usc/20/1221.md) et seq.];
- (ii) steps the [Secretary](/usc/20/1003.md?p=17) will take to ensure that the materials submitted by [applicants](/usc/20/3982.md?p=1) are processed in a proper and timely manner;
- (iii) steps the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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)](#c-8-A), the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/3982.md?p=1) may request a review by the [Secretary](/usc/20/1003.md?p=17) if the [applicant](/usc/20/3982.md?p=1)—
- (I) has evidence of a specific technical, administrative, or scoring error made by the [Department](/usc/20/1003.md?p=4), an [agent](/usc/20/1094.md?p=i-1) of the [Department](/usc/20/1003.md?p=4), 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)](#c-8-C-i-I), the [Secretary](/usc/20/1003.md?p=17) shall review such evidence and provide a timely response to the [applicant](/usc/20/3982.md?p=1). If the [Secretary](/usc/20/1003.md?p=17) determines that a technical or administrative error was made by the [Department](/usc/20/1003.md?p=4) or an [agent](/usc/20/1094.md?p=i-1) of the [Department](/usc/20/1003.md?p=4), the application of the [applicant](/usc/20/3982.md?p=1) 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)](#c-8-C-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](/usc/20/1003.md?p=17) shall—
- (I) review such evidence and provide a timely response to the [applicant](/usc/20/3982.md?p=1); and
- (II) if the [Secretary](/usc/20/1003.md?p=17) determines that a scoring error was made by the [Department](/usc/20/1003.md?p=4) 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)](#c-8-C-i-I), if the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) shall refer the application to a secondary review panel.
- (II) **Timely review; replacement score—** The secondary review panel described in [subclause (I)](#c-8-C-iv-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](/usc/20/3982.md?p=1) 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](/usc/20/1003.md?p=17) under clause [(i)](#c-8-C-i), [(ii)](#c-8-C-ii), or [(iii)](#c-8-C-iii) shall not be reviewable by any [officer](/usc/20/1094.md?p=i-5) or employee of the [Department](/usc/20/1003.md?p=4).
- (II) **Scoring—** The score awarded by a secondary review panel under [clause (iv)](#c-8-C-iv) shall not be reviewable by any [officer](/usc/20/1094.md?p=i-5) or employee of the [Department](/usc/20/1003.md?p=4) other than the [Secretary](/usc/20/1003.md?p=17).
- (vi) **Funding of applications with certain adjusted scores—** To the extent feasible based on the availability of appropriations, the [Secretary](/usc/20/1003.md?p=17) shall [fund](/usc/20/4702.md?p=3) applications with scores that are adjusted upward under clauses [(ii)](#c-8-C-ii), [(iii)](#c-8-C-iii), and [(iv)](#c-8-C-iv) to equal or exceed the minimum cut off score for the applicable grant competition.
- (d) **Outreach—**
- (1) **In general—** The [Secretary](/usc/20/1003.md?p=17) 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)](#d-1), the [Secretary](/usc/20/1003.md?p=17) shall notify the entities described in [subsection (b)](#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](/usc/20/1003.md?p=21-A), and regional organizations about candidates for notification.
- (3) **Technical assistance—** The [Secretary](/usc/20/1003.md?p=17) shall provide technical training to [applicants](/usc/20/3982.md?p=1) for projects and programs authorized under this division. The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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 [section 1087vv(d) of this title](/usc/20/1087vv.md?p=d), documentation of an individual’s status pursuant to [subsection (h)(4)](#h-4) shall be made by providing the [Secretary](/usc/20/1003.md?p=17) with—
- (A) a signed statement from the individual’s [parent](/usc/20/1021.md?p=16) 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 [section 1087vv(d) of this title](/usc/20/1087vv.md?p=d), documentation of an individual’s status pursuant to [subsection (h)(4)](#h-4) shall be made by providing the [Secretary](/usc/20/1003.md?p=17) with—
- (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)](#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 [section 11434a of title 42](/usc/42/11434a.md), shall be eligible to participate in programs under sections [1070a–12](/usc/20/1070a–12.md), [1070a–13](/usc/20/1070a–13.md), [1070a–14](/usc/20/1070a–14.md), and [1070a–16](/usc/20/1070a–16.md) of this title.
- (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](/usc/20/1003.md?p=17) shall determine an eligible entity’s prior experience of high quality service delivery, as required under [subsection (c)(2)](#c-2), based on the outcome criteria described in paragraphs [(2)](#f-2) and [(3)](#f-3).
- (2) **Disaggregation of relevant data—** The outcome criteria under this subsection shall be disaggregated by [low-income students](/usc/20/1161a.md?p=b-1), [first generation college students](#h-3), and individuals with [disabilities](/usc/20/1003.md?p=6), in the [schools](/usc/20/5802.md?p=a-11) 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 [section 1070a–12 of this title](/usc/20/1070a–12.md), the extent to which the eligible entity met or exceeded the entity’s objectives established in the entity’s application for such program regarding—
- (i) the delivery of service to a total number of students served by the program;
- (ii) the continued [secondary school](/usc/20/1003.md?p=16) enrollment of such students;
- (iii) the graduation of such students from [secondary school](/usc/20/1003.md?p=16) with a regular [secondary school](/usc/20/1003.md?p=16) diploma in the standard number of years;
- (iv) the completion by such students of a rigorous [secondary school](/usc/20/1003.md?p=16) 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](/usc/20/1001.md?p=a); and
- (vi) to the extent practicable, the postsecondary education completion of such students.
- (B) For programs authorized under [section 1070a–13 of this title](/usc/20/1070a–13.md), the extent to which the eligible entity met or exceeded the entity’s objectives for such program regarding—
- (i) the delivery of service to a total number of students served by the program, as agreed upon by the entity and the [Secretary](/usc/20/1003.md?p=17) for the period;
- (ii) such students’ [school](/usc/20/5802.md?p=a-11) 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](/usc/20/1003.md?p=21-A);
- (iv) the retention in, and graduation from, [secondary school](/usc/20/1003.md?p=16) of such students;
- (v) the completion by such students of a rigorous [secondary school](/usc/20/1003.md?p=16) 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](/usc/20/1001.md?p=a); and
- (vii) to the extent practicable, the postsecondary education completion of such students.
- (C) For programs authorized under [section 1070a–14 of this title](/usc/20/1070a–14.md)—
- (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](/usc/20/1001.md?p=a) 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](/usc/20/1001.md?p=a) 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](/usc/20/1003.md?p=17) 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 [section 1070a–15 of this title](/usc/20/1070a–15.md), the extent to which the entity met or exceeded the entity’s objectives for such program regarding—
- (i) the delivery of service to a total number of students served by the program, as agreed upon by the entity and the [Secretary](/usc/20/1003.md?p=17) 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 [section 1070a–16 of this title](/usc/20/1070a–16.md), the extent to which the entity met or exceeded the entity’s objectives for such program regarding—
- (i) the enrollment of students without a [secondary school](/usc/20/1003.md?p=16) 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](/usc/20/1003.md?p=16) 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](/usc/20/1003.md?p=17) 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)](#f-2) or [(3)](#f-3) is met or exceeded, the [Secretary](/usc/20/1003.md?p=17) shall compare the agreed upon target for the criterion, as established in the eligible entity’s application approved by the [Secretary](/usc/20/1003.md?p=17), 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](/usc/20/1003.md?p=17) 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](/usc/20/3982.md?p=1) and current grantees. In expending these [funds](/usc/20/4702.md?p=3), the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1001.md?p=a) 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](/usc/20/1021.md?p=16) 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](/usc/20/1021.md?p=16), an individual whose only such [parent](/usc/20/1021.md?p=16) 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](/usc/20/1088.md?p=d-1) for a period of more than 180 days and was discharged or released therefrom under conditions other than dishonorable;
- (B) served on [active duty](/usc/20/1088.md?p=d-1) and was discharged or released therefrom because of a service connected [disability](/usc/20/1003.md?p=6);
- (C) was a member of a reserve component of the Armed Forces called to [active duty](/usc/20/1088.md?p=d-1) 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](/usc/20/1088.md?p=d-1) in support of a contingency operation (as that term is defined in [section 101(a)(13) of title 10](/usc/10/101.md?p=a-13)) on or after September 11, 2001.
- (6) **Waiver—** The [Secretary](/usc/20/1003.md?p=17) may waive the service requirements in subparagraph [(A)](#h-5-A), [(B)](#h-5-B), or [(C)](#h-5-C) of paragraph (5) if the [Secretary](/usc/20/1003.md?p=17) determines the application of the service requirements to a veteran will defeat the purpose of a program under this division.
# §1070a–12. Talent search
- (a) **Program authority—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=16) 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 [section 1090(a) of this title](/usc/20/1090.md?p=a);
- (5) guidance on and assistance in—
- (A) [secondary school](/usc/20/1003.md?p=16) reentry;
- (B) alternative education programs for [secondary school](/usc/20/1003.md?p=16) dropouts that lead to the receipt of a regular [secondary school](/usc/20/1003.md?p=16) 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](/usc/20/1021.md?p=16), 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](/usc/20/1003.md?p=16) 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)](#b) or [paragraphs (1) through (6)](#1..6) of this subsection that are specially designed for students who are [limited English proficient](/usc/20/1021.md?p=15), students from groups that are traditionally underrepresented in postsecondary education, students with [disabilities](/usc/20/1003.md?p=6), students who are homeless children and youths (as such term is defined in [section 11434a of title 42](/usc/42/11434a.md)), students who are in foster care or are aging out of the foster care system, or other disconnected students.
- (d) **Requirements for approval of applications—** In approving applications for projects under this section for any fiscal year the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1059e.md?p=b-4) 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 [section 1070a–16 of this title](/usc/20/1070a–16.md);
- (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 [section 1070a–16 of this title](/usc/20/1070a–16.md); and
- (4) require an assurance that the project will be located in a setting accessible to the persons proposed to be served by the project.
# §1070a–13. Upward bound
- (a) **Program authority—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=16).
- (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 [section 1090(a) of this title](/usc/20/1090.md?p=a);
- (5) guidance on and assistance in—
- (A) [secondary school](/usc/20/1003.md?p=16) reentry;
- (B) alternative education programs for [secondary school](/usc/20/1003.md?p=16) dropouts that lead to the receipt of a regular [secondary school](/usc/20/1003.md?p=16) 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](/usc/20/1021.md?p=16), 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](/usc/20/1003.md?p=9) or [secondary school](/usc/20/1003.md?p=16) 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)](#b), [subsection (c)](#c), or [paragraphs (1) through (6)](#1..6) of this subsection that are specially designed for students who are [limited English proficient](/usc/20/1021.md?p=15), students from groups that are traditionally underrepresented in postsecondary education, students with [disabilities](/usc/20/1003.md?p=6), students who are homeless children and youths (as such term is defined in [section 11434a of title 42](/usc/42/11434a.md)), students who are in foster care or are aging out of the foster care system, or other disconnected students.
- (e) **Requirements for approval of applications—** In approving applications for projects under this section for any fiscal year, the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1059e.md?p=b-4) 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](/usc/20/1059e.md?p=b-4), 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](/usc/20/1003.md?p=16);
- (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](/usc/20/5802.md?p=a-11) recess, for a period not to exceed three months, except that youth participating in a work-study position under [subsection (d)(5)](#d-5) may be paid a stipend of $300 per month during the summer [school](/usc/20/5802.md?p=a-11) 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](/usc/20/1003.md?p=17), from [funds](/usc/20/4702.md?p=3) not otherwise appropriated, $57,000,000 for each of the fiscal years 2008 through 2011 to carry out [paragraph (2)](#g-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)](#g-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](/usc/20/1003.md?p=17) shall not continue, implement, or enforce the absolute priority for the Upward Bound Program published by the [Department](/usc/20/1003.md?p=4) 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](/usc/20/1003.md?p=4) 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.
# §1070a–14. Student support services
- (a) **Program authority—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1021.md?p=15), students from groups that are traditionally underrepresented in postsecondary education, students with [disabilities](/usc/20/1003.md?p=6), students who are homeless children and youths (as such term is defined in [section 11434a of title 42](/usc/42/11434a.md)), students who are in foster care or are aging out of the foster care system, or other disconnected students; and
- (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 [section 1090(a) of this title](/usc/20/1090.md?p=a);
- (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](/usc/20/1088.md?p=a-2-A) for—
- (A) students who are homeless children and youths (as such term is defined in [section 11434a of title 42](/usc/42/11434a.md)) or were formerly homeless children and youths; and
- (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)](#b) or [paragraphs (1) through (4)](#1..4) of this subsection that are specially designed for students who are [limited English proficient](/usc/20/1021.md?p=15), students from groups that are traditionally underrepresented in postsecondary education, students with [disabilities](/usc/20/1003.md?p=6), students who are homeless children and youths (as such term is defined in [section 11434a of title 42](/usc/42/11434a.md)), students who are in foster care or are aging out of the foster care system, or other disconnected students.
- (d) **Special rule—**
- (1) **Use for student aid—** A recipient of a grant that undertakes any of the permissible services identified in [subsection (c)](#c) may, in addition, use such [funds](/usc/20/4702.md?p=3) to provide grant aid to students. A grant provided under this paragraph shall not exceed the Federal Pell Grant amount, determined under [section 1070a(b)(2)(A) of this title](/usc/20/1070a.md), for which a student is eligible, or be less than the minimum Federal Pell Grant amount described in [section 1070a(b)(4) of this title](/usc/20/1070a.md?p=b-4), for the current [academic year](/usc/20/1088.md?p=a-2-A). In making grants to students under this subsection, an institution shall ensure that adequate consultation takes place between the student support service program office and the institution’s financial aid office.
- (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](/usc/20/1003.md?p=17) 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)](#d-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](/usc/20/1087ll.md?p=a), as defined in [section 1087ll](/usc/20/1087ll.md) of this title.
- (4) **Matching required—** A recipient of a grant who uses such [funds](/usc/20/4702.md?p=3) for the purpose described in [paragraph (1)](#d-1) shall match the [funds](/usc/20/4702.md?p=3) used for such purpose, in cash, from non-Federal [funds](/usc/20/4702.md?p=3), in an amount that is not less than 33 percent of the total amount of [funds](/usc/20/4702.md?p=3) used for that purpose. This paragraph shall not apply to any [grant recipient](/usc/20/956.md?p=f-5-E) that is an [institution of higher education](/usc/20/1001.md?p=a) eligible to receive [funds](/usc/20/4702.md?p=3) 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](/usc/20/4702.md?p=3) received under this section for grant aid.
- (6) **Supplement, not supplant—** [Funds](/usc/20/4702.md?p=3) received by a [grant recipient](/usc/20/956.md?p=f-5-E) that are used under this subsection shall be used to supplement, and not supplant, non-Federal [funds](/usc/20/4702.md?p=3) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=6); or
- (B) be [low-income individuals](/usc/20/1059e.md?p=b-4) 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](/usc/20/1059e.md?p=b-4), first generation college students, or individuals with [disabilities](/usc/20/1003.md?p=6);
- (3) require an assurance that not less than one-third of the individuals with [disabilities](/usc/20/1003.md?p=6) participating in the project be [low-income individuals](/usc/20/1059e.md?p=b-4);
- (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](/usc/20/1003.md?p=16);
- (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](/usc/20/1003.md?p=17) 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.
# §1070a–15. Postbaccalaureate achievement program authority
- (a) **Program authority—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/1059e.md?p=b-4) 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](/usc/20/1059d.md?p=b-1), as defined in [section 7546 of this title](/usc/20/7546.md);
- (B) [Native Hawaiians](/usc/20/1059d.md?p=b-3), as defined in [section 7517 of this title](/usc/20/7517.md); and
- (C) Native American Pacific Islanders, as defined in [section 1059g of this title](/usc/20/1059g.md);
- (3) an assurance that participants be enrolled in a degree program at an [eligible institution](/usc/20/1066a.md?p=1) having an agreement with the [Secretary](/usc/20/1003.md?p=17) in accordance with the provisions of [section 1094 of this title](/usc/20/1094.md); and
- (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](/usc/20/1003.md?p=17) 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](/usc/20/4702.md?p=2), and transportation to summer programs.
- (g) **Funding—** From amounts appropriated pursuant to the authority of [section 1070a–11(g) of this title](/usc/20/1070a–11.md?p=g), the [Secretary](/usc/20/1003.md?p=17) shall, to the extent practicable, allocate [funds](/usc/20/4702.md?p=3) for projects authorized by this section in an amount which is not less than $11,000,000 for each of the fiscal years 2009 through 2014.
# §1070a–16. Educational opportunity centers
- (a) **Program authority; services provided—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1094.md?p=i-5); 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](/usc/20/1003.md?p=16) reentry or entry to a general educational development (GED) program or other alternative education programs for [secondary school](/usc/20/1003.md?p=16) dropouts;
- (7) individualized personal, career, and academic counseling;
- (8) tutorial services;
- (9) career workshops and counseling;
- (10) mentoring programs involving elementary or [secondary school](/usc/20/1003.md?p=16) 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)](#b-1..b-10) that are specially designed for students who are [limited English proficient](/usc/20/1021.md?p=15), students from groups that are traditionally underrepresented in postsecondary education, students with [disabilities](/usc/20/1003.md?p=6), students who are homeless children and youths (as such term is defined in [section 11434a of title 42](/usc/42/11434a.md)), students who are in foster care or are aging out of the foster care system, or other disconnected students.
- (c) **Requirements for approval of applications—** In approving applications for educational opportunity centers under this section for any fiscal year the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1059e.md?p=b-4) 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 [section 1070a–12 of this title](/usc/20/1070a–12.md); and
- (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 [section 1070a–12 of this title](/usc/20/1070a–12.md).
# §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](/usc/20/1003.md?p=17) is authorized to make grants to institutions of higher education and other public and private [nonprofit](/usc/20/1003.md?p=13) 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](/usc/20/9101.md?p=3) of projects funded under this division as well as annually on the following topics and other topics chosen by the [Secretary](/usc/20/1003.md?p=17):
- (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](/usc/20/1021.md?p=15), students from groups that are traditionally underrepresented in postsecondary education, students with [disabilities](/usc/20/1003.md?p=6), students who are homeless children and youths (as such term is defined in [section 11434a of title 42](/usc/42/11434a.md)), students who are in foster care or are aging out of the foster care system, or other disconnected students.
- (c) **Consultation—** Grants for the purposes of this section shall be made only after consultation with regional and [State](/usc/20/1003.md?p=21-A) professional associations of persons having special knowledge with respect to the needs and problems of such programs and projects.
# §1070a–18. Reports, evaluations, and grants for project improvement and dissemination
- (a) **Reports to the authorizing committees—**
- (1) **In general—** The [Secretary](/usc/20/1003.md?p=17) shall submit annually, to the [authorizing committees](/usc/20/1003.md?p=1), 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](/usc/20/4702.md?p=3) under this division are required to report their performance to the [Secretary](/usc/20/1003.md?p=17);
- (B) focus on the programs’ performance on the relevant outcome criteria determined under [section 1070a–11(f)(4) of this title](/usc/20/1070a–11.md?p=f-4);
- (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](/usc/20/1161a.md?p=b-1), first-generation students, and students with [disabilities](/usc/20/1003.md?p=6).
- (2) **Information—** The [Secretary](/usc/20/1003.md?p=17) shall provide, with each report submitted under [paragraph (1)](#a-1), information on the impact of the secondary review process described in [section 1070a–11(c)(8)(C)(iv) of this title](/usc/20/1070a–11.md?p=c-8-C-iv), including the number and type of secondary reviews, the disposition of the secondary reviews, the effect on timing of awards, and any other information the [Secretary](/usc/20/1003.md?p=17) determines is necessary.
- (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](/usc/20/1003.md?p=17) 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 [section 1070a–13 of this title](/usc/20/1070a–13.md). The evaluation of the programs and projects assisted under [section 1070a–13 of this title](/usc/20/1070a–13.md) shall be implemented not later than June 30, 2010.
- (B) **Content of upward bound evaluation—** The evaluation of the programs and projects assisted under [section 1070a–13 of this title](/usc/20/1070a–13.md) that is described in [subparagraph (A)](#b-1-A) shall examine the characteristics of the students who benefit most from the Upward Bound program under [section 1070a–13 of this title](/usc/20/1070a–13.md) and the characteristics of the programs and projects that most benefit students.
- (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)](#b-1) shall identify institutional, community, and program or project practices that are effective in—
- (i) enhancing the access of [low-income individuals](/usc/20/1059e.md?p=b-4) and [first-generation college students](/usc/20/1059e.md?p=b-3) 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 [section 1070a–11(f)(4) of this title](/usc/20/1070a–11.md?p=f-4).
- (C) **Dissemination and use of evaluation findings—** The [Secretary](/usc/20/1003.md?p=17) shall disseminate to eligible entities and make available to the public the practices identified under [subparagraph (B)](#b-2-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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/4702.md?p=2).
- (c) **Grants—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1161a.md?p=b-1) 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](/usc/20/1003.md?p=17) 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](/usc/20/1059e.md?p=b-4) and [first-generation college students](/usc/20/1059e.md?p=b-3).
# §1070a–21. Early intervention and college awareness program authorized
- (a) **Program authorized—** The [Secretary](/usc/20/1003.md?p=17) is authorized, in accordance with the requirements of this division, to establish a program that encourages [eligible entities](#c) to provide support, and maintain a commitment, to eligible [low-income students](/usc/20/1161a.md?p=b-1), including students with [disabilities](/usc/20/1003.md?p=6), to assist the students in obtaining a [secondary school](/usc/20/1003.md?p=16) 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](/usc/20/1003.md?p=16) students, including students with [disabilities](/usc/20/1003.md?p=6), to reduce—
- (A) the risk of such students dropping out of [school](/usc/20/5802.md?p=a-11); 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](/usc/20/4702.md?p=3) appropriated under [section 1070a–28 of this title](/usc/20/1070a–28.md) for each fiscal year, the [Secretary](/usc/20/1003.md?p=17) shall make awards to [eligible entities](#c) described in paragraphs [(1)](#c-1) and [(2)](#c-2) of subsection (c) to enable the entities to carry out the program authorized under [subsection (a)](#a).
- (2) **Award period—** The [Secretary](/usc/20/1003.md?p=17) may award a grant under this division to an [eligible entity](#c) described in paragraphs [(1)](#c-1) and [(2)](#c-2) of subsection (c) for—
- (A) six years; or
- (B) in the case of an [eligible entity](#c) that applies for a grant under this division for seven years to enable the [eligible entity](#c) to provide services to a student through the student’s first year of attendance at an [institution of higher education](/usc/20/1001.md?p=a), seven years.
- (3) **Priority—** In making awards to [eligible entities](#c) described in [subsection (c)(1)](#c-1), the [Secretary](/usc/20/1003.md?p=17) shall—
- (A) give priority to [eligible entities](#c) 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](/usc/20/1003.md?p=16).
- (c) **“Eligible entity” defined—** For the purposes of this division, the term “eligible entity” means—
- (1) a [State](/usc/20/1003.md?p=21-A); or
- (2) a partnership—
- (A) consisting of—
- (i) one or more [local educational agencies](/usc/20/1003.md?p=11); 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](/usc/20/1003.md?p=21-A) agencies, institutions or agencies sponsoring programs authorized under subpart 4, or other public or private agencies or organizations.
# §1070a–22. Requirements
- (a) **Funding rules—** In awarding grants from the amount appropriated under [section 1070a–28 of this title](/usc/20/1070a–28.md) for a fiscal year, the [Secretary](/usc/20/1003.md?p=17) shall make available—
- (1) to eligible entities described in [section 1070a–21(c)(1) of this title](/usc/20/1070a–21.md?p=c-1), not less than 33 percent of such amount;
- (2) to eligible entities described in [section 1070a–21(c)(2) of this title](/usc/20/1070a–21.md?p=c-2), not less than 33 percent of such amount; and
- (3) to eligible entities described in paragraph (1) or (2) of [section 1070a–21(c) of this title](/usc/20/1070a–21.md?p=c), the remainder of such amount taking into consideration the number, quality, and promise of the applications for the grants, and, to the extent practicable—
- (A) the geographic distribution of such grant awards; and
- (B) the distribution of such grant awards between urban and rural [applicants](/usc/20/3982.md?p=1).
- (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](/usc/20/5802.md?p=a-11) district or [State](/usc/20/1003.md?p=21-A); and
- (2) [related services](/usc/20/5802.md?p=a-9) under other Federal or non-Federal programs.
- (c) **Designation of fiscal agent—** An eligible entity described in [section 1070a–21(c)(2) of this title](/usc/20/1070a–21.md?p=c-2) shall designate an [institution of higher education](/usc/20/1001.md?p=a) or a [local educational agency](/usc/20/1003.md?p=11) as the fiscal [agent](/usc/20/1094.md?p=i-1) for the eligible entity.
- (d) **Cohort approach—**
- (1) **In general—** The [Secretary](/usc/20/1003.md?p=17) shall require that eligible entities described in [section 1070a–21(c)(2) of this title](/usc/20/1070a–21.md?p=c-2)—
- (A) provide services under this division to at least one grade level of students, beginning not later than 7th grade, in a participating [school](/usc/20/5802.md?p=a-11) 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](/usc/20/5802.md?p=a-11) Lunch Act [[42 U.S.C. 1751](/usc/42/1751.md) et seq.] (or, if an eligible entity determines that it would promote the effectiveness of a program, an entire grade level of students, beginning not later than the 7th grade, who reside in public housing as defined in [section 1437a(b)(1) of title 42](/usc/42/1437a.md?p=b-1));
- (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](/usc/20/1001.md?p=a) 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](/usc/20/1003.md?p=17) to require the cohort approach described in [paragraph (1)](#d-1), the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/5802.md?p=a-11) or community.
- (e) **Supplement, not supplant—** Grant [funds](/usc/20/4702.md?p=3) awarded under this division shall be used to supplement, and not supplant, other Federal, [State](/usc/20/1003.md?p=21-A), and local [funds](/usc/20/4702.md?p=3) that would otherwise be expended to carry out activities assisted under this division.
# §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](/usc/20/1003.md?p=17) an application for carrying out the program under this division.
- (2) **Contents—** Each application submitted pursuant to [paragraph (1)](#a-1) shall be in such form, contain or be accompanied by such information or assurances, and be submitted at such time as the [Secretary](/usc/20/1003.md?p=17) 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 [section 1070a–24(a) of this title](/usc/20/1070a–24.md?p=a);
- (B) describe, in the case of an eligible entity described in [section 1070a–21(c)(2) of this title](/usc/20/1070a–21.md?p=c-2) that chooses to provide scholarships, or an eligible entity described in [section 1070a–21(c)(1) of this title](/usc/20/1070a–21.md?p=c-1), how the eligible entity will meet the requirements of [section 1070a–25 of this title](/usc/20/1070a–25.md);
- (C) describe, in the case of an eligible entity described in [section 1070a–21(c)(2) of this title](/usc/20/1070a–21.md?p=c-2) that requests a reduced match percentage under [subsection (b)(2)](#b-2), how such reduction will assist the entity to provide the scholarships described in [subsection (b)(2)(A)(ii)](#b-2-A-ii);
- (D) provide assurances that adequate administrative and support staff will be responsible for coordinating the activities described in [section 1070a–24 of this title](/usc/20/1070a–24.md);
- (E) provide assurances that activities assisted under this division will not displace an employee or eliminate a position at a [school](/usc/20/5802.md?p=a-11) 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 [section 1070a–21(c)(1) of this title](/usc/20/1070a–21.md?p=c-1) that chooses to use a cohort approach, or an eligible entity described in [section 1070a–21(c)(2) of this title](/usc/20/1070a–21.md?p=c-2), how the eligible entity will define the cohorts of the students served by the eligible entity pursuant to [section 1070a–22(d) of this title](/usc/20/1070a–22.md?p=d), and how the eligible entity will serve the cohorts through grade 12, including—
- (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](/usc/20/1003.md?p=16);
- (G) describe how the eligible entity will coordinate programs under this division with other existing Federal, [State](/usc/20/1003.md?p=21-A), or local programs to avoid duplication and maximize the number of students served;
- (H) provide such additional assurances as the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/4702.md?p=3) that will enable the eligible entity to meet the matching requirement described in [subsection (b)](#b).
- (b) **Matching requirement—**
- (1) **In general—** The [Secretary](/usc/20/1003.md?p=17) shall not approve an application submitted under [subsection (a)](#a) unless such application—
- (A) provides that the eligible entity will provide, from [State](/usc/20/1003.md?p=21-A), local, institutional, or private [funds](/usc/20/4702.md?p=3), not less than 50 percent of the cost of the program, which matching [funds](/usc/20/4702.md?p=3) 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](/usc/20/4702.md?p=3) will be paid; and
- (C) includes provisions designed to ensure that [funds](/usc/20/4702.md?p=3) provided under this division shall supplement and not supplant [funds](/usc/20/4702.md?p=3) expended for existing programs.
- (2) **Special rule—** Notwithstanding the matching requirement described in [paragraph (1)(A)](#b-1-A), the [Secretary](/usc/20/1003.md?p=17) may by regulation modify the percentage requirement described in [paragraph (1)(A)](#b-1-A) for eligible entities described in [section 1070a–21(c)(2) of this title](/usc/20/1070a–21.md?p=c-2). The [Secretary](/usc/20/1003.md?p=17) may approve an eligible entity’s request for a reduced match percentage—
- (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 [section 1070a–21(c)(2) of this title](/usc/20/1070a–21.md?p=c-2) and requests that contributions to the eligible entity’s scholarship [fund](/usc/20/4702.md?p=3) established under [section 1070a–25 of this title](/usc/20/1070a–25.md) be matched on a two to one basis; or
- (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](/usc/20/4702.md?p=3) described in its application are no longer available and the eligible entity has exhausted all revenues for replacing such matching [funds](/usc/20/4702.md?p=3).
- (c) **Methods for complying with matching requirement—** An eligible entity may count toward the matching requirement described in [subsection (b)(1)(A)](#b-1-A)—
- (1) the amount of the financial assistance obligated to students from [State](/usc/20/1003.md?p=21-A), local, institutional, or private [funds](/usc/20/4702.md?p=3) under this division, including pre-existing non-Federal financial assistance programs, including—
- (A) the amount contributed to a student scholarship [fund](/usc/20/4702.md?p=3) established under [section 1070a–25 of this title](/usc/20/1070a–25.md); and
- (B) the amount of the costs of administering the scholarship program under [section 1070a–25 of this title](/usc/20/1070a–25.md);
- (2) the amount of tuition, fees, room or [board](/usc/20/4702.md?p=2) 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](/usc/20/1003.md?p=13) and philanthropic organizations, and other organizations; and
- (4) other resources recognized by the [Secretary](/usc/20/1003.md?p=17), 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](/usc/20/1003.md?p=17) shall convene peer review panels to assist in making determinations regarding the awarding of grants under this division.
# §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 [section 1070a–22(d)(1)(A) of this title](/usc/20/1070a–22.md?p=d-1-A) or to priority students described in [subsection (d)](#d).
- (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](/usc/20/1003.md?p=16) diploma; and
- (B) complete applications for and enroll in a program of postsecondary education.
- (4) In the case of an eligible entity described in [section 1070a–21(c)(1) of this title](/usc/20/1070a–21.md?p=c-1), providing for the scholarships described in [section 1070a–25 of this title](/usc/20/1070a–25.md).
- (b) **Permissible activities for States and partnerships—** An eligible entity that receives a grant under this division may use grant [funds](/usc/20/4702.md?p=3) 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)](#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](/usc/20/1003.md?p=21-A) academic standards.
- (5) Supporting [dual or concurrent enrollment programs](/usc/20/2302.md?p=15) between the [secondary school](/usc/20/1003.md?p=16) and [institution of higher education](/usc/20/1001.md?p=a) partners of an eligible entity described in [section 1070a–21(c)(2) of this title](/usc/20/1070a–21.md?p=c-2), and other activities that support participating students in—
- (A) meeting challenging [State](/usc/20/1003.md?p=21-A) 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 [section 1070a–21(c)(2) of this title](/usc/20/1070a–21.md?p=c-2), providing support for scholarships described in [section 1070a–25 of this title](/usc/20/1070a–25.md).
- (8) Introducing eligible students to institutions of higher education, through trips and [school](/usc/20/5802.md?p=a-11)-based sessions.
- (9) Providing an intensive extended [school](/usc/20/5802.md?p=a-11) day, [school](/usc/20/5802.md?p=a-11) 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](/usc/20/1003.md?p=16) completion and postsecondary education enrollment of at-risk children, such as—
- (A) the identification of at-risk children;
- (B) after-[school](/usc/20/5802.md?p=a-11) 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](/usc/20/1021.md?p=16) 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](/usc/20/1021.md?p=15).
- (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 [section 1070a–22(d)(1)(A) of this title](/usc/20/1070a–22.md?p=d-1-A), through the first year of attendance at an [institution of higher education](/usc/20/1001.md?p=a).
- (13) Fostering and improving [parent](/usc/20/1021.md?p=16) 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](/usc/20/1021.md?p=16) 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](/usc/20/4702.md?p=3) described in the application are no longer available, engaging entities described in [section 1070a–21(c)(2) of this title](/usc/20/1070a–21.md?p=c-2) in a collaborative manner to provide matching resources and participate in other activities authorized under this section.
- (c) **Additional permissible activities for States—** In addition to the required activities described in [subsection (a)](#a) and the permissible activities described in [subsection (b)](#b), an eligible entity described in [section 1070a–21(c)(1) of this title](/usc/20/1070a–21.md?p=c-1) receiving [funds](/usc/20/4702.md?p=3) under this division may use grant [funds](/usc/20/4702.md?p=3) to carry out one or more of the following activities:
- (1) Providing technical assistance to—
- (A) [secondary schools](/usc/20/1003.md?p=16) that are located within the [State](/usc/20/1003.md?p=21-A); or
- (B) partnerships described in [section 1070a–21(c)(2) of this title](/usc/20/1070a–21.md?p=c-2) that are located within the [State](/usc/20/1003.md?p=21-A).
- (2) Providing [professional development](/usc/20/1021.md?p=19) opportunities to individuals working with eligible cohorts of students described in [section 1070a–22(d)(1)(A) of this title](/usc/20/1070a–22.md?p=d-1-A).
- (3) Providing administrative support to help build the capacity of eligible entities described in [section 1070a–21(c)(2) of this title](/usc/20/1070a–21.md?p=c-2) to compete for and manage grants awarded under this division.
- (4) Providing strategies and activities that align efforts in the [State](/usc/20/1003.md?p=21-A) 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)](#c-6-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](/usc/20/1003.md?p=6) and students who are [limited English proficient](/usc/20/1021.md?p=15), to succeed academically in, and prepare financially for, postsecondary education.
- (7) Working to align [State](/usc/20/1003.md?p=21-A) academic standards and curricula with the expectations of postsecondary institutions and employers.
- (8) Developing alternatives to traditional [secondary school](/usc/20/1003.md?p=16) 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](/usc/20/5802.md?p=a-11) 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](/usc/20/1003.md?p=16) diploma.
- (9) Creating [community college](/usc/20/1161w.md?p=f-1) programs for drop-outs that are personalized drop-out recovery programs that allow drop-outs to complete a regular [secondary school](/usc/20/1003.md?p=16) 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](/usc/20/1003.md?p=16) who is—
- (1) eligible to be counted under [section 6333(c) of this title](/usc/20/6333.md?p=c);
- (2) eligible for assistance under a [State](/usc/20/1003.md?p=21-A) program funded under part A or E of title IV of the Social Security Act ([42 U.S.C. 601](/usc/42/601.md) et seq., 670 et seq.);
- (3) eligible for assistance under subtitle B of title VII of the McKinney-Vento Homeless Assistance Act ([42 U.S.C. 11431](/usc/42/11431.md) et seq.); or
- (4) otherwise considered by the eligible entity to be a disconnected student.
- (e) **Allowable providers—** In the case of eligible entities described in [section 1070a–21(c)(1) of this title](/usc/20/1070a–21.md?p=c-1), the activities required by this section may be provided by service providers such as community-based organizations, [schools](/usc/20/5802.md?p=a-11), institutions of higher education, public and private agencies, [nonprofit](/usc/20/1003.md?p=13) and philanthropic organizations, businesses, institutions and agencies sponsoring programs authorized under subpart 4, and other organizations the [State](/usc/20/1003.md?p=21-A) determines appropriate.
# §1070a–25. Scholarship component
- (a) **In general—**
- (1) **States—** In order to receive a grant under this division, an eligible entity described in [section 1070a–21(c)(1) of this title](/usc/20/1070a–21.md?p=c-1) shall establish or maintain a financial assistance program that awards scholarships to students in accordance with the requirements of this section. The [Secretary](/usc/20/1003.md?p=17) shall encourage the eligible entity to ensure that a scholarship provided pursuant to this section is available to an eligible student for use at any [institution of higher education](/usc/20/1001.md?p=a).
- (2) **Partnerships—** An eligible entity described in [section 1070a–21(c)(2) of this title](/usc/20/1070a–21.md?p=c-2) may award scholarships to eligible students in accordance with the requirements of this section.
- (b) **Limitation—**
- (1) **In general—** Subject to [paragraph (2)](#b-2), each eligible entity described in [section 1070a–21(c)(1) of this title](/usc/20/1070a–21.md?p=c-1) that receives a grant under this division shall use not less than 25 percent and not more than 50 percent of the grant [funds](/usc/20/4702.md?p=3) for activities described in [section 1070a–24 of this title](/usc/20/1070a–24.md) (except for the activity described in [subsection (a)(4)](/usc/20/1070a–24.md?p=a-4) of such section), with the remainder of such [funds](/usc/20/4702.md?p=3) to be used for a scholarship program under this section in accordance with such subsection.
- (2) **Exception—** Notwithstanding [paragraph (1)](#b-1), the [Secretary](/usc/20/1003.md?p=17) may allow an eligible entity to use more than 50 percent of grant [funds](/usc/20/4702.md?p=3) 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 [section 1070a–23 of this title](/usc/20/1070a–23.md).
- (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 [section 1070a of this title](/usc/20/1070a.md) for such [award year](/usc/20/1088.md?p=a-1).
- (e) **Portability of assistance—**
- (1) **In general—** Each eligible entity described in [section 1070a–21(c)(1) of this title](/usc/20/1070a–21.md?p=c-1) that receives a grant under this division shall hold in reserve, for the students served by such grant as described in section [1070a–22(d)(1)(A)](/usc/20/1070a–22.md?p=d-1-A) or [1070a–24(d)](/usc/20/1070a–24.md?p=d) of this title, an amount that is not less than the minimum scholarship amount described in [subsection (d)](#d), multiplied by the number of students the eligible entity estimates will meet the requirements of [paragraph (2)](#e-2).
- (2) **Requirement for portability—** [Funds](/usc/20/4702.md?p=3) held in reserve under [paragraph (1)](#e-1) shall be made available to an eligible student when the eligible student has—
- (A) completed a [secondary school](/usc/20/1003.md?p=16) diploma, its recognized equivalent, or another recognized alternative standard for individuals with [disabilities](/usc/20/1003.md?p=6); and
- (B) enrolled in an [institution of higher education](/usc/20/1001.md?p=a).
- (3) **Qualified educational expenses—** [Funds](/usc/20/4702.md?p=3) 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](/usc/20/1001.md?p=a); 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](/usc/20/4702.md?p=3) held in reserve under [paragraph (1)](#e-1) that are not used by an eligible student within six years of the student’s scheduled completion of [secondary school](/usc/20/1003.md?p=16) 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)](#e-1) and, if applicable, redistributing excess [funds](/usc/20/4702.md?p=3) in accordance with clause (i) of this subparagraph, an eligible entity has [funds](/usc/20/4702.md?p=3) held in reserve under [paragraph (1)](#e-1) that remain available, the eligible entity shall return such remaining reserved [funds](/usc/20/4702.md?p=3) to the [Secretary](/usc/20/1003.md?p=17) for distribution to other grantees under this division in accordance with the funding rules described in [section 1070a–22(a) of this title](/usc/20/1070a–22.md?p=a).
- (B) **Nonparticipating entity—** Notwithstanding [subparagraph (A)](#e-4-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](/usc/20/4702.md?p=3) held in reserve under [paragraph (1)](#e-1) that are not awarded or obligated to eligible students to the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1087ll.md?p=a).
- (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](/usc/20/1003.md?p=16) 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](/usc/20/1001.md?p=a) that is located within the [State](/usc/20/1003.md?p=21-A)’s boundaries, except that, at the [State](/usc/20/1003.md?p=21-A)’s option, an eligible entity may offer scholarship program portability for recipients who attend institutions of higher education outside such [State](/usc/20/1003.md?p=21-A); and
- (4) who participated in the activities required under [section 1070a–24(a) of this title](/usc/20/1070a–24.md?p=a).
# §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 [section 1070a–25 of this title](/usc/20/1070a–25.md), if applicable, that a student may be eligible to receive.
# §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)](#b) and shall submit to the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) pursuant to [subsection (b)](#b).
- (b) **Evaluation standards—** The [Secretary](/usc/20/1003.md?p=17) shall prescribe standards for the evaluation described in [subsection (a)](#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](/usc/20/1003.md?p=17) shall, from not more than 0.75 percent of the [funds](/usc/20/4702.md?p=3) appropriated under [section 1070a–28 of this title](/usc/20/1070a–28.md) for a fiscal year, award one or more grants, contracts, or cooperative agreements to or with public and private institutions and organizations, to enable the institutions and organizations to evaluate the effectiveness of the program and, as appropriate, disseminate the results of the evaluation. Such evaluation shall include a separate analysis of—
- (1) the implementation of the scholarship component described in [section 1070a–25 of this title](/usc/20/1070a–25.md); and
- (2) the use of methods for complying with matching requirements described in paragraphs (1) and (2) of [section 1070a–23(c) of this title](/usc/20/1070a–23.md?p=c).
- (d) **Report—** The [Secretary](/usc/20/1003.md?p=17) shall biennially report to Congress regarding the activities assisted under this division and the evaluations conducted pursuant to this section.
# §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.
# [§§1070a–31 to 1070a–35. Repealed. Pub. L. 110–315, title IV, § 405, Aug. 14, 2008, 122 Stat. 3215 — repealed]
# [§§1070a–41 to 1070a–43. Repealed. Pub. L. 105–244, title IV, § 405, Oct. 7, 1998, 112 Stat. 1664 — repealed]
# [§§1070a–51 to 1070a–53. Repealed. Pub. L. 105–244, title IV, § 405, Oct. 7, 1998, 112 Stat. 1664 — repealed]
# [§1070a–61. Repealed. Pub. L. 105–244, title IV, § 405, Oct. 7, 1998, 112 Stat. 1664 — repealed]
# [§1070a–71. Repealed. Pub. L. 105–244, title IV, § 405, Oct. 7, 1998, 112 Stat. 1664 — repealed]
# [§1070a–81. Repealed. Pub. L. 105–244, title IV, § 405, Oct. 7, 1998, 112 Stat. 1664 — repealed]
# §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](/usc/20/1003.md?p=17) to make payments to institutions of higher education which have made agreements with the [Secretary](/usc/20/1003.md?p=17) in accordance with [section 1070b–2(a) of this title](/usc/20/1070b–2.md?p=a), for use by such institutions for payments to undergraduate students of supplemental grants awarded to them under this subpart, there are authorized to be appropriated such sums as may be necessary for fiscal year 2009 and each of the five succeeding fiscal years.
- (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.
# §1070b–1. Amount and duration of grants
- (a) **Amount of grant—**
- (1) Except as provided in [paragraph (3)](#a-3), from the [funds](/usc/20/4702.md?p=3) received by it for such purpose under this subpart, an institution which awards a supplemental grant to a student for an [academic year](/usc/20/1088.md?p=a-2-A) 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)](#a-1) with respect to a student for any [academic year](/usc/20/1088.md?p=a-2-A) 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](/usc/20/1088.md?p=a-2-A), 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](/usc/20/1087ll.md?p=a) 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 [section 1091 of this title](/usc/20/1091.md), except as provided in [section 1070b–2(c) of this title](/usc/20/1070b–2.md?p=c).
- (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](/usc/20/1088.md?p=a-2-A) to cover costs for a period which are not applicable to other periods of such [academic year](/usc/20/1088.md?p=a-2-A).
# §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 [section 1094 of this title](/usc/20/1094.md), an agreement with the [Secretary](/usc/20/1003.md?p=17) applicable to this subpart;
- (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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=21-A) scholarships; and
- (D) [foundation](/usc/20/4702.md?p=1) or other charitable organization [funds](/usc/20/4702.md?p=3).
- (b) **Eligibility for selection—** Awards may be made under this subpart only to a student who—
- (1) is an eligible student under [section 1091 of this title](/usc/20/1091.md); and
- (2) makes application at a time and in a manner consistent with the requirements of the [Secretary](/usc/20/1003.md?p=17) 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 [section 1094 of this title](/usc/20/1094.md), and within the amount allocated to the institution for that purpose for that year under [section 1070b–3 of this title](/usc/20/1070b–3.md), select individuals who are to be awarded such grants and determine, in accordance with [section 1070b–1 of this title](/usc/20/1070b–1.md), the amounts to be paid to them.
- (2)
- (A) In carrying out paragraph (1) of this subsection, each [institution of higher education](/usc/20/1001.md?p=a) shall, in the agreement made under [section 1094 of this title](/usc/20/1094.md), assure that the selection procedures—
- (i) will be designed to award supplemental grants under this subpart, first, to [students with exceptional need](#c-2-B), and
- (ii) will give a priority for supplemental grants under this subpart to students who receive Pell Grants and meet the requirements of [section 1091 of this title](/usc/20/1091.md).
- (B) For the purpose of [subparagraph (A)](#c-2-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](/usc/20/4702.md?p=3) granted to an [institution of higher education](/usc/20/1001.md?p=a) 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 [section 1096 of this title](/usc/20/1096.md).
# §1070b–3. Allocation of funds
- (a) **Allocation based on previous allocation—**
- (1) From the amount appropriated pursuant to [section 1070b(b) of this title](/usc/20/1070b.md?p=b) for each fiscal year, the [Secretary](/usc/20/1003.md?p=17) shall first allocate to each [eligible institution](/usc/20/1066a.md?p=1) an amount equal to 100 percent of the amount such institution received under subsections [(a)](#a) and [(b)](#b) of this section for fiscal year 1999 (as such subsections were in effect with respect to allocations for such fiscal year).
- (2)
- (A) From the amount so appropriated, the [Secretary](/usc/20/1003.md?p=17) shall next allocate to each [eligible institution](/usc/20/1066a.md?p=1) 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](/usc/20/1003.md?p=17) shall next allocate to each [eligible institution](/usc/20/1066a.md?p=1) 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](/usc/20/1066a.md?p=1) 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](/usc/20/3982.md?p=1) 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](/usc/20/1003.md?p=17) shall allocate to each [eligible institution](/usc/20/1066a.md?p=1) 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)](#a-1) but less than the amount required to be allocated to all institutions under [paragraph (2)](#a-2), then—
- (i) the [Secretary](/usc/20/1003.md?p=17) shall allot the amount required to be allocated to all institutions under [paragraph (1)](#a-1), and
- (ii) the amount of the allocation to each institution under [paragraph (2)](#a-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](/usc/20/1003.md?p=17) 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](/usc/20/1066a.md?p=1) described in [subparagraph (B)](#a-4-B).
- (B) In order to receive an allocation pursuant to [subparagraph (A)](#a-4-A) an institution shall be an [eligible institution](/usc/20/1066a.md?p=1) from which 50 percent or more of the [Pell Grant recipients](/usc/20/1061.md?p=3) attending such [eligible institution](/usc/20/1066a.md?p=1) graduate from or transfer to a 4-year [institution of higher education](/usc/20/1001.md?p=a).
- (b) **Allocation of excess based on fair share—**
- (1) From the remainder of the amount appropriated pursuant to [section 1070b(b) of this title](/usc/20/1070b.md?p=b) for each year (after making the allocations required by [subsection (a)](#a)), the [Secretary](/usc/20/1003.md?p=17) shall allocate to each [eligible institution](/usc/20/1066a.md?p=1) 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](/usc/20/1066a.md?p=1) (having such excess eligible amounts).
- (2) For any [eligible institution](/usc/20/1066a.md?p=1), 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)](#c)), divided by (ii) the sum of the need of all institutions (as so determined), multiplied by (iii) the amount appropriated pursuant to [section 1070b(b) of this title](/usc/20/1070b.md?p=b) of the fiscal year; exceeds
- (B) the amount required to be allocated to that institution under [subsection (a)](#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](/usc/20/1003.md?p=17) 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](#c-3-A) 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](#c-3-A) for all undergraduate students determined under [subparagraph (C)](#c-2-C), minus the student aid index determined under [subparagraph (B)](#c-2-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)](#c-2-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](#c-3-A) for all undergraduate students determined under [subparagraph (C)](#c-2-C), minus the student aid index determined under [subparagraph (B)](#c-2-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)](#c-2-F) for each income category of independent students; and
- (H) add the amounts determined under subparagraphs [(E)](#c-2-E) and [(G)](#c-2-G).
- (3)
- (A) For purposes of [paragraph (2)](#c-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)](#c-3-B), (ii) standard living expenses determined in accordance with subparagraph [(C)](#c-3-C), and (iii) books and supplies determined in accordance with [subparagraph (D)](#c-3-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](/usc/20/1003.md?p=17), 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](/usc/20/1003.md?p=17) any portion of the sums allocated to such institution under this section for any fiscal year the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) may waive this paragraph for a specific institution if the [Secretary](/usc/20/1003.md?p=17) finds that enforcing this paragraph would be contrary to the interest of the program.
- (e) **Filing deadlines—** The [Secretary](/usc/20/1003.md?p=17) shall, from time to time, set dates before which institutions must file applications for allocations under this part.
# §1070b–4. Carryover and carryback authority
- (a) **Carryover authority—** Of the sums made available to an [eligible institution](/usc/20/1066a.md?p=1) 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](/usc/20/1066a.md?p=1) 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](/usc/20/1066a.md?p=1) may make grants to students after the end of the [academic year](/usc/20/1088.md?p=a-2-A), but prior to the beginning of the succeeding fiscal year, from such succeeding fiscal year’s appropriations.
# §1070c. Purpose; appropriations authorized
- (a) **Purpose of subpart—** It is the purpose of this subpart to make incentive grants available to [States](/usc/20/1003.md?p=21-A) to assist [States](/usc/20/1003.md?p=21-A) 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](/usc/20/1070c–4.md) work-study; and
- (2) carrying out the activities described in [section 1070c–3a of this title](/usc/20/1070c–3a.md).
- (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)](#b-1) exceeds $30,000,000, the excess amount shall be available to carry out [section 1070c–3a of this title](/usc/20/1070c–3a.md).
- (3) **Availability—** Sums appropriated pursuant to the authority of [paragraph (1)](#b-1) for any fiscal year shall remain available for payments to [States](/usc/20/1003.md?p=21-A) under this subpart until the end of the fiscal year succeeding the fiscal year for which such sums were appropriated.
# §1070c–1. Allotment among States
- (a) **Allotment based on number of eligible students in attendance—**
- (1) From the sums appropriated pursuant to [section 1070c(b)(1) of this title](/usc/20/1070c.md?p=b-1) and not reserved under [section 1070c(b)(2) of this title](/usc/20/1070c.md?p=b-2) for any fiscal year, the [Secretary](/usc/20/1003.md?p=17) shall allot to each [State](/usc/20/1003.md?p=21-A) an amount which bears the same ratio to such sums as the number of students who are deemed eligible in such [State](/usc/20/1003.md?p=21-A) for participation in the grant program authorized by this subpart bears to the total number of such students in all the [States](/usc/20/1003.md?p=21-A), except that no [State](/usc/20/1003.md?p=21-A) shall receive less than the [State](/usc/20/1003.md?p=21-A) received for fiscal year 1979.
- (2) For the purpose of this subsection, the number of students who are deemed eligible in a [State](/usc/20/1003.md?p=21-A) for participation in the grant program authorized by this subpart, and the number of such students in all the [States](/usc/20/1003.md?p=21-A), shall be determined for the most recent year for which satisfactory data are available.
- (b) **Reallotment—** The amount of any [State](/usc/20/1003.md?p=21-A)’s allotment under [subsection (a)](#a) for any fiscal year which the [Secretary](/usc/20/1003.md?p=17) determines will not be required for such fiscal year for the leveraging educational assistance partnership program of that [State](/usc/20/1003.md?p=21-A) shall be available for reallotment from time to time, on such dates during such year as the [Secretary](/usc/20/1003.md?p=17) may fix, to other [States](/usc/20/1003.md?p=21-A) in proportion to the original allotments to such [States](/usc/20/1003.md?p=21-A) under such part for such year, but with such proportionate amount for any of such [States](/usc/20/1003.md?p=21-A) being reduced to the extent it exceeds the sum the [Secretary](/usc/20/1003.md?p=17) estimates such [State](/usc/20/1003.md?p=21-A) needs and will be able to use for such year for carrying out the [State](/usc/20/1003.md?p=21-A) plan. The total of such reductions shall be similarly reallotted among the [States](/usc/20/1003.md?p=21-A) whose proportionate amounts were not so reduced. Any amount reallotted to a [State](/usc/20/1003.md?p=21-A) under this part during a year from [funds](/usc/20/4702.md?p=3) appropriated pursuant to [section 1070c(b)(1) of this title](/usc/20/1070c.md?p=b-1) shall be deemed part of its allotment under [subsection (a)](#a) for such year.
- (c) **Allotments subject to continuing compliance—** The [Secretary](/usc/20/1003.md?p=17) shall make payments for continuing incentive grants only to [States](/usc/20/1003.md?p=21-A) which continue to meet the requirements of [section 1070c–2(b) of this title](/usc/20/1070c–2.md?p=b).
# §1070c–2. Applications for leveraging educational assistance partnership programs
- (a) **Submission and contents of applications—** A [State](/usc/20/1003.md?p=21-A) which desires to obtain a payment under this subpart for any fiscal year shall submit annually an application therefor through the [State](/usc/20/1003.md?p=21-A) agency administering its program under this subpart as of July 1, 1985, unless the Governor of that [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=17) to make the determinations required under this subpart.
- (b) **Payment of Federal share of grants made by qualified program—** From a [State](/usc/20/1003.md?p=21-A)’s allotment under this subpart for any fiscal year the [Secretary](/usc/20/1003.md?p=17) is authorized to make payments to such [State](/usc/20/1003.md?p=21-A) for paying up to 50 percent of the amount of student grants pursuant to a [State](/usc/20/1003.md?p=21-A) program which—
- (1) is administered by a single [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1087ll.md?p=a) per [academic year](/usc/20/1088.md?p=a-2-A) (A) for attendance on a full-time basis at an [institution of higher education](/usc/20/1001.md?p=a), and (B) for campus-based [community service](/usc/20/1070c–4.md) work learning study jobs;
- (3) provides that—
- (A) not more than 20 percent of the allotment to the [State](/usc/20/1003.md?p=21-A) 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 [section 1087–53(b)(1) of this title](/usc/20/1087–53.md?p=b-1);
- (4) provides for the selection of recipients of such grants or of such [State](/usc/20/1003.md?p=21-A) work-study jobs on the basis of substantial financial need determined annually on the basis of criteria established by the [State](/usc/20/1003.md?p=21-A) and approved by the [Secretary](/usc/20/1003.md?p=17), except that for the purpose of collecting data to make such determination of financial need, no student or [parent](/usc/20/1021.md?p=16) shall be charged a fee that is payable to an entity other than such [State](/usc/20/1003.md?p=21-A);
- (5) provides that, effective with respect to any [academic year](/usc/20/1088.md?p=a-2-A) beginning on or after October 1, 1978, all [nonprofit](/usc/20/1003.md?p=13) institutions of higher education in the [State](/usc/20/1003.md?p=21-A) are eligible to participate in the [State](/usc/20/1003.md?p=21-A) program, except in any [State](/usc/20/1003.md?p=21-A) in which participation of [nonprofit](/usc/20/1003.md?p=13) institutions of higher education is in violation of the constitution of the [State](/usc/20/1003.md?p=21-A) or in any [State](/usc/20/1003.md?p=21-A) in which participation of [nonprofit](/usc/20/1003.md?p=13) institutions of higher education is in violation of a statute of the [State](/usc/20/1003.md?p=21-A) 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](/usc/20/4702.md?p=3) supplied by such [State](/usc/20/1003.md?p=21-A) which represent an additional expenditure for such year by such [State](/usc/20/1003.md?p=21-A) for grants or work-study jobs for students attending institutions of higher education over the amount expended by such [State](/usc/20/1003.md?p=21-A) for such grants or work-study jobs, if any, during the second fiscal year preceding the fiscal year in which such [State](/usc/20/1003.md?p=21-A) initially received [funds](/usc/20/4702.md?p=3) under this subpart;
- (7) provides that if the [State](/usc/20/1003.md?p=21-A)’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](/usc/20/1003.md?p=21-A)’s allocation shall be made available to such students;
- (8) provides for [State](/usc/20/1003.md?p=21-A) 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](/usc/20/4702.md?p=3) accounting procedures as may be necessary to assure proper disbursement of and accounting for Federal [funds](/usc/20/4702.md?p=3) paid to the [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=17) to perform his functions under this subpart;
- (10) for any [academic year](/usc/20/1088.md?p=a-2-A) 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](/usc/20/1003.md?p=21-A) [funds](/usc/20/4702.md?p=3) 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](/usc/20/1003.md?p=21-A), 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) shall pay such reserved amount, in advance or by way of reimbursement, and in such installments as the [Secretary](/usc/20/1003.md?p=17) may determine. The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) approves an upward revision of such estimated cost, the [Secretary](/usc/20/1003.md?p=17) may reserve the Federal share of the added cost only from the applicable allotment (or reallotment) available at the time of such approval.
# §1070c–3. Administration of State programs; judicial review
- (a) **Disapproval of applications; suspension of eligibility—**
- (1) The [Secretary](/usc/20/1003.md?p=17) shall not finally disapprove any application for a [State](/usc/20/1003.md?p=21-A) program submitted under [section 1070c–2 of this title](/usc/20/1070c–2.md), or any modification thereof, without first affording the [State](/usc/20/1003.md?p=21-A) agency submitting the program reasonable notice and opportunity for a hearing.
- (2) Whenever the [Secretary](/usc/20/1003.md?p=17), after reasonable notice and opportunity for hearing to the [State](/usc/20/1003.md?p=21-A) agency administering a [State](/usc/20/1003.md?p=21-A) program approved under this subpart, finds—
- (A) that the [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=17) shall notify such [State](/usc/20/1003.md?p=21-A) agency that the [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=21-A) is dissatisfied with the [Secretary](/usc/20/1003.md?p=17)’s final action with respect to the approval of its [State](/usc/20/1003.md?p=21-A) program submitted under this subpart or with his final action under [subsection (a)](#a), such [State](/usc/20/1003.md?p=21-A) may appeal to the United States court of appeals for the circuit in which such [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=17), if supported by substantial evidence, shall be conclusive; but the court, for good cause shown, may remand the case to the [Secretary](/usc/20/1003.md?p=17) to take further evidence, and the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/28.md), section 1254.
# §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](/usc/20/1003.md?p=21-A) to enable the [States](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=21-A), and local governmental and private efforts that provide financial assistance to help [low-income students](/usc/20/1161a.md?p=b-1) attend an [institution of higher education](/usc/20/1001.md?p=a);
- (2) provide need-based grants for access and persistence to eligible [low-income students](/usc/20/1161a.md?p=b-1);
- (3) provide early notification to [low-income students](/usc/20/1161a.md?p=b-1) 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 [section 1070c(b)(2) of this title](/usc/20/1070c.md?p=b-2) for each fiscal year, the [Secretary](/usc/20/1003.md?p=17) shall make an allotment to each [State](/usc/20/1003.md?p=21-A) that submits an application for an allotment in accordance with [subsection (c)](#c) to enable the [State](/usc/20/1003.md?p=21-A) to pay the Federal share, as described in [paragraph (2)](#b-2), of the cost of carrying out the activities under [subsection (d)](#d).
- (B) **Determination of allotment—** In making allotments under [subparagraph (A)](#b-1-A), the [Secretary](/usc/20/1003.md?p=17) shall consider the following:
- (i) **Continuation of award—** Except as provided in [clause (ii)](#b-1-B-ii), if a [State](/usc/20/1003.md?p=21-A) continues to meet the specifications established in such [State](/usc/20/1003.md?p=21-A)’s application under [subsection (c)](#c), the [Secretary](/usc/20/1003.md?p=17) shall make an allotment to such [State](/usc/20/1003.md?p=21-A) that is not less than the allotment made to such [State](/usc/20/1003.md?p=21-A) for the previous fiscal year.
- (ii) **Special continuation and transition rule—** If a [State](/usc/20/1003.md?p=21-A) that applied for and received an allotment under this section for fiscal year 2010 pursuant to [subsection (j)](#j) meets the specifications established in the [State](/usc/20/1003.md?p=21-A)’s application under [subsection (c)](#c) for fiscal year 2011, then the [Secretary](/usc/20/1003.md?p=17) shall make an allotment to such [State](/usc/20/1003.md?p=21-A) for fiscal year 2011 that is not less than the allotment made pursuant to [subsection (j)](#j) to such [State](/usc/20/1003.md?p=21-A) for fiscal year 2010 under this section (as this section was in effect on the day before August 14, 2008).
- (iii) **Priority—** The [Secretary](/usc/20/1003.md?p=17) shall give priority in making allotments to [States](/usc/20/1003.md?p=21-A) that meet the requirements described in [paragraph (2)(B)(ii)](#b-2-B-ii).
- (2) **Federal share—**
- (A) **In general—** The Federal share of the cost of carrying out the activities under [subsection (d)](#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)](#d) shall be 57 percent if a [State](/usc/20/1003.md?p=21-A) applies for an allotment under this section in partnership with any number of degree-granting institutions of higher education in the [State](/usc/20/1003.md?p=21-A) whose combined full-time enrollment represents less than a majority of all students attending institutions of higher education in the [State](/usc/20/1003.md?p=21-A), and—
- (I) philanthropic organizations that are located in, or that provide funding in, the [State](/usc/20/1003.md?p=21-A); or
- (II) private corporations that are located in, or that do business in, the [State](/usc/20/1003.md?p=21-A).
- (ii) The Federal share of the cost of carrying out the activities under [subsection (d)](#d) shall be 66.66 percent if a [State](/usc/20/1003.md?p=21-A) applies for an allotment under this section in partnership with any number of degree-granting institutions of higher education in the [State](/usc/20/1003.md?p=21-A) whose combined full-time enrollment represents a majority of all students attending institutions of higher education in the [State](/usc/20/1003.md?p=21-A), and—
- (I) philanthropic organizations that are located in, or that provide funding in, the [State](/usc/20/1003.md?p=21-A); or
- (II) private corporations that are located in, or that do business in, the [State](/usc/20/1003.md?p=21-A).
- (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](/usc/20/4702.md?p=2); or
- (bb) transportation passes; and
- (II) helps a student meet the [cost of attendance](/usc/20/1087ll.md?p=a) at an [institution of higher education](/usc/20/1001.md?p=a).
- (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)](#b-2-C-ii) shall not be considered an asset or income of the student or the student’s [parent](/usc/20/1021.md?p=16).
- (c) **Application for allotment—**
- (1) **In general—**
- (A) **Submission—** A [State](/usc/20/1003.md?p=21-A) that desires to receive an allotment under this section on behalf of a partnership described in [paragraph (3)](#c-3) shall submit an application to the [Secretary](/usc/20/1003.md?p=17) at such time, in such manner, and containing such information as the [Secretary](/usc/20/1003.md?p=17) may require.
- (B) **Content—** An application submitted under [subparagraph (A)](#c-1-A) shall include the following:
- (i) A description of the [State](/usc/20/1003.md?p=21-A)’s plan for using the allotted [funds](/usc/20/4702.md?p=3).
- (ii) An assurance that the [State](/usc/20/1003.md?p=21-A) will provide matching [funds](/usc/20/4702.md?p=3), in cash or in kind, from [State](/usc/20/1003.md?p=21-A), institutional, philanthropic, or private [funds](/usc/20/4702.md?p=3), of not less than 33.33 percent of the cost of carrying out the activities under [subsection (d)](#d). The [State](/usc/20/1003.md?p=21-A) shall specify the methods by which matching [funds](/usc/20/4702.md?p=3) will be paid. A [State](/usc/20/1003.md?p=21-A) that uses non-Federal [funds](/usc/20/4702.md?p=3) to create or expand partnerships with entities described in [subsection (a)(1)](#a-1), in which such entities match [State](/usc/20/1003.md?p=21-A) [funds](/usc/20/4702.md?p=3) for student scholarships, may apply such matching [funds](/usc/20/4702.md?p=3) from such entities toward fulfilling the [State](/usc/20/1003.md?p=21-A)’s matching obligation under this clause.
- (iii) An assurance that the [State](/usc/20/1003.md?p=21-A) will use [funds](/usc/20/4702.md?p=3) provided under this section to supplement, and not supplant, Federal and [State](/usc/20/1003.md?p=21-A) [funds](/usc/20/4702.md?p=3) 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](/usc/20/1003.md?p=21-A) or that there is a plan to make such programs widely available.
- (v) A description of the organizational structure that the [State](/usc/20/1003.md?p=21-A) has in place to administer the activities under [subsection (d)](#d), including a description of how the [State](/usc/20/1003.md?p=21-A) will compile information on degree completion of students receiving grants under this section.
- (vi) A description of the steps the [State](/usc/20/1003.md?p=21-A) will take to ensure that students who receive grants under this section persist to degree completion.
- (vii) An assurance that the [State](/usc/20/1003.md?p=21-A) has a method in place, such as acceptance of the automatic zero student aid index determination described in [section 1087ss(c)](/usc/20/1087ss.md)[^1] of this title, to identify eligible [low-income students](/usc/20/1161a.md?p=b-1) and award [State](/usc/20/1003.md?p=21-A) grant aid to such students.
- (viii) An assurance that the [State](/usc/20/1003.md?p=21-A) will provide notification to eligible [low-income students](/usc/20/1161a.md?p=b-1) that grants under this section are—
- (I) Leveraging Educational Assistance Partnership Grants; and
- (II) funded by the Federal Government and the [State](/usc/20/1003.md?p=21-A), and, where applicable, other contributing partners.
- (2) **State agency—** The [State](/usc/20/1003.md?p=21-A) agency that submits an application for a [State](/usc/20/1003.md?p=21-A) under [section 1070c–2(a) of this title](/usc/20/1070c–2.md?p=a) shall be the same [State](/usc/20/1003.md?p=21-A) agency that submits an application under [paragraph (1)](#c-1) for such [State](/usc/20/1003.md?p=21-A).
- (3) **Partnership—** In applying for an allotment under this section, the [State](/usc/20/1003.md?p=21-A) agency shall apply for the allotment in partnership with—
- (A) not less than one public and one private degree-granting [institution of higher education](/usc/20/1001.md?p=a) that are located in the [State](/usc/20/1003.md?p=21-A), if applicable;
- (B) new or existing early information and intervention, mentoring, or outreach programs located in the [State](/usc/20/1003.md?p=21-A); and
- (C) not less than one—
- (i) philanthropic organization located in, or that provides funding in, the [State](/usc/20/1003.md?p=21-A); or
- (ii) private corporation located in, or that does business in, the [State](/usc/20/1003.md?p=21-A).
- (4) **Roles of partners—**
- (A) **State agency—** A [State](/usc/20/1003.md?p=21-A) 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](/usc/20/4702.md?p=3), and coordinate activities among partners;
- (III) encourage each [institution of higher education](/usc/20/1001.md?p=a) in the [State](/usc/20/1003.md?p=21-A) to participate in the partnership;
- (IV) make determinations and early notifications of assistance as described under [subsection (d)(2)](#d-2); and
- (V) annually report to the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1001.md?p=a) 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](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=21-A) in the identification of eligible students and the dissemination of early notifications of assistance as agreed to with the [State](/usc/20/1003.md?p=21-A) 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](/usc/20/4702.md?p=3) for grants for access and persistence for participating students, or provide [funds](/usc/20/4702.md?p=3) or support for early information and intervention, mentoring, or outreach programs.
- (d) **Authorized activities—**
- (1) **In general—**
- (A) **Establishment of partnership—** Each [State](/usc/20/1003.md?p=21-A) receiving an allotment under this section shall use the [funds](/usc/20/4702.md?p=3) to establish a partnership to award grants for access and persistence to eligible [low-income students](/usc/20/1161a.md?p=b-1) 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](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=21-A) where the student resides that are of the same type of institution as the [institution of higher education](/usc/20/1001.md?p=a) the student attends; minus
- (ii) other Federal and [State](/usc/20/1003.md?p=21-A) aid the student receives.
- (C) **Special rules—**
- (i) **Partnership institutions—** A [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=21-A) provides grants through another program under this subpart to students attending institutions of higher education located in another [State](/usc/20/1003.md?p=21-A), grants awarded under this section may be used at institutions of higher education located in another [State](/usc/20/1003.md?p=21-A).
- (2) **Early notification—**
- (A) **In general—** Each [State](/usc/20/1003.md?p=21-A) receiving an allotment under this section shall annually notify [low-income students](/usc/20/1161a.md?p=b-1) in grades seven through 12 in the [State](/usc/20/1003.md?p=21-A), and their families, of their potential eligibility for student financial assistance, including an access and persistence grant, to attend an [institution of higher education](/usc/20/1001.md?p=a).
- (B) **Content of notice—** The notice under [subparagraph (A)](#d-2-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](/usc/20/1161a.md?p=b-1) 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](/usc/20/1003.md?p=21-A) 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)](#d-3);
- (bb) graduate from [secondary school](/usc/20/1003.md?p=16); and
- (cc) enroll at an [institution of higher education](/usc/20/1001.md?p=a)—
- (AA) that is a partner in the partnership; or
- (BB) with respect to which attendance is permitted under [subsection (d)(1)(C)(ii)](#d-1-C-ii);
- (VI) information on any additional requirements (such as a student pledge detailing student responsibilities) that the [State](/usc/20/1003.md?p=21-A) 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 [section 1090(a) of this title](/usc/20/1090.md?p=a) to be eligible for such grant and assistance from other Federal and [State](/usc/20/1003.md?p=21-A) financial aid programs; and
- (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](/usc/20/1001.md?p=a) that is a partner in the partnership or qualifies under [subsection (d)(1)(C)(ii)](#d-1-C-ii);
- (II) annual Federal and [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1001.md?p=a).
- (3) **Eligibility—** In determining which students are eligible to receive grants for access and persistence, the [State](/usc/20/1003.md?p=21-A) shall ensure that each such student complies with the following subparagraph [(A)](#d-3-A) or [(B)](#d-3-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](/usc/20/1003.md?p=21-A)’s approved criteria in [section 1070c–2(b)(4) of this title](/usc/20/1070c–2.md?p=b-4).
- (ii) Qualifies for the [State](/usc/20/1003.md?p=21-A)’s maximum undergraduate award, as authorized under [section 1070c–2(b) of this title](/usc/20/1070c–2.md?p=b).
- (iii) Is participating in, or has participated in, a Federal, [State](/usc/20/1003.md?p=21-A), institutional, or community early information and intervention, mentoring, or outreach program, as recognized by the [State](/usc/20/1003.md?p=21-A) 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)](#d-5).
- (4) **Grant award—** Once a student, including those students who have received early notification under [paragraph (2)](#d-2) from the [State](/usc/20/1003.md?p=21-A), 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](/usc/20/1003.md?p=21-A) form, and is determined eligible by the [State](/usc/20/1003.md?p=21-A) under [paragraph (3)](#d-3), the [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1001.md?p=a).
- (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 [section 1091(c) of this title](/usc/20/1091.md?p=c), and remains financially eligible as determined by the [State](/usc/20/1003.md?p=21-A), except that the [State](/usc/20/1003.md?p=21-A) may impose reasonable time limits to degree completion.
- (e) **Administrative cost allowance—** A [State](/usc/20/1003.md?p=21-A) that receives an allotment under this section may reserve not more than two percent of the [funds](/usc/20/4702.md?p=3) made available annually through the allotment for [State](/usc/20/1003.md?p=21-A) administrative functions required to carry out this section.
- (f) **Statutory and regulatory relief for institutions of higher education—** The [Secretary](/usc/20/1003.md?p=17) may grant, upon the request of an [institution of higher education](/usc/20/1001.md?p=a) that is in a partnership described in [subsection (b)(2)(B)(ii)](#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](/usc/20/1003.md?p=21-A) receiving an allotment under this section for a fiscal year shall provide the [Secretary](/usc/20/1003.md?p=17) with an assurance that the aggregate amount expended per student or the aggregate expenditures by the [State](/usc/20/1003.md?p=21-A), from [funds](/usc/20/4702.md?p=3) derived from non-Federal sources, for the authorized activities described in [subsection (d)](#d) for the preceding fiscal year were not less than the amount expended per student or the aggregate expenditure by the [State](/usc/20/1003.md?p=21-A) for the activities for the second preceding fiscal year.
- (i) **Special rule—** Notwithstanding [subsection (h)](#h), for purposes of determining a [State](/usc/20/1003.md?p=21-A)’s share of the cost of the authorized activities described in [subsection (d)](#d), the [State](/usc/20/1003.md?p=21-A) shall consider only those expenditures from non-Federal sources that exceed the [State](/usc/20/1003.md?p=21-A)’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](/usc/20/1003.md?p=17) shall continue to award grants under section 1070c–3a of this title as such section existed on the day before August 14, 2008, to [States](/usc/20/1003.md?p=21-A) that choose to apply for grants under such predecessor section.
- (k) **Reports—** Not later than three years after August 14, 2008, and annually thereafter, the [Secretary](/usc/20/1003.md?p=17) shall submit a report describing the activities and the impact of the partnerships under this section to the [authorizing committees](/usc/20/1003.md?p=1).
# §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](/usc/20/1001.md?p=a), through formal or informal consultation with local [nonprofit](/usc/20/1003.md?p=13), governmental, and community-based organizations, and which—
- (1) are designed to improve the quality of life for community residents, particularly [low-income individuals](/usc/20/1059e.md?p=b-4), 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.
# [§§1070d to 1070d–1d. Repealed. Pub. L. 102–325, title IV, § 402(a)(1), July 23, 1992, 106 Stat. 482 — repealed]
# §1070d–2. Maintenance and expansion of existing programs
- (a) **Program authority—** The [Secretary](/usc/20/1003.md?p=17) shall maintain and expand existing secondary and postsecondary [high school](/usc/20/2302.md?p=25) equivalency program and college assistance migrant program projects located at institutions of higher education or at private [nonprofit](/usc/20/1003.md?p=13) 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](/usc/20/2302.md?p=25) 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](/usc/20/5802.md?p=a-11) attendance in the [State](/usc/20/1003.md?p=21-A) in which such persons reside and are not enrolled in [school](/usc/20/5802.md?p=a-11);
- (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 [[20 U.S.C. 6391](/usc/20/6391.md) et seq.] or [section 3222 of title 29](/usc/29/3222.md); and
- (C) who lack a [high school](/usc/20/2302.md?p=25) 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](/usc/20/1003.md?p=21-A) in which the project is located for [high school](/usc/20/2302.md?p=25) 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](/usc/20/2302.md?p=25) 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 [[20 U.S.C. 6391](/usc/20/6391.md) et seq.] or [section 3222 of title 29](/usc/29/3222.md), and who meet the minimum qualifications for attendance at a college or university;
- (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](/usc/20/4702.md?p=2); 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](/usc/20/956.md?p=f-5-E) will coordinate the project, to the extent feasible, with other local, [State](/usc/20/1003.md?p=21-A), 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](/usc/20/1003.md?p=17) shall award grants for a 5-year period. For the purpose of making grants under this subpart, the [Secretary](/usc/20/1003.md?p=17) shall consider the prior experience of service delivery under the particular project for which [funds](/usc/20/4702.md?p=3) are sought by each [applicant](/usc/20/3982.md?p=1). Such prior experience shall be awarded the same level of consideration given this factor for [applicants](/usc/20/3982.md?p=1) for programs in accordance with [section 1070a–11(c)(2) of this title](/usc/20/1070a–11.md?p=c-2).
- (f) **Minimum allocations—** The [Secretary](/usc/20/1003.md?p=17) shall not allocate an amount less than—
- (1) $180,000 for each project under the [high school](/usc/20/2302.md?p=25) 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)](#i), the [Secretary](/usc/20/1003.md?p=17)—
- (1) may reserve not more than a total of ½ of one percent for outreach activities, technical assistance, and [professional development](/usc/20/1021.md?p=19) programs relating to the programs under [subsection (a)](#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](/usc/20/2302.md?p=25) 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](/usc/20/2302.md?p=25) 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](/usc/20/4702.md?p=3) to the [high school](/usc/20/2302.md?p=25) 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](/usc/20/1003.md?p=17) shall—
- (1) annually collect data on persons receiving services authorized under this subpart regarding such persons’ rates of [secondary school](/usc/20/1003.md?p=16) 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](/usc/20/1003.md?p=1) a report based on the most recently available data under [paragraph (1)](#h-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.
# §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.
# [§1070d–32. Repealed. Pub. L. 102–325, title IV, § 406(a), July 23, 1992, 106 Stat. 508 — repealed]
# §1070d–33. Scholarships authorized
- (a) **Program authority—** The [Secretary](/usc/20/1003.md?p=17) is authorized, in accordance with the provisions of this subpart, to make grants to [States](/usc/20/1003.md?p=21-A) to enable the [States](/usc/20/1003.md?p=21-A) 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](/usc/20/1001.md?p=a) eligible to participate in any programs assisted under this subchapter. The [State educational agency](/usc/20/1003.md?p=20) administering the program in a [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=17) shall identify to each [State educational agency](/usc/20/1003.md?p=20) the number of scholarships available to that [State](/usc/20/1003.md?p=21-A) under [section 1070d–34(b) of this title](/usc/20/1070d–34.md?p=b) that are attributable to such excess; and
- (2) the [State educational agency](/usc/20/1003.md?p=20) 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](/usc/20/1001.md?p=a).
- (d) **Byrd Scholars—** Individuals awarded scholarships under this subpart shall be known as “Byrd Scholars”.
# §1070d–34. Allocation among States
- (a) **Allocation formula—** From the sums appropriated pursuant to the authority of [section 1070d–41 of this title](/usc/20/1070d–41.md) for any fiscal year, the [Secretary](/usc/20/1003.md?p=17) shall allocate to each [State](/usc/20/1003.md?p=21-A) that has an agreement under [section 1070d–35 of this title](/usc/20/1070d–35.md) an amount equal to $1,500 multiplied by the number of scholarships determined by the [Secretary](/usc/20/1003.md?p=17) to be available to such [State](/usc/20/1003.md?p=21-A) in accordance with [subsection (b)](#b).
- (b) **Number of scholarships available—** The number of scholarships to be made available in a [State](/usc/20/1003.md?p=21-A) for any fiscal year shall bear the same ratio to the number of scholarships made available to all [States](/usc/20/1003.md?p=21-A) as the [State](/usc/20/1003.md?p=21-A)’s population ages 5 through 17 bears to the population ages 5 through 17 in all the [States](/usc/20/1003.md?p=21-A), except that not less than 10 scholarships shall be made available to any [State](/usc/20/1003.md?p=21-A).
- (c) **Use of census data—** For the purpose of this section, the population ages 5 through 17 in a [State](/usc/20/1003.md?p=21-A) and in all the [States](/usc/20/1003.md?p=21-A) shall be determined by the most recently available data, satisfactory to the [Secretary](/usc/20/1003.md?p=17), from the Bureau of the Census.
- (d) **Consolidation by Insular Areas prohibited—** Notwithstanding [section 1469a of title 48](/usc/48/1469a.md), [funds](/usc/20/4702.md?p=3) allocated under this part to an Insular Area described in that section shall be deemed to be direct payments to classes of individuals, and the Insular Area may not consolidate such [funds](/usc/20/4702.md?p=3) with other [funds](/usc/20/4702.md?p=3) received by the Insular Area from any [department](/usc/20/1003.md?p=4) or agency of the United States Government.
- (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](/usc/20/1003.md?p=21-B) 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](/usc/20/1003.md?p=21-B).
- (2) **Termination of eligibility—** A student from the [Freely Associated States](/usc/20/1003.md?p=21-B) shall not be eligible to receive a scholarship under this subpart after September 30, 2004.
# §1070d–35. Agreements
The [Secretary](/usc/20/1003.md?p=17) shall enter into an agreement with each [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=20) will administer the scholarship program authorized by this subpart in the [State](/usc/20/1003.md?p=21-A);
- (2) the [State educational agency](/usc/20/1003.md?p=20) will comply with the eligibility and selection provisions of this subpart;
- (3) the [State educational agency](/usc/20/1003.md?p=20) will conduct outreach activities to publicize the availability of scholarships under this subpart to all eligible students in the [State](/usc/20/1003.md?p=21-A), 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](/usc/20/1003.md?p=20) will pay to each individual in the [State](/usc/20/1003.md?p=21-A) who is awarded a scholarship under this subpart $1,500.
# §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](/usc/20/1003.md?p=16) (or a home [school](/usc/20/5802.md?p=a-11), whether treated as a home [school](/usc/20/5802.md?p=a-11) or a private [school](/usc/20/5802.md?p=a-11) under [State](/usc/20/1003.md?p=21-A) law) or have the equivalent of a certificate of graduation as recognized by the [State](/usc/20/1003.md?p=21-A) in which the student resides and must have been admitted for enrollment at an [institution of higher education](/usc/20/1001.md?p=a).
- (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.
# §1070d–37. Selection of scholars
- (a) **Establishment of criteria—** The [State educational agency](/usc/20/1003.md?p=20) is authorized to establish the criteria for the selection of scholars under this subpart.
- (b) **Adoption of procedures—** The [State educational agency](/usc/20/1003.md?p=20) shall adopt selection procedures designed to ensure an equitable geographic distribution of awards within the [State](/usc/20/1003.md?p=21-A) (and in the case of the Federated [States](/usc/20/1003.md?p=21-A) 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)](#a) and [(b)](#b), the [State educational agency](/usc/20/1003.md?p=20) shall consult with [school](/usc/20/5802.md?p=a-11) administrators, [school](/usc/20/5802.md?p=a-11) [boards](/usc/20/4702.md?p=2), teachers, counselors, and [parents](/usc/20/1021.md?p=16).
- (d) **Timing of selection—** The selection process shall be completed, and the awards made, prior to the end of each [secondary school](/usc/20/1003.md?p=16) [academic year](/usc/20/1088.md?p=a-2-A).
# §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](/usc/20/1088.md?p=a-2-A) 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](/usc/20/1003.md?p=20) 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](/usc/20/1001.md?p=a).
# [§1070d–39. Repealed. Pub. L. 102–325, title IV, § 406(g)(1), July 23, 1992, 106 Stat. 509 — repealed]
# §1070d–40. Construction of needs provisions
Except as provided in [section 1087kk of this title](/usc/20/1087kk.md), nothing in this subpart, or any other Act, shall be construed to permit the receipt of a scholarship under this subpart to be counted for any needs test in connection with the awarding of any grant or the making of any loan under this chapter or any other provision of Federal law relating to educational assistance.
# §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.
# §1070e. Child care access means parents in school
- (a) **Purpose—** The purpose of this section is to support the participation of low-income [parents](/usc/20/1021.md?p=16) in postsecondary education through the provision of campus-based child care services.
- (b) **Program authorized—**
- (1) **Authority—** The [Secretary](/usc/20/1003.md?p=17) may award grants to institutions of higher education to assist the institutions in providing campus-based child care services to [low-income students](#b-7).
- (2) **Amount of grants—**
- (A) **In general—** The amount of a grant awarded to an [institution of higher education](/usc/20/1001.md?p=a) under this section for a fiscal year shall not exceed 1 percent of the total amount of all Federal Pell Grant [funds](/usc/20/4702.md?p=3) awarded to students enrolled at the [institution of higher education](/usc/20/1001.md?p=a) for the preceding fiscal year.
- (B) **Minimum—**
- (i) **In general—** Except as provided in [clause (ii)](#b-2-B-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)](#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](/usc/20/1003.md?p=17) shall award a grant under this section for a period of 4 years.
- (B) **Payments—** Subject to [subsection (e)(2)](#e-2), the [Secretary](/usc/20/1003.md?p=17) shall make annual grant payments under this section.
- (4) **Eligible institutions—** An [institution of higher education](/usc/20/1001.md?p=a) shall be eligible to receive a grant under this section for a fiscal year if the total amount of all Federal Pell Grant [funds](/usc/20/4702.md?p=3) awarded to students enrolled at the [institution of higher education](/usc/20/1001.md?p=a) 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](/usc/20/4702.md?p=3) under this section shall be used by an [institution of higher education](/usc/20/1001.md?p=a) to support or establish a campus-based child care program primarily serving the needs of [low-income students](#b-7) enrolled at the [institution of higher education](/usc/20/1001.md?p=a). Grant [funds](/usc/20/4702.md?p=3) under this section may be used to provide before and after [school](/usc/20/5802.md?p=a-11) services to the extent necessary to enable [low-income students](#b-7) enrolled at the [institution of higher education](/usc/20/1001.md?p=a) to pursue postsecondary education.
- (6) **Construction—** Nothing in this section shall be construed to prohibit an [institution of higher education](/usc/20/1001.md?p=a) that receives grant [funds](/usc/20/4702.md?p=3) 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](/usc/20/1088.md?p=a-1) for which the determination is made; or
- (B) who would otherwise be eligible to receive a Federal Pell Grant for the [award year](/usc/20/1088.md?p=a-1) for which the determination is made, except that the student fails to meet the requirements of—
- (i) [section 1070a(c)(1) of this title](/usc/20/1070a.md?p=c-1) because the student is enrolled in a graduate or first professional course of study; or
- (ii) [section 1091(a)(5) of this title](/usc/20/1091.md?p=a-5) because the student is in the United States for a temporary purpose.
- (8) **Publicity—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1001.md?p=a) desiring a grant under this section shall submit an application to the [Secretary](/usc/20/1003.md?p=17) at such time, in such manner, and accompanied by such information as the [Secretary](/usc/20/1003.md?p=17) may require. Each application shall—
- (1) demonstrate that the institution is an [eligible institution](/usc/20/1066a.md?p=1) described in [subsection (b)(4)](#b-4);
- (2) specify the amount of [funds](/usc/20/4702.md?p=3) requested;
- (3) demonstrate the need of [low-income students](#b-7) 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](/usc/20/4702.md?p=3) 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](#b-7) 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](/usc/20/1021.md?p=16) who are not [low-income students](#b-7), and accessing [foundation](/usc/20/4702.md?p=1), 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](#b-7) 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](/usc/20/1003.md?p=8) at the institution, and the needs of the [parents](/usc/20/1021.md?p=16) 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](#b-7) with child care services;
- (B) specify any measures the institution will take to assist [low-income students](#b-7) 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](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=17) 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](/usc/20/1021.md?p=16) pursuing postsecondary education at the institution.
- (e) **Reporting requirements; continuing eligibility—**
- (1) **Reporting requirements—**
- (A) **Reports—** Each [institution of higher education](/usc/20/1001.md?p=a) receiving a grant under this section shall report to the [Secretary](/usc/20/1003.md?p=17) 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](#b-7) 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](/usc/20/1003.md?p=17) shall make continuation awards under this section to an [institution of higher education](/usc/20/1001.md?p=a) only if the [Secretary](/usc/20/1003.md?p=17) determines, on the basis of the reports submitted under [paragraph (1)](#e-1), that the institution is making a good faith effort to ensure that [low-income students](#b-7) at the institution have access to affordable, quality child care services.
- (f) **Construction—** No [funds](/usc/20/4702.md?p=3) provided under this section shall be used for construction, except for minor renovation or repair to meet applicable [State](/usc/20/1003.md?p=21-A) 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.
# [§§1070f to 1070f–6. Repealed. Pub. L. 110–315, title IV, § 411, Aug. 14, 2008, 122 Stat. 3226 — repealed]
# §1070g. Definitions
For the purposes of this subpart:
- (1) **Eligible institution—** The term “[eligible institution](/usc/20/1066a.md?p=1)” means an [institution of higher education](/usc/20/1001.md?p=a), as defined in [section 1002 of this title](/usc/20/1002.md), that the [Secretary](/usc/20/1003.md?p=17) determines—
- (A) provides high quality teacher preparation and [professional development](/usc/20/1021.md?p=19) 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](/usc/20/1003.md?p=21-A) in order for a [teacher candidate](#3) to receive a professional certification or licensing credential that is required for employment as a teacher in an [elementary school](/usc/20/1003.md?p=9) or [secondary school](/usc/20/1003.md?p=16) in that [State](/usc/20/1003.md?p=21-A), except that such term shall not include any program of instruction offered by an [eligible institution](/usc/20/1066a.md?p=1) 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 [section 1070g–2(a)(2) of this title](/usc/20/1070g–2.md?p=a-2).
# §1070g–1. Program established
- (a) **Program authority—**
- (1) **Payments required—** The [Secretary](/usc/20/1003.md?p=17) shall pay to each [eligible institution](/usc/20/1066a.md?p=1) such sums as may be necessary to pay to each [teacher candidate](/usc/20/1070g.md?p=3) who files an application and agreement in accordance with [section 1070g–2 of this title](/usc/20/1070g–2.md), and who qualifies under paragraph (2) of [section 1070g–2(a) of this title](/usc/20/1070g–2.md?p=a), a TEACH Grant in the amount of $4,000 for each year during which that [teacher candidate](/usc/20/1070g.md?p=3) is in attendance at the institution.
- (2) **References—** Grants made under [paragraph (1)](#a-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](/usc/20/4702.md?p=3) provided to an [eligible institution](/usc/20/1066a.md?p=1) under [subsection (a)](#a) shall be advanced to the [eligible institution](/usc/20/1066a.md?p=1) 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](/usc/20/1070g.md?p=3) until such time as the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) to place an institution on a reimbursement system of payment.
- (2) **Direct payment—** Nothing in this section shall be interpreted to prohibit the [Secretary](/usc/20/1003.md?p=17) from paying directly to [teacher candidates](/usc/20/1070g.md?p=3), in advance of the beginning of the academic term, an amount for which [teacher candidates](/usc/20/1070g.md?p=3) are eligible, in cases where the [eligible institution](/usc/20/1066a.md?p=1) elects not to participate in the disbursement system required by [paragraph (1)](#b-1).
- (3) **Distribution of grants to teacher candidates—** Payments under this subpart shall be made, in accordance with regulations promulgated by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1070g.md?p=3)’s account shall be limited to tuition and fees and, in the case of institutionally-owned housing, room and [board](/usc/20/4702.md?p=2). The [teacher candidate](/usc/20/1070g.md?p=3) may elect to have the institution provide other such goods and services by crediting the [teacher candidate](/usc/20/1070g.md?p=3)’s account.
- (c) **Reductions in amount—**
- (1) **Part-time students—** In any case where a [teacher candidate](/usc/20/1070g.md?p=3) attends an [eligible institution](/usc/20/1066a.md?p=1) on less than a full-time basis (including a [teacher candidate](/usc/20/1070g.md?p=3) who attends an [eligible institution](/usc/20/1066a.md?p=1) on less than a half-time basis) during any year, the amount of a grant under this subpart for which that [teacher candidate](/usc/20/1070g.md?p=3) is eligible shall be reduced in proportion to the degree to which that [teacher candidate](/usc/20/1070g.md?p=3) is not attending on a full-time basis, in accordance with a schedule of reductions established by the [Secretary](/usc/20/1003.md?p=17) 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 [section 1089 of this title](/usc/20/1089.md).
- (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](/usc/20/1087ll.md?p=a) (as defined in [section 1087ll](/usc/20/1087ll.md) of this title) at the [eligible institution](/usc/20/1066a.md?p=1) at which that [teacher candidate](/usc/20/1070g.md?p=3) is in attendance.
- (d) **Period of eligibility for grants—**
- (1) **Undergraduate and post-baccalaureate students—** The period during which an undergraduate or [post-baccalaureate](/usc/20/1070g.md?p=2) student may receive grants under this subpart shall be the period required for the completion of the first undergraduate baccalaureate or [post-baccalaureate](/usc/20/1070g.md?p=2) course of study being pursued by the [teacher candidate](/usc/20/1070g.md?p=3) at the [eligible institution](/usc/20/1066a.md?p=1) at which the [teacher candidate](/usc/20/1070g.md?p=3) is in attendance, except that—
- (A) any period during which the [teacher candidate](/usc/20/1070g.md?p=3) is enrolled in a noncredit or remedial course of study as described in [paragraph (3)](#d-3) shall not be counted for the purpose of this paragraph; and
- (B) the total amount that a [teacher candidate](/usc/20/1070g.md?p=3) may receive under this subpart for undergraduate or [post-baccalaureate](/usc/20/1070g.md?p=2) 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](/usc/20/1070g.md?p=3) at the [eligible institution](/usc/20/1066a.md?p=1) at which the [teacher candidate](/usc/20/1070g.md?p=3) is in attendance, except that the total amount that a [teacher candidate](/usc/20/1070g.md?p=3) 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](/usc/20/1066a.md?p=1) to be necessary to help the [teacher candidate](/usc/20/1070g.md?p=3) be prepared for the pursuit of a first undergraduate baccalaureate or [post-baccalaureate](/usc/20/1070g.md?p=2) degree or certificate or, in the case of courses in English language instruction, to be necessary to enable the [teacher candidate](/usc/20/1070g.md?p=3) 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](/usc/20/1070g.md?p=3) is enrolled.
# §1070g–2. Applications; eligibility
- (a) **Applications; demonstration of eligibility—**
- (1) **Filing required—** The [Secretary](/usc/20/1003.md?p=17) shall periodically set dates by which [teacher candidates](/usc/20/1070g.md?p=3) shall file applications for grants under this subpart. Each [teacher candidate](/usc/20/1070g.md?p=3) desiring a grant under this subpart for any year shall file an application containing such information and assurances as the [Secretary](/usc/20/1003.md?p=17) may determine necessary to enable the [Secretary](/usc/20/1003.md?p=17) to carry out the functions and responsibilities of this subpart.
- (2) **Demonstration of TEACH Grant eligibility—** Each application submitted under [paragraph (1)](#a-1) shall contain such information as is necessary to demonstrate that—
- (A) if the [applicant](/usc/20/3982.md?p=1) is an enrolled student—
- (i) the student is an eligible student for purposes of [section 1091 of this title](/usc/20/1091.md);
- (ii) the student—
- (I) has a grade point average that is determined, under standards prescribed by the [Secretary](/usc/20/1003.md?p=17), 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](/usc/20/1003.md?p=16) 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](/usc/20/1070g.md?p=2), or graduate [school](/usc/20/5802.md?p=a-11) 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](/usc/20/3982.md?p=1) is a current or prospective teacher applying for a grant to obtain a graduate degree—
- (i) the [applicant](/usc/20/3982.md?p=1) 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](/usc/20/3982.md?p=1) 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)](#a) shall contain or be accompanied by an agreement by the [applicant](/usc/20/3982.md?p=1) that—
- (1) the [applicant](/usc/20/3982.md?p=1) will—
- (A) serve as a full-time teacher for a total of not less than 4 [academic years](/usc/20/1088.md?p=a-2-A) within 8 years after completing the course of study for which the [applicant](/usc/20/3982.md?p=1) received a TEACH Grant under this subpart (referred to in this section as the “service obligation window”);
- (B) teach in a [school](/usc/20/5802.md?p=a-11) described in [section 1087ee(a)(2)(A) of this title](/usc/20/1087ee.md?p=a-2-A);
- (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](/usc/20/1003.md?p=21-A) government, or [local educational agency](/usc/20/1003.md?p=11), and approved by the [Secretary](/usc/20/1003.md?p=17);
- (D) submit a certification of employment by the chief administrative [officer](/usc/20/1094.md?p=i-5) of the [school](/usc/20/5802.md?p=a-11) in accordance with [subsection (d)(5)](#d-5); and
- (E) meet all [State](/usc/20/1003.md?p=21-A) 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](/usc/20/3982.md?p=1) 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](/usc/20/3982.md?p=1) will be treated as a loan and collected from the [applicant](/usc/20/3982.md?p=1) in accordance with [subsection (c)](#c) and the regulations thereunder; and
- (3) contains, or is accompanied by, a plain-language disclosure form developed by the [Secretary](/usc/20/1003.md?p=17) 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)](#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](/usc/20/1003.md?p=17) in regulations under this subpart.
- (2) **Reconsideration of conversion decisions—**
- (A) **Request to reconsider—** In any case where the [Secretary](/usc/20/1003.md?p=17) 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)](#b) and has converted the grant into a Federal Direct Unsubsidized Stafford Loan under part D in accordance with [paragraph (1)](#c-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](/usc/20/1003.md?p=17) reconsider such initial determination and may submit additional information to demonstrate satisfaction of the service obligation. Upon receipt of such a request, the [Secretary](/usc/20/1003.md?p=17) 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)](#c-2-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](/usc/20/1003.md?p=17) determines that the reason for such determination was the recipient’s failure to timely submit a certification required under [subsection (b)(1)(D)](#b-1-D) (as in effect on the day before October 13, 2021), an error or processing delay by the [Secretary](/usc/20/1003.md?p=17), a change to the fields considered eligible for fulfillment of the service obligation (as described in [subsection (b)(1)(C)](#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](/usc/20/1003.md?p=17), 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)](#b), the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1088.md?p=e) 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)](#c-2-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)](#c-2-B), the [Secretary](/usc/20/1003.md?p=17) shall, upon such reinstatement—
- (i) extend the time remaining for the recipient to fulfill the service obligation described in [subsection (b)(1)](#b-1) to a period of time equal to—
- (I) 8 years; minus
- (II) the number of full [academic years](/usc/20/1088.md?p=a-2-A) of teaching that the recipient completed prior to the reconversion of the loan to a TEACH Grant under [subparagraph (B)](#c-2-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](/usc/20/1088.md?p=a-2-A) of teaching described in [clause (i)(II)](#c-2-C-i-II) as years that count toward the individual’s service obligation (regardless of whether the TEACH Grant [funds](/usc/20/4702.md?p=3) 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)](#b-1-C-vii), but is no longer so designated, the [grant recipient](/usc/20/956.md?p=f-5-E) may fulfill the service obligation described in [subsection (b)(1)](#b-1) by teaching in that field.
- (2) **Extenuating circumstances—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) shall notify TEACH [grant recipients](/usc/20/956.md?p=f-5-E) not less than once per calendar year regarding how to submit the employment certification under [subsection (b)(1)(D)](#b-1-D) and the recommendations and requirements for submitting that certification under [subsection (d)(5)](#d-5).
- (4) **Qualifying schools and high-need fields—** The [Secretary](/usc/20/1003.md?p=17) shall maintain and annually update a list of qualifying [schools](/usc/20/5802.md?p=a-11) as described in [subsection (b)(1)(B)](#b-1-B), and a list of high-need fields as described in [subsection (b)(1)(C)](#b-1-C) and shall make such lists publicly available on the [Department](/usc/20/1003.md?p=4)’s website in a sortable and searchable format.
- (5) **Submission of employment certification—**
- (A) **Recommended submissions—** The [Secretary](/usc/20/1003.md?p=17) shall notify TEACH [Grant recipients](/usc/20/956.md?p=f-5-E) that the [Department](/usc/20/1003.md?p=4) recommends that TEACH [Grant recipients](/usc/20/956.md?p=f-5-E) submit the employment certification described in [subsection (b)(1)(D)](#b-1-D) as soon as practicable after the completion of each year of service.
- (B) **Required submission—** A TEACH [Grant recipient](/usc/20/956.md?p=f-5-E) shall be required to submit to the [Department](/usc/20/1003.md?p=4) 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](/usc/20/1003.md?p=17) shall notify TEACH [Grant recipients](/usc/20/956.md?p=f-5-E) of the required submission deadlines described in this paragraph.
- (D) **Adjustment of deadline—** The [Secretary](/usc/20/1003.md?p=17) shall adjust the submission deadline described in [subparagraph (B)](#d-5-B) to account for a service obligation window extension.
- (E) **Alternative to certification—** The [Secretary](/usc/20/1003.md?p=17) shall provide an alternative to the certification of employment described in [subsection (b)(1)(D)](#b-1-D) for recipients who cannot obtain such required certification of employment from the chief administrative [officer](/usc/20/1094.md?p=i-5) of the [school](/usc/20/5802.md?p=a-11) because the recipient can demonstrate the [school](/usc/20/5802.md?p=a-11) is no longer in existence or the [school](/usc/20/5802.md?p=a-11) refuses to cooperate.
# §1070g–3. Program period and funding
Beginning on July 1, 2008, there shall be available to the [Secretary](/usc/20/1003.md?p=17) to carry out this subpart, from [funds](/usc/20/4702.md?p=3) not otherwise appropriated, such sums as may be necessary to provide TEACH Grants in accordance with this subpart to each eligible [applicant](/usc/20/3982.md?p=1).
# §1070g–4. Program report
Not later than two years after August 14, 2008, and every two years thereafter, the [Secretary](/usc/20/1003.md?p=17) shall prepare and submit to the [authorizing committees](/usc/20/1003.md?p=1) a report on TEACH grants with respect to the [schools](/usc/20/5802.md?p=a-11) and students served by recipients of such grants. Such report shall take into consideration information related to—
- (1) the number of TEACH [grant recipients](/usc/20/956.md?p=f-5-E);
- (2) the degrees obtained by such recipients;
- (3) the location, including the [school](/usc/20/5802.md?p=a-11), [local educational agency](/usc/20/1003.md?p=11), and [State](/usc/20/1003.md?p=21-A), where the recipients completed the service agreed to under [section 1070g–2(b) of this title](/usc/20/1070g–2.md?p=b) and the subject taught;
- (4) the duration of such service; and
- (5) any other data necessary to conduct such evaluation.
# [§1070h. Repealed. Pub. L. 117–103, div. R, § 103(c)(2), Mar. 15, 2022, 136 Stat. 821 — repealed]
# §1071. Statement of purpose; nondiscrimination; and appropriations authorized
- (a) **Purpose; discrimination prohibited—**
- (1) **Purpose—** The purpose of this part is to enable the [Secretary](/usc/20/1003.md?p=17)—
- (A) to encourage [States](/usc/20/1003.md?p=21-A) and [nonprofit](/usc/20/1003.md?p=13) private institutions and organizations to establish adequate loan insurance programs for students in [eligible institutions](/usc/20/1066a.md?p=1) (as defined in [section 1085 of this title](/usc/20/1085.md)),
- (B) to provide a Federal program of student loan insurance for students or lenders who do not have reasonable access to a [State](/usc/20/1003.md?p=21-A) or private [nonprofit](/usc/20/1003.md?p=13) program of student loan insurance covered by an agreement under [section 1078(b) of this title](/usc/20/1078.md?p=b),
- (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](/usc/20/1003.md?p=21-A) or of a [nonprofit](/usc/20/1003.md?p=13) private institution or organization which meets the requirements of [section 1078(a)(1)(B) of this title](/usc/20/1078.md?p=a-1-B).
- (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](/usc/20/3982.md?p=1) 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](/usc/20/4702.md?p=3) (established by [section 1081 of this title](/usc/20/1081.md)) (A) the sum of $1,000,000, and (B) such further sums, if any, as may become necessary for the adequacy of the student loan insurance [fund](/usc/20/4702.md?p=3),
- (2) there are authorized to be appropriated, for payments under [section 1078 of this title](/usc/20/1078.md) with respect to interest on student loans and for payments under [section 1087 of this title](/usc/20/1087.md), such sums for the fiscal year ending June 30, 1966, and succeeding fiscal years, as may be required therefor,
- (3) there is authorized to be appropriated the sum of $17,500,000 for making advances pursuant to [section 1072 of this title](/usc/20/1072.md) for the reserve [funds](/usc/20/4702.md?p=3) of [State](/usc/20/1003.md?p=21-A) and [nonprofit](/usc/20/1003.md?p=13) private student loan insurance programs,
- (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)](/usc/20/1072.md?p=a) and [(b)](/usc/20/1072.md?p=b) of this title, and (B) such sums as may be necessary for making advances pursuant to [section 1072(c) of this title](/usc/20/1072.md?p=c), for the reserve [funds](/usc/20/4702.md?p=3) of [State](/usc/20/1003.md?p=21-A) and [nonprofit](/usc/20/1003.md?p=13) private student loan insurance programs,
- (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 [section 1078(f) of this title](/usc/20/1078.md?p=f) to [guaranty agencies](/usc/20/1085.md?p=j), and
- (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 [section 1072(c)(7) of this title](/usc/20/1072.md?p=c-7).
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 sections [1077](/usc/20/1077.md) and [1078](/usc/20/1078.md) of this title shall be known as “Federal Stafford Loans”.
- (d) **Termination of authority to make or insure new loans—** Notwithstanding [paragraphs (1) through (6)](#b-1..b-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](/usc/20/4702.md?p=3) 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.
# §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 [section 1071(b) of this title](/usc/20/1071.md?p=b), the [Secretary](/usc/20/1003.md?p=17) is authorized to make advances to any [State](/usc/20/1003.md?p=21-A) with which the [Secretary](/usc/20/1003.md?p=17) has made an agreement pursuant to [section 1078(b) of this title](/usc/20/1078.md?p=b) for the purpose of helping to establish or strengthen the reserve [fund](/usc/20/4702.md?p=3) of the student loan insurance program covered by that agreement. If for any fiscal year a [State](/usc/20/1003.md?p=21-A) does not have a student loan insurance program covered by an agreement made pursuant to [section 1078(b) of this title](/usc/20/1078.md?p=b), and the [Secretary](/usc/20/1003.md?p=17) determines after consultation with the chief executive [officer](/usc/20/1094.md?p=i-5) of that [State](/usc/20/1003.md?p=21-A) that there is no reasonable likelihood that the [State](/usc/20/1003.md?p=21-A) will have such a student loan insurance program for such year, the [Secretary](/usc/20/1003.md?p=17) may make advances for such year for the same purpose to one or more [nonprofit](/usc/20/1003.md?p=13) private institutions or organizations with which the [Secretary](/usc/20/1003.md?p=17) has made an agreement pursuant to [section 1078(b) of this title](/usc/20/1078.md?p=b) in order to enable students in the [State](/usc/20/1003.md?p=21-A) to participate in a program of student loan insurance covered by such an agreement. The [Secretary](/usc/20/1003.md?p=17) may make advances under this subsection both to a [State](/usc/20/1003.md?p=21-A) program (with which he has such an agreement) and to one or more [nonprofit](/usc/20/1003.md?p=13) private institutions or organizations (with which he has such an agreement) in that [State](/usc/20/1003.md?p=21-A) if he determines that such advances are necessary in order that students in each [eligible institution](/usc/20/1066a.md?p=1) have access through such institution to a student loan insurance program which meets the requirements of [section 1078(b)(1) of this title](/usc/20/1078.md?p=b-1).
- (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](/usc/20/4702.md?p=3). 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](/usc/20/4702.md?p=3) 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](/usc/20/4702.md?p=3) pursuant to [State](/usc/20/1003.md?p=21-A) 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)](/usc/20/1078.md?p=c-9-E) or [(F)](/usc/20/1078.md?p=c-9-F) of this title, such unencumbered non-Federal portion shall not be subject to recall, repayment, or recovery by the [Secretary](/usc/20/1003.md?p=17).
- (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 [section 1078(b) of this title](/usc/20/1078.md?p=b) as the [Secretary](/usc/20/1003.md?p=17) determines will best carry out the purpose of this section. Advances made by the [Secretary](/usc/20/1003.md?p=17) under this subsection shall be repaid within such period as the [Secretary](/usc/20/1003.md?p=17) may deem to be appropriate in each case in the light of the maturity and solvency of the reserve [fund](/usc/20/4702.md?p=3) for which the advance was made.
- (b) **Limitations on total advances—**
- (1) **In general—** The total of the advances from the sums appropriated pursuant to paragraph (4)(A) of [section 1071(b) of this title](/usc/20/1071.md?p=b) to [nonprofit](/usc/20/1003.md?p=13) private institutions and organizations for the benefit of students in any [State](/usc/20/1003.md?p=21-A) and to such [State](/usc/20/1003.md?p=21-A) may not exceed an amount which bears the same ratio to such sums as the population of such [State](/usc/20/1003.md?p=21-A) aged 18 to 22, inclusive, bears to the population of all the [States](/usc/20/1003.md?p=21-A) aged 18 to 22 inclusive, but such advances may otherwise be in such amounts as the [Secretary](/usc/20/1003.md?p=17) determines will best achieve the purposes for which they are made. The amount available for advances to any [State](/usc/20/1003.md?p=21-A) shall not be less than $25,000 and any additional [funds](/usc/20/4702.md?p=3) needed to meet this requirement shall be derived by proportionately reducing (but not below $25,000) the amount available for advances to each of the remaining [States](/usc/20/1003.md?p=21-A).
- (2) **Calculation of population—** For the purpose of this subsection, the population aged 18 to 22, inclusive, of each [State](/usc/20/1003.md?p=21-A) and of all the [States](/usc/20/1003.md?p=21-A) shall be determined by the [Secretary](/usc/20/1003.md?p=17) 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 [section 1071(b)(4)(B) of this title](/usc/20/1071.md), the [Secretary](/usc/20/1003.md?p=17) shall advance to each [State](/usc/20/1003.md?p=21-A) which has an agreement with the [Secretary](/usc/20/1003.md?p=17) under [section 1078(c) of this title](/usc/20/1078.md?p=c) with respect to a student loan insurance program, an amount determined in accordance with paragraph (2) of this subsection to be used for the purpose of making payments under the [State](/usc/20/1003.md?p=21-A)’s insurance obligations under such program.
- (2) **Amount of advances—**
- (A) Except as provided in [subparagraph (B)](#c-2-B), the amount to be advanced to each such [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=21-A) pursuant to this subsection at an earlier date; and
- (ii) the amount of the unspent balance of the advances made to a [State](/usc/20/1003.md?p=21-A) pursuant to [subsection (a)](#a).
Notwithstanding [subparagraph (A)](#c-2-A) and the preceding sentence of this subparagraph, but subject to subparagraph (D) of this paragraph, the amount of any advance to a [State](/usc/20/1003.md?p=21-A) described in [paragraph (5)(A)](#c-5-A) for the first year of its eligibility under such paragraph, and the amount of any advance to any [State](/usc/20/1003.md?p=21-A) described in [paragraph (5)(B)](#c-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)](#c-2-B), the unspent balance of the advances made to a [State](/usc/20/1003.md?p=21-A) pursuant to [subsection (a)](#a) shall be that portion of the balance of the [State](/usc/20/1003.md?p=21-A)’s reserve [fund](/usc/20/4702.md?p=3) (remaining at the time of the [State](/usc/20/1003.md?p=21-A)’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](/usc/20/1003.md?p=21-A), pursuant to [subsection (a)](#a), bears to the total of all past contributions to such [reserve funds](#i-5) from all sources (other than interest on investment of any portion of the reserve [fund](/usc/20/4702.md?p=3)) contributed since the date such [State](/usc/20/1003.md?p=21-A) executed an agreement pursuant to [section 1078(b) of this title](/usc/20/1078.md?p=b).
- (D) If the sums appropriated for any fiscal year for paying the amounts determined under subparagraphs [(A)](#c-2-A) and [(B)](#c-2-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](/usc/20/1003.md?p=21-A) which exceeds $50,000; and
- (ii) if further reduction is required, by equally reducing the $50,000 minimum allocation of each [State](/usc/20/1003.md?p=21-A).
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](/usc/20/1003.md?p=21-A)’s insurance obligations.
- (4) **Repayment of advances—** Advances made by the [Secretary](/usc/20/1003.md?p=17) under this subsection shall, subject to [subsection (d)](#d), be repaid within such period as the [Secretary](/usc/20/1003.md?p=17) may deem to be appropriate and shall be deposited in the [fund](/usc/20/4702.md?p=3) established by [section 1081 of this title](/usc/20/1081.md).
- (5) **Limitation on number of advances—** Except as provided in [paragraph (7)](#c-7), advances pursuant to this subsection shall be made to a [State](/usc/20/1003.md?p=21-A)—
- (A) in the case of a [State](/usc/20/1003.md?p=21-A) which is actively carrying on a program under an agreement pursuant to [section 1078(b) of this title](/usc/20/1078.md?p=b) which was entered into before October 12, 1976, upon such date as such [State](/usc/20/1003.md?p=21-A) may request, but not before October 1, 1977, and on the same day of each of the 2 succeeding calendar years after the date so requested; and
- (B) in the case of a [State](/usc/20/1003.md?p=21-A) which enters into an agreement pursuant to [section 1078(b) of this title](/usc/20/1078.md?p=b) on or after October 12, 1976, or which is not actively carrying on a program under an agreement pursuant to such section on such date, upon such date as such [State](/usc/20/1003.md?p=21-A) may request, but not before October 1, 1977, and on the same day of each of the 4 succeeding calendar years after the date so requested of the advance.
- (6) **Payment of advances where no State program—**
- (A) If for any fiscal year a [State](/usc/20/1003.md?p=21-A) does not have a student loan insurance program covered by an agreement made pursuant to [section 1078(b) of this title](/usc/20/1078.md?p=b), and the [Secretary](/usc/20/1003.md?p=17) determines after consultation with the chief executive [officer](/usc/20/1094.md?p=i-5) of that [State](/usc/20/1003.md?p=21-A) that there is no reasonable likelihood that the [State](/usc/20/1003.md?p=21-A) will have such a student loan insurance program for such year, the [Secretary](/usc/20/1003.md?p=17) may make advances pursuant to this subsection for such year for the same purpose to one or more [nonprofit](/usc/20/1003.md?p=13) private institutions or organizations with which he has made an agreement pursuant to [subsection (c)](#c), as well as [subsection (b)](#b), of [section 1078 of this title](/usc/20/1078.md) and subparagraph (B) of this paragraph in order to enable students in that [State](/usc/20/1003.md?p=21-A) to participate in a program of student loan insurance covered by such agreements.
- (B) The [Secretary](/usc/20/1003.md?p=17) may enter into an agreement with a private [nonprofit](/usc/20/1003.md?p=13) institution or organization for the purpose of this paragraph under which such institution or organization—
- (i) agrees to establish within such [State](/usc/20/1003.md?p=21-A) at least one office with sufficient staff to handle written, electronic, and telephone inquiries from students, [eligible lenders](/usc/20/1085.md?p=d-1), and other persons in the [State](/usc/20/1003.md?p=21-A), to encourage maximum commercial lender participation within the [State](/usc/20/1003.md?p=21-A), and to conduct periodic visits to at least the major [eligible lenders](/usc/20/1085.md?p=d-1) within the [State](/usc/20/1003.md?p=21-A);
- (ii) agrees that its insurance will not be denied any student because of his or her choice of [eligible institutions](/usc/20/1066a.md?p=1); and
- (iii) certifies that it is neither an [eligible institution](/usc/20/1066a.md?p=1), nor has any substantial affiliation with an [eligible institution](/usc/20/1066a.md?p=1).
- (7) **Emergency advances—** The [Secretary](/usc/20/1003.md?p=17) is authorized to make advances, on terms and conditions satisfactory to the [Secretary](/usc/20/1003.md?p=17), to a [guaranty agency](/usc/20/1085.md?p=j)—
- (A) in accordance with [section 1078(j) of this title](/usc/20/1078.md?p=j), in order to ensure that the [guaranty agency](/usc/20/1085.md?p=j) shall make loans as the lender-of-last-resort; or
- (B) if the [Secretary](/usc/20/1003.md?p=17) is seeking to terminate the [guaranty agency](/usc/20/1085.md?p=j)’s agreement, or assuming the [guaranty agency](/usc/20/1085.md?p=j)’s functions, in accordance with [section 1078(c)(9)(F)(v) of this title](/usc/20/1078.md?p=c-9-F-v), in order to assist the agency in meeting its immediate cash needs, ensure the uninterrupted payment of claims, or ensure that the [guaranty agency](/usc/20/1085.md?p=j) shall make loans as described in [subparagraph (A)](#c-7-A).
- (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](/usc/20/1003.md?p=17) under this section shall be repaid in accordance with this subsection and shall be deposited in the [fund](/usc/20/4702.md?p=3) established by [section 1081 of this title](/usc/20/1081.md). The [Secretary](/usc/20/1003.md?p=17) shall, in accordance with the requirements of [paragraph (2)](#d-2), recover (and so deposit) an amount equal to $75,000,000 during fiscal year 1988 and an amount equal to $35,000,000 for fiscal year 1989.
- (2) **Determination of guaranty agency obligations—** In determining the amount of advances which shall be repaid by a [guaranty agency](/usc/20/1085.md?p=j) under [paragraph (1)](#d-1), the [Secretary](/usc/20/1003.md?p=17)—
- (A) shall consider the solvency and maturity of the reserve and insurance [funds](/usc/20/4702.md?p=3) of the [guaranty agency](/usc/20/1085.md?p=j) assisted by such advances, as determined by the Comptroller General taking into account the requirements of [State](/usc/20/1003.md?p=21-A) law as in effect on October 17, 1986;
- (B) shall not seek repayment of such advances from any [State](/usc/20/1003.md?p=21-A) described in [subsection (c)(5)(B)](#c-5-B) during any year of its eligibility under such subsection; and
- (C) shall not seek repayment of such advances from any [State](/usc/20/1003.md?p=21-A) if such repayment encumbers the reserve [fund](/usc/20/4702.md?p=3) requirement of [State](/usc/20/1003.md?p=21-A) law as in effect on October 17, 1986.
- (e) **Correction for errors under reduction of excess cash reserves—**
- (1) **In general—** The [Secretary](/usc/20/1003.md?p=17) shall pay any [guaranty agency](/usc/20/1085.md?p=j) the amount of reimbursement of claims under [section 1078(c)(1) of this title](/usc/20/1078.md?p=c-1), filed between September 1, 1988, and December 31, 1989, which were previously withheld or canceled in order to be applied to satisfy such agency’s obligation to eliminate excess cash reserves held by such agency, based on the maximum cash reserve (as described in [subsection (e)](#e) of this section as in effect on September 1, 1988) permitted at the end of 1986, if such maximum cash reserve was miscalculated because of erroneous financial information provided by such agency to the [Secretary](/usc/20/1003.md?p=17) and if (A) such erroneous information is verified by an audited financial statement of the reserve [fund](/usc/20/4702.md?p=3), signed by a certified public accountant, and (B) such audited financial statement is provided to the [Secretary](/usc/20/1003.md?p=17) prior to January 1, 1993.
- (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](/usc/20/1003.md?p=17) 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](/usc/20/1085.md?p=j) which—
- (1) was required to eliminate excess cash reserves, based on the maximum cash reserve (as described in [subsection (e)](#e) of this section as in effect on September 1, 1988) permitted at the end of 1986;
- (2) appealed the [Secretary](/usc/20/1003.md?p=17)’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 [section 1078(c)(1) of this title](/usc/20/1078.md?p=c-1) or [section 1078(f) of this title](/usc/20/1078.md?p=f) previously withheld or canceled in order to be applied to satisfy such agency’s obligation to eliminate excess cash reserves held by such agency, based on the maximum cash reserve (as described in [subsection (e)](#e) of this section as in effect on September 1, 1988) permitted at the end of 1986; and
- (4) according to a [Department](/usc/20/1003.md?p=4) of Education review that was completed and forwarded to such [guaranty agency](/usc/20/1085.md?p=j) 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](#i-5) of the [guaranty agencies](/usc/20/1085.md?p=j), and any [assets](/usc/20/1087vv.md?p=f-2) purchased with such [reserve funds](#i-5), regardless of who holds or controls the reserves or [assets](/usc/20/1087vv.md?p=f-2), 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](/usc/20/1003.md?p=17) may not require the return of all [reserve funds](#i-5) of a [guaranty agency](/usc/20/1085.md?p=j) to the [Secretary](/usc/20/1003.md?p=17) unless the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/4702.md?p=3) or [assets](/usc/20/1087vv.md?p=f-2) or the orderly termination of the [guaranty agency](/usc/20/1085.md?p=j)’s operations and the liquidation of its [assets](/usc/20/1087vv.md?p=f-2). The reserves shall be maintained by each [guaranty agency](/usc/20/1085.md?p=j) to pay program expenses and contingent liabilities, as authorized by the [Secretary](/usc/20/1003.md?p=17), except that—
- (A) the [Secretary](/usc/20/1003.md?p=17) may direct a [guaranty agency](/usc/20/1085.md?p=j) to return to the [Secretary](/usc/20/1003.md?p=17) a portion of its reserve [fund](/usc/20/4702.md?p=3) which the [Secretary](/usc/20/1003.md?p=17) determines is unnecessary to pay the program expenses and contingent liabilities of the [guaranty agency](/usc/20/1085.md?p=j);
- (B) the [Secretary](/usc/20/1003.md?p=17) may direct the [guaranty agency](/usc/20/1085.md?p=j) to require the return, to the [guaranty agency](/usc/20/1085.md?p=j) or to the [Secretary](/usc/20/1003.md?p=17), of any [reserve funds](#i-5) or [assets](/usc/20/1087vv.md?p=f-2) held by, or under the control of, any other entity, which the [Secretary](/usc/20/1003.md?p=17) determines are necessary to pay the program expenses and contingent liabilities of the [guaranty agency](/usc/20/1085.md?p=j), or which are required for the orderly termination of the [guaranty agency](/usc/20/1085.md?p=j)’s operations and the liquidation of its [assets](/usc/20/1087vv.md?p=f-2);
- (C) the [Secretary](/usc/20/1003.md?p=17) may direct a [guaranty agency](/usc/20/1085.md?p=j), or such agency’s [officers](/usc/20/1094.md?p=i-5) or [directors](/usc/20/9101.md?p=3), to cease any activities involving expenditure, use or transfer of the [guaranty agency](/usc/20/1085.md?p=j)’s [reserve funds](#i-5) or [assets](/usc/20/1087vv.md?p=f-2) which the [Secretary](/usc/20/1003.md?p=17) determines is a misapplication, misuse, or improper expenditure of such [funds](/usc/20/4702.md?p=3) or [assets](/usc/20/1087vv.md?p=f-2); and
- (D) any such determination under subparagraph [(A)](#g-1-A) or [(B)](#g-1-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](/usc/20/4702.md?p=3) and [assets](/usc/20/1087vv.md?p=f-2) of the [guaranty agency](/usc/20/1085.md?p=j) are preserved, any contract with respect to the administration of a [guaranty agency](/usc/20/1085.md?p=j)’s [reserve funds](#i-5), or the administration of any [assets](/usc/20/1087vv.md?p=f-2) purchased or acquired with the [reserve funds](#i-5) of the [guaranty agency](/usc/20/1085.md?p=j), that is entered into or extended by the [guaranty agency](/usc/20/1085.md?p=j), or any other party on behalf of or with the concurrence of the [guaranty agency](/usc/20/1085.md?p=j), after August 10, 1993, shall provide that the contract is terminable by the [Secretary](/usc/20/1003.md?p=17) upon 30 days notice to the contracting parties if the [Secretary](/usc/20/1003.md?p=17) determines that such contract includes an impermissible transfer of the [reserve funds](#i-5) or [assets](/usc/20/1087vv.md?p=f-2), or is otherwise inconsistent with the terms or purposes of this section.
- (B) The [Secretary](/usc/20/1003.md?p=17) may direct a [guaranty agency](/usc/20/1085.md?p=j) to suspend or cease activities under any contract entered into by or on behalf of such agency after January 1, 1993, if the [Secretary](/usc/20/1003.md?p=17) determines that the misuse or improper expenditure of such [guaranty agency](/usc/20/1085.md?p=j)’s [funds](/usc/20/4702.md?p=3) or [assets](/usc/20/1087vv.md?p=f-2) or such contract provides unnecessary or improper benefits to such agency’s [officers](/usc/20/1094.md?p=i-5) or [directors](/usc/20/9101.md?p=3).
- (3) **Penalties—** Violation of any direction issued by the [Secretary](/usc/20/1003.md?p=17) under this subsection may be subject to the penalties described in [section 1097 of this title](/usc/20/1097.md).
- (4) **Availability of funds—** Any [funds](/usc/20/4702.md?p=3) that are returned or otherwise recovered by the [Secretary](/usc/20/1003.md?p=17) pursuant to this subsection shall be available for expenditure for expenses pursuant to [section 1087h of this title](/usc/20/1087h.md).
- (h) **Recall of reserves; limitations on use of reserve funds and assets—**
- (1) **In general—** Notwithstanding any other provision of law, the [Secretary](/usc/20/1003.md?p=17) shall, except as otherwise provided in this subsection, recall $1,000,000,000 from the [reserve funds](#h-8-B) held by [guaranty agencies](/usc/20/1085.md?p=j) on September 1, 2002.
- (2) **Deposit—** [Funds](/usc/20/4702.md?p=3) recalled by the [Secretary](/usc/20/1003.md?p=17) under this subsection shall be deposited in the Treasury.
- (3) **Required share—** The [Secretary](/usc/20/1003.md?p=17) shall require each [guaranty agency](/usc/20/1085.md?p=j) to return [reserve funds](#h-8-B) under [paragraph (1)](#h-1) based on the agency’s required share of recalled [reserve funds](#h-8-B) held by [guaranty agencies](/usc/20/1085.md?p=j) as of September 30, 1996. For purposes of this paragraph, a [guaranty agency](/usc/20/1085.md?p=j)’s required share of recalled [reserve funds](#h-8-B) shall be determined as follows:
- (A) The [Secretary](/usc/20/1003.md?p=17) shall compute each [guaranty agency](/usc/20/1085.md?p=j)’s reserve ratio by dividing (i) the amount held in the agency’s [reserve funds](#h-8-B) as of September 30, 1996 (but reflecting later accounting or auditing adjustments approved by the [Secretary](/usc/20/1003.md?p=17)), 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](/usc/20/1085.md?p=j).
- (B) If the reserve ratio of any [guaranty agency](/usc/20/1085.md?p=j) as computed under [subparagraph (A)](#h-3-A) exceeds 2.0 percent, the agency’s required share shall include so much of the amounts held in the agency’s [reserve funds](#h-8-B) as exceed a reserve ratio of 2.0 percent.
- (C) If any additional amount is required to be recalled under [paragraph (1)](#h-1) (after deducting the total of the required shares calculated under [subparagraph (B)](#h-3-B)), such additional amount shall be obtained by imposing on each [guaranty agency](/usc/20/1085.md?p=j) an equal percentage reduction in the amount of the agency’s [reserve funds](#h-8-B) remaining after deduction of the amount recalled under [subparagraph (B)](#h-3-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)](#h-3-B)), by
- (ii) the total amount of all such agencies’ [reserve funds](#h-8-B) remaining (after deduction of the required shares calculated under such subparagraph).
- (D) If any additional amount is required to be recalled under [paragraph (1)](#h-1) (after deducting the total of the required shares calculated under subparagraphs [(B)](#h-3-B) and [(C)](#h-3-C)), such additional amount shall be obtained by imposing on each [guaranty agency](/usc/20/1085.md?p=j) 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](#h-8-B) 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)](#h-1) (after deducting the amount recalled under subparagraphs [(B)](#h-3-B) and [(C)](#h-3-C)), by
- (ii) the total amount of all such agencies’ [reserve funds](#h-8-B) 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](/usc/20/1085.md?p=j) shall transfer a portion of the agency’s required share determined under [paragraph (3)](#h-3) to a restricted account established by the agency that is of a type selected by the agency with the approval of the [Secretary](/usc/20/1003.md?p=17). [Funds](/usc/20/4702.md?p=3) 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](/usc/20/1085.md?p=j) shall not use the [funds](/usc/20/4702.md?p=3) in such a restricted account for any purpose without the express written permission of the [Secretary](/usc/20/1003.md?p=17), except that a [guaranty agency](/usc/20/1085.md?p=j) may use the earnings from such restricted account for [default reduction activities](#h-8-A).
- (C) **Installments—** In each of fiscal years 1998 through 2002, each [guaranty agency](/usc/20/1085.md?p=j) shall transfer the agency’s required share to such restricted account in 5 equal annual installments, except that—
- (i) a [guaranty agency](/usc/20/1085.md?p=j) that has a reserve ratio (as computed under [subparagraph (3)(A)](#h-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](/usc/20/1085.md?p=j) may transfer such required share to such account in accordance with such other payment schedules as are approved by the [Secretary](/usc/20/1003.md?p=17).
- (5) **Shortage—** If, on September 1, 2002, the total amount in the restricted accounts described in [paragraph (4)](#h-4) is less than the amount the [Secretary](/usc/20/1003.md?p=17) is required to recall under [paragraph (1)](#h-1), the [Secretary](/usc/20/1003.md?p=17) shall require the return of the amount of the shortage from other [reserve funds](#h-8-B) held by [guaranty agencies](/usc/20/1085.md?p=j) under procedures established by the [Secretary](/usc/20/1003.md?p=17). The [Secretary](/usc/20/1003.md?p=17) shall first attempt to obtain the amount of such shortage from each [guaranty agency](/usc/20/1085.md?p=j) that failed to transfer the agency’s required share to the agency’s restricted account in accordance with [paragraph (4)](#h-4).
- (6) **Enforcement—**
- (A) **In general—** The [Secretary](/usc/20/1003.md?p=17) may take such reasonable measures, and require such information, as may be necessary to ensure that [guaranty agencies](/usc/20/1085.md?p=j) comply with the requirements of this subsection.
- (B) **Prohibition—** If the [Secretary](/usc/20/1003.md?p=17) determines that a [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/4702.md?p=3) under this part until the [Secretary](/usc/20/1003.md?p=17) determines that the agency has so transferred the agency’s required share.
- (C) **Waiver—** The [Secretary](/usc/20/1003.md?p=17) may waive the requirements of [subparagraph (B)](#h-6-B) for a [guaranty agency](/usc/20/1085.md?p=j) described in such subparagraph if the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) shall not have any authority to direct a [guaranty agency](/usc/20/1085.md?p=j) to return [reserve funds](#h-8-B) under [subsection (g)(1)(A)](#g-1-A) during the period from August 5, 1997, through September 30, 2002.
- (B) **Use of termination collections—** Any [reserve funds](#h-8-B) directed by the [Secretary](/usc/20/1003.md?p=17) to be returned to the [Secretary](/usc/20/1003.md?p=17) under [subsection (g)(1)(B)](#g-1-B) during such period that do not exceed a [guaranty agency](/usc/20/1085.md?p=j)’s required share of recalled [reserve funds](#h-8-B) under [paragraph (3)](#h-3)—
- (i) shall be used to satisfy the agency’s required share of recalled [reserve funds](#h-8-B); and
- (ii) shall be deposited in the restricted account established by the agency under [paragraph (4)](#h-4), without regard to whether such [funds](/usc/20/4702.md?p=3) exceed the next installment required under such paragraph.
- (C) **Use of sanctions collections—** Any [reserve funds](#h-8-B) directed by the [Secretary](/usc/20/1003.md?p=17) to be returned to the [Secretary](/usc/20/1003.md?p=17) under [subsection (g)(1)(C)](#g-1-C) during such period that do not exceed a [guaranty agency](/usc/20/1085.md?p=j)’s next installment under [paragraph (4)](#h-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)](#h-4).
- (D) **Balance available to Secretary—** Any [reserve funds](#h-8-B) directed by the [Secretary](/usc/20/1003.md?p=17) to be returned to the [Secretary](/usc/20/1003.md?p=17) under subparagraph [(B)](#g-1-B) or [(C)](#g-1-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](/usc/20/1085.md?p=j) for use by borrowers seeking assistance in avoiding default.
- (B) **Reserve funds—** The term “reserve funds” when used with respect to a [guaranty agency](/usc/20/1085.md?p=j)—
- (i) includes any [reserve funds](#h-8-B) in cash or liquid [assets](/usc/20/1087vv.md?p=f-2) held by the [guaranty agency](/usc/20/1085.md?p=j), or held by, or under the control of, any other entity; and
- (ii) does not include buildings, equipment, or other nonliquid [assets](/usc/20/1087vv.md?p=f-2).
- (i) **Additional recall of reserves—**
- (1) **In general—** Notwithstanding any other provision of law and subject to [paragraph (4)](#i-4), the [Secretary](/usc/20/1003.md?p=17) shall recall, from [reserve funds](#i-5) held in the Federal Student Loan [Reserve Funds](#i-5) established under [section 1072a of this title](/usc/20/1072a.md) by [guaranty agencies](/usc/20/1085.md?p=j)—
- (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](/usc/20/4702.md?p=3) recalled by the [Secretary](/usc/20/1003.md?p=17) under this subsection shall be deposited in the Treasury.
- (3) **Required share—** The [Secretary](/usc/20/1003.md?p=17) shall require each [guaranty agency](/usc/20/1085.md?p=j) to return [reserve funds](#i-5) under [paragraph (1)](#i-1) on the basis of the agency’s required share. For purposes of this paragraph, a [guaranty agency](/usc/20/1085.md?p=j)’s required share shall be determined as follows:
- (A) **Equal percentage—** The [Secretary](/usc/20/1003.md?p=17) shall require each [guaranty agency](/usc/20/1085.md?p=j) to return an amount representing an equal percentage reduction in the amount of [reserve funds](#i-5) 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](/usc/20/1085.md?p=j)’ [reserve funds](#i-5) held on September 30, 1996, less any amounts subject to recall under [subsection (h)](#h).
- (C) **Special rule—** Notwithstanding subparagraphs [(A)](#i-3-A) and [(B)](#i-3-B), the percentage reduction under [subparagraph (B)](#i-3-B) shall not result in the depletion of the [reserve funds](#i-5) of any agency which charges the 1.0 percent insurance premium pursuant to [section 1078(b)(1)(H) of this title](/usc/20/1078.md?p=b-1-H) below an amount equal to the amount of lender claim payments paid during the 90 days prior to the date of the return under this subsection. If any additional amount is required to be returned after deducting the total of the required shares under [subparagraph (B)](#i-3-B) and as a result of the preceding sentence, such additional amount shall be obtained by imposing on each [guaranty agency](/usc/20/1085.md?p=j) to which the preceding sentence does not apply, an equal percentage reduction in the amount of the agency’s remaining [reserve funds](#i-5).
- (4) **Offset of required shares—** If any [guaranty agency](/usc/20/1085.md?p=j) returns to the [Secretary](/usc/20/1003.md?p=17) any [reserve funds](#i-5) in excess of the amount required under this subsection or [subsection (h)](#h), the total amount required to be returned under [paragraph (1)](#i-1) shall be reduced by the amount of such excess [reserve funds](#i-5) returned.
- (5) **Definition of reserve funds—** The term “reserve funds” when used with respect to a [guaranty agency](/usc/20/1085.md?p=j)—
- (A) includes any [reserve funds](#i-5) in cash or liquid [assets](/usc/20/1087vv.md?p=f-2) held by the [guaranty agency](/usc/20/1085.md?p=j), or held by, or under the control of, any other entity; and
- (B) does not include buildings, equipment, or other nonliquid [assets](/usc/20/1087vv.md?p=f-2).
# §1072a. Federal Student Loan Reserve Fund
- (a) **Establishment—** Each [guaranty agency](/usc/20/1085.md?p=j) shall, not later than 60 days after October 7, 1998, deposit all [funds](/usc/20/4702.md?p=3), securities, and other liquid [assets](/usc/20/1087vv.md?p=f-2) contained in the reserve [fund](/usc/20/4702.md?p=3) established pursuant to [section 1072 of this title](/usc/20/1072.md) into a Federal Student Loan Reserve [Fund](/usc/20/4702.md?p=3) (in this section and [section 1072b of this title](/usc/20/1072b.md) referred to as the “Federal [Fund](/usc/20/4702.md?p=3)”), which shall be an account of a type selected by the agency, with the approval of the [Secretary](/usc/20/1003.md?p=17).
- (b) **Investment of funds—** [Funds](/usc/20/4702.md?p=3) transferred to the Federal [Fund](/usc/20/4702.md?p=3) shall be invested in obligations issued or guaranteed by the United States or a [State](/usc/20/1003.md?p=21-A), or in other similarly low-risk securities selected by the [guaranty agency](/usc/20/1085.md?p=j), with the approval of the [Secretary](/usc/20/1003.md?p=17). Earnings from the Federal [Fund](/usc/20/4702.md?p=3) shall be the sole property of the Federal Government.
- (c) **Additional deposits—** After the establishment of the Federal [Fund](/usc/20/4702.md?p=3), a [guaranty agency](/usc/20/1085.md?p=j) shall deposit into the Federal [Fund](/usc/20/4702.md?p=3)—
- (1) all amounts received from the [Secretary](/usc/20/1003.md?p=17) as payment of reinsurance on loans pursuant to [section 1078(c)(1) of this title](/usc/20/1078.md?p=c-1);
- (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)](/usc/20/1078.md?p=c-6-A)[^1] and 1078–6(a)(1)(B) of this title; and
- (B) with respect to a loan that the [Secretary](/usc/20/1003.md?p=17) has repaid or discharged under [section 1087 of this title](/usc/20/1087.md);
- (3) insurance premiums collected from borrowers pursuant to sections [1078(b)(1)(H)](/usc/20/1078.md?p=b-1-H) and [1078–8(h)](/usc/20/1078–8.md?p=h) of this title;
- (4) all amounts received from the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17).
- (d) **Uses of funds—** Subject to [subsection (f)](#f), the Federal [Fund](/usc/20/4702.md?p=3) may only be used by a [guaranty agency](/usc/20/1085.md?p=j)—
- (1) to pay lender claims pursuant to sections [1078(b)(1)(G)](/usc/20/1078.md?p=b-1-G), [1078(j)](/usc/20/1078.md?p=j), and [1087](/usc/20/1087.md) of this title; and
- (2) to pay into the Agency Operating [Fund](/usc/20/4702.md?p=3) established pursuant to [section 1072b of this title](/usc/20/1072b.md) (in this section and [section 1072b of this title](/usc/20/1072b.md) referred to as the “Operating [Fund](/usc/20/4702.md?p=3)”) a default aversion fee in accordance with [section 1078(l)](/usc/20/1078.md?p=l) of this title.
- (e) **Ownership of Federal Fund—** The Federal [Fund](/usc/20/4702.md?p=3), and any nonliquid asset (such as a building or equipment) developed or purchased by the [guaranty agency](/usc/20/1085.md?p=j) in whole or in part with Federal reserve [funds](/usc/20/4702.md?p=3), regardless of who holds or controls the Federal reserve [funds](/usc/20/4702.md?p=3) 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](/usc/20/4702.md?p=3), which property shall be used in the operation of the program authorized by this part, as provided in [subsection (d)](#d). The [Secretary](/usc/20/1003.md?p=17) may restrict or regulate the use of such asset only to the extent necessary to reasonably protect the [Secretary](/usc/20/1003.md?p=17)’s prorated share of the value of such asset. The [Secretary](/usc/20/1003.md?p=17) may direct a [guaranty agency](/usc/20/1085.md?p=j), or such agency’s [officers](/usc/20/1094.md?p=i-5) or [directors](/usc/20/9101.md?p=3), to cease any activity involving expenditures, use, or transfer of the Federal [Fund](/usc/20/4702.md?p=3) administered by the [guaranty agency](/usc/20/1085.md?p=j) that the [Secretary](/usc/20/1003.md?p=17) determines is a misapplication, misuse, or improper expenditure of the Federal [Fund](/usc/20/4702.md?p=3) or the [Secretary](/usc/20/1003.md?p=17)’s share of such asset.
- (f) **Transition—**
- (1) **In general—** In order to establish the Operating [Fund](/usc/20/4702.md?p=3), each [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/4702.md?p=3) for deposit into the Operating [Fund](/usc/20/4702.md?p=3) for use in the performance of the [guaranty agency](/usc/20/1085.md?p=j)’s duties under this part. Such transfers may occur during the first 3 years following the establishment of the Operating [Fund](/usc/20/4702.md?p=3). However, no agency may transfer in excess of 45 percent of the balance, as of September 30, 1998, of the agency’s Federal [Fund](/usc/20/4702.md?p=3) to the agency’s Operating [Fund](/usc/20/4702.md?p=3) during such 3-year period. In determining the amount that may be transferred, the agency shall ensure that sufficient [funds](/usc/20/4702.md?p=3) remain in the Federal [Fund](/usc/20/4702.md?p=3) 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 [section 1072 of this title](/usc/20/1072.md).
- (2) **Special rule—** A limited number of [guaranty agencies](/usc/20/1085.md?p=j) may transfer interest earned on the Federal [Fund](/usc/20/4702.md?p=3) to the Operating [Fund](/usc/20/4702.md?p=3) during the first 3 years after October 7, 1998, if the [guaranty agency](/usc/20/1085.md?p=j) demonstrates to the [Secretary](/usc/20/1003.md?p=17) that—
- (A) the cash flow in the Operating [Fund](/usc/20/4702.md?p=3) 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](/usc/20/1085.md?p=j).
- (3) **Repayment provisions—** Each [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/4702.md?p=3), and shall repay all amounts transferred not later than 5 years from the date of the establishment of the Operating [Fund](/usc/20/4702.md?p=3). With respect to amounts transferred from the Federal [Fund](/usc/20/4702.md?p=3), the [guaranty agency](/usc/20/1085.md?p=j) shall not be required to repay any interest on the [funds](/usc/20/4702.md?p=3) transferred and subsequently repaid. The [guaranty agency](/usc/20/1085.md?p=j) shall provide to the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1085.md?p=j) transfers [funds](/usc/20/4702.md?p=3) from the Federal [Fund](/usc/20/4702.md?p=3) in accordance with this section, and fails to make scheduled repayments to the Federal [Fund](/usc/20/4702.md?p=3), the agency may not receive any other [funds](/usc/20/4702.md?p=3) under this part until the [Secretary](/usc/20/1003.md?p=17) determines that the agency has made such repayments. The [Secretary](/usc/20/1003.md?p=17) shall pay to the [guaranty agency](/usc/20/1085.md?p=j) any [funds](/usc/20/4702.md?p=3) withheld in accordance with this paragraph immediately upon making the determination that the [guaranty agency](/usc/20/1085.md?p=j) has made all such repayments.
- (5) **Waiver—** The [Secretary](/usc/20/1003.md?p=17) may—
- (A) waive the requirements of [paragraph (3)](#f-3), but only with respect to repayment of interest that was transferred in accordance with [paragraph (2)](#f-2); and
- (B) waive [paragraph (4)](#f-4);
for a [guaranty agency](/usc/20/1085.md?p=j), if the [Secretary](/usc/20/1003.md?p=17) determines that there are extenuating circumstances (such as [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=17) shall extend the period for repayment of interest that was transferred in accordance with [paragraph (2)](#f-2) from 2 years to 5 years if the [Secretary](/usc/20/1003.md?p=17) determines that—
- (i) the cash flow of the Operating [Fund](/usc/20/4702.md?p=3) will be negative as a result of repayment as required by [paragraph (3)](#f-3);
- (ii) the repayment of the interest transferred will substantially diminish the financial circumstances of the [guaranty agency](/usc/20/1085.md?p=j); and
- (iii) the [guaranty agency](/usc/20/1085.md?p=j) has demonstrated—
- (I) that the agency is able to repay all transferred [funds](/usc/20/4702.md?p=3) by the end of the 8th year following the date of establishment of the Operating [Fund](/usc/20/4702.md?p=3); 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](/usc/20/4702.md?p=3) during the 6th, 7th, and 8th years following the establishment of the Operating [Fund](/usc/20/4702.md?p=3) 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](/usc/20/4702.md?p=3) transferred from the Federal [Fund](/usc/20/4702.md?p=3) to the Operating [Fund](/usc/20/4702.md?p=3) for operating expenses shall be invested in obligations issued or guaranteed by the United States or a [State](/usc/20/1003.md?p=21-A), or in other similarly low-risk securities selected by the [guaranty agency](/usc/20/1085.md?p=j), with the approval of the [Secretary](/usc/20/1003.md?p=17).
- (8) **Special rule—** In calculating the minimum reserve level required by [section 1078(c)(9)(A) of this title](/usc/20/1078.md?p=c-9-A), the [Secretary](/usc/20/1003.md?p=17) shall include all amounts owed to the Federal [Fund](/usc/20/4702.md?p=3) by the [guaranty agency](/usc/20/1085.md?p=j) in the calculation.
# §1072b. Agency Operating Fund
- (a) **Establishment—** Each [guaranty agency](/usc/20/1085.md?p=j) shall, not later than 60 days after October 7, 1998, establish a [fund](/usc/20/4702.md?p=3) designated as the Operating [Fund](/usc/20/4702.md?p=3).
- (b) **Investment of funds—** [Funds](/usc/20/4702.md?p=3) deposited into the Operating [Fund](/usc/20/4702.md?p=3) shall be invested at the discretion of the [guaranty agency](/usc/20/1085.md?p=j) in accordance with prudent investor standards.
- (c) **Additional deposits—** After the establishment of the Operating [Fund](/usc/20/4702.md?p=3), the [guaranty agency](/usc/20/1085.md?p=j) shall deposit into the Operating [Fund](/usc/20/4702.md?p=3)—
- (1) the loan processing and issuance fee paid by the [Secretary](/usc/20/1003.md?p=17) pursuant to [section 1078(f) of this title](/usc/20/1078.md?p=f);
- (2) 30 percent of amounts received after October 7, 1998, from the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) in accordance with [section 1087h of this title](/usc/20/1087h.md);
- (4) the default aversion fee paid in accordance with [section 1078(l)](/usc/20/1078.md?p=l) of this title;
- (5) amounts remaining pursuant to [section 1078(c)(6)(B)](/usc/20/1078.md?p=c-6-B)[^1] of this title from collection on defaulted loans held by the agency, after payment of the [Secretary](/usc/20/1003.md?p=17)’s equitable share, excluding amounts deposited in the Federal [Fund](/usc/20/4702.md?p=3) pursuant to [section 1072a(c)(2) of this title](/usc/20/1072a.md?p=c-2); and
- (6) other receipts as specified in regulations of the [Secretary](/usc/20/1003.md?p=17).
- (d) **Uses of funds—**
- (1) **In general—** [Funds](/usc/20/4702.md?p=3) in the Operating [Fund](/usc/20/4702.md?p=3) shall be used for application processing, loan disbursement, [enrollment and repayment status management](#d-3-C), [default aversion activities](#d-3-B) (including those described in [section 1072(h)(8) of this title](/usc/20/1072.md?p=h-8)), [default collection activities](#d-3-A), [school](/usc/20/5802.md?p=a-11) and lender training, financial aid awareness and related outreach activities, compliance monitoring, and other student financial aid related activities, as selected by the [guaranty agency](/usc/20/1085.md?p=j).
- (2) **Special rule—** The [guaranty agency](/usc/20/1085.md?p=j) may, in the agency’s discretion, transfer [funds](/usc/20/4702.md?p=3) from the Operating [Fund](/usc/20/4702.md?p=3) to the Federal [Fund](/usc/20/4702.md?p=3) for use pursuant to [section 1072a of this title](/usc/20/1072a.md). Such transfer shall be irrevocable, and any [funds](/usc/20/4702.md?p=3) so transferred shall become the sole property of the United States.
- (3) **Definitions—** For purposes of this subsection:
- (A) **Default collection activities—** The term “default collection activities” means activities of a [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/1085.md?p=f) activities required pursuant to regulations of the [Secretary](/usc/20/1003.md?p=17).
- (B) **Default aversion activities—** The term “default aversion activities” means activities of a [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/1085.md?p=f) activities required pursuant to regulations of the [Secretary](/usc/20/1003.md?p=17).
- (C) **Enrollment and repayment status management—** The term “enrollment and repayment status management” means activities of a [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/1085.md?p=j) 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](/usc/20/4702.md?p=3), with the exception of [funds](/usc/20/4702.md?p=3) transferred from the Federal [Fund](/usc/20/4702.md?p=3) in accordance with [section 1072a(f) of this title](/usc/20/1072a.md?p=f), shall be considered to be the property of the [guaranty agency](/usc/20/1085.md?p=j).
- (2) **Regulation—** Except as provided in [paragraph (3)](#e-3), the [Secretary](/usc/20/1003.md?p=17) may not regulate the uses or expenditure of moneys in the Operating [Fund](/usc/20/4702.md?p=3), but the [Secretary](/usc/20/1003.md?p=17) may require such necessary reports and audits as provided in [section 1078(b)(2) of this title](/usc/20/1078.md?p=b-2).
- (3) **Exception—** Notwithstanding paragraphs [(1)](#e-1) and [(2)](#e-2), during any period in which [funds](/usc/20/4702.md?p=3) are owed to the Federal [Fund](/usc/20/4702.md?p=3) as a result of transfer under [section 1072a(f) of this title](/usc/20/1072a.md?p=f)—
- (A) moneys in the Operating [Fund](/usc/20/4702.md?p=3) may only be used for expenses related to the student loan programs authorized under this part; and
- (B) the [Secretary](/usc/20/1003.md?p=17) may regulate the uses or expenditure of moneys in the Operating [Fund](/usc/20/4702.md?p=3).
# §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)](#b), the [Secretary](/usc/20/1003.md?p=17) shall not issue certificates of insurance under [section 1079 of this title](/usc/20/1079.md) to lenders in a [State](/usc/20/1003.md?p=21-A) if the [Secretary](/usc/20/1003.md?p=17) determines that every [eligible institution](/usc/20/1066a.md?p=1) has reasonable access in that [State](/usc/20/1003.md?p=21-A) to a [State](/usc/20/1003.md?p=21-A) or private [nonprofit](/usc/20/1003.md?p=13) student loan insurance program which is covered by an agreement under [section 1078(b) of this title](/usc/20/1078.md?p=b).
- (b) **Exceptions—** The [Secretary](/usc/20/1003.md?p=17) may issue certificates of insurance under [section 1079 of this title](/usc/20/1079.md) to a lender in a [State](/usc/20/1003.md?p=21-A)—
- (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](/usc/20/1003.md?p=21-A) (or under any private [nonprofit](/usc/20/1003.md?p=13) loan insurance program which has received an advance under [section 1072 of this title](/usc/20/1072.md) for the benefit of students in such [State](/usc/20/1003.md?p=21-A));
- (2) for insurance of all the loans made to student borrowers by a lender who satisfies the [Secretary](/usc/20/1003.md?p=17) that, by reason of the residence of such borrowers, such lender will not have access to any single [State](/usc/20/1003.md?p=21-A) or [nonprofit](/usc/20/1003.md?p=13) 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](/usc/20/1085.md?p=j) in such [State](/usc/20/1003.md?p=21-A), 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.
# §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 [section 1085 of this title](/usc/20/1085.md)) to students covered by Federal loan insurance under this part shall not exceed $2,000,000,000 for the period from July 1, 1976, to September 30, 1976, for each of the succeeding fiscal years ending prior to October 1, 2009, and for the period from October 1, 2009, to June 30, 2010, for loans first disbursed on or before June 30, 2010.
- (b) **Apportionment of amounts—** The [Secretary](/usc/20/1003.md?p=17) 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)](#a), Federal loan insurance quotas applicable to [eligible lenders](/usc/20/1085.md?p=d-1), or to [States](/usc/20/1003.md?p=21-A) or areas, and may from time to time reassign unused portions of these quotas.
# §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](/usc/20/1088.md?p=a-2-A) or its equivalent (as determined by the [Secretary](/usc/20/1003.md?p=17)) 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](/usc/20/1066a.md?p=1) 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](/usc/20/1088.md?p=a-2-A) in length (as determined under [section 1088 of this title](/usc/20/1088.md)); and
- (II) if such student is enrolled in a program of undergraduate education which is less than one [academic year](/usc/20/1088.md?p=a-2-A), 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)](#a-1-A-i-I) as the length of such program measured in semester, trimester, quarter, or clock hours bears to one [academic year](/usc/20/1088.md?p=a-2-A);
- (ii) in the case of a student at an [eligible institution](/usc/20/1066a.md?p=1) 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](/usc/20/1088.md?p=a-2-A), 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)](#a-1-A-ii-I) as such remainder measured in semester, trimester, quarter, or clock hours bears to one [academic year](/usc/20/1088.md?p=a-2-A);
- (iii) in the case of a student at an [eligible institution](/usc/20/1066a.md?p=1) 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](/usc/20/1088.md?p=a-2-A), 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)](#a-1-A-iii-I) as such remainder measured in semester, trimester, quarter, or clock hours bears to one [academic year](/usc/20/1088.md?p=a-2-A); and
- (iv) in the case of a graduate or professional student (as defined in regulations of the [Secretary](/usc/20/1003.md?p=17)) at an [eligible institution](/usc/20/1066a.md?p=1), $8,500.
- (B) The annual insurable limits contained in [subparagraph (A)](#a-1-A) shall not apply in cases where the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1085.md?p=e) 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)](#a-1-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](/usc/20/1088.md?p=b-1) 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](/usc/20/1078–1.md)[^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](/usc/20/1003.md?p=17)) and (I) including any loans which are insured by the [Secretary](/usc/20/1003.md?p=17) under this section, or by a [guaranty agency](/usc/20/1085.md?p=j), made to such student before the student became a graduate or professional student),[^2] but (II) excluding loans made under [section 1078–1](/usc/20/1078–1.md)[^1] or 1078–2 of this title,
except that the [Secretary](/usc/20/1003.md?p=17) may increase the limit applicable to students who are pursuing programs which the [Secretary](/usc/20/1003.md?p=17) determines are exceptionally expensive.
- (B) The [Secretary](/usc/20/1003.md?p=17) may increase the aggregate insurable limit applicable to students who are pursuing programs which the [Secretary](/usc/20/1003.md?p=17) 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)](#b-1-B), the insurance liability on any loan insured by the [Secretary](/usc/20/1003.md?p=17) 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 [section 1080 of this title](/usc/20/1080.md) by the [Secretary](/usc/20/1003.md?p=17) to any [eligible lender](/usc/20/1085.md?p=d-1) as described in [section 1085(d)(1)(D) of this title](/usc/20/1085.md?p=d-1-D) exceeds 5 percent of the sum of the loans made by such lender which are insured by the [Secretary](/usc/20/1003.md?p=17) and which were in repayment at the end of the preceding fiscal year, 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)](#b-1-C), shall be equal to 90 percent of the amount of such portion; or
- (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)](#b-1-C), shall be equal to 80 percent of the amount of such portion.
- (B) Notwithstanding [subparagraph (A)](#b-1-A), the provisions of clauses [(i)](#b-1-A-i) and [(ii)](#b-1-A-ii) of such subparagraph shall not apply to an [eligible lender](/usc/20/1085.md?p=d-1) as described in [section 1085(d)(1)(D) of this title](/usc/20/1085.md?p=d-1-D) for the fiscal year in which such lender begins to carry on a loan program insured by the [Secretary](/usc/20/1003.md?p=17), or for any of the 4 succeeding fiscal years.
- (C) The applicable date with respect to a loan made by an [eligible lender](/usc/20/1085.md?p=d-1) as described in [section 1085(d)(1)(D) of this title](/usc/20/1085.md?p=d-1-D) shall be—
- (i) the 90th day after the adjournment of the next regular session of the appropriate [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=21-A) prohibits a pledge of such [State](/usc/20/1003.md?p=21-A)’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](/usc/20/1003.md?p=17) and which are in repayment shall be the original principal amount of loans made by such lender which are insured by the [Secretary](/usc/20/1003.md?p=17) reduced by—
- (A) the amount the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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 [section 1077(a)(2)(B) of this title](/usc/20/1077.md?p=a-2-B) or such first installment need not be paid pursuant to [section 1077(a)(2)(C) of this title](/usc/20/1077.md?p=a-2-C); and
- (D) the original principal amount of loans repaid by the [Secretary](/usc/20/1003.md?p=17) under [section 1087 of this title](/usc/20/1087.md).
- (3) **Payments to assignees—** For the purpose of this subsection, payments by the [Secretary](/usc/20/1003.md?p=17) under [section 1080 of this title](/usc/20/1080.md) to an assignee of the lender with respect to a loan shall be deemed payments made to such lender.
- (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 section [1080](/usc/20/1080.md) or [1087](/usc/20/1087.md) of this title.
# §1076. Sources of funds
Loans made by [eligible lenders](/usc/20/1085.md?p=d-1) in accordance with this part shall be insurable by the [Secretary](/usc/20/1003.md?p=17) whether made from [funds](/usc/20/4702.md?p=3) fully owned by the lender or from [funds](/usc/20/4702.md?p=3) held by the lender in a trust or similar capacity and available for such loans.
# §1077. Eligibility of student borrowers and terms of federally insured student loans
- (a) **List of requirements—** Except as provided in [section 1078–3 of this title](/usc/20/1078–3.md), a loan by an [eligible lender](/usc/20/1085.md?p=d-1) shall be insurable by the [Secretary](/usc/20/1003.md?p=17) under the provisions of this part only if—
- (1) made to a student who (A) is an eligible student under [section 1091 of this title](/usc/20/1091.md), (B) has agreed to notify promptly the [holder](/usc/20/1085.md?p=i) of the loan concerning any change of address, and (C) is carrying at least one-half the normal full-time academic workload for the course of study the student is pursuing (as determined by the institution); and
- (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)](#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](/usc/20/1066a.md?p=1) at least one-half the normal full-time academic workload as determined by the institution, except—
- (i) as provided in [subparagraph (C)](#a-2-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](/usc/20/1003.md?p=17) 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](/usc/20/1066a.md?p=1) 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](/usc/20/1066a.md?p=1); or
- (II) is pursuing a course of study pursuant to a graduate fellowship program approved by the [Secretary](/usc/20/1003.md?p=17), or pursuant to a rehabilitation training program for individuals with [disabilities](/usc/20/1003.md?p=6) approved by the [Secretary](/usc/20/1003.md?p=17),
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 section [1078–2](/usc/20/1078–2.md) or [1078–3](/usc/20/1078–3.md) of this title), 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) not in excess of 3 years for any reason which the lender determines, in accordance with regulations prescribed by the [Secretary](/usc/20/1003.md?p=17) under [section 1085(o)](/usc/20/1085.md?p=o) of this title, has caused or will cause the borrower to have an economic hardship; or
- (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)](#a-2-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 [section 1077a of this title](/usc/20/1077a.md), which interest shall be payable in installments over the period of the loan except that, if provided in the note or other written agreement, any interest payable by the student may be deferred until not later than the date upon which repayment of the first installment of principal falls due, in which case interest accrued during that period may be added on that date to the principal;
- (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](/usc/20/1003.md?p=17) under this part, and that the lender will enter into such agreements with the [Secretary](/usc/20/1003.md?p=17) as may be necessary for the purpose of [section 1087 of this title](/usc/20/1087.md);
- (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](/usc/20/1088.md?p=e) under [section 1080a of this title](/usc/20/1080a.md), and (ii) provides that the lender on request of the borrower will provide information on the repayment status of the note to such [consumer reporting agencies](/usc/20/1088.md?p=e);
- (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](/usc/20/1003.md?p=17); and
- (I) contains such other terms and conditions, consistent with the provisions of this part and with the regulations issued by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) with respect to such loan;
- (3) the [funds](/usc/20/4702.md?p=3) 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](/usc/20/1003.md?p=17) 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](/usc/20/4702.md?p=3) shall, at the request of the borrower, be delivered directly to the student and the checks may be endorsed, and [fund](/usc/20/4702.md?p=3) transfers authorized, pursuant to an authorized power-of-attorney; and
- (4) the [funds](/usc/20/4702.md?p=3) borrowed by a student are disbursed in accordance with [section 1078–7 of this title](/usc/20/1078–7.md).
- (b) **Special rules for multiple disbursement—** For the purpose of [subsection (a)(4)](#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 section [1078–2](/usc/20/1078–2.md) or [1078–3](/usc/20/1078–3.md) of this title, or made to a student to cover the [cost of attendance](/usc/20/1087ll.md?p=a) at an [eligible institution](/usc/20/1066a.md?p=1) outside the United States.
- (c) **Special repayment rules—** Except as provided in [subsection (a)(2)(H)](#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.
# §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](#n-1) 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)](#a-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)](#a-1) or any loan for which the interest rate is determined under [paragraph (1)](#a-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](#n-2) beginning on or after a date which is 3 months after a determination made under [subsection (b)](#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](/usc/20/1003.md?p=17), after consultation with the [Secretary](/usc/20/1003.md?p=17) 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)](#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](/usc/20/1078–1.md)[^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](/usc/20/1003.md?p=17), after consultation with the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1078–1.md)[^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)](#c-2), the [Secretary](/usc/20/1003.md?p=17), after consultation with the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1078–1.md)[^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](/usc/20/1078–1.md)[^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)](/usc/20/1078–1.md?p=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)](#c-4-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](/usc/20/4702.md?p=2) 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](/usc/20/1003.md?p=17) shall determine the applicable rate of interest under [subparagraph (B)](#c-4-B) after consultation with the [Secretary](/usc/20/1003.md?p=17) 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)](#c-4-A)—
- (i) for any loan made pursuant to [section 1078–1](/usc/20/1078–1.md)[^1] of this title for which the first disbursement is made on or after October 1, 1992—
- (I) [subparagraph (B)](#c-4-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 [section 1078–2 of this title](/usc/20/1078–2.md) for which the first disbursement is made on or after October 1, 1992—
- (I) [subparagraph (B)](#c-4-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)](#c-4-A) and [(D)](#c-4-D) for any loan made pursuant to [section 1078–2 of this title](/usc/20/1078–2.md) for which the first disbursement is made on or after July 1, 1994—
- (i) [subparagraph (B)](#c-4-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)](#a) and [(b)](#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](#n-2) 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)](#a), [(b)](#b), and [(d)](#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 section [1077](/usc/20/1077.md), [1078](/usc/20/1078.md), or [1078–8](/usc/20/1078–8.md) of this title, 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) 3.10 percent,
except that such rate shall not exceed 9 percent.
- (2) **Consultation—** The [Secretary](/usc/20/1003.md?p=17) shall determine the applicable rate of interest under [paragraph (1)](#e-1) after consultation with the [Secretary](/usc/20/1003.md?p=17) 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)](#a), [(b)](#b), [(d)](#d), and [(e)](#e) of this section, with respect to any loan made, insured, or guaranteed under this part (other than a loan made pursuant to section [1078–2](/usc/20/1078–2.md) or [1078–3](/usc/20/1078–3.md) of this title) 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) 3.10 percent,
except that such rate shall not exceed 8.25 percent.
- (2) **Consultation—** The [Secretary](/usc/20/1003.md?p=17) shall determine the applicable rate of interest under [paragraph (1)](#f-1) after consultation with the [Secretary](/usc/20/1003.md?p=17) 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)](#f), but subject to [subsection (h)](#h), with respect to any loan under section [1078](/usc/20/1078.md) or [1078–8](/usc/20/1078–8.md) of this title for which the first disbursement is made on or after July 1, 1995, the applicable rate of interest for interest which accrues—
- (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 section [1078(b)(1)(M)](/usc/20/1078.md?p=b-1-M) or [1077(a)(2)(C)](/usc/20/1077.md?p=a-2-C) of this title,
shall not exceed the rate determined under [paragraph (2)](#g-2).
- (2) **Rate determination—** For purposes of [paragraph (1)](#g-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](/usc/20/1003.md?p=17) shall determine the applicable rate of interest under this subsection after consultation with the [Secretary](/usc/20/1003.md?p=17) 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)](#a), [(b)](#b), [(d)](#d), [(e)](#e), [(f)](#f), and [(g)](#g) of this section, with respect to any loan made, insured, or guaranteed under this part (other than a loan made pursuant to sections [1078–2](/usc/20/1078–2.md) and [1078–3](/usc/20/1078–3.md) of this title) for which the first disbursement is 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 securities with a comparable maturity as established by the [Secretary](/usc/20/1003.md?p=17); 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)](#a), [(b)](#b), [(d)](#d), [(e)](#e), [(f)](#f), and [(g)](#g), with respect to any loan made under [section 1078–2 of this title](/usc/20/1078–2.md) for which the first disbursement is made on or after July 1, 1998, [paragraph (1)](#h-1) shall be applied—
- (A) by substituting “2.1 percent” for “1.0 percent” in [subparagraph (B)](#h-2-B); and
- (B) by substituting “9.0 percent” for “8.25 percent” in the matter following such subparagraph.
- (3) **Consultation—** The [Secretary](/usc/20/1003.md?p=17) shall determine the applicable rate of interest under this subsection after consultation with the [Secretary](/usc/20/1003.md?p=17) 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)](#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 [section 1078(a) of this title](/usc/20/1078.md?p=a), by crediting the excess interest to the Government; or
- (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 [section 1078(a) of this title](/usc/20/1078.md?p=a), by crediting the excess interest to the Government; or
- (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](/usc/20/1085.md?p=i) 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](/usc/20/1003.md?p=17). 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 [section 1083(b) of this title](/usc/20/1083.md?p=b).
- (6) **Publication of Treasury bill rate—** For the purpose of enabling [holders](/usc/20/1085.md?p=i) of loans to make the determinations and adjustments provided for in this subsection, the [Secretary](/usc/20/1003.md?p=17) 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)](#i-7-C) and [(D)](#i-7-D), a lender or [holder](/usc/20/1085.md?p=i) 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](/usc/20/1003.md?p=17) 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)](#i-1), or 3.10 percent in the case of loans described in [paragraph (3)](#i-3).
- (B) In connection with the conversion specified in [subparagraph (A)](#i-7-A) for any period prior to such conversion, and subject to paragraphs (C) and (D), a lender or [holder](/usc/20/1085.md?p=i) 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)](#i-1) or 3.10 percent in the case of loans described in [paragraph (3)](#i-3). The rebate of excess interest derived through this conversion shall be provided to the borrower as specified in [paragraph (5)](#i-5) for loans described in [paragraph (1)](#i-1) or to the Government and borrower as specified in [paragraph (3)](#i-3).
- (C) A lender or [holder](/usc/20/1085.md?p=i) of a loan being converted pursuant to this paragraph shall complete such conversion on or before January 1, 1995. The lender or [holder](/usc/20/1085.md?p=i) 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 [section 1083(b) of this title](/usc/20/1083.md?p=b) if such disclosure has not been previously made.
- (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)](#i-7-A) or [(B)](#i-7-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)](#h), but subject to [paragraph (2)](#j-2), with respect to any loan made, insured, or guaranteed under this part (other than a loan made pursuant to section [1078–2](/usc/20/1078–2.md) or [1078–3](/usc/20/1078–3.md) of this title) 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—
- (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)](#h), with respect to any loan under this part (other than a loan made pursuant to section [1078–2](/usc/20/1078–2.md) or [1078–3](/usc/20/1078–3.md) of this title) 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—
- (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 section [1078(b)(1)(M)](/usc/20/1078.md?p=b-1-M) or [1077(a)(2)(C)](/usc/20/1077.md?p=a-2-C) of this title,
shall be determined under [paragraph (1)](#j-1) by substituting “1.7 percent” for “2.3 percent”.
- (3) **PLUS loans—** Notwithstanding [subsection (h)](#h), with respect to any loan under [section 1078–2 of this title](/usc/20/1078–2.md) 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 the lesser of—
- (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](/usc/20/1003.md?p=17) shall determine the applicable rate of interest under this subsection after consultation with the [Secretary](/usc/20/1003.md?p=17) 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)](#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 section [1078–2](/usc/20/1078–2.md) or [1078–3](/usc/20/1078–3.md) of this title) 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—
- (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)](#h), with respect to any loan under this part (other than a loan made pursuant to section [1078–2](/usc/20/1078–2.md) or [1078–3](/usc/20/1078–3.md) of this title) 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—
- (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 section [1077(a)(2)(C)](/usc/20/1077.md?p=a-2-C) or [1078(b)(1)(M)](/usc/20/1078.md?p=b-1-M) of this title,
shall be determined under [paragraph (1)](#k-1) by substituting “1.7 percent” for “2.3 percent”.
- (3) **PLUS loans—** Notwithstanding [subsection (h)](#h), with respect to any loan under [section 1078–2 of this title](/usc/20/1078–2.md) 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 [paragraph (1)](#k-1)—
- (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 [section 1078–3 of this title](/usc/20/1078–3.md) for which the application is received by an [eligible lender](/usc/20/1085.md?p=d-1) on or after October 1, 1998, and before July 1, 2006, the applicable rate of interest shall be at an annual rate on the unpaid principal balance of the loan that is equal to the lesser of—
- (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](/usc/20/1003.md?p=17) shall determine the applicable rate of interest under this subsection after consultation with the [Secretary](/usc/20/1003.md?p=17) 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)](#h), with respect to any loan made, insured, or guaranteed under this part (other than a loan made pursuant to section [1078–2](/usc/20/1078–2.md) or [1078–3](/usc/20/1078–3.md) of this title) for which the first disbursement is made on or after July 1, 2006, and before July 1, 2010, the applicable rate of interest shall be 6.8 percent on the unpaid principal balance of the loan.
- (2) **PLUS loans—** Notwithstanding [subsection (h)](#h), with respect to any loan under [section 1078–2 of this title](/usc/20/1078–2.md) for which the first disbursement is made on or after July 1, 2006, and before July 1, 2010, the applicable rate of interest shall be 8.5 percent on the unpaid principal balance of the loan.
- (3) **Consolidation loans—** With respect to any consolidation loan under [section 1078–3 of this title](/usc/20/1078–3.md) for which the application is received by an [eligible lender](/usc/20/1085.md?p=d-1) on or after July 1, 2006, and that was disbursed before July 1, 2010, the applicable rate of interest shall be at an annual rate on the unpaid principal balance of the loan that is equal to the lesser of—
- (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)](#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 section [1078–2](/usc/20/1078–2.md), [1078–3](/usc/20/1078–3.md), or [1078–8](/usc/20/1078–8.md) of this title) for which the first disbursement is made on or after July 1, 2006, and before July 1, 2010, the applicable rate of interest shall be as follows:
- (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 [section 1078–3 of this title](/usc/20/1078–3.md) shall be construed to prohibit a lender from charging a borrower interest at a rate less than the rate which is applicable under this part.
- (n) **Definitions—** For the purpose of subsections [(a)](#a) and [(d)](#d) of this section—
- (1) the term “period of instruction” shall, at the discretion of the lender, be any [academic year](/usc/20/1088.md?p=a-2-A), 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](/usc/20/1001.md?p=a); 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](/usc/20/1001.md?p=a) and shall coincide with academic terms such as [academic year](/usc/20/1088.md?p=a-2-A), semester, trimester, quarter, or other academic period as defined by such institution.
# §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](/usc/20/1066a.md?p=1) for which the first disbursement is made before July 1, 2010, and—
- (A) which is insured by the [Secretary](/usc/20/1003.md?p=17) under this part; or
- (B) which is insured under a program of a [State](/usc/20/1003.md?p=21-A) or of a [nonprofit](/usc/20/1003.md?p=13) private institution or organization which was contracted for, and paid to the student, within the period specified in [paragraph (5)](#a-5), and which—
- (i) in the case of a loan insured prior to July 1, 1967, was made by an [eligible lender](/usc/20/1085.md?p=d-1) and is insured under a program which meets the requirements of [subparagraph (E)](#b-1-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)](#b-1-D) of subsection (b)(1)) at an [eligible institution](/usc/20/1066a.md?p=1), or
- (ii) in the case of a loan insured after June 30, 1967, was made by an [eligible lender](/usc/20/1085.md?p=d-1) and is insured under a program covered by an agreement made pursuant to [subsection (b)](#b),
shall be entitled to have paid on his or her behalf and for his or her account to the [holder](/usc/20/1085.md?p=i) of the loan a portion of the interest on such loan under circumstances described in [paragraph (2)](#a-2).
- (2) **Additional requirements to receive subsidy—**
- (A) Each student qualifying for a portion of an interest payment under [paragraph (1)](#a-1) shall—
- (i) have provided to the lender a statement from the [eligible institution](/usc/20/1066a.md?p=1), 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 [section 1078–7 of this title](/usc/20/1078–7.md);
- (ii) meet the requirements of [subparagraph (B)](#a-2-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)](#a-2-A-ii) of subparagraph (A), a student shall qualify for a portion of an interest payment under [paragraph (1)](#a-1) if the [eligible institution](/usc/20/1066a.md?p=1) has determined and documented the student’s amount of need for a loan based on the student’s estimated [cost of attendance](/usc/20/1087ll.md?p=a), 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)](#a-2-D).
- (C) For the purpose of this paragraph—
- (i) a student’s [cost of attendance](/usc/20/1087ll.md?p=a) shall be determined under [section 1087ll](/usc/20/1087ll.md) of this title;
- (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 [section 1091(b) of this title](/usc/20/1091.md?p=b)), subpart 3 of part A of this subchapter, and parts C and E; plus
- (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 [[42 U.S.C. 12511](/usc/42/12511.md) et seq.]; and
- (bb) any veterans’ education benefits as defined in [section 1087vv(c) of this title](/usc/20/1087vv.md?p=c); and
- (iii) the determination of need and of the amount of a loan by an [eligible institution](/usc/20/1066a.md?p=1) under [subparagraph (B)](#a-2-B) with respect to a student shall be calculated in accordance with part F.
- (D) An [eligible institution](/usc/20/1066a.md?p=1) 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](/usc/20/1078–1.md)[^1] or 1078–8 of this title or a [parent](/usc/20/1021.md?p=16) under [section 1078–2 of this title](/usc/20/1078–2.md) or under any [State](/usc/20/1003.md?p=21-A)-sponsored or private loan program for an [academic year](/usc/20/1088.md?p=a-2-A) for which the determination is made may be used to offset the student aid index of the student for that year.
- (3) **Amount of interest subsidy—**
- (A)
- (i) Subject to [section 1087–1(c) of this title](/usc/20/1087–1.md?p=c), the portion of the interest on a loan which a student is entitled to have paid, on behalf of and for the account of the student, to the [holder](/usc/20/1085.md?p=i) of the loan pursuant to paragraph (1) of this subsection shall be equal to the total amount of the interest on the unpaid principal amount of the loan—
- (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)](#b-1-M) of this section or in [section 1077(a)(2)(C) of this title](/usc/20/1077.md?p=a-2-C).
- (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](/usc/20/1003.md?p=21-A) or private loan insurance program.
- (iii) The [holder](/usc/20/1085.md?p=i) 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](/usc/20/1003.md?p=17) the portion of interest which has been so determined without administrative delay after the receipt by the [Secretary](/usc/20/1003.md?p=17) of an accurate and complete request for payment pursuant to [paragraph (4)](#a-4).
- (iv) The [Secretary](/usc/20/1003.md?p=17) shall pay this portion of the interest to the [holder](/usc/20/1085.md?p=i) 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)](#b) was made, or, if the loan was made by a [State](/usc/20/1003.md?p=21-A) 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](/usc/20/4702.md?p=3) transfer, 3 days before the first disbursement of the loan; or
- (III) in the case of a loan disbursed through an escrow [agent](/usc/20/1094.md?p=i-1), 3 days before the first disbursement of the loan.
- (B) If—
- (i) a [State](/usc/20/1003.md?p=21-A) student loan insurance program is covered by an agreement under [subsection (b)](#b),
- (ii) a statute of such [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=17) determines that [subsection (d)](#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](/usc/20/1003.md?p=17) may pay an administrative cost allowance to the [holder](/usc/20/1085.md?p=i) 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](/usc/20/1003.md?p=21-A)’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](/usc/20/1003.md?p=17)) 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](/usc/20/1085.md?p=i) of a loan with respect to which payments of interest are required to be made by the [Secretary](/usc/20/1003.md?p=17) shall submit to the [Secretary](/usc/20/1003.md?p=17), at such time or times and in such manner as the [Secretary](/usc/20/1003.md?p=17) may prescribe, statements containing such information as may be required by or pursuant to regulation for the purpose of enabling the [Secretary](/usc/20/1003.md?p=17) 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)](#a-1-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](/usc/20/4702.md?p=3) transfers have not been completed.
- (b) **Insurance program agreements to qualify loans for interest subsidies—**
- (1) **Requirements of insurance program—** Any [State](/usc/20/1003.md?p=21-A) or any [nonprofit](/usc/20/1003.md?p=13) private institution or organization may enter into an agreement with the [Secretary](/usc/20/1003.md?p=17) for the purpose of entitling students who receive loans which are insured under a student loan insurance program of that [State](/usc/20/1003.md?p=21-A), institution, or organization to have made on their behalf the payments provided for in [subsection (a)](#a) if the [Secretary](/usc/20/1003.md?p=17) determines that the student loan insurance program—
- (A) authorizes the insurance in any [academic year](/usc/20/1088.md?p=a-2-A), as defined in [section 1088(a)(2) of this title](/usc/20/1088.md?p=a-2), or its equivalent (as determined under regulations of the [Secretary](/usc/20/1003.md?p=17)) for any student who is carrying at an [eligible institution](/usc/20/1066a.md?p=1) or in a program of study abroad approved for credit by the eligible home institution at which such student is enrolled at least one-half the normal full-time academic workload (as determined by the institution) in any amount up to a maximum of—
- (i) in the case of a student at an [eligible institution](/usc/20/1066a.md?p=1) 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](/usc/20/1088.md?p=a-2-A) in length; and
- (II) if such student is enrolled in a program of undergraduate education which is less than 1 [academic year](/usc/20/1088.md?p=a-2-A), 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)](#b-1-A-i-I) as the length of such program measured in semester, trimester, quarter, or clock hours bears to 1 [academic year](/usc/20/1088.md?p=a-2-A);
- (ii) in the case of a student at an [eligible institution](/usc/20/1066a.md?p=1) 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](/usc/20/1088.md?p=a-2-A), 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)](#b-1-A-ii-I) as such remainder measured in semester, trimester, quarter, or clock hours bears to one [academic year](/usc/20/1088.md?p=a-2-A);
- (iii) in the case of a student at an [eligible institution](/usc/20/1066a.md?p=1) 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](/usc/20/1088.md?p=a-2-A), 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)](#b-1-A-iii-I) as such remainder measured in semester, trimester, quarter, or clock hours bears to one [academic year](/usc/20/1088.md?p=a-2-A);
- (iv) in the case of a student who has received an associate or baccalaureate degree and is enrolled in an [eligible program](/usc/20/1088.md?p=b-1) 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)](#b-1-A-ii) and [(iii)](#b-1-A-iii), include any prior enrollment in the [eligible program](/usc/20/1088.md?p=b-1) 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](/usc/20/1003.md?p=17)) at an [eligible institution](/usc/20/1066a.md?p=1), $8,500; and
- (vi) in the case of a student enrolled in coursework specified in sections [1091(b)(3)(B)](/usc/20/1091.md?p=b-3-B) and [1091(b)(4)(B)](/usc/20/1091.md?p=b-4-B) of this title—
- (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](/usc/20/1003.md?p=21-A) required for employment as a teacher in an [elementary school](/usc/20/1003.md?p=9) or [secondary school](/usc/20/1003.md?p=16);
except in cases where the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1085.md?p=e) 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](/usc/20/1078–1.md)[^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](/usc/20/1003.md?p=17)), and (I) including any loans which are insured by the [Secretary](/usc/20/1003.md?p=17) under this section, or by a [guaranty agency](/usc/20/1085.md?p=j), made to such student before the student became a graduate or professional student, but (II) excluding loans made under [section 1078–1](/usc/20/1078–1.md)[^1] or 1078–2 of this title,
except that the [Secretary](/usc/20/1003.md?p=17) may increase the limit applicable to students who are pursuing programs which the [Secretary](/usc/20/1003.md?p=17) determines are exceptionally expensive;
- (C) authorizes the insurance of loans to any individual student for at least 6 [academic years](/usc/20/1088.md?p=a-2-A) of study or their equivalent (as determined under regulations of the [Secretary](/usc/20/1003.md?p=17));
- (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](/usc/20/1003.md?p=17) 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)](#m);
- (E) subject to subparagraphs [(D)](#b-1-D) and [(L)](#b-1-L), and except as provided by [subparagraph (M)](#b-1-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 [section 1078–8 of this title](/usc/20/1078–8.md), the option of repaying the loan in accordance with a standard, graduated, income-sensitive, or extended repayment schedule (as described in [paragraph (9)](#b-9)) established by the lender in accordance with regulations of the [Secretary](/usc/20/1003.md?p=17); and
- (ii) repayment of loans shall be in installments in accordance with the repayment plan selected under [paragraph (9)](#b-9) and commencing at the beginning of the repayment period determined under [paragraph (7)](#b-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 [section 1077a of this title](/usc/20/1077a.md);
- (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](/usc/20/4702.md?p=3) advanced pursuant to [subsection (j)](#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)](#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](/usc/20/4702.md?p=3) under [section 1072a of this title](/usc/20/1072a.md) of a Federal default fee of an amount equal to 1.0 percent of the principal amount of the loan, which fee shall be collected either by deduction from the proceeds of the loan or by payment from other non-Federal sources, and ensures that the proceeds of the Federal default fee will not be used for incentive payments to lenders;
- (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)](#a-1) and [(2)](#a-2);
- (J) provides that a student may obtain insurance under the program for a loan for any year of study at an [eligible institution](/usc/20/1066a.md?p=1);
- (K) in the case of a [State](/usc/20/1003.md?p=21-A) program, provides that such [State](/usc/20/1003.md?p=21-A) program is administered by a single [State](/usc/20/1003.md?p=21-A) agency, or by one or more [nonprofit](/usc/20/1003.md?p=13) private institutions or organizations under supervision of a single [State](/usc/20/1003.md?p=21-A) 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)](#b-9-A-ii), [(iii)](#b-9-A-iii), or [(v)](#b-9-A-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)](#b-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](/usc/20/1003.md?p=17), 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](/usc/20/1066a.md?p=1), 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](/usc/20/1003.md?p=17), or pursuant to a rehabilitation training program for disabled individuals approved by the [Secretary](/usc/20/1003.md?p=17),
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 section [1078–2](/usc/20/1078–2.md) or [1078–3](/usc/20/1078–3.md) of this title), 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, 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](/usc/20/1088.md?p=d-4); or
- (II) is performing [qualifying National Guard duty during a war or other military operation or national emergency](/usc/20/1088.md?p=d-5),
and for the 180-day period following the demobilization date for the service described in subclause [(I)](#b-1-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](/usc/20/1003.md?p=17) under [section 1085(o)](/usc/20/1085.md?p=o) of this title, has caused or will cause the borrower to have an economic hardship; or
- (v) during which the borrower is receiving treatment for cancer and the 6 months after such period;
- (N) provides that [funds](/usc/20/4702.md?p=3) 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](/usc/20/1085.md?p=j), are, at the request of the student, disbursed directly to the student by the means described in [clause (i)](#b-1-N-i), unless such student requests that the check be endorsed, or the [funds](/usc/20/4702.md?p=3) 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](/usc/20/1085.md?p=j) by the means described in [clause (i)](#b-1-N-i).[^2]
- (O) provides that the proceeds of the loans will be disbursed in accordance with the requirements of [section 1078–7 of this title](/usc/20/1078–7.md);
- (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](/usc/20/1085.md?p=i) of the loan, directly or through the [guaranty agency](/usc/20/1085.md?p=j), 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](/usc/20/1021.md?p=16) under [sections 1078–1](/usc/20/1078–1.md)[^1] and 1078–2 of this title;
- (R) with respect to lenders which are [eligible institutions](/usc/20/1066a.md?p=1), provides for the insurance of loans by only such institutions as are located within the geographic area served by such [guaranty agency](/usc/20/1085.md?p=j);
- (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](/usc/20/1066a.md?p=1) within the [State](/usc/20/1003.md?p=21-A), or if such a student is a legal resident of the [State](/usc/20/1003.md?p=21-A) and is accepted for enrollment in or is attending an [eligible institution](/usc/20/1066a.md?p=1) outside that [State](/usc/20/1003.md?p=21-A);
- (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](/usc/20/1066a.md?p=1) during any [academic year](/usc/20/1088.md?p=a-2-A); and (ii) the limitation, suspension, or termination of the eligibility of an [eligible institution](/usc/20/1066a.md?p=1) if—
- (I) such institution is ineligible for the emergency action, limitation, suspension, or termination of [eligible institutions](/usc/20/1066a.md?p=1) under regulations issued by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17);
- (II) there is a [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=17) 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](/usc/20/9101.md?p=3), or [officer](/usc/20/1094.md?p=i-5) of such institution is found guilty in any criminal, civil, or administrative proceeding, or such institution or an owner, [director](/usc/20/9101.md?p=3), or [officer](/usc/20/1094.md?p=i-5) of such institution is found liable in any civil or administrative proceeding, regarding the obtaining, maintenance, or disbursement of [State](/usc/20/1003.md?p=21-A) or Federal grant, loan, or work assistance [funds](/usc/20/4702.md?p=3); or
- (V) such institution or an owner, [director](/usc/20/9101.md?p=3), or [officer](/usc/20/1094.md?p=i-5) of such institution has unpaid financial liabilities involving the improper acquisition, expenditure, or refund of [State](/usc/20/1003.md?p=21-A) or Federal financial assistance [funds](/usc/20/4702.md?p=3);
except that, if a [guaranty agency](/usc/20/1085.md?p=j) limits, suspends, or terminates the participation of an [eligible institution](/usc/20/1066a.md?p=1), the [Secretary](/usc/20/1003.md?p=17) shall apply that limitation, suspension, or termination to all locations of such institution, unless the [Secretary](/usc/20/1003.md?p=17) finds, within 30 days of notification of the action by the [guaranty agency](/usc/20/1085.md?p=j), that the [guaranty agency](/usc/20/1085.md?p=j)’s action did not comply with the requirements of this section;
- (U) provides (i) for the eligibility of all lenders described in [section 1085(d)(1) of this title](/usc/20/1085.md?p=d-1) under reasonable criteria, unless (I) that lender is eliminated as a lender under regulations for the emergency action, limitation, suspension, or termination of a lender under the Federal student loan insurance program or is eliminated as a lender pursuant to criteria issued under the student loan insurance program which are substantially the same as regulations with respect to such eligibility as a lender issued under the Federal student loan insurance program, or (II) there is a [State](/usc/20/1003.md?p=21-A) constitutional prohibition affecting the eligibility of a lender, (ii) assurances that the [guaranty agency](/usc/20/1085.md?p=j) will report to the [Secretary](/usc/20/1003.md?p=17) concerning changes in such criteria, including any procedures in effect under such program to take emergency action, limit, suspend, or terminate lenders, and (iii) for (I) a compliance audit of each lender that originates or holds more than $5,000,000 in loans made under this subchapter for any lender fiscal year (except that each lender described in [section 1085(d)(1)(A)(ii)(III) of this title](/usc/20/1085.md) shall annually submit the results of an audit required by this clause), 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](/usc/20/1003.md?p=17), the results of which shall be submitted to the [Secretary](/usc/20/1003.md?p=17), or (II) with regard to a lender that is audited under [chapter 75](/usc/31/chstV-ch75.md) of title 31, such audit shall be deemed to satisfy the requirements of [subclause (I)](#b-1-I) for the period covered by such audit, except that the [Secretary](/usc/20/1003.md?p=17) may waive the requirements of this clause (iii) if the lender submits to the [Secretary](/usc/20/1003.md?p=17) the results of an audit conducted for other purposes that the [Secretary](/usc/20/1003.md?p=17) determines provides the same information as the audits required by this clause;
- (V) provides authority for the [guaranty agency](/usc/20/1085.md?p=j) to require a participation agreement between the [guaranty agency](/usc/20/1085.md?p=j) and each [eligible institution](/usc/20/1066a.md?p=1) within the [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=17) for uniform claims and procedures pursuant to [section 1082(l)](/usc/20/1082.md?p=l) of this title;
- (X) provides information to the [Secretary](/usc/20/1003.md?p=17) in accordance with [subsection (c)(9)](#c-9) and maintains reserve [funds](/usc/20/4702.md?p=3) determined by the [Secretary](/usc/20/1003.md?p=17) 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)](#b-1-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](/usc/20/1001.md?p=a);
- (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 [section 1078–8 of this title](/usc/20/1078–8.md) and is eligible for a deferment under subparagraph (M) of this paragraph, provide information to the borrower to assist the borrower in understanding the impact of the capitalization of interest on the borrower’s loan principal and on the total amount of interest to be paid during the life of the loan.
- (2) **Contents of insurance program agreement—** Such an agreement shall—
- (A) provide that the [holder](/usc/20/1085.md?p=i) of any such loan will be required to submit to the [Secretary](/usc/20/1003.md?p=17), at such time or times and in such manner as the [Secretary](/usc/20/1003.md?p=17) may prescribe, statements containing such information as may be required by or pursuant to regulation for the purpose of enabling the [Secretary](/usc/20/1003.md?p=17) 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 [section 1087 of this title](/usc/20/1087.md), and as are agreed to by the [Secretary](/usc/20/1003.md?p=17) and the [guaranty agency](/usc/20/1085.md?p=j), as the case may be;
- (C) provide for making such reports, in such form and containing such information, including financial information, as the [Secretary](/usc/20/1003.md?p=17) may reasonably require to carry out the [Secretary](/usc/20/1003.md?p=17)’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](/usc/20/1003.md?p=17) may find necessary to assure the correctness and verification of such reports;
- (D) provide for—
- (i) conducting, except as provided in [clause (ii)](#b-2-D-ii), financial and compliance audits of the [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/1003.md?p=17), the results of which shall be submitted to the [Secretary](/usc/20/1003.md?p=17); or
- (ii) with regard to a guaranty program of a [State](/usc/20/1003.md?p=21-A) which is audited under [chapter 75](/usc/31/chstV-ch75.md) of title 31, deeming such audit to satisfy the requirements of [clause (i)](#b-2-D-i) for the period of time covered by such audit;
- (E)
- (i) provide that any [guaranty agency](/usc/20/1085.md?p=j) may transfer loans which are insured under this part to any other [guaranty agency](/usc/20/1085.md?p=j) with the approval of the [holder](/usc/20/1085.md?p=i) of the loan and such other [guaranty agency](/usc/20/1085.md?p=j); and
- (ii) provide that the lender (or the [holder](/usc/20/1085.md?p=i) of the loan) shall, not later than 120 days after the borrower has left the [eligible institution](/usc/20/1066a.md?p=1), 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](/usc/20/1085.md?p=i) 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](/usc/20/1085.md?p=j), and, upon the request of an [institution of higher education](/usc/20/1001.md?p=a), the [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/1085.md?p=i) concerning repayment of the loan,
except that this [subparagraph (F)](#b-2-F) shall only apply if the borrower is in the grace period described in [section 1077(a)(2)(B) of this title](/usc/20/1077.md?p=a-2-B) or [subsection (b)(7)](#b-7) or is in repayment status.
- (3) **Restrictions on inducements, payments, mailings, and advertising—** A [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/1001.md?p=a), any employee of an [institution of higher education](/usc/20/1001.md?p=a), or any individual or entity in order to secure [applicants](/usc/20/3982.md?p=1) for loans made under this part; or
- (ii) any lender, or any [agent](/usc/20/1094.md?p=i-1), employee, or independent contractor of any lender or [guaranty agency](/usc/20/1085.md?p=j), in order to administer or market loans made under this part (other than a loan made as part of the [guaranty agency](/usc/20/1085.md?p=j)’s lender-of-last-resort program pursuant to [subsection (j)](#j)), for the purpose of securing the designation of the [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/1003.md?p=16) 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](/usc/20/1085.md?p=j);
- (C) perform, for an [institution of higher education](/usc/20/1001.md?p=a) participating in a program under this subchapter, any function that such institution is required to perform under this subchapter, except that the [guaranty agency](/usc/20/1085.md?p=j) may perform functions on behalf of such institution in accordance with section [1092(b)](/usc/20/1092.md?p=b) or [1092(l)](/usc/20/1092.md?p=l) of this title;
- (D) pay, on behalf of an [institution of higher education](/usc/20/1001.md?p=a), another person to perform any function that such institution is required to perform under this subchapter, except that the [guaranty agency](/usc/20/1085.md?p=j) may perform functions on behalf of such institution in accordance with section [1092(b)](/usc/20/1092.md?p=b) or [1092(l)](/usc/20/1092.md?p=l) of this title; or
- (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](/usc/20/1085.md?p=j) to provide technical assistance to institutions of higher education comparable to the technical assistance provided to institutions of higher education by the [Department](/usc/20/1003.md?p=4).
- (4) **Special rule—** With respect to the graduate fellowship program referred to in [paragraph (1)(M)(i)(II)](#b-1-M-i-II), the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) has implemented [section 1092b of this title](/usc/20/1092b.md) and is able to provide to [guaranty agencies](/usc/20/1085.md?p=j) the information required by such section, any [guaranty agency](/usc/20/1085.md?p=j) may request information regarding loans made after January 1, 1987, to students who are residents of the [State](/usc/20/1003.md?p=21-A) for which the agency is the designated guarantor, from any other [guaranty agency](/usc/20/1085.md?p=j) insuring loans to such students.
- (B) Upon a request pursuant to [subparagraph (A)](#b-5-A), a [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/1085.md?p=j) for information on students shall be paid by the [guaranty agency](/usc/20/1085.md?p=j) requesting the information.
- (6) **State guaranty agency information request of State licensing boards—** Each [guaranty agency](/usc/20/1085.md?p=j) is authorized to enter into agreements with each appropriate [State](/usc/20/1003.md?p=21-A) licensing [board](/usc/20/4702.md?p=2) under which the [State](/usc/20/1003.md?p=21-A) licensing [board](/usc/20/4702.md?p=2), upon request, will furnish the [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/1085.md?p=j).
- (7) **Repayment period—**
- (A) In the case of a loan made under [section 1077 of this title](/usc/20/1077.md) or this section, the repayment period shall exclude any period of authorized deferment or forbearance and shall begin 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).
- (B) In the case of a loan made under [section 1078–8 of this title](/usc/20/1078–8.md), the repayment period shall exclude any period of authorized deferment or forbearance, and shall begin as described in [subparagraph (A)](#b-7-A), but interest shall begin to accrue or be paid by the borrower on the day the loan is disbursed.
- (C) In the case of a loan made under section [1078–2](/usc/20/1078–2.md) or [1078–3](/usc/20/1078–3.md) of this title, the repayment period shall begin on the day the loan is disbursed, or, if the loan is disbursed in multiple installments, on the day of the last such disbursement, and shall exclude any period of authorized deferment or forbearance.
- (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)](#b-7-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 [section 10101 of title 10](/usc/10/10101.md) is called or ordered to [active duty](/usc/20/1088.md?p=d-1) for a period of more than 30 days (as defined in [section 101(d)(2)](/usc/20/101.md) of such title). Such period of exclusion shall include the period necessary to resume enrollment at the borrower’s next available regular enrollment period.
- (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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17), 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](/usc/20/1003.md?p=12) 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)](#b-1-L-i); and
- (v) beginning July 1, 2009, an income-based repayment plan that enables a borrower to make a lower monthly payment in accordance with [section 1098e of this title](/usc/20/1098e.md), except that the plan described in this clause shall not be available to a borrower for a loan under [section 1078–2 of this title](/usc/20/1078–2.md) made on behalf of a dependent student or for a consolidation loan under [section 1078–3 of this title](/usc/20/1078–3.md), if the proceeds of such loan were used to discharge the liability of a loan under [section 1078–2 of this title](/usc/20/1078–2.md) made on behalf of a dependent student.
- (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)](#b-9-A), the lender shall provide the borrower with a repayment plan described in [subparagraph (A)(i)](#b-9-A-i).
- (c) **Guaranty agreements for reimbursing losses—**
- (1) **Authority to enter into agreements—**
- (A) The [Secretary](/usc/20/1003.md?p=17) may enter into a guaranty agreement with any [guaranty agency](/usc/20/1085.md?p=j), whereby the [Secretary](/usc/20/1003.md?p=17) shall undertake to reimburse it, under such terms and conditions as the [Secretary](/usc/20/1003.md?p=17) may establish, with respect to losses (resulting from the [default](#c-4) of the student borrower) on the unpaid balance of the principal and accrued interest of any insured loan. The [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/1085.md?p=j) for reimbursement with respect to such losses, the [Secretary](/usc/20/1003.md?p=17) shall pay promptly and without administrative delay. Except as provided in subparagraph (B) of this paragraph and in [paragraph (7)](#c-7), the amount to be paid a [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/1085.md?p=j) shall file a claim for reimbursement with respect to losses under this subsection within 30 days after the [guaranty agency](/usc/20/1085.md?p=j) discharges its insurance obligation on the loan.
- (B) Notwithstanding [subparagraph (A)](#c-1-A)—
- (i) if, for any fiscal year, the amount of such reimbursement payments by the [Secretary](/usc/20/1003.md?p=17) under this subsection exceeds 5 percent of the loans which are insured by such [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/1085.md?p=j) which are in repayment shall be the original principal amount of loans made by a lender which are insured by such a [guaranty agency](/usc/20/1085.md?p=j) 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)](#b-1-E) of this section or such first installment need not be paid pursuant to [subsection (b)(1)(M)](#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](/usc/20/1003.md?p=17) shall apply the provisions of—
- (i) the fourth sentence of [subparagraph (A)](#c-1-A) by substituting “100 percent” for “95 percent”;[^1]
- (ii) [subparagraph (B)(i)](#c-1-B-i) by substituting “100 percent” for “85 percent”; and
- (iii) [subparagraph (B)(ii)](#c-1-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](/usc/20/1085.md?p=j) from another [guaranty agency](/usc/20/1085.md?p=j) pursuant to a plan approved by the [Secretary](/usc/20/1003.md?p=17) in response to the insolvency of the latter such guarantee agency, the [Secretary](/usc/20/1003.md?p=17) shall apply the provision of—
- (i) the fourth sentence of [subparagraph (A)](#c-1-A) by substituting “100 percent” for “95 percent”;[^1]
- (ii) [subparagraph (B)(i)](#c-1-B-i) by substituting “90 percent” for “85 percent”; and
- (iii) [subparagraph (B)(ii)](#c-1-B-ii) by substituting “80 percent” for “75 percent”.
- (F)
- (i) Notwithstanding any other provisions of this section, in the case of [exempt claims](#c-1-F-ii), the [Secretary](/usc/20/1003.md?p=17) shall apply the provisions of—
- (I) the fourth sentence of [subparagraph (A)](#c-1-A) by substituting “100 percent” for “95 percent”;[^1]
- (II) [subparagraph (B)(i)](#c-1-B-i) by substituting “100 percent” for “85 percent”; and
- (III) [subparagraph (B)(ii)](#c-1-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](/usc/20/1021.md?p=16) 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](/usc/20/1003.md?p=17) shall exclude a loan made pursuant to a lender-of-last-resort program when making reimbursement payment calculations under subparagraphs [(B)](#c-1-B) and [(C)](#c-1-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](/usc/20/1085.md?p=f) 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](/usc/20/1085.md?p=j) recoveries on defaulted loans under this part;
- (B) shall provide for making such reports, in such form and containing such information, as the [Secretary](/usc/20/1003.md?p=17) may reasonably require to carry out the [Secretary](/usc/20/1003.md?p=17)’s functions under this subsection, and for keeping such records and for affording such access thereto as the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) pursuant to this subsection, the undertaking of the [Secretary](/usc/20/1003.md?p=17) under the guaranty agreement is acceptable in full satisfaction of [State](/usc/20/1003.md?p=21-A) law or regulation requiring the maintenance of a reserve;
- (D) shall provide that if, after the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17)), there shall be paid over to the [Secretary](/usc/20/1003.md?p=17) (for deposit in the [fund](/usc/20/4702.md?p=3) established by [section 1081 of this title](/usc/20/1081.md)) such proportion of the amounts of such payments as is determined (in accordance with [paragraph (6)(A)](#c-6-A)) to represent his equitable share thereof, but (i) shall provide for subrogation of the United States to the rights of any [insurance beneficiary](#c-4) only to the extent required for the purpose of [paragraph (8)](#c-8); and (ii) except as the [Secretary](/usc/20/1003.md?p=17) may otherwise by or pursuant to regulation provide, amounts so paid by a borrower on such a loan shall be first applied in reduction of principal owing on such loan;
- (E) shall set forth adequate assurance that an amount equal to each payment made under [paragraph (1)](#c-1) will be promptly deposited in or credited to the accounts maintained for the purpose of [section 1072(c) of this title](/usc/20/1072.md?p=c);
- (F) set forth adequate assurances that the [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/1066a.md?p=1) within the area served by the [guaranty agency](/usc/20/1085.md?p=j), length of the borrower’s educational program, or the borrower’s [academic year](/usc/20/1088.md?p=a-2-A) in [school](/usc/20/5802.md?p=a-11);
- (G) shall prohibit the [Secretary](/usc/20/1003.md?p=17) from making any reimbursement under this subsection to a [guaranty agency](/usc/20/1085.md?p=j) when a [default](#c-4) claim is based on an inability to locate the borrower, unless the [guaranty agency](/usc/20/1085.md?p=j), at the time of filing for reimbursement, certifies to the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17); and
- (H) set forth assurances that—
- (i) upon the request of an [eligible institution](/usc/20/1066a.md?p=1), the [guaranty agency](/usc/20/1085.md?p=j) shall, subject to clauses [(ii)](#c-2-H-ii) and [(iii)](#c-2-H-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](/usc/20/1066a.md?p=1) and for whom [default](#c-4) aversion assistance activities have been requested under [subsection (l)](#l);
- (ii) the [guaranty agency](/usc/20/1085.md?p=j) shall not require the payment from the institution of any fee for such information; and
- (iii) the [guaranty agency](/usc/20/1085.md?p=j) 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)](#c-10), and otherwise consistent with the regulations of the [Secretary](/usc/20/1003.md?p=17), 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](/usc/20/1001.md?p=a), a hospital, or a health care facility that offers postgraduate training, provided that if the borrower qualifies for a deferment under [section 1077(a)(2)(C)(vii) of this title](/usc/20/1077.md) or subsection (b)(1)(M)(vii) of this section as in effect prior to the enactment of the Higher Education Amendments of 1992, or [section 1077(a)(2)(C) of this title](/usc/20/1077.md?p=a-2-C) or [subsection (b)(1)(M)](#b-1-M) of this section as amended by such amendments, the borrower has exhausted his or her eligibility for such deferment;
- (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 [section 2174 of title 10](/usc/10/2174.md), and, pursuant to that eligibility, the interest is being paid on such loan under [subsection (o)](#o);
- (ii) the length of the forbearance granted by the lender—
- (I) under [clause (i)(I)](#c-3-A-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)](#c-3-A-i-II) or [(IV)](#c-3-A-i-IV) shall not exceed 3 years; or
- (III) under [clause (i)(III)](#c-3-A-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)](#c-3-A-i), and no adverse information regarding a borrower may be reported to a [consumer reporting agency](/usc/20/1088.md?p=e) solely because of the granting of such forbearance;
- (B) may, to the extent provided in regulations of the [Secretary](/usc/20/1003.md?p=17), 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)](#c-3-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)](#c-3-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)](#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](/usc/20/1085.md?p=j) 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](#c-4). The [Secretary](/usc/20/1003.md?p=17) shall permit lenders to exercise administrative forbearances that do not require the agreement of the borrower, under conditions authorized by the [Secretary](/usc/20/1003.md?p=17). 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)](#b-1-M) or [section 1077(a)(2)(C) of this title](/usc/20/1077.md?p=a-2-C), and (ii) if the borrower is less than 60 days delinquent on such loans at the time of sale or transfer, forbearances for borrowers on loans which are sold or transferred.
- (4) **Definitions—** For the purpose of this subsection, the terms “insurance beneficiary” and “default” have the meanings assigned to them by [section 1085 of this title](/usc/20/1085.md).
- (5) **Applicability to existing loans—** In the case of any guaranty agreement with a [guaranty agency](/usc/20/1085.md?p=j), the [Secretary](/usc/20/1003.md?p=17) may, in accordance with the terms of this subsection, undertake to guarantee loans described in [paragraph (1)](#c-1) which are insured by such [guaranty agency](/usc/20/1085.md?p=j) and are outstanding on the date of execution of the guaranty agreement, but only with respect to [defaults](#c-4) 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)](#c-2-D), the [Secretary](/usc/20/1003.md?p=17)’s equitable share of payments made by the borrower shall be that portion of the payments remaining after the [guaranty agency](/usc/20/1085.md?p=j) with which the [Secretary](/usc/20/1003.md?p=17) 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 [section 1072b of this title](/usc/20/1072b.md), except that—
- (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](/usc/20/1085.md?p=j) 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](/usc/20/1003.md?p=17) a portion of the collection charge under [subclause (I)](#c-6-B-i-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](/usc/20/1003.md?p=17) the entire amount charged under [clause (i)(I)](#c-6-B-i-I) with respect to each defaulted loan that is paid off with [excess consolidation proceeds](#c-6-C).
- (C) For purposes of [subparagraph (B)](#c-6-B), the term “excess consolidation proceeds” means, with respect to any [guaranty agency](/usc/20/1085.md?p=j) 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)](#c-1-C), the amount to be paid a [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/1085.md?p=j) begins to actively carry on a student loan insurance program which is subject to a guaranty agreement under [subsection (b)](#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](/usc/20/1085.md?p=j) in discharge of its insurance obligation insured under such program.
- (B) Notwithstanding the provisions of [paragraph (1)(C)](#c-1-C), the [Secretary](/usc/20/1003.md?p=17) may pay a [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/1085.md?p=j) begins to actively carry on a student loan insurance program which is subject to a guaranty agreement under [subsection (b)](#b) or is one of the 4 succeeding fiscal years.
- (C) The [Secretary](/usc/20/1003.md?p=17) shall continuously monitor the operations of those [guaranty agencies](/usc/20/1085.md?p=j) to which the provisions of subparagraph [(A)](#c-7-A) or [(B)](#c-7-B) are applicable and revoke the application of such subparagraph to any such [guaranty agency](/usc/20/1085.md?p=j) which the [Secretary](/usc/20/1003.md?p=17) determines has not exercised reasonable prudence in the administration of such program.
- (8) **Assignment to protect Federal fiscal interest—** If the [Secretary](/usc/20/1003.md?p=17) determines that the protection of the Federal fiscal interest so requires, a [guaranty agency](/usc/20/1085.md?p=j) shall assign to the [Secretary](/usc/20/1003.md?p=17) any loan of which it is the [holder](/usc/20/1085.md?p=i) and for which the [Secretary](/usc/20/1003.md?p=17) has made a payment pursuant to paragraph (1) of this subsection.
- (9) **Guaranty agency reserve level—**
- (A) Each [guaranty agency](/usc/20/1085.md?p=j) which has entered into an agreement with the [Secretary](/usc/20/1003.md?p=17) pursuant to this subsection shall maintain in the agency’s Federal Student Loan Reserve [Fund](/usc/20/4702.md?p=3) established under [section 1072a of this title](/usc/20/1072a.md) a current minimum reserve level of at least 0.25 percent of the total attributable amount of all outstanding loans guaranteed by such agency. For purposes of this paragraph, such total attributable amount does not include amounts of outstanding loans transferred to the [guaranty agency](/usc/20/1085.md?p=j) from another [guaranty agency](/usc/20/1085.md?p=j) pursuant to a plan of the [Secretary](/usc/20/1003.md?p=17) in response to the insolvency of the latter such [guaranty agency](/usc/20/1085.md?p=j).
- (B) The [Secretary](/usc/20/1003.md?p=17) shall collect, on an annual basis, information from each [guaranty agency](/usc/20/1085.md?p=j) having an agreement under this subsection to enable the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1085.md?p=j) falls below the required minimum reserve level in any 2 consecutive years, (ii) any [guaranty agency](/usc/20/1085.md?p=j)’s Federal reimbursement payments are reduced to 85 percent pursuant to paragraph [(1)(B)(i)](#c-1-B-i), or (iii) the [Secretary](/usc/20/1003.md?p=17) determines that the administrative or financial condition of a [guaranty agency](/usc/20/1085.md?p=j) jeopardizes such agency’s continued ability to perform its responsibilities under its guaranty agreement, then the [Secretary](/usc/20/1003.md?p=17) shall require the [guaranty agency](/usc/20/1085.md?p=j) to submit and implement a management plan acceptable to the [Secretary](/usc/20/1003.md?p=17) within 45 working days of any such event.
- (D)
- (i) If the [Secretary](/usc/20/1003.md?p=17) is not seeking to terminate the [guaranty agency](/usc/20/1085.md?p=j)’s agreement under [subparagraph (E)](#c-9-E), or assuming the [guaranty agency](/usc/20/1085.md?p=j)’s functions under [subparagraph (F)](#c-9-F), a management plan described in [subparagraph (C)](#c-9-C) shall include the means by which the [guaranty agency](/usc/20/1085.md?p=j) will improve its financial and administrative condition to the required level within 18 months.
- (ii) If the [Secretary](/usc/20/1003.md?p=17) is seeking to terminate the [guaranty agency](/usc/20/1085.md?p=j)’s agreement under [subparagraph (E)](#c-9-E), or assuming the [guaranty agency](/usc/20/1085.md?p=j)’s functions under [subparagraph (F)](#c-9-F), a management plan described in [subparagraph (C)](#c-9-C) shall include the means by which the [Secretary](/usc/20/1003.md?p=17) and the [guaranty agency](/usc/20/1085.md?p=j) shall work together to ensure the orderly termination of the operations, and liquidation of the [assets](/usc/20/1087vv.md?p=f-2), of the [guaranty agency](/usc/20/1085.md?p=j).
- (E) The [Secretary](/usc/20/1003.md?p=17) may terminate a [guaranty agency](/usc/20/1085.md?p=j)’s agreement in accordance with [subparagraph (F)](#c-9-F) if—
- (i) a [guaranty agency](/usc/20/1085.md?p=j) required to submit a management plan under this paragraph fails to submit a plan that is acceptable to the [Secretary](/usc/20/1003.md?p=17);
- (ii) the [Secretary](/usc/20/1003.md?p=17) determines that a [guaranty agency](/usc/20/1085.md?p=j) has failed to improve substantially its administrative and financial condition;
- (iii) the [Secretary](/usc/20/1003.md?p=17) determines that the [guaranty agency](/usc/20/1085.md?p=j) is in danger of financial collapse;
- (iv) the [Secretary](/usc/20/1003.md?p=17) determines that such action is necessary to protect the Federal fiscal interest; or
- (v) the [Secretary](/usc/20/1003.md?p=17) determines that such action is necessary to ensure the continued availability of loans to student or [parent](/usc/20/1021.md?p=16) borrowers.
- (F) If a [guaranty agency](/usc/20/1085.md?p=j)’s agreement under this subsection is terminated pursuant to [subparagraph (E)](#c-9-E), then the [Secretary](/usc/20/1003.md?p=17) shall assume responsibility for all functions of the [guaranty agency](/usc/20/1085.md?p=j) under the loan insurance program of such agency. In performing such functions the [Secretary](/usc/20/1003.md?p=17) is authorized to—
- (i) permit the transfer of guarantees to another [guaranty agency](/usc/20/1085.md?p=j);
- (ii) revoke the reinsurance agreement of the [guaranty agency](/usc/20/1085.md?p=j) at a specified date, so as to require the merger, consolidation, or termination of the [guaranty agency](/usc/20/1085.md?p=j);
- (iii) transfer guarantees to the [Department](/usc/20/1003.md?p=4) of Education for the purpose of payment of such claims and process such claims using the claims standards of the [guaranty agency](/usc/20/1085.md?p=j), if such standards are determined by the [Secretary](/usc/20/1003.md?p=17) to be in compliance with this chapter;
- (iv) design and implement a plan to restore the [guaranty agency](/usc/20/1085.md?p=j)’s viability;
- (v) provide the [guaranty agency](/usc/20/1085.md?p=j) with additional advance [funds](/usc/20/4702.md?p=3) in accordance with [section 1072(c)(7) of this title](/usc/20/1072.md?p=c-7), with such restrictions on the use of such [funds](/usc/20/4702.md?p=3) as is determined appropriate by the [Secretary](/usc/20/1003.md?p=17), in order to—
- (I) meet the immediate cash needs of the [guaranty agency](/usc/20/1085.md?p=j);
- (II) ensure the uninterrupted payment of claims; or
- (III) ensure that the [guaranty agency](/usc/20/1085.md?p=j) will make loans as the lender-of-last-resort, in accordance with [subsection (j)](#j);
- (vi) use all [funds](/usc/20/4702.md?p=3) and [assets](/usc/20/1087vv.md?p=f-2) of the [guaranty agency](/usc/20/1085.md?p=j) to assist in the activities undertaken in accordance with this subparagraph and take appropriate action to require the return, to the [guaranty agency](/usc/20/1085.md?p=j) or the [Secretary](/usc/20/1003.md?p=17), of any [funds](/usc/20/4702.md?p=3) or [assets](/usc/20/1087vv.md?p=f-2) provided by the [guaranty agency](/usc/20/1085.md?p=j), under contract or otherwise, to any person or organization; or
- (vii) take any other action the [Secretary](/usc/20/1003.md?p=17) determines necessary to ensure the continued availability of loans made under this part to residents of the [State](/usc/20/1003.md?p=21-A) or [States](/usc/20/1003.md?p=21-A) in which the [guaranty agency](/usc/20/1085.md?p=j) did business, the full honoring of all guarantees issued by the [guaranty agency](/usc/20/1085.md?p=j) prior to the [Secretary](/usc/20/1003.md?p=17)’s assumption of the functions of such agency, and the proper servicing of loans guaranteed by the [guaranty agency](/usc/20/1085.md?p=j) prior to the [Secretary](/usc/20/1003.md?p=17)’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](/usc/20/1003.md?p=21-A) law, if the [Secretary](/usc/20/1003.md?p=17) has terminated or is seeking to terminate a [guaranty agency](/usc/20/1085.md?p=j)’s agreement under [subparagraph (E)](#c-9-E), or has assumed a [guaranty agency](/usc/20/1085.md?p=j)’s functions under [subparagraph (F)](#c-9-F)—
- (i) no [State](/usc/20/1003.md?p=21-A) court may issue any order affecting the [Secretary](/usc/20/1003.md?p=17)’s actions with respect to such [guaranty agency](/usc/20/1085.md?p=j);
- (ii) any contract with respect to the administration of a [guaranty agency](/usc/20/1085.md?p=j)’s reserve [funds](/usc/20/4702.md?p=3), or the administration of any [assets](/usc/20/1087vv.md?p=f-2) purchased or acquired with the reserve [funds](/usc/20/4702.md?p=3) of the [guaranty agency](/usc/20/1085.md?p=j), that is entered into or extended by the [guaranty agency](/usc/20/1085.md?p=j), or any other party on behalf of or with the concurrence of the [guaranty agency](/usc/20/1085.md?p=j), after August 10, 1993, shall provide that the contract is terminable by the [Secretary](/usc/20/1003.md?p=17) upon 30 days notice to the contracting parties if the [Secretary](/usc/20/1003.md?p=17) determines that such contract includes an impermissible transfer of the reserve [funds](/usc/20/4702.md?p=3) or [assets](/usc/20/1087vv.md?p=f-2), or is otherwise inconsistent with the terms or purposes of this section; and
- (iii) no provision of [State](/usc/20/1003.md?p=21-A) law shall apply to the actions of the [Secretary](/usc/20/1003.md?p=17) in terminating the operations of a [guaranty agency](/usc/20/1085.md?p=j).
- (H) Notwithstanding any other provision of law, the [Secretary](/usc/20/1003.md?p=17)’s liability for any outstanding liabilities of a [guaranty agency](/usc/20/1085.md?p=j) (other than outstanding student loan guarantees under this part), the functions of which the [Secretary](/usc/20/1003.md?p=17) has assumed, shall not exceed the fair market value of the reserves of the [guaranty agency](/usc/20/1085.md?p=j), minus any necessary liquidation or other administrative costs.
- (I) The [Secretary](/usc/20/1003.md?p=17) shall not take any action under subparagraph [(E)](#c-9-E) or [(F)](#c-9-F) without giving the [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/1003.md?p=17) pursuant to this paragraph shall be confidential and exempt from disclosure under [section 552 of title 5](/usc/5/552.md), relating to freedom of information, or any other Federal law.
- (K) The [Secretary](/usc/20/1003.md?p=17), within 6 months after the end of each fiscal year, shall submit to the [authorizing committees](/usc/20/1003.md?p=1) a report specifying the [Secretary](/usc/20/1003.md?p=17)’s assessment of the fiscal soundness of the [guaranty agency](/usc/20/1085.md?p=j) system.
- (10) **Documentation of forbearance agreements—** For the purposes of [paragraph (3)](#c-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 [section 3937 of title 50](/usc/50/3937.md)) or of any [State](/usc/20/1003.md?p=21-A) (other than a statute applicable principally to such [State](/usc/20/1003.md?p=21-A)’s student loan insurance program) which limits the rate or amount of interest payable on loans shall apply to a loan—
- (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](/usc/20/1085.md?p=j) under a program covered by an agreement made pursuant to [subsection (b)](#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](/usc/20/1003.md?p=17)—
- (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)](#f-1-C), pay to each [guaranty agency](/usc/20/1085.md?p=j), 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)](#f-1-C), pay to each [guaranty agency](/usc/20/1085.md?p=j), 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)](#f-1-A) shall be paid on a quarterly basis. The [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/1085.md?p=j) 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](/usc/20/4702.md?p=3) transfers have not been completed.
- (g) **Action on insurance program and guaranty agreements—** If a [nonprofit](/usc/20/1003.md?p=13) private institution or organization—
- (1) applies to enter into an agreement with the [Secretary](/usc/20/1003.md?p=17) under subsections [(b)](#b) and [(c)](#c) with respect to a student loan insurance program to be carried on in a [State](/usc/20/1003.md?p=21-A) with which the [Secretary](/usc/20/1003.md?p=17) does not have an agreement under [subsection (b)](#b), and
- (2) as provided in the application, undertakes to meet the requirements of section [1072(c)(6)(B)(i)](/usc/20/1072.md?p=c-6-B-i), [(ii)](/usc/20/1072.md), and [(iii)](/usc/20/1072.md) of this title,
the [Secretary](/usc/20/1003.md?p=17) shall consider and act upon such application within 180 days, and shall forthwith notify the [authorizing committees](/usc/20/1003.md?p=1) 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](/usc/20/1085.md?p=j) or [eligible lender](/usc/20/1085.md?p=d-1) (hereafter in this subsection referred to as the “escrow [agent](/usc/20/1094.md?p=i-1)”) may enter into an agreement with any other [eligible lender](/usc/20/1085.md?p=d-1) that is not an [eligible institution](/usc/20/1066a.md?p=1) or an agency or instrumentality of the [State](/usc/20/1003.md?p=21-A) (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](/usc/20/1094.md?p=i-1) 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](/usc/20/1066a.md?p=1) when [funds](/usc/20/4702.md?p=3) are escrowed under this subsection for a student at such institution.
- (2) **Authority of escrow agent—** Each escrow [agent](/usc/20/1094.md?p=i-1) 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](/usc/20/1094.md?p=i-1) pursuant to the escrow agreement entered into under such [paragraph (1)](#i-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](/usc/20/4702.md?p=3) when the student ceases to carry at an [eligible institution](/usc/20/1066a.md?p=1) 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](/usc/20/1003.md?p=21-A), the [guaranty agency](/usc/20/1085.md?p=j) or an [eligible lender](/usc/20/1085.md?p=d-1) in the [State](/usc/20/1003.md?p=21-A) described in [section 1085(d)(1)(D) of this title](/usc/20/1085.md?p=d-1-D) shall, before July 1, 2010, make loans directly, or through an agreement with an [eligible lender](/usc/20/1085.md?p=d-1) or lenders, to eligible students and [parents](/usc/20/1021.md?p=16) who are otherwise unable to obtain loans under this part (except for consolidation loans under [section 1078–3 of this title](/usc/20/1078–3.md)) or who attend an [institution of higher education](/usc/20/1001.md?p=a) in the [State](/usc/20/1003.md?p=21-A) that is designated under [paragraph (4)](#j-4). Loans made under this subsection shall not exceed the amount of the need of the borrower, as determined under [subsection (a)(2)(B)](#a-2-B), nor be less than $200. No loan under section 1078, [1078–2](/usc/20/1078–2.md), or [1078–8](/usc/20/1078–8.md) of this title that is made pursuant to this subsection shall be made with interest rates, origination or default fees, or other terms and conditions that are more favorable to the borrower than the maximum interest rates, origination or default fees, or other terms and conditions applicable to that type of loan under this part. The [guaranty agency](/usc/20/1085.md?p=j) shall consider the request of any [eligible lender](/usc/20/1085.md?p=d-1), as defined under [section 1085(d)(1)(A) of this title](/usc/20/1085.md?p=d-1-A), to serve as the lender-of-last-resort pursuant to this subsection.
- (2) **Rules and operating procedures—** The [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/1003.md?p=17), 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](/usc/20/1085.md?p=d-1), nor, in the case of students and [parents](/usc/20/1021.md?p=16) applying for loans under this subsection because of an inability to otherwise obtain loans under this part (except for consolidation loans under [section 1078–3 of this title](/usc/20/1078–3.md)), be required to receive more than two rejections from [eligible lenders](/usc/20/1085.md?p=d-1) in order to obtain a loan under this subsection;
- (C) information about the availability of loans under the program is made available to institutions of higher education in the [State](/usc/20/1003.md?p=21-A); 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](/usc/20/1003.md?p=17) is authorized to provide a [guaranty agency](/usc/20/1085.md?p=j) designated for a [State](/usc/20/1003.md?p=21-A) with additional advance [funds](/usc/20/4702.md?p=3) in accordance with [subparagraph (C)](#j-3-C) and [section 1072(c)(7) of this title](/usc/20/1072.md?p=c-7), with such restrictions on the use of such [funds](/usc/20/4702.md?p=3) as are determined appropriate by the [Secretary](/usc/20/1003.md?p=17), in order to ensure that the [guaranty agency](/usc/20/1085.md?p=j) will make loans as the lender-of-last-resort. Such agency shall make such loans in accordance with this subsection and the requirements of the [Secretary](/usc/20/1003.md?p=17).
- (B) Notwithstanding any other provision in this part, a [guaranty agency](/usc/20/1085.md?p=j) serving as a lender-of-last-resort under this paragraph shall be paid a fee, established by the [Secretary](/usc/20/1003.md?p=17), for making such loans in lieu of interest and special allowance subsidies, and shall be required to assign such loans to the [Secretary](/usc/20/1003.md?p=17) on demand. Upon such assignment, the portion of the advance represented by the loans assigned shall be considered repaid by such [guaranty agency](/usc/20/1085.md?p=j).
- (C) The [Secretary](/usc/20/1003.md?p=17) shall exercise the authority described in [subparagraph (A)](#j-3-A) only if the [Secretary](/usc/20/1003.md?p=17) determines that eligible borrowers are seeking and are unable to obtain loans under this part or designates an [institution of higher education](/usc/20/1001.md?p=a) for participation in the program under this subsection under [paragraph (4)](#j-4), and that the [guaranty agency](/usc/20/1085.md?p=j) designated for that [State](/usc/20/1003.md?p=21-A) has the capability to provide lender-of-last-resort loans in a timely manner, in accordance with the [guaranty agency](/usc/20/1085.md?p=j)’s obligations under [paragraph (1)](#j-1), but cannot do so without advances provided by the [Secretary](/usc/20/1003.md?p=17) under this paragraph. If the [Secretary](/usc/20/1003.md?p=17) makes the determinations described in the preceding sentence and determines that it would be cost-effective to do so, the [Secretary](/usc/20/1003.md?p=17) may provide advances under this paragraph to such [guaranty agency](/usc/20/1085.md?p=j). If the [Secretary](/usc/20/1003.md?p=17) determines that such [guaranty agency](/usc/20/1085.md?p=j) does not have such capability, or will not provide such loans in a timely fashion, the [Secretary](/usc/20/1003.md?p=17) may provide such advances to enable another [guaranty agency](/usc/20/1085.md?p=j), that the [Secretary](/usc/20/1003.md?p=17) determines to have such capability, to make lender-of-last-resort loans to eligible borrowers in that [State](/usc/20/1003.md?p=21-A) who are experiencing loan access problems or to eligible borrowers who attend an institution in the [State](/usc/20/1003.md?p=21-A) that is designated under [paragraph (4)](#j-4).
- (4) **Institution-wide student qualification—** Upon the request of an [institution of higher education](/usc/20/1001.md?p=a) and pursuant to standards developed by the [Secretary](/usc/20/1003.md?p=17), the [Secretary](/usc/20/1003.md?p=17) shall designate such institution for participation in the lender-of-last-resort program under this paragraph.[^5] If the [Secretary](/usc/20/1003.md?p=17) designates an institution under this paragraph, the [guaranty agency](/usc/20/1085.md?p=j) designated for the [State](/usc/20/1003.md?p=21-A) in which the institution is located shall make loans, in the same manner as such loans are made under [paragraph (1)](#j-1), to students and [parent](/usc/20/1021.md?p=16) borrowers of the designated institution, regardless of whether the students or [parent](/usc/20/1021.md?p=16) borrowers are otherwise unable to obtain loans under this part (other than a consolidation loan under [section 1078–3 of this title](/usc/20/1078–3.md)).
- (5) **Standards developed by the Secretary—** In developing standards with respect to [paragraph (4)](#j-4), the [Secretary](/usc/20/1003.md?p=17) may require—
- (A) an [institution of higher education](/usc/20/1001.md?p=a) to demonstrate that, despite [due diligence](/usc/20/1085.md?p=f) on the part of the institution, the institution has been unable to secure the commitment of [eligible lenders](/usc/20/1085.md?p=d-1) 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](/usc/20/1001.md?p=a) shall demonstrate that the institution has met a minimum threshold, as determined by the [Secretary](/usc/20/1003.md?p=17), for the number or percentage of students at such institution who have received rejections from [eligible lenders](/usc/20/1085.md?p=d-1) for loans under this part; and
- (C) any other standards and guidelines the [Secretary](/usc/20/1003.md?p=17) determines to be appropriate.
- (6) **Expiration of authority—** The [Secretary](/usc/20/1003.md?p=17)’s authority under [paragraph (4)](#j-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](/usc/20/1001.md?p=a), or borrowers from such institution, to participate in the program under this subsection pursuant to a designation of the institution by the [Secretary](/usc/20/1003.md?p=17) under [paragraph (4)](#j-4) shall expire on June 30, 2010. After such date, borrowers from an institution designated under [paragraph (4)](#j-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](/usc/20/1085.md?p=j) or [eligible lender](/usc/20/1085.md?p=d-1) 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)](#b-3) and the requirements of [section 1085(d)(5) of this title](/usc/20/1085.md?p=d-5); and
- (B) shall not advertise, market, or otherwise promote loans under this subsection, except that nothing in this paragraph shall prohibit a [guaranty agency](/usc/20/1085.md?p=j) from fulfilling its responsibilities under [paragraph (2)(C)](#j-2-C).
- (9) **Dissemination and reporting—**
- (A) **In general—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=1) and make available to the public—
- (I) copies of any new or revised plans or agreements made by [guaranty agencies](/usc/20/1085.md?p=j) or the [Department](/usc/20/1003.md?p=4) 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](/usc/20/1085.md?p=j) and [eligible lender](/usc/20/1085.md?p=d-1); and
- (bb) any related payments by the [Department](/usc/20/1003.md?p=4), a [guaranty agency](/usc/20/1085.md?p=j), or an [eligible lender](/usc/20/1085.md?p=d-1); 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](/usc/20/1003.md?p=1) and make available to the public—
- (I) copies of any new or revised plans or agreements made by [guaranty agencies](/usc/20/1085.md?p=j) or the [Department](/usc/20/1003.md?p=4) 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](/usc/20/1085.md?p=j) and [eligible lender](/usc/20/1085.md?p=d-1); and
- (bb) any related payments by the [Department](/usc/20/1003.md?p=4), a [guaranty agency](/usc/20/1085.md?p=j), or an [eligible lender](/usc/20/1085.md?p=d-1).
- (B) **Separate reporting—** The information required to be reported under [subparagraph (A)(ii)(II)](#j-9-A-ii-II) shall be reported separately for loans originated or approved pursuant to [paragraph (4)](#j-4), or payments related to such loans, for the time period in which the [Secretary](/usc/20/1003.md?p=17) is authorized to make designations under [paragraph (4)](#j-4).
- (k) **Information on defaults—**
- (1) **Provision of information to eligible institutions—** Notwithstanding any other provision of law, in order to notify [eligible institutions](/usc/20/1066a.md?p=1) of former students who are in default of their continuing obligation to repay student loans, each [guaranty agency](/usc/20/1085.md?p=j) shall, upon the request of an [eligible institution](/usc/20/1066a.md?p=1), furnish information with respect to students who were enrolled at the [eligible institution](/usc/20/1066a.md?p=1) 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)](#k-1).
- (3) **Borrower location information—** Any information provided by the institution relating to borrower location shall be used by the [guaranty agency](/usc/20/1085.md?p=j) in conducting required skip-tracing activities.
- (4) **Provision of information to borrowers in default—** Each [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/1085.md?p=j) having an agreement with the [Secretary](/usc/20/1003.md?p=17) under [subsection (c)](#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](/usc/20/1085.md?p=j), in accordance with the provisions of this paragraph, may transfer from the Federal Student Loan Reserve [Fund](/usc/20/4702.md?p=3) under [section 1072a of this title](/usc/20/1072a.md) to the Agency Operating [Fund](/usc/20/4702.md?p=3) under [section 1072b of this title](/usc/20/1072b.md) a default aversion fee. Such fee shall be paid for any loan on which a claim for default has not been paid as a result of the loan being brought into [current repayment status](#l-2-C) by the [guaranty agency](/usc/20/1085.md?p=j) on or before the 300th day after the loan becomes 60 days delinquent.
- (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](/usc/20/1085.md?p=j) 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](/usc/20/1085.md?p=j) averts the default unless—
- (i) at least 18 months has elapsed between the date the borrower entered [current repayment status](#l-2-C) 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](/usc/20/1003.md?p=17) may require borrowers who have defaulted on loans made under this part that are assigned to the [Secretary](/usc/20/1003.md?p=17) under [subsection (c)(8)](#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](/usc/20/1003.md?p=17) 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 [section 1098e of this title](/usc/20/1098e.md), as the case may be.
- (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](/usc/20/1003.md?p=17) pursuant to [subsection (c)(8)](#c-8).
- (n) **Blanket certificate of loan guaranty—**
- (1) **In general—** Subject to [paragraph (3)](#n-3), any [guaranty agency](/usc/20/1085.md?p=j) that has entered into or enters into any insurance program agreement with the [Secretary](/usc/20/1003.md?p=17) under this part may—
- (A) offer [eligible lenders](/usc/20/1085.md?p=d-1) 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](/usc/20/1085.md?p=j) of individual loans for eligible borrowers enrolled in [eligible programs](/usc/20/1088.md?p=b-1) at [eligible institutions](/usc/20/1066a.md?p=1); and
- (B) provide [eligible lenders](/usc/20/1085.md?p=d-1) 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](/usc/20/1085.md?p=d-1) may not make a loan to a borrower under this section after such lender receives a notification from the [guaranty agency](/usc/20/1085.md?p=j) that the borrower is not an eligible borrower.
- (B) A [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/1003.md?p=17) may permit, on a pilot basis, a limited number of [guaranty agencies](/usc/20/1085.md?p=j) to offer blanket certificates of guaranty under this subsection. Beginning in fiscal year 2001, any [guaranty agency](/usc/20/1085.md?p=j) that has an insurance program agreement with the [Secretary](/usc/20/1003.md?p=17) may offer blanket certificates of guaranty under this subsection.
- (4) **Report required—** The [Secretary](/usc/20/1003.md?p=17) shall, at the conclusion of the pilot program under [paragraph (3)](#n-3), provide a report to the [authorizing committees](/usc/20/1003.md?p=1) 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](/usc/20/4702.md?p=3) received by transfer to the [Secretary](/usc/20/1003.md?p=17) under [section 2174 of title 10](/usc/10/2174.md) or [section 3078 of title 33](/usc/33/3078.md) for the payment of interest and any [special allowance](#o-3) on a loan to a member of the Armed Forces or an [officer](/usc/20/1094.md?p=i-5) in the commissioned [officer](/usc/20/1094.md?p=i-5) corps of the National Oceanic and Atmospheric Administration, respectively, that is made, insured, or guaranteed under this part, the [Secretary](/usc/20/1003.md?p=17) shall pay the interest and [special allowance](#o-3) on such loan as due for a period not in excess of 36 consecutive months. The [Secretary](/usc/20/1003.md?p=17) may not pay interest or any [special allowance](#o-3) on such a loan out of any [funds](/usc/20/4702.md?p=3) other than [funds](/usc/20/4702.md?p=3) that have been so transferred.
- (2) **Forbearance—** During the period in which the [Secretary](/usc/20/1003.md?p=17) is making payments on a loan under [paragraph (1)](#o-1), the lender shall grant the borrower forbearance in accordance with the guaranty agreement under [subsection (c)(3)(A)(i)(IV)](#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 [section 1087–1 of this title](/usc/20/1087–1.md).
# §1078–1. Voluntary flexible agreements with guaranty agencies
- (a) **Voluntary agreements—**
- (1) **Authority—** Subject to [paragraph (2)](#a-2),[^1] the [Secretary](/usc/20/1003.md?p=17) may enter into a voluntary, flexible agreement with a [guaranty agency](/usc/20/1085.md?p=j) under this section, in lieu of agreements with a [guaranty agency](/usc/20/1085.md?p=j) under subsections (b) and (c) of [section 1078 of this title](/usc/20/1078.md). The [Secretary](/usc/20/1003.md?p=17) may waive or modify any requirement under such subsections, except that the [Secretary](/usc/20/1003.md?p=17) may not waive—
- (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 [section 1078(b)(3) of this title](/usc/20/1078.md?p=b-3); or
- (C) the Federal default fee required by [section 1078(b)(1)(H) of this title](/usc/20/1078.md?p=b-1-H) and the second sentence of [section 1078–8(h) of this title](/usc/20/1078–8.md?p=h).
- (2) **Eligibility—** During fiscal years 1999, 2000, and 2001, the [Secretary](/usc/20/1003.md?p=17) may enter into a voluntary, flexible agreement with not more than 6 [guaranty agencies](/usc/20/1085.md?p=j) that had 1 or more agreements with the [Secretary](/usc/20/1003.md?p=17) under subsections (b) and (c) of [section 1078 of this title](/usc/20/1078.md) as of the day before October 7, 1998. Beginning in fiscal year 2002, any [guaranty agency](/usc/20/1085.md?p=j) or consortium thereof may enter into a voluntary flexible agreement with the [Secretary](/usc/20/1003.md?p=17).
- (3) **Report required—**
- (A) **In general—** The [Secretary](/usc/20/1003.md?p=17), in consultation with the [guaranty agencies](/usc/20/1085.md?p=j) operating under voluntary flexible agreements, shall report on an annual basis to the [authorizing committees](/usc/20/1003.md?p=1) 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](/usc/20/1085.md?p=j) operating under an agreement under subsection (b) or (c) of [section 1078 of this title](/usc/20/1078.md);
- (ii) consumer education programs described in [section 1083a of this title](/usc/20/1083a.md); and
- (iii) the availability and delivery of student financial aid.
- (B) **Contents—** Each report described in [subparagraph (A)](#a-3-A) shall include—
- (i) a description of each voluntary flexible agreement and the performance goals established by the [Secretary](/usc/20/1003.md?p=17) for each agreement;
- (ii) a list of—
- (I) [guaranty agencies](/usc/20/1085.md?p=j) operating under voluntary flexible agreements;
- (II) the specific statutory or regulatory waivers provided to each such [guaranty agency](/usc/20/1085.md?p=j); and
- (III) any other waivers provided to other [guaranty agencies](/usc/20/1085.md?p=j) under [paragraph (1)](#a-1);
- (iii) a description of the standards by which each [guaranty agency](/usc/20/1085.md?p=j)’s performance under the [guaranty agency](/usc/20/1085.md?p=j)’s voluntary flexible agreement was assessed and the degree to which each [guaranty agency](/usc/20/1085.md?p=j) achieved the performance standards;
- (iv) an analysis of the fees paid by the [Secretary](/usc/20/1003.md?p=17), 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](/usc/20/1085.md?p=j).
- (b) **Terms of agreement—** An agreement between the [Secretary](/usc/20/1003.md?p=17) and a [guaranty agency](/usc/20/1085.md?p=j) under this section—
- (1) shall be developed by the [Secretary](/usc/20/1003.md?p=17), in consultation with the [guaranty agency](/usc/20/1085.md?p=j), on a case-by-case basis;
- (2) may only include provisions—
- (A) specifying the responsibilities of the [guaranty agency](/usc/20/1085.md?p=j) under the agreement, with respect to—
- (i) administering the issuance of insurance on loans made under this part on behalf of the [Secretary](/usc/20/1003.md?p=17);
- (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](/usc/20/1003.md?p=17), and reporting the result thereof to the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/5802.md?p=a-11) and students in support of access to higher education;
- (B) regarding the fees the [Secretary](/usc/20/1003.md?p=17) shall pay, in lieu of revenues that the [guaranty agency](/usc/20/1085.md?p=j) may otherwise receive under this part, to the [guaranty agency](/usc/20/1085.md?p=j) under the agreement, and other [funds](/usc/20/4702.md?p=3) that the [guaranty agency](/usc/20/1085.md?p=j) may receive or retain under the agreement, except that in no case may the cost to the [Secretary](/usc/20/1003.md?p=17) of the agreement, as reasonably projected by the [Secretary](/usc/20/1003.md?p=17), exceed the cost to the [Secretary](/usc/20/1003.md?p=17), 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](/usc/20/1003.md?p=17) and the [guaranty agency](/usc/20/1085.md?p=j);
- (D) regarding the standards by which the [guaranty agency](/usc/20/1085.md?p=j)’s performance of the agency’s responsibilities under the agreement will be assessed, and the consequences for a [guaranty agency](/usc/20/1085.md?p=j)’s failure to achieve a specified level of performance on 1 or more performance standards;
- (E) regarding the circumstances in which a [guaranty agency](/usc/20/1085.md?p=j)’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](/usc/20/4702.md?p=3), that relate to the program under this part and in which the [Secretary](/usc/20/1003.md?p=17) permits the [guaranty agency](/usc/20/1085.md?p=j) to engage; and
- (G) such other provisions as the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1085.md?p=j) 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](/usc/20/1003.md?p=17) shall publish in the Federal Register a notice to all [guaranty agencies](/usc/20/1085.md?p=j) that sets forth—
- (A) an invitation for the [guaranty agencies](/usc/20/1085.md?p=j) to enter into agreements under this section; and
- (B) the criteria that the [Secretary](/usc/20/1003.md?p=17) will use for selecting the [guaranty agencies](/usc/20/1085.md?p=j) with which the [Secretary](/usc/20/1003.md?p=17) will enter into agreements under this section.
- (2) **Agreement notice—** The [Secretary](/usc/20/1003.md?p=17) shall notify the members of the [authorizing committees](/usc/20/1003.md?p=1) 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](/usc/20/1003.md?p=17) for the agreement;
- (B) a list of participating [guaranty agencies](/usc/20/1085.md?p=j) and the specific statutory or regulatory waivers provided to each [guaranty agency](/usc/20/1085.md?p=j);
- (C) a description of the standards by which each [guaranty agency](/usc/20/1085.md?p=j)’s performance under the agreement will be assessed; and
- (D) a description of the fees that will be paid to each participating [guaranty agency](/usc/20/1085.md?p=j).
- (3) **Waiver notice—** The [Secretary](/usc/20/1003.md?p=17) shall notify the members of the [authorizing committees](/usc/20/1003.md?p=1) not later than 30 days prior to the granting of a waiver pursuant to [subsection (a)(2)](#a-2)[^1] to a [guaranty agency](/usc/20/1085.md?p=j) 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 [section 1078(b)(3) of this title](/usc/20/1078.md?p=b-3) that are not part of such an agreement, shall be readily available to the public.
- (5) **Modification notice—** The [Secretary](/usc/20/1003.md?p=17) shall notify the members of the [authorizing committees](/usc/20/1003.md?p=1) 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](/usc/20/1003.md?p=17) shall reinstate the [guaranty agency](/usc/20/1085.md?p=j)’s prior agreements under subsections (b) and (c) of [section 1078 of this title](/usc/20/1078.md), subject only to such additional requirements as the [Secretary](/usc/20/1003.md?p=17) determines to be necessary in order to ensure the efficient transfer of responsibilities between the agreement under this section and the agreements under subsections (b) and (c) of [section 1078 of this title](/usc/20/1078.md), and including the [guaranty agency](/usc/20/1085.md?p=j)’s compliance with reserve requirements under sections [1072](/usc/20/1072.md) and [1078](/usc/20/1078.md) of this title.
# §1078–2. Federal PLUS loans
- (a) **Authority to borrow—**
- (1) **Authority and eligibility—** Prior to July 1, 2010, a graduate or professional [student](#a-3-A) or the [parents](/usc/20/1021.md?p=16) of a dependent [student](#a-3-A) shall be eligible to borrow [funds](/usc/20/4702.md?p=3) under this section in amounts specified in [subsection (b)](#b), if—
- (A) the graduate or professional [student](#a-3-A) or the [parents](/usc/20/1021.md?p=16) do not have an adverse credit history as determined pursuant to regulations promulgated by the [Secretary](/usc/20/1003.md?p=17);
- (B) in the case of a graduate or professional [student](#a-3-A) or [parent](/usc/20/1021.md?p=16) who has been convicted of, or has pled nolo contendere or guilty to, a crime involving fraud in obtaining [funds](/usc/20/4702.md?p=3) under this subchapter, such graduate or professional [student](#a-3-A) or [parent](/usc/20/1021.md?p=16) has completed the repayment of such [funds](/usc/20/4702.md?p=3) to the [Secretary](/usc/20/1003.md?p=17), or to the [holder](/usc/20/1085.md?p=i) in the case of a loan under this subchapter obtained by fraud; and
- (C) the graduate or professional [student](#a-3-A) or the [parents](/usc/20/1021.md?p=16) meet such other eligibility criteria as the [Secretary](/usc/20/1003.md?p=17) may establish by regulation, after consultation with [guaranty agencies](/usc/20/1085.md?p=j), [eligible lenders](/usc/20/1085.md?p=d-1), and other organizations involved in [student](#a-3-A) financial assistance.
- (2) **Terms, conditions, and benefits—** Except as provided in subsections [(c)](#c), [(d)](#d), and [(e)](#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](/usc/20/1021.md?p=16) borrower under this section.
- (B)
- (i) **Extenuating circumstances—** An [eligible lender](/usc/20/1085.md?p=d-1) may determine that extenuating circumstances exist under the regulations promulgated pursuant to [paragraph (1)(A)](#a-1-A) if, during the period beginning January 1, 2007, and ending December 31, 2009, an [applicant](/usc/20/3982.md?p=1) for a loan under this section—
- (I) is or has been delinquent for 180 days or fewer on [mortgage loan](#a-3-B-ii) 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)](#a-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](#a-3-A) that is secured by the primary residence of the [borrower](#a-3-A).
- (iii) **Rule of construction—** Nothing in this subparagraph shall be construed to limit an [eligible lender](/usc/20/1085.md?p=d-1)’s authority under the regulations promulgated pursuant to [paragraph (1)(A)](#a-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](#a-3-A) aid index in the determination of need under this subchapter, but no loan may be made to any graduate or professional [student](#a-3-A) or any [parent](/usc/20/1021.md?p=16) under this section for any [academic year](/usc/20/1088.md?p=a-2-A) in excess of (A) the [student](#a-3-A)’s estimated [cost of attendance](/usc/20/1087ll.md?p=a), minus (B) other financial aid as certified by the [eligible institution](/usc/20/1066a.md?p=1) under [section 1078(a)(2)(A) of this title](/usc/20/1078.md?p=a-2-A). The annual insurable limit on account of any [student](#a-3-A) shall not be deemed to be exceeded by a [line of credit](/usc/20/1085.md?p=e) under which actual payments to the [borrower](#a-3-A) will not be made in any year in excess of the annual limit.
- (c) **PLUS loan disbursement—** All loans made under this section shall be disbursed in accordance with the requirements of [section 1078–7 of this title](/usc/20/1078–7.md) and shall be disbursed by—
- (1) an electronic transfer of [funds](/usc/20/4702.md?p=3) from the lender to the [eligible institution](/usc/20/1066a.md?p=1); or
- (2) a check copayable to the [eligible institution](/usc/20/1066a.md?p=1) and the graduate or professional [student](#a-3-A) or [parent](/usc/20/1021.md?p=16) [borrower](#a-3-A).
- (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](/usc/20/1021.md?p=16) [borrower](#a-3-A) or the graduate or professional [student](#a-3-A) [borrower](#a-3-A) meets the conditions required for a deferral under section [1077(a)(2)(C)](/usc/20/1077.md?p=a-2-C) or [1078(b)(1)(M)](/usc/20/1078.md?p=b-1-M) of this title; and
- (ii) upon the request of the [parent](/usc/20/1021.md?p=16) [borrower](#a-3-A), during any period during which the [student](#a-3-A) on whose behalf the loan was borrowed by the [parent](/usc/20/1021.md?p=16) [borrower](#a-3-A) meets the conditions required for a deferral under section [1077(a)(2)(C)(i)(I)](/usc/20/1077.md?p=a-2-C-i-I) or [1078(b)(1)(M)(i)(I)](/usc/20/1078.md?p=b-1-M-i-I) of this title; and
- (B)
- (i) in the case of a [parent](/usc/20/1021.md?p=16) [borrower](#a-3-A), upon the request of the [parent](/usc/20/1021.md?p=16) [borrower](#a-3-A), during the 6-month period beginning on the later of—
- (I) the day after the date the [student](#a-3-A) 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](/usc/20/1021.md?p=16) [borrower](#a-3-A) is also a [student](#a-3-A), the day after the date such [parent](/usc/20/1021.md?p=16) [borrower](#a-3-A) ceases to carry at least one-half such a workload; and
- (ii) in the case of a graduate or professional [student](#a-3-A) [borrower](#a-3-A), during the 6-month period beginning on the day after the date such [student](#a-3-A) 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)](#d-1) shall, if agreed upon by the [borrower](#a-3-A) 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](#a-3-A).
- (3) **Subsidies prohibited—** No payments to reduce interest costs shall be paid pursuant to [section 1078(a) of this title](/usc/20/1078.md?p=a) on loans made pursuant to this section.
- (4) **Applicable rates of interest—** Interest on loans made pursuant to this section shall be at the applicable rate of interest provided in [section 1077a of this title](/usc/20/1077a.md).
- (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 [section 1077a(c)(4) of this title](/usc/20/1077a.md?p=c-4).
- (e) **Refinancing—**
- (1) **Refinancing to secure combined payment—** An [eligible lender](/usc/20/1085.md?p=d-1) may at any time consolidate loans held by it which are made under this section to a [borrower](#a-3-A), 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](#a-3-A) who is electing to obtain variable interest under paragraph [(2)](#e-2) or [(3)](#e-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](/usc/20/1003.md?p=17) or [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/1085.md?p=d-1) 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](#a-3-A) to obtain the interest rate provided under [section 1077a(c)(4) of this title](/usc/20/1077a.md?p=c-4). A lender offering to reissue a loan or loans for such purpose may charge a [borrower](#a-3-A) an amount not to exceed $100 to cover the administrative costs of reissuing such loan or loans, not more than one-half of which shall be paid to the guarantor of the loan being reissued to cover costs of reissuance. Reissuance of a loan under this paragraph shall not affect any insurance applicable with respect to the loan, and no additional insurance fee may be charged to the [borrower](#a-3-A) with respect to the loan.
- (3) **Refinancing by discharge of previous loan—** A [borrower](#a-3-A) who has applied to an original lender for reissuance of a loan under [paragraph (2)](#e-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 [section 1077a(c)(4) of this title](/usc/20/1077a.md?p=c-4);
- (B) shall not result in the extension of the duration of the note (other than as permitted under [subsection (d)(5)(B)](#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](#a-3-A) 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](#a-3-A)’s original loan in lieu of presentation of the original promissory note.
- (f) **Verification of immigration status and social security number—** A [parent](/usc/20/1021.md?p=16) who wishes to borrow [funds](/usc/20/4702.md?p=3) under this section shall be subject to verification of the [parent](/usc/20/1021.md?p=16)’s—
- (1) immigration status in the same manner as immigration status is verified for [students](#a-3-A) under [section 1091(g) of this title](/usc/20/1091.md?p=g); and
- (2) social security number in the same manner as social security numbers are verified for [students](#a-3-A) under [section 1091(o)](/usc/20/1091.md?p=o) of this title.
# §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](#a-3-A) for consolidation of their obligations with respect to [eligible student loans](#a-4), the [Secretary](/usc/20/1003.md?p=17) or a [guaranty agency](/usc/20/1085.md?p=j) shall enter into agreements in accordance with [subsection (b)](#b) with the following [eligible lenders](/usc/20/1085.md?p=d-1):
- (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 [section 1087–3 of this title](/usc/20/1087–3.md);
- (B) [State](/usc/20/1003.md?p=21-A) agencies described in subparagraphs (D) and (F) of [section 1085(d)(1) of this title](/usc/20/1085.md?p=d-1); and
- (C) other [eligible lenders](/usc/20/1085.md?p=d-1) described in subparagraphs (A), (B), (C), (E), and (J) of such section.
- (2) **Insurance coverage of consolidation loans—** Except as provided in [section 1079(e) of this title](/usc/20/1079.md?p=e), no contract of insurance under this part shall apply to a consolidation loan unless such loan is made under an agreement pursuant to this section and is covered by a certificate issued in accordance with [subsection (b)(2)](#b-2). Loans covered by such a certificate that is issued by a [guaranty agency](/usc/20/1085.md?p=j) shall be considered to be insured loans for the purposes of reimbursements under [section 1078(c) of this title](/usc/20/1078.md?p=c), but no payment shall be made with respect to such loans under [section 1078(f) of this title](/usc/20/1078.md?p=f) to any such agency.
- (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 [section 1095a of this title](/usc/20/1095a.md); and
- (ii) at the time of application for a consolidation loan—
- (I) is in repayment status as determined under [section 1078(b)(7)(A) of this title](/usc/20/1078.md?p=b-7-A);
- (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](/usc/20/1085.md?p=i) of the defaulted loans.
- (B)
- (i) [^1] An individual’s status as an [eligible borrower](#a-3-A) under this section or under [section 1087e(g) of this title](/usc/20/1087e.md?p=g) terminates under both sections upon receipt of a consolidation loan under this section or under [section 1087e(g) of this title](/usc/20/1087e.md?p=g), except that—
- (I) an individual who receives [eligible student loans](#a-4) 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 [section 1087e(g) of this title](/usc/20/1087e.md?p=g) only—
- (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](/usc/20/1085.md?p=j) for default aversion or if the loan is already in default;
- (bb) for the purposes of using the public service loan forgiveness program under [section 1087e(m) of this title](/usc/20/1087e.md?p=m);
- (cc) for the purpose of using the no accrual of interest for [active duty](/usc/20/1088.md?p=d-1) service members benefit offered under [section 1087e(o)](/usc/20/1087e.md?p=o) of this title; or
- (dd) for the purpose of separating a joint consolidation loan into 2 separate Federal Direct Consolidation Loans under [section 1087e(g)(2) of this title](/usc/20/1087e.md?p=g-2).
- (4) **“Eligible student loans” defined—** For the purpose of [paragraph (1)](#a-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](/usc/20/1003.md?p=17) or [guaranty agency](/usc/20/1085.md?p=j), 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 [[42 U.S.C. 292q](/usc/42/292q.md) et seq.]; or
- (E) made under part E of title VIII of the Public Health Service Act [[42 U.S.C. 297a](/usc/42/297a.md) et seq.].
- (b) **Contents of agreements, certificates of insurance, and loan notes—**
- (1) **Agreements with lenders—** Any lender described in subparagraph [(A)](#a-1-A), [(B)](#a-1-B), or [(C)](#a-1-C) of subsection (a)(1) who wishes to make consolidation loans under this section shall enter into an agreement with the [Secretary](/usc/20/1003.md?p=17) or a [guaranty agency](/usc/20/1085.md?p=j) which provides—
- (A) that, in the case of all lenders described in [subsection (a)(1)](#a-1), the lender will make a consolidation loan to an [eligible borrower](#a-3-A) (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);
- (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)](#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](#a-4) received by the [eligible borrower](#a-3-A) 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](/usc/20/1085.md?p=i) or [holders](/usc/20/1085.md?p=i) 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](/usc/20/1003.md?p=17), 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](/usc/20/5802.md?p=a-11) at least half-time;
- (bb) the grace period under [section 1087dd(c)(1)(A) of this title](/usc/20/1087dd.md?p=c-1-A); and
- (cc) the periods during which the borrower’s student loan repayments are deferred under [section 1087dd(c)(2) of this title](/usc/20/1087dd.md?p=c-2);
- (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 [section 1087ee(a) of this title](/usc/20/1087ee.md?p=a); and
- (III) the occupations listed in [section 1087ee of this title](/usc/20/1087ee.md) that qualify for Federal Perkins Loan cancellation under [section 1087ee(a) of this title](/usc/20/1087ee.md?p=a);
- (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](/usc/20/1003.md?p=17) or the [guaranty agency](/usc/20/1085.md?p=j) may specifically require of the lender to carry out this section.
- (2) **Issuance of certificate of comprehensive insurance coverage—** The [Secretary](/usc/20/1003.md?p=17) shall issue a certificate of comprehensive insurance coverage under [section 1079(b) of this title](/usc/20/1079.md?p=b) to a lender which has entered into an agreement with the [Secretary](/usc/20/1003.md?p=17) under paragraph (1) of this subsection. The [guaranty agency](/usc/20/1085.md?p=j) may issue a certificate of comprehensive insurance coverage to a lender with which it has an agreement under such paragraph. The [Secretary](/usc/20/1003.md?p=17) shall not issue a certificate to a lender described in subparagraph [(B)](#a-1-B) or [(C)](#a-1-C) of subsection (a)(1) unless the [Secretary](/usc/20/1003.md?p=17) determines that such lender has first applied to, and has been denied a certificate of insurance by, the [guaranty agency](/usc/20/1085.md?p=j) which insures the preponderance of its loans (by value).
- (3) **Contents of certificate—** A certificate issued under [paragraph (2)](#b-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](/usc/20/1003.md?p=17) or the [guaranty agency](/usc/20/1085.md?p=j) (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](/usc/20/1003.md?p=17) on the lender and an identification of the office of the [Department](/usc/20/1003.md?p=4) of Education or of the [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/1003.md?p=17) or a [guaranty agency](/usc/20/1085.md?p=j) pursuant to [paragraph (2)](#b-2) only if the loan is made to an [eligible borrower](#a-3-A) who has agreed to notify the [holder](/usc/20/1085.md?p=i) 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)](#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)](#b-4-C-ii), during any period for which the borrower would be eligible for a deferral under [section 1078(b)(1)(M) of this title](/usc/20/1078.md?p=b-1-M), and that any such period shall not be included in determining the repayment schedule pursuant to [subsection (c)(2)](#c-2) of this section; and
- (ii) provides that interest shall accrue and be paid during any such period—
- (I) by the [Secretary](/usc/20/1003.md?p=17), in the case of a consolidation loan for which the application is received by an [eligible lender](/usc/20/1085.md?p=d-1) before November 13, 1997, that consolidated only Federal Stafford Loans for which the student borrower received an interest subsidy under [section 1078 of this title](/usc/20/1078.md);
- (II) by the [Secretary](/usc/20/1003.md?p=17), in the case of a consolidation loan for which the application is received by an [eligible lender](/usc/20/1085.md?p=d-1) on or after November 13, 1997, except that the [Secretary](/usc/20/1003.md?p=17) 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 [section 1078 of this title](/usc/20/1078.md) or Federal Direct Stafford Loans for which the borrower received an interest subsidy under [section 1087e of this title](/usc/20/1087e.md); or
- (III) by the borrower, or capitalized, in the case of a consolidation loan other than a loan described in subclause [(I)](#b-4-C-ii-I) or [(II)](#b-4-C-ii-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](/usc/20/1088.md?p=e) under [section 1080a of this title](/usc/20/1080a.md), and (ii) provides that the lender on request of the borrower will provide information on the repayment status of the note to such [consumer reporting agencies](/usc/20/1088.md?p=e).
- (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)](#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 [section 1087e(m) of this title](/usc/20/1087e.md?p=m), the [Secretary](/usc/20/1003.md?p=17) shall offer any such borrower who applies for it, a Federal Direct Consolidation loan. In addition, in the event that a borrower chooses to obtain a consolidation loan for the purposes of using the no accrual of interest for [active duty](/usc/20/1088.md?p=d-1) service members program offered under [section 1087e(o)](/usc/20/1087e.md?p=o) of this title, the [Secretary](/usc/20/1003.md?p=17) shall offer a Federal Direct Consolidation loan to any such borrower who applies for participation in such program. A direct consolidation loan offered under this paragraph shall, as requested by the borrower, be repaid either pursuant to income contingent repayment under part D of this subchapter, pursuant to income-based repayment under [section 1098e of this title](/usc/20/1098e.md), or pursuant to any other repayment provision under this section, except that if a borrower intends to be eligible to use the public service loan forgiveness program under [section 1087e(m) of this title](/usc/20/1087e.md?p=m), such loan shall be repaid using one of the repayment options described in [section 1087e(m)(1)(A) of this title](/usc/20/1087e.md?p=m-1-A). The [Secretary](/usc/20/1003.md?p=17) shall not offer such loans if, in the [Secretary](/usc/20/1003.md?p=17)’s judgment, the [Department](/usc/20/1003.md?p=4) of Education does not have the necessary origination and servicing arrangements in place for such loans.
- (6) **Nondiscrimination in loan consolidation—** An [eligible lender](/usc/20/1085.md?p=d-1) 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](#a-4) the borrower seeks to consolidate, except that a lender is not required to consolidate loans described in subparagraph [(D)](#a-4-D) or [(E)](#a-4-E) of subsection (a)(4) or [subsection (d)(1)(C)(ii)](#d-1-C-ii);
- (B) based on the type or category of [institution of higher education](/usc/20/1001.md?p=a) 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)](#c-1-B) and [(C)](#c-1-C), with respect to any loan made under this section for which the application is received by an [eligible lender](/usc/20/1085.md?p=d-1)—
- (i) on or after October 1, 1998, and before July 1, 2006, the applicable interest rate shall be determined under [section 1077a(k)(4) of this title](/usc/20/1077a.md?p=k-4); or
- (ii) on or after July 1, 2006, and that is disbursed before July 1, 2010, the applicable interest rate shall be determined under [section 1077a(l)(3)](/usc/20/1077a.md?p=l-3) of this title.
- (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](/usc/20/1085.md?p=d-1) 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 [section 1077a(f) of this title](/usc/20/1077a.md?p=f), except that the [eligible lender](/usc/20/1085.md?p=d-1) may continue to calculate interest on such a loan at the rate previously in effect and defer, until not later than April 1, 1998, the recalculation of the interest on such a loan at the rate required by this subparagraph if the recalculation is applied retroactively to the date on which the loan is made.
- (2) **Repayment schedules—**
- (A) Notwithstanding any other provision of this part, to the extent authorized by its certificate of insurance under [subsection (b)(2)](#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](/usc/20/1003.md?p=17). 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](/usc/20/1003.md?p=17) under [subsection (b)(5)](#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)](#c-2-A) may not exceed the amount of the consolidation loan.
- (3) **Additional repayment requirements—** Notwithstanding [paragraph (2)](#c-2)—
- (A) except in the case of an income-based repayment schedule under [section 1098e of this title](/usc/20/1098e.md), a repayment schedule established with respect to a consolidation loan shall require that the minimum installment payment be an amount equal to not less than the accrued unpaid interest;
- (B) except as required by the terms of repayment pursuant to income contingent repayment offered by the [Secretary](/usc/20/1003.md?p=17) under [subsection (b)(5)](#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 [section 1098e of this title](/usc/20/1098e.md) shall not be available to a consolidation loan borrower who used the proceeds of the loan to discharge the liability on a loan under [section 1078–2 of this title](/usc/20/1078–2.md), or a Federal Direct PLUS loan, made on behalf of a dependent student.
- (4) **Commencement of repayment—** Repayment of a consolidation loan shall commence within 60 days after all [holders](/usc/20/1085.md?p=i) have, pursuant to [subsection (b)(1)(D)](#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](/usc/20/1003.md?p=17) with respect to any such loan, but a fee may be payable by the lender to the [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/1003.md?p=17) or a [guaranty agency](/usc/20/1085.md?p=j) shall enter into agreements with [eligible lenders](/usc/20/1085.md?p=d-1) described in subparagraphs [(A)](#a-1-A), [(B)](#a-1-B), and [(C)](#a-1-C) of subsection (a)(1) for the consolidation of [eligible student loans](#d-1-C).
- (B) **Applicability rule—** Unless otherwise provided in this subsection, the agreements entered into under [subparagraph (A)](#d-1-A) and the loans made under such agreements for the consolidation of [eligible student loans](#d-1-C) 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)](#a-4-A), [(B)](#a-4-B), and [(C)](#a-4-C) of subsection (a)(4); and
- (ii) made under subpart I of part A of title VII of the Public Health Service Act [[42 U.S.C. 292](/usc/42/292.md) et seq.].
- (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)](#d-1-C-ii) shall bear interest at a rate not to exceed the rate determined under [subparagraph (B)](#d-2-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)](#d-2-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](/usc/20/1003.md?p=17) shall determine the applicable rate of interest under [subparagraph (B)](#d-2-B) after consultation with the [Secretary](/usc/20/1003.md?p=17) 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 [section 1087–1 of this title](/usc/20/1087–1.md) shall be paid with respect to the portion of any consolidated loan under this subsection that is attributable to any loan described in [paragraph (1)(C)(ii)](#d-1-C-ii).
- (B) **No interest subsidy rule—** No interest subsidy under [section 1078(a) of this title](/usc/20/1078.md?p=a) shall be paid on behalf of any [eligible borrower](#a-3-A) for any portion of a consolidated loan under this subsection that is attributable to any loan described in [paragraph (1)(C)(ii)](#d-1-C-ii).
- (C) **Additional reserve rule—** Notwithstanding any other provision of this chapter, additional reserves shall not be required for any [guaranty agency](/usc/20/1085.md?p=j) 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 [[42 U.S.C. 292](/usc/42/292.md) et seq.] with respect to a loan made under that subpart and consolidated under this subsection shall be retained by the student loan insurance account established under section 710 of the Public Health Service Act [[42 U.S.C. 292i](/usc/42/292i.md)].
- (4) **Regulations—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) to promulgate rules or regulations governing the terms or conditions of the agreements and certificates under [subsection (b)](#b). Loans made under this section which are insured by the [Secretary](/usc/20/1003.md?p=17) shall be considered to be new loans made to students for the purpose of [section 1074(a) of this title](/usc/20/1074.md?p=a).
- (f) **Interest payment rebate fee—**
- (1) **In general—** For any month beginning on or after October 1, 1993, each [holder](/usc/20/1085.md?p=i) 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](/usc/20/1003.md?p=17), on a monthly basis and in such manner as the [Secretary](/usc/20/1003.md?p=17) 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)](#f-1) shall be equal to 0.62 percent of the principal plus accrued unpaid interest on such loan.
- (3) **Deposit—** The [Secretary](/usc/20/1003.md?p=17) shall deposit all fees collected pursuant to this subsection into the insurance [fund](/usc/20/4702.md?p=3) established in [section 1081 of this title](/usc/20/1081.md).
# §1078–4. Commingling of funds
Notwithstanding any other provision of this part regarding permissible uses of [funds](/usc/20/4702.md?p=3) from any source, [funds](/usc/20/4702.md?p=3) received by a [guaranty agency](/usc/20/1085.md?p=j) under any provision of this part may be commingled with [funds](/usc/20/4702.md?p=3) 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](/usc/20/1085.md?p=j) would otherwise be authorized to expend; and
- (2) the authority to commingle such [funds](/usc/20/4702.md?p=3) 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 — repealed]
# §1078–6. Default reduction program
- (a) **Other repayment incentives—**
- (1) **Sale or assignment of loan—**
- (A) **In general—** Each [guaranty agency](/usc/20/1085.md?p=j), 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](/usc/20/1003.md?p=17) has made a payment under paragraph (1) of [section 1078(c) of this title](/usc/20/1078.md?p=c), shall—
- (i) if practicable, sell the loan to an [eligible lender](/usc/20/1085.md?p=d-1); or
- (ii) beginning July 1, 2014, assign the loan to the [Secretary](/usc/20/1003.md?p=17) if the [guaranty agency](/usc/20/1085.md?p=j) has been unable to sell the loan under [clause (i)](#a-1-A-i).
- (B) **Monthly payments—** Neither the [guaranty agency](/usc/20/1085.md?p=j) nor the [Secretary](/usc/20/1003.md?p=17) shall demand from a borrower as monthly payment amounts described in [subparagraph (A)](#a-1-A) more than is reasonable and affordable based on the borrower’s total financial circumstances. With respect to a borrower who has 1 or more loans made under part D on or after July 1, 2027 that are described in [subparagraph (A)](#a-1-A), the total monthly payment of the borrower for all such loans shall not be less than $10.
- (C) **Consumer reporting agencies—** Upon the sale or assignment of the loan, the [Secretary](/usc/20/1003.md?p=17), [guaranty agency](/usc/20/1085.md?p=j) or other [holder](/usc/20/1085.md?p=i) of the loan shall request any [consumer reporting agency](/usc/20/1088.md?p=e) to which the [Secretary](/usc/20/1003.md?p=17), [guaranty agency](/usc/20/1085.md?p=j) or [holder](/usc/20/1085.md?p=i), 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)](#a-1-A-i)—
- (i) the [guaranty agency](/usc/20/1085.md?p=j)—
- (I) shall, in the case of a sale made on or after July 1, 2014, repay the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) shall reinstate the [Secretary](/usc/20/1003.md?p=17)’s obligation to—
- (I) reimburse the [guaranty agency](/usc/20/1085.md?p=j) for the amount that the agency may, in the future, expend to discharge the [guaranty agency](/usc/20/1085.md?p=j)’s insurance obligation; and
- (II) pay to the [holder](/usc/20/1085.md?p=i) of such loan a special allowance pursuant to [section 1087–1 of this title](/usc/20/1087–1.md).
- (E) **Duties upon assignment—** With respect to a loan assigned under [subparagraph (A)(ii)](#a-1-A-ii)—
- (i) the [guaranty agency](/usc/20/1085.md?p=j) 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)](#a-1-D-i-II-aa); and
- (ii) the [Secretary](/usc/20/1003.md?p=17) shall pay the [guaranty agency](/usc/20/1085.md?p=j), for deposit in the agency’s Operating [Fund](/usc/20/4702.md?p=3) established pursuant to [section 1072b of this title](/usc/20/1072b.md), an amount equal to the amount added to the principal and interest outstanding at the time of the assignment in accordance with [clause (i)](#a-1-E-i).
- (F) **Eligible lender limitation—** A loan shall not be sold to an [eligible lender](/usc/20/1085.md?p=d-1) under [subparagraph (A)(i)](#a-1-A-i) if such lender has been found by the [guaranty agency](/usc/20/1085.md?p=j) or the [Secretary](/usc/20/1003.md?p=17) to have substantially failed to exercise the [due diligence](/usc/20/1085.md?p=f) required of lenders under this part.
- (G) **Default due to error—** A loan that does not meet the requirements of [subparagraph (A)](#a-1-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](/usc/20/1003.md?p=17) pursuant to the sale of such loans by a [guaranty agency](/usc/20/1085.md?p=j) under [paragraph (1)(A)(i)](#a-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)](#a-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)](#a-1-A) shall not be precluded by [section 1091 of this title](/usc/20/1091.md) from receiving additional loans or grants under this subchapter (for which he or she is otherwise eligible) on the basis of defaulting on the loan prior to such loan sale or assignment.
- (4) **Applicability of general loan conditions—** A loan that is sold or assigned under [paragraph (1)](#a-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](/usc/20/1085.md?p=j) 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](/usc/20/1085.md?p=d-1) or assigned to the [Secretary](/usc/20/1003.md?p=17)) upon the borrower’s payment of 6 consecutive monthly payments. The [guaranty agency](/usc/20/1085.md?p=j) 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)](#b) shall include making available financial and economic education materials for a borrower who has rehabilitated a loan.
# §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](/usc/20/1085.md?p=m-1-A) (as determined under [section 1085(m) of this title](/usc/20/1085.md?p=m)) for each of the 3 most recent fiscal years for which data are available is less than 10 percent may disburse any loan made, insured, or guaranteed under this part in a single installment for any period of enrollment that is not more than 1 semester, 1 trimester, 1 quarter, or 4 months. Notwithstanding section 422(d) of the Higher Education Amendments of 1998, this paragraph shall be effective beginning on February 8, 2006.
- (4) **Amendment to special rule—** Beginning on October 1, 2011, the special rule under [paragraph (3)](#a-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](/usc/20/1066a.md?p=1) prior to the end of that 30-day period. An institution whose [cohort default rate](/usc/20/1085.md?p=m-1-A) (as determined under [section 1085(m) of this title](/usc/20/1085.md?p=m)) for each of the three most recent fiscal years for which data are available is less than 10 percent shall be exempt from the requirements of this paragraph. Notwithstanding section 422(d) of the Higher Education Amendments of 1998, the second sentence of this paragraph shall be effective beginning on February 8, 2006.
- (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)](#b-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)](#b-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)](#a)—
- (1) shall be made in accordance with a schedule provided by the institution (under [section 1078(a)(2)(A)(i)(II) of this title](/usc/20/1078.md?p=a-2-A-i-II)) that complies with the requirements of this section;
- (2) may be made directly by the lender or, in the case of a loan under sections [1078](/usc/20/1078.md) and [1078–1](/usc/20/1078–1.md)[^1] of this title, may be disbursed pursuant to the escrow provisions of [section 1078(i) of this title](/usc/20/1078.md?p=i); and
- (3) notwithstanding [subsection (a)(2)](#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](/usc/20/1094.md?p=i-1) 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](/usc/20/1094.md?p=i-1) the portion (or all) of such installment that exceeds such eligible amount, except that overawards permitted pursuant to [section 1087–53(b)(4) of this title](/usc/20/1087–53.md?p=b-4) shall not be construed to be overawards for purposes of this paragraph. Any portion (or all) of a disbursement installment which is so returned shall be credited to the borrower’s loan and treated as a prepayment thereon.
- (e) **Exclusion of consolidation and foreign study loans—** The provisions of this section shall not apply in the case of a loan made under [section 1078–3 of this title](/usc/20/1078–3.md), or made to a student to cover the [cost of attendance](/usc/20/1087ll.md?p=a) in a program of study abroad approved by the home [eligible institution](/usc/20/1066a.md?p=1) if the home [eligible institution](/usc/20/1066a.md?p=1) has a [cohort default rate](/usc/20/1085.md?p=m-1-A) (as calculated under [section 1085(m) of this title](/usc/20/1085.md?p=m)) of less than 5 percent.
- (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](/usc/20/1085.md?p=d-1) 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.
# §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 [section 1078 of this title](/usc/20/1078.md). Except as provided in this section, all terms and conditions for Federal Stafford loans established under [section 1078 of this title](/usc/20/1078.md) shall apply to loans made pursuant to this section.
- (b) **Eligible borrowers—** Prior to July 1, 2010, any student meeting the requirements for student eligibility under [section 1091 of this title](/usc/20/1091.md) (including graduate and professional students as defined in regulations promulgated by the [Secretary](/usc/20/1003.md?p=17)) shall be entitled to borrow an unsubsidized Federal Stafford Loan for which the first disbursement is made before such date if the [eligible institution](/usc/20/1066a.md?p=1) at which the student has been accepted for enrollment, or at which the student is in attendance, has—
- (1) determined and documented the student’s need for the loan based on the student’s estimated [cost of attendance](/usc/20/1087ll.md?p=a) (as determined under [section 1087ll](/usc/20/1087ll.md) of this title) and the student’s estimated financial assistance, including a loan which qualifies for interest subsidy payments under [section 1078 of this title](/usc/20/1078.md); and
- (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)](#c); and
- (B) setting forth a schedule for disbursement of the proceeds of the loan in installments, consistent with the requirements of [section 1078–7 of this title](/usc/20/1078–7.md).
- (c) **Determination of amount of loan—** The determination of the amount of a loan by an [eligible institution](/usc/20/1066a.md?p=1) under [subsection (b)](#b) shall be calculated by subtracting from the estimated [cost of attendance](/usc/20/1087ll.md?p=a) at the [eligible institution](/usc/20/1066a.md?p=1) any estimated financial assistance reasonably available to such student. An [eligible institution](/usc/20/1066a.md?p=1) may not, in carrying out the provisions of [subsection (b)](#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)](#d-2), [(3)](#d-3), and [(4)](#d-4), the annual and aggregate limits for loans under this section shall be the same as those established under [section 1078(b)(1) of this title](/usc/20/1078.md?p=b-1), less any amount received by such student pursuant to the subsidized loan program established under [section 1078 of this title](/usc/20/1078.md).
- (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)](#d-2-A-ii), may borrow in any [academic year](/usc/20/1088.md?p=a-2-A) (as defined in [section 1088(a)(2) of this title](/usc/20/1088.md?p=a-2)) or its equivalent shall be the amount determined under [paragraph (1)](#d-1), plus—
- (i) in the case of such a student who is a graduate or professional student attending an [eligible institution](/usc/20/1066a.md?p=1), $12,000; and
- (ii) notwithstanding [paragraph (4)](#d-4), in the case of an independent student, or a dependent student whose [parents](/usc/20/1021.md?p=16) are unable to borrow under [section 1078–2 of this title](/usc/20/1078–2.md) or the Federal Direct PLUS Loan Program, who has obtained a baccalaureate degree and who is enrolled in coursework specified in paragraph (3)(B) or (4)(B) of [section 1091(b) of this title](/usc/20/1091.md?p=b)—
- (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](/usc/20/1003.md?p=21-A) required for employment as a teacher in an elementary or [secondary school](/usc/20/1003.md?p=16),
except in cases where the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1085.md?p=e) 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)](#d-2-A) may borrow shall be the amount described in [paragraph (1)](#d-1), adjusted to reflect the increased annual limits described in [subparagraph (A)](#d-2-A), as prescribed by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1021.md?p=16) are unable to borrow under [section 1078–2 of this title](/usc/20/1078–2.md) or the Federal Direct PLUS Loan Program) may borrow in any [academic year](/usc/20/1088.md?p=a-2-A) (as defined in [section 1088(a)(2) of this title](/usc/20/1088.md?p=a-2)) or its equivalent shall be the sum of the amount determined under [paragraph (1)](#d-1), plus $2,000.
- (B) **Aggregate limits—** The maximum aggregate amount of loans under this section a student described in [subparagraph (A)](#d-3-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](/usc/20/1021.md?p=16) are unable to borrow under [section 1078–2 of this title](/usc/20/1078–2.md) or the Federal Direct PLUS Loan Program, may borrow in any [academic year](/usc/20/1088.md?p=a-2-A) (as defined in [section 1088(a)(2) of this title](/usc/20/1088.md?p=a-2)) or its equivalent shall be the sum of the amount determined under [paragraph (1)](#d-1), plus—
- (i) in the case of such a student attending an [eligible institution](/usc/20/1066a.md?p=1) 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](/usc/20/1088.md?p=a-2-A) in length; or
- (II) if such student is enrolled in a program of undergraduate education which is less than one [academic year](/usc/20/1088.md?p=a-2-A), 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)](#d-4-A-i-I) as the length of such program measured in semester, trimester, quarter, or clock hours bears to one [academic year](/usc/20/1088.md?p=a-2-A);
- (ii) in the case of such a student at an [eligible institution](/usc/20/1066a.md?p=1) 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](/usc/20/1088.md?p=a-2-A), 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)](#d-4-A-ii-I) as such remainder measured in semester, trimester, quarter, or clock hours bears to one [academic year](/usc/20/1088.md?p=a-2-A); and
- (iii) in the case of such a student enrolled in coursework specified in—
- (I) [section 1091(b)(3)(B) of this title](/usc/20/1091.md?p=b-3-B), $6,000; or
- (II) [section 1091(b)(4)(B) of this title](/usc/20/1091.md?p=b-4-B), $7,000.
- (B) **Aggregate limits—** The maximum aggregate amount of loans under this section a student described in [subparagraph (A)](#d-4-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)](#d-2-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 [section 1078(b)(7) of this title](/usc/20/1078.md?p=b-7). Not less than 30 days prior to the anticipated commencement of such repayment period, the [holder](/usc/20/1085.md?p=i) of such loan shall provide notice to the borrower that interest will accrue before repayment begins and of the borrower’s option to begin loan repayment at an earlier date.
- (2) **Capitalization of interest—**
- (A) Except as provided in [subparagraph (C)](#e-2-C), interest on loans made under this section for which payments of principal are not required during the in-[school](/usc/20/5802.md?p=a-11) and grace periods or for which payments are deferred under sections [1077(a)(2)(C)](/usc/20/1077.md?p=a-2-C) and [1078(b)(1)(M)](/usc/20/1078.md?p=b-1-M) of this title 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 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)](#e-2-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 section [1078(b)(1)(M)(v)](/usc/20/1078.md?p=b-1-M-v) or [1077(a)(2)(C)(iv)](/usc/20/1077.md?p=a-2-C-iv) of this title.
- (3) **Subsidies prohibited—** No payments to reduce interest costs shall be paid pursuant to [section 1078(a) of this title](/usc/20/1078.md?p=a) on loans made pursuant to this section.
- (4) **Applicable rates of interest—** Interest on loans made pursuant to this section shall be at the applicable rate of interest provided in [section 1077a of this title](/usc/20/1077a.md).
- (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 [section 1077a(c)(4) of this title](/usc/20/1077a.md?p=c-4).
- (6) **Repayment period—** For purposes of calculating the repayment period under [section 1078(b)(9) of this title](/usc/20/1078.md?p=b-9), such period shall commence at the time the first payment of principal is due from the borrower.
- (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](/usc/20/1085.md?p=j) shall use a single application form and a single repayment schedule for subsidized Federal Stafford loans made pursuant to [section 1078 of this title](/usc/20/1078.md) and for unsubsidized Federal Stafford loans made pursuant to this section.
- (h) **Insurance premium—** Each [State](/usc/20/1003.md?p=21-A) or [nonprofit](/usc/20/1003.md?p=13) private institution or organization having an agreement with the [Secretary](/usc/20/1003.md?p=17) under [section 1078(b)(1) of this title](/usc/20/1078.md?p=b-1) may charge a borrower under this section an insurance premium equal to not more than 1.0 percent of the principal amount of the loan, if such premium will not be used for incentive payments to lenders. Effective 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, in lieu of the insurance premium authorized under the preceding sentence, each [State](/usc/20/1003.md?p=21-A) or [nonprofit](/usc/20/1003.md?p=13) private institution or organization having an agreement with the [Secretary](/usc/20/1003.md?p=17) under [section 1078(b)(1) of this title](/usc/20/1078.md?p=b-1) shall collect and deposit into the Federal Student Loan Reserve [Fund](/usc/20/4702.md?p=3) under [section 1072a of this title](/usc/20/1072a.md), a Federal default fee of an amount equal to 1.0 percent of the principal amount of the loan, which fee shall be collected either by deduction from the proceeds of the loan or by payment from other non-Federal sources. The Federal default fee shall not be used for incentive payments to lenders.
# [§1078–9. Repealed. Pub. L. 110–84, title III, § 302(a), Sept. 27, 2007, 121 Stat. 796 — repealed]
# §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](/usc/20/1003.md?p=17) shall carry out a program, through the [holder](/usc/20/1085.md?p=i) of the loan, of assuming the obligation to repay a qualified loan amount for a loan made under section [1078](/usc/20/1078.md) or [1078–8](/usc/20/1078–8.md) of this title, in accordance with [subsection (c)](#c), for any [new borrower](/usc/20/1003.md?p=12) on or after October 1, 1998, who—
- (1) has been employed as a full-time teacher for 5 consecutive complete [school](/usc/20/5802.md?p=a-11) years—
- (A) in a [school](/usc/20/5802.md?p=a-11) or location that qualifies under [section 1087ee(a)(2)(A) of this title](/usc/20/1087ee.md?p=a-2-A) for loan cancellation for Perkins loan recipients who teach in such [schools](/usc/20/5802.md?p=a-11) or locations; and
- (B) if employed as an [elementary school](/usc/20/1003.md?p=9) or [secondary school](/usc/20/1003.md?p=16) teacher, is highly qualified as defined in [section 9101](/usc/20/9101.md)[^1] of the Elementary Secondary[^2] Education Act of 1965 [[20 U.S.C. 7801](/usc/20/7801.md)], or meets the requirements of [subsection (g)(3)](#g-3); and
- (2) is not in default on a loan for which the borrower seeks forgiveness.
- (c) **Qualified loans amount—**
- (1) **In general—** The [Secretary](/usc/20/1003.md?p=17) shall repay not more than $5,000 in the aggregate of the loan obligation on a loan made under section [1078](/usc/20/1078.md) or [1078–8](/usc/20/1078–8.md) of this title that is outstanding after the completion of the fifth complete [school](/usc/20/5802.md?p=a-11) year of teaching described in [subsection (b)(1)](#b-1). No borrower may receive a reduction of loan obligations under both this section and [section 1087j of this title](/usc/20/1087j.md).
- (2) **Treatment of consolidation loans—** A loan amount for a loan made under [section 1078–3 of this title](/usc/20/1078–3.md) 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 section [1078](/usc/20/1078.md) or [1078–8](/usc/20/1078–8.md) of this title for a borrower who meets the requirements of [subsection (b)](#b), as determined in accordance with regulations prescribed by the [Secretary](/usc/20/1003.md?p=17).
- (3) **Additional amounts for teachers in mathematics, science, or special education—** Notwithstanding the amount specified in [paragraph (1)](#c-1), the aggregate amount that the [Secretary](/usc/20/1003.md?p=17) shall repay under this section shall be not more than $17,500 in the case of—
- (A) a [secondary school](/usc/20/1003.md?p=16) teacher—
- (i) who meets the requirements of [subsection (b)](#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](/usc/20/1003.md?p=9) or [secondary school](/usc/20/1003.md?p=16) teacher—
- (i) who meets the requirements of [subsection (b)](#b);
- (ii) whose qualifying employment for purposes of such subsection is as a [special education teacher](/usc/20/1003.md?p=19) whose primary responsibility is to provide special education to children with [disabilities](/usc/20/1003.md?p=6) (as those terms are defined in [section 1401 of this title](/usc/20/1401.md)); and
- (iii) who, as certified by the chief administrative [officer](/usc/20/1094.md?p=i-5) of the public or non-profit private [elementary school](/usc/20/1003.md?p=9) or [secondary school](/usc/20/1003.md?p=16) in which the borrower is employed, or, in the case of a teacher who is employed by an [educational service agency](/usc/20/1021.md?p=5), as certified by the chief administrative [officer](/usc/20/1094.md?p=i-5) of such agency, is teaching children with [disabilities](/usc/20/1003.md?p=6) that correspond with the borrower’s special education training and has demonstrated knowledge and teaching skills in the content areas of the [elementary school](/usc/20/1003.md?p=9) or [secondary school](/usc/20/1003.md?p=16) curriculum that the borrower is teaching.
- (d) **Regulations—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/5802.md?p=a-11) in which a teacher may perform service pursuant to [subsection (b)](#b) is not available before May 1 of any year, the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/5802.md?p=a-11) that—
- (A) meets the requirements of [subsection (b)(1)(A)](#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](/usc/20/5802.md?p=a-11) and shall be eligible for loan forgiveness pursuant to [subsection (b)](#b).
- (2) **Prevention of double benefits—** No borrower may, for the same service, receive a benefit under both this section and—
- (A) [section 1078–11 of this title](/usc/20/1078–11.md);
- (B) [section 1087e(m) of this title](/usc/20/1087e.md?p=m); or
- (C) subtitle D of title I of the National and Community Service Act of 1990 ([42 U.S.C. 12601](/usc/42/12601.md) et seq.).
- (3) **Private school teachers—** An individual who is employed as a teacher in a private [school](/usc/20/5802.md?p=a-11) and is exempt from [State](/usc/20/1003.md?p=21-A) certification requirements (unless otherwise applicable under [State](/usc/20/1003.md?p=21-A) law), may, in lieu of the requirement of [subsection (b)(1)(B)](#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](/usc/20/5802.md?p=a-11) teacher shall be recognized by 5 or more [States](/usc/20/1003.md?p=21-A) for the purpose of fulfilling the highly qualified teacher requirements under [section 9101](/usc/20/9101.md)[^1] of the Elementary and Secondary Education Act of 1965 [[20 U.S.C. 7801](/usc/20/7801.md)], and the score achieved by such teacher on each test shall equal or exceed the average passing score of those 5 [States](/usc/20/1003.md?p=21-A).
- (h) **“Year” defined—** For purposes of this section, the term “year”, where applied to service as a teacher, means an [academic year](/usc/20/1088.md?p=a-2-A) as defined by the [Secretary](/usc/20/1003.md?p=17).
# §1078–11. Loan forgiveness for service in areas of national need
- (a) **Program authorized—**
- (1) **Loan forgiveness authorized—** The [Secretary](/usc/20/1003.md?p=17) shall forgive, in accordance with this section, the qualified loan amount described in [subsection (c)](#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)](#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)](#a-1), the [Secretary](/usc/20/1003.md?p=17) is authorized to carry out a program—
- (A) through the [holder](/usc/20/1085.md?p=i) 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](/usc/20/1098e.md?p=a-1) or an excepted consolidation loan (as such terms are defined in [section 1098e(a) of this title](/usc/20/1098e.md?p=a))); and
- (B) to cancel a qualified loan amount for a loan made under part D of this subchapter (other than an [excepted PLUS loan](/usc/20/1098e.md?p=a-1) or an excepted consolidation loan).
- (3) **Regulations—** The [Secretary](/usc/20/1003.md?p=17) 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](#g-3).
- (2) **Nurses—** The individual is employed full-time—
- (A) as a [nurse](#g-7) in a clinical setting; or
- (B) as a member of the nursing faculty at an accredited [school](/usc/20/5802.md?p=a-11) of nursing (as those terms are defined in [section 296 of title 42](/usc/42/296.md)).
- (3) **Foreign language specialists—** The individual—
- (A) has obtained a baccalaureate or advanced degree in a [critical foreign language](/usc/20/1003.md?p=3); and
- (B) is employed full-time—
- (i) in an [elementary school](/usc/20/1003.md?p=9) or [secondary school](/usc/20/1003.md?p=16) as a teacher of a [critical foreign language](/usc/20/1003.md?p=3);
- (ii) in an agency of the United States Government in a position that regularly requires the use of such [critical foreign language](/usc/20/1003.md?p=3); or
- (iii) in an [institution of higher education](/usc/20/1001.md?p=a) as a faculty member or instructor teaching a [critical foreign language](/usc/20/1003.md?p=3).
- (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](/usc/20/5802.md?p=a-11) have a combined average of 30 percent or more of the [schools](/usc/20/5802.md?p=a-11)’ total student enrollments composed of children meeting a measure of poverty under [section 6313(a)(5) of this title](/usc/20/6313.md?p=a-5); or
- (B) a [school](/usc/20/5802.md?p=a-11) that qualifies under [section 1087ee(a)(2)(A) of this title](/usc/20/1087ee.md?p=a-2-A) for loan cancellation for Perkins loan recipients who teach in such a [school](/usc/20/5802.md?p=a-11).
- (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](/usc/20/9101.md)[^1] of the Elementary and Secondary Education Act of 1965 [[20 U.S.C. 7801](/usc/20/7801.md)]; and
- (B) is employed full-time—
- (i) as a teacher educating students who are [limited English proficient](/usc/20/1021.md?p=15);
- (ii) as a teacher in a [school](/usc/20/5802.md?p=a-11) that qualifies under [section 1087ee(a)(2)(A) of this title](/usc/20/1087ee.md?p=a-2-A) for loan cancellation for Perkins loan recipients who teach in such a [school](/usc/20/5802.md?p=a-11);
- (iii) as a teacher and is an individual from an underrepresented population in the teaching profession, as determined by the [Secretary](/usc/20/1003.md?p=17); or
- (iv) as a teacher in an [educational service agency](/usc/20/1021.md?p=5), as such term is defined in [section 7801 of this title](/usc/20/7801.md).
- (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](#g-10) or [audiologist](#g-2) in an [eligible preschool program](#g-4) or a [school](/usc/20/5802.md?p=a-11) that qualifies under [section 1087ee(a)(2)(A) of this title](/usc/20/1087ee.md?p=a-2-A) for loan cancellation for Perkins loan recipients who teach in such a [school](/usc/20/5802.md?p=a-11); and
- (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](/usc/20/5802.md?p=a-11) counselor who has documented competence in counseling children and adolescents in a [school](/usc/20/5802.md?p=a-11) setting and who—
- (i) is licensed by the [State](/usc/20/1003.md?p=21-A) or certified by an independent professional regulatory authority;
- (ii) in the absence of such [State](/usc/20/1003.md?p=21-A) licensure or certification, possesses national certification in [school](/usc/20/5802.md?p=a-11) counseling or a specialty of counseling granted by an independent professional organization; or
- (iii) holds a minimum of a master’s degree in [school](/usc/20/5802.md?p=a-11) counseling from a program accredited by the [Council](/usc/20/80r–1.md?p=2) for Accreditation of Counseling and Related Educational Programs or the equivalent; and
- (B) is so employed in a [school](/usc/20/5802.md?p=a-11) that qualifies under [section 1087ee(a)(2)(A) of this title](/usc/20/1087ee.md?p=a-2-A) for loan cancellation for Perkins loan recipients who teach in such a [school](/usc/20/5802.md?p=a-11).
- (9) **Public sector employees—** The individual is employed full-time in—
- (A) public safety (including as a first responder, firefighter, police [officer](/usc/20/1094.md?p=i-5), or other law enforcement or public safety [officer](/usc/20/1094.md?p=i-5));
- (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](#g-6) at a [nonprofit](/usc/20/1003.md?p=13) 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 [section 1786 of title 42](/usc/42/1786.md).
- (11) **Medical specialists—** The individual—
- (A) has received a degree from a medical [school](/usc/20/5802.md?p=a-11) at an [institution of higher education](/usc/20/1001.md?p=a); 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](/usc/20/80r–1.md?p=2) for Graduate Medical Education) that—
- (i) requires more than five years of total graduate medical training; and
- (ii) has fewer United States medical [school](/usc/20/5802.md?p=a-11) graduate [applicants](/usc/20/3982.md?p=1) 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](/usc/20/5802.md?p=a-11) (as accredited by the [Commission](/usc/20/9701.md?p=2) 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](/usc/20/5802.md?p=a-11) accredited by the [Commission](/usc/20/9701.md?p=2) 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](#g-9); 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](/usc/20/5802.md?p=a-11) superintendent, principal, or other administrator in a [local educational agency](/usc/20/1003.md?p=11), including in an [educational service agency](/usc/20/1021.md?p=5), in which 30 percent or more of the [schools](/usc/20/5802.md?p=a-11) are [schools](/usc/20/5802.md?p=a-11) that qualify under [section 1087ee(a)(2)(A) of this title](/usc/20/1087ee.md?p=a-2-A) for loan cancellation for Perkins loan recipients who teach in such a [school](/usc/20/5802.md?p=a-11).
- (17) **Occupational therapists—** The individual is an [occupational therapist](#g-8) 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](#g-1)—
- (A) in a Federal, [State](/usc/20/1003.md?p=21-A), 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](/usc/20/1003.md?p=17) of Health and Human Services.
- (c) **Qualified loan amount—**
- (1) **In general—** Subject to [paragraph (2)](#c-2), for each [school](/usc/20/5802.md?p=a-11), academic, or calendar year of full-time employment in an area of national need described in [subsection (b)](#b) that a borrower completes on or after August 14, 2008, the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/5802.md?p=a-11), academic, or calendar year of employment, respectively.
- (2) **Maximum amount—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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 section [1078–10](/usc/20/1078–10.md), [1078–12](/usc/20/1078–12.md), [1087e(m)](/usc/20/1087e.md?p=m), or [1087j](/usc/20/1087j.md) of this title.
- (g) **Definitions—** In this section:
- (1) **Allied health professional—** The term “allied health professional” means an allied health professional as defined in [section 295p(5) of title 42](/usc/42/295p.md?p=5) who—
- (A) has graduated and received an allied health professions degree or certificate from an [institution of higher education](/usc/20/1001.md?p=a); and
- (B) is employed with a Federal, [State](/usc/20/1003.md?p=21-A), 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](/usc/20/1003.md?p=17) 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](/usc/20/1001.md?p=a) accredited by an agency or association recognized by the [Secretary](/usc/20/1003.md?p=17) pursuant to [section 1099b(a) of this title](/usc/20/1099b.md?p=a); and
- (B)
- (i) provides audiology services under subsection (ll)(2) of [section 1395x of title 42](/usc/42/1395x.md); or
- (ii) meets or exceeds the qualifications for a qualified [audiologist](#g-2) 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](#g-4) or [eligible early childhood education program](#g-5) in a [low-income community](#g-6);
- (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](/usc/20/1003.md?p=21-A) or local government licensing, certification, approval, and registration requirements, and
- (C) is operated by—
- (i) a public or private [school](/usc/20/5802.md?p=a-11) that is supported, sponsored, supervised, or administered by a [local educational agency](/usc/20/1003.md?p=11);
- (ii) a Head Start agency serving as a grantee designated under the Head Start Act ([42 U.S.C. 9831](/usc/42/9831.md) et seq.);
- (iii) a [nonprofit](/usc/20/1003.md?p=13) 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](/usc/20/1003.md?p=21-A) prekindergarten program, [school](/usc/20/5802.md?p=a-11) program, or other out-of-home early childhood development care program, that—
- (i) is licensed or regulated by the [State](/usc/20/1003.md?p=21-A); 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 ([42 U.S.C. 9831](/usc/42/9831.md) et seq.); or
- (C) an Early Head Start Program carried out under section 645A of the Head Start Act ([42 U.S.C. 9840a](/usc/42/9840a.md)).
- (6) **Low-income community—** The term “low-income community” means a [school attendance area](/usc/20/5891a.md?p=2) (as defined in [section 6313(a)(2)(A) of this title](/usc/20/6313.md?p=a-2-A))—
- (A) in which 70 percent of households earn less than 85 percent of the [State](/usc/20/1003.md?p=21-A) median household income; or
- (B) that includes a [school](/usc/20/5802.md?p=a-11) that qualifies under [section 1087ee(a)(2)(A) of this title](/usc/20/1087ee.md?p=a-2-A) for loan cancellation for Perkins loan recipients who teach in such a [school](/usc/20/5802.md?p=a-11).
- (7) **Nurse—** The term “nurse” means a nurse who meets all of the following:
- (A) The [nurse](#g-7) graduated from—
- (i) an accredited [school](/usc/20/5802.md?p=a-11) of nursing (as those terms are defined in [section 296 of title 42](/usc/42/296.md));
- (ii) a nursing center; or
- (iii) an academic health center that provides [nurse](#g-7) training.
- (B) The [nurse](#g-7) holds a valid and unrestricted license to practice nursing in the [State](/usc/20/1003.md?p=21-A) in which the [nurse](#g-7) practices in a clinical setting.
- (C) The [nurse](#g-7) 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](/usc/20/5802.md?p=a-11) of nursing (as defined in [section 296 of title 42](/usc/42/296.md)).
- (iii) A nursing degree from an associate degree [school](/usc/20/5802.md?p=a-11) of nursing (as defined in such section).
- (iv) A nursing degree from a diploma [school](/usc/20/5802.md?p=a-11) 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](/usc/20/1001.md?p=a) accredited by an agency or association recognized by the [Secretary](/usc/20/1003.md?p=17) pursuant to [section 1099b(a) of this title](/usc/20/1099b.md?p=a); and
- (B)
- (i) provides occupational therapy services under [section 1395x(g) of title 42](/usc/42/1395x.md?p=g); or
- (ii) meets or exceeds the qualifications for a qualified [occupational therapist](#g-8), as determined by [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1001.md?p=a) accredited by an agency or association recognized by the [Secretary](/usc/20/1003.md?p=17) pursuant to [section 1099b(a) of this title](/usc/20/1099b.md?p=a); and
- (B)
- (i) provides physical therapy services under [section 1395x(p) of title 42](/usc/42/1395x.md?p=p); or
- (ii) meets or exceeds the qualifications for a qualified [physical therapist](#g-9), as determined by [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1001.md?p=a) accredited by an agency or association recognized by the [Secretary](/usc/20/1003.md?p=17) pursuant to [section 1099b(a) of this title](/usc/20/1099b.md?p=a); and
- (B) provides speech-language pathology services under [section 1395x(ll)(1)](/usc/42/1395x.md?p=ll-1) of title 42, or meets or exceeds the qualifications for a qualified [speech-language pathologist](#g-10) under [subsection (ll)(4)](/usc/42/1395x.md) of such section.
- (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.
# §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-1).
- (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](/usc/20/1003.md?p=13) organization that provides legal assistance with respect to civil matters to [low-income individuals](/usc/20/1059e.md?p=b-4) 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](/usc/20/1003.md?p=6) Assistance and Bill of Rights Act of 2000 ([42 U.S.C. 15041](/usc/42/15041.md) et seq.);
- (II) section [732](/usc/29/732.md) or [794e](/usc/29/794e.md) of title 29;
- (III) part A of title I of the Protection and Advocacy for Individuals with Mental Illness Act ([42 U.S.C. 10801](/usc/42/10801.md) et seq.);
- (IV) [section 3004 of title 29](/usc/29/3004.md);
- (V) [section 1320b–21 of title 42](/usc/42/1320b–21.md);
- (VI) [section 300d–53 of title 42](/usc/42/300d–53.md); or
- (VII) [section 21061 of title 52](/usc/52/21061.md);
- (B) as such employee, provides civil legal assistance as described in [subparagraph (A)](#b-1-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)](#b-2-B), the term “student loan” means—
- (i) subject to [clause (ii)](#b-2-A-ii), a loan made, insured, or guaranteed under this part, part D, or part E; and
- (ii) a loan made under section [1078–3](/usc/20/1078–3.md) or [1087e(g)](/usc/20/1087e.md?p=g) of this title, to the extent that such loan was used to repay—
- (I) a Federal Direct Stafford Loan, a Federal Direct Unsubsidized Stafford Loan, or a Federal Direct PLUS Loan;
- (II) a loan made under section [1078](/usc/20/1078.md), [1078–2](/usc/20/1078–2.md), or [1078–8](/usc/20/1078–8.md) of this title; or
- (III) a loan made under part E.
- (B) **Exclusion of parent plus loans—** The term “[student loan](#b-2-A)” does not include any of the following loans:
- (i) A loan made to the [parents](/usc/20/1021.md?p=16) of a dependent student under [section 1078–2 of this title](/usc/20/1078–2.md).
- (ii) A Federal Direct PLUS Loan made to the [parents](/usc/20/1021.md?p=16) of a dependent student.
- (iii) A loan made under section [1078–3](/usc/20/1078–3.md) or [1087e(g)](/usc/20/1087e.md?p=g) of this title, to the extent that such loan was used to repay—
- (I) a loan made to the [parents](/usc/20/1021.md?p=16) of a dependent student under [section 1078–2 of this title](/usc/20/1078–2.md); or
- (II) a Federal Direct PLUS Loan made to the [parents](/usc/20/1021.md?p=16) of a dependent student.
- (c) **Program authorized—** From amounts appropriated under [subsection (i)](#i) for a fiscal year, the [Secretary](/usc/20/1003.md?p=17) shall carry out a program of assuming the obligation to repay a [student loan](#b-2-A), by direct payments on behalf of a borrower to the [holder](/usc/20/1085.md?p=i) of such loan, in accordance with [subsection (d)](#d), for any borrower who—
- (1) is employed as a [civil legal assistance attorney](#b-1); 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)](#c), a borrower shall enter into a written agreement with the [Secretary](/usc/20/1003.md?p=17) that specifies that—
- (A) the borrower will remain employed as a [civil legal assistance attorney](#b-1) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) under [subparagraph (B)](#d-1-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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) shall make [student loan](#b-2-A) 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)](#d-2-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](#b-2-A) repayments made by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) in an agreement under [paragraph (1)](#d-1), except that the amount paid by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) to pay any amount to reimburse a borrower for any repayments made by such borrower prior to the date on which the [Secretary](/usc/20/1003.md?p=17) 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)](#d), the borrower and the [Secretary](/usc/20/1003.md?p=17) may, subject to [paragraph (2)](#e-2), enter into an additional agreement in accordance with [subsection (d)](#d).
- (2) **Term—** An agreement entered into under [paragraph (1)](#e-1) may require the borrower to remain employed as a [civil legal assistance attorney](#b-1) for less than three years.
- (f) **Award basis; priority—**
- (1) **Award basis—** Subject to [paragraph (2)](#f-2), the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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-1);
- (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)](#d).
- (g) **Ineligibility for double benefits—** No borrower may, for the same service, receive a reduction of loan obligations under both this section and section [1078–11](/usc/20/1078–11.md) or [1087e(m)](/usc/20/1087e.md?p=m) of this title.
- (h) **Regulations—** The [Secretary](/usc/20/1003.md?p=17) 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.
# §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](/usc/20/1085.md?p=d-1), made upon such form, containing such information, and supported by such evidence as the [Secretary](/usc/20/1003.md?p=17) may require, and otherwise in conformity with this section, the [Secretary](/usc/20/1003.md?p=17) finds that the [applicant](/usc/20/3982.md?p=1) has made a loan to an eligible student which is insurable under the provisions of this part, he may issue to the [applicant](/usc/20/3982.md?p=1) 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)](#a-1) shall become effective upon the date of issuance of the certificate, except that the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1085.md?p=d-1), and in that event, upon compliance with [subsection (a)(1)](#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](/usc/20/1085.md?p=e), 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)](#c).
- (3) **Contents of applications—** An application submitted pursuant to [subsection (a)(1)](#a-1) shall contain (A) an agreement by the [applicant](/usc/20/3982.md?p=1) to pay, in accordance with regulations, the premiums fixed by the [Secretary](/usc/20/1003.md?p=17) pursuant to subsection [(c)](#c), and (B) an agreement by the [applicant](/usc/20/3982.md?p=1) that if the loan is covered by insurance the [applicant](/usc/20/3982.md?p=1) 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](/usc/20/1003.md?p=17) 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](/usc/20/1085.md?p=d-1) as provided in [subsection (a)](#a), the [Secretary](/usc/20/1003.md?p=17) may, in accordance with regulations consistent with [section 1074 of this title](/usc/20/1074.md), issue to any [eligible lender](/usc/20/1085.md?p=d-1) applying therefor a certificate of comprehensive insurance coverage which shall, without further action by the [Secretary](/usc/20/1003.md?p=17), insure all insurable loans made by that lender, on or after the date of the certificate and before a specified cutoff date, within the limits of an aggregate maximum amount stated in the certificate. Such regulations may provide for conditioning such insurance, with respect to any loan, upon compliance by the lender with such requirements (to be stated or incorporated by reference in the certificate) as in the [Secretary](/usc/20/1003.md?p=17)’s judgment will best achieve the purpose of this subsection while protecting the United States from the risk of unreasonable loss and promoting the objectives of this part, including (but not limited to) provisions as to the reporting of such loans and information relevant thereto to the [Secretary](/usc/20/1003.md?p=17) and as to the payment of initial and other premiums and the effect of default therein, and including provision for confirmation by the [Secretary](/usc/20/1003.md?p=17) from time to time (through endorsement of the certificate) of the coverage of specific new loans by such certificate, which confirmation shall be incontestable by the [Secretary](/usc/20/1003.md?p=17) in the absence of fraud or misrepresentation of fact or patent error.
- (2) **Uncovered loans—** If the [holder](/usc/20/1085.md?p=i) of a certificate of comprehensive insurance coverage issued under this subsection grants to a student a [line of credit](/usc/20/1085.md?p=e) extending beyond the cutoff date specified in that certificate, loans or payments thereon made by the [holder](/usc/20/1085.md?p=i) after that date pursuant to the [line of credit](/usc/20/1085.md?p=e) 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 [section 1074 of this title](/usc/20/1074.md), the [Secretary](/usc/20/1003.md?p=17) may, in accordance with regulations, make commitments to insure such future loans or payments, and such commitments may be honored either as provided in [subsection (a)](#a) or by inclusion of such insurance on comprehensive coverage under the subsection for the period or periods in which such future loans or payments are made.
- (c) **Charges for Federal insurance—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17). 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](/usc/20/1003.md?p=17) has made such payment on his own motion pursuant to [section 1080(a) of this title](/usc/20/1080.md?p=a).
- (d) **Assignability of insurance—** The rights of an [eligible lender](/usc/20/1085.md?p=d-1) 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](/usc/20/1085.md?p=d-1), and subject to regulation by the [Secretary](/usc/20/1003.md?p=17).
- (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)](#a), the [Secretary](/usc/20/1003.md?p=17) 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)](#b), the [Secretary](/usc/20/1003.md?p=17) may amend that certificate accordingly.
# §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](/usc/20/1085.md?p=k) shall promptly notify the [Secretary](/usc/20/1003.md?p=17), and the [Secretary](/usc/20/1003.md?p=17) shall if requested (at that time or after further collection efforts) by the beneficiary, or may on the [Secretary](/usc/20/1003.md?p=17)’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)](#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](/usc/20/1003.md?p=17)) to the date on which payment is authorized by the [Secretary](/usc/20/1003.md?p=17), reduced to the extent required by [section 1075(b) of this title](/usc/20/1075.md?p=b). Such beneficiary shall be required to meet the standards of [due diligence](/usc/20/1085.md?p=f) in the collection of the loan and shall be required to 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). The [Secretary](/usc/20/1003.md?p=17) shall make the determination required to carry out the provisions of this section not later than 90 days after the notification by the [insurance beneficiary](/usc/20/1085.md?p=k) and shall make payment in full on the amount of the beneficiary’s loss pending completion of the [due diligence](/usc/20/1085.md?p=f) investigation.
- (b) **Effect of payment of loss—** Upon payment of the amount of the loss pursuant to [subsection (a)](#a), the United States shall be subrogated for all of the rights of the [holder](/usc/20/1085.md?p=i) 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](/usc/20/1085.md?p=k). If the net recovery made by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17)) exceeds the amount of the loss, the excess shall be paid over to the insured. The [Secretary](/usc/20/1003.md?p=17) may, in attempting to make recovery on such loans, contract with private business concerns, [State](/usc/20/1003.md?p=21-A) student loan insurance agencies, or [State](/usc/20/1003.md?p=21-A) [guaranty agencies](/usc/20/1085.md?p=j), for payment for services rendered by such concerns or agencies in assisting the [Secretary](/usc/20/1003.md?p=17) in making such recovery. Any contract under this subsection entered into by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17), or to preclude forbearance by the [Secretary](/usc/20/1003.md?p=17) in the enforcement of the insured obligation after payment on that insurance. Any forbearance which is approved by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1085.md?p=i) of a federally insured loan has failed to exercise reasonable care and [due diligence](/usc/20/1085.md?p=f) 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](/usc/20/1085.md?p=i) 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](/usc/20/1003.md?p=17), after a reasonable notice and opportunity for hearing to an [eligible lender](/usc/20/1085.md?p=d-1), finds that it has substantially failed to exercise such care and diligence or to make the reports and statements required under [section 1078(a)(4) of this title](/usc/20/1078.md?p=a-4) and [section 1079(a)(3) of this title](/usc/20/1079.md?p=a-3), or to pay the required Federal loan insurance premiums, the [Secretary](/usc/20/1003.md?p=17) shall disqualify that lender for further Federal insurance on loans granted pursuant to this part until the [Secretary](/usc/20/1003.md?p=17) is satisfied that its failure has ceased and finds that there is reasonable assurance that the lender will in the future exercise necessary care and diligence or comply with such requirements, as the case may be.
- (e) **Default rate of lenders, holders, and guaranty agencies—**
- (1) **In general—** The [Secretary](/usc/20/1003.md?p=17) shall annually publish a list indicating the [cohort default rate](/usc/20/1085.md?p=m-1-A) (determined in accordance with [section 1085(m) of this title](/usc/20/1085.md?p=m)) for each originating lender, subsequent [holder](/usc/20/1085.md?p=i), and [guaranty agency](/usc/20/1085.md?p=j) participating in the program assisted under this part and an average [cohort default rate](/usc/20/1085.md?p=m-1-A) for all institutions of higher education within each [State](/usc/20/1003.md?p=21-A).
- (2) **Regulations—** The [Secretary](/usc/20/1003.md?p=17) shall prescribe regulations designed to prevent an institution from evading the application to that institution of a [cohort default rate](/usc/20/1085.md?p=m-1-A) 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](/usc/20/1003.md?p=17) shall establish a [cohort default rate](/usc/20/1085.md?p=m-1-A) for lenders, [holders](/usc/20/1085.md?p=i), and [guaranty agencies](/usc/20/1085.md?p=j) (determined consistent with [section 1085(m) of this title](/usc/20/1085.md?p=m)), except that the rate for lenders, [holders](/usc/20/1085.md?p=i), and [guaranty agencies](/usc/20/1085.md?p=j) shall not reflect any loans issued in accordance with [section 1078(j) of this title](/usc/20/1078.md?p=j). The [Secretary](/usc/20/1003.md?p=17) shall allow institutions, lenders, [holders](/usc/20/1085.md?p=i), and [guaranty agencies](/usc/20/1085.md?p=j) the opportunity to correct such [cohort default rate](/usc/20/1085.md?p=m-1-A) information.
# §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 [section 1078 of this title](/usc/20/1078.md), the [Secretary](/usc/20/1003.md?p=17) and each [guaranty agency](/usc/20/1085.md?p=j), [eligible lender](/usc/20/1085.md?p=d-1), and subsequent [holder](/usc/20/1085.md?p=i) shall enter into an agreement with each [consumer reporting agency](/usc/20/1088.md?p=e) to exchange information concerning student borrowers, in accordance with the requirements of this section. For the purpose of assisting such [consumer reporting agencies](/usc/20/1088.md?p=e) in complying with the Fair Credit Reporting Act [[15 U.S.C. 1681](/usc/15/1681.md) et seq.], such agreements may provide for timely response by the [Secretary](/usc/20/1003.md?p=17) (concerning loans covered by Federal loan insurance) or by a [guaranty agency](/usc/20/1085.md?p=j), [eligible lender](/usc/20/1085.md?p=d-1), or subsequent [holder](/usc/20/1085.md?p=i) (concerning loans covered by a guaranty agreement), or to requests from such [consumer reporting agencies](/usc/20/1088.md?p=e) for responses to objections raised by borrowers. Subject to the requirements of [subsection (c)](#c), such agreements shall require the [Secretary](/usc/20/1003.md?p=17) or the [guaranty agency](/usc/20/1085.md?p=j), [eligible lender](/usc/20/1085.md?p=d-1), or subsequent [holder](/usc/20/1085.md?p=i), as appropriate, to disclose to such [consumer reporting agencies](/usc/20/1088.md?p=e), with respect to any loan under this part that has not been repaid by the borrower—
- (1) that the loan is an [education loan](/usc/20/1094.md?p=i-3) (as such term is defined in [section 1019 of this title](/usc/20/1019.md));
- (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 ([15 U.S.C. 1681](/usc/15/1681.md) et seq.);
- (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](/usc/20/1003.md?p=17) has made a payment pursuant to [section 1080(a) of this title](/usc/20/1080.md?p=a) or the [guaranty agency](/usc/20/1085.md?p=j) has made a payment to the previous [holder](/usc/20/1085.md?p=i) of the loan; and
- (5) the date of cancellation of the note upon completion of repayment by the borrower of the loan or payment by the [Secretary](/usc/20/1003.md?p=17) pursuant to [section 1087 of this title](/usc/20/1087.md).
- (b) **Additional information—** Such agreements may also provide for the disclosure by such [consumer reporting agencies](/usc/20/1088.md?p=e) to the [Secretary](/usc/20/1003.md?p=17) or a [guaranty agency](/usc/20/1085.md?p=j), whichever insures or guarantees a loan, upon receipt of a notice under [subsection (a)(4)](#a-4) that such a loan is in default, of information concerning the borrower’s location or other information which may assist the [Secretary](/usc/20/1003.md?p=17), the [guaranty agency](/usc/20/1085.md?p=j), the [eligible lender](/usc/20/1085.md?p=d-1), or the subsequent [holder](/usc/20/1085.md?p=i) 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](/usc/20/1003.md?p=17) or the [guaranty agency](/usc/20/1085.md?p=j), [eligible lender](/usc/20/1085.md?p=d-1), or subsequent [holder](/usc/20/1085.md?p=i) unless its accuracy and completeness have been verified and the [Secretary](/usc/20/1003.md?p=17) or the [guaranty agency](/usc/20/1085.md?p=j) has determined that disclosure would accomplish the purpose of this section;
- (2) as to any information so disclosed, such [consumer reporting agencies](/usc/20/1088.md?p=e) will be promptly notified of, and will promptly record, any change submitted by the [Secretary](/usc/20/1003.md?p=17), the [guaranty agency](/usc/20/1085.md?p=j), [eligible lender](/usc/20/1085.md?p=d-1), or subsequent [holder](/usc/20/1085.md?p=i) 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 ([15 U.S.C. 1681i](/usc/15/1681i.md));
- (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)](#a-4) of this section, except for disclosures made to obtain the borrower’s location, the [Secretary](/usc/20/1003.md?p=17), or the [guaranty agency](/usc/20/1085.md?p=j), [eligible lender](/usc/20/1085.md?p=d-1), or subsequent [holder](/usc/20/1085.md?p=i) 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](/usc/20/1088.md?p=e) 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](/usc/20/1085.md?p=j), [eligible lender](/usc/20/1085.md?p=d-1), or subsequent [holder](/usc/20/1085.md?p=i) or [consumer reporting agency](/usc/20/1088.md?p=e) which discloses or receives information under this section shall not be considered a Government contractor within the meaning of [section 552a of title 5](/usc/5/552a.md).
- (e) **Disclosure to institutions—** The [Secretary](/usc/20/1003.md?p=17) and each [guaranty agency](/usc/20/1085.md?p=j), [eligible lender](/usc/20/1085.md?p=d-1), and subsequent [holder](/usc/20/1085.md?p=i) of a loan are authorized to disclose information described in subsections [(a)](#a) and [(b)](#b) concerning student borrowers to the [eligible institutions](/usc/20/1066a.md?p=1) such borrowers attend or previously attended. To further the purpose of this section, an [eligible institution](/usc/20/1066a.md?p=1) may enter into an arrangement with any or all of the [holders](/usc/20/1085.md?p=i) 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](/usc/20/1085.md?p=i) in contacting and influencing borrowers to avoid default.
- (f) **Duration of authority—** Notwithstanding paragraphs [(4)](#a-4) and [(5)](#a-5) of subsection (a) of section 605 of the Fair Credit Reporting Act ([15 U.S.C. 1681c(a)(4)](/usc/15/1681c.md?p=a-4), (a)(5)), a [consumer reporting agency](/usc/20/1088.md?p=e) may make a report containing information received from the [Secretary](/usc/20/1003.md?p=17) or a [guaranty agency](/usc/20/1085.md?p=j), [eligible lender](/usc/20/1085.md?p=d-1), or subsequent [holder](/usc/20/1085.md?p=i) regarding the status of a borrower’s defaulted account on a loan guaranteed under this part until—
- (1) 7 years from the date on which the [Secretary](/usc/20/1003.md?p=17) or the agency paid a claim to the [holder](/usc/20/1085.md?p=i) on the guaranty;
- (2) 7 years from the date the [Secretary](/usc/20/1003.md?p=17), [guaranty agency](/usc/20/1085.md?p=j), [eligible lender](/usc/20/1085.md?p=d-1), or subsequent [holder](/usc/20/1085.md?p=i) first reported the account to the [consumer reporting agency](/usc/20/1088.md?p=e); 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.
# §1081. Insurance fund
- (a) **Establishment—** There is hereby established a student loan insurance [fund](/usc/20/4702.md?p=3) (hereinafter in this section called the “[fund](/usc/20/4702.md?p=3)”) which shall be available without fiscal year limitation to the [Secretary](/usc/20/1003.md?p=17) for making payments in connection with the default of loans insured by the [Secretary](/usc/20/1003.md?p=17) under this part, or in connection with payments under a guaranty agreement under [section 1078(c) of this title](/usc/20/1078.md?p=c). All amounts received by the [Secretary](/usc/20/1003.md?p=17) as premium charges for insurance and as receipts, earnings, or proceeds derived from any claim or other [assets](/usc/20/1087vv.md?p=f-2) acquired by the [Secretary](/usc/20/1003.md?p=17) in connection with operations under this part, any excess advances under [section 1072 of this title](/usc/20/1072.md), and any other moneys, property, or [assets](/usc/20/1087vv.md?p=f-2) derived by the [Secretary](/usc/20/1003.md?p=17) from operations in connection with this section, shall be deposited in the [fund](/usc/20/4702.md?p=3). All payments in connection with the default of loans insured by the [Secretary](/usc/20/1003.md?p=17) under this part, or in connection with such guaranty agreements shall be paid from the [fund](/usc/20/4702.md?p=3). Moneys in the [fund](/usc/20/4702.md?p=3) not needed for current operations under this section may be invested in bonds or other obligations guaranteed as to principal and interest by the United States.
- (b) **Borrowing authority—** If at any time the moneys in the [fund](/usc/20/4702.md?p=3) are insufficient to make payments in connection with the default of any loan insured by the [Secretary](/usc/20/1003.md?p=17) under this part, or in connection with any guaranty agreement made under [section 1078(c) of this title](/usc/20/1078.md?p=c), the [Secretary](/usc/20/1003.md?p=17) is authorized, to the extent provided in advance by appropriations Acts, to issue to the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) with the approval of the [Secretary](/usc/20/1003.md?p=17) of the Treasury. Such notes or other obligations shall bear interest at a rate determined by the [Secretary](/usc/20/1003.md?p=17) of the Treasury, taking into consideration the current average market yield on outstanding marketable obligations of the United States of comparable maturities during the month preceding the issuance of the notes or other obligations. The [Secretary](/usc/20/1003.md?p=17) of the Treasury is authorized and directed to purchase any notes and other obligations issued hereunder and for that purpose is authorized to use as a public debt transaction the proceeds from the sale of any securities issued under [chapter 31](/usc/31/chstIII-ch31.md) of title 31, and the purposes for which securities may be issued under that chapter, are extended to include any purchase of such notes and obligations. The [Secretary](/usc/20/1003.md?p=17) of the Treasury may at any time sell any of the notes or other obligations acquired under this subsection. All redemptions, purchases, and sales by the [Secretary](/usc/20/1003.md?p=17) of the Treasury of such notes or other obligations shall be treated as public debt transactions of the United States. Sums borrowed under the subsection shall be deposited in the [fund](/usc/20/4702.md?p=3) and redemption of such notes and obligations shall be made by the [Secretary](/usc/20/1003.md?p=17) from such [fund](/usc/20/4702.md?p=3).
# §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](/usc/20/1003.md?p=17) may—
- (1) prescribe such regulations as may be necessary to carry out the purposes of this part, including regulations applicable to [third party servicers](/usc/20/1088.md?p=c) (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](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=17) shall survive notwithstanding any change in the person occupying the office of [Secretary](/usc/20/1003.md?p=17) or any vacancy in that office; but no attachment, injunction, garnishment, or other similar process, mesne or final, shall be issued against the [Secretary](/usc/20/1003.md?p=17) or property under the [Secretary](/usc/20/1003.md?p=17)’s control and nothing herein shall be construed to except litigation arising out of activities under this part from the application of sections [509](/usc/28/509.md), [517](/usc/28/517.md), [547](/usc/28/547.md), and [2679](/usc/28/2679.md) of title 28;
- (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](/usc/20/1003.md?p=17)’s obligations and rights to those of [eligible lenders](/usc/20/1085.md?p=d-1), and borrowers in case of default, and relating to such other matters as the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17), after notice and opportunity for a hearing, if the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) under this part;
- (5) enforce, pay, or compromise, any claim on, or arising because of, any such insurance or any guaranty agreement under [section 1078(c) of this title](/usc/20/1078.md?p=c); and
- (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](/usc/20/1003.md?p=17) 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 [chapter 91](/usc/31/chstVI-ch91.md) of title 31. The transactions of the [Secretary](/usc/20/1003.md?p=17), including the settlement of insurance claims and of claims for payments pursuant to [section 1078 of this title](/usc/20/1078.md), and transactions related thereto and vouchers approved by the [Secretary](/usc/20/1003.md?p=17) in connection with such transactions, shall be final and conclusive upon all accounting and other [officers](/usc/20/1094.md?p=i-5) of the Government. The [Secretary](/usc/20/1003.md?p=17) may not enter into any settlement of any claim under this subchapter that exceeds $1,000,000 unless—
- (1) the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/1066a.md?p=1), (ii) [State](/usc/20/1003.md?p=21-A) or private, [nonprofit](/usc/20/1003.md?p=13) 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](/usc/20/1003.md?p=17) may designate such additional subcategories within the categories specified in subparagraph (B) of this paragraph as the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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)](#c-1-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](/usc/20/1003.md?p=17), and where an insurer insures loans for lenders in more than one [State](/usc/20/1003.md?p=21-A), such insurer’s report shall list all data separately for each [State](/usc/20/1003.md?p=21-A).
- (3) **Institutional, public, or nonprofit lenders—** For purposes of clarity in communications, the [Secretary](/usc/20/1003.md?p=17) shall separately identify loans made by the lenders referred to in [clause (i)](#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](/usc/20/1003.md?p=17) under this part listed in paragraph (2) of this subsection may be delegated to employees in the regional office of the [Department](/usc/20/1003.md?p=4).
- (2) **Delegable functions—** The functions which may be delegated pursuant to this subsection are—
- (A) reviewing applications for loan insurance under [section 1079 of this title](/usc/20/1079.md) and issuing contracts for Federal loan insurance, certificates of insurance, and certificates of comprehensive insurance coverage to [eligible lenders](/usc/20/1085.md?p=d-1) which are financial or credit institutions subject to examination and supervision by an agency of the United States or of any [State](/usc/20/1003.md?p=21-A);
- (B) receiving claims for payments under [section 1080(a) of this title](/usc/20/1080.md?p=a), examining those claims, and pursuant to regulations of the [Secretary](/usc/20/1003.md?p=17), approving claims for payment, or requiring lenders to take additional collection action as a condition for payment of claims; and
- (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](/usc/20/1003.md?p=17) issued under [subsection (a)](#a)), and recommending litigation with respect to any such claim.
- (e) **Use of information on borrowers—** Notwithstanding any other provision of law, the [Secretary](/usc/20/1003.md?p=17) may provide to [eligible lenders](/usc/20/1085.md?p=d-1), and to any [guaranty agency](/usc/20/1085.md?p=j) having a guaranty agreement under [section 1078(c)(1) of this title](/usc/20/1078.md?p=c-1), any information with respect to the names and addresses of borrowers or other relevant information which is available to the [Secretary](/usc/20/1003.md?p=17), from whatever source such information may be derived.
- (f) **Audit of financial transactions—**
- (1) **Comptroller General and Inspector General authority—** The Comptroller General and the Inspector General of the [Department](/usc/20/1003.md?p=4) of Education shall each have the authority to conduct an audit of the financial transactions of—
- (A) any [guaranty agency](/usc/20/1085.md?p=j) operating under an agreement with the [Secretary](/usc/20/1003.md?p=17) pursuant to [section 1078(b) of this title](/usc/20/1078.md?p=b);
- (B) any [eligible lender](/usc/20/1085.md?p=d-1) as defined in [section 1085(d)(1) of this title](/usc/20/1085.md?p=d-1);
- (C) a representative sample of [eligible lenders](/usc/20/1085.md?p=d-1) under this part, upon the request of either of the [authorizing committees](/usc/20/1003.md?p=1), with respect to the payment of the special allowance under [section 1087–1 of this title](/usc/20/1087–1.md) in order to evaluate the program authorized by this part.
- (2) **Access to records—** For the purpose of carrying out this subsection, the [records](#f-3) of any entity described in subparagraph (A), (B), (C), or (D)[^1] of [paragraph (1)](#f-1) shall be available to the Comptroller General and the Inspector General of the [Department](/usc/20/1003.md?p=4) of Education. For the purpose of [section 716(c) of title 31](/usc/31/716.md?p=c), such [records](#f-3) shall be considered to be [records](#f-3) to which the Comptroller General has access by law, and for the purpose of [section 406(a)(4) of title 5](/usc/5/406.md?p=a-4), such [records](#f-3) shall be considered to be [records](#f-3) necessary in the performance of functions assigned by [chapter 4](/usc/5/chptI-ch4.md) of title 5 to the Inspector General.
- (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](/usc/20/1003.md?p=4) of Education shall audit the [records](#f-3) to determine the extent to which they, at a minimum, comply with Federal statutes, and rules and regulations prescribed by the [Secretary](/usc/20/1003.md?p=17), in effect at the time that the [record](#f-3) was made, and in no case shall the Comptroller General or the Inspector General apply subsequently determined standards, procedures, or regulations to the [records](#f-3) 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](/usc/20/1085.md?p=j)—
- (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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/1085.md?p=j) 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](/usc/20/1085.md?p=j) has no liability under paragraph (1) of this subsection if, prior to notification by the [Secretary](/usc/20/1003.md?p=17) under that paragraph, the lender or [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/1085.md?p=j), and occurring prior to notification by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/1085.md?p=i), the lender or [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/1003.md?p=17). In determining the amount of such penalty, or the amount agreed upon in compromise, the [Secretary](/usc/20/1003.md?p=17) shall consider the appropriateness of the penalty to the resources of the lender or [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/1003.md?p=17), after a reasonable notice and opportunity for hearing to an [eligible lender](/usc/20/1085.md?p=d-1), finds that the [eligible lender](/usc/20/1085.md?p=d-1)—
- (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 [section 1078(a)(4) of this title](/usc/20/1078.md?p=a-4), or
- (III) to pay the required loan insurance premiums to any [guaranty agency](/usc/20/1085.md?p=j), 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 [section 1078 of this title](/usc/20/1078.md),
the [Secretary](/usc/20/1003.md?p=17) shall limit, suspend, or terminate that lender from participation in the insurance programs operated by [guaranty agencies](/usc/20/1085.md?p=j) under this part.
- (B) The [Secretary](/usc/20/1003.md?p=17) shall not lift any such limitation, suspension, or termination until the [Secretary](/usc/20/1003.md?p=17) 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)](#h-1-A-i), or
- (iii) cease to engage in the practices described in [subparagraph (A)(ii)](#h-1-A-ii),
as the case may be.
- (2) **Review of sanctions on lenders—**
- (A) The [Secretary](/usc/20/1003.md?p=17) shall review each limitation, suspension, or termination imposed by any [guaranty agency](/usc/20/1085.md?p=j) pursuant to [section 1078(b)(1)(U) of this title](/usc/20/1078.md?p=b-1-U) within 60 days after receipt by the [Secretary](/usc/20/1003.md?p=17) of a notice from the [guaranty agency](/usc/20/1085.md?p=j) of the imposition of such limitation, suspension, or termination, unless the right to such review is waived in writing by the lender. The [Secretary](/usc/20/1003.md?p=17) shall uphold the imposition of such limitation, suspension, or termination in the student loan insurance program of each of the [guaranty agencies](/usc/20/1085.md?p=j) under this part, and shall notify such [guaranty agencies](/usc/20/1085.md?p=j) of such sanction—
- (i) if such review is waived; or
- (ii) if such review is not waived, unless the [Secretary](/usc/20/1003.md?p=17) determines that the limitation, suspension, or termination was not imposed in accordance with requirements of such section.
- (B) The [Secretary](/usc/20/1003.md?p=17)’s review under this paragraph of the limitation, suspension, or termination imposed by a [guaranty agency](/usc/20/1085.md?p=j) pursuant to [section 1078(b)(1)(U) of this title](/usc/20/1078.md?p=b-1-U) shall be limited to—
- (i) a review of the written record of the proceedings in which the [guaranty agency](/usc/20/1085.md?p=j) imposed such sanctions; and
- (ii) a determination as to whether the [guaranty agency](/usc/20/1085.md?p=j) complied with [section 1078(b)(1)(U) of this title](/usc/20/1078.md?p=b-1-U) and any notice and hearing requirements prescribed in regulations of the [Secretary](/usc/20/1003.md?p=17) under this part.
- (C) The [Secretary](/usc/20/1003.md?p=17) shall not lift any such sanction until the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) shall notify each [guaranty agency](/usc/20/1085.md?p=j) of the lifting of any such sanction.
- (3) **Review of sanctions on eligible institutions—**
- (A) The [Secretary](/usc/20/1003.md?p=17) shall review each limitation, suspension, or termination imposed by any [guaranty agency](/usc/20/1085.md?p=j) pursuant to [section 1078(b)(1)(T) of this title](/usc/20/1078.md?p=b-1-T) within 60 days after receipt by the [Secretary](/usc/20/1003.md?p=17) of a notice from the [guaranty agency](/usc/20/1085.md?p=j) of the imposition of such limitation, suspension, or termination, unless the right to such review is waived in writing by the institution. The [Secretary](/usc/20/1003.md?p=17) shall uphold the imposition of such limitation, suspension, or termination in the student loan insurance program of each of the [guaranty agencies](/usc/20/1085.md?p=j) under this part, and shall notify such [guaranty agencies](/usc/20/1085.md?p=j) of such sanctions—
- (i) if such review is waived; or
- (ii) if such review is not waived, unless the [Secretary](/usc/20/1003.md?p=17) determines that the limitation, suspension, or termination was not imposed in accordance with requirements of such section.
- (B) The [Secretary](/usc/20/1003.md?p=17)’s review under this paragraph of the limitation, suspension, or termination imposed by a [guaranty agency](/usc/20/1085.md?p=j) pursuant to [section 1078(b)(1)(T) of this title](/usc/20/1078.md?p=b-1-T) shall be limited to—
- (i) a review of the written record of the proceedings in which the [guaranty agency](/usc/20/1085.md?p=j) imposed such sanctions; and
- (ii) a determination as to whether the [guaranty agency](/usc/20/1085.md?p=j) complied with [section 1078(b)(1)(T) of this title](/usc/20/1078.md?p=b-1-T) and any notice and hearing requirements prescribed in regulations of the [Secretary](/usc/20/1003.md?p=17) under this part.
- (C) The [Secretary](/usc/20/1003.md?p=17) shall not lift any such sanction until the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) shall notify each [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/1003.md?p=17) is authorized to sell defaulted student loans assigned to the United States under this part to collection agencies, [eligible lenders](/usc/20/1085.md?p=d-1), [guaranty agencies](/usc/20/1085.md?p=j), or other qualified purchaser on such terms as the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17)—
- (A) receives information, determined by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/4702.md?p=3); and
- (C) determines that the likelihood of loss outweighs the importance of following the limitation, suspension, or termination procedures authorized in [subsection (h)](#h);
the [Secretary](/usc/20/1003.md?p=17) 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)](#h) before the expiration of that period.
- (3) **Opportunity to show cause—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) shall publicize models for providing the repayment assistance described in [paragraph (1)](#k-1) and each year select entities that deserve recognition, through means devised by the [Secretary](/usc/20/1003.md?p=17), for the development of innovative plans for providing such assistance to employees.
- (3) **Recommendation—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) shall, by regulation developed in consultation with [guaranty agencies](/usc/20/1085.md?p=j), lenders, institutions of higher education, secondary markets, students, [third party servicers](/usc/20/1088.md?p=c) and other organizations involved in providing loans under this part, prescribe standardized forms and procedures regarding—
- (A) origination of loans;
- (B) electronic [funds](/usc/20/4702.md?p=3) 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)](#l-1) shall include all aspects of the loan process as such process involves [eligible lenders](/usc/20/1085.md?p=d-1) and [guaranty agencies](/usc/20/1085.md?p=j) 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](/usc/20/5802.md?p=a-11), lenders, secondary markets, and the [Department](/usc/20/1003.md?p=4).
- (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](/usc/20/1085.md?p=j) 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](/usc/20/952.md?p=c) 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](/usc/20/1088.md?p=c), and the [Department](/usc/20/1003.md?p=4) 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](/usc/20/1003.md?p=17) shall review regulations prescribed pursuant to [paragraph (1)](#l-1) and seek additional recommendations from [guaranty agencies](/usc/20/1085.md?p=j), lenders, institutions of higher education, students, secondary markets, [third party servicers](/usc/20/1088.md?p=c) 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](/usc/20/1003.md?p=17), in cooperation with representatives of [guaranty agencies](/usc/20/1085.md?p=j), [eligible lenders](/usc/20/1085.md?p=d-1), 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](/usc/20/1003.md?p=17) shall—
- (i) use clear, concise, and simple language to facilitate understanding of loan terms and conditions by [applicants](/usc/20/3982.md?p=1); and
- (ii) be formatted to require the [applicant](/usc/20/3982.md?p=1) to clearly indicate a choice of lender.
- (C) **Free application form—** For [academic year](/usc/20/1088.md?p=a-2-A) 1999–2000 and succeeding [academic years](/usc/20/1088.md?p=a-2-A), the [Secretary](/usc/20/1003.md?p=17) shall prescribe the form developed under [section 1090 of this title](/usc/20/1090.md) as the application form under this part, other than for loans under sections [1078–2](/usc/20/1078–2.md) and [1078–3](/usc/20/1078–3.md) of this title.
- (D) **Master promissory note—**
- (i) **In general—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17). Such forms shall be used for loans made under this part or part D as directed by the [Secretary](/usc/20/1003.md?p=17). Unless otherwise notified by the [Secretary](/usc/20/1003.md?p=17), each [institution of higher education](/usc/20/1001.md?p=a) 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](/usc/20/1003.md?p=17) shall consult with representatives of [guaranty agencies](/usc/20/1085.md?p=j), [eligible lenders](/usc/20/1085.md?p=d-1), 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](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=21-A) law to the contrary, including the Uniform Commercial Code as in effect in any [State](/usc/20/1003.md?p=21-A), a security interest in loans made under this part, on behalf of any [eligible lender](/usc/20/1085.md?p=d-1) (as defined in [section 1085(d) of this title](/usc/20/1085.md?p=d)) shall attach, be perfected, and be assigned priority in the manner provided by the applicable [State](/usc/20/1003.md?p=21-A)’s law for perfection of security interests in accounts, as such law may be amended from time to time (including applicable transition provisions). If any such [State](/usc/20/1003.md?p=21-A)’s law provides for a statutory lien to be created in such loans, such statutory lien may be created by the entity or entities governed by such [State](/usc/20/1003.md?p=21-A) law in accordance with the applicable statutory provisions that created such a statutory lien.
- (ii) **Collateral description—** In addition to any other method for describing collateral in a legally sufficient manner permitted under the laws of the [State](/usc/20/1003.md?p=21-A), 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)](#m-1-E-i) and [(ii)](#m-1-E-ii) and any provisions of any [State](/usc/20/1003.md?p=21-A) law to the contrary, other than any such [State](/usc/20/1003.md?p=21-A)’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](/usc/20/1003.md?p=21-A).
- (2) **Common deferment form—** The [Secretary](/usc/20/1003.md?p=17), in cooperation with representatives of [guaranty agencies](/usc/20/1085.md?p=j), 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](/usc/20/1003.md?p=17) 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](/usc/20/1085.md?p=j) 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](/usc/20/1085.md?p=j).
- (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](/usc/20/1003.md?p=17) 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](/usc/20/4702.md?p=3) 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](/usc/20/4702.md?p=3) shall be expended by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17).
- (3) **Plan for use required—** The [Secretary](/usc/20/1003.md?p=17) shall submit a plan, for inclusion in the materials accompanying the President’s budget each fiscal year, detailing the expenditure of [funds](/usc/20/4702.md?p=3) authorized by this section to accomplish the 5 percent reduction in defaults. At the conclusion of the fiscal year, the [Secretary](/usc/20/1003.md?p=17) shall report the [Secretary](/usc/20/1003.md?p=17)’s findings and activities concerning the expenditure of [funds](/usc/20/4702.md?p=3) and whether the performance measure was met. If the performance measure was not met, the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=1).
- (o) **Consequences of guaranty agency insolvency—** In the event that the [Secretary](/usc/20/1003.md?p=17) has determined that a [guaranty agency](/usc/20/1085.md?p=j) is unable to meet its insurance obligations under this part, the [holder](/usc/20/1085.md?p=i) of loans insured by the [guaranty agency](/usc/20/1085.md?p=j) may submit insurance claims directly to the [Secretary](/usc/20/1003.md?p=17) and the [Secretary](/usc/20/1003.md?p=17) shall pay to the [holder](/usc/20/1085.md?p=i) the full insurance obligation of the [guaranty agency](/usc/20/1085.md?p=j), in accordance with insurance requirements no more stringent than those of the [guaranty agency](/usc/20/1085.md?p=j). Such arrangements shall continue until the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1094.md?p=i-5) and [directors](/usc/20/9101.md?p=3), and those employees and paid consultants of [eligible institutions](/usc/20/1066a.md?p=1), [eligible lenders](/usc/20/1085.md?p=d-1), [guaranty agencies](/usc/20/1085.md?p=j), loan servicing agencies, accrediting agencies or associations, [State](/usc/20/1003.md?p=21-A) licensing agencies or [boards](/usc/20/4702.md?p=2), 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](/usc/20/4702.md?p=3) under this subchapter or as to the eligibility of any entity or individual to participate under this subchapter, shall report to the [Secretary](/usc/20/1003.md?p=17), in such manner and at such time as the [Secretary](/usc/20/1003.md?p=17) shall require, on any financial interest which such individual may hold in any other entity participating in any program assisted under this subchapter.
# §1083. Student loan information by eligible lenders
- (a) **Required disclosure before disbursement—** Each [eligible lender](/usc/20/1085.md?p=d-1), 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 [section 1078–3 of this title](/usc/20/1078–3.md)), shall provide thorough and accurate loan information on such loan to the borrower in simple and understandable terms. Any disclosure required by this subsection may be made by an [eligible lender](/usc/20/1085.md?p=d-1) by written or electronic means, including as part of the application material provided to the borrower, as part of the promissory note evidencing the loan, or on a separate written form provided to the borrower. Each lender shall provide to each borrower a telephone number, and may provide an electronic address, through which additional loan information can be obtained. The disclosure shall include—
- (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](/usc/20/1085.md?p=d-1), 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 [section 1078–8 of this title](/usc/20/1078–8.md) or to a student borrower under [section 1078–2 of this title](/usc/20/1078–2.md), an explanation—
- (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](/usc/20/1001.md?p=a); 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](/usc/20/1021.md?p=16) borrower on behalf of a student under [section 1078–2 of this title](/usc/20/1078–2.md), an explanation—
- (A) that the [parent](/usc/20/1021.md?p=16) 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](/usc/20/1001.md?p=a);
- (B) if the [parent](/usc/20/1021.md?p=16) 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](/usc/20/1021.md?p=16) may be eligible for a deferment on the loan if the [parent](/usc/20/1021.md?p=16) is enrolled on at least a half-time basis in an [institution of higher education](/usc/20/1001.md?p=a);
- (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](/usc/20/1088.md?p=e); 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](/usc/20/1085.md?p=d-1) shall, at or prior to the start of the repayment period on a loan made, insured, or guaranteed under section [1078](/usc/20/1078.md), [1078–2](/usc/20/1078–2.md), or [1078–8](/usc/20/1078–8.md) of this title, disclose to the borrower by written or electronic means the information required under this subsection in simple and understandable terms. Each [eligible lender](/usc/20/1085.md?p=d-1) shall provide to each borrower a telephone number, and may provide an electronic address, through which additional loan information can be obtained. The disclosure required by this subsection shall be made not less than 30 days nor more than 150 days before the first payment on the loan is due from the borrower. The disclosure shall include—
- (1) the name of the [eligible lender](/usc/20/1085.md?p=d-1) 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 [section 1078–2(d)(1) of this title](/usc/20/1078–2.md?p=d-1) is to end, as applicable;
- (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)](/usc/20/1078–2.md?p=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)](#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](/usc/20/1003.md?p=13) organizations, advocates, and counselors (including the Student Loan Ombudsman of the [Department](/usc/20/1003.md?p=4)) of which the lender is aware, where borrowers may receive advice and assistance on loan repayment.
- (c) **Separate notification—** Each [eligible lender](/usc/20/1085.md?p=d-1) 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](/usc/20/1088.md?p=e). The requirement of this subsection shall be in addition to the information required by [subsection (a)](#a) of this section.
- (d) **Special disclosure rules on PLUS loans, and unsubsidized loans—** Loans made under sections [1078–2](/usc/20/1078–2.md) and [1078–8](/usc/20/1078–8.md) of this title shall not be subject to the disclosure of projected monthly payment amounts required under [subsection (b)(7)](#b-7) if the lender, in lieu of such disclosure, provides the borrower with sample projections of monthly repayment amounts, assuming different levels of borrowing and interest accruals resulting from capitalization of interest while the borrower, or the student on whose behalf the loan is made, is in [school](/usc/20/5802.md?p=a-11), in simple and understandable terms. Such sample projections shall disclose the cost to the borrower of—
- (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](/usc/20/1085.md?p=d-1) 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](/usc/20/1003.md?p=4)’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](/usc/20/1085.md?p=d-1) 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](/usc/20/1085.md?p=d-1) 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](/usc/20/1003.md?p=13) organizations, advocates, and counselors (including the Student Loan Ombudsman of the [Department](/usc/20/1003.md?p=4)), 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](/usc/20/1085.md?p=d-1) 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 [[15 U.S.C. 1601](/usc/15/1601.md) et seq.] with regard to loans made under this part.
- (4) **Actions by the Secretary—** The [Secretary](/usc/20/1003.md?p=17) may limit, suspend, or terminate the continued participation of an [eligible lender](/usc/20/1085.md?p=d-1) in making loans under this part for failure by that lender to comply with this section.
# §1083a. Consumer education information
- (a) **In general—** Each [guaranty agency](/usc/20/1085.md?p=j) participating in a program under this part, working with the institutions of higher education served by such [guaranty agency](/usc/20/1085.md?p=j), 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](/usc/20/1001.md?p=a). The activities described in this section shall be considered default reduction activities for the purposes of [section 1072 of this title](/usc/20/1072.md).
- (b) **Rule of construction—** Nothing in this section shall be construed to prohibit—
- (1) a [guaranty agency](/usc/20/1085.md?p=j) from using existing activities, programs, and materials in meeting the requirements of this section;
- (2) a [guaranty agency](/usc/20/1085.md?p=j) from providing programs or materials similar to the programs or materials described in [subsection (a)](#a) to an [institution of higher education](/usc/20/1001.md?p=a) 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)](#a).
# §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](/usc/20/1003.md?p=21-A) or [nonprofit](/usc/20/1003.md?p=13) private student loan insurance program which meets the requirements of [section 1078(a)(1)(B) of this title](/usc/20/1078.md?p=a-1-B).
# §1085. Definitions for student loan insurance program
As used in this part:
- (a) **Eligible institution—**
- (1) **In general—** Except as provided in [paragraph (2)](#a-2), the term “eligible institution” means an [institution of higher education](/usc/20/1001.md?p=a), as defined in [section 1002 of this title](/usc/20/1002.md), except that, for the purposes of sections [1077(a)(2)(C)(i)](/usc/20/1077.md?p=a-2-C-i) and [1078(b)(1)(M)(i)](/usc/20/1078.md?p=b-1-M-i) of this title, an eligible institution includes any institution that is within this definition without regard to whether such institution is participating in any program under this subchapter and includes any institution ineligible for participation in any program under this part pursuant to paragraph (2) of this subsection.
- (2) **Ineligibility based on high default rates—**
- (A) An institution whose [cohort default rate](#m-1-A) is equal to or greater than the threshold percentage specified in [subparagraph (B)](#a-2-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](/usc/20/1003.md?p=17) of the loss of eligibility under this paragraph, the institution appeals the loss of its eligibility to the [Secretary](/usc/20/1003.md?p=17). The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) that the [Secretary](/usc/20/1003.md?p=17)’s calculation of its [cohort default rate](#m-1-A) is not accurate, and that recalculation would reduce its [cohort default rate](#m-1-A) for any of the three fiscal years below the threshold percentage specified in [subparagraph (B)](#a-2-B);
- (ii) there are exceptional mitigating circumstances within the meaning of [paragraph (5)](#a-5); or
- (iii) there are, in the judgment of the [Secretary](/usc/20/1003.md?p=17), other exceptional mitigating circumstances that would make the application of this paragraph inequitable.
During such appeal, the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) an amount equal to the amount of interest, special allowance, reinsurance, and any related payments made by the [Secretary](/usc/20/1003.md?p=17) (or which the [Secretary](/usc/20/1003.md?p=17) 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)](#a-2-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](/usc/20/1061.md?p=2) within the meaning of [section 1061(2) of this title](/usc/20/1061.md?p=2);
- (ii) a tribally controlled college or university, as defined in [section 1801(a)(4) of title 25](/usc/25/1801.md?p=a-4); or
- (iii) a Navajo [Community College](/usc/20/1161w.md?p=f-1) under the Navajo Community College Act.
- (D) Notwithstanding the first sentence of [subparagraph (A)](#a-2-A), the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](#j) correct errors in the draft data used to calculate the institution’s [cohort default rate](#m-1-A);
- (ii) the [guaranty agency](#j) 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](#j).
- (3) **Appeals for regulatory relief—** An institution whose [cohort default rate](#m-1-A), calculated in accordance with [subsection (m)](#m), is equal to or greater than the threshold percentage specified in [paragraph (2)(B)(iv)](#a-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](/usc/20/1003.md?p=17), file an appeal demonstrating exceptional mitigating circumstances, as defined in [paragraph (5)](#a-5). The [Secretary](/usc/20/1003.md?p=17) shall issue a decision on any such appeal not later than 45 days after the date of submission of the appeal. If the [Secretary](/usc/20/1003.md?p=17) determines that the institution demonstrates exceptional mitigating circumstances, the [Secretary](/usc/20/1003.md?p=17) may not subject the institution to provisional certification based solely on the institution’s [cohort default rate](#m-1-A).
- (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](/usc/20/1094.md?p=i-3) 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)](/usc/20/1078–1.md?p=a-2)[^1] of this title; or
- (C) is an institution whose [cohort default rate](#m-1-A) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17)) of the relevant loan servicing and collection records used by a [guaranty agency](#j) in determining whether to pay a claim on a defaulted loan or by the [Department](/usc/20/1003.md?p=4) in determining an institution’s default rate in the loan program under part D of this subchapter. The [Secretary](/usc/20/1003.md?p=17) shall reduce the institution’s [cohort default rate](#m-1-A) to reflect the percentage of defaulted loans in the representative sample that are required to be excluded pursuant to [subsection (m)(1)(B)](#m-1-B).
- (5) **Definition of mitigating circumstances—**
- (A) For purposes of this subsection, an [institution of higher education](/usc/20/1001.md?p=a) shall be treated as having exceptional mitigating circumstances that make application of [paragraph (2)](#a-2) inequitable, and that provide for regulatory relief under [paragraph (3)](#a-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](#m-1-A) 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 [section 1070a(b)(2)(A) of this title](/usc/20/1070a.md), for which a student would be eligible based on the student’s enrollment status; or
- (II) have an adjusted gross income that when added with the adjusted gross income of the student’s [parents](/usc/20/1021.md?p=16) (unless the student is an independent student), of less than the poverty level, as determined by the [Department](/usc/20/1003.md?p=4) of Health and Human Services.
- (ii) In the case of an [institution of higher education](/usc/20/1001.md?p=a) 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)](#a-5-A-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](/usc/20/1088.md?p=d-1) in the Armed Forces of the United States.
- (iii)
- (I) In the case of an [institution of higher education](/usc/20/1001.md?p=a) that does not award a degree described in [clause (ii)](#a-5-A-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)](#a-5-A-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](/usc/20/1088.md?p=d-1) 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](#m-1-A) 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)](#a-6-B) to continue to be an [eligible institution](#a-1) shall—
- (i) submit to the [Secretary](/usc/20/1003.md?p=17) a default management plan which the [Secretary](/usc/20/1003.md?p=17), in the [Secretary](/usc/20/1003.md?p=17)’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](#m-1-A) that is less than 25 percent;
- (ii) engage an independent third party (which may be paid with [funds](/usc/20/4702.md?p=3) received under [section 1059d of this title](/usc/20/1059d.md) or part B of subchapter III) to provide technical assistance in implementing such default management plan; and
- (iii) provide to the [Secretary](/usc/20/1003.md?p=17), on an annual basis or at such other intervals as the [Secretary](/usc/20/1003.md?p=17) may require, evidence of [cohort default rate](#m-1-A) 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)](#a-2-C), the [Secretary](/usc/20/1003.md?p=17) may, in the [Secretary](/usc/20/1003.md?p=17)’s discretion, continue to treat an institution described in subparagraph (A) of this paragraph as an [eligible institution](#a-1) 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](/usc/20/1003.md?p=17) that—
- (i) such institution has complied and is continuing to comply with the requirements of [subparagraph (A)](#a-6-A); and
- (ii) such institution has made substantial improvement, during each of the preceding 1-year periods, in the institution’s [cohort default rate](#m-1-A).
- (7) **Default prevention and assessment of eligibility based on high default rates—**
- (A) **First year—**
- (i) **In general—** An institution whose [cohort default rate](#m-1-A) is equal to or greater than the threshold percentage specified in [paragraph (2)(B)(iv)](#a-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](#m-1-A) to exceed such threshold;
- (II) establish measurable objectives and the steps to be taken to improve the institution’s [cohort default rate](#m-1-A); 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)](#a-7-A-i) to the [Secretary](/usc/20/1003.md?p=17), 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](#m-1-A) is equal to or greater than the threshold percentage specified in [paragraph (2)(B)(iv)](#a-2-B-iv) for two consecutive fiscal years, shall require the institution’s default prevention task force established under [subparagraph (A)](#a-7-A) to review and revise the plan required under such subparagraph, and shall submit such revised plan to the [Secretary](/usc/20/1003.md?p=17).
- (ii) **Review by the Secretary—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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)](#a-2). The participation rate index shall be determined by multiplying the institution’s [cohort default rate](#m-1-A) for loans under this part or part D, or weighted average [cohort default rate](#m-1-A) 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](#m-1-A) is determined.
- (B) **Data—** An institution shall provide the [Secretary](/usc/20/1003.md?p=17) 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](#m-1-A).
- (C) **Notification—** Prior to publication of a final [cohort default rate](#m-1-A) for an institution that provides the data described in [subparagraph (B)](#a-8-B), the [Secretary](/usc/20/1003.md?p=17) shall notify the institution of the institution’s compliance or noncompliance with [subparagraph (A)](#a-8-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)](#d-2..d-6), the term “eligible lender” means—
- (A) a National or [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=21-A), 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 [section 1813(a)(1) of title 12](/usc/12/1813.md?p=a-1)) that is a wholly owned subsidiary of a [nonprofit](/usc/20/1003.md?p=13) [foundation](/usc/20/4702.md?p=1), the [foundation](/usc/20/4702.md?p=1) is described in [section 501(c)(3) of title 26](/usc/26/501.md?p=c-3) and exempt from taxation under [section 501(a)](/usc/26/501.md?p=a) of such title, and the bank makes loans under this part only to undergraduate students who are age 22 or younger and has a portfolio of such loans that is not more than $5,000,000, or (IV) it is a National or [State](/usc/20/1003.md?p=21-A) chartered bank, or a credit union, with [assets](/usc/20/1087vv.md?p=f-2) of less than $1,000,000,000;
- (B) a pension [fund](/usc/20/4702.md?p=3) as defined in the Employee Retirement Income Security Act [[29 U.S.C. 1001](/usc/29/1001.md) et seq.];
- (C) an insurance company which is subject to examination and supervision by an agency of the United States or a [State](/usc/20/1003.md?p=21-A);
- (D) in any [State](/usc/20/1003.md?p=21-A), a single agency of the [State](/usc/20/1003.md?p=21-A) or a single [nonprofit](/usc/20/1003.md?p=13) private agency designated by the [State](/usc/20/1003.md?p=21-A);
- (E) an [eligible institution](/usc/20/1066a.md?p=1) which meets the requirements of [paragraphs (2) through (5)](#2..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 [section 1087–3 of this title](/usc/20/1087–3.md), or an agency of any [State](/usc/20/1003.md?p=21-A) functioning as a secondary market;
- (G) for purposes of making loans under sections [1078–2(d)](/usc/20/1078–2.md?p=d) and [1078–3](/usc/20/1078–3.md) of this title, 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 [section 1087–3 of this title](/usc/20/1087–3.md);
- (H) for purposes of making loans under [sections 1078(h)](/usc/20/1078.md?p=h)[^1] and 1078(j) of this title, a [guaranty agency](#j);
- (I) a Rural Rehabilitation Corporation, or its successor agency, which has received Federal [funds](/usc/20/4702.md?p=3) under Public Law 499, Eighty-first Congress (64 Stat. 98 (1950));
- (J) for purpose of making loans under [section 1078–3 of this title](/usc/20/1078–3.md), any [nonprofit](/usc/20/1003.md?p=13) private agency functioning in any [State](/usc/20/1003.md?p=21-A) as a secondary market; and
- (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](/cfr/13/120.470.md) (as such section is in effect on October 7, 1998); and (ii) participates in the program authorized by this part pursuant to [subparagraph (C)](#d-1-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](#d-1) under this part, an [eligible institution](/usc/20/1066a.md?p=1)—
- (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](/usc/20/5802.md?p=a-11);
- (iii) shall not—
- (I) make a loan to any undergraduate student;
- (II) make a loan other than a loan under section [1078](/usc/20/1078.md) or [1078–8](/usc/20/1078–8.md) of this title to a graduate or professional student; or
- (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](#m-1-A) (as defined in [subsection (m)](#m)) greater than 10 percent;
- (vii) shall, for any year for which the institution engages in activities as an [eligible lender](#d-1), provide for a compliance audit conducted in accordance with [section 1078(b)(1)(U)(iii)(I) of this title](/usc/20/1078.md), and the regulations thereunder, and submit the results of such audit to the [Secretary](/usc/20/1003.md?p=17);
- (viii) shall use any proceeds from special allowance payments and interest payments from borrowers, interest subsidies received from the [Department](/usc/20/1003.md?p=4) 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)](#d-A..d-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](#d-1) under [subparagraph (A)](#d-2-A) shall be permitted to use a portion of the proceeds described in [subparagraph (A)(viii)](#d-2-A-viii) for reasonable and direct administrative expenses.
- (C) **Supplement, not supplant—** An [eligible lender](#d-1) under [subparagraph (A)](#d-2-A) shall ensure that the proceeds described in [subparagraph (A)(viii)](#d-2-A-viii) are used to supplement, and not to supplant, non-Federal [funds](/usc/20/4702.md?p=3) that would otherwise be used for need-based grant programs.
- (3) **Disqualification for high default rates—** The term “[eligible lender](#d-1)” does not include any [eligible institution](/usc/20/1066a.md?p=1) in any fiscal year immediately after the fiscal year in which the [Secretary](/usc/20/1003.md?p=17) 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 [section 1078(a)(1) of this title](/usc/20/1078.md?p=a-1) made by the institution with respect to students at that institution and repayable in each such year, are in default, as defined in [subsection (m)](#m).
- (4) **Waiver of disqualification—** Whenever the [Secretary](/usc/20/1003.md?p=17) determines that—
- (A) there is reasonable possibility that an [eligible institution](/usc/20/1066a.md?p=1) may, within 1 year after a determination is made under [paragraph (3)](#d-3), improve the collection of loans described in [section 1078(a)(1) of this title](/usc/20/1078.md?p=a-1), so that the application of [paragraph (3)](#d-3) would be a hardship to that institution, or
- (B) the termination of the lender’s status under [paragraph (3)](#d-3) would be a hardship to the present or for prospective students of the [eligible institution](/usc/20/1066a.md?p=1), 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](/usc/20/1003.md?p=17) shall waive the provisions of [paragraph (3)](#d-3) with respect to that institution. Any determination required under this paragraph shall be made by the [Secretary](/usc/20/1003.md?p=17) prior to the termination of an [eligible institution](/usc/20/1066a.md?p=1) as a lender under the exception of [paragraph (3)](#d-3). Whenever the [Secretary](/usc/20/1003.md?p=17) grants a waiver pursuant to this paragraph, the [Secretary](/usc/20/1003.md?p=17) 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](#d-1)” does not include any lender that the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/4702.md?p=3), or other inducements, to any [institution of higher education](/usc/20/1001.md?p=a), any employee of an [institution of higher education](/usc/20/1001.md?p=a), or any individual or entity in order to secure [applicants](/usc/20/3982.md?p=1) 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](/usc/20/1003.md?p=16) 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](/usc/20/1001.md?p=a), 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](/usc/20/1001.md?p=a), 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](/usc/20/1066a.md?p=9), [commission](/usc/20/9701.md?p=2), or group established by a lender or group of lenders for providing such service, except that the [eligible lender](#d-1) may reimburse such employee for reasonable expenses incurred in providing such service;
- (E) performed for an [institution of higher education](/usc/20/1001.md?p=a) any function that such [institution of higher education](/usc/20/1001.md?p=a) 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 section [1092(b)](/usc/20/1092.md?p=b) or [1092(l)](/usc/20/1092.md?p=l) of this title;
- (F) paid, on behalf of an [institution of higher education](/usc/20/1001.md?p=a), another person to perform any function that such [institution of higher education](/usc/20/1001.md?p=a) 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 section [1092(b)](/usc/20/1092.md?p=b) or [1092(l)](/usc/20/1092.md?p=l) of this title;
- (G) provided payments or other benefits to a student at an [institution of higher education](/usc/20/1001.md?p=a) 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](/usc/20/1003.md?p=4).
- (6) **Rebate fee requirement—** To be an [eligible lender](#d-1) under this part, an [eligible lender](#d-1) shall pay rebate fees in accordance with [section 1078–3(f) of this title](/usc/20/1078–3.md?p=f).
- (7) **Eligible lender trustees—** Notwithstanding any other provision of this subsection, an [eligible lender](#d-1) may not make or hold a loan under this part as trustee for an [institution of higher education](/usc/20/1001.md?p=a), or for an organization affiliated with an [institution of higher education](/usc/20/1001.md?p=a), unless—
- (A) the [eligible lender](#d-1) 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](#d-1), with respect to its duties as trustee, each comply on and after January 1, 2007, with the requirements of [paragraph (2)](#d-2), except that—
- (i) the requirements of clauses [(i)](#d-2-A-i), [(ii)](#d-2-A-ii), [(vi)](#d-2-A-vi), and [(viii)](#d-2-A-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)](#d-2-A-iii) and [(v)](#d-2-A-v) of paragraph (2)(A) shall apply to the organization; and
- (II) the requirements of [clause (viii)](#d-2-A-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)](#d-2-A-iv) and [(ix)](#d-2-A-ix) of paragraph (2)(A) shall not apply to the [eligible lender](#d-1), institution, or organization; and
- (iv) the [eligible lender](#d-1), institution, and organization shall ensure that the loans made or held by the [eligible lender](#d-1) as trustee for the institution or organization, as the case may be, are included in a compliance audit in accordance with [clause (vii)](#d-2-A-vii) of paragraph (2)(A).
- (8) **School as lender program audit—** Each institution serving as an [eligible lender](#d-1) under [paragraph (1)(E)](#d-1-E), and each [eligible lender](#d-1) serving as a trustee for an [institution of higher education](/usc/20/1001.md?p=a) or an organization affiliated with an [institution of higher education](/usc/20/1001.md?p=a), shall annually complete and submit to the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=4), and any proceeds from the sale or other disposition of loans, for need-based grant programs, in accordance with [paragraph (2)(A)(viii)](#d-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)](#d-2-A-viii) for direct administrative expenses; and
- (C) the institution or lender is ensuring that the proceeds described in [paragraph (2)(A)(viii)](#d-2-A-viii) are being used to supplement, and not to supplant, Federal and non-Federal [funds](/usc/20/4702.md?p=3) 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](#d-1) who owns a loan.
- (j) **Guaranty agency—** The term “guaranty agency” means any [State](/usc/20/1003.md?p=21-A) or [nonprofit](/usc/20/1003.md?p=13) private institution or organization with which the [Secretary](/usc/20/1003.md?p=17) has an agreement under [section 1078(b) of this title](/usc/20/1078.md?p=b).
- (k) **Insurance beneficiary—** The term “insurance beneficiary” means the insured or its authorized representative assigned in accordance with [section 1079(d) of this title](/usc/20/1079.md?p=d).
- (l) **Default—** Except as provided in [subsection (m)](#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)](#m-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 [section 1078–3 of this title](/usc/20/1078–3.md) that is used to repay any such loans) received for attendance at that institution in that fiscal year who [default](#l) before the end of the second fiscal year following the fiscal year in which the students entered repayment. The [Secretary](/usc/20/1003.md?p=17) shall require that each [guaranty agency](#j) that has insured loans for current or former students of the institution afford such institution a reasonable opportunity (as specified by the [Secretary](/usc/20/1003.md?p=17)) to review and correct errors in the information required to be provided to the [Secretary](/usc/20/1003.md?p=17) by the [guaranty agency](#j) for the purposes of calculating a cohort default rate for such institution, prior to the calculation of such rate.
- (B) In determining the number of students who [default](#l) before the end of such second fiscal year, the [Secretary](/usc/20/1003.md?p=17) shall include only loans for which the [Secretary](/usc/20/1003.md?p=17) or a [guaranty agency](#j) has paid claims for insurance. In considering appeals with respect to [cohort default rates](#m-1-A) pursuant to [subsection (a)(3)](#a-3), the [Secretary](/usc/20/1003.md?p=17) shall exclude, from the calculation of the number of students who entered repayment and from the calculation of the number of students who [default](#l), 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](/usc/20/1003.md?p=17), result in an inaccurate or incomplete calculation of such [cohort default rate](#m-1-A).
- (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](#m-1-A)” means the percentage of such current and former students who entered repayment on such loans (or on the portion of a loan made under [section 1078–3 of this title](/usc/20/1078–3.md) that is used to repay any such loans) in any of the three most recent fiscal years, who [default](#l) before the end of the second fiscal year following the year in which they entered repayment.
- (2) **Special rules—**
- (A) In the case of a student who has attended and borrowed at more than one [school](/usc/20/5802.md?p=a-11), the student (and such student’s subsequent repayment or [default](#l)) is attributed to each [school](/usc/20/5802.md?p=a-11) 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](/usc/20/5802.md?p=a-11), such [school](/usc/20/5802.md?p=a-11)’s owner, [agent](/usc/20/1094.md?p=i-1), contractor, employee, or any other entity or individual affiliated with such [school](/usc/20/5802.md?p=a-11), in order to avoid [default](#l) by the borrower, is considered as in [default](#l) 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](#l) for purposes of this subsection. The [Secretary](/usc/20/1003.md?p=17) may require [guaranty agencies](#j) 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](#j) has renewed the borrower’s subchapter IV eligibility as provided in [section 1078–6(b) of this title](/usc/20/1078–6.md?p=b).
- (D) For the purposes of this subsection, a loan made in accordance with [section 1078–1](/usc/20/1078–1.md)[^1] of this title (or the portion of a loan made under [section 1078–3 of this title](/usc/20/1078–3.md) that is used to repay a loan made under [section 1078–1](/usc/20/1078–1.md)[^1] of this title) shall not be considered to enter repayment until after the borrower has ceased to be enrolled in a course of study leading to a degree or certificate at an [eligible institution](/usc/20/1066a.md?p=1) on at least a half-time basis (as determined by the institution) and ceased to be in a period of forbearance based on such enrollment. Each [eligible lender](#d-3) of a loan made under [section 1078–1](/usc/20/1078–1.md)[^1] of this title (or a loan made under [section 1078–3 of this title](/usc/20/1078–3.md) a portion of which is used to repay a loan made under [section 1078–1](/usc/20/1078–1.md)[^1] of this title) shall provide the [guaranty agency](#j) with the information necessary to determine when the loan entered repayment for purposes of this subsection, and the [guaranty agency](#j) shall provide such information to the [Secretary](/usc/20/1003.md?p=17).
- (3) **Regulations to prevent evasions—** The [Secretary](/usc/20/1003.md?p=17) shall prescribe regulations designed to prevent an institution from evading the application to that institution of a [default](#l) 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](/usc/20/1003.md?p=17) shall publish not less often than once every fiscal year a report showing cohort [default](#l) data and life of [cohort default rates](#m-1-A) for each category of institution, including: (i) four-year public institutions; (ii) four-year private [nonprofit](/usc/20/1003.md?p=13) institutions; (iii) two-year public institutions; (iv) two-year private [nonprofit](/usc/20/1003.md?p=13) 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 section [1078](/usc/20/1078.md), [1078–2](/usc/20/1078–2.md), or [1078–8](/usc/20/1078–8.md) of this title, received for attendance at the institution, the [Secretary](/usc/20/1003.md?p=17) shall publish the percentage of those current and former students who enter repayment on such loans (or on the portion of a loan made under [section 1078–3 of this title](/usc/20/1078–3.md) that is used to repay any such loans) received for attendance at the institution in that fiscal year who [default](#l) before the end of each succeeding fiscal year.
- (B) The [Secretary](/usc/20/1003.md?p=17) may designate such additional subcategories within the categories specified in [subparagraph (A)](#m-4-A) as the [Secretary](/usc/20/1003.md?p=17) deems appropriate.
- (C) The [Secretary](/usc/20/1003.md?p=17) shall publish not less often than once every fiscal year a report showing [default](#l) data for each institution for which a [cohort default rate](#m-1-A) is calculated under this subsection.
- (D) The [Secretary](/usc/20/1003.md?p=17) shall publish the report described in [subparagraph (C)](#m-4-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 [section 206 of title 29](/usc/29/206.md); or
- (ii) an amount equal to 150 percent of the [poverty line](/usc/20/1003.md?p=14) applicable to the borrower’s [family size](/usc/20/1070a.md?p=a-2-B) as determined in accordance with [section 9902(2) of title 42](/usc/42/9902.md?p=2); or
- (B) such borrower meets such other criteria as are established by the [Secretary](/usc/20/1003.md?p=17) by regulation in accordance with [paragraph (2)](#o-2).
- (2) **Considerations—** In establishing criteria for purposes of [paragraph (1)(B)](#o-1-B), the [Secretary](/usc/20/1003.md?p=17) 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)](#p-2) and the prohibition in [paragraph (3)](#p-3), the term “eligible not-for-profit holder” means an [eligible lender](#d-1) under [subsection (d)](#d) (except for an [eligible lender](#d-1) described in [subsection (d)(1)(E)](#d-1-E)) that requests a special allowance payment under [section 1087–1(b)(2)(I)(vi)(II) of this title](/usc/20/1087–1.md?p=b-2-I-vi-II) or a payment under [section 1141 of this title](/usc/20/1141.md) and that is—
- (A) a [State](/usc/20/1003.md?p=21-A), 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](/cfr/26/1.103–1.md), or [section 144(b) of title 26](/usc/26/144.md?p=b);
- (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](/usc/20/1003.md?p=21-A), political subdivision, authority, agency, instrumentality, or other entity described in subparagraph [(A)](#p-1-A), [(B)](#p-1-B), or [(C)](#p-1-C), regardless of whether such [State](/usc/20/1003.md?p=21-A), political subdivision, authority, agency, instrumentality, or other entity is an [eligible lender](#d-1) under [subsection (d)](#d).
- (2) **Limitations—**
- (A) **Existing on September 27, 2007—**
- (i) **In general—** An [eligible lender](#d-1) shall not be an eligible not-for-profit holder under this chapter unless such lender—
- (I) was a [State](/usc/20/1003.md?p=21-A), political subdivision, authority, agency, instrumentality, or other entity described in paragraph [(1)(A)](#p-1-A), [(B)](#p-1-B), or [(C)](#p-1-C) that was, on September 27, 2007, acting as an [eligible lender](#d-1) under [subsection (d)](#d) (other than an [eligible lender](#d-1) described in [subsection (d)(1)(E)](#d-1-E)); or
- (II) is acting as a trustee on behalf of a [State](/usc/20/1003.md?p=21-A), political subdivision, authority, agency, instrumentality, or other entity described in subparagraph [(A)](#p-1-A), [(B)](#p-1-B), or [(C)](#p-1-C) of paragraph (1), regardless of whether such [State](/usc/20/1003.md?p=21-A), political subdivision, authority, agency, instrumentality, or other entity is an [eligible lender](#d-1) under [subsection (d)](#d), and such [State](/usc/20/1003.md?p=21-A), 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 [section 1087–1 of this title](/usc/20/1087–1.md).
- (ii) **Exception—** Notwithstanding [clause (i)](#p-2-A-i), a [State](/usc/20/1003.md?p=21-A) may elect, in accordance with regulations of the [Secretary](/usc/20/1003.md?p=17), to waive the requirements of this subparagraph for a new not-for-profit [holder](#i) determined by the [State](/usc/20/1003.md?p=21-A) to be necessary to carry out a public purpose of such [State](/usc/20/1003.md?p=21-A), except that a [State](/usc/20/1003.md?p=21-A) may not make such election with respect the[^2] requirements of [clause (i)(II)](#p-2-A-i-II).
- (B) **No for-profit ownership or control—**
- (i) **In general—** No [State](/usc/20/1003.md?p=21-A), political subdivision, authority, agency, instrumentality, or other entity described in paragraph [(1)(A)](#p-1-A), [(B)](#p-1-B), or [(C)](#p-1-C) shall be an eligible not-for-profit holder under this chapter if such [State](/usc/20/1003.md?p=21-A), 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)](#p-1-D) shall not be an eligible not-for-profit holder under this chapter with respect to a [State](/usc/20/1003.md?p=21-A), political subdivision, authority, agency, instrumentality, or other entity described in subparagraph [(A)](#p-1-A), [(B)](#p-1-B), or [(C)](#p-1-C) of paragraph (1), regardless of whether such [State](/usc/20/1003.md?p=21-A), political subdivision, authority, agency, instrumentality, or other entity is an [eligible lender](#d-1) under [subsection (d)](#d), if such [State](/usc/20/1003.md?p=21-A), 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](/usc/20/1003.md?p=21-A), political subdivision, authority, agency, instrumentality, trustee, or other entity described in paragraph [(1)(A)](#p-1-A), [(B)](#p-1-B), [(C)](#p-1-C), or [(D)](#p-1-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](/usc/20/1003.md?p=21-A), 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](/usc/20/1003.md?p=21-A), political subdivision, authority, agency, instrumentality, or other entity described in subparagraph [(A)](#p-1-A), [(B)](#p-1-B), or [(C)](#p-1-C) of paragraph (1), regardless of whether such [State](/usc/20/1003.md?p=21-A), political subdivision, authority, agency, instrumentality, or other entity is an [eligible lender](#d-1) under [subsection (d)](#d), and such [State](/usc/20/1003.md?p=21-A), 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)](#p-1-D) shall not receive compensation as consideration for acting as an [eligible lender](#d-1) on behalf of a [State](/usc/20/1003.md?p=21-A), political subdivision, authority, agency, instrumentality, or other entity described in subparagraph [(A)](#p-1-A), [(B)](#p-1-B), or [(C)](#p-1-C) of paragraph (1), regardless of whether such [State](/usc/20/1003.md?p=21-A), political subdivision, authority, agency, instrumentality, or other entity is an [eligible lender](#d-1) under [subsection (d)](#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](/usc/20/1003.md?p=21-A), political subdivision, authority, agency, instrumentality, or other entity described in subparagraph [(A)](#p-1-A), [(B)](#p-1-B), or [(C)](#p-1-C) of paragraph (1), regardless of whether such [State](/usc/20/1003.md?p=21-A), political subdivision, authority, agency, instrumentality, or other entity is an [eligible lender](#d-1) under [subsection (d)](#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](/usc/20/1003.md?p=21-A), political subdivision, authority, agency, instrumentality, or other entity, or by the trustee described in [paragraph (1)(D)](#p-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](/usc/20/1003.md?p=21-A), 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 [section 1087–1(b)(2)(I)(vi)(II) of this title](/usc/20/1087–1.md?p=b-2-I-vi-II) and that is sold by the eligible not-for-profit holder holding the loan to an entity that is not an eligible not-for-profit holder under this chapter, the special allowance payment for such loan shall, beginning on the date of the sale, no longer be calculated under [section 1087–1(b)(2)(I)(vi)(II) of this title](/usc/20/1087–1.md?p=b-2-I-vi-II) and shall be calculated under [section 1087–1(b)(2)(I)(vi)(I) of this title](/usc/20/1087–1.md?p=b-2-I-vi-I) instead.
- (4) **Regulations—** Not later than 1 year after September 27, 2007, the [Secretary](/usc/20/1003.md?p=17) shall promulgate regulations in accordance with the provisions of this subsection.
# §1086. Delegation of functions
- (a) **In general—** An [eligible lender](/usc/20/1085.md?p=d-1) or [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/1085.md?p=i) of a loan made under this part.
# §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 [section 1078(a)(1) of this title](/usc/20/1078.md?p=a-1) dies or becomes permanently and totally disabled (as determined in accordance with regulations of the [Secretary](/usc/20/1003.md?p=17)), or if a student borrower who has received such a loan 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 then the [Secretary](/usc/20/1003.md?p=17) shall discharge the borrower’s liability on the loan by repaying the amount owed on the loan. The [Secretary](/usc/20/1003.md?p=17) may develop such safeguards as the [Secretary](/usc/20/1003.md?p=17) determines necessary to prevent fraud and abuse in the discharge of liability under this subsection. Notwithstanding any other provision of this subsection, the [Secretary](/usc/20/1003.md?p=17) may promulgate regulations to reinstate the obligation of, and resume collection on, loans discharged under this subsection in any case in which—
- (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](/usc/20/1003.md?p=14); or
- (B) the [Secretary](/usc/20/1003.md?p=17) determines the reinstatement and resumption to be necessary.
- (2) **Disability determinations—** A borrower who has been determined by the [Secretary](/usc/20/1003.md?p=17) of Veterans Affairs to be unemployable due to a service-connected condition and who provides documentation of such determination to the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) shall establish and implement, with respect to any borrower described in [subparagraph (B)](#a-3-B), procedures to—
- (i) use return information disclosed under [section 6103(l)(13)](/usc/26/6103.md?p=l-13) of title 26, pursuant to approval provided under [section 1098h of this title](/usc/20/1098h.md), to determine the borrower’s continued eligibility for the loan discharge described in [subparagraph (B)](#a-3-B);
- (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](/usc/20/1003.md?p=17) 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)](#a-3-A) shall apply—
- (i) to each borrower of a loan that is discharged due to the total and permanent [disability](/usc/20/1003.md?p=6) (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](/usc/20/1003.md?p=17) shall pay to the [holder](/usc/20/1085.md?p=i) of a loan described in section 1078(a)(1)(A) or (B), 1078–1,[^1] 1078–2, 1078–3, or [1078–8](/usc/20/1078–8.md) 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 chapter [12](/usc/11/ch12.md) or [13](/usc/11/ch13.md) of title 11;
- (2) when the borrower who has filed for relief under chapter [7](/usc/20/ch7.md) or [11](/usc/20/ch11.md) of such title commences an action for a determination of dischargeability under section 523(a)(8)(B) of such title; or
- (3) for loans described in section 523(a)(8)(A) of such title, when the borrower files for relief under chapter [7](/usc/20/ch7.md) or [11](/usc/20/ch11.md) of such title.
- (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](/usc/20/1021.md?p=16) 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](/usc/20/1066a.md?p=1) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) shall report to the [authorizing committees](/usc/20/1003.md?p=1) 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 [section 1087ee(a)(5) of this title](/usc/20/1087ee.md?p=a-5).
- (5) **Reporting—** The [Secretary](/usc/20/1003.md?p=17) shall report to [consumer reporting agencies](/usc/20/1088.md?p=e) 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](/usc/20/1021.md?p=16) has received a loan described in [section 1078–2 of this title](/usc/20/1078–2.md) dies, then the [Secretary](/usc/20/1003.md?p=17) shall discharge the borrower’s liability on the loan by repaying the amount owed on the loan.
# [§1087–0. Repealed. Pub. L. 105–244, title IV, § 432, Oct. 7, 1998, 112 Stat. 1710 — repealed]
# §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](/usc/20/1085.md?p=i) of loans to be less than equitable, (2) that incentive payments on such loans are paid promptly to [eligible lenders](/usc/20/1085.md?p=d-1), 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](/usc/20/1085.md?p=i) 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](#b-5) held by such [holder](/usc/20/1085.md?p=i) during such period.
- (2) **Rate of special allowance—**
- (A) Subject to subparagraphs [(B)](#b-2-B), [(C)](#b-2-C), [(D)](#b-2-D), [(E)](#b-2-E), [(F)](#b-2-F), [(G)](#b-2-G), [(H)](#b-2-H), and [(I)](#b-2-I) and [paragraph (4)](#b-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 [section 1077a(i) of this title](/usc/20/1077a.md?p=i).
- (B)
- (i) The quarterly rate of the special allowance for [holders](/usc/20/1085.md?p=i) of loans which were made or purchased with [funds](/usc/20/4702.md?p=3) obtained by the [holder](/usc/20/1085.md?p=i) from the issuance of obligations, the income from which is exempt from taxation under [title 26](/usc/26.md) shall be one-half the quarterly rate of the special allowance established under [subparagraph (A)](#b-2-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](/usc/20/1085.md?p=i) of loans which were made or purchased with [funds](/usc/20/4702.md?p=3) obtained by the [holder](/usc/20/1085.md?p=i) from collections or default reimbursements on, or interests or other income pertaining to, [eligible loans](#b-5) made or purchased with [funds](/usc/20/4702.md?p=3) described in the preceding sentence of this subparagraph or from income on the investment of such [funds](/usc/20/4702.md?p=3). 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)](#d) of this section.
- (iv) Notwithstanding clauses [(i)](#b-2-B-i) and [(ii)](#b-2-B-ii), the quarterly rate of the special allowance for [holders](/usc/20/1085.md?p=i) of loans which are financed with [funds](/usc/20/4702.md?p=3) obtained by the [holder](/usc/20/1085.md?p=i) 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](/usc/26.md), shall be the quarterly rate of the special allowance established under subparagraph [(A)](#b-2-A), [(E)](#b-2-E), [(F)](#b-2-F), [(G)](#b-2-G), [(H)](#b-2-H), or [(I)](#b-2-I) as the case may be. Such rate shall also apply to [holders](/usc/20/1085.md?p=i) of loans which were made or purchased with [funds](/usc/20/4702.md?p=3) obtained by the [holder](/usc/20/1085.md?p=i) from collections or default reimbursements on, or interest or other income pertaining to, [eligible loans](#b-5) made or purchased with [funds](/usc/20/4702.md?p=3) described in the preceding sentence of this subparagraph or from income on the investment of such [funds](/usc/20/4702.md?p=3).
- (v) Notwithstanding clauses [(i)](#b-2-B-i) and [(ii)](#b-2-B-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)](#b-4), as the case may be, for a [holder](/usc/20/1085.md?p=i) of loans that—
- (I) were made or purchased with [funds](/usc/20/4702.md?p=3)—
- (aa) obtained from the issuance of obligations the income from which is excluded from gross income under [title 26](/usc/26.md) 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](#b-5) made or purchased with [funds](/usc/20/4702.md?p=3) described in division (aa), or from income on the investment of such [funds](/usc/20/4702.md?p=3); 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](/usc/20/4702.md?p=3) obtained from a source other than [funds](/usc/20/4702.md?p=3) described in subclause (I) of this clause; or
- (cc) sold or transferred to any other [holder](/usc/20/1085.md?p=i) after September 30, 2004.
- (vi) Notwithstanding clauses [(i)](#b-2-B-i), [(ii)](#b-2-B-ii), and [(v)](#b-2-B-v), but subject to [clause (vii)](#b-2-B-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](/usc/20/1085.md?p=i) 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)](#b-2-B-i) or [(ii)](#b-2-B-ii) of subparagraph (B) of this paragraph as of February 8, 2006.
- (vii) [Clause (vi)](#b-2-B-vi) shall be applied by substituting “December 31, 2010” for “February 8, 2006” in the case of a [holder](/usc/20/1085.md?p=i) 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](/usc/20/1003.md?p=21-A) or local government or a [nonprofit](/usc/20/1003.md?p=13) 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](/usc/20/1078–1.md)[^1] or 1078–2 of this title for which the interest rate is determined under [section 1077a(c)(4) of this title](/usc/20/1077a.md?p=c-4), a special allowance shall not be paid unless the rate determined for any 12-month period under [subparagraph (B)](/usc/20/1077a.md?p=c-4-B) of such section exceeds 12 percent.
- (ii) Subject to subparagraphs [(G)](#b-2-G), [(H)](#b-2-H), and [(I)](#b-2-I), in the case of loans disbursed on or after October 1, 1992, pursuant to [section 1078–1](/usc/20/1078–1.md)[^1] or 1078–2 of this title for which the interest rate is determined under [section 1077a(c)(4) of this title](/usc/20/1077a.md?p=c-4), a special allowance shall not be paid unless the rate determined for any 12-month period under [section 1077a(c)(4)(B) of this title](/usc/20/1077a.md?p=c-4-B) exceeds—
- (I) 11 percent in the case of a loan under [section 1078–1](/usc/20/1078–1.md)[^1] of this title; or
- (II) 10 percent in the case of a loan under [section 1078–2 of this title](/usc/20/1078–2.md).
- (D)
- (i) In the case of loans made or purchased directly from [funds](/usc/20/4702.md?p=3) loaned or advanced pursuant to a [qualified State obligation](#b-2-D-ii), 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 [section 1077a(g)(2) of this title](/usc/20/1077a.md?p=g-2), subparagraph (A)(iii) shall be applied by substituting “2.5 percent” for “3.10 percent”.
- (F) Subject to [paragraph (4)](#b-4), the special allowance paid pursuant to this subsection on loans for which the applicable rate of interest is determined under [section 1077a(h) of this title](/usc/20/1077a.md?p=h) shall be computed (i) by determining the applicable bond equivalent rate of the security with a comparable maturity, as established by the [Secretary](/usc/20/1003.md?p=17), (ii) by subtracting the applicable interest rates on such loans from such applicable bond equivalent rate, (iii) by adding 1.0 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 [section 1077a(i) of this title](/usc/20/1077a.md?p=i).
- (G) **Loans disbursed between july 1, 1998, and october 1, 1998.—**
- (i) **In general.—** Subject to [paragraph (4)](#b-4) and clauses (ii), (iii), and (iv) of this subparagraph, and except as provided in [subparagraph (B)](#b-2-B), the special allowance paid pursuant to this subsection on loans for which the first disbursement is made on or after July 1, 1998, and before October 1, 1998, 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 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) **In school and grace period.—** In the case of any loan for which the first disbursement is made on or after July 1, 1998, and before October 1, 1998, and for which the applicable rate of interest is described in [section 1077a(j)(2) of this title](/usc/20/1077a.md?p=j-2), clause (i)(III) of this subparagraph shall be applied by substituting “2.2 percent” for “2.8 percent”.
- (iii) **PLUS loans.—** In the case of any loan for which the first disbursement is made on or after July 1, 1998, and before October 1, 1998, and for which the applicable rate of interest is described in [section 1077a(j)(3) of this title](/usc/20/1077a.md?p=j-3), clause (i)(III) of this subparagraph shall be applied by substituting “3.1 percent” for “2.8 percent”, subject to clause (v) of this subparagraph.
- (iv) **Consolidation loans.—** This subparagraph shall not apply in the case of any consolidation loan.
- (v) **Limitation on special allowances for PLUS loans.—** In the case of PLUS loans made under [section 1078–2 of this title](/usc/20/1078–2.md) and disbursed on or after July 1, 1998, and before October 1, 1998, for which the interest rate is determined under [1077a(j)(3)](/usc/20/1077a.md?p=j-3) of this title, a special allowance shall not be paid for such loan for such[^2] unless the rate determined under [subparagraph (A)](/usc/20/1077a.md?p=j-3-A) of such section (without regard to [subparagraph (B)](/usc/20/1077a.md?p=j-3-B) of such section) exceeds 9.0 percent.
- (H) **Loans disbursed on or after october 1, 1998, and before january 1, 2000.—**
- (i) **In general.—** Subject to [paragraph (4)](#b-4) and clauses (ii), (iii), and (iv) of this subparagraph, and except as provided in [subparagraph (B)](#b-2-B), the special allowance paid pursuant to this subsection on loans for which the first disbursement is made on or after October 1, 1998, and before January 1, 2000, 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 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) **In school and grace period.—** In the case of any loan for which the first disbursement is made on or after October 1, 1998, and before January 1, 2000, and for which the applicable rate of interest is described in [section 1077a(k)(2) of this title](/usc/20/1077a.md?p=k-2), clause (i)(III) of this subparagraph shall be applied by substituting “2.2 percent” for “2.8 percent”.
- (iii) **PLUS loans.—** In the case of any loan for which the first disbursement is made on or after October 1, 1998, and before January 1, 2000, and for which the applicable rate of interest is described in [section 1077a(k)(3) of this title](/usc/20/1077a.md?p=k-3), clause (i)(III) of this subparagraph shall be applied by substituting “3.1 percent” for “2.8 percent”, subject to clause (v) of this subparagraph.
- (iv) **Consolidation loans.—** In the case of any consolidation loan for which the application is received by an [eligible lender](/usc/20/1085.md?p=d-1) on or after October 1, 1998, and before January 1, 2000, and for which the applicable interest rate is determined under [section 1077a(k)(4) of this title](/usc/20/1077a.md?p=k-4), clause (i)(III) of this subparagraph shall be applied by substituting “3.1 percent” for “2.8 percent”, subject to clause (vi) of this subparagraph.
- (v) **Limitation on special allowances for plus loans.—** In the case of PLUS loans made under [section 1078–2 of this title](/usc/20/1078–2.md) and first disbursed on or after October 1, 1998, and before January 1, 2000, for which the interest rate is determined under [section 1077a(k)(3) of this title](/usc/20/1077a.md?p=k-3), a special allowance shall not be paid for such loan during any 12-month period beginning on July 1 and ending on June 30 unless, on the June 1 preceding such July 1—
- (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](/usc/20/1003.md?p=17) for purposes of such section); plus
- (II) 3.1 percent,
exceeds 9.0 percent.
- (vi) **Limitation on special allowances for consolidation loans.—** In the case of consolidation loans made under [section 1078–3 of this title](/usc/20/1078–3.md) and for which the application is received on or after October 1, 1998, and before January 1, 2000, for which the interest rate is determined under [section 1077a(k)(4) of this title](/usc/20/1077a.md?p=k-4), a special allowance shall not be paid for such loan during any 3-month period ending March 31, June 30, September 30, or December 31 unless—
- (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 [section 1077a(k)(4) of this title](/usc/20/1077a.md?p=k-4).
- (I) **Loans disbursed on or after january 1, 2000, and before july 1, 2010.—**
- (i) **In general.—** Notwithstanding subparagraphs [(G)](#b-2-G) and [(H)](#b-2-H), but subject to [paragraph (4)](#b-4) and the following clauses of this subparagraph, and except as provided in [subparagraph (B)](#b-2-B), the special allowance paid pursuant to this subsection on loans for which the first disbursement is made on or after January 1, 2000, and before July 1, 2010, shall be computed—
- (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)](#b-2-I-i-I) (in accordance with [clause (vii)](#b-2-I-vii));
- (III) by adding 2.34 percent to the resultant percent; and
- (IV) by dividing the resultant percent by 4.
- (ii) **In school and grace period.—** In the case of any loan—
- (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 [section 1077a(k)(2) of this title](/usc/20/1077a.md?p=k-2); or
- (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)](/usc/20/1077a.md?p=l-1) or [(l)(4)](/usc/20/1077a.md?p=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 section [1077(a)(2)(C)](/usc/20/1077.md?p=a-2-C) or [1078(b)(1)(M)](/usc/20/1078.md?p=b-1-M) of this title;
clause (i)(III) of this subparagraph shall be applied by substituting “1.74 percent” for “2.34 percent”.
- (iii) **PLUS loans.—** In the case of any loan for which the first disbursement is made on or after January 1, 2000, and before July 1, 2010, and for which the applicable rate of interest is described in section [1077a(k)(3)](/usc/20/1077a.md?p=k-3) or [(l)(2)](/usc/20/1077a.md?p=l-2) of this title, clause (i)(III) of this subparagraph shall be applied by substituting “2.64 percent” for “2.34 percent”.
- (iv) **Consolidation loans.—** In the case of any consolidation loan for which the application is received by an [eligible lender](/usc/20/1085.md?p=d-1) on or after January 1, 2000, and that is disbursed before July 1, 2010, and for which the applicable interest rate is determined under section [1077a(k)(4)](/usc/20/1077a.md?p=k-4) or [(l)(3)](/usc/20/1077a.md?p=l-3) of this title, clause (i)(III) of this subparagraph shall be applied by substituting “2.64 percent” for “2.34 percent”.
- (v) **Recapture of excess interest.—**
- (I) **Excess credited.—** With respect to a loan on which the applicable interest rate is determined under subsection (k) or (l) of [section 1077a of this title](/usc/20/1077a.md) and for which the first disbursement of principal is made on or after April 1, 2006, and before July 1, 2010, if the applicable interest rate for any 3-month period exceeds the [special allowance support level](#b-2-I-v-III) applicable to such loan under this subparagraph for such period, then an adjustment shall be made by calculating the excess interest in the amount computed under subclause (II) of this clause, and by crediting the excess interest to the Government not less often than annually.
- (II) **Calculation of excess.—** The amount of any adjustment of interest on a loan to be made under this subsection for any quarter shall be equal to—
- (aa) the applicable interest rate minus the [special allowance support level](#b-2-I-v-III) 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) **Special allowance support level.—** For purposes of this clause, the term “special allowance support level” means, for any loan, a number expressed as a percentage equal to the sum of the rates determined under subclauses [(I)](#b-2-I-i-I) and [(III)](#b-2-I-i-III) of clause (i), and applying any substitution rules applicable to such loan under clauses [(ii)](#b-2-I-ii), [(iii)](#b-2-I-iii), [(iv)](#b-2-I-iv), [(vi)](#b-2-I-vi), and [(vii)](#b-2-I-vii) in determining such sum.
- (vi) **Reduction for loans disbursed on or after october 1, 2007, and before july 1, 2010.—** With respect to a loan on which the applicable interest rate is determined under [section 1077a(l)](/usc/20/1077a.md?p=l) of this title and for which the first disbursement of principal is made on or after October 1, 2007, and before July 1, 2010, the special allowance payment computed pursuant to this subparagraph shall be computed—
- (I) for loans held by an [eligible lender](/usc/20/1085.md?p=d-1) not described in [subclause (II)](#b-2-I-vi-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)](#b-2-I-ii);
- (cc) by substituting “1.79 percent” for “2.64 percent” in [clause (iii)](#b-2-I-iii); and
- (dd) by substituting “2.09 percent” for “2.64 percent” in [clause (iv)](#b-2-I-iv); and
- (II) for loans held by an eligible not-for-profit [holder](/usc/20/1085.md?p=i)—
- (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)](#b-2-I-ii);
- (cc) by substituting “1.94 percent” for “2.64 percent” in [clause (iii)](#b-2-I-iii); and
- (dd) by substituting “2.24 percent” for “2.64 percent” in [clause (iv)](#b-2-I-iv).
- (vii) **Revised calculation rule to reflect financial market conditions.—**
- (I) **Calculation based on LIBOR.—** For the calendar quarter beginning on April 1, 2012[^3] and each subsequent calendar quarter, in computing the special allowance paid pursuant to this subsection with respect to loans described in [subclause (II)](#b-2-I-vii-II), clause (i)(I) of this subparagraph shall be applied by substituting “of the 1-month London Inter Bank Offered Rate (LIBOR) for United States dollars in effect for each of the days in such quarter as compiled and released by the British Bankers Association” for “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) **Loans eligible for LIBOR-based calculation.—** The special allowance paid pursuant to this subsection shall be calculated as described in [subclause (I)](#b-2-I-vii-I) with respect to special allowance payments for the 3-month period ending June 30, 2012, and each succeeding 3-month period, on loans for which the first disbursement is made on or after January 1, 2000, and before July 1, 2010, if, not later than April 1, 2012, the [holder](/usc/20/1085.md?p=i) of the loan (or, if the [holder](/usc/20/1085.md?p=i) acts as [eligible lender](/usc/20/1085.md?p=d-1) trustee for the beneficial owner of the loan, the beneficial owner of the loan), affirmatively and permanently waives all contractual, statutory, or other legal rights to a special allowance paid pursuant to this subsection that is calculated using the formula in effect at the time the loans were first disbursed.
- (III) **Terms of waiver.—**
- (aa) **In general.—** A waiver pursuant to [subclause (II)](#b-2-I-vii-II) shall be in a form (printed or electronic) prescribed by the [Secretary](/usc/20/1003.md?p=17), and shall be applicable to—
- (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](/usc/20/1085.md?p=i) (pursuant to [section 1094b of this title](/usc/20/1094b.md));
- (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](/usc/20/1085.md?p=d-1) 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) **Exceptions.—** Any waiver pursuant to [subclause (II)](#b-2-I-vii-II) that is elected for loans described in subitem (AA) or (BB) of [item (aa)](#b-2-I-vii-III-aa) shall not apply to any loan described in such subitem for which the lender or beneficial owner of the loan demonstrates to the satisfaction of the [Secretary](/usc/20/1003.md?p=17) that—
- (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 [section 78c(a)(62) of title 15](/usc/15/78c.md?p=a-62)), and such rating organization provided a written opinion that the agency would downgrade the rating applicable to such obligation if the lender or owner elected such a waiver.
- (viii) **Revised calculation rule to address instances where 1-month usd libor ceases or is non-representative.—**
- (I) **Substitute reference index.—** The provisions of this clause apply to loans for which the special allowance payment would otherwise be calculated pursuant to [clause (vii)](#b-2-I-vii).
- (II) **Calculation based on sofr.—** For loans described in subclause [(III)](#b-2-I-viii-III) or [(IV)](#b-2-I-viii-IV), the special allowance payment described in this subclause shall be substituted for the payment provided under [clause (vii)](#b-2-I-vii). For each calendar quarter, the formula for computing the special allowance that would otherwise apply under [clause (vii)](#b-2-I-vii) shall be revised by substituting “of the quotes of the 30-day Average Secured Overnight Financing Rate (SOFR) in effect for each of the days in such quarter as published by the Federal Reserve Bank of New York (or a successor administrator), adjusted daily by adding the tenor spread adjustment, as that term is defined in the Adjustable Interest Rate (LIBOR) Act, for 1-month LIBOR contracts of 0.11448 percent” for “of the 1-month London Inter Bank Offered Rate (LIBOR) for United States dollars in effect for each of the days in such quarter as compiled and released by the British Bankers Association”. The special allowance calculation for loans subject to [clause (vii)](#b-2-I-vii) shall otherwise remain in effect.
- (III) **Loans eligible for sofr-based calculation.—** Except as provided in [subclause (IV)](#b-2-I-viii-IV), the special allowance payment calculated under [subclause (II)](#b-2-I-viii-II) shall apply to all loans for which the [holder](/usc/20/1085.md?p=i) (or, if the [holder](/usc/20/1085.md?p=i) acts as an [eligible lender](/usc/20/1085.md?p=d-1) trustee for the beneficial owner of the loan, the beneficial owner of the loan) at any time after the effective date of this clause notifies the [Secretary](/usc/20/1003.md?p=17) that the [holder](/usc/20/1085.md?p=i) or beneficial owner affirmatively and permanently elects to waive all contractual, statutory, or other legal rights to a special allowance paid under [clause (vii)](#b-2-I-vii) or to the special allowance paid pursuant to any other formula that was previously in effect with respect to such loan, and accepts the rate described in [subclause (II)](#b-2-I-viii-II). Any such waiver shall apply to all loans then held, or to be held from time to time, by such [holder](/usc/20/1085.md?p=i) or beneficial owner; provided that, due to the need to obtain the approval of, demonstrated to the satisfaction of the [Secretary](/usc/20/1003.md?p=17)—
- (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](/usc/20/1085.md?p=i) of the loan (or, if the [holder](/usc/20/1085.md?p=i) acts as an [eligible lender](/usc/20/1085.md?p=d-1) trustee for the beneficial owner of the loan, the beneficial owner of the loan) may elect to apply the rate described in [subclause (II)](#b-2-I-viii-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](/usc/20/1003.md?p=17) from the [holder](/usc/20/1085.md?p=i) or beneficial owner and shall permanently and irrevocably continue for all subsequent quarters.
- (IV) **Fallback provisions.—**
- (aa) In the event that a [holder](/usc/20/1085.md?p=i) or beneficial owner has not elected to waive its rights to a special allowance payment under [clause (vii)](#b-2-I-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 [section 5802 of title 12](/usc/12/5802.md),
the special allowance rate calculation as described in [subclause (II)](#b-2-I-viii-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)](#b-2-I-viii-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](/usc/20/1085.md?p=i) of an [eligible loan](#b-5) 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 [section 1078(a) of this title](/usc/20/1078.md?p=a) with respect to a loan have not been made within 30 days after the [Secretary](/usc/20/1003.md?p=17) has received an accurate, timely, and complete request for payment thereof, the special allowance payable to such [holder](/usc/20/1085.md?p=i) shall be increased by an amount equal to the daily interest accruing on the special allowance and interest benefits payments due the [holder](/usc/20/1085.md?p=i).
- (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)](#b-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](/usc/20/1085.md?p=i), 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](/usc/20/1003.md?p=17) 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](/usc/20/1085.md?p=i) of the loan under [section 1078(a) of this title](/usc/20/1078.md?p=a);
- (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 [section 1078(b) of this title](/usc/20/1078.md?p=b).
- (6) **Regulation of time and manner of payment—** The [Secretary](/usc/20/1003.md?p=17) shall pay the [holder](/usc/20/1085.md?p=i) of an [eligible loan](#b-5), 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](/usc/20/1085.md?p=i) shall submit to the [Secretary](/usc/20/1003.md?p=17), at such time or times and in such a manner as the [Secretary](/usc/20/1003.md?p=17) may deem proper, such information as may be required by regulation for the purpose of enabling the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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)](#b), the [Secretary](/usc/20/1003.md?p=17) 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 [section 1078(a)(3)(A) of this title](/usc/20/1078.md?p=a-3-A) and [subsection (b)](#b) of this section, respectively, to any [holder](/usc/20/1085.md?p=i); or
- (ii) directly from the [holder](/usc/20/1085.md?p=i) of the loan, if the lender fails or is not required to bill the [Secretary](/usc/20/1003.md?p=17) for interest and special allowance or withdraws from the program with unpaid loan origination fees.
- (B) If the [Secretary](/usc/20/1003.md?p=17) 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 [section 1078(a)(3)(A) of this title](/usc/20/1078.md?p=a-3-A) and [subsection (b)](#b) of this section, respectively, is less than the amount the lender was authorized to charge borrowers for origination fees in that quarter, the [Secretary](/usc/20/1003.md?p=17) shall deduct the excess amount from the subsequent quarters’ payments until the total amount has been deducted.
- (2) **Amount of origination fees—**
- (A) **In general—** Subject to paragraph (6) of this subsection, with respect to any loan (including loans made under [section 1078–8 of this title](/usc/20/1078–8.md), but excluding loans made under sections [1078–3](/usc/20/1078–3.md) and [1087–2(o)](/usc/20/1087–2.md?p=o) of this title) for which a completed note or other written evidence of the loan was sent or delivered to the borrower for signing on or after 10 days after August 13, 1981, each [eligible lender](/usc/20/1085.md?p=d-1) under this part is authorized to charge the borrower an origination fee in an amount not to exceed 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 payment to the borrower. Except as provided in [paragraph (8)](#c-8), a lender that charges an origination fee under this paragraph shall assess the same fee to all student borrowers.
- (B) **Subsequent reductions—** [Subparagraph (A)](#c-2-A) shall be applied to loans made under this part (other than loans made under sections [1078–3](/usc/20/1078–3.md) and [1087–2(o)](/usc/20/1087–2.md?p=o) of this title)—
- (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 [section 1077a of this title](/usc/20/1077a.md).
- (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](/usc/20/1003.md?p=17) 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 [section 1078(a)(3)(A) of this title](/usc/20/1078.md?p=a-3-A) or for special allowances under [subsection (b)](#b) of this section, to collect any origination fee or to submit the sums collected as origination fees to the United States. The [Secretary](/usc/20/1003.md?p=17) shall, not later than January 1, 1987, return to any such lender any such sums collected before October 17, 1986, together with interest thereon.
- (6) **SLS and PLUS loans—** With respect to any loans made under [section 1078–1](/usc/20/1078–1.md)[^1] or 1078–2 of this title on or after October 1, 1992, and first disbursed before July 1, 2010, each [eligible lender](/usc/20/1085.md?p=d-1) 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](/usc/20/1078–1.md)[^1] or 1078–2 of this title shall be paid to the [Secretary](/usc/20/1003.md?p=17) by the lender and deposited in the [fund](/usc/20/4702.md?p=3) authorized under [section 1081 of this title](/usc/20/1081.md).
- (8) **Exception—** Notwithstanding [paragraph (2)](#c-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)](#b), the [Secretary](/usc/20/1003.md?p=17) shall collect a loan fee in an amount determined in accordance with [paragraph (2)](#d-2)—
- (i) by reducing the total amount of interest and special allowance payable under [section 1078(a)(3)(A) of this title](/usc/20/1078.md?p=a-3-A) and [subsection (b)](#b), respectively, to any [holder](/usc/20/1085.md?p=i) of a loan; or
- (ii) directly from the [holder](/usc/20/1085.md?p=i) of the loan, if the lender—
- (I) fails or is not required to bill the [Secretary](/usc/20/1003.md?p=17) for interest and special allowance payments; or
- (II) withdraws from the program with unpaid loan fees.
- (B) **Special rule—** If the [Secretary](/usc/20/1003.md?p=17) 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 [section 1078(a)(3)(A) of this title](/usc/20/1078.md?p=a-3-A) and [subsection (b)](#b), respectively, is less than the amount of such loan fees, then the [Secretary](/usc/20/1003.md?p=17) shall deduct the amount of the loan fee balance from the amount of interest and special allowance payments that would otherwise be payable, in subsequent quarterly increments until the balance has been deducted.
- (2) **Amount of loan fees—** The amount of the loan fee which shall be deducted under [paragraph (1)](#d-1), but which may not be collected from the borrower, shall be equal to—
- (A) except as provided in [subparagraph (B)](#d-2-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](/usc/20/1003.md?p=17) shall deposit all fees collected pursuant to [paragraph (3)](#d-3) into the insurance [fund](/usc/20/4702.md?p=3) established in [section 1081 of this title](/usc/20/1081.md).
- (e) **Nondiscrimination—** In order for the [holders](/usc/20/1085.md?p=i) of loans which were made or purchased with [funds](/usc/20/4702.md?p=3) obtained by the [holder](/usc/20/1085.md?p=i) from an Authority issuing obligations, the income from which is exempt from taxation under [title 26](/usc/26.md), to be eligible to receive a special allowance under [subsection (b)(2)](#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](/usc/20/1003.md?p=6) status, income, attendance at a particular [eligible institution](/usc/20/1066a.md?p=1) within the area served by the Authority, length of the borrower’s educational program, or the borrower’s [academic year](/usc/20/1088.md?p=a-2-A) in [school](/usc/20/5802.md?p=a-11).
- (f) **Regulations to prevent denial of loans to eligible students—** The [Secretary](/usc/20/1003.md?p=17) shall adopt or amend appropriate regulations pertaining to programs carried out under this part to prevent, where practicable, any practices which the [Secretary](/usc/20/1003.md?p=17) 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 (50 U.S.C. App. 527) [now [50 U.S.C. 3937](/usc/50/3937.md)],[^1] the applicable interest rate to be subtracted in calculating the special allowance for such loan under this section shall be the interest rate determined under that Act for such loan.
# §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](/usc/20/1003.md?p=17) under this part or by a [guaranty agency](/usc/20/1085.md?p=j), 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](/usc/20/1003.md?p=17).
- (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](/usc/20/1003.md?p=21-A), 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](/usc/20/1003.md?p=21-A), 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](/usc/20/1003.md?p=17) $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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/4702.md?p=2) of [Directors](/usc/20/9101.md?p=3) 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](/usc/20/9101.md?p=3) shall be elected by the common stockholders of the Association entitled to vote pursuant to [subsection (f)](#f). Commencing with the annual shareholders meeting to be held in 1993—
- (i) 7 of the elected [directors](/usc/20/9101.md?p=3) shall be affiliated with an [eligible institution](/usc/20/1066a.md?p=1); and
- (ii) 7 of the elected [directors](/usc/20/9101.md?p=3) shall be affiliated with an [eligible lender](/usc/20/1085.md?p=d-1).
- (B) The President shall designate 1 of the [directors](/usc/20/9101.md?p=3) to serve as Chairman.
- (2) **Terms of appointed and elected members—** The [directors](/usc/20/9101.md?p=3) 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](/usc/20/9101.md?p=3) 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](/usc/20/4702.md?p=2) which becomes vacant shall be filled by appointment of the President. Any elective seat on the [Board](/usc/20/4702.md?p=2) which becomes vacant after the annual election of the [directors](/usc/20/9101.md?p=3) shall be filled by the [Board](/usc/20/4702.md?p=2), but only for the unexpired portion of the term.
- (3) **Affiliated members—** For the purpose of this subsection, the references to a [director](/usc/20/9101.md?p=3) “affiliated with the [eligible institution](/usc/20/1066a.md?p=1)” or a [director](/usc/20/9101.md?p=3) “affiliated with an [eligible lender](/usc/20/1085.md?p=d-1)” means an individual who is, or within 5 years of election to the [Board](/usc/20/4702.md?p=2) has been, an employee, [officer](/usc/20/1094.md?p=i-5), [director](/usc/20/9101.md?p=3), or similar official of—
- (A) an [eligible institution](/usc/20/1066a.md?p=1) or an [eligible lender](/usc/20/1085.md?p=d-1);
- (B) an association whose members consist primarily of [eligible institutions](/usc/20/1066a.md?p=1) or [eligible lenders](/usc/20/1085.md?p=d-1); or
- (C) a [State](/usc/20/1003.md?p=21-A) agency, authority, instrumentality, [commission](/usc/20/9701.md?p=2), or similar institution, the primary purpose of which relates to educational matters or banking matters.
- (4) **Meetings and functions of the Board—** The [Board](/usc/20/4702.md?p=2) of [Directors](/usc/20/9101.md?p=3) shall meet at the call of its Chairman, but at least semiannually. The [Board](/usc/20/4702.md?p=2) shall determine the general policies which shall govern the operations of the Association. The Chairman of the [Board](/usc/20/4702.md?p=2) shall, with the approval of the [Board](/usc/20/4702.md?p=2), 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](/usc/20/4702.md?p=2) of [Directors](/usc/20/9101.md?p=3), and such persons shall be the [officers](/usc/20/1094.md?p=i-5) 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](/usc/20/1003.md?p=17) under this part or by a [guaranty agency](/usc/20/1085.md?p=j);
- (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](/usc/20/1085.md?p=j) or by an [eligible lender](/usc/20/1085.md?p=d-1) in a [State](/usc/20/1003.md?p=21-A) described in section [1085(d)(1)(D)](/usc/20/1085.md?p=d-1-D) or [(F)](/usc/20/1085.md?p=d-1-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](/usc/20/1066a.md?p=1) 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-1-C-ii);
- (D) to undertake a program of loan insurance pursuant to agreements with the [Secretary](/usc/20/1003.md?p=17) under [section 1078 of this title](/usc/20/1078.md), and except with respect to loans under [subsection (o)](#o) of this section or under [section 1078–3 of this title](/usc/20/1078–3.md), the [Secretary](/usc/20/1003.md?p=17) may enter into an agreement with the Association for such purpose only if the [Secretary](/usc/20/1003.md?p=17) determines that (i) eligible borrowers are seeking and unable to obtain loans under this part, and (ii) no [guaranty agency](/usc/20/1085.md?p=j) is capable of or willing to provide a program of loan insurance for such borrowers; and
- (E) to undertake any other activity which the [Board](/usc/20/4702.md?p=2) of [Directors](/usc/20/9101.md?p=3) 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)](#d-1-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)](#d-1-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](/usc/20/1003.md?p=21-A) law to the contrary, including the Uniform Commercial Code as in effect in any [State](/usc/20/1003.md?p=21-A), a security interest in insured student loans created on behalf of the Association or any [eligible lender](/usc/20/1085.md?p=d-1) as defined in [section 1085(a) of this title](/usc/20/1085.md?p=a) may be perfected either through the taking of possession of such loans or by the filing of notice of such security interest in such loans in the manner provided by such [State](/usc/20/1003.md?p=21-A) law for perfection of security interests in accounts.
- (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)](#d-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](/usc/20/4702.md?p=2) of [Directors](/usc/20/9101.md?p=3) may prescribe, shall make advances on security or purchase student loans pursuant to [subsection (d)](#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](/usc/20/1001.md?p=a), 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](/usc/20/4702.md?p=2) of [Directors](/usc/20/9101.md?p=3) 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](/usc/20/9101.md?p=3).
- (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](/usc/20/4702.md?p=2) of [Directors](/usc/20/9101.md?p=3) 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)](#g-2), dividends may be declared on voting common stock by the [Board](/usc/20/4702.md?p=2) of [Directors](/usc/20/9101.md?p=3). Such dividends as may be declared by the [Board](/usc/20/4702.md?p=2) of [Directors](/usc/20/9101.md?p=3) shall be paid to the [holders](/usc/20/1085.md?p=i) 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](/usc/20/1085.md?p=i). 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](/usc/20/4702.md?p=2) of [Directors](/usc/20/9101.md?p=3) 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](/usc/20/1085.md?p=i) 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](/usc/20/1085.md?p=i) of the preferred shares shall be paid in full at par value thereof, plus all accrued dividends, before the [holders](/usc/20/1085.md?p=i) 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](/usc/20/1003.md?p=17) of Education and the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of Education to approve the issuance of such obligations is limited to obligations issued by the Association and guaranteed by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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)](#d-1-B) and [(C)](#d-1-C) of this section and as to which the income is exempt from taxation under [title 26](/usc/26.md) 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 [section 265 of title 26](/usc/26/265.md).
- (2) **Guarantee of debt—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) in consultation with the [Secretary](/usc/20/1003.md?p=17) of the Treasury. Nothing in this section shall be construed so as to authorize the [Secretary](/usc/20/1003.md?p=17) of Education or the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) to discharge his responsibilities under guarantees issued by him, he is authorized to issue to the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) with the approval of the [Secretary](/usc/20/1003.md?p=17) of the Treasury. Such notes or other obligations shall bear interest at a rate determined by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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 [chapter 31](/usc/31/chstIII-ch31.md) of title 31, and the purposes for which securities may be issued under that chapter are extended to include any purchase of such notes and obligations. The [Secretary](/usc/20/1003.md?p=17) of the Treasury may at any time sell any of the notes or other obligations acquired by him under this subsection. All redemptions, purchases, and sales by the [Secretary](/usc/20/1003.md?p=17) of the Treasury of such notes or other obligations shall be treated as public debt transactions of the United States. There is authorized to be appropriated to the [Secretary](/usc/20/1003.md?p=17) such sums as may be necessary to pay the principal and interest on the notes or obligations issued by him to the [Secretary](/usc/20/1003.md?p=17) of the Treasury.
- (4) **Action on request for guarantees—** Upon receipt of a request from the Association under this subsection requiring approvals by the [Secretary](/usc/20/1003.md?p=17) of Education or the [Secretary](/usc/20/1003.md?p=17) of the Treasury, the [Secretary](/usc/20/1003.md?p=17) of Education or the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of Education and the [Secretary](/usc/20/1003.md?p=17) of the Treasury submit to the Congress a detailed explanation of reasons for doing so.
- (5) **Authority of Treasury to purchase debt—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of the Treasury is authorized to use as a public debt transaction the proceeds of the sale of any securities hereafter issued under [chapter 31](/usc/31/chstIII-ch31.md) of title 31, as now or hereafter in force, and the purposes for which securities may be issued under [chapter 31](/usc/31/chstIII-ch31.md) of title 31, as now or hereafter in force are extended to include such purchases. The [Secretary](/usc/20/1003.md?p=17) of the Treasury shall not at any time purchase any obligations under this subsection if such purchase would increase the aggregate principal amount of his then outstanding holdings of such obligations under this subsection to an amount greater than $1,000,000,000. Each purchase of obligations by the [Secretary](/usc/20/1003.md?p=17) of the Treasury under this subsection shall be upon such terms and conditions as to yield a return at a rate determined by the [Secretary](/usc/20/1003.md?p=17) of the Treasury, taking into consideration the current average rate on outstanding marketable obligations of the United States of comparable maturities as of the last day of the month preceding the making of such purchase. The [Secretary](/usc/20/1003.md?p=17) of the Treasury may, at any time, sell, upon such terms and conditions and at such price or prices as he shall determine, any of the obligations acquired by him under this subsection. All redemptions, purchases, and sales by the [Secretary](/usc/20/1003.md?p=17) of the Treasury of such obligations under this subsection shall be treated as public debt transactions of the United States.
- (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 section [1078](/usc/20/1078.md) or [1079](/usc/20/1079.md) of this title, to the Federal Financing Bank.
- (7) **Offset fee—**
- (A) The Association shall pay to the [Secretary](/usc/20/1003.md?p=17), 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 [section 1078–3 of this title](/usc/20/1078–3.md), [subsection (o)](#o), or [subsection (q)](#q)) and that was acquired on or after August 10, 1993.
- (B) If the [Secretary](/usc/20/1003.md?p=17) determines that the Association has substantially failed to comply with [subsection (q)](#q), [subparagraph (A)](#h-7-A) shall be applied by substituting “1.0 percent” for “0.3 percent”.
- (C) The [Secretary](/usc/20/1003.md?p=17) shall deposit all fees collected pursuant to this paragraph into the insurance [fund](/usc/20/4702.md?p=3) established in [section 1081 of this title](/usc/20/1081.md).
- (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](/usc/20/4702.md?p=2) of [Directors](/usc/20/9101.md?p=3), 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](/usc/20/1094.md?p=i-5) and exercise the power granted by this section in any [State](/usc/20/1003.md?p=21-A) without regard to any qualification or similar statute in any [State](/usc/20/1003.md?p=21-A);
- (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](/usc/20/1087vv.md?p=f-2);
- (8) to appoint such [officers](/usc/20/1094.md?p=i-5), attorneys, employees, and [agents](/usc/20/1094.md?p=i-1) 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](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=17), standards of education and experience representative of the highest standards prescribed by the licensing authorities of the several [States](/usc/20/1003.md?p=21-A) which provide for the continuing licensing of public accountants and which are prescribed by the [Secretary](/usc/20/1003.md?p=17) in appropriate regulations may perform such audits until December 31, 1975. A report of each such audit shall be furnished to the [Secretary](/usc/20/1003.md?p=17) of the Treasury. The audit shall be conducted at the place or places where the accounts are normally kept. The representatives of the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1094.md?p=i-1), and custodians.
- (k) **Report on audits by Treasury—** A report of each such audit for a fiscal year shall be made by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1087vv.md?p=f-2) 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](/usc/20/4702.md?p=3); 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17), 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)](#d-4) shall be lawful investments, and may be accepted as security for all fiduciary, trust, and public [funds](/usc/20/4702.md?p=3), the investment or deposit of which shall be under authority or control of the United States or of any [officer](/usc/20/1094.md?p=i-5) or [officers](/usc/20/1094.md?p=i-5) 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](/usc/20/9701.md?p=2), 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 [section 355(2) of title 12](/usc/12/355.md?p=2), be deemed to be an agency of the United States. The obligations of the Association shall be deemed to be obligations of the United States for the purpose of [section 3124 of title 31](/usc/31/3124.md). For the purpose of the distribution of its property pursuant to [section 726 of title 11](/usc/11/726.md), the Association shall be deemed a person within the meaning of such title. The priority established in favor of the United States by [section 3713 of title 31](/usc/31/3713.md) shall not establish a priority over the indebtedness of the Association issued or incurred on or before September 30, 1992. The Federal Reserve Banks are authorized to act as depositaries, custodians, or fiscal [agents](/usc/20/1094.md?p=i-1), or a combination thereof, for the Association in the general performance of its powers under this section.
- (m) **Preparation of obligations—** In order to furnish obligations for delivery by the Association, the [Secretary](/usc/20/1003.md?p=17) of the Treasury is authorized to prepare such obligations in such form as the [Board](/usc/20/4702.md?p=2) of [Directors](/usc/20/9101.md?p=3) 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](/usc/20/1003.md?p=17) of the Treasury. The Association shall reimburse the [Secretary](/usc/20/1003.md?p=17) of the Treasury for any expenditures made in the preparation, custody, and delivery of such obligations. The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1094.md?p=i-1) may, upon request of a borrower, consolidate loans received under this subchapter in accordance with [section 1078–3 of this title](/usc/20/1078–3.md).
- (2) **Use of existing agencies as agent—** The Association in making loans pursuant to this subsection in any [State](/usc/20/1003.md?p=21-A) served by a [guaranty agency](/usc/20/1085.md?p=j) or an [eligible lender](/usc/20/1085.md?p=d-1) in a [State](/usc/20/1003.md?p=21-A) described in section [1085(d)(1)(D)](/usc/20/1085.md?p=d-1-D) or [(F)](/usc/20/1085.md?p=d-1-F) of this title may designate as its [agent](/usc/20/1094.md?p=i-1) 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](/usc/20/1085.md?p=j) and [eligible lender](/usc/20/1085.md?p=d-1) 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)](/usc/20/1078.md?p=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)](#d-2) of this section.
- (2) **Limitation—** No advance may be made under this subsection unless the [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/1003.md?p=17) determines that eligible borrowers are seeking and are unable to obtain loans under this part, the Association or its designated [agent](/usc/20/1094.md?p=i-1) 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](/usc/20/1003.md?p=17). The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17), that their students are seeking and unable to obtain loans.
- (B) Loans made pursuant to this subsection shall be insurable by the [Secretary](/usc/20/1003.md?p=17) under [section 1079 of this title](/usc/20/1079.md) with a certificate of comprehensive insurance coverage provided for under [section 1079(b)(1) of this title](/usc/20/1079.md?p=b-1) or by a [guaranty agency](/usc/20/1085.md?p=j) under paragraph (2)(A) of this subsection.
- (2) **Issuance and coverage of loans—**
- (A) Whenever the [Secretary](/usc/20/1003.md?p=17), after consultation with, and with the agreement of, representatives of the [guaranty agency](/usc/20/1085.md?p=j) in a [State](/usc/20/1003.md?p=21-A), or an [eligible lender](/usc/20/1085.md?p=d-1) in a [State](/usc/20/1003.md?p=21-A) described in [section 1085(d)(1)(D) of this title](/usc/20/1085.md?p=d-1-D), determines that a substantial portion of eligible borrowers in such [State](/usc/20/1003.md?p=21-A) or within an area of such [State](/usc/20/1003.md?p=21-A) are seeking and are unable to obtain loans under this part, the Association or its designated [agent](/usc/20/1094.md?p=i-1) shall begin making such loans to borrowers in such [State](/usc/20/1003.md?p=21-A) or within an area of such [State](/usc/20/1003.md?p=21-A) in accordance with this subsection at the request of the [Secretary](/usc/20/1003.md?p=17).
- (B) Loans made pursuant to this subsection shall be insurable by the agency identified in [subparagraph (A)](#q-2-A) having an agreement pursuant to [section 1078(b) of this title](/usc/20/1078.md?p=b). For loans insured by such agency, the agency shall provide the Association with a certificate of comprehensive insurance coverage, if the Association and the agency have mutually agreed upon a means to determine that the agency has not already guaranteed a loan under this part to a student which would cause a subsequent loan made by the Association to be in violation of any provision under this part.
- (3) **Termination of lending—** The Association or its designated [agent](/usc/20/1094.md?p=i-1) shall cease making loans under this subsection at such time as the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of Education and [Secretary](/usc/20/1003.md?p=17) 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](#r-15-A); 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](#r-15-B) of the Association within 45 days of the end of each fiscal quarter.
- (2) **Audit by Secretary of the Treasury—**
- (A) The [Secretary](/usc/20/1003.md?p=17) 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 [section 1087–3 of this title](/usc/20/1087–3.md) are being met; and
- (ii) obtain the services of such experts as the [Secretary](/usc/20/1003.md?p=17) of the Treasury determines necessary and appropriate, as authorized by [section 3109 of title 5](/usc/5/3109.md), to assist in determining 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 [section 1087–3 of this title](/usc/20/1087–3.md) are being met.
- (B) Each auditor appointed under this paragraph shall conduct an audit of the Association to the extent requested by the [Secretary](/usc/20/1003.md?p=17) of the Treasury and shall prepare and submit a report to the [Secretary](/usc/20/1003.md?p=17) of the Treasury concerning the results of such audit. A copy of such report shall be furnished to the Association and the [Secretary](/usc/20/1003.md?p=17) of Education on the date on which it is delivered to the [Secretary](/usc/20/1003.md?p=17) of the Treasury.
- (C) The Association shall provide full and prompt access to the [Secretary](/usc/20/1003.md?p=17) of the Treasury to its books and records and other information requested by the [Secretary](/usc/20/1003.md?p=17) of the Treasury.
- (D) **Annual assessment.—**
- (i) **In general.—** For each fiscal year beginning on or after October 1, 1996, the [Secretary](/usc/20/1003.md?p=17) of the Treasury may establish and collect from the Association an assessment (or assessments) in amounts sufficient to provide for reasonable costs and expenses of carrying out the duties of the [Secretary](/usc/20/1003.md?p=17) of the Treasury under this section and [section 1087–3 of this title](/usc/20/1087–3.md) during such fiscal year. In no event may the total amount so assessed exceed, for any fiscal year, $800,000, adjusted for each fiscal year ending after September 30, 1997, by the ratio of the Consumer Price Index for All Urban Consumers (issued by the Bureau of Labor Statistics) for the final month of the fiscal year preceding the fiscal year for which the assessment is made to the Consumer Price Index for All Urban Consumers for September 1997.
- (ii) **Deposit.—** Amounts collected from assessments under this subparagraph shall be deposited in an account within the Treasury of the United States as designated by the [Secretary](/usc/20/1003.md?p=17) of the Treasury for that purpose. The [Secretary](/usc/20/1003.md?p=17) of the Treasury is authorized and directed to pay out of any [funds](/usc/20/4702.md?p=3) available in such account the reasonable costs and expenses of carrying out the duties of the [Secretary](/usc/20/1003.md?p=17) of the Treasury under this section and [section 1087–3 of this title](/usc/20/1087–3.md). None of the [funds](/usc/20/4702.md?p=3) deposited into such account shall be available for any purpose other than making payments for such costs and expenses.
- (E) **Obligation to obtain, maintain, and report information.—**
- (i) **In general.—** The Association shall obtain such information and make and keep such records as the [Secretary](/usc/20/1003.md?p=17) 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](#r-2-E-iii), 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](#r-15-B), 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) **Summary reports.—** The [Secretary](/usc/20/1003.md?p=17) of the Treasury may require summary reports of such information 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](/usc/20/1003.md?p=17) of the Treasury has concerns regarding the financial or operational condition of the Association, the [Secretary](/usc/20/1003.md?p=17) of the Treasury may, notwithstanding the preceding sentence and [clause (i)](#r-2-E-i), require the Association to make reports concerning the activities of any [associated person](#r-2-E-iii), whose business activities are reasonably likely to have a material impact on the financial or operational condition of the Association.
- (iii) **Definition.—** For purposes of this subparagraph, the term “associated person” means any person, other than a natural person, directly or indirectly controlling, controlled by, or under common control with the Association.
- (F) **Compensation of auditors and examiners.—**
- (i) **Rates of pay.—** Rates of basic pay for all auditors and examiners appointed pursuant to [subparagraph (A)](#r-2-A) may be set and adjusted by the [Secretary](/usc/20/1003.md?p=17) of the Treasury without regard to the provisions of [chapter 51](/usc/20/ch51.md) or subchapter III of [chapter 53](/usc/5/chptIII-sptD-ch53.md) of title 5.
- (ii) **Comparability.—**
- (I) **In general.—** Subject to [section 5373 of title 5](/usc/5/5373.md), the [Secretary](/usc/20/1003.md?p=17) of the Treasury may provide additional compensation and benefits to auditors and examiners appointed pursuant to [subparagraph (A)](#r-2-A) if the same type of compensation or benefits are then being provided by any agency referred to in [section 1833b of title 12](/usc/12/1833b.md) or, if not then being provided, could be provided by such an agency under applicable provisions of law, rule, or regulation.
- (II) **Consultation.—** In setting and adjusting the total amount of compensation and benefits for auditors and examiners appointed pursuant to [subparagraph (A)](#r-2-A), the [Secretary](/usc/20/1003.md?p=17) of the Treasury shall consult with, and seek to maintain comparability with, the agencies referred to in [section 1833b of title 12](/usc/12/1833b.md).
- (3) **Monitoring of safety and soundness—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of the Treasury determines that the financial safety and soundness of the Association is at risk, the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](#r-15-B) 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](/usc/20/1003.md?p=17) of the Treasury a capital restoration plan, in reasonable detail, that the Association believes is adequate to cause the [capital ratio](#r-15-B) to equal or exceed 2 percent within 36 months.
- (5) **Capital restoration plan—**
- (A) **Submission, approval, and implementation—** The [Secretary](/usc/20/1003.md?p=17) of the Treasury and the Association shall consult with respect to any capital restoration plan submitted pursuant to [paragraph (4)](#r-4) and the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of the Treasury by the Association, unless the Association and [Secretary](/usc/20/1003.md?p=17) of the Treasury mutually agree to a longer consideration period. If the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of the Treasury does not approve a capital restoration plan as provided in [subparagraph (A)](#r-5-A), then not later than the earlier of the date the [Secretary](/usc/20/1003.md?p=17) 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)](#r-5-A) (as such period may have been extended by mutual agreement), the [Secretary](/usc/20/1003.md?p=17) of the Treasury shall submit the Association’s capital restoration plan, in the form most recently proposed to the [Secretary](/usc/20/1003.md?p=17) of the Treasury by the Association, together with a report on the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of Education by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of the Treasury with respect to the capital restoration plan submitted to the [Secretary](/usc/20/1003.md?p=17) of the Treasury and any findings of the [Secretary](/usc/20/1003.md?p=17) of the Treasury.
- (6) **Substantial capital ratio reduction—**
- (A) **Additional plan required—** If the [capital ratio](#r-15-B) 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](/usc/20/1003.md?p=17) 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)](#r-4)) to increase promptly its [capital ratio](#r-15-B) to equal or exceed 1.75 percent. The [Secretary](/usc/20/1003.md?p=17) of the Treasury and the Association shall consult with respect to any plan or modified plan submitted pursuant to this paragraph. The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of the Treasury by the Association, unless the Association and [Secretary](/usc/20/1003.md?p=17) of the Treasury mutually agree to a longer consideration period. If the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of the Treasury disapproves a capital restoration plan or modified plan submitted pursuant to [subparagraph (A)](#r-6-A), then, not later than the earlier of the date the [Secretary](/usc/20/1003.md?p=17) 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)](#r-6-A) (as such period may have been extended by mutual agreement), the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of Education by the [Secretary](/usc/20/1003.md?p=17) of the Treasury. The Association, within 5 days after receipt from the [Secretary](/usc/20/1003.md?p=17) of the Treasury of such submission, shall submit to the Chairmen and ranking minority members of such Committees, and the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of the Treasury with respect to the disapproved plan and the alternative plan of the [Secretary](/usc/20/1003.md?p=17) of the Treasury and any findings of the [Secretary](/usc/20/1003.md?p=17) of the Treasury.
- (C) **Review by Congress; Association implementation—** Congress shall have 60 [legislative days](#r-15-C) after the date on which Congress receives the alternative plan under [subparagraph (B)](#r-6-B) from the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of the Treasury under [subparagraph (B)](#r-6-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](#r-15-B) of the Association does not equal or exceed 1.75 percent at the end of the Association’s most recent calendar quarter, the [Secretary](/usc/20/1003.md?p=17) of the Treasury may, until the [capital ratio](#r-15-B) 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](/usc/20/4702.md?p=3) student loan purchases and warehousing advances.
- (B) **Restrict growth—** Restrict or eliminate growth of the Association’s [assets](/usc/20/1087vv.md?p=f-2), 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](#r-15-B).
- (E) **Limit executive compensation—** Prohibit the Association from increasing for any executive [officer](/usc/20/1094.md?p=i-5) any compensation including bonuses at a rate exceeding that [officer](/usc/20/1094.md?p=i-5)’s average rate of compensation during the previous 12 calendar months and prohibiting the [Board](/usc/20/4702.md?p=2) from adopting any new employment severance contracts.
- (8) **Critical capital standard—**
- (A) If the [capital ratio](#r-15-B) 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](/usc/20/1003.md?p=17) of the Treasury pursuant to paragraph [(4)](#r-4) or [(6)(A)](#r-6-A), the Association shall forthwith proceed with diligence to implement the most recently proposed plan with such modifications as the [Secretary](/usc/20/1003.md?p=17) of the Treasury determines are necessary to cause the [capital ratio](#r-15-B) to equal or exceed 2 percent within 60 months.
- (B) If the [capital ratio](#r-15-B) 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](/usc/20/1003.md?p=17) of the Treasury pursuant to paragraph [(4)](#r-4) or [(6)(A)](#r-6-A), the Association shall—
- (i) within 14 days of such occurrence submit a capital restoration plan to the [Secretary](/usc/20/1003.md?p=17) of the Treasury which the Association believes is adequate to cause the [capital ratio](#r-15-B) 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](/usc/20/1003.md?p=17) of the Treasury determines are necessary to cause the [capital ratio](#r-15-B) to equal or exceed 2 percent within 60 months.
- (C) Immediately upon a determination under subparagraph [(A)](#r-8-A) or [(B)](#r-8-B) to implement a capital restoration plan, the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of Education.
- (9) **Additional reports to committees—** The Association shall submit a copy of its capital restoration plan, modifications proposed to the [Secretary](/usc/20/1003.md?p=17) of the Treasury, and proposed modifications received from the [Secretary](/usc/20/1003.md?p=17) of the Treasury to the Congressional Budget Office and Government Accountability Office upon their submission to the [Secretary](/usc/20/1003.md?p=17) of the Treasury or receipt from the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of the Treasury does not approve a capital restoration plan as provided in paragraph [(5)(A)](#r-5-A) or [(6)(A)](#r-6-A), or in the event that a capital restoration plan is modified by the [Secretary](/usc/20/1003.md?p=17) of the Treasury pursuant to paragraph [(6)(B)](#r-6-B) or [(8)](#r-8), the Congressional Budget Office and Government Accountability Office shall each submit a report within 30 days of the [Secretary](/usc/20/1003.md?p=17) of the Treasury’s submission to the Chairmen and ranking minority members as required in paragraphs [(5)(B)](#r-5-B), [(6)(B)](#r-6-B), and [(8)(C)](#r-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](/usc/20/1003.md?p=17) of the Treasury’s submission made pursuant to [paragraph (5)(B)](#r-5-B), or the capital restoration plan proposed by the Association and the modifications made by the [Secretary](/usc/20/1003.md?p=17) of the Treasury pursuant to paragraph [(6)(B)](#r-6-B) or [(8)](#r-8);
- (C) analyzing the impact of the capital restoration plan and reasons for disapproval of the plan contained in the [Secretary](/usc/20/1003.md?p=17) of the Treasury’s submission made pursuant to [paragraph (5)(B)](#r-5-B), or the impact of the capital restoration plan proposed by the Association and the modifications made by the [Secretary](/usc/20/1003.md?p=17) of the Treasury pursuant to paragraph [(6)(B)](#r-6-B) or [(8)](#r-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](#r-15-B) without impairing its ability to perform its purpose and authorized activities as provided in this section.
- (10) **Review by Secretary of Education—** The [Secretary](/usc/20/1003.md?p=17) of Education shall review the [Secretary](/usc/20/1003.md?p=17) of the Treasury’s submission required pursuant to paragraph [(5)(B)](#r-5-B), [(6)(B)](#r-6-B), or [(8)](#r-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](#r-15-B); 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](#r-15-B) specified in [paragraph (4)](#r-4).
- (11) **Safe harbor—** The Association shall be deemed in compliance with the [capital ratios](#r-15-B) described in paragraphs [(4)](#r-4) and [(6)(A)](#r-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](#r-15-A), 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](/usc/20/1003.md?p=17) of the Treasury, the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of the Treasury, the [Secretary](/usc/20/1003.md?p=17) of Education, the Congressional Budget Office, and the Government Accountability Office to withhold information from Congress, or prevent the [Secretary](/usc/20/1003.md?p=17) of Education, the Congressional Budget Office, and the Government Accountability Office from complying with a request for information from any other Federal [department](/usc/20/1003.md?p=4) 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 [section 552 of title 5](/usc/5/552.md), this paragraph shall be considered a statute described in [subsection (b)(3)](/usc/5/552.md?p=b-3) of such section 552.
- (13) **Enforcement of safety and soundness requirements—** The [Secretary](/usc/20/1003.md?p=17) of Education or the [Secretary](/usc/20/1003.md?p=17) 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](#r-15-B) of at least 2.25 percent. The [Secretary](/usc/20/1003.md?p=17) of the Treasury may, whenever such [capital ratio](#r-15-B) is not met, take any one or more of the actions described in [paragraph (7)](#r-7), except that—
- (i) the [capital ratio](#r-15-B) to be restored pursuant to [paragraph (7)(D)](#r-7-D) shall be 2.25 percent; and
- (ii) if the relevant [capital ratio](#r-15-B) is in excess of or equal to 2 percent for such quarter, the [Secretary](/usc/20/1003.md?p=17) of the Treasury shall defer taking any of the actions set forth in [paragraph (7)](#r-7) until the next succeeding quarter and may then proceed with any such action only if the [capital ratio](#r-15-B) of the Association remains below 2.25 percent.
- (B) **Applicability—** The provisions of paragraphs [(4)](#r-4), [(5)](#r-5), [(6)](#r-6), [(8)](#r-8), [(9)](#r-9), [(10)](#r-10), and [(11)](#r-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 [section 78c(a) of title 15](/usc/15/78c.md?p=a).
- (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](/usc/20/1087vv.md?p=f-2) 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](/usc/20/4702.md?p=2), 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](/usc/20/4702.md?p=2) of [Directors](/usc/20/9101.md?p=3) 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)](#r-16), the Association shall certify to the [Secretary](/usc/20/1003.md?p=17) of the Treasury that the payment of the dividend will be made in compliance with [paragraph (16)](#r-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 [section 1087–3 of this title](/usc/20/1087–3.md).
- (2) **Sunset plan—**
- (A) **Plan submission by the Association—** Not later than July 1, 2007, the Association shall submit to the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1087vv.md?p=f-2) 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](/usc/20/1087vv.md?p=f-2) 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](/usc/20/1087vv.md?p=f-2) 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](/usc/20/1003.md?p=17) 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)](#s-3).
- (C) **Plan monitoring—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of the Treasury may require the Association to amend the plan (including any amendments to the plan), if the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of Education and the [Secretary](/usc/20/1003.md?p=17) of the Treasury of the Association’s intention to dissolve, unless within 60 days of receipt of such notice the [Secretary](/usc/20/1003.md?p=17) of Education notifies the Association that the Association continues to be needed to serve as a lender of last resort pursuant to [subsection (q)](#q) or continues to be needed to purchase loans under an agreement with the [Secretary](/usc/20/1003.md?p=17) described in [paragraph (4)(A)](#s-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](/usc/20/1003.md?p=17) 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](/usc/20/5602.md?p=12) solely for the benefit of [holders](/usc/20/1085.md?p=i) 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](/usc/20/1003.md?p=17) 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](/usc/20/1087vv.md?p=f-2) 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](/usc/20/1087vv.md?p=f-2) 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)](#s-3-A) and [(C)](#s-3-C), the Association shall transfer to the shareholders of the Association any remaining [assets](/usc/20/1087vv.md?p=f-2) 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](/usc/20/1087vv.md?p=f-2) (including acquiring [assets](/usc/20/1087vv.md?p=f-2) pursuant to contractual commitments) described in [subsection (d)](#d) other than in connection with the Association—
- (I) serving as a lender of last resort pursuant to [subsection (q)](#q); and
- (II) purchasing loans insured under this part, if the [Secretary](/usc/20/1003.md?p=17), with the approval of the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) determines there is inadequate liquidity for loans made under this part.
- (ii) **Agreement—** The [Secretary](/usc/20/1003.md?p=17) is authorized to enter into an agreement described in [subclause (II)](#s-4-A-i-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](/usc/20/1003.md?p=17) determines that liquidity remains inadequate. The fee provided under [subsection (h)(7)](#h-7) shall not apply to loans acquired under any such agreement with the [Secretary](/usc/20/1003.md?p=17).
- (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)](#q) or with purchasing loans under an agreement with the [Secretary](/usc/20/1003.md?p=17) as described in [subparagraph (A)](#s-4-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)](#s-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.
# §1087–3. Reorganization of Student Loan Marketing Association through formation of Holding Company
- (a) **Actions by Association’s Board of Directors—** The [Board](/usc/20/4702.md?p=2) of [Directors](/usc/20/9101.md?p=3) of the [Association](#i-1) shall take or cause to be taken all such action as the [Board](/usc/20/4702.md?p=2) of [Directors](/usc/20/9101.md?p=3) deems necessary or appropriate to effect, upon the shareholder approval described in [subsection (b)](#b), a restructuring of the common stock ownership of the [Association](#i-1), as set forth in a plan of [reorganization](#i-6) adopted by the [Board](/usc/20/4702.md?p=2) of [Directors](/usc/20/9101.md?p=3) (the terms of which shall be consistent with this section) so that all of the outstanding common shares of the [Association](#i-1) shall be directly owned by a [Holding Company](#i-3). Such actions may include, in the [Board](/usc/20/4702.md?p=2) of [Director](/usc/20/9101.md?p=3)’s discretion, a merger of a wholly owned [subsidiary](#i-8) of the [Holding Company](#i-3) with and into the [Association](#i-1), which would have the effect provided in the plan of [reorganization](#i-6) and the law of the jurisdiction in which such [subsidiary](#i-8) is incorporated. As part of the restructuring, the [Board](/usc/20/4702.md?p=2) of [Directors](/usc/20/9101.md?p=3) may cause—
- (1) the common shares of the [Association](#i-1) to be converted, on the [reorganization effective date](#i-7), to common shares of the [Holding Company](#i-3) on a one for one basis, consistent with applicable [State](/usc/20/1003.md?p=21-A) or District of Columbia law; and
- (2) [Holding Company](#i-3) common shares to be registered with the Securities and Exchange [Commission](/usc/20/9701.md?p=2).
- (b) **Shareholder approval—** The plan of reorganization adopted by the [Board](/usc/20/4702.md?p=2) of [Directors](/usc/20/9101.md?p=3) pursuant to [subsection (a)](#a) shall be submitted to common shareholders of the [Association](#i-1) for their approval. The reorganization shall occur on the [reorganization effective date](#i-7), provided that the plan of reorganization has been approved by the affirmative votes, cast in person or by proxy, of the [holders](/usc/20/1085.md?p=i) of a majority of the issued and outstanding shares of the [Association](#i-1) common stock.
- (c) **Transition—** In the event the shareholders of the [Association](#i-1) approve the plan of reorganization under [subsection (b)](#b), the following provisions shall apply beginning on the [reorganization effective date](#i-7):
- (1) **In general—** Except as specifically provided in this section, until the [dissolution date](#i-2) the [Association](#i-1) 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, [section 1087–2 of this title](/usc/20/1087–2.md), and the [Association](#i-1) shall continue to carry out the purposes of such section. The Holding Company and any [subsidiary](#i-8) of the Holding Company (other than the [Association](#i-1)) shall not be entitled to any of the rights, privileges, and obligations, and shall not be subject to the limitations and restrictions, applicable to the [Association](#i-1) under [section 1087–2 of this title](/usc/20/1087–2.md), except as specifically provided in this section. The Holding Company and any [subsidiary](#i-8) of the Holding Company (other than the [Association](#i-1) or a [subsidiary](#i-8) of the [Association](#i-1)) shall not purchase loans insured under this chapter until such time as the [Association](#i-1) ceases acquiring such loans, except that the Holding Company may purchase such loans if the [Association](#i-1) is merely continuing to acquire loans as a lender of last resort pursuant to [section 1087–2(q) of this title](/usc/20/1087–2.md?p=q) or under an agreement with the [Secretary](/usc/20/1003.md?p=17) described in [paragraph (6)](#c-6).
- (2) **Transfer of certain property—**
- (A) **In general—** Except as provided in this section, on the [reorganization effective date](#i-7) or as soon as practicable thereafter, the [Association](#i-1) shall use the [Association](#i-1)’s best efforts to transfer to the Holding Company or any [subsidiary](#i-8) of the Holding Company (or both), as directed by the Holding Company, all real and personal property of the [Association](#i-1) (both tangible and intangible) other than the [remaining property](#i-5). Subject to the preceding sentence, such transferred property shall include all right, title, and interest in—
- (i) direct or indirect [subsidiaries](#i-8) of the [Association](#i-1) (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](#i-1);
- (iii) licenses and other intellectual property of the [Association](#i-1); and
- (iv) any other property of the [Association](#i-1).
- (B) **Construction—** Nothing in this paragraph shall be construed to prohibit the [Association](#i-1) from transferring [remaining property](#i-5) from time to time to the Holding Company or any [subsidiary](#i-8) of the Holding Company, subject to the provisions of [paragraph (4)](#c-4).
- (3) **Transfer of personnel—** On the [reorganization effective date](#i-7), employees of the [Association](#i-1) shall become employees of the Holding Company (or any [subsidiary](#i-8) of the Holding Company), and the Holding Company (or any [subsidiary](#i-8) of the Holding Company) shall provide all necessary and appropriate management and operational support (including loan servicing) to the [Association](#i-1), as requested by the [Association](#i-1). The [Association](#i-1), however, may obtain such management and operational support from persons or entities not associated with the Holding Company.
- (4) **Dividends—** The [Association](#i-1) 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](/usc/20/4702.md?p=2) of [Directors](/usc/20/9101.md?p=3) of the [Association](#i-1), the [Association](#i-1)’s capital would be in compliance with the capital standards and requirements set forth in [section 1087–2(r) of this title](/usc/20/1087–2.md?p=r). If, at any time after the [reorganization effective date](#i-7), the [Association](#i-1) fails to comply with such capital standards, the Holding Company shall transfer with [due diligence](/usc/20/1085.md?p=f) to the [Association](#i-1) additional capital in such amounts as are necessary to ensure that the [Association](#i-1) again complies with the capital standards.
- (5) **Certification prior to dividend—** Prior to the payment of any dividend under [paragraph (4)](#c-4), the [Association](#i-1) shall certify to the [Secretary](/usc/20/1003.md?p=17) of the Treasury that the payment of the dividend will be made in compliance with [paragraph (4)](#c-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](#i-7), the [Association](#i-1) shall not engage in any new business activities or acquire any additional program [assets](/usc/20/1087vv.md?p=f-2) described in [section 1087–2(d) of this title](/usc/20/1087–2.md?p=d) other than in connection with—
- (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](#i-7);
- (iii) the [Association](#i-1) serving as a lender-of-last-resort pursuant to [section 1087–2(q) of this title](/usc/20/1087–2.md?p=q); and
- (iv) the [Association](#i-1)’s purchase of loans insured under this part, if the [Secretary](/usc/20/1003.md?p=17), with the approval of the [Secretary](/usc/20/1003.md?p=17) of the Treasury, enters into an agreement with the [Association](#i-1) for the continuation or resumption of the [Association](#i-1)’s secondary market purchase program because the [Secretary](/usc/20/1003.md?p=17) determines there is inadequate liquidity for loans made under this part.
- (B) **Agreement—** The [Secretary](/usc/20/1003.md?p=17) is authorized to enter into an agreement described in [clause (iv)](#c-6-A-iv) of subparagraph (A) with the [Association](#i-1) 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](/usc/20/1003.md?p=17) determines that liquidity remains inadequate. The fee provided under [section 1087–2(h)(7) of this title](/usc/20/1087–2.md?p=h-7) shall not apply to loans acquired under any such agreement with the [Secretary](/usc/20/1003.md?p=17).
- (7) **Issuance of debt obligations during the transition period; attributes of debt obligations—** After the [reorganization effective date](#i-7), the [Association](#i-1) 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 [section 1087–2(q) of this title](/usc/20/1087–2.md?p=q) or with purchasing loans under an agreement with the [Secretary](/usc/20/1003.md?p=17) as described in [paragraph (6)](#c-6). Nothing in this section shall modify the attributes accorded the debt obligations of the [Association](#i-1) by [section 1087–2 of this title](/usc/20/1087–2.md), regardless of whether such debt obligations are incurred prior to, or at any time following, the [reorganization effective date](#i-7) or are transferred to a trust in accordance with [subsection (d)](#d).
- (8) **Monitoring of safety and soundness—**
- (A) **Obligation to obtain, maintain, and report information—** The [Association](#i-1) shall obtain such information and make and keep such records as the [Secretary](/usc/20/1003.md?p=17) of the Treasury may from time to time prescribe concerning—
- (i) the financial risk to the [Association](#i-1) resulting from the activities of any [associated person](#c-8-G), to the extent such activities are reasonably likely to have a material impact on the financial condition of the [Association](#i-1), including the [Association](#i-1)’s capital ratio, the [Association](#i-1)’s liquidity, or the [Association](#i-1)’s ability to conduct and finance the [Association](#i-1)’s operations; and
- (ii) the [Association](#i-1)’s policies, procedures, and systems for monitoring and controlling any such financial risk.
- (B) **Summary reports—** The [Secretary](/usc/20/1003.md?p=17) of the Treasury may require summary reports of the information described in [subparagraph (A)](#c-8-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](/usc/20/1003.md?p=17) of the Treasury has concerns regarding the financial or operational condition of the [Association](#i-1), the [Secretary](/usc/20/1003.md?p=17) of the Treasury may, notwithstanding the preceding sentence and [subparagraph (A)](#c-8-A), require the [Association](#i-1) to make reports concerning the activities of any [associated person](#c-8-G) whose business activities are reasonably likely to have a material impact on the financial or operational condition of the [Association](#i-1).
- (C) **Separate operation of corporations—**
- (i) **In general—** The [funds](/usc/20/4702.md?p=3) and [assets](/usc/20/1087vv.md?p=f-2) of the [Association](#i-1) shall at all times be maintained separately from the [funds](/usc/20/4702.md?p=3) and [assets](/usc/20/1087vv.md?p=f-2) of the Holding Company or any [subsidiary](#i-8) of the Holding Company and may be used by the [Association](#i-1) solely to carry out the [Association](#i-1)’s purposes and to fulfill the [Association](#i-1)’s obligations.
- (ii) **Books and records—** The [Association](#i-1) shall maintain books and records that clearly reflect the [assets](/usc/20/1087vv.md?p=f-2) and liabilities of the [Association](#i-1), separate from the [assets](/usc/20/1087vv.md?p=f-2) and liabilities of the Holding Company or any [subsidiary](#i-8) of the Holding Company.
- (iii) **Corporate office—** The [Association](#i-1) shall maintain a corporate office that is physically separate from any office of the Holding Company or any [subsidiary](#i-8) of the Holding Company.
- (iv) **Director—** No [director](/usc/20/9101.md?p=3) of the [Association](#i-1) who is appointed by the President pursuant to [section 1087–2(c)(1)(A) of this title](/usc/20/1087–2.md?p=c-1-A) may serve as a [director](/usc/20/9101.md?p=3) of the Holding Company.
- (v) **One officer requirement—** At least one [officer](/usc/20/1094.md?p=i-5) of the [Association](#i-1) shall be an [officer](/usc/20/1094.md?p=i-5) solely of the [Association](#i-1).
- (vi) **Transactions—** Transactions between the [Association](#i-1) and the Holding Company or any [subsidiary](#i-8) of the Holding Company, including any loan servicing arrangements, shall be on terms no less favorable to the [Association](#i-1) than the [Association](#i-1) could obtain from an unrelated third party offering comparable services.
- (vii) **Credit prohibition—** The [Association](#i-1) shall not extend credit to the Holding Company or any [subsidiary](#i-8) of the Holding Company nor guarantee or provide any credit enhancement to any debt obligations of the Holding Company or any [subsidiary](#i-8) of the Holding Company.
- (viii) **Amounts collected—** Any amounts collected on behalf of the [Association](#i-1) by the Holding Company or any [subsidiary](#i-8) of the Holding Company with respect to the [assets](/usc/20/1087vv.md?p=f-2) of the [Association](#i-1), pursuant to a servicing contract or other arrangement between the [Association](#i-1) and the Holding Company or any [subsidiary](#i-8) of the Holding Company, shall be collected solely for the benefit of the [Association](#i-1) and shall be immediately deposited by the Holding Company or such [subsidiary](#i-8) to an account under the sole control of the [Association](#i-1).
- (D) **Encumbrance of assets—** Notwithstanding any Federal or [State](/usc/20/1003.md?p=21-A) law, rule, or regulation, or legal or equitable principle, doctrine, or theory to the contrary, under no circumstances shall the [assets](/usc/20/1087vv.md?p=f-2) of the [Association](#i-1) 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](#i-1) 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](#i-7) and prior to the [dissolution date](#i-2), all business activities of the Holding Company shall be conducted through [subsidiaries](#i-8) of the Holding Company.
- (F) **Confidentiality—** Any information provided by the [Association](#i-1) pursuant to this section shall be subject to the same confidentiality obligations contained in [section 1087–2(r)(12) of this title](/usc/20/1087–2.md?p=r-12).
- (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](#i-1).
- (9) **Issuance of stock warrants—**
- (A) **In general—** On the [reorganization effective date](#i-7), 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](#i-1), determined as of the last day of the fiscal quarter preceding September 30, 1996, with each stock warrant entitling the [holder](/usc/20/1085.md?p=i) 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](#i-1) 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](#i-1). 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](#i-1) common stock into Holding Company common stock as part of the plan of reorganization approved by the [Association](#i-1)’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](/usc/20/1003.md?p=17) of the Treasury and the [Association](#i-1).
- (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)](#c-9-A). The District of Columbia Financial Responsibility and Management Assistance Authority shall deposit into the account established under [section 1155(e)](/usc/20/1155.md?p=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](#i-7), the Holding Company shall not sell, pledge, or otherwise transfer the outstanding shares of the [Association](#i-1), or agree to or cause the liquidation of the [Association](#i-1) or cause the [Association](#i-1) to file a petition for bankruptcy under [title 11](/usc/11.md), without prior approval of the [Secretary](/usc/20/1003.md?p=17) of the Treasury and the [Secretary](/usc/20/1003.md?p=17) of Education.
- (d) **Termination of Association—** In the event the shareholders of the [Association](#i-1) approve a plan of reorganization under [subsection (b)](#b), the [Association](#i-1) shall dissolve, and the [Association](#i-1)’s separate existence shall terminate on September 30, 2008, after discharge of all outstanding debt obligations and liquidation pursuant to this subsection. The [Association](#i-1) may dissolve pursuant to this subsection prior to such date by notifying the [Secretary](/usc/20/1003.md?p=17) of Education and the [Secretary](/usc/20/1003.md?p=17) of the Treasury of the [Association](#i-1)’s intention to dissolve, unless within 60 days after receipt of such notice the [Secretary](/usc/20/1003.md?p=17) of Education notifies the [Association](#i-1) that the [Association](#i-1) continues to be needed to serve as a lender of last resort pursuant to [section 1087–2(q) of this title](/usc/20/1087–2.md?p=q) or continues to be needed to purchase loans under an agreement with the [Secretary](/usc/20/1003.md?p=17) described in [subsection (c)(6)](#c-6). On the [dissolution date](#i-2), the [Association](#i-1) shall take the following actions:
- (1) **Establishment of a trust—** The [Association](#i-1) shall, under the terms of an irrevocable trust agreement that is in form and substance satisfactory to the [Secretary](/usc/20/1003.md?p=17) of the Treasury, the [Association](#i-1) and the appointed trustee, irrevocably transfer all [remaining obligations](#i-4) of the [Association](#i-1) to the trust and irrevocably deposit or cause to be deposited into such trust, to be held as [trust funds](/usc/20/5602.md?p=12) solely for the benefit of [holders](/usc/20/1085.md?p=i) of the [remaining obligations](#i-4), 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](/usc/20/1003.md?p=17) 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](#i-4) in accordance with their terms. To the extent the [Association](#i-1) 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](/usc/20/1087vv.md?p=f-2) deposited into the trust pursuant to this subsection shall be applied by the trustee to the payment of the [remaining obligations](#i-4) assumed by the trust.
- (3) **Obligations not transferred to the trust—** The [Association](#i-1) shall make proper provision for all other obligations of the [Association](#i-1) 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](#i-1) outstanding. Any obligations of the [Association](#i-1) 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)](#d-1) and [(3)](#d-3), any remaining [assets](/usc/20/1087vv.md?p=f-2) of the trust shall be transferred to the Holding Company or any [subsidiary](#i-8) of the Holding Company, as directed by the Holding Company.
- (e) **Operation of Holding Company—** In the event the shareholders of the [Association](#i-1) approve the plan of reorganization under [subsection (b)](#b), the following provisions shall apply beginning on the [reorganization effective date](#i-7):
- (1) **Holding Company Board of Directors—** The number of members and composition of the [Board](/usc/20/4702.md?p=2) of [Directors](/usc/20/9101.md?p=3) 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](#i-8) of the Holding Company (other than the [Association](#i-1))—
- (A) may not contain the name “Student Loan Marketing [Association](#i-1)”; and
- (B) may contain, to the extent permitted by applicable [State](/usc/20/1003.md?p=21-A) or District of Columbia law, “Sallie Mae” or variations thereof, or such other names as the [Board](/usc/20/4702.md?p=2) of [Directors](/usc/20/9101.md?p=3) of the [Association](#i-1) or the Holding Company deems appropriate.
- (3) **Use of Sallie Mae name—** Subject to [paragraph (2)](#e-2), the [Association](#i-1) may assign to the Holding Company, or any [subsidiary](#i-8) of the Holding Company, the “Sallie Mae” name as a trademark or service mark, except that neither the Holding Company nor any [subsidiary](#i-8) of the Holding Company (other than the [Association](#i-1) or any [subsidiary](#i-8) of the [Association](#i-1)) 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](#i-8) of the Holding Company (other than a debt obligation or other security issued to and held by the Holding Company or any [subsidiary](#i-8) of the Holding Company). The [Association](#i-1) shall remit to the account established under [section 1155(e)](/usc/20/1155.md?p=e)[^1] of this title, $5,000,000, within 60 days of the [reorganization effective date](#i-7) 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](#i-2), the Holding Company, and any [subsidiary](#i-8) of the Holding Company (other than the [Association](#i-1)), 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](#i-8) 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](#i-8) 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](#i-1) as a federally chartered corporation, or of the Holding Company as a [State](/usc/20/1003.md?p=21-A) or District of Columbia chartered corporation.
- (g) **Right to enforce—** The [Secretary](/usc/20/1003.md?p=17) of Education or the [Secretary](/usc/20/1003.md?p=17) 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](#i-7) 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](/usc/20/1003.md?p=17) of Education permits the transfer of [remaining obligations](#i-4) in accordance with [subsection (d)](#d).
- (3) **Holding Company—** The term “Holding Company” means the new business corporation established pursuant to this section by the [Association](#i-1) under the laws of any [State](/usc/20/1003.md?p=21-A) of the United States or the District of Columbia for the purposes of the reorganization and restructuring described in [subsection (a)](#a).
- (4) **Remaining obligations—** The term “remaining obligations” means the debt obligations of the [Association](#i-1) outstanding as of the [dissolution date](#i-2).
- (5) **Remaining property—** The term “remaining property” means the following [assets](/usc/20/1087vv.md?p=f-2) and liabilities of the [Association](#i-1) which are outstanding as of the [reorganization effective date](#i-7):
- (A) Debt obligations issued by the [Association](#i-1).
- (B) Contracts relating to interest rate, currency, or commodity positions or protections.
- (C) Investment securities owned by the [Association](#i-1).
- (D) Any instruments, [assets](/usc/20/1087vv.md?p=f-2), or agreements described in [section 1087–2(d) of this title](/usc/20/1087–2.md?p=d) (including, without limitation, all student loans and agreements relating to the purchase and sale of student loans, forward purchase and lending commitments, warehousing advances, academic facilities obligations, letters of credit, standby bond purchase agreements, liquidity agreements, and student loan revenue bonds or other loans).
- (E) Except as specifically prohibited by this section or [section 1087–2 of this title](/usc/20/1087–2.md), any other nonmaterial [assets](/usc/20/1087vv.md?p=f-2) or liabilities of the [Association](#i-1) which the [Association](#i-1)’s [Board](/usc/20/4702.md?p=2) of [Directors](/usc/20/9101.md?p=3) determines to be necessary or appropriate to the [Association](#i-1)’s operations.
- (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)](#a).
- (7) **Reorganization effective date—** The term “reorganization effective date” means the effective date of the reorganization as determined by the [Board](/usc/20/4702.md?p=2) of [Directors](/usc/20/9101.md?p=3) of the [Association](#i-1), which shall not be earlier than the date that shareholder approval is obtained pursuant to [subsection (b)](#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.
# §1087–4. Discrimination in secondary markets prohibited
The Student Loan Marketing Association (and, if the Association is privatized under [section 1087–3 of this title](/usc/20/1087–3.md), any successor entity functioning as a secondary market for loans under this part, including the Holding Company described in such section) shall not engage directly or indirectly in any pattern or practice that 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](/usc/20/1003.md?p=6) status, income, attendance at a particular [eligible institution](/usc/20/1066a.md?p=1), length of the borrower’s educational program, or the borrower’s [academic year](/usc/20/1088.md?p=a-2-A) at an [eligible institution](/usc/20/1066a.md?p=1).
# §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](/usc/20/1066a.md?p=1), 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](/usc/20/1001.md?p=a), through formal or informal consultation with local [nonprofit](/usc/20/1003.md?p=13), governmental, and community-based organizations, as designed to improve the quality of life for community residents, particularly [low-income individuals](/usc/20/1059e.md?p=b-4), 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](/usc/42.md);
- (3) support services to students with [disabilities](/usc/20/1003.md?p=6), including students with [disabilities](/usc/20/1003.md?p=6) 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.
# §1087–52. Allocation of funds
- (a) **Allocation based on previous allocation—**
- (1) From the amount appropriated pursuant to [section 1087–51(b) of this title](/usc/20/1087–51.md?p=b) for each fiscal year, the [Secretary](/usc/20/1003.md?p=17) shall first allocate to each [eligible institution](/usc/20/1066a.md?p=1) for each succeeding fiscal year, an amount equal to 100 percent of the amount such institution received under subsections [(a)](#a) and [(b)](#b) of this section for fiscal year 1999 (as such subsections were in effect with respect to allocations for such fiscal year).
- (2)
- (A) From the amount so appropriated, the [Secretary](/usc/20/1003.md?p=17) shall next allocate to each [eligible institution](/usc/20/1066a.md?p=1) 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](/usc/20/1003.md?p=17) shall next allocate to each [eligible institution](/usc/20/1066a.md?p=1) 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](/usc/20/1066a.md?p=1) 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](/usc/20/3982.md?p=1) 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](/usc/20/1003.md?p=17) shall allocate to each [eligible institution](/usc/20/1066a.md?p=1) 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)](#a-1) but less than the amount required to be allocated to all institutions under [paragraph (2)](#a-2), then—
- (i) the [Secretary](/usc/20/1003.md?p=17) shall allot the amount required to be allocated to all institutions under [paragraph (1)](#a-1), and
- (ii) the amount of the allocation to each institution under [paragraph (2)](#a-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](/usc/20/1003.md?p=17) 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](/usc/20/1066a.md?p=1) described in [subparagraph (B)](#a-4-B).
- (B) In order to receive an allocation pursuant to [subparagraph (A)](#a-4-A) an institution shall be an [eligible institution](/usc/20/1066a.md?p=1) from which 50 percent or more of the [Pell Grant recipients](/usc/20/1061.md?p=3) attending such [eligible institution](/usc/20/1066a.md?p=1) graduate or transfer to a 4-year [institution of higher education](/usc/20/1001.md?p=a).
- (b) **Allocation of excess based on share of excess eligible amounts—**
- (1) From the remainder of the amount appropriated pursuant to [section 1087–51(b) of this title](/usc/20/1087–51.md?p=b) after making the allocations required by [subsection (a)](#a) of this section, the [Secretary](/usc/20/1003.md?p=17) shall allocate to each [eligible institution](/usc/20/1066a.md?p=1) 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](/usc/20/1066a.md?p=1) (having such excess eligible amounts).
- (2) For any [eligible institution](/usc/20/1066a.md?p=1), 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)](#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 [section 1087–51(b) of this title](/usc/20/1087–51.md?p=b) for the fiscal year; exceeds
- (B) the amount required to be allocated to that institution under [subsection (a)](#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](/usc/20/1003.md?p=17) 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](#c-4-A) 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](#c-4-A) for all undergraduate students determined under [subparagraph (C)](#c-2-C); or
- (ii) the [average cost of attendance](#c-4-A) for all undergraduate students minus the student aid index determined under [subparagraph (B)](#c-2-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)](#c-2-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](#c-4-A) for all undergraduate students determined under [subparagraph (C)](#c-2-C); or
- (ii) the [average cost of attendance](#c-4-A) for all undergraduate students minus the student aid index determined under [subparagraph (B)](#c-2-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)](#c-2-F) for each income category of independent students; and
- (H) add the amounts determined under subparagraphs [(E)](#c-2-E) and [(G)](#c-2-G).
- (3) To determine the self-help need of an institution’s eligible graduate and professional students, the [Secretary](/usc/20/1003.md?p=17) 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](#c-4-A) for all graduate and professional students;
- (D) subtract from the [average cost of attendance](#c-4-A) for all graduate and professional students (determined under [subparagraph (C)](#c-3-C)), the student aid index (determined under [subparagraph (B)](#c-3-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)](#c-3-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)](#c-2) and [(3)](#c-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)](#c-4-B), (ii) standard living expenses determined in accordance with subparagraph [(C)](#c-4-C), and (iii) books and supplies determined in accordance with [subparagraph (D)](#c-4-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](/usc/20/1003.md?p=17), 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](/usc/20/1003.md?p=17) any portion of the sums allocated to such institutions under this section for any fiscal year, the [Secretary](/usc/20/1003.md?p=17) shall reallot such excess to [eligible institutions](/usc/20/1066a.md?p=1) which used at least 5 percent of the total amount of [funds](/usc/20/4702.md?p=3) 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](/usc/20/4702.md?p=3) 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)](#b) of this section. [Funds](/usc/20/4702.md?p=3) 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](/usc/20/1003.md?p=17) may waive this paragraph for a specific institution if the [Secretary](/usc/20/1003.md?p=17) finds that enforcing this paragraph would be contrary to the interest of the program.
- (e) **Filing deadlines—** The [Secretary](/usc/20/1003.md?p=17) shall, from time to time, set dates before which institutions must file applications for allocations under this part.
# §1087–53. Grants for Federal work-study programs
- (a) **Agreements required—** The [Secretary](/usc/20/1003.md?p=17) is authorized to enter into agreements with institutions of higher education under which the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17), of its students in work for the institution itself, work in community service or work in the public interest for a Federal, [State](/usc/20/1003.md?p=21-A), or local public agency or private [nonprofit](/usc/20/1003.md?p=13) 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 [section 206 of title 29](/usc/29/206.md);
- (2) provide that [funds](/usc/20/4702.md?p=3) granted an [institution of higher education](/usc/20/1001.md?p=a), 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](/usc/20/4702.md?p=3) 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)](#d) of this section) is included in meeting the requirement of this subparagraph, except that the [Secretary](/usc/20/1003.md?p=17) may waive this subparagraph if the [Secretary](/usc/20/1003.md?p=17) 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 [section 1096 of this title](/usc/20/1096.md), may use a portion of the sums granted to it to meet the cost of a job location and development program in accordance with [section 1087–56 of this title](/usc/20/1087–56.md), and may transfer [funds](/usc/20/4702.md?p=3) in accordance with the provisions of [section 1095 of this title](/usc/20/1095.md);
- (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 [section 1091 of this title](/usc/20/1091.md) will be assisted, except that if the institution’s grant under this part is directly or indirectly based in part on the financial need demonstrated by students who are (A) attending the institution on less than a full-time basis, or (B) independent students, a reasonable portion of the grant shall be made available to such students;
- (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](/usc/20/4702.md?p=3) 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](/usc/20/1003.md?p=17)—
- (i) the student is employed at a [nonprofit](/usc/20/1003.md?p=13) 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](/usc/20/1088.md?p=a-2-A) are employed in positions for which the Federal share exceeds 75 percent; and
- (B) the Federal share may exceed 75 percent if the [Secretary](/usc/20/1003.md?p=17) determines, pursuant to regulations promulgated by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/4702.md?p=3)) to all eligible students in the institution in need thereof;
- (7) provide assurances that employment made available from [funds](/usc/20/4702.md?p=3) 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](/usc/20/1003.md?p=17) 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](/usc/20/5802.md?p=a-11); or
- (B) in community service in accordance with paragraph (2)(A) of this subsection;
- (9) provide assurances that employment made available from [funds](/usc/20/4702.md?p=3) under this part may be used to support programs for supportive services to students with [disabilities](/usc/20/1003.md?p=6);
- (10) provide assurances that the institution will inform all eligible students of the opportunity to perform community service, and will consult with local [nonprofit](/usc/20/1003.md?p=13), governmental, and community-based organizations to identify such opportunities; and
- (11) include such other reasonable provisions as the [Secretary](/usc/20/1003.md?p=17) 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)](#b) of this section, an [institution of higher education](/usc/20/1001.md?p=a) may, at its option, enter into an additional agreement with the [Secretary](/usc/20/1003.md?p=17) 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)](#b-1-A..b-1-D) of subsection (b)(1) of this section and [subsection (b)(3)](#b-3) of this section;
- (2) provide that the institution will use not more than 25 percent of the [funds](/usc/20/4702.md?p=3) made available to such institution under this part for any fiscal year for the operation of the program described in [paragraph (1)](#c-1);
- (3) provide that, notwithstanding [subsection (b)(5)](#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](/usc/20/1088.md?p=a-2-A) 1987–1988 and 1988–1989, 55 percent for [academic year](/usc/20/1088.md?p=a-2-A) 1989–1990, and 50 percent for [academic year](/usc/20/1088.md?p=a-2-A) 1990–1991 and succeeding [academic years](/usc/20/1088.md?p=a-2-A), 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](/usc/20/4702.md?p=3) 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](/usc/20/1088.md?p=a-2-A) to which [subsection (b)(2)(A)](#b-2-A) applies, an institution shall ensure that [funds](/usc/20/4702.md?p=3) 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](/usc/20/1003.md?p=9); 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](/usc/20/5802.md?p=a-11) 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 [[20 U.S.C. 6301](/usc/20/6301.md) et seq.]; and
- (B) ensure that any student compensated with the [funds](/usc/20/4702.md?p=3) described in [paragraph (1)](#d-1) who is employed in a [school](/usc/20/5802.md?p=a-11) participating in a reading reform project described in [subparagraph (A)](#d-2-A) receives training from the employing [school](/usc/20/5802.md?p=a-11) in the instructional practices used by the [school](/usc/20/5802.md?p=a-11).
- (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](/usc/20/4702.md?p=3) 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](/usc/20/5802.md?p=a-11);
- (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](/usc/20/4702.md?p=3) described in [paragraph (1)](#e-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.
# §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](/usc/20/4702.md?p=2), and books) furnished by such institution.
# §1087–55. Flexible use of funds
- (a) **Carry-over authority—**
- (1) Of the sums granted to an [eligible institution](/usc/20/1066a.md?p=1) 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](/usc/20/1003.md?p=17) for making grants under [section 1087–53 of this title](/usc/20/1087–53.md) to other institutions in the same [State](/usc/20/1003.md?p=21-A) until the close of the second fiscal year next succeeding the fiscal year for which such [funds](/usc/20/4702.md?p=3) were appropriated.
- (b) **Carry-back authority—**
- (1) Up to 10 percent of the sums the [Secretary](/usc/20/1003.md?p=17) determines an [eligible institution](/usc/20/1066a.md?p=1) may receive from [funds](/usc/20/4702.md?p=3) which have been appropriated for a fiscal year may be used by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1066a.md?p=1) may make payments to students of wages earned after the end of the [academic year](/usc/20/1088.md?p=a-2-A), 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](/usc/20/1066a.md?p=1) 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](/usc/20/1066a.md?p=1) 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](/usc/20/4702.md?p=2), 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](#d-2-B), an [eligible institution](/usc/20/1066a.md?p=1) located in any area affected by such [major disaster](#d-2-B), as determined by the [Secretary](/usc/20/1003.md?p=17), may make payments under this part to [disaster-affected students](#d-2-A), for the period of time (not to exceed one [academic year](/usc/20/1088.md?p=a-2-A)) in which the [disaster-affected students](#d-2-A) were prevented from fulfilling the students’ work-study obligations as described in [paragraph (2)(A)(iii)](#d-2-A-iii), as follows:
- (A) Payments may be made under this part to [disaster-affected students](#d-2-A) 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](/usc/20/4702.md?p=3).
- (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](/usc/20/4702.md?p=3) under this part prior to the occurrence of the [major disaster](#d-2-B).
- (C) Any payments made to [disaster-affected students](#d-2-A) under this subsection shall meet the matching requirements of [section 1087–53 of this title](/usc/20/1087–53.md), unless such matching requirements are waived by the [Secretary](/usc/20/1003.md?p=17).
- (2) **Definitions—** In this subsection:
- (A) The term “disaster-affected student” means a student enrolled at an [eligible institution](/usc/20/1066a.md?p=1) who—
- (i) received a work-study award under this section for the [academic year](/usc/20/1088.md?p=a-2-A) during which a [major disaster](#d-2-B) occurred;
- (ii) earned Federal work-study wages from such [eligible institution](/usc/20/1066a.md?p=1) for such [academic year](/usc/20/1088.md?p=a-2-A);
- (iii) was prevented from fulfilling the student’s work-study obligation for all or part of such [academic year](/usc/20/1088.md?p=a-2-A) due to such [major disaster](#d-2-B); and
- (iv) was unable to be reassigned to another work-study job.
- (B) The term “major disaster” has the meaning given such term in [section 5122(2) of title 42](/usc/42/5122.md?p=2).
# §1087–56. Job location and development programs
- (a) **Agreements required—**
- (1) The [Secretary](/usc/20/1003.md?p=17) is authorized to enter into agreements with [eligible institutions](/usc/20/1066a.md?p=1) under which such institution may use not more than 10 percent or $75,000 of its allotment under [section 1087–52 of this title](/usc/20/1087–52.md), whichever is less, to establish or expand a program under which such institution, separately or in combination with other [eligible institutions](/usc/20/1066a.md?p=1), locates and develops jobs, including community service jobs, for currently enrolled students.
- (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)](#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](/usc/20/4702.md?p=3) available under this section will not be used to locate or develop jobs at an [eligible institution](/usc/20/1066a.md?p=1);
- (3) provide satisfactory assurance that [funds](/usc/20/4702.md?p=3) 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](/usc/20/4702.md?p=3) 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](/usc/20/4702.md?p=3), and that if such [funds](/usc/20/4702.md?p=3) 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](/usc/20/1003.md?p=17) an annual report on the uses made of [funds](/usc/20/4702.md?p=3) provided under this section and an evaluation of the effectiveness of such program in benefiting the students of such institution.
# §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](/usc/20/4702.md?p=3) made available under [section 1096(a) of this title](/usc/20/1096.md?p=a) and attributable to the amount of the institution’s expenditures under this part to conduct that institution’s program of community [service-learning](/usc/20/1003.md?p=18), including—
- (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](/usc/20/1003.md?p=13) agencies, and programs assisted under the National and Community Service Act of 1990 [[42 U.S.C. 12501](/usc/42/12501.md) et seq.] in the planning, development, and administration of such programs.
- (b) **Off-campus community service—**
- (1) **Grants authorized—** In addition to [funds](/usc/20/4702.md?p=3) made available under [section 1087–53(b)(2)(A) of this title](/usc/20/1087–53.md?p=b-2-A), the [Secretary](/usc/20/1003.md?p=17) is authorized to award grants to institutions participating under this part to supplement off-campus community service employment.
- (2) **Use of funds—** An institution shall ensure that [funds](/usc/20/4702.md?p=3) granted to such institution under this subsection are used in accordance with [section 1087–53(b)(2)(A) of this title](/usc/20/1087–53.md?p=b-2-A) to recruit and compensate students (including compensation for time spent in training and for travel directly related to such community service).
- (3) **Priority—** In awarding grants under this subsection, the [Secretary](/usc/20/1003.md?p=17) 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.
# §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)](#f) of this section, [funds](/usc/20/4702.md?p=3) 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)](#f) of this section, and from the [funds](/usc/20/4702.md?p=3) available under [paragraph (1)](#b-1), [eligible institutions](/usc/20/1066a.md?p=1) may, following approval of an application under [subsection (c)](#c) of this section by the [Secretary](/usc/20/1003.md?p=17)—
- (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](/usc/20/1003.md?p=18) opportunities;
- (C) carry out activities described in section [1087–53](/usc/20/1087–53.md) or [1087–56](/usc/20/1087–56.md) of this title;
- (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](/usc/20/1066a.md?p=1) may submit an application for [funds](/usc/20/4702.md?p=3) authorized by [subsection (f)](#f) of this section to use [funds](/usc/20/4702.md?p=3) under [subsection (b)(1)](#b-1) of this section at such time and in such manner as the [Secretary](/usc/20/1003.md?p=17), by regulation, may reasonably require.
- (d) **Match required—** [Funds](/usc/20/4702.md?p=3) 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](/usc/20/1066a.md?p=1) that—
- (A) has been a public or private [nonprofit](/usc/20/1003.md?p=13), 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](/usc/20/5802.md?p=a-11), 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.
# §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](/usc/20/1021.md?p=16) of such students) in attendance at participating institutions of higher education selected by the [Secretary](/usc/20/1003.md?p=17), 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 [section 1087i–1 of this title](/usc/20/1087i–1.md). Loans made under this part shall be made by participating institutions, or consortia thereof, that have agreements with the [Secretary](/usc/20/1003.md?p=17) to originate loans, or by alternative originators designated by the [Secretary](/usc/20/1003.md?p=17) to make loans for students in attendance at participating institutions (and their [parents](/usc/20/1021.md?p=16)).
- (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 [section 1078 of this title](/usc/20/1078.md), shall be known as “Federal Direct Stafford/Ford Loans”.
- (c) **Maximum aid—** The maximum dollar amount of financial assistance provided under this part to a student shall not exceed the [cost of attendance](/usc/20/1087ll.md?p=a) for such student.
# §1087b. Funds for origination of direct student loans
- (a) **In general—** The [Secretary](/usc/20/1003.md?p=17) shall provide, on the basis of the need and the eligibility of students at each participating institution, and [parents](/usc/20/1021.md?p=16) of such students, for such loans, [funds](/usc/20/4702.md?p=3) for student and [parent](/usc/20/1021.md?p=16) loans under this part—
- (1) directly to an [institution of higher education](/usc/20/1001.md?p=a) that has an agreement with the [Secretary](/usc/20/1003.md?p=17) under [section 1087d(a) of this title](/usc/20/1087d.md?p=a) to participate in the direct student loan programs under this part and that also has an agreement with the [Secretary](/usc/20/1003.md?p=17) under [section 1087d(b) of this title](/usc/20/1087d.md?p=b) to originate loans under this part; or
- (2) through an alternative originator designated by the [Secretary](/usc/20/1003.md?p=17) to students (and [parents](/usc/20/1021.md?p=16) of students) attending institutions of higher education that have an agreement with the [Secretary](/usc/20/1003.md?p=17) under [section 1087d(a) of this title](/usc/20/1087d.md?p=a) but that do not have an agreement with the [Secretary](/usc/20/1003.md?p=17) under [section 1087d(b) of this title](/usc/20/1087d.md?p=b).
- (b) **No entitlement to participate or originate—** No [institution of higher education](/usc/20/1001.md?p=a) 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](/usc/20/1021.md?p=16) of such student) to borrow under this part.
- (c) **Delivery of loan funds—** Loan [funds](/usc/20/4702.md?p=3) shall be paid and delivered to an institution by the [Secretary](/usc/20/1003.md?p=17) prior to the beginning of the payment period established by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/4702.md?p=3) for students (and [parents](/usc/20/1021.md?p=16) 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](/usc/20/1003.md?p=17) to serve as the [agent](/usc/20/1094.md?p=i-1) of such institutions with respect to the receipt of the disbursements of such loan [funds](/usc/20/4702.md?p=3) and the transfer of such [funds](/usc/20/4702.md?p=3) to such institutions. To be eligible to receive [funds](/usc/20/4702.md?p=3) under this part, an institution outside the United States shall make arrangements with the [agent](/usc/20/1094.md?p=i-1) designated by the [Secretary](/usc/20/1003.md?p=17) under this subsection to receive [funds](/usc/20/4702.md?p=3) under this part.
# §1087c. Selection of institutions for participation and origination
- (a) **General authority—** The [Secretary](/usc/20/1003.md?p=17) shall enter into agreements pursuant to [section 1087d(a) of this title](/usc/20/1087d.md?p=a) with institutions of higher education to participate in the direct student loan program under this part, and agreements pursuant to [section 1087d(b) of this title](/usc/20/1087d.md?p=b) with institutions of higher education, or consortia thereof, to originate loans in such program, for [academic years](/usc/20/1088.md?p=a-2-A) beginning on or after July 1, 1994. Alternative origination services, through which an entity other than the participating institution at which the student is in attendance originates the loan, shall be provided by the [Secretary](/usc/20/1003.md?p=17), through 1 or more contracts under [section 1087f(b) of this title](/usc/20/1087f.md?p=b) or such other means as the [Secretary](/usc/20/1003.md?p=17) may provide, for students attending participating institutions that do not originate direct student loans under this part. Such agreements for the [academic year](/usc/20/1088.md?p=a-2-A) 1994–1995 shall, to the extent feasible, be entered into not later than January 1, 1994.
- (b) **Selection criteria—**
- (1) **Application—** Each [institution of higher education](/usc/20/1001.md?p=a) desiring to participate in the direct student loan program under this part shall submit an application satisfactory to the [Secretary](/usc/20/1003.md?p=17) containing such information and assurances as the [Secretary](/usc/20/1003.md?p=17) may require.
- (2) **Selection procedure—** The [Secretary](/usc/20/1003.md?p=17) shall select institutions for participation in the direct student loan program under this part, and shall enter into agreements with such institutions under [section 1087d(a) of this title](/usc/20/1087d.md?p=a), from among those institutions that submit the applications described in [paragraph (1)](#b-1), and meet such other eligibility requirements as the [Secretary](/usc/20/1003.md?p=17) shall prescribe.
- (c) **Selection criteria for origination—**
- (1) **In general—** The [Secretary](/usc/20/1003.md?p=17) 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)](#c-2).
- (2) **Selection criteria—** The [Secretary](/usc/20/1003.md?p=17) 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 section [1078(b)(1)(T)](/usc/20/1078.md?p=b-1-T), [1082(h)](/usc/20/1082.md?p=h), or [1094(c)](/usc/20/1094.md?p=c) of this title;
- (D) in the opinion of the [Secretary](/usc/20/1003.md?p=17), 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](/usc/20/1003.md?p=17) in the [Secretary](/usc/20/1003.md?p=17)’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](/usc/20/1003.md?p=17) may establish to protect the financial interest of the United States and to promote the purposes of this part.
- (d) **Eligible institutions—** The [Secretary](/usc/20/1003.md?p=17) may not select an [institution of higher education](/usc/20/1001.md?p=a) for participation under this section unless such institution is an [eligible institution](/usc/20/1066a.md?p=1) under [section 1085(a) of this title](/usc/20/1085.md?p=a).
- (e) **Consortia—** Subject to such requirements as the [Secretary](/usc/20/1003.md?p=17) may prescribe, [eligible institutions](/usc/20/1066a.md?p=1) of higher education (as determined under [subsection (d)](#d)) with agreements under [section 1087d(a) of this title](/usc/20/1087d.md?p=a) may apply to the [Secretary](/usc/20/1003.md?p=17) as consortia to originate loans under this part for students in attendance at such institutions. Each such institution shall be required to meet the requirements of [subsection (c)](#c) with respect to loan origination.
# §1087d. Agreements with institutions
- (a) **Participation agreements—** An agreement with any [institution of higher education](/usc/20/1001.md?p=a) 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 [section 1091 of this title](/usc/20/1091.md);
- (B) estimate the need of each such student as required by part F of this subchapter for an [academic year](/usc/20/1088.md?p=a-2-A), except that, any loan obtained by a student under this part with the same terms as loans made under [section 1078–8 of this title](/usc/20/1078–8.md) (except as otherwise provided in this part), or a loan obtained by a [parent](/usc/20/1021.md?p=16) under this part with the same terms as loans made under [section 1078–2 of this title](/usc/20/1078–2.md) (except as otherwise provided in this part), or obtained under any [State](/usc/20/1003.md?p=21-A)-sponsored or private loan program, may be used to offset the student aid index of the student for that year;
- (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](/usc/20/1003.md?p=17), 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 [section 1078–7 of this title](/usc/20/1078–7.md); and
- (E) provide timely and accurate information—
- (i) concerning the status of student borrowers (and students on whose behalf [parents](/usc/20/1021.md?p=16) 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](/usc/20/1021.md?p=16)) after such borrowers leave the institution, to the [Secretary](/usc/20/1003.md?p=17) for the servicing and collecting of loans made under this part; and
- (ii) if the institution does not have an agreement with the [Secretary](/usc/20/1003.md?p=17) under [subsection (b)](#b), concerning student eligibility and need, as determined under subparagraphs [(A)](#a-1-A) and [(B)](#a-1-B), to the [Secretary](/usc/20/1003.md?p=17) as needed for the alternative origination of loans to eligible students and [parents](/usc/20/1021.md?p=16) in accordance with this part;
- (2) provide assurances that the institution will comply with requirements established by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/1021.md?p=16) borrowers for origination activities or the provision of any information necessary for a student or [parent](/usc/20/1021.md?p=16) to receive a loan under this part, or any benefits associated with such loan;
- (6) provide assurances that, beginning July 1, 2026, the institution will comply with all requirements of [subsection (c)](#c); and
- (7) include such other provisions as the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1001.md?p=a), or consortia thereof, for the origination of loans under this part shall—
- (1) supplement the agreement entered into in accordance with [subsection (a)](#a);
- (2) include provisions established by the [Secretary](/usc/20/1003.md?p=17) that are similar to the participation agreement provisions described in paragraphs [(1)(E)(ii)](#a-1-E-ii), [(2)](#a-2), [(3)](#a-3), [(4)](#a-4), [(5)](#a-5), [(6)](#a-6), and [(7)](#a-7) 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](/usc/20/1021.md?p=16) 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](/usc/20/1003.md?p=17).
- (c) **Ineligibility for certain programs based on low earning outcomes—**
- (1) **In general—** Notwithstanding [section 1088(b) of this title](/usc/20/1088.md?p=b), an [institution of higher education](/usc/20/1001.md?p=a) subject to this subsection shall not use [funds](/usc/20/4702.md?p=3) under this part for student enrollment in an educational program offered by the institution that is described in [paragraph (2)](#c-2).
- (2) **Low-earning outcome programs described—** An educational program at an institution is described in this paragraph if the program awards an undergraduate degree, graduate or professional degree, or graduate certificate, for which the median earnings (as determined by the [Secretary](/usc/20/1003.md?p=17)) of the programmatic cohort of students who received [funds](/usc/20/4702.md?p=3) under this subchapter for enrollment in such program, who completed such program during the [academic year](/usc/20/1088.md?p=a-2-A) that is 4 years before the year of the determination, who are not enrolled in any [institution of higher education](/usc/20/1001.md?p=a), and who are working, are, for not less than 2 of the 3 years immediately preceding the date of the determination, less than the median earnings of a working adult described in [paragraph (3)](#c-3) for the corresponding year.
- (3) **Calculation of median earnings—**
- (A) **Working adult—** For purposes of applying [paragraph (2)](#c-2) to an educational program at an institution, a working adult described in this paragraph is a working adult who, for the corresponding year—
- (i) is aged 25 to 34;
- (ii) is not enrolled in an [institution of higher education](/usc/20/1001.md?p=a); and
- (iii)
- (I) in the case of a determination made for an educational program that awards a baccalaureate or lesser degree, has only a [high school](/usc/20/2302.md?p=25) diploma or its recognized equivalent; or
- (II) in the case of a determination made for a graduate or professional program, has only a baccalaureate degree.
- (B) **Source of data—** For purposes of applying [paragraph (2)](#c-2) to an educational program at an institution, the median earnings of a working adult, as described in [subparagraph (A)](#c-3-A), shall be based on data from the Bureau of the Census—
- (i) with respect to an educational program that awards a baccalaureate or lesser degree—
- (I) for the [State](/usc/20/1003.md?p=21-A) in which the institution is located; or
- (II) if fewer than 50 percent of the students enrolled in the institution reside in the [State](/usc/20/1003.md?p=21-A) where the institution is located, for the entire United States; and
- (ii) with respect to an educational program that is a graduate or professional program—
- (I) for the lowest median earnings of—
- (aa) a working adult in the [State](/usc/20/1003.md?p=21-A) in which the institution is located;
- (bb) a working adult in the same field of study (as determined by the [Secretary](/usc/20/1003.md?p=17), such as by using the 2-digit CIP code) in the [State](/usc/20/1003.md?p=21-A) in which the institution is located; and
- (cc) a working adult in the same field of study (as so determined) in the entire United States; or
- (II) if fewer than 50 percent of the students enrolled in the institution reside in the [State](/usc/20/1003.md?p=21-A) where the institution is located, for the lower median earnings of—
- (aa) a working adult in the entire United States; or
- (bb) a working adult in the same field of study (as so determined) in the entire United States.
- (4) **Small programmatic cohorts—** For any year for which the programmatic cohort described in [paragraph (2)](#c-2) for an educational program of an institution is fewer than 30 individuals, the [Secretary](/usc/20/1003.md?p=17) shall—
- (A) first, aggregate additional years of programmatic data in order to achieve a cohort of at least 30 individuals; and
- (B) second, in cases in which the cohort (including the individuals added under [subparagraph (A)](#c-4-A)) is still fewer than 30 individuals, aggregate additional cohort years of programmatic data for educational programs of equivalent length in order to achieve a cohort of at least 30 individuals.
- (5) **Appeals process—** An educational program shall not lose eligibility under this subsection unless the institution has had the opportunity to appeal the programmatic median earnings of students working and not enrolled determination under [paragraph (2)](#c-2), through a process established by the [Secretary](/usc/20/1003.md?p=17). During such appeal, the [Secretary](/usc/20/1003.md?p=17) may permit the educational program to continue to participate in the program under this part.
- (6) **Notice to students—**
- (A) **In general—** If an educational program of an [institution of higher education](/usc/20/1001.md?p=a) subject to this subsection does not meet the cohort median earning requirements, as described in [paragraph (2)](#c-2), for one year during the applicable [covered period](#c-6-B) but has not yet failed to meet such requirements for 2 years during such [covered period](#c-6-B), the institution shall promptly inform each student enrolled in the educational program of the [eligible program](/usc/20/1088.md?p=b-1)’s low cohort median earnings and that the educational program is at risk of losing its eligibility for [funds](/usc/20/4702.md?p=3) under this part.
- (B) **Covered period—** In this paragraph, the term “covered period” means the period of the 3 years immediately preceding the date of a determination made under [paragraph (2)](#c-2).
- (7) **Regaining programmatic eligibility—** The [Secretary](/usc/20/1003.md?p=17) shall establish a process by which an [institution of higher education](/usc/20/1001.md?p=a) that has an educational program that has lost eligibility under this subsection may, after a period of not less than 2 years of such program’s ineligibility, apply to regain such eligibility, subject to the requirements established by the [Secretary](/usc/20/1003.md?p=17) that further the purpose of this subsection.
- (d) **Withdrawal and termination procedures—** The [Secretary](/usc/20/1003.md?p=17) shall establish procedures by which institutions or consortia may withdraw or be terminated from the program under this part.
# §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 sections [1078](/usc/20/1078.md), [1078–2](/usc/20/1078–2.md), [1078–3](/usc/20/1078–3.md), and [1078–8](/usc/20/1078–8.md) of this title.
- (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) [section 1078 of this title](/usc/20/1078.md) shall be known as “Federal Direct Stafford Loans”;
- (B) [section 1078–2 of this title](/usc/20/1078–2.md) shall be known as “Federal Direct PLUS Loans”;
- (C) [section 1078–3 of this title](/usc/20/1078–3.md) shall be known as “Federal Direct Consolidation Loans”; and
- (D) [section 1078–8 of this title](/usc/20/1078–8.md) shall be known as “Federal Direct Unsubsidized Stafford Loans”.
- (3) **Termination of authority to make interest subsidized loans and Federal Direct PLUS loans to graduate and professional students—**
- (A) **Termination of authority to make interest subsidized loans to graduate and professional students—** Subject to [subparagraph (B)](#a-3-B), and notwithstanding any provision of this part or part B—
- (i) for any period of instruction beginning on or after July 1, 2012, a graduate or professional student shall not be eligible to receive a Federal Direct Stafford loan under this part; and
- (ii) for any period of instruction beginning on July 1, 2012, and ending on June 30, 2026, the maximum annual amount of Federal Direct Unsubsidized Stafford loans such a student may borrow in any [academic year](/usc/20/1088.md?p=a-2-A) (as defined in [section 1088(a)(2) of this title](/usc/20/1088.md?p=a-2)) or its equivalent shall be the maximum annual amount for such student determined under [section 1078–8 of this title](/usc/20/1078–8.md), plus an amount equal to the amount of Federal Direct Stafford loans the student would have received in the absence of this subparagraph.
- (B) **Exception—** [Subparagraph (A)](#a-3-A) shall not apply to an individual enrolled in course work specified in paragraph (3)(B) or (4)(B) of [section 1091(b) of this title](/usc/20/1091.md?p=b).
- (C) **Termination of authority to make Federal Direct PLUS loans to graduate and professional students—** Subject to [paragraph (8)](#a-8) and notwithstanding any provision of this part or part B, for any period of instruction beginning on or after July 1, 2026, a graduate or professional student shall not be eligible to receive a Federal Direct PLUS Loan under this part.
- (4) **Graduate and professional annual and aggregate limits for Federal Direct Unsubsidized Stafford loans beginning July 1, 2026—**
- (A) **Annual limits beginning July 1, 2026—** Subject to paragraphs [(7)(A)](#a-7-A) and [(8)](#a-8), beginning on July 1, 2026, the maximum annual amount of Federal Direct Unsubsidized Stafford loans—
- (i) a [graduate student](#a-4-C-i), who is not a [professional student](#a-4-C-ii), may borrow in any [academic year](/usc/20/1088.md?p=a-2-A) or its equivalent shall be $20,500; and
- (ii) a [professional student](#a-4-C-ii) may borrow in any [academic year](/usc/20/1088.md?p=a-2-A) or its equivalent shall be $50,000.
- (B) **Aggregate limits—** Subject to paragraphs [(6)](#a-6), [(7)(A)](#a-7-A), and [(8)](#a-8), beginning on July 1, 2026, the maximum aggregate amount of Federal Direct Unsubsidized Stafford loans, in addition to the amount borrowed for undergraduate education, that—
- (i) a [graduate student](#a-4-C-i)—
- (I) who is not (and has not been) a [professional student](#a-4-C-ii), may borrow for programs of study described in [subparagraph (C)(i)](#a-4-C-i) shall be $100,000; or
- (II) who is (or has been) a [professional student](#a-4-C-ii), may borrow for programs of study described in [subparagraph (C)(i)](#a-4-C-i) shall be an amount equal to—
- (aa) $200,000; minus
- (bb) the amount such student borrowed for programs of study described in [subparagraph (C)(ii)](#a-4-C-ii); and
- (ii) a [professional student](#a-4-C-ii)—
- (I) who is not (and has not been) a [graduate student](#a-4-C-i), may borrow for programs of study described in [subparagraph (C)(ii)](#a-4-C-ii) shall be $200,000; or
- (II) who is (or has been) a [graduate student](#a-4-C-i), may borrow for programs of study described in [subparagraph (C)(ii)](#a-4-C-ii) shall be an amount equal to—
- (aa) $200,000; minus
- (bb) the amount such student borrowed for programs of study described in [subparagraph (C)(i)](#a-4-C-i).
- (C) **Definitions—**
- (i) **Graduate student—** The term “graduate student” means a student enrolled in a program of study that awards a graduate credential (other than a professional degree) upon completion of the program.
- (ii) **Professional student—** In this paragraph, the term “professional student” means a student enrolled in a program of study that awards a professional degree, as defined under [section 668.2 of title 34, Code of Federal Regulations](/cfr/34/668.2.md) (as in effect on July 4, 2025), upon completion of the program.
- (5) **Parent borrower annual and aggregate limits for Federal Direct PLUS loans beginning July 1, 2026—**
- (A) **Annual limits—** Subject to [paragraph (8)](#a-8) and notwithstanding any provision of this part or part B, beginning on July 1, 2026, for each dependent student, the total maximum annual amount of Federal Direct PLUS loans that may be borrowed on behalf of that dependent student by all [parents](/usc/20/1021.md?p=16) of that dependent student shall be $20,000.
- (B) **Aggregate limits—** Subject to [paragraph (8)](#a-8) and notwithstanding any provision of this part or part B, beginning on July 1, 2026, for each dependent student, the total maximum aggregate amount of Federal Direct PLUS loans that may be borrowed on behalf of that dependent student by all [parents](/usc/20/1021.md?p=16) of that dependent student shall be $65,000, without regard to any amounts repaid, forgiven, canceled, or otherwise discharged on any such loan.
- (6) **Lifetime maximum aggregate amount for all students—** Subject to [paragraph (8)](#a-8) and notwithstanding any provision of this part or part B, beginning on July 1, 2026, the maximum aggregate amount of loans made, insured, or guaranteed under this subchapter that a student may borrow (other than a Federal Direct PLUS loan, or loan under [section 1078–2 of this title](/usc/20/1078–2.md), made to the student as a [parent](/usc/20/1021.md?p=16) borrower on behalf of a dependent student) shall be $257,500, without regard to any amounts repaid, forgiven, canceled, or otherwise discharged on any such loan.
- (7) **Additional rules regarding annual loan limits—**
- (A) **Less than full-time enrollment—** Notwithstanding any provision of this part or part B, in any case in which a student is enrolled in a program of study of an [institution of higher education](/usc/20/1001.md?p=a) on less than a full-time basis during any [academic year](/usc/20/1088.md?p=a-2-A), the amount of a loan that student may borrow for an [academic year](/usc/20/1088.md?p=a-2-A) or its equivalent 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](/usc/20/1003.md?p=17) computed for purposes of this subparagraph.
- (B) **Institutionally determined limits—** Notwithstanding the annual loan limits established under this section and, for undergraduate students, under this part and part B, beginning on July 1, 2026, an [institution of higher education](/usc/20/1001.md?p=a) (at the discretion of a financial aid administrator at the institution) may limit the total amount of loans made under this part for a program of study for an [academic year](/usc/20/1088.md?p=a-2-A) that a student may borrow, and that a [parent](/usc/20/1021.md?p=16) may borrow on behalf of such student, as long as any such limit is applied consistently to all students enrolled in such program of study.
- (8) **Interim exception for certain students—**
- (A) **Application of prior limits—** Paragraphs [(3)(C)](#a-3-C), [(4)](#a-4), [(5)](#a-5), and [(6)](#a-6) shall not apply, and [paragraph (3)(A)(ii)](#a-3-A-ii) shall apply as such paragraph was in effect for periods of instruction ending before June 30, 2026, during the expected time to credential described in [subparagraph (B)](#a-8-B), with respect to an individual who, as of June 30, 2026—
- (i) is enrolled in a program of study at an [institution of higher education](/usc/20/1001.md?p=a); and
- (ii) has received a loan (or on whose behalf a loan was made) under this part for such program of study.
- (B) **Expected time to credential—** For purposes of this paragraph, the expected time to credential of an individual shall be equal to the lesser of—
- (i) three [academic years](/usc/20/1088.md?p=a-2-A); or
- (ii) the period determined by calculating the difference between—
- (I) the [program length](#a-8-C) for the program of study in which the individual is enrolled; and
- (II) the period of such program of study that such individual has completed as of the date of the determination under this subparagraph.
- (C) **Definition of program length—** In this paragraph, the term “program length” means the minimum amount of time in weeks, months, or years that is specified in the catalog, marketing materials, or other official publications of an [institution of higher education](/usc/20/1001.md?p=a) for a full-time student to complete the requirements for a specific program of study.
- (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)](#b-1), but subject to [paragraph (3)](#b-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 section [1078(b)(1)(M)](/usc/20/1078.md?p=b-1-M) or [1077(a)(2)(C)](/usc/20/1077.md?p=a-2-C) of this title,
shall not exceed the rate determined under [subparagraph (B)](#b-2-B).
- (B) For the purpose of [subparagraph (A)](#b-2-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)](#b-1) and [(2)](#b-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](/usc/20/1003.md?p=17); 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](/usc/20/4702.md?p=2) 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](/usc/20/1003.md?p=17); 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 section [1078(b)(1)(M)](/usc/20/1078.md?p=b-1-M) or [1077(a)(2)(C)](/usc/20/1077.md?p=a-2-C) of this title,
shall be determined under [subparagraph (A)](#b-5-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)](#b-5-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 section [1078(b)(1)(M)](/usc/20/1078.md?p=b-1-M) or [1077(a)(2)(C)](/usc/20/1077.md?p=a-2-C) of this title,
shall be determined under [subparagraph (A)](#b-6-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)](#b-6-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](/usc/20/1003.md?p=17) shall determine the applicable rate of interest under this paragraph after consultation with the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) determines appropriate to encourage on-time repayment of the loan. Such reductions may be offered only if the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/4702.md?p=3) available for the William D. Ford Federal Direct Loan Program in that fiscal year from [section 1087h of this title](/usc/20/1087h.md) and other administrative accounts.
- (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](/usc/20/1003.md?p=17) shall ensure the cost neutrality of such reductions. The [Secretary](/usc/20/1003.md?p=17) shall not prescribe such regulations in final form unless an official report from the [Director](/usc/20/9101.md?p=3) of the Office of Management and Budget to the [Secretary](/usc/20/1003.md?p=17) and a comparable report from the [Director](/usc/20/9101.md?p=3) 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](/usc/20/1003.md?p=1) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) shall determine the applicable rates of interest under this subsection after consultation with the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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)](#c-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](/usc/20/1003.md?p=17), the [Secretary](/usc/20/1003.md?p=17) shall offer a borrower of a loan made under this part before July 1, 2026, who has not received a loan made under this part on or after July 1, 2026, 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)](#a-1) of this section and with [section 1078(b)(9)(A)(i) of this title](/usc/20/1078.md?p=b-9-A-i);
- (B) a graduated repayment plan, consistent with [section 1078(b)(9)(A)(ii) of this title](/usc/20/1078.md?p=b-9-A-ii);
- (C) an extended repayment plan, consistent with [section 1078(b)(9)(A)(iv) of this title](/usc/20/1078.md?p=b-9-A-iv), except that the borrower shall annually repay a minimum amount determined by the [Secretary](/usc/20/1003.md?p=17) in accordance with [section 1078(b)(1)(L) of this title](/usc/20/1078.md?p=b-1-L);
- (D) before June 30, 2028, 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](/usc/20/1003.md?p=17), 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;
- (E) beginning on July 1, 2009, an income-based repayment plan in accordance with [section 1098e of this title](/usc/20/1098e.md), 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 or an excepted Consolidation Loan (as defined in [section 1098e(a)(2) of this title](/usc/20/1098e.md?p=a-2)); and
- (F) beginning on July 1, 2026, the income-based Repayment Assistance Plan under [subsection (q)](#q), provided that—
- (i) such Plan shall not be available for the repayment of excepted loans (as defined in [paragraph (7)(E)](#d-7-E)); and
- (ii) the borrower is required to pay each outstanding loan of the borrower made under this part under such Repayment Assistance Plan, except that a borrower of an excepted loan (as defined in [paragraph (7)(E)](#d-7-E)) may repay the excepted loan separately from other loans under this part obtained by the borrower.
- (2) **Selection by Secretary—** If a borrower of a loan made under this part does not select a repayment plan described in [paragraph (1)](#d-1), the [Secretary](/usc/20/1003.md?p=17) may provide the borrower with a repayment plan described in subparagraph [(A)](#d-1-A), [(B)](#d-1-B), or [(C)](#d-1-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)](#d-1), or the [Secretary](/usc/20/1003.md?p=17)’s selection of a plan for the borrower under [paragraph (2)](#d-2), as the case may be, under such terms and conditions as may be established by the [Secretary](/usc/20/1003.md?p=17).
- (4) **Alternative repayment plans—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) that the terms and conditions of the repayment plans available under [paragraph (1)](#d-1) are not adequate to accommodate the borrower’s exceptional circumstances. In designing such alternative repayment plans, the [Secretary](/usc/20/1003.md?p=17) 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)](#d-1).
- (5) **Repayment after default—** The [Secretary](/usc/20/1003.md?p=17) 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-based repayment plan under [subsection (q)](#q) or [section 1098e of this title](/usc/20/1098e.md), as applicable.
- (6) **Termination and limitation of repayment authority—**
- (A) **Sunset of repayment plans available before July 1, 2026—** [Paragraphs (1) through (4)](#1..4) of this subsection shall only apply to loans made under this part before July 1, 2026.
- (B) **Prohibitions—** The [Secretary](/usc/20/1003.md?p=17) may not, for any loan made under this part on or after July 1, 2026—
- (i) authorize a borrower of such a loan to repay such loan pursuant to a repayment plan that is not described in [paragraph (7)(A)](#d-7-A); or
- (ii) carry out or modify a repayment plan that is not described in such paragraph.
- (7) **Repayment plans for loans made on or after July 1, 2026—**
- (A) **Design and selection—** Beginning on July 1, 2026, the [Secretary](/usc/20/1003.md?p=17) shall offer a borrower of a loan made under this part on or after such date (including such a borrower who also has a loan made under this part before such date) two plans for repayment of the borrower’s loans under this part, including principal and interest on such loans. The borrower shall be entitled to accelerate, without penalty, repayment on such loans. The borrower may choose—
- (i) a standard repayment plan—
- (I) with a fixed monthly repayment amount paid over a fixed period of time equal to the applicable period determined under [subclause (II)](#d-7-A-i-II); and
- (II) with the applicable period of time for repayment determined based on the total outstanding principal of all loans of the borrower made under this part before, on, or after July 1, 2026, at the time the borrower is entering repayment under such plan, as follows—
- (aa) for a borrower with total outstanding principal of less than $25,000, a period of 10 years;
- (bb) for a borrower with total outstanding principal of not less than $25,000 and less than $50,000, a period of 15 years;
- (cc) for a borrower with total outstanding principal of not less than $50,000 and less than $100,000, a period of 20 years; and
- (dd) for a borrower with total outstanding principal of $100,000 or more, a period of 25 years; or
- (ii) the income-based Repayment Assistance Plan under [subsection (q)](#q).
- (B) **Selection by Secretary—** If a borrower of a loan made under this part on or after July 1, 2026, does not select a repayment plan described in [subparagraph (A)](#d-7-A), the [Secretary](/usc/20/1003.md?p=17) shall provide the borrower with the standard repayment plan described in [subparagraph (A)(i)](#d-7-A-i).
- (C) **Selection applies to all outstanding loans—** A borrower is required to pay each outstanding loan of the borrower made under this part under the same selected repayment plan, except that a borrower who selects the Repayment Assistance Plan and also has an [excepted loan](#d-7-E-ii) that is not eligible for repayment under such Repayment Assistance Plan shall repay the [excepted loan](#d-7-E-ii) separately from other loans under this part obtained by the borrower.
- (D) **Changes of repayment plan—** A borrower may change the borrower’s selection of—
- (i) the standard repayment plan under [subparagraph (A)(i)](#d-7-A-i), or the [Secretary](/usc/20/1003.md?p=17)’s selection of such plan for the borrower under [subparagraph (B)](#d-7-B), as the case may be, to the Repayment Assistance Plan under [subparagraph (A)(ii)](#d-7-A-ii) at any time; and
- (ii) the Repayment Assistance Plan under [subparagraph (A)(ii)](#d-7-A-ii) to the standard repayment plan under [subparagraph (A)(i)](#d-7-A-i) at any time.
- (E) **Repayment for borrowers with excepted loans made on or after July 1, 2026—**
- (i) **Standard repayment plan required—** Notwithstanding [subparagraphs (A) through (D)](#d-7-A..d-7-D), beginning on July 1, 2026, the [Secretary](/usc/20/1003.md?p=17) shall require a borrower who has received an [excepted loan](#d-7-E-ii) made on or after such date (including such a borrower who also has an [excepted loan](#d-7-E-ii) made before such date) to repay each [excepted loan](#d-7-E-ii), including principal and interest on those [excepted loans](#d-7-E-ii), under the standard repayment plan under [subparagraph (A)(i)](#d-7-A-i). The borrower shall be entitled to accelerate, without penalty, repayment on such loans.
- (ii) **Excepted loan defined—** For the purposes of this paragraph, the term “excepted loan” means a loan with an outstanding balance that is—
- (I) a Federal Direct PLUS Loan that is made on behalf of a dependent student; or
- (II) a Federal Direct Consolidation Loan, if the proceeds of such loan were used to discharge the liability on—
- (aa) an [excepted PLUS loan](/usc/20/1098e.md?p=a-1), as defined in [section 1098e(a)(1) of this title](/usc/20/1098e.md?p=a-1); or
- (bb) an excepted consolidation loan (as such term is defined in [section 1098e(a)(2)(A) of this title](/usc/20/1098e.md?p=a-2-A), notwithstanding [subparagraph (B)](/usc/20/1098e.md) of such section).
- (e) **Income contingent repayment—**
- (1) **Information and procedures—** The [Secretary](/usc/20/1003.md?p=17) 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 [section 6103 of title 26](/usc/26/6103.md)) may be obtained under the preceding sentence only to the extent authorized by [section 6103(l)(13)](/usc/26/6103.md?p=l-13) of title 26. The [Secretary](/usc/20/1003.md?p=17) shall establish procedures for determining the borrower’s repayment obligation on that loan for such year, and such other procedures as are necessary to implement effectively income contingent repayment.
- (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 [section 62 of title 26](/usc/26/62.md)) of the borrower or, if the borrower is married and files a Federal income tax return jointly with the borrower’s spouse, on the adjusted gross income of the borrower and the borrower’s spouse.
- (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](/usc/20/1003.md?p=17) other documentation of income satisfactory to the [Secretary](/usc/20/1003.md?p=17), which documentation the [Secretary](/usc/20/1003.md?p=17) may use to determine an appropriate repayment schedule.
- (4) **Repayment schedules—** Income contingent repayment schedules shall be established by regulations promulgated by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17).
- (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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17), who shall determine whether such adjustment is appropriate, in accordance with criteria established by the [Secretary](/usc/20/1003.md?p=17).
- (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](/usc/20/1003.md?p=17) 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 [section 1085(o)](/usc/20/1085.md?p=o) of this title;
- (ii) makes monthly payments under paragraph (1) or (6) of [section 1098e(b) of this title](/usc/20/1098e.md?p=b);
- (iii) makes monthly payments of not less than the monthly amount calculated under [section 1078(b)(9)(A)(i) of this title](/usc/20/1078.md?p=b-9-A-i) or [subsection (d)(1)(A)](#d-1-A), based on a 10-year repayment period, when the borrower first made the election described in [section 1098e(b)(1) of this title](/usc/20/1098e.md?p=b-1);
- (iv) makes payments of not less than the payments required under a standard repayment plan under [section 1078(b)(9)(A)(i) of this title](/usc/20/1078.md?p=b-9-A-i) or [subsection (d)(1)(A)](#d-1-A) with a repayment period of 10 years; or
- (v) makes payments under an income contingent repayment plan under [subsection (d)(1)(D)](#d-1-D).
- (8) **Automatic recertification—**
- (A) **In general—** The [Secretary](/usc/20/1003.md?p=17) shall establish and implement, with respect to any borrower described in [subparagraph (B)](#e-8-B), procedures to—
- (i) use return information disclosed under [section 6103(l)(13)](/usc/26/6103.md?p=l-13) of title 26, pursuant to approval provided under [section 1098h of this title](/usc/20/1098h.md), to determine the repayment obligation of the borrower without further action by the borrower;
- (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](/usc/20/1003.md?p=17) 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)](#e-8-A) shall apply to each borrower of a loan made under this part who, on or after the date on which the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1070a.md?p=a-2-B) under such plan.
- (f) **Deferment; Forbearance—**
- (1) **Effect on principal and interest—** A [borrower](#f-5) of a loan made under this part who meets the requirements described in [paragraph (2)](#f-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](#f-5) received an interest subsidy under [section 1078 of this title](/usc/20/1078.md); or
- (B) shall accrue and be capitalized or paid by the [borrower](#f-5), 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)](#f-1-A-ii).
- (2) **Eligibility—** A [borrower](#f-5) of a loan made under this part shall be eligible for a deferment during any period—
- (A) during which the [borrower](#f-5)—
- (i) is carrying at least one-half the normal full-time work load for the course of study that the [borrower](#f-5) is pursuing, as determined by the [eligible institution](/usc/20/1066a.md?p=1) (as such term is defined in [section 1085(a) of this title](/usc/20/1085.md?p=a)) the [borrower](#f-5) is attending; or
- (ii) is pursuing a course of study pursuant to a graduate fellowship program approved by the [Secretary](/usc/20/1003.md?p=17), or pursuant to a rehabilitation training program for individuals with [disabilities](/usc/20/1003.md?p=6) approved by the [Secretary](/usc/20/1003.md?p=17),
except that no [borrower](#f-5) 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) subject to [paragraph (7)](#f-7), not in excess of 3 years during which the [borrower](#f-5) is seeking and unable to find full-time employment;
- (C) during which the [borrower](#f-5)—
- (i) is [serving on active duty during a war or other military operation or national emergency](/usc/20/1088.md?p=d-4); or
- (ii) is performing [qualifying National Guard duty during a war or other military operation or national emergency](/usc/20/1088.md?p=d-5),
and for the 180-day period following the demobilization date for the service described in clause [(i)](#f-2-C-i) or [(ii)](#f-2-C-ii); or
- (D) subject to [paragraph (7)](#f-7), not in excess of 3 years during which the [Secretary](/usc/20/1003.md?p=17) determines, in accordance with regulations prescribed under [section 1085(o)](/usc/20/1085.md?p=o) of this title, that the [borrower](#f-5) has experienced or will experience an economic hardship.
- (3) **Deferment for borrowers receiving cancer treatment—**
- (A) **Effect on principal and interest—** A [borrower](#f-5) of a loan made under this part who meets the requirements of [subparagraph (B)](#f-3-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](#f-5) of a loan made under this part shall be eligible for a deferment during—
- (i) any period in which such [borrower](#f-5) 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](#f-5) of a loan made under this part who meets the requirements of [subparagraph (B)](#f-4-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](#f-5) received an interest subsidy under [section 1078 of this title](/usc/20/1078.md); or
- (ii) shall accrue and be capitalized or paid by the [borrower](#f-5), 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)](#f-4-A-i-II).
- (B) **Eligibility—** A [borrower](#f-5) of a loan made under this part shall be eligible for a deferment under [subparagraph (A)](#f-4-A) if the [borrower](#f-5)—
- (i) is the spouse of a member of the Armed Forces serving on [active duty](/usc/20/1088.md?p=d-1); 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](#f-5) may establish eligibility for a deferment under [subparagraph (A)](#f-4-A) by providing to the [Secretary](/usc/20/1003.md?p=17)—
- (I) the documentation described in [clause (ii)](#f-4-C-ii); or
- (II) such other documentation as the [Secretary](/usc/20/1003.md?p=17) determines appropriate.
- (ii) **Documentation—** The documentation described in this clause is—
- (I) evidence that the [borrower](#f-5) is the spouse of a member of the Armed Forces serving on [active duty](/usc/20/1088.md?p=d-1);
- (II) evidence that a military permanent change of station order was issued to such member; and
- (III)
- (aa) evidence that the [borrower](#f-5) 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](/usc/20/1003.md?p=17), that the [borrower](#f-5) 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](/usc/20/1003.md?p=12) 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](#f-5) 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 [section 1077(a)(2)(C) of this title](/usc/20/1077.md?p=a-2-C) or [section 1078(b)(1)(M) of this title](/usc/20/1078.md?p=b-1-M) as such sections were in effect on July 22, 1992.
- (7) **Sunset of unemployment and economic hardship deferments—** A [borrower](#f-5) who receives a loan made under this part on or after July 1, 2027, shall not be eligible to defer such loan under subparagraph [(B)](#f-2-B) or [(D)](#f-2-D) of paragraph (2).
- (8) **Forbearance on loans made under this part on or after July 1, 2027—** A [borrower](#f-5) who receives a loan made under this part on or after July 1, 2027, may only be eligible for a forbearance on such loan pursuant to [section 1078(c)(3)(B) of this title](/usc/20/1078.md?p=c-3-B) that does not exceed 9 months during any 24-month period.
- (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 [section 1078–3(a)(4) of this title](/usc/20/1078–3.md?p=a-4), including any loan made under part B and first disbursed before July 1, 2010. To be eligible for a consolidation loan under this part, a borrower shall meet the eligibility criteria set forth in [section 1078–3(a)(3) of this title](/usc/20/1078–3.md?p=a-3).
- (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 [section 1078–3(a)(3) of this title](/usc/20/1078–3.md?p=a-3) (as such subparagraph was in effect on June 30, 2006), may apply to the [Secretary](/usc/20/1003.md?p=17), in accordance with subparagraph (C) of this paragraph, for each individual borrower in the married couple (or previously married couple) to receive a separate Federal Direct Consolidation Loan under this part.
- (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 [section 1078–3(a)(3)(A) of this title](/usc/20/1078–3.md?p=a-3-A) or any other provision of law, for each individual borrower who applies under [subparagraph (A)](#g-2-A), the [Secretary](/usc/20/1003.md?p=17) shall—
- (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)](#g-2-C-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)](#g-2-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)](#g-2-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)](#g-2-A), in a case in which—
- (I) the individual borrower certifies to the [Secretary](/usc/20/1003.md?p=17) that such borrower—
- (aa) has experienced an act of domestic violence (as defined in [section 12291 of title 34](/usc/34/12291.md) from the other individual borrower;
- (bb) has experienced economic abuse (as defined in [section 12291 of title 34](/usc/34/12291.md) from the other individual borrower; or
- (cc) is unable to reasonably reach or access the loan information of the other individual borrower; or
- (II) the [Secretary](/usc/20/1003.md?p=17) determines that authorizing each individual borrower to apply separately under [subparagraph (A)](#g-2-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)](#g-2-C-ii), the other non-applying individual borrower shall become solely liable for the remaining balance of the joint consolidation loan.
- (3) **Consolidation loans made on or after July 1, 2026—** A Federal Direct Consolidation Loan offered to a borrower under this part on or after July 1, 2026, may only be repaid pursuant to a repayment plan described in clause [(i)](#d-7-A-i) or [(ii)](#d-7-A-ii) of subsection (d)(7)(A) of this section, as applicable, and the repayment schedule of such a Consolidation Loan shall be determined in accordance with such repayment plan.
- (h) **Borrower defenses—** Notwithstanding any other provision of [State](/usc/20/1003.md?p=21-A) or Federal law, the [Secretary](/usc/20/1003.md?p=17) shall specify in regulations which acts or omissions of an [institution of higher education](/usc/20/1001.md?p=a) 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](/usc/20/1003.md?p=17), 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 [section 1090(a)(1) of this title](/usc/20/1090.md?p=a-1) shall constitute the application for loans made under this part (other than a Federal Direct PLUS loan). The [Secretary](/usc/20/1003.md?p=17) shall develop, print, and distribute to participating institutions a standard promissory note and loan disclosure form.
- (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](/usc/20/4702.md?p=2). 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](/usc/20/1003.md?p=17) shall establish periods for the payments described in [paragraph (1)](#j-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](/usc/20/1003.md?p=17)[^1] an institution may maintain loan [funds](/usc/20/4702.md?p=3) 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](/usc/20/1003.md?p=17) 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](/usc/20/4702.md?p=3) received by transfer to the [Secretary](/usc/20/1003.md?p=17) under [section 2174 of title 10](/usc/10/2174.md) or [section 3078 of title 33](/usc/33/3078.md) for the payment of interest on a loan made under this part to a member of the Armed Forces or an [officer](/usc/20/1094.md?p=i-5) in the commissioned [officer](/usc/20/1094.md?p=i-5) corps of the National Oceanic and Atmospheric Administration, respectively, the [Secretary](/usc/20/1003.md?p=17) shall pay the interest on the loan as due for a period not in excess of 36 consecutive months. The [Secretary](/usc/20/1003.md?p=17) may not pay interest on such a loan out of any [funds](/usc/20/4702.md?p=3) other than [funds](/usc/20/4702.md?p=3) that have been so transferred.
- (2) **Forbearance—** During the period in which the [Secretary](/usc/20/1003.md?p=17) is making payments on a loan under [paragraph (1)](#l-1), the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) shall cancel the balance of interest and principal due, in accordance with [paragraph (2)](#m-2), on any [eligible Federal Direct Loan](#m-3-A) not in default for a borrower who—
- (A) has made 120 monthly payments on the [eligible Federal Direct Loan](#m-3-A) after October 1, 2007, pursuant to any one or a combination of the following—
- (i) payments under an income-based repayment plan under [section 1098e of this title](/usc/20/1098e.md);
- (ii) payments under a standard repayment plan under [subsection (d)(1)(A)](#d-1-A), based on a 10-year repayment period;
- (iii) monthly payments under a repayment plan under subsection [(d)(1)](#d-1) or (g) of not less than the monthly amount calculated under [subsection (d)(1)(A)](#d-1-A), based on a 10-year repayment period;
- (iv) payments under an income contingent repayment plan under [subsection (d)(1)(D)](#d-1-D) (as in effect on the day before the date of the repeal of [subsection (e)](#e) of this section); or
- (v) on-time payments under the Repayment Assistance Plan under [subsection (q)](#q); and
- (B)
- (i) is employed in a [public service job](#m-3-B) at the time of such forgiveness; and
- (ii) has been employed in a [public service job](#m-3-B) during the period in which the borrower makes each of the 120 payments described in [subparagraph (A)](#m-1-A).
- (2) **Loan cancellation amount—** After the conclusion of the employment period described in [paragraph (1)](#m-1), the [Secretary](/usc/20/1003.md?p=17) 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](#m-3-A) 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](/usc/20/1078–11.md?p=g-6) at a [nonprofit](/usc/20/1003.md?p=13) organization), early childhood education (including licensed or regulated childcare, Head Start, and [State](/usc/20/1003.md?p=21-A) funded prekindergarten), public service for individuals with [disabilities](/usc/20/1003.md?p=6), public service for the elderly, public library sciences, [school](/usc/20/5802.md?p=a-11)-based library sciences and other [school](/usc/20/5802.md?p=a-11)-based services, or at an organization that is described in [section 501(c)(3) of title 26](/usc/26/501.md?p=c-3) and exempt from taxation under [section 501(a)](/usc/26/501.md?p=a) of such title; or
- (ii) teaching as a full-time faculty member at a Tribal College or University as defined in [section 1059c(b) of this title](/usc/20/1059c.md?p=b) and other faculty teaching in high-needs subject areas or areas of shortage (including nurse faculty, foreign language faculty, and part-time faculty at [community colleges](/usc/20/1161w.md?p=f-1)), as determined by the [Secretary](/usc/20/1003.md?p=17).
- (4) **Ineligibility for double benefits—** No borrower may, for the same service, receive a reduction of loan obligations under both this subsection and section [1078–10](/usc/20/1078–10.md), [1078–11](/usc/20/1078–11.md), [1078–12](/usc/20/1078–12.md), or [1087j](/usc/20/1087j.md) of this title.
- (n) **Identity fraud protection—** The [Secretary](/usc/20/1003.md?p=17) shall take such steps as may be necessary to ensure that monthly Federal Direct Loan statements and other publications of the [Department](/usc/20/1003.md?p=4) 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)](#o-2) and [(4)](#o-4), interest shall not accrue for an [eligible military borrower](#o-3) 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](/usc/20/1088.md?p=d-4); or
- (ii) is performing [qualifying National Guard duty during a war or other military operation or national emergency](/usc/20/1088.md?p=d-5); 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 section 351(a), of [title 37](/usc/37.md).
- (4) **Limitation—** An individual who qualifies as an [eligible military borrower](#o-3) under this subsection may receive the benefit of this subsection for not more than 60 months.
- (p) **Disclosures—** Each [institution of higher education](/usc/20/1001.md?p=a) with which the [Secretary](/usc/20/1003.md?p=17) has an agreement under [section 1087c of this title](/usc/20/1087c.md), and each contractor with which the [Secretary](/usc/20/1003.md?p=17) has a contract under [section 1087f of this title](/usc/20/1087f.md), shall, with respect to loans under this part and in accordance with such regulations as the [Secretary](/usc/20/1003.md?p=17) shall prescribe, comply with each of the requirements under [section 1083 of this title](/usc/20/1083.md) that apply to a lender with respect to a loan under part B.
- (q) **Repayment Assistance Plan—**
- (1) **In general—** Notwithstanding any other provision of this chapter, beginning on July 1, 2026, the [Secretary](/usc/20/1003.md?p=17) shall carry out an income-based repayment plan (to be known as the “Repayment Assistance Plan”), that shall have the following terms and conditions:
- (A) The total monthly repayment amount owed by a borrower for all of the loans of the borrower that are repaid pursuant to the Repayment Assistance Plan shall be equal to the [applicable monthly payment](#q-4-B-i) of a borrower calculated under [paragraph (4)(B)](#q-4-B), except that the borrower may not be precluded from repaying an amount that exceeds such amount for any month.
- (B) The [Secretary](/usc/20/1003.md?p=17) shall apply the borrower’s [applicable monthly payment](#q-4-B-i) under this paragraph first toward interest due on each such loan, next toward any fees due on each loan, and then toward the principal of each loan.
- (C) Any principal due and not paid under [subparagraph (B)](#q-1-B) or [paragraph (2)(B)](#q-2-B) shall be deferred.
- (D) A borrower who is not in a period of deferment or forbearance shall make an [applicable monthly payment](#q-4-B-i) for each month until the earlier of—
- (i) the date on which the outstanding balance of principal and interest due on all of the loans of the borrower that are repaid pursuant to the Repayment Assistance Plan is $0; or
- (ii) the date on which the borrower has made 360 [qualifying monthly payments](#q-1-F).
- (E) The [Secretary](/usc/20/1003.md?p=17) shall cancel any outstanding balance of principal and interest due on a loan made under this part to a borrower—
- (i) who, for any period of time, participated in the Repayment Assistance Plan under this subsection;
- (ii) whose most recent payment for such loan prior to the loan cancellation under this subparagraph was made under such Repayment Assistance Plan; and
- (iii) who has made 360 [qualifying monthly payments](#q-1-F) on such loan.
- (F) For the purposes of this subsection, the term “qualifying monthly payment” means any of the following:
- (i) An on-time [applicable monthly payment](#q-4-B-i) under this subsection.
- (ii) An on-time monthly payment under the standard repayment plan under [subsection (d)(7)(A)(i)](#d-7-A-i) of not less than the monthly payment required under such plan.
- (iii) A monthly payment under any repayment plan (excluding the Repayment Assistance Plan under this subsection) of not less than the monthly payment that would be required under a standard repayment plan under [subsection (d)(1)(A)](#d-1-A) with a repayment period of 10 years.
- (iv) A monthly payment under [section 1098e of this title](/usc/20/1098e.md) of not less than the monthly payment required under such section, including a monthly payment equal to the minimum payment amount permitted under such section.
- (v) A monthly payment made before July 1, 2028, under an income contingent repayment plan carried out under [subsection (d)(1)(D)](#d-1-D) (or under an alternative repayment plan in lieu of repayment under such an income contingent repayment plan, if placed in such an alternative repayment plan by the [Secretary](/usc/20/1003.md?p=17)) of not less than the monthly payment required under such a plan, including a monthly payment equal to the minimum payment amount permitted under such a plan.
- (vi) A month when the borrower did not make a payment because the borrower was in deferment under [subsection (f)(2)(B)](#f-2-B) or due to an economic hardship described in [subsection (f)(2)(D)](#f-2-D).
- (vii) A month that ended before July 4, 2025, when the borrower did not make a payment because the borrower was in a period of deferment or forbearance described in [section 685.209(k)(4)(iv) of title 34, Code of Federal Regulations](/cfr/34/685.209.md?p=k-4-iv) (as in effect on July 4, 2025).
- (G) The procedures established by the [Secretary](/usc/20/1003.md?p=17) under [section 1098e(c) of this title](/usc/20/1098e.md?p=c) shall apply for annually determining the borrower’s eligibility for the Repayment Assistance Plan, including verification of a borrower’s annual income and the annual amount due on the total amount of loans eligible to be repaid under this subsection, and such other procedures as are necessary to effectively implement income-based repayment under this subsection. With respect to carrying out [section 1098h(a)(2) of this title](/usc/20/1098h.md?p=a-2) for the Repayment Assistance Plan, an individual may elect to opt out of the disclosures required under [section 1098h(a)(2)(A)(ii) of this title](/usc/20/1098h.md?p=a-2-A-ii) in accordance with the procedures established under [section 1098e(c)(2) of this title](/usc/20/1098e.md?p=c-2).
- (2) **Balance assistance for distressed borrowers—**
- (A) **Interest subsidy—** With respect to a borrower of a loan made under this part, for each month for which such a borrower makes an on-time [applicable monthly payment](#q-4-B-i) required under [paragraph (1)(A)](#q-1-A) and such monthly payment is insufficient to pay the total amount of interest that accrues for the month on all loans of the borrower repaid pursuant to the Repayment Assistance Plan under this subsection, the amount of interest accrued and not paid for the month shall not be charged to the borrower.
- (B) **Matching principal payment—** With respect to a borrower of a loan made under this part and not in a period of deferment or forbearance, for each month for which a borrower makes an on-time [applicable monthly payment](#q-4-B-i) required under [paragraph (1)(A)](#q-1-A) and such monthly payment reduces the total outstanding principal balance of all loans of the borrower repaid pursuant to the Repayment Assistance Plan under this subsection by less than $50, the [Secretary](/usc/20/1003.md?p=17) shall reduce such total outstanding principal balance of the borrower by an amount that is equal to—
- (i) the amount that is the lesser of—
- (I) $50; or
- (II) the total amount paid by the borrower for such month pursuant to [paragraph (1)(A)](#q-1-A); minus
- (ii) the total amount paid by the borrower for such month pursuant to [paragraph (1)(A)](#q-1-A) that is applied to such total outstanding principal balance.
- (3) **Additional documents—** A borrower who chooses, or is required, to repay a loan under this subsection, and for whom [adjusted gross income](#q-4-A) is unavailable or does not reasonably reflect the borrower’s current income, shall provide to the [Secretary](/usc/20/1003.md?p=17) other documentation of income satisfactory to the [Secretary](/usc/20/1003.md?p=17), which documentation the [Secretary](/usc/20/1003.md?p=17) may use to determine repayment under this subsection.
- (4) **Definitions—** In this subsection:
- (A) **Adjusted gross income—** The term “adjusted gross income”, when used with respect to a borrower, means the adjusted gross income (as such term is defined in [section 62 of title 26](/usc/26/62.md)) of the borrower (and the borrower’s spouse, as applicable) for the most recent taxable year, except that, in the case of a married borrower who files a separate Federal income tax return, the term does not include the adjusted gross income of the borrower’s spouse.
- (B) **Applicable monthly payment—**
- (i) **In general—** Except as provided in clause [(ii)](#q-4-B-ii), [(iii)](#q-4-B-iii), or [(vi)](#q-4-B-vi), the term “applicable monthly payment” means, when used with respect to a borrower, the amount equal to—
- (I) the applicable base payment of the borrower, divided by 12; minus
- (II) $50 for each [dependent](#q-4-B-v) of the borrower (which, in the case of a married borrower filing a separate Federal income tax return, shall include only each [dependent](#q-4-B-v) that the borrower claims on that return).
- (ii) **Minimum amount—** In the case of a borrower with an [applicable monthly payment](#q-4-B-i) amount calculated under [clause (i)](#q-4-B-i) that is less than $10, the [applicable monthly payment](#q-4-B-i) of the borrower shall be $10.
- (iii) **Final payment—** In the case of a borrower whose total outstanding balance of principal and interest on all of the loans of the borrower that are repaid pursuant to the Repayment Assistance Plan is less than the [applicable monthly payment](#q-4-B-i) calculated pursuant to clause [(i)](#q-4-B-i) or [(ii)](#q-4-B-ii), as applicable, then the [applicable monthly payment](#q-4-B-i) of the borrower shall be the total outstanding balance of principal and interest on all such loans.
- (iv) **Base payment—** The amount of the applicable base payment for a borrower with an [adjusted gross income](#q-4-A) of—
- (I) not more than $10,000, is $120;
- (II) more than $10,000 and not more than $20,000, is 1 percent of such [adjusted gross income](#q-4-A);
- (III) more than $20,000 and not more than $30,000, is 2 percent of such [adjusted gross income](#q-4-A);
- (IV) more than $30,000 and not more than $40,000, is 3 percent of such [adjusted gross income](#q-4-A);
- (V) more than $40,000 and not more than $50,000, is 4 percent of such [adjusted gross income](#q-4-A);
- (VI) more than $50,000 and not more than $60,000, is 5 percent of such [adjusted gross income](#q-4-A);
- (VII) more than $60,000 and not more than $70,000, is 6 percent of such [adjusted gross income](#q-4-A);
- (VIII) more than $70,000 and not more than $80,000, is 7 percent of such [adjusted gross income](#q-4-A);
- (IX) more than $80,000 and not more than $90,000, is 8 percent of such [adjusted gross income](#q-4-A);
- (X) more than $90,000 and not more than $100,000, is 9 percent of such [adjusted gross income](#q-4-A); and
- (XI) more than $100,000, is 10 percent of such [adjusted gross income](#q-4-A).
- (v) **Dependent—** For the purposes of this paragraph, the term “dependent” means an individual who is a dependent under [section 152 of title 26](/usc/26/152.md).
- (vi) **Special rule—** In the case of a borrower who is required by the [Secretary](/usc/20/1003.md?p=17) to provide information to the [Secretary](/usc/20/1003.md?p=17) to determine the [applicable monthly payment](#q-4-B-i) of the borrower under this subparagraph, and who does not comply with such requirement, the [applicable monthly payment](#q-4-B-i) of the borrower shall be—
- (I) the sum of the monthly payment amounts the borrower would have paid for each of the borrower’s loans made under this part under a standard repayment plan with a fixed monthly repayment amount, paid over a period of 10 years, based on the outstanding principal due on such loan when such loan entered repayment; and
- (II) determined pursuant to this clause until the date on which the borrower provides such information to the [Secretary](/usc/20/1003.md?p=17).
# §1087f. Contracts
- (a) **Contracts for supplies and services—**
- (1) **In general—** The [Secretary](/usc/20/1003.md?p=17) shall, to the extent practicable, award contracts for origination, servicing, and collection described in [subsection (b)](#b). In awarding such contracts, the [Secretary](/usc/20/1003.md?p=17) shall ensure that such services and supplies are provided at competitive prices.
- (2) **Entities—** The entities with which the [Secretary](/usc/20/1003.md?p=17) may enter into contracts shall include only entities which the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) shall enter into contracts only with entities that have extensive and relevant experience and demonstrated effectiveness. The entities with which the [Secretary](/usc/20/1003.md?p=17) may enter into such contracts shall include, where practicable, agencies with agreements with the [Secretary](/usc/20/1003.md?p=17) under sections [1078(b)](/usc/20/1078.md?p=b) and [(c)](/usc/20/1078.md?p=c) of this title, if such agencies meet the qualifications as determined by the [Secretary](/usc/20/1003.md?p=17) under this subsection and if those agencies have such experience and demonstrated effectiveness. In awarding contracts to such [State](/usc/20/1003.md?p=21-A) agencies, the [Secretary](/usc/20/1003.md?p=17) shall, to the extent practicable and consistent with the purposes of this part, give special consideration to [State](/usc/20/1003.md?p=21-A) agencies with a history of high quality performance to perform services for institutions of higher education within their [State](/usc/20/1003.md?p=21-A).
- (3) **Rule of construction—** Nothing in this section shall be construed as a limitation of the authority of any [State](/usc/20/1003.md?p=21-A) agency to enter into an agreement for the purposes of this section as a member of a consortium of [State](/usc/20/1003.md?p=21-A) agencies.
- (b) **Contracts for origination, servicing, and data systems—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1021.md?p=16)), if such institutions do not have agreements with the [Secretary](/usc/20/1003.md?p=17) under [section 1087d(b) of this title](/usc/20/1087d.md?p=b);
- (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](/usc/20/1003.md?p=17) determines are necessary to ensure the successful operation of the program.
# [§1087g. Repealed. Pub. L. 111–39, title IV, § 404(b)(3), July 1, 2009, 123 Stat. 1946 — repealed]
# §1087h. Funds for administrative expenses
- (a) **Administrative expenses—**
- (1) **Additional mandatory funds for servicing—** There shall be available to the [Secretary](/usc/20/1003.md?p=17) (in addition to any other amounts appropriated under any appropriations Act for administrative costs under this part and part B and out of any money in the Treasury not otherwise appropriated) $1,000,000,000 to be obligated for administrative costs under this part and part B, including the costs of servicing the direct student loan programs under this part, which shall remain available until expended.
- (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](/usc/20/1003.md?p=17), from [funds](/usc/20/4702.md?p=3) not otherwise appropriated, [funds](/usc/20/4702.md?p=3) to be obligated for account maintenance fees payable to [guaranty agencies](/usc/20/1085.md?p=j) under part B and calculated in accordance with [subsection (b)](#b).
- (5) **Account maintenance fees—** Account maintenance fees under [paragraph (3)](#a-3)[^2] shall be paid quarterly and deposited in the Agency Operating [Fund](/usc/20/4702.md?p=3) established under [section 1072b of this title](/usc/20/1072b.md).
- (6) **Technical assistance to institutions of higher education—**
- (A) **Provision of assistance—** The [Secretary](/usc/20/1003.md?p=17) shall provide institutions of higher education participating, or seeking to participate, in the loan programs under this part with technical [assistance](#a-6-C) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) may carry over [funds](/usc/20/4702.md?p=3) made available under this section to a subsequent fiscal year.
- (b) **Calculation basis—** Account maintenance fees payable to [guaranty agencies](/usc/20/1085.md?p=j) under [subsection (a)(4)](#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](/usc/20/4702.md?p=3) may be expended under this section unless the [Secretary](/usc/20/1003.md?p=17) includes in the [Department](/usc/20/1003.md?p=4) of Education’s annual budget justification to Congress a detailed description of the specific activities for which the [funds](/usc/20/4702.md?p=3) 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.
# §1087i. Authority to sell loans
The [Secretary](/usc/20/1003.md?p=17), in consultation with the [Secretary](/usc/20/1003.md?p=17) of the Treasury, is authorized to sell loans made under this part on such terms as the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) to offer reductions in the interest rate paid by a borrower of a loan made under this part as the [Secretary](/usc/20/1003.md?p=17) determines appropriate to encourage on-time repayment in accordance with [section 1087e(b)(7) of this title](/usc/20/1087e.md?p=b-7). Such reductions may be offered only if the [Secretary](/usc/20/1003.md?p=17) determines the reductions are in the best financial interests of the Federal Government.
# §1087i–1. Temporary authority to purchase student loans
- (a) **Authority to purchase—**
- (1) **Authority; determination required—** Upon a determination by the [Secretary](/usc/20/1003.md?p=17) that there is an inadequate availability of loan capital to meet the demand for loans under sections [1078](/usc/20/1078.md), [1078–2](/usc/20/1078–2.md), or [1078–8](/usc/20/1078–8.md) of this title, whether as a result of inadequate liquidity for such loans or for other reasons, the [Secretary](/usc/20/1003.md?p=17), in consultation with the [Secretary](/usc/20/1003.md?p=17) of the Treasury, is authorized to purchase, or enter into forward commitments to purchase, from any [eligible lender](/usc/20/1019.md?p=4), as defined by [section 1085(d)(1) of this title](/usc/20/1085.md?p=d-1), loans first disbursed under sections [1078](/usc/20/1078.md), [1078–2](/usc/20/1078–2.md), or [1078–8](/usc/20/1078–8.md) of this title on or after October 1, 2003, and before July 1, 2010, on such terms as the [Secretary](/usc/20/1003.md?p=17), the [Secretary](/usc/20/1003.md?p=17) of the Treasury, and the [Director](/usc/20/9101.md?p=3) of the Office of Management and Budget jointly determine are in the best interest of the United States, except that any purchase under this section shall not result in any net cost to the Federal Government (including the cost of servicing the loans purchased), as determined jointly by the [Secretary](/usc/20/1003.md?p=17), the [Secretary](/usc/20/1003.md?p=17) of the Treasury, and the [Director](/usc/20/9101.md?p=3) of the Office of Management and Budget.
- (2) **Federal Register notice—** The [Secretary](/usc/20/1003.md?p=17), the [Secretary](/usc/20/1003.md?p=17) of the Treasury, and the [Director](/usc/20/9101.md?p=3) 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)](#a-1) that—
- (A) establishes the terms and conditions governing the purchases authorized by [paragraph (1)](#a-1);
- (B) includes an outline of the methodology and factors that the [Secretary](/usc/20/1003.md?p=17), the [Secretary](/usc/20/1003.md?p=17) of the Treasury, and the [Director](/usc/20/9101.md?p=3) of the Office of Management and Budget, will jointly consider in evaluating the price at which to purchase loans made under section [1078](/usc/20/1078.md), [1078–2](/usc/20/1078–2.md), or [1078–8](/usc/20/1078–8.md) of this title; and
- (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)](#a-1), the [Secretary](/usc/20/1003.md?p=17), in consultation with the [Secretary](/usc/20/1003.md?p=17) of the Treasury, is authorized to purchase, or enter into forward commitments to purchase, from any [eligible lender](/usc/20/1019.md?p=4) (as defined in [section 1085(d)(1) of this title](/usc/20/1085.md?p=d-1)), loans that such lender purchased under [section 1078–6 of this title](/usc/20/1078–6.md) on or after October 1, 2003, and before July 1, 2010, and that are not in default, on such terms as the [Secretary](/usc/20/1003.md?p=17), the [Secretary](/usc/20/1003.md?p=17) of the Treasury, and the [Director](/usc/20/9101.md?p=3) of the Office of Management and Budget jointly determine are in the best interest of the United States, except that any purchase under this paragraph shall not result in any net cost to the Federal Government (including the cost of servicing the loans purchased), as determined jointly by the [Secretary](/usc/20/1003.md?p=17), the [Secretary](/usc/20/1003.md?p=17) of the Treasury, and the [Director](/usc/20/9101.md?p=3) of the Office of Management and Budget.
- (B) **Federal Register notice—** The [Secretary](/usc/20/1003.md?p=17), the [Secretary](/usc/20/1003.md?p=17) of the Treasury, and the [Director](/usc/20/9101.md?p=3) 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](/usc/20/1003.md?p=17), the [Secretary](/usc/20/1003.md?p=17) of the Treasury, and the [Director](/usc/20/9101.md?p=3) of the Office of Management and Budget will jointly consider in evaluating the price at which to purchase loans rehabilitated pursuant to [section 1078–6(a) of this title](/usc/20/1078–6.md?p=a); and
- (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](/usc/20/1003.md?p=17) shall require, as a condition of any purchase under [subsection (a)](#a), that the [funds](/usc/20/4702.md?p=3) paid by the [Secretary](/usc/20/1003.md?p=17) to any [eligible lender](/usc/20/1019.md?p=4) 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)](#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)](#a-3), to originate such new Federal loans to students, or to purchase loans in accordance with [section 1078–6(a) of this title](/usc/20/1078–6.md?p=a).
- (c) **Maintaining servicing arrangements—** The [Secretary](/usc/20/1003.md?p=17) may, if agreed upon by an [eligible lender](/usc/20/1019.md?p=4) 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)](#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](/usc/20/1003.md?p=17) purchases a loan under this section—
- (1) the [guaranty agency](/usc/20/1085.md?p=j) 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 [section 1078(b) of this title](/usc/20/1078.md?p=b) for such loan shall cease to be effective with respect to any default on such loan that occurs on or after the date of such purchase.
- (e) **Reports and cost estimates—** The [Secretary](/usc/20/1003.md?p=17) shall prepare, transmit to the [authorizing committees](/usc/20/1003.md?p=1), 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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)](#e-1-A-i) and [(ii)](#e-1-A-ii) of subparagraph (A) shall be disaggregated by lender and, for each lender, by category of institution (using the categories described in [section 1015a(d) of this title](/usc/20/1015a.md?p=d)) and type of loan.
- (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)](#e-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)](#e-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](/usc/20/1003.md?p=4) 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)](#e-2-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)](#e-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)](#e-1-A-ii), that includes the information described in [paragraph (2)](#e-2) for such fiscal year.
- (f) **Expiration of authority—** The [Secretary](/usc/20/1003.md?p=17)’s authority to purchase loans under this section shall expire on July 1, 2010.
# §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)](#a-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)](#a-2) into a Federal Direct Consolidation Loan during the period described in [paragraph (3)](#a-3).
- (2) **Categories of loans that may be consolidated—** The categories of loans that may be consolidated under [paragraph (1)](#a-1) are—
- (A) loans made under this part;
- (B) loans purchased by the [Secretary](/usc/20/1003.md?p=17) pursuant to [section 1087i–1 of this title](/usc/20/1087i–1.md); and
- (C) loans made under part B that are held by an [eligible lender](/usc/20/1019.md?p=4), as such term is defined in [section 1085(d) of this title](/usc/20/1085.md?p=d).
- (3) **Time period in which loans may be consolidated—** The [Secretary](/usc/20/1003.md?p=17) 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 [section 1087e(g) of this title](/usc/20/1087e.md?p=g), except that—
- (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)](#b-2)), [section 1077a(l)(3)](/usc/20/1077a.md?p=l-3) of this title shall be applied without rounding the weighted average of the interest rate on the loans consolidated to the nearest higher one-eighth of 1 percent as described in [subparagraph (A)](/usc/20/1077a.md?p=l-3-A) of section 1077a(l)(3) of this title; and
- (2) if a Federal Direct Consolidation Loan made under this section that repays a loan which is subject to an interest rate determined under section [1077a(g)(2)](/usc/20/1077a.md?p=g-2), [(j)(2)](/usc/20/1077a.md?p=j-2), or [(k)(2)](/usc/20/1077a.md?p=k-2) of this title, then the interest rate for such Federal Direct Consolidation Loan shall be calculated—
- (A) by using the applicable rate of interest described in section [1077a(g)(2)](/usc/20/1077a.md?p=g-2), [(j)(2)](/usc/20/1077a.md?p=j-2), or [(k)(2)](/usc/20/1077a.md?p=k-2) of this title, respectively; and
- (B) in accordance with [section 1077a(l)(3)](/usc/20/1077a.md?p=l-3) of this title.
# §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](/usc/20/1003.md?p=17) shall carry out a program of canceling the obligation to repay a qualified loan amount in accordance with [subsection (c)](#c) for Federal Direct Stafford Loans and Federal Direct Unsubsidized Stafford Loans made under this part for any [new borrower](/usc/20/1003.md?p=12) on or after October 1, 1998, who—
- (1) has been employed as a full-time teacher for 5 consecutive complete [school](/usc/20/5802.md?p=a-11) years—
- (A) in a [school](/usc/20/5802.md?p=a-11) or location that qualifies under [section 1087ee(a)(2)(A) of this title](/usc/20/1087ee.md?p=a-2-A) for loan cancellation for Perkins loan recipients who teach in such [schools](/usc/20/5802.md?p=a-11) or locations; and
- (B) if employed as an [elementary school](/usc/20/1003.md?p=9) or [secondary school](/usc/20/1003.md?p=16) teacher, is highly qualified as defined in [section 9101](/usc/20/9101.md)[^1] of the Elementary and Secondary Education Act of 1965 [[20 U.S.C. 7801](/usc/20/7801.md)], or meets the requirements of [subsection (g)(3)](#g-3); and
- (2) is not in default on a loan for which the borrower seeks forgiveness.
- (c) **Qualified loan amounts—**
- (1) **In general—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/5802.md?p=a-11) year of teaching described in [subsection (b)(1)](#b-1). No borrower may receive a reduction of loan obligations under both this section and [section 1078–10 of this title](/usc/20/1078–10.md).
- (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 section [1078](/usc/20/1078.md) or [1078–8](/usc/20/1078–8.md) of this title, for a borrower who meets the requirements of [subsection (b)](#b), as determined in accordance with regulations prescribed by the [Secretary](/usc/20/1003.md?p=17).
- (3) **Additional amounts for teachers in mathematics, science, or special education—** Notwithstanding the amount specified in [paragraph (1)](#c-1), the aggregate amount that the [Secretary](/usc/20/1003.md?p=17) shall cancel under this section shall be not more than $17,500 in the case of—
- (A) a [secondary school](/usc/20/1003.md?p=16) teacher—
- (i) who meets the requirements of [subsection (b)](#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](/usc/20/1003.md?p=9) or [secondary school](/usc/20/1003.md?p=16) teacher—
- (i) who meets the requirements of [subsection (b)](#b);
- (ii) whose qualifying employment for purposes of such subsection is as a [special education teacher](/usc/20/1003.md?p=19) whose primary responsibility is to provide special education to children with [disabilities](/usc/20/1003.md?p=6) (as those terms are defined in [section 1401 of this title](/usc/20/1401.md)); and
- (iii) who, as certified by the chief administrative [officer](/usc/20/1094.md?p=i-5) of the public or non-profit private [elementary school](/usc/20/1003.md?p=9) or [secondary school](/usc/20/1003.md?p=16) in which the borrower is employed, or, in the case of a teacher who is employed by an [educational service agency](/usc/20/1021.md?p=5), as certified by the chief administrative [officer](/usc/20/1094.md?p=i-5) of such agency, is teaching children with [disabilities](/usc/20/1003.md?p=6) that correspond with the borrower’s special education training and has demonstrated knowledge and teaching skills in the content areas of the [elementary school](/usc/20/1003.md?p=9) or [secondary school](/usc/20/1003.md?p=16) curriculum that the borrower is teaching.
- (d) **Regulations—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/5802.md?p=a-11) in which a teacher may perform service pursuant to [subsection (b)](#b) is not available before May 1 of any year, the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/5802.md?p=a-11) that—
- (A) meets the requirements of [subsection (b)(1)(A)](#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](/usc/20/5802.md?p=a-11) and shall be eligible for loan cancellation pursuant to [subsection (b)](#b).
- (2) **Prevention of double benefits—** No borrower may, for the same voluntary service, receive a benefit under both this section and—
- (A) [section 1078–11 of this title](/usc/20/1078–11.md);
- (B) [section 1087e(m) of this title](/usc/20/1087e.md?p=m); or
- (C) subtitle D of title I of the National and Community Service Act of 1990 ([42 U.S.C. 12601](/usc/42/12601.md) et seq.).
- (3) **Private school teachers—** An individual who is employed as a teacher in a private [school](/usc/20/5802.md?p=a-11) and is exempt from [State](/usc/20/1003.md?p=21-A) certification requirements (unless otherwise applicable under [State](/usc/20/1003.md?p=21-A) law), may, in lieu of the requirement of [subsection (b)(1)(B)](#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](/usc/20/5802.md?p=a-11) teacher shall be recognized by 5 or more [States](/usc/20/1003.md?p=21-A) for the purpose of fulfilling the highly qualified teacher requirements under [section 9101](/usc/20/9101.md)[^1] of the Elementary and Secondary Education Act of 1965 [[20 U.S.C. 7801](/usc/20/7801.md)], and the score achieved by such teacher on each test shall equal or exceed the average passing score of those 5 [States](/usc/20/1003.md?p=21-A).
- (h) **“Year” defined—** For the purpose of this section, the term “year” where applied to service as a teacher means an [academic year](/usc/20/1088.md?p=a-2-A) as defined by the [Secretary](/usc/20/1003.md?p=17).
# §1087aa. Appropriations authorized
- (a) **Program authority—** The [Secretary](/usc/20/1003.md?p=17) shall carry out a program assisting in the maintenance of [funds](/usc/20/4702.md?p=3) 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](/usc/20/1001.md?p=a) 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](/usc/20/4702.md?p=3) 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 [section 1087e(a)(2) of this title](/usc/20/1087e.md?p=a-2), for which such undergraduate student is eligible.
- (B) **Loans for current undergraduate Federal Perkins Loan borrowers—** Through September 30, 2017, an [institution of higher education](/usc/20/1001.md?p=a) 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](/usc/20/4702.md?p=3) established under this part by the institution, but only if the institution has awarded all Federal Direct Stafford Loans as referenced under [section 1087e(a)(2)(A) of this title](/usc/20/1087e.md?p=a-2-A) for which such undergraduate student is eligible.
- (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](/usc/20/1001.md?p=a) 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](/usc/20/4702.md?p=3) 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](/usc/20/1001.md?p=a) shall not make loans under this part after September 30, 2017.
- (3) **Prohibition on additional appropriations—** No [funds](/usc/20/4702.md?p=3) are authorized to be appropriated under this chapter or any other Act to carry out the functions described in [paragraph (1)](#b-1) for any fiscal year following fiscal year 2015.
# §1087bb. Allocation of funds
- (a) **Allocation based on previous allocation—**
- (1) From the amount appropriated pursuant to [section 1087aa(b)](/usc/20/1087aa.md?p=b)[^1] of this title for each fiscal year, the [Secretary](/usc/20/1003.md?p=17) shall first allocate to each [eligible institution](/usc/20/1066a.md?p=1) an amount equal to—
- (A) 100 percent of the amount received under subsections [(a)](#a) and [(b)](#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)](#e),
except that if the institution has a [cohort default rate](#g-1-B) in excess of the applicable maximum [cohort default rate](#g-1-B) under [subsection (f)](#f), the institution may not receive an allocation under this paragraph.
- (2)
- (A) From the amount so appropriated, the [Secretary](/usc/20/1003.md?p=17) shall next allocate to each [eligible institution](/usc/20/1066a.md?p=1) 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](/usc/20/1003.md?p=17) shall next allocate to each [eligible institution](/usc/20/1066a.md?p=1) 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](/usc/20/1066a.md?p=1) 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](/usc/20/3982.md?p=1) 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](/usc/20/1003.md?p=17) shall allocate to each [eligible institution](/usc/20/1066a.md?p=1) 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)](#a-2-A), [(B)](#a-2-B), or [(C)](#a-2-C), the [Secretary](/usc/20/1003.md?p=17) shall allocate to such institution an amount equal to the product of—
- (i) the amount determined under subparagraph [(A)](#a-2-A), [(B)](#a-2-B), or [(C)](#a-2-C), multiplied by
- (ii) the institution’s default penalty, as determined under [subsection (e)](#e),
except that if the institution has a [cohort default rate](#g-1-B) in excess of the applicable maximum [cohort default rate](#g-1-B) under [subsection (f)](#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)](#a-1) but less than the amount required to be allocated to all institutions under [paragraph (2)](#a-2), then—
- (i) the [Secretary](/usc/20/1003.md?p=17) shall allot the amount required to be allocated to all institutions under [paragraph (1)](#a-1), and
- (ii) the amount of the allocation to each institution under [paragraph (2)](#a-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)](/usc/20/1087aa.md?p=b)[^1] of this title after making the allocations required by [subsection (a)](#a) of this section, the [Secretary](/usc/20/1003.md?p=17) shall allocate to each [eligible institution](/usc/20/1066a.md?p=1) 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](/usc/20/1066a.md?p=1) (having such excess eligible amounts).
- (2) For any [eligible institution](/usc/20/1066a.md?p=1), the excess eligible amount is the amount, if any, by which—
- (A)
- (i) that institution’s eligible amount (as determined under [paragraph (3)](#b-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)](/usc/20/1087aa.md?p=b)[^1] of this title for the fiscal year; exceeds
- (B) the amount required to be allocated to that institution under [subsection (a)](#a),
except that an [eligible institution](/usc/20/1066a.md?p=1) which has a [cohort default rate](#g-1-B) in excess of the applicable maximum [cohort default rate](#g-1-B) under [subsection (f)](#f) may not receive an allocation under this paragraph.
- (3) For any [eligible institution](/usc/20/1066a.md?p=1), the eligible amount of that institution is equal to—
- (A) the amount of the institution’s self-help need, as determined under [subsection (c)](#c); minus
- (B) the institution’s anticipated collections; multiplied by
- (C) the institution’s default penalty, as determined under [subsection (e)](#e);
except that, if the institution has a [cohort default rate](#g-1-B) in excess of the applicable maximum [cohort default rate](#g-1-B) under [subsection (f)](#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](/usc/20/1003.md?p=17) 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](#c-4-A) 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](#c-4-A) for all undergraduate students determined under [subparagraph (C)](#c-2-C); or
- (ii) the [average cost of attendance](#c-4-A) for all undergraduate students minus the student aid index determined under [subparagraph (B)](#c-2-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)](#c-2-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](#c-4-A) for all undergraduate students determined under [subparagraph (C)](#c-2-C); or
- (ii) the [average cost of attendance](#c-4-A) for all undergraduate students minus the student aid index determined under [subparagraph (B)](#c-2-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)](#c-2-F) for each income category of independent students; and
- (H) add the amounts determined under subparagraphs [(E)](#c-2-E) and [(G)](#c-2-G).
- (3) To determine the self-help need of an institution’s eligible graduate and professional students, the [Secretary](/usc/20/1003.md?p=17) 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](#c-4-A) for all graduate and professional students;
- (D) subtract from the [average cost of attendance](#c-4-A) for all graduate and professional students (determined under [subparagraph (C)](#c-3-C)), the student aid index (determined under [subparagraph (B)](#c-3-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)](#c-3-D) by the number of eligible students in each category;
- (F) add the amounts determined under [subparagraph (E)](#c-3-E) for each income category.
- (4)
- (A) For purposes of paragraphs [(2)](#c-2) and [(3)](#c-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)](#c-4-B), (ii) standard living expenses determined in accordance with subparagraph [(C)](#c-4-C), and (iii) books and supplies determined in accordance with [subparagraph (D)](#c-4-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](/usc/20/1003.md?p=17), 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](/usc/20/1003.md?p=17) shall establish an appeals process by which the anticipated collections required in [paragraph (1)](#d-1) may be waived for institutions with low [cohort default rates](#g-1-B) 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](#g-1-B) that—
- (A) equals or exceeds 15 percent, shall establish a default reduction plan pursuant to regulations prescribed by the [Secretary](/usc/20/1003.md?p=17), 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](/usc/20/1088.md?p=a-2-A);
- (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](#g-1-B) (as defined under [subsection (g)](#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](#g-1-B) (as defined in [subsection (g)](#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](/usc/20/1003.md?p=17) of the [loss of eligibility](#e-3-E) under this paragraph, the institution appeals the [loss of eligibility](#e-3-E) to the [Secretary](/usc/20/1003.md?p=17). The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) that the calculation of the institution’s [cohort default rate](#g-1-B) is not accurate, and that recalculation would reduce the institution’s [cohort default rate](#g-1-B) for any of the 3 fiscal years below 50 percent; or
- (ii) there are, in the judgment of the [Secretary](/usc/20/1003.md?p=17), 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)](#e-3-A), the [Secretary](/usc/20/1003.md?p=17) 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)](#e-3-A), or the conclusion of any appeal pursuant to [subparagraph (B)](#e-3-B), whichever is later, the balance of the student loan [fund](/usc/20/4702.md?p=3) established under this part by the institution that is the subject of the termination shall be distributed as follows:
- (i) The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/4702.md?p=3) by the [Secretary](/usc/20/1003.md?p=17) under this part bears to the sum of such Federal capital contributions and the capital contributions to such [fund](/usc/20/4702.md?p=3) made by the institution.
- (ii) The remainder of such student loan [fund](/usc/20/4702.md?p=3) shall be paid to the institution.
- (D) **Use of returned funds—** Any [funds](/usc/20/4702.md?p=3) returned to the [Secretary](/usc/20/1003.md?p=17) under this paragraph shall be reallocated to institutions of higher education pursuant to [subsection (i)](#i).
- (E) **Definition—** For the purposes of [subparagraph (A)](#e-3-A), the term “loss of eligibility” shall be defined as the mandatory liquidation of an institution’s student loan [fund](/usc/20/4702.md?p=3), and assignment of the institution’s outstanding loan portfolio to the [Secretary](/usc/20/1003.md?p=17).
- (f) **Applicable maximum cohort default rate—**
- (1) **Award years prior to 2000—** For [award years](/usc/20/1088.md?p=a-1) prior to [award year](/usc/20/1088.md?p=a-1) 2000, the applicable maximum [cohort default rate](#g-1-B) is 30 percent.
- (2) **Award year 2000 and succeeding award years—** For [award year](/usc/20/1088.md?p=a-1) 2000 and subsequent years, the applicable maximum [cohort default rate](#g-1-B) is 25 percent.
- (g) **“Cohort default rate” defined—**
- (1)
- (A) The term “[cohort default rate](#g-1-B)” means, for any [award year](/usc/20/1088.md?p=a-1) 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](/usc/20/1088.md?p=a-1) who default before the end of the following [award year](/usc/20/1088.md?p=a-1).
- (B) For any [award year](/usc/20/1088.md?p=a-1) 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](/usc/20/1088.md?p=a-1) and who default before the end of the [award year](/usc/20/1088.md?p=a-1) immediately following the year in which they entered repayment.
- (C) A loan on which a payment is made by the [institution of higher education](/usc/20/1001.md?p=a), 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](/usc/20/5802.md?p=a-11), the student (and his or her subsequent repayment or default) is attributed to the [school](/usc/20/5802.md?p=a-11) for attendance at which the student received the loan that entered repayment in the [award year](/usc/20/1088.md?p=a-1).
- (E) In determining the number of students who default before the end of such [award year](/usc/20/1088.md?p=a-1), the institution, in calculating the [cohort default rate](#g-1-B), shall exclude—
- (i) any loan on which the borrower has, after the time periods specified in [paragraph (2)](#g-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)](#g-2), been rehabilitated or canceled; and
- (iii) any other loan that the [Secretary](/usc/20/1003.md?p=17) determines should be excluded from such determination.
- (F) The [Secretary](/usc/20/1003.md?p=17) shall prescribe regulations designed to prevent an institution from evading the application to that institution of a [cohort default rate](#g-1-B) 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](/usc/20/1003.md?p=17).
- (2) For purposes of calculating the [cohort default rate](#g-1-B) 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](/usc/20/1003.md?p=17) 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](/usc/20/1001.md?p=a) returns to the [Secretary](/usc/20/1003.md?p=17) any portion of the sums allocated to such institution under this section for any fiscal year, the [Secretary](/usc/20/1003.md?p=17) shall reallocate 80 percent of such returned portions to [participating institutions](#i-1-B) in an amount not to exceed such [participating institution](#i-1-B)’s excess eligible amounts as determined under [paragraph (2)](#i-2).
- (B) For the purpose of this subsection, the term “participating institution” means an [institution of higher education](/usc/20/1001.md?p=a) 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)](#a) in the fiscal year for which the reallocation determination is made.
- (2) **Excess eligible amount—** For any [participating institution](#i-1-B), the excess eligible amount is the amount, if any, by which—
- (A)
- (i) that institution’s eligible amount (as determined under [subsection (b)(3)](#b-3)), divided by (ii) the sum of the eligible amounts of all [participating institutions](#i-1-B) (as determined under [paragraph (3)](#i-3)), multiplied by (iii) the amount of [funds](/usc/20/4702.md?p=3) available for reallocation under this subsection; exceeds
- (B) the amount required to be allocated to that institution under [subsection (b)](#b).
- (3) **Remainder—** The [Secretary](/usc/20/1003.md?p=17) shall reallocate the remainder of such returned portions in accordance with regulations of the [Secretary](/usc/20/1003.md?p=17).
- (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](/usc/20/1003.md?p=17) may waive this paragraph for a specific institution if the [Secretary](/usc/20/1003.md?p=17) finds that enforcing it is contrary to the interest of the program.
# §1087cc. Agreements with institutions of higher education
- (a) **Contents of agreements—** An agreement with any [institution of higher education](/usc/20/1001.md?p=a) for the payment of Federal capital contributions under this part shall—
- (1) provide for the establishment and maintenance of a student loan [fund](/usc/20/4702.md?p=3) for the purpose of this part;
- (2) provide for the deposit in such [fund](/usc/20/4702.md?p=3) of—
- (A) Federal capital contributions from [funds](/usc/20/4702.md?p=3) appropriated under [section 1087aa of this title](/usc/20/1087aa.md);
- (B) a capital contribution by an institution in an amount equal to one-third of the Federal capital contributions described in [subparagraph (A)](#a-2-A);
- (C) collections of principal and interest on student loans made from deposited [funds](/usc/20/4702.md?p=3);
- (D) charges collected pursuant to regulations under [section 1087dd(c)(1)(H) of this title](/usc/20/1087dd.md?p=c-1-H); and
- (E) any other earnings of the [funds](/usc/20/4702.md?p=3);
- (3) provide that such student loan [fund](/usc/20/4702.md?p=3) 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)](#b);
- (C) capital distributions, as provided in [section 1087ff of this title](/usc/20/1087ff.md); and
- (D) costs of litigation, and other collection costs agreed to by the [Secretary](/usc/20/1003.md?p=17) in connection with the collection of a loan from the [fund](/usc/20/4702.md?p=3) (and interest thereon) or a charge assessed pursuant to regulations under [section 1087dd(c)(1)(H) of this title](/usc/20/1087dd.md?p=c-1-H);
- (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](/usc/20/1003.md?p=17) in accordance with criteria established by regulation, the [Secretary](/usc/20/1003.md?p=17) may—
- (i) require the institution to assign such note or agreement to the [Secretary](/usc/20/1003.md?p=17), 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](/usc/20/1003.md?p=17)’s collection costs, among other institutions in accordance with [section 1087bb of this title](/usc/20/1087bb.md); or
- (B) if the institution is not one described in [subparagraph (A)](#a-4-A), the [Secretary](/usc/20/1003.md?p=17) may allow such institution to refer such note or agreement to the [Secretary](/usc/20/1003.md?p=17), 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](/usc/20/1003.md?p=17)’s collection costs) shall be repaid to such institution and treated as an additional capital contribution under [section 1087bb of this title](/usc/20/1087bb.md);
- (5) provide that, if an [institution of higher education](/usc/20/1001.md?p=a) determines not to service and collect student loans made available from [funds](/usc/20/4702.md?p=3) 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](/usc/20/4702.md?p=3) to the [Secretary](/usc/20/1003.md?p=17) and the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17)’s collection costs) among other institutions in accordance with [section 1087bb of this title](/usc/20/1087bb.md);
- (6) provide that, notwithstanding any other provision of law, the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17), from whatever source such information may be derived;
- (7) provide assurances that the institution will comply with the provisions of [section 1087cc–1 of this title](/usc/20/1087cc–1.md);
- (8) provide that the [institution of higher education](/usc/20/1001.md?p=a) 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](/usc/20/1003.md?p=17) and the institution, except that nothing in this paragraph shall be construed to permit the [Secretary](/usc/20/1003.md?p=17) to require the assignment of loans to the [Secretary](/usc/20/1003.md?p=17) other than as is provided for in paragraphs [(4)](#a-4) and [(5)](#a-5).
- (b) **Administrative expenses—** An institution which has entered into an agreement under [subsection (a)](#a) shall be entitled, for each fiscal year during which it makes student loans from a student loan [fund](/usc/20/4702.md?p=3) 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 [section 1096 of this title](/usc/20/1096.md).
- (c) **Cooperative agreements with consumer reporting agencies—**
- (1) For the purpose of promoting responsible repayment of loans made pursuant to this part, the [Secretary](/usc/20/1003.md?p=17) and each [institution of higher education](/usc/20/1001.md?p=a) participating in the program under this part shall enter into cooperative agreements with [consumer reporting agencies](/usc/20/1088.md?p=e) to provide for the exchange of information concerning student borrowers concerning whom the [Secretary](/usc/20/1003.md?p=17) has received a referral pursuant to [section 1087gg of this title](/usc/20/1087gg.md) and regarding loans held by the [Secretary](/usc/20/1003.md?p=17) or an institution.
- (2) Each cooperative agreement made pursuant to [paragraph (1)](#c-1) shall be made in accordance with the requirements of [section 1080a of this title](/usc/20/1080a.md) except that such agreement shall provide for the disclosure by the [Secretary](/usc/20/1003.md?p=17) or an institution, as the case may be, to such [consumer reporting agencies](/usc/20/1088.md?p=e), with respect to any loan held by the [Secretary](/usc/20/1003.md?p=17) or the institution, respectively, 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)](#a-4) and [(5)](#a-5) of subsection (a) of [section 1681c of title 15](/usc/15/1681c.md), a [consumer reporting agency](/usc/20/1088.md?p=e) may make a report containing information received from the [Secretary](/usc/20/1003.md?p=17) or an institution regarding the status of a borrower’s account on a loan made under this part until the loan is paid in full.
- (4)
- (A) Except as provided in [subparagraph (B)](#c-4-B), an [institution of higher education](/usc/20/1001.md?p=a), after consultation with the [Secretary](/usc/20/1003.md?p=17) and pursuant to the agreements entered into under [paragraph (1)](#c-1), shall disclose at least annually to any [consumer reporting agency](/usc/20/1088.md?p=e) with which the [Secretary](/usc/20/1003.md?p=17) has such an agreement the information set forth in [paragraph (2)](#c-2), and shall disclose promptly to such [consumer reporting agency](/usc/20/1088.md?p=e) any changes to the information previously disclosed.
- (B) The [Secretary](/usc/20/1003.md?p=17) may promulgate regulations establishing criteria under which an [institution of higher education](/usc/20/1001.md?p=a) may cease reporting the information described in [paragraph (2)](#c-2) before a loan is paid in full.
- (5) Each [institution of higher education](/usc/20/1001.md?p=a) shall notify the appropriate [consumer reporting agencies](/usc/20/1088.md?p=e) 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](/usc/20/1088.md?p=e) 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)](#a-9), the [Secretary](/usc/20/1003.md?p=17) 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)](#a-5)[^1] relating to due diligence, the [Secretary](/usc/20/1003.md?p=17) 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.
# §1087cc–1. Student loan information by eligible institutions
- (a) **Disclosure required prior to disbursement—** Each [institution of higher education](/usc/20/1001.md?p=a) 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](/usc/20/1001.md?p=a) 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](/usc/20/1001.md?p=a), 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=4) of Defense educational loan repayment program ([10 U.S.C. 16302](/usc/10/16302.md));
- (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](/usc/20/1088.md?p=e);
- (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 [section 1087aa(b)(1)(A) of this title](/usc/20/1087aa.md?p=b-1-A), a notice and explanation providing a comparison of the interest rates of loans under this part and part D and informing the borrower that the borrower has reached the maximum annual borrowing limit for which the borrower is eligible as referenced under subparagraphs (A) and (D) of [section 1087e(a)(2) of this title](/usc/20/1087e.md?p=a-2); and
- (18) with respect to current undergraduate Federal Perkins loan borrowers, as described in [section 1087aa(b)(1)(B) of this title](/usc/20/1087aa.md?p=b-1-B), a notice and explanation providing a comparison of the interest rates of loans under this part and part D and informing the borrower that the borrower has reached the maximum annual borrowing limit for which the borrower is eligible on Federal Direct Stafford Loans as referenced under [section 1087e(a)(2)(A) of this title](/usc/20/1087e.md?p=a-2-A).
- (b) **Disclosure required prior to repayment—** Each [institution of higher education](/usc/20/1001.md?p=a) shall enter into an agreement with the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1001.md?p=a) 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](/usc/20/1001.md?p=a), 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](/usc/20/1066a.md?p=1) 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](/usc/20/1003.md?p=17) to make payments with respect to such loan.
# §1087dd. Terms of loans
- (a) **Terms and conditions—**
- (1) Loans from any student loan [fund](/usc/20/4702.md?p=3) established pursuant to an agreement under [section 1087cc of this title](/usc/20/1087cc.md) to any student by any institution shall, subject to such conditions, limitations, and requirements as the [Secretary](/usc/20/1003.md?p=17) shall prescribe by regulation, be made on such terms and conditions as the institution may determine.
- (2)
- (A) Except as provided in [paragraph (4)](#a-4), the total of loans made to a student in any [academic year](/usc/20/1088.md?p=a-2-A) or its equivalent by an [institution of higher education](/usc/20/1001.md?p=a) from a loan [fund](/usc/20/4702.md?p=3) 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](/usc/20/1003.md?p=17)).
- (B) Except as provided in [paragraph (4)](#a-4), the aggregate unpaid principal amount for all loans made to a student by institutions of higher education from loan [funds](/usc/20/4702.md?p=3) 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](/usc/20/1003.md?p=17), and including any loans from such [funds](/usc/20/4702.md?p=3) 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](/usc/20/1003.md?p=17)), and including any loans from such [funds](/usc/20/4702.md?p=3) 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](/usc/20/1003.md?p=17) under [paragraph (1)](#a-1) shall be designed to prevent the impairment of the capital student loan [funds](/usc/20/4702.md?p=3) 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)](#a-2-A) and [(2)(B)](#a-2-B) by 20 percent.
- (b) **Demonstration of need and eligibility required—**
- (1) A loan from a student loan [fund](/usc/20/4702.md?p=3) 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 [section 1091 of this title](/usc/20/1091.md), and who provides the institution with the student’s drivers license number, if any, at the time of application for the loan. A student who is in default on a loan under this part shall not be eligible for an additional loan under this part unless such loan meets one of the conditions for exclusion under [section 1087bb(g)(1)(E) of this title](/usc/20/1087bb.md?p=g-1-E).
- (2) If the institution’s capital contribution under [section 1087bb of this title](/usc/20/1087bb.md) is directly or indirectly based in part on the financial need demonstrated by students who are (A) attending the institution less than full time, or (B) independent students, then a reasonable portion of the loans made from the institution’s student loan [fund](/usc/20/4702.md?p=3) containing the contribution shall be made available to such students.
- (c) **Contents of loan agreement—**
- (1) Any agreement between an institution and a student for a loan from a student loan [fund](/usc/20/4702.md?p=3) assisted under this part—
- (A) shall be evidenced by note or other written instrument which, except as provided in [paragraph (2)](#c-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](/usc/20/1003.md?p=17)) 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](/usc/20/1001.md?p=a) or a comparable institution outside the United States approved for this purpose by the [Secretary](/usc/20/1003.md?p=17), 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](/usc/20/1003.md?p=17), 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](/usc/20/4702.md?p=3) 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)](#c-2-A-i), or [(ii)](#c-2-A-ii) during any period in which repayment is suspended by reason of [paragraph (2)](#c-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](/usc/20/1003.md?p=17);
- (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](/usc/20/1003.md?p=17) of Veterans Affairs to be unemployable due to a service-connected [disability](/usc/20/1003.md?p=6);
- (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](/usc/20/1003.md?p=17) for such purpose), to such institution, and except as necessary to carry out [section 1087cc(a)(6)](/usc/20/1087cc.md?p=a-6)[^1] of this title;
- (H) pursuant to regulations of the [Secretary](/usc/20/1003.md?p=17), 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](/usc/20/1003.md?p=17), 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](/usc/20/1088.md?p=e) under [section 1087cc(c) of this title](/usc/20/1087cc.md?p=c).
- (2)
- (A) No repayment of principal of, or interest on, any loan from a student loan [fund](/usc/20/4702.md?p=3) 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](/usc/20/1066a.md?p=1); or
- (II) is pursuing a course of study pursuant to a graduate fellowship program approved by the [Secretary](/usc/20/1003.md?p=17), or pursuant to a rehabilitation training program for disabled individuals approved by the [Secretary](/usc/20/1003.md?p=17),
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](/usc/20/1088.md?p=d-4); or
- (II) is performing [qualifying National Guard duty during a war or other military operation or national emergency](/usc/20/1088.md?p=d-5),
and for the 180-day period following the demobilization date for the service described in subclause [(I)](#c-2-A-iii-I) or [(II)](#c-2-A-iii-II);
- (iv) not in excess of 3 years for any reason which the lender determines, in accordance with regulations prescribed by the [Secretary](/usc/20/1003.md?p=17) under [section 1085(o)](/usc/20/1085.md?p=o) of this title, has caused or will cause the borrower to have an economic hardship;
- (v) during which the borrower is engaged in service described in [section 1087ee(a)(2) of this title](/usc/20/1087ee.md?p=a-2); or
- (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)](#c-1-A) of paragraph (1).
- (B) No repayment of principal of, or interest on, any loan for any period described in [subparagraph (A)](#c-2-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)](#c-2-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](/usc/20/1003.md?p=17) is authorized, when good cause is shown, to extend, in accordance with regulations, the 10-year maximum repayment period provided for in [subparagraph (A)](#c-1-A) of paragraph (1) with respect to individual loans.
- (B) Pursuant to uniform criteria established by the [Secretary](/usc/20/1003.md?p=17), the repayment period for any student borrower who during the repayment period is a [low-income individual](/usc/20/1059e.md?p=b-4) 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)](#c-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)](#c-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)](#c-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 [section 10101 of title 10](/usc/10/10101.md) is called or ordered to [active duty](/usc/20/1088.md?p=d-1) for a period of more than 30 days (as defined in [section 101(d)(2)](/usc/20/101.md) of such title). Such period of exclusion shall include the period necessary to resume enrollment at the borrower’s next available regular enrollment period.
- (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](/usc/20/4702.md?p=3) established pursuant to such agreement reasonably available (to the extent of the available [funds](/usc/20/4702.md?p=3) in such [fund](/usc/20/4702.md?p=3)) to all eligible students in such institutions in need thereof.
- (e) **Forbearance—**
- (1) The [Secretary](/usc/20/1003.md?p=17) shall ensure that, as documented in accordance with [paragraph (2)](#e-2), an [institution of higher education](/usc/20/1001.md?p=a) 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](/usc/20/1003.md?p=17) 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 [section 2174 of title 10](/usc/10/2174.md) and, pursuant to that eligibility, the interest on such loan is being paid under [subsection (j)](#j), except that the form of a forbearance under this paragraph shall be a temporary cessation of all payments on the loan other than payments of interest on the loan that are made under [subsection (j)](#j).
- (2) For the purpose of [paragraph (1)](#e-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](/usc/20/1001.md?p=a); and
- (B) recording the terms in the borrower’s file.
- (f) **Special repayment rule authority—**
- (1) Subject to such restrictions as the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) may, in the agreement entered into under this part, authorize an [institution of higher education](/usc/20/1001.md?p=a) to compromise on the repayment of such defaulted loans in accordance with [paragraph (2)](#f-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](/usc/20/4702.md?p=3) under this part bears to the institution’s capital contribution to such [fund](/usc/20/4702.md?p=3).
- (2) No compromise repayment of a defaulted loan as authorized by [paragraph (1)](#f-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](/usc/20/1003.md?p=17) 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 [section 1099c(c) of this title](/usc/20/1099c.md?p=c).
- (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 [section 1087ee(a) of this title](/usc/20/1087ee.md?p=a).
- (5) **Reporting—** The [Secretary](/usc/20/1003.md?p=17) or institution, as the case may be, shall report to [consumer reporting agencies](/usc/20/1088.md?p=e) 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](/usc/20/1003.md?p=17) in the case of a loan held by the [Secretary](/usc/20/1003.md?p=17), the loan shall be considered rehabilitated, and the institution that made that loan (or the [Secretary](/usc/20/1003.md?p=17), in the case of a loan held by the [Secretary](/usc/20/1003.md?p=17)) shall request that any [consumer reporting agency](/usc/20/1088.md?p=e) 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 [section 1091 of this title](/usc/20/1091.md) from receiving additional grant, loan, or work assistance under this subchapter (for which the borrower is otherwise eligible) on the basis of defaulting on the loan prior to such rehabilitation.
- (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](/usc/20/1001.md?p=a) may establish, with the approval of the [Secretary](/usc/20/1003.md?p=17), an incentive repayment program designed to reduce default and to replenish student loan [funds](/usc/20/4702.md?p=3) 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](/usc/20/4702.md?p=3), including any Federal [funds](/usc/20/4702.md?p=3) from the student loan [fund](/usc/20/4702.md?p=3), or with institutional [funds](/usc/20/4702.md?p=3) from the student loan [fund](/usc/20/4702.md?p=3).
- (j) **Armed Forces and NOAA Commissioned Officer Corps student loan interest payment programs—**
- (1) **Authority—** Using [funds](/usc/20/4702.md?p=3) received by transfer to the [Secretary](/usc/20/1003.md?p=17) under [section 2174 of title 10](/usc/10/2174.md) or [section 3078 of title 33](/usc/33/3078.md) for the payment of interest on a loan made under this part to a member of the Armed Forces or an [officer](/usc/20/1094.md?p=i-5) in the commissioned [officer](/usc/20/1094.md?p=i-5) corps of the National Oceanic and Atmospheric Administration, respectively, the [Secretary](/usc/20/1003.md?p=17) shall pay the interest on the loan as due for a period not in excess of 36 consecutive months. The [Secretary](/usc/20/1003.md?p=17) may not pay interest on such a loan out of any [funds](/usc/20/4702.md?p=3) other than [funds](/usc/20/4702.md?p=3) that have been so transferred.
- (2) **Forbearance—** During the period in which the [Secretary](/usc/20/1003.md?p=17) is making payments on a loan under [paragraph (1)](#j-1), the [institution of higher education](/usc/20/1001.md?p=a) shall grant the borrower forbearance in accordance with [subsection (e)(1)(C)](#e-1-C).
- (k) **Additional safeguards—** The [Secretary](/usc/20/1003.md?p=17) may develop such additional safeguards as the [Secretary](/usc/20/1003.md?p=17) determines necessary to prevent fraud and abuse in the cancellation of liability under [subsection (c)(1)(F)](#c-1-F). Notwithstanding [subsection (c)(1)(F)](#c-1-F), the [Secretary](/usc/20/1003.md?p=17) may promulgate regulations to resume collection on loans cancelled under [subsection (c)(1)(F)](#c-1-F) in any case in which—
- (1) a borrower received a cancellation of liability under [subsection (c)(1)(F)](#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](/usc/20/1003.md?p=14); or
- (2) the [Secretary](/usc/20/1003.md?p=17) determines necessary.
# §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](/usc/20/4702.md?p=3) 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)](#a-2).
- (2) Loans shall be canceled under [paragraph (1)](#a-1) for service—
- (A) as a full-time teacher for service in an [academic year](/usc/20/1088.md?p=a-2-A) (including such a teacher employed by an [educational service agency](/usc/20/1021.md?p=5))—
- (i) in a public or other [nonprofit](/usc/20/1003.md?p=13) private [elementary school](/usc/20/1003.md?p=9) or [secondary school](/usc/20/1003.md?p=16), which, for the purpose of this paragraph and for that year—
- (I) has been determined by the [Secretary](/usc/20/1003.md?p=17) (pursuant to regulations of the [Secretary](/usc/20/1003.md?p=17) and after consultation with the [State educational agency](/usc/20/1003.md?p=20) of the [State](/usc/20/1003.md?p=21-A) in which the [school](/usc/20/5802.md?p=a-11) is located) to be a [school](/usc/20/5802.md?p=a-11) 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 [[20 U.S.C. 6313(a)(5)](/usc/20/6313.md?p=a-5)], exceeds 30 percent of the total number of children enrolled in such [school](/usc/20/5802.md?p=a-11); and
- (II) is in the [school](/usc/20/5802.md?p=a-11) district of a [local educational agency](/usc/20/1003.md?p=11) which is eligible in such year for assistance pursuant to part A of title I of the Elementary and Secondary Education Act of 1965 [[20 U.S.C. 6311](/usc/20/6311.md) et seq.]; or
- (ii) in one or more public, or [nonprofit](/usc/20/1003.md?p=13) private, [elementary schools](/usc/20/1003.md?p=9) or [secondary schools](/usc/20/1003.md?p=16) or locations operated by an [educational service agency](/usc/20/1021.md?p=5) that have been determined by the [Secretary](/usc/20/1003.md?p=17) (pursuant to regulations of the [Secretary](/usc/20/1003.md?p=17) and after consultation with the [State educational agency](/usc/20/1003.md?p=20) of the [State](/usc/20/1003.md?p=21-A) in which the [educational service agency](/usc/20/1021.md?p=5) operates) to be a [school](/usc/20/5802.md?p=a-11) 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 [[20 U.S.C. 6313(a)(5)](/usc/20/6313.md?p=a-5)], exceeds 30 percent of the total number of children taught at such [school](/usc/20/5802.md?p=a-11) or location;
- (B) as a full-time staff member in a preschool program carried on under the Head Start Act [[42 U.S.C. 9831](/usc/42/9831.md) et seq.], or in a prekindergarten or child care program that is licensed or regulated by the [State](/usc/20/1003.md?p=21-A), that is operated for a period which is comparable to a full [school](/usc/20/5802.md?p=a-11) year in the locality if the salary of such staff member is not more than the salary of a comparable employee of the [local educational agency](/usc/20/1003.md?p=11);
- (C) as a full-time [special education teacher](/usc/20/1003.md?p=19), including teachers of infants, toddlers, children, or youth with [disabilities](/usc/20/1003.md?p=6) in a public or other [nonprofit](/usc/20/1003.md?p=13) elementary or [secondary school](/usc/20/1003.md?p=16) system, including a system administered by an [educational service agency](/usc/20/1021.md?p=5), or as a full-time qualified professional provider of [early intervention services](/usc/20/1087ii.md?p=c) in a public or other [nonprofit](/usc/20/1003.md?p=13) program under public supervision by the lead agency as authorized in [section 1435(a)(10) of this title](/usc/20/1435.md?p=a-10);
- (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 section 351(a), of [title 37](/usc/37.md) as an area of hostilities;
- (E) as a volunteer under the Peace Corps Act [[22 U.S.C. 2501](/usc/22/2501.md) et seq.] or a volunteer under the Domestic Volunteer Service Act of 1973 [[42 U.S.C. 4950](/usc/42/4950.md) et seq.];
- (F) as a full-time law enforcement [officer](/usc/20/1094.md?p=i-5) or corrections [officer](/usc/20/1094.md?p=i-5) for service to local, [State](/usc/20/1003.md?p=21-A), or Federal law enforcement or corrections agencies, or as a full-time attorney employed in a defender organization established in accordance with [section 3006A(g)(2) of title 18](/usc/18/3006A.md?p=g-2);
- (G) as a full-time teacher of mathematics, science, foreign languages, bilingual education, or any other field of expertise where the [State educational agency](/usc/20/1003.md?p=20) 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](/usc/20/1003.md?p=13) child or family service agency who is providing, or supervising the provision of, services to [high-risk children](/usc/20/1087ii.md?p=b) who are from [low-income communities](/usc/20/1087ii.md?p=a) and the families of such children;
- (J) as a full-time fire fighter for service to a local, [State](/usc/20/1003.md?p=21-A), or Federal fire [department](/usc/20/1003.md?p=4) or fire district;
- (K) as a full-time faculty member at a Tribal College or University, as that term is defined in [section 1059c of this title](/usc/20/1059c.md);
- (L) as a librarian, if the librarian has a master’s degree in library science and is employed in—
- (i) an [elementary school](/usc/20/1003.md?p=9) or [secondary school](/usc/20/1003.md?p=16) that is eligible for assistance under part A of title I of the Elementary and Secondary Education Act of 1965 [[20 U.S.C. 6311](/usc/20/6311.md) et seq.]; or
- (ii) a public library that serves a geographic area that contains one or more [schools](/usc/20/5802.md?p=a-11) 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](/usc/20/5802.md?p=a-11) that are eligible for assistance under title I of the Elementary and Secondary Education Act of 1965 [[20 U.S.C. 6301](/usc/20/6301.md) et seq.].
For the purpose of this paragraph, the term “children with disabilities” has the meaning set forth in [section 1401 of this title](/usc/20/1401.md).
- (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)](#a-2-A), [(C)](#a-2-C), [(D)](#a-2-D), [(F)](#a-2-F), [(G)](#a-2-G), [(H)](#a-2-H), [(I)](#a-2-I), [(J)](#a-2-J), [(K)](#a-2-K), [(L)](#a-2-L), or [(M)](#a-2-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)](#a-2-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)](#a-2-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](/usc/20/1088.md?p=a-2-A) as defined by the [Secretary](/usc/20/1003.md?p=17).
- (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](/usc/26.md).
- (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 ([42 U.S.C. 12601](/usc/42/12601.md) et seq.).
- (7) An individual with an outstanding loan obligation under this part who performs service of any type that is described in [paragraph (2)](#a-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](/usc/20/1003.md?p=17) 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](/usc/20/4702.md?p=3) 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](/usc/20/4702.md?p=3) provided by the [Secretary](/usc/20/1003.md?p=17) under [section 1087hh of this title](/usc/20/1087hh.md). None of the [funds](/usc/20/4702.md?p=3) appropriated pursuant to [section 1087aa(b)](/usc/20/1087aa.md?p=b)[^1] of this title shall be available for payments pursuant to this subsection. To the extent feasible, the [Secretary](/usc/20/1003.md?p=17) shall pay the amounts for which any institution qualifies under this subsection not later than 3 months after the institution files an institutional application for campus-based [funds](/usc/20/4702.md?p=3).
- (c) **Special rules—**
- (1) **List—** If the list of [schools](/usc/20/5802.md?p=a-11) in which a teacher may perform service pursuant to [subsection (a)(2)(A)](#a-2-A) is not available before May 1 of any year, the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/5802.md?p=a-11) which—
- (A) meets the requirements of [subsection (a)(2)(A)](#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](/usc/20/5802.md?p=a-11) and shall be eligible for loan cancellation pursuant to [subsection (a)(1)](#a-1) such[^2] subsequent years.
# §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](/usc/20/4702.md?p=3) established under this part by each [institution of higher education](/usc/20/1001.md?p=a) as follows:
- (1) The [Secretary](/usc/20/1003.md?p=17) shall first be paid an amount which bears the same ratio to the balance in such [fund](/usc/20/4702.md?p=3) at the close of September 30, 2017, as the total amount of the Federal capital contributions to such [fund](/usc/20/4702.md?p=3) by the [Secretary](/usc/20/1003.md?p=17) under this part bears to the sum of such Federal contributions and the institution’s capital contributions to such [fund](/usc/20/4702.md?p=3).
- (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](/usc/20/1003.md?p=17) has made an agreement under this part, shall pay to the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/4702.md?p=3) 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](/usc/20/4702.md?p=3) and not already reimbursed from the [fund](/usc/20/4702.md?p=3) or from such payments of principal or interest), as was determined for the [Secretary](/usc/20/1003.md?p=17) under [subsection (a)](#a).
- (c) **Distribution of excess capital—**
- (1) Upon a finding by the institution or the [Secretary](/usc/20/1003.md?p=17) prior to October 1, 2017, that the liquid [assets](/usc/20/1087vv.md?p=f-2) of a student loan [fund](/usc/20/4702.md?p=3) 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](/usc/20/1003.md?p=17), as the case may be, there shall be, subject to such limitations as may be included in regulations of the [Secretary](/usc/20/1003.md?p=17) or in such agreement, a capital distribution from such [fund](/usc/20/4702.md?p=3). Such capital distribution shall be made as follows:
- (A) The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) to the student loan [fund](/usc/20/4702.md?p=3) prior to such distribution bear to the sum of such Federal capital contributions and the capital contributions to the [fund](/usc/20/4702.md?p=3) made by the institution.
- (B) The remainder of the capital distribution shall be paid to the institution.
- (2) No finding that the liquid [assets](/usc/20/1087vv.md?p=f-2) of a student loan [fund](/usc/20/4702.md?p=3) established under this part exceed the amount required under [paragraph (1)](#c-1) may be made prior to a date which is 2 years after the date on which the [institution of higher education](/usc/20/1001.md?p=a) received the [funds](/usc/20/4702.md?p=3) from such institution’s allocation under [section 1087bb of this title](/usc/20/1087bb.md).
# §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](/usc/20/1003.md?p=17) by an institution with an agreement under [section 1087cc(a) of this title](/usc/20/1087cc.md?p=a),
the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) may prescribe, including reimbursement for expenses reasonably incurred in attempting such collection.
- (b) **Collection of referred, transferred, or assigned loans—** The [Secretary](/usc/20/1003.md?p=17) shall continue to attempt to collect any loan referred, transferred, or assigned under paragraph (4) or (5) of [section 1087cc(a) of this title](/usc/20/1087cc.md?p=a) until all appropriate collection efforts, as determined by the [Secretary](/usc/20/1003.md?p=17), have been expended.
# §1087hh. General authority of Secretary
In carrying out the provisions of this part, the [Secretary](/usc/20/1003.md?p=17) 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 [section 1082(a)(2) of this title](/usc/20/1082.md?p=a-2); and
- (4) to enter into a contract or other arrangement with [State](/usc/20/1003.md?p=21-A) or [nonprofit](/usc/20/1003.md?p=13) agencies and, on a competitive basis, with collection agencies for servicing and collection of loans under this part.
# §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 [section 6333(c) of this title](/usc/20/6333.md?p=c).
- (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](/usc/20/1003.md?p=6) and infants and toddlers with [disabilities](/usc/20/1003.md?p=6) as defined in sections [1401](/usc/20/1401.md) and [1432](/usc/20/1432.md) of this title, respectively, and the term “early intervention services” has the meaning given the term in [section 1432 of this title](/usc/20/1432.md).
# §1087kk. Amount of need
Except as otherwise provided therein, for [award year](/usc/20/1088.md?p=a-1) 2024–2025 and each subsequent [award year](/usc/20/1088.md?p=a-1), 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](/usc/20/1087ll.md?p=a) of such student, minus
- (2) the [student aid index](/usc/20/1087mm.md?p=a) (as defined in [section 1087mm of this title](/usc/20/1087mm.md)) for such student, minus
- (3) other financial assistance not received under this subchapter (as defined in [section 1087vv(i) of this title](/usc/20/1087vv.md?p=i)).
# §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](/usc/20/4702.md?p=2) 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](/usc/20/4702.md?p=2) 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](/usc/20/1021.md?p=16), 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 [section 403(b) of title 37](/usc/37/403.md?p=b), a standard allowance for food based upon such student’s choice of purchasing food on-campus or off-campus (determined respectively in accordance with subparagraph [(A)](#a-5-A) or [(B)](#a-5-B)), but not for housing costs; and
- (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)](#a-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](/usc/20/1003.md?p=6), an allowance (as determined by the institution) for those expenses related to the student’s [disability](/usc/20/1003.md?p=6), 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](#a) 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](/usc/20/1021.md?p=16) 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](/usc/20/1001.md?p=a) less than half-time, an [institution of higher education](/usc/20/1001.md?p=a) may include an allowance for living expenses, including food and housing costs in accordance with [subsection (a)(4)](#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](#a) described in [paragraphs (1) through (14)](#a-1..a-14) of subsection (a), and shall disclose such elements on any portion of the website describing tuition and fees of the institution.
# §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](/usc/20/1088.md?p=a-2-A), as determined in accordance with this part.
- (b) **Special rule for students eligible for the total maximum Pell Grant—** The [Secretary](/usc/20/1003.md?p=17) shall consider an [applicant](/usc/20/3982.md?p=1) to automatically have a [student aid index](#a) equal to zero if the [applicant](/usc/20/3982.md?p=1) is eligible for the total maximum Federal Pell Grant under [section 1070a(b)(1)(A) of this title](/usc/20/1070a.md?p=b-1-A), except that, if the [applicant](/usc/20/3982.md?p=1) has a calculated [student aid index](#a) of less than zero the [Secretary](/usc/20/1003.md?p=17) shall consider the negative number as the [student aid index](#a) for the [applicant](/usc/20/3982.md?p=1).
- (c) **Special rule for nonfilers—** Notwithstanding [subsection (b)](#b), for an [applicant](/usc/20/3982.md?p=1) (or, as applicable, an [applicant](/usc/20/3982.md?p=1) and spouse, or an [applicant](/usc/20/3982.md?p=1)’s [parents](/usc/20/1021.md?p=16)) who is not required to file a Federal tax return for the second preceding tax year, the [Secretary](/usc/20/1003.md?p=17) shall for the purposes of this subchapter consider the [student aid index](#a) as equal to − $1,500 for the [applicant](/usc/20/3982.md?p=1).
# §1087nn. Determination of student aid index
The [student aid index](/usc/20/1087mm.md?p=a)—
- (1) for a dependent student shall be determined in accordance with [section 1087oo](/usc/20/1087oo.md) of this title;
- (2) for a single [independent](/usc/20/1087vv.md?p=d) student or a married [independent](/usc/20/1087vv.md?p=d) student without dependents (other than a spouse) shall be determined in accordance with [section 1087pp of this title](/usc/20/1087pp.md); and
- (3) for an [independent](/usc/20/1087vv.md?p=d) student with dependents other than a spouse shall be determined in accordance with [section 1087qq of this title](/usc/20/1087qq.md).
# §1087oo. Student aid index for dependent students
- (a) **Computation of student aid index—**
- (1) **In general—** Except as provided in [paragraph (2)](#a-2), for each dependent student, the [student aid index](/usc/20/1087mm.md?p=a) is equal to the sum of—
- (A) the assessment of the [parents](/usc/20/1021.md?p=16)’ adjusted available income (determined in accordance with [subsection (b)](#b));
- (B) the assessment of the student’s available income (determined in accordance with [subsection (g)](#g)); and
- (C) the student’s available [assets](/usc/20/1087vv.md?p=f-2) (determined in accordance with [subsection (h)](#h)).
- (2) **Exception—** If the sum determined under [paragraph (1)](#a-1) with respect to a dependent student is less than − $1,500, the [student aid index](/usc/20/1087mm.md?p=a) for the dependent student shall be − $1,500.
- (b) **Assessment of parents’ adjusted available income—** The assessment of [parents](/usc/20/1021.md?p=16)’ adjusted available income is equal to the amount determined by—
- (1) computing adjusted available income by adding—
- (A) the [parents](/usc/20/1021.md?p=16)’ available income (determined in accordance with [subsection (c)](#c)); and
- (B) the [parents](/usc/20/1021.md?p=16)’ available [assets](/usc/20/1087vv.md?p=f-2) (determined in accordance with [subsection (d)](#d));
- (2) assessing such adjusted available income in accordance with the assessment schedule set forth in [subsection (e)](#e); and
- (3) considering such assessment resulting under [paragraph (2)](#b-2) as the amount determined under this subsection.
- (c) **Parents’ available income—**
- (1) **In general—** The [parents](/usc/20/1021.md?p=16)’ available income is determined by subtracting from total income (as defined in [section 1087vv of this title](/usc/20/1087vv.md))—
- (A) Federal income taxes;
- (B) an allowance for payroll taxes, determined in accordance with [paragraph (2)](#c-2);
- (C) an income protection allowance, determined in accordance with [paragraph (3)](#c-3); and
- (D) an employment expense allowance, determined in accordance with [paragraph (4)](#c-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](/usc/20/1021.md?p=16), multiplied by the rate of tax under [section 3101(b) of title 26](/usc/26/3101.md?p=b); and
- (B) the amount earned by the [parents](/usc/20/1021.md?p=16) 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 [section 3101(a) of title 26](/usc/26/3101.md?p=a).
- (3) **Income protection allowance—** The income protection allowance shall equal the amount determined in the following table, as adjusted by the [Secretary](/usc/20/1003.md?p=17) pursuant to [section 1087rr(b) of this title](/usc/20/1087rr.md?p=b):
| Income Protection Allowance (to be adjusted for 2023–2024 and succeeding years) | |
| --- | --- |
| [Family Size](/usc/20/1070a.md?p=a-2-B) (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](/usc/20/1021.md?p=16)’s earned income or married [parents](/usc/20/1021.md?p=16)’ combined earned income (as adjusted by the [Secretary](/usc/20/1003.md?p=17) pursuant to [section 1087rr(g) of this title](/usc/20/1087rr.md?p=g)).
- (d) **Parents’ available assets—**
- (1) **In general—**
- (A) **Determination—** Except as provided in [subparagraph (B)](#d-1-B), the [parents](/usc/20/1021.md?p=16)’ available [assets](/usc/20/1087vv.md?p=f-2) are equal to—
- (i) the difference between the [parents](/usc/20/1021.md?p=16)’ [assets](/usc/20/1087vv.md?p=f-2) and the asset protection allowance (determined in accordance with [paragraph (2)](#d-2)); multiplied by
- (ii) 12 percent.
- (B) **Not less than zero—** The [parents](/usc/20/1021.md?p=16)’ available [assets](/usc/20/1087vv.md?p=f-2) 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](/usc/20/1003.md?p=17) pursuant to [section 10877rr(d) of this title](https://uscode.house.gov/view.xhtml?req=(/us/usc/t20/s10877rr/d))):
| Asset Protection Allowances for [Parents](/usc/20/1021.md?p=16) of Dependent Students | | |
| --- | --- | --- |
| If the age of the oldest [parent](/usc/20/1021.md?p=16) is— | And there are | |
| two [parents](/usc/20/1021.md?p=16) | one [parent](/usc/20/1021.md?p=16) | |
| | 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](/usc/20/1021.md?p=16)’ adjusted available income (as determined under [subsection (b)(1)](#b-1) and hereafter in this subsection referred to as “AAI”) is calculated based on the following table (as revised by the [Secretary](/usc/20/1003.md?p=17) pursuant to [section 1087rr(e) of this title](/usc/20/1087rr.md?p=e)):
| [Parents](/usc/20/1021.md?p=16)’ Contribution From AAI | |
| --- | --- |
| If the [parents](/usc/20/1021.md?p=16)’ AAI is— | Then the [parents](/usc/20/1021.md?p=16)’ 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](/usc/20/1087vv.md?p=f-2) in the case of student whose [parents](/usc/20/1021.md?p=16) are married and not separated, or who are unmarried but live together, shall include the income and [assets](/usc/20/1087vv.md?p=f-2) of both [parents](/usc/20/1021.md?p=16).
- (2) **Divorced or separated parents—** Parental income and [assets](/usc/20/1087vv.md?p=f-2) for a student whose [parents](/usc/20/1021.md?p=16) are divorced or separated, but not remarried, is determined by including only the income and [assets](/usc/20/1087vv.md?p=f-2) of the [parent](/usc/20/1021.md?p=16) who provides the greater portion of the student’s financial support.
- (3) **Death of a parent—** Parental income and [assets](/usc/20/1087vv.md?p=f-2) in the case of the death of any [parent](/usc/20/1021.md?p=16) is determined as follows:
- (A) If either of the [parents](/usc/20/1021.md?p=16) has died, the surviving [parent](/usc/20/1021.md?p=16) shall be considered a single [parent](/usc/20/1021.md?p=16), until that [parent](/usc/20/1021.md?p=16) has remarried.
- (B) If both [parents](/usc/20/1021.md?p=16) have died, the student shall not report any parental income or [assets](/usc/20/1087vv.md?p=f-2).
- (4) **Remarried parents—** If a [parent](/usc/20/1021.md?p=16) whose income and [assets](/usc/20/1087vv.md?p=f-2) are taken into account under [paragraph (2)](#f-2), or if a [parent](/usc/20/1021.md?p=16) who is a widow or widower and whose income is taken into account under [paragraph (3)](#f-3), has remarried, the income of that [parent](/usc/20/1021.md?p=16)’s spouse shall be included in determining the [parent](/usc/20/1021.md?p=16)’s assessment of adjusted available income if the student’s [parent](/usc/20/1021.md?p=16) and the stepparent are married as of the date of application for the [award year](/usc/20/1088.md?p=a-1) concerned.
- (5) **Single parent who is not divorced or separated—** Parental income and [assets](/usc/20/1087vv.md?p=f-2) in the case of a student whose [parent](/usc/20/1021.md?p=16) is not described in [paragraph (1)](#f-1) and is a single [parent](/usc/20/1021.md?p=16) who is not divorced, separated, or remarried, shall include the income and [assets](/usc/20/1087vv.md?p=f-2) of such single [parent](/usc/20/1021.md?p=16).
- (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)](#g-2)); multiplied by
- (B) 50 percent,
except that the amount determined under this paragraph shall not be less than − $1,500 for [award year](/usc/20/1088.md?p=a-1) 2024–2025 and not less than zero for [award year](/usc/20/1088.md?p=a-1) 2025–2026 and each [award year](/usc/20/1088.md?p=a-1) 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)](#g-3);
- (C) an income protection allowance that is equal to $9,410, as adjusted pursuant to [section 1087rr(b) of this title](/usc/20/1087rr.md?p=b); and
- (D) an allowance for [parents](/usc/20/1021.md?p=16)’ negative available income, determined in accordance with [paragraph (4)](#g-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 [section 3101(b) of title 26](/usc/26/3101.md?p=b); and
- (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 [section 3101(a) of title 26](/usc/26/3101.md?p=a).
- (4) **Allowance for parents’ negative available income—** The allowance for [parents](/usc/20/1021.md?p=16)’ negative available income is the amount, if any, by which the sum of the amounts deducted under [subsection (c)(1)](#c-1) exceeds the sum of the [parents](/usc/20/1021.md?p=16)’ total income (as defined in [section 1087vv of this title](/usc/20/1087vv.md)) and the [parents](/usc/20/1021.md?p=16)’ available [assets](/usc/20/1087vv.md?p=f-2) (as determined in accordance with [subsection (d)](#d)).
- (h) **Student’s assets—** The student’s [assets](/usc/20/1087vv.md?p=f-2) are determined by calculating the [assets](/usc/20/1087vv.md?p=f-2) of the student and multiplying such amount by 20 percent, except that the result shall not be less than zero.
# §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](/usc/20/1087vv.md?p=d) student without dependents other than a spouse, the [student aid index](/usc/20/1087mm.md?p=a) is equal to (except as provided in [paragraph (2)](#a-2)) the sum of—
- (A) the family’s available income (determined in accordance with [subsection (b)](#b)); and
- (B) the family’s available [assets](/usc/20/1087vv.md?p=f-2) (determined in accordance with [subsection (c)](#c)).
- (2) **Exception—** If the sum determined under [paragraph (1)](#a-1) with respect to an [independent](/usc/20/1087vv.md?p=d) student without dependents other than a spouse is less than − $1,500, the [student aid index](/usc/20/1087mm.md?p=a) for the [independent](/usc/20/1087vv.md?p=d) 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 [section 1087vv of this title](/usc/20/1087vv.md))—
- (i) Federal income taxes;
- (ii) an allowance for payroll taxes, determined in accordance with [paragraph (2)](#b-2);
- (iii) an income protection allowance that is equal to—
- (I) in the case of a single [independent](/usc/20/1087vv.md?p=d) student without dependents, $14,630, as adjusted pursuant to [section 1078rr(b) of this title](https://uscode.house.gov/view.xhtml?req=(/us/usc/t20/s1078rr/b)); and
- (II) in the case of a married [independent](/usc/20/1087vv.md?p=d) student without dependents, $23,460, as adjusted pursuant to [section 1078rr(b) of this title](https://uscode.house.gov/view.xhtml?req=(/us/usc/t20/s1078rr/b)); and
- (iv) in the case of a married [independent](/usc/20/1087vv.md?p=d) student, an employment expense allowance, as determined in accordance with [paragraph (3)](#b-3); and
- (B) multiplying the amount determined under [subparagraph (A)](#b-1-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 [section 3101(b) of title 26](/usc/26/3101.md?p=b); and
- (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 [section 3101(a) of title 26](/usc/26/3101.md?p=a).
- (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](/usc/20/1003.md?p=17) pursuant to [section 1087rr(g) of this title](/usc/20/1087rr.md?p=g)).
- (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)](#c-1-B), the family’s available [assets](/usc/20/1087vv.md?p=f-2) are equal to—
- (i) the difference between the family’s [assets](/usc/20/1087vv.md?p=f-2) (as defined in [section 1087vv(f) of this title](/usc/20/1087vv.md?p=f)) and the asset protection allowance (determined in accordance with [paragraph (2)](#c-2)); multiplied by
- (ii) 20 percent.
- (B) **Not less than zero—** The family’s available [assets](/usc/20/1087vv.md?p=f-2) 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](/usc/20/1003.md?p=17) pursuant to [section 1087rr(d) of this title](/usc/20/1087rr.md?p=d)):
| Asset Protection Allowances for Families and Students | | |
| --- | --- | --- |
| If the age of the student is— | And the student is | |
| married | single | |
| | 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](/usc/20/1087vv.md?p=f-2) shall not be considered in determining the family’s available income or [assets](/usc/20/1087vv.md?p=f-2).
# §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](/usc/20/1087vv.md?p=d) student with dependents other than a spouse, the [student aid index](/usc/20/1087mm.md?p=a) 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)](#b)); and
- (ii) the family’s available [assets](/usc/20/1087vv.md?p=f-2) (determined in accordance with [subsection (c)](#c));
- (B) assessing such adjusted available income in accordance with an assessment schedule set forth in [subsection (d)](#d); and
- (C) considering such assessment resulting under [subparagraph (B)](#a-1-B) as the amount determined under this subsection.
- (2) **Exception—** If the sum determined under [paragraph (1)](#a-1) with respect to an [independent](/usc/20/1087vv.md?p=d) student with dependents other than a spouse is less than − $1,500, the [student aid index](/usc/20/1087mm.md?p=a) for the [independent](/usc/20/1087vv.md?p=d) 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 [section 1087vv of this title](/usc/20/1087vv.md))—
- (A) Federal income taxes;
- (B) an allowance for payroll taxes, determined in accordance with [paragraph (2)](#b-2);
- (C) an income protection allowance, determined in accordance with [paragraph (3)](#b-3); and
- (D) an employment expense allowance, determined in accordance with [paragraph (4)](#b-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 [section 3101(b) of title 26](/usc/26/3101.md?p=b); and
- (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 [section 3101(a) of title 26](/usc/26/3101.md?p=a).
- (3) **Income protection allowance—** The income protection allowance shall equal the amount determined in the following table, as adjusted by the [Secretary](/usc/20/1003.md?p=17) pursuant to [section 1078rr(b) of this title](https://uscode.house.gov/view.xhtml?req=(/us/usc/t20/s1078rr/b)):
- (A) In the case of a married [independent](/usc/20/1087vv.md?p=d) student with dependents:
| Income Protection Allowance (to be adjusted for 2023–2024 and succeeding years) | |
| --- | --- |
| [Family Size](/usc/20/1070a.md?p=a-2-B) (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](/usc/20/1087vv.md?p=d) student with dependents:
| Income Protection Allowance (to be adjusted for 2023–2024 and succeeding years) | |
| --- | --- |
| [Family Size](/usc/20/1070a.md?p=a-2-B) (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](/usc/20/1003.md?p=17) pursuant to [section 1087rr(g) of this title](/usc/20/1087rr.md?p=g)).
- (c) **Family’s available assets—**
- (1) **In general—**
- (A) **Determination—** Except as provided in [subparagraph (B)](#c-1-B), the family’s available [assets](/usc/20/1087vv.md?p=f-2) are equal to—
- (i) the difference between the family’s [assets](/usc/20/1087vv.md?p=f-2) (as defined in [1087vv(f)](/usc/20/1087vv.md?p=f) of this title) and the asset protection allowance (determined in accordance with [paragraph (2)](#c-2)); multiplied by
- (ii) 7 percent.
- (B) **Not less than zero—** The family’s available [assets](/usc/20/1087vv.md?p=f-2) 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](/usc/20/1003.md?p=17) pursuant to [section 1087rr(d) of this title](/usc/20/1087rr.md?p=d)):
| Asset Protection Allowances for Families and Students | | |
| --- | --- | --- |
| If the age of the student is— | And the student is | |
| married | single | |
| | 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)](#a-1) and hereafter in this subsection referred to as “AAI”) is calculated based on the following table (as revised by the [Secretary](/usc/20/1003.md?p=17) pursuant to [section 1087rr(e) of this title](/usc/20/1087rr.md?p=e)):
| Assessment From Adjusted Available Income | |
| --- | --- |
| 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](/usc/20/1087vv.md?p=f-2) shall not be considered in determining the family’s available income or [assets](/usc/20/1087vv.md?p=f-2).
# §1087rr. Regulations; updated tables
- (a) **Authority to prescribe regulations restricted—** Notwithstanding any other provision of law, the [Secretary](/usc/20/1003.md?p=17) 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)](#b..g); and
- (2) with respect to the definition of [cost of attendance](/usc/20/1087ll.md?p=a) under [section 1087ll](/usc/20/1087ll.md) of this title, excluding [section 1087ll(a)(1)](/usc/20/1087ll.md?p=a-1) of this title.
- (b) **Income protection allowance adjustments—** For [award year](/usc/20/1088.md?p=a-1) 2023–2024 and each subsequent [award year](/usc/20/1088.md?p=a-1), the [Secretary](/usc/20/1003.md?p=17) shall publish in the Federal Register revised income protection allowances for the purposes of subsections [(c)(3)](/usc/20/1087oo.md?p=c-3) and [(g)(2)(C)](/usc/20/1087oo.md?p=g-2-C) of section 1087oo of this title, subclauses (I) and (II) of [section 1087pp(b)(1)(A)(iii) of this title](/usc/20/1087pp.md?p=b-1-A-iii), and [section 1087qq(b)(3) of this title](/usc/20/1087qq.md?p=b-3), by increasing the income protection allowances in each of such provisions, by a percentage equal to the percentage increase in the [Consumer Price Index](#f), as defined in [subsection (f)](#f), between April 2020 and the April in the year prior to the beginning of the [award year](/usc/20/1088.md?p=a-1) and rounding the result to the nearest $10.
- (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](/usc/20/1087vv.md?p=f-2) as defined under [section 1087vv(f) of this title](/usc/20/1087vv.md?p=f) is the following:
| Farm/Business Net Worth Adjustment | |
| --- | --- |
| 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](/usc/20/1088.md?p=a-1) 2023–2024 and each subsequent [award year](/usc/20/1088.md?p=a-1), the [Secretary](/usc/20/1003.md?p=17) shall publish in the Federal Register a revised table of the adjusted net worth of a farm or business for purposes of [section 1087vv(f) of this title](/usc/20/1087vv.md?p=f). Such revised table shall be developed—
- (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](#f) between April 2020 and the April in the year prior to the beginning of such [award year](/usc/20/1088.md?p=a-1), 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)](#c-2-A).
- (d) **Asset protection allowance—** For [award year](/usc/20/1088.md?p=a-1) 2023–2024 and each subsequent [award year](/usc/20/1088.md?p=a-1), the [Secretary](/usc/20/1003.md?p=17) shall publish in the Federal Register a revised table of allowances for the purpose of sections [1087oo(d)(2)](/usc/20/1087oo.md?p=d-2), [1087pp(c)(2)](/usc/20/1087pp.md?p=c-2), and [1087qq(c)(2)](/usc/20/1087qq.md?p=c-2) of this title. Such revised table shall be developed by determining the present value cost, rounded to the nearest $100, of an annuity that would provide, for each age cohort of 40 and above, a supplemental income at age 65 (adjusted for inflation) equal to the difference between the moderate family income (as most recently determined by the Bureau of Labor Statistics), and the current average social security retirement benefits. For each age cohort below 40, the allowance shall be computed by decreasing the allowance for age 40, as updated, by one-fifteenth for each year of age below age 40 and rounding the result to the nearest $100. In making such determinations—
- (1) the tables of allowances specified in sections [1087oo(d)(2)](/usc/20/1087oo.md?p=d-2), [1087pp(c)(2)](/usc/20/1087pp.md?p=c-2), and [1087qq(c)(2)](/usc/20/1087qq.md?p=c-2) of this title shall be considered to be for [award year](/usc/20/1088.md?p=a-1) 2021–2022 for the purposes of calculating inflation;
- (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](/usc/20/9701.md?p=2) on an annuity shall be presumed to be 6 percent.
- (e) **Assessment schedules and rates—** For [award year](/usc/20/1088.md?p=a-1) 2023–2024 and each subsequent [award year](/usc/20/1088.md?p=a-1), the [Secretary](/usc/20/1003.md?p=17) shall publish in the Federal Register a revised table of assessments from adjusted available income for the purpose of sections [1087oo(e)](/usc/20/1087oo.md?p=e) and [1087qq(d)](/usc/20/1087qq.md?p=d) of this title. Such revised table shall be developed—
- (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](#f) between April 2020 and the April in the year prior to the beginning of such [academic year](/usc/20/1088.md?p=a-2-A), rounded to the nearest $100; and
- (2) by adjusting the other dollar amounts to reflect the changes made pursuant to [paragraph (1)](#e-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](/usc/20/1003.md?p=4) 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](/usc/20/1088.md?p=a-1) 2023–2024 and each succeeding [award year](/usc/20/1088.md?p=a-1), the [Secretary](/usc/20/1003.md?p=17) shall publish in the Federal Register a revised table of employment expense allowances for the purpose of sections [1087oo(c)(4)](/usc/20/1087oo.md?p=c-4), [1087pp(b)(3)](/usc/20/1087pp.md?p=b-3), and [1087qq(b)(4)](/usc/20/1087qq.md?p=b-4) of this title. Such revised table shall be developed by increasing the dollar amount specified in sections [1087oo(c)(4)](/usc/20/1087oo.md?p=c-4), [1087pp(b)(3)](/usc/20/1087pp.md?p=b-3), and [1087qq(b)(4)](/usc/20/1087qq.md?p=b-4) of this title by a percentage equal to the percentage increase in the [Consumer Price Index](#f), as defined in [subsection (f)](#f), between April 2020 and the April in the year prior to the beginning of the [award year](/usc/20/1088.md?p=a-1) and rounding the result to the nearest $10.
- (h) **Clarification for award year 2023–2024—** For [award year](/usc/20/1088.md?p=a-1) 2023–2024, the [Secretary](/usc/20/1003.md?p=17) 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 sections [1087oo](/usc/20/1087oo.md), [1087pp](/usc/20/1087pp.md), and [1087qq](/usc/20/1087qq.md) of this title, pursuant to this section. The amounts and tables specified in sections [1087oo](/usc/20/1087oo.md), [1087pp](/usc/20/1087pp.md), and [1087qq](/usc/20/1087qq.md) of this title with respect to such allowances and schedules shall only be used by the [Secretary](/usc/20/1003.md?p=17) as a baseline for adjustments and table revisions prescribed in accordance with this section.
# §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 [section 1090 of this title](/usc/20/1090.md), on or after July 1, 2024.
- (b) **Applicants exempt from asset reporting—**
- (1) **In general—** Except as provided in [paragraph (3)](#b-3), in carrying out [section 1090 of this title](/usc/20/1090.md), the [Secretary](/usc/20/1003.md?p=17) shall not use asset information from an [eligible applicant](#b-2) or, as applicable, the [parent](/usc/20/1021.md?p=16) or spouse of an [eligible applicant](#b-2).
- (2) **Eligible applicants—** In this subsection, the term “eligible applicant” means an [applicant](/usc/20/3982.md?p=1) who meets at least one of the following criteria:
- (A) Is an [applicant](/usc/20/3982.md?p=1) who qualifies for an automatic zero [student aid index](/usc/20/1087mm.md?p=a) or negative [student aid index](/usc/20/1087mm.md?p=a) under subsection (b) or (c) of [section 1087mm of this title](/usc/20/1087mm.md).
- (B) Is an [applicant](/usc/20/3982.md?p=1) who is a dependent student and the student’s [parents](/usc/20/1021.md?p=16) 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-4-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](#b-4-C) (or the equivalent successor schedule) with the Federal income tax return for the second preceding tax year; or
- (ii) file a [Schedule C](#b-4-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](/usc/20/3982.md?p=1) who is an [independent](/usc/20/1087vv.md?p=d) 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-4-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](#b-4-C) (or the equivalent successor schedule) with the Federal income tax return for the second preceding tax year; or
- (ii) files a [Schedule C](#b-4-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](/usc/20/3982.md?p=1) who, at any time during the previous 24-month period, received a benefit under a [means-tested Federal benefit program](#b-4-H) (or whose [parent](/usc/20/1021.md?p=16) or spouse received such a benefit, as applicable).
- (3) **Special rule—** An [eligible applicant](#b-2) shall not be exempt from asset reporting under this section if the [applicant](/usc/20/3982.md?p=1) is a dependent student and the students’ [parents](/usc/20/1021.md?p=16) 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](/usc/20/1087vv.md?p=f-2), 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 ([42 U.S.C. 1381](/usc/42/1381.md) et seq.).
- (ii) The supplemental nutrition assistance program under the Food and Nutrition Act of 2008 ([7 U.S.C. 2011](/usc/7/2011.md) et seq.), a nutrition assistance program carried out under [section 19](/usc/7/19.md) of such Act ([7 U.S.C. 2028](/usc/7/2028.md)), and a supplemental nutrition assistance program carried out under [section 1841(c) of title 48](/usc/48/1841.md?p=c).
- (iii) The program of block grants for [States](/usc/20/1003.md?p=21-A) for temporary assistance for needy families established under part A of title IV of the Social Security Act ([42 U.S.C. 601](/usc/42/601.md) et seq.).
- (iv) The special supplemental nutrition program for women, infants, and children established by [section 1786 of title 42](/usc/42/1786.md).
- (v) The Medicaid program under title XIX of the Social Security Act ([42 U.S.C. 1396](/usc/42/1396.md) et seq.).
- (vi) Federal housing assistance programs, including tenant-based assistance under [section 1437f(o)](/usc/42/1437f.md?p=o) of title 42, and public housing, as defined in [section 1437a(b)(1) of title 42](/usc/42/1437a.md?p=b-1).
- (vii) Other means-tested programs determined by the [Secretary](/usc/20/1003.md?p=17) to be approximately consistent with the income eligibility requirements of the means-tested programs under [clauses (i) through (vi)](#b-4-H-i..b-4-H-vi).
# §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](/usc/20/3982.md?p=1) with special circumstances under [subsection (b)](#b) to—
- (i) the [cost of attendance](/usc/20/1087ll.md?p=a);
- (ii) the values of the data used to calculate the [student aid index](/usc/20/1087mm.md?p=a); or
- (iii) the values of the data used to calculate the Federal Pell Grant award.
- (B) For an [applicant](/usc/20/3982.md?p=1) with unusual circumstances under [subsection (c)](#c), to the dependency status of such [applicant](/usc/20/3982.md?p=1).
- (2) **Limitations on authority—**
- (A) **Use of authority—** No [institution of higher education](/usc/20/1001.md?p=a) 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](/usc/20/1021.md?p=16) 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](/usc/20/1021.md?p=16)’s request for adjustments under this section including the review of any supplementary information or documentation of a student or [parent](/usc/20/1021.md?p=16)’s special circumstances or a student’s unusual circumstances.
- (C) **Rule of construction—** The authority to make adjustments under [paragraph (1)(A)](#a-1-A) shall not be construed to permit financial aid administrators to deviate from the [cost of attendance](/usc/20/1087ll.md?p=a), the values of data used to calculate the [student aid index](/usc/20/1087mm.md?p=a) 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)](#a-1-B)—
- (i) submission of a court order or official Federal or [State](/usc/20/1003.md?p=21-A) documentation that the student or the student’s [parents](/usc/20/1021.md?p=16) or legal guardians are incarcerated in any Federal or [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=21-A) or county;
- (II) a Tribal welfare authority or agency;
- (III) an [independent](/usc/20/1087vv.md?p=d) 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](/usc/20/1021.md?p=16) 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 [section 1087vv(d)(9) of this title](/usc/20/1087vv.md?p=d-9); and
- (C) supplementary information, as necessary, about the financial status or personal circumstances of eligible [applicants](/usc/20/3982.md?p=1) as it relates to the special circumstances or unusual circumstances based on which the [applicant](/usc/20/3982.md?p=1) is requesting an adjustment.
- (4) **Special rule—** In making adjustments under [paragraph (1)](#a-1), a financial aid administrator may offer a dependent student financial assistance under a Federal Direct Unsubsidized Stafford Loan without requiring the [parents](/usc/20/1021.md?p=16) of such student to provide their [parent](/usc/20/1021.md?p=16) 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 [section 1087vv(d)(9) of this title](/usc/20/1087vv.md?p=d-9), and the financial aid administrator determines that the [parents](/usc/20/1021.md?p=16) of such student ended financial support of such student or refuse to file such form.
- (5) **Public disclosure—** Each [institution of higher education](/usc/20/1001.md?p=a) 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 [section 3102 of title 29](/usc/29/3102.md));
- (iii) a change in housing status that results in an individual being a [homeless youth](/usc/20/1087vv.md?p=m);
- (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](/usc/20/3982.md?p=1) who does not qualify for the exemption from asset reporting under [section 1087ss of this title](/usc/20/1087ss.md), [assets](/usc/20/1087vv.md?p=f-2) as defined in [section 1087vv(f) of this title](/usc/20/1087vv.md?p=f); or
- (vii) other changes or adjustments in the income, [assets](/usc/20/1087vv.md?p=f-2), 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](/usc/20/1087ll.md?p=a) or the values of the data used to calculate the [student aid index](/usc/20/1087mm.md?p=a)—
- (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 sections [1087uu](/usc/20/1087uu.md) and [1087uu–1](/usc/20/1087uu–1.md) of this title; and
- (B) may include—
- (i) tuition expenses at an [elementary school](/usc/20/1003.md?p=9) or [secondary school](/usc/20/1003.md?p=16);
- (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 [section 1087ll](/usc/20/1087ll.md) of this title;
- (iv) recent unemployment of a family member or student;
- (v) a student or family member who is a dislocated worker (as defined in [section 3102 of title 29](/usc/29/3102.md));
- (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 [section 1094 of this title](/usc/20/1094.md);
- (vii) a change in housing status that results in an individual being a [homeless youth](/usc/20/1087vv.md?p=m);
- (viii) a condition of severe [disability](/usc/20/1003.md?p=6) of the student, or in the case of a dependent student, the dependent student’s [parent](/usc/20/1021.md?p=16) or guardian, or in the case of an [independent](/usc/20/1087vv.md?p=d) student, the [independent](/usc/20/1087vv.md?p=d) 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](/usc/20/1087vv.md?p=f-2), 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](/usc/20/3982.md?p=1) shall be—
- (A) conditions that differentiate an individual student from a group of students; and
- (B) based on unusual circumstances, pursuant to [section 1087vv(d)(9) of this title](/usc/20/1087vv.md?p=d-9).
- (2) **Provisional independent students—**
- (A) **Requirements for the Secretary—** The [Secretary](/usc/20/1003.md?p=17) shall—
- (i) enable each student who, based on an unusual circumstance described in [section 1087vv(d)(9) of this title](/usc/20/1087vv.md?p=d-9), may qualify for an adjustment under [subsection (a)(1)(B)](#a-1-B) that will result in a determination of independence under this section or [section 1087uu–2 of this title](/usc/20/1087uu–2.md) to complete the Free Application for Federal Student Aid as an [independent](/usc/20/1087vv.md?p=d) student for the purpose of a provisional determination of the student’s Federal financial aid award, with the final determination of the award subject to the documentation requirements of [subsection (a)(3)](#a-3);
- (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 [section 1090(a)(3)(A) of this title](/usc/20/1090.md?p=a-3-A), based on the assumption that the student is determined to be an [independent](/usc/20/1087vv.md?p=d) student; and
- (iii) specify, on the Free Application for Federal Student Aid, the consequences under [section 1097(a) of this title](/usc/20/1097.md?p=a) of knowingly and willfully completing the Free Application for Federal Student Aid as an [independent](/usc/20/1087vv.md?p=d) student under [clause (i)](#c-2-A-i) without meeting the unusual circumstances to qualify for such a determination.
- (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](/usc/20/1087vv.md?p=d) student under [subparagraph (A)](#c-2-A), a financial aid administrator shall—
- (i) notify the student of the institutional process, requirements, and timeline for an adjustment under this section and [section 1087vv(d)(9) of this title](/usc/20/1087vv.md?p=d-9) that will result in a review of the student’s request for an adjustment and a determination of the student’s dependency status under such sections within a reasonable time after the student completes the Free Application for Federal Student Aid;
- (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 [section 1087vv(d)(9) of this title](/usc/20/1087vv.md?p=d-9), including documented interviews, for at least the duration of the student’s enrollment, and shall abide by all other record keeping requirements of this chapter; and
- (iv) presume that any student who has obtained an adjustment under this section and [section 1087vv(d)(9) of this title](/usc/20/1087vv.md?p=d-9) and a final determination of independence for any preceding [award year](/usc/20/1088.md?p=a-1) at an [institution of higher education](/usc/20/1001.md?p=a) to be [independent](/usc/20/1087vv.md?p=d) for each subsequent [award year](/usc/20/1088.md?p=a-1) at the same institution unless—
- (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](/usc/20/1087vv.md?p=d) student status and is not determined to be an [independent](/usc/20/1087vv.md?p=d) student by a financial aid administrator, such student shall only be eligible for a Federal Direct Unsubsidized Stafford Loan for that [award year](/usc/20/1088.md?p=a-1) 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](/usc/20/1087vv.md?p=f-2) any proceeds or losses from a sale of farm or [business assets](/usc/20/1087vv.md?p=l) 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](/usc/20/1003.md?p=6) of a student, or in the case of a dependent student, the dependent student’s [parent](/usc/20/1021.md?p=16) or guardian, or in the case of an [independent](/usc/20/1087vv.md?p=d) student, the [independent](/usc/20/1087vv.md?p=d) student’s dependent or spouse, so as to take into consideration the additional costs incurred as a result of such [disability](/usc/20/1003.md?p=6).
- (e) **Refusal or adjustment of loan certifications—** On a case-by-case basis, an [eligible institution](/usc/20/1066a.md?p=1) 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](/usc/20/1066a.md?p=1) shall discriminate against any borrower or [applicant](/usc/20/3982.md?p=1) in obtaining a loan on the basis of race, ethnicity, national origin, religion, sex, marital status, age, or [disability](/usc/20/1003.md?p=6) 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](#f-4)—
- (A) determine that the income earned from work for an [applicant](/usc/20/3982.md?p=1) is zero, if the [applicant](/usc/20/3982.md?p=1) 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](/usc/20/1021.md?p=16), 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)](#f-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](/usc/20/1021.md?p=16), or spouse, as applicable, has already obtained other employment.
- (3) **Program reviews—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1088.md?p=a-1) applicable to the [qualifying emergency](#f-4), as determined by the [Secretary](/usc/20/1003.md?p=17).
- (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](/usc/42.md);
- (B) a [national emergency](/usc/20/1088.md?p=d-3) related to the coronavirus declared by the President under [section 1621 of title 50](/usc/50/1621.md); or
- (C) a period of recession or economic downturn as determined by the [Secretary](/usc/20/1003.md?p=17), in consultation with the [Secretary](/usc/20/1003.md?p=17) of Labor.
# §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 [section 3174 of title 29](/usc/29/3174.md) shall not be taken into account in determining the need or eligibility of any person for benefits or assistance, or the amount of such benefits or assistance, under any Federal, [State](/usc/20/1003.md?p=21-A), or local program financed in whole or in part with Federal [funds](/usc/20/4702.md?p=3).
# §1087uu–1. Native American students
- (a) **In general—** In determining the [student aid index](/usc/20/1087mm.md?p=a) for Native American students, computations performed pursuant to this part shall exclude—
- (1) any income and [assets](/usc/20/1087vv.md?p=f-2) of $2,000 or less per individual payment received by the student (and spouse) and student’s [parents](/usc/20/1021.md?p=16) under Public Law 98–64 ([25 U.S.C. 117a](/usc/25/117a.md) et seq.; 97 Stat. 365) (commonly known as the “Per Capita Act”) or the Indian Tribal Judgment [Funds](/usc/20/4702.md?p=3) Use or Distribution Act ([25 U.S.C. 1401](/usc/25/1401.md) et seq.); and
- (2) any income received by the student (and spouse) and student’s [parents](/usc/20/1021.md?p=16) under the [Alaska Native](/usc/20/1059d.md?p=b-1) Claims Settlement Act ([43 U.S.C. 1601](/usc/43/1601.md) et seq.) or the Maine Indian Claims Settlement Act of 1980 ([25 U.S.C. 1721](/usc/25/1721.md) et seq.).[^1]
- (b) **Guidance—** The [Secretary](/usc/20/1003.md?p=17) shall develop guidance, in consultation with Tribal Colleges and Universities (as defined in [section 1059c of this title](/usc/20/1059c.md)) and the [State higher education agency](/usc/20/1003.md?p=22) in Alaska and Maine, to implement the determination under [subsection (a)](#a) without adding additional questions to the FAFSA, including through the use of the authority under [section 1087tt of this title](/usc/20/1087tt.md).
# §1087uu–2. Special rules for independent students
- (a) **Determination process for unaccompanied homeless youth—** In making a determination of independence under [section 1087vv(d)(8) of this title](/usc/20/1087vv.md?p=d-8), a financial aid administrator shall comply with the following:
- (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](/usc/20/1003.md?p=11) homeless liaison, designated pursuant to [section 11432(g)(1)(J)(ii) of title 42](/usc/42/11432.md?p=g-1-J-ii) or a designee of the liaison;
- (B) the [director](/usc/20/9101.md?p=3) of an emergency or transitional shelter, street outreach program, [homeless youth](/usc/20/1087vv.md?p=m) drop-in center, or other program serving individuals who are experiencing homelessness, or a designee of the [director](/usc/20/9101.md?p=3);
- (C) the [director](/usc/20/9101.md?p=3) 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](/usc/20/9101.md?p=3); or
- (D) a financial aid administrator at another institution who documented the student’s circumstance in the same or a prior [award year](/usc/20/1088.md?p=a-1).
- (2) If a student is unable to provide documentation from any individual described in [paragraph (1)](#a-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](/usc/20/1087vv.md?p=n), or [unaccompanied](/usc/20/1087vv.md?p=n), at risk of homelessness, and self-supporting; and
- (B) made without regard to the reasons that the student is an [unaccompanied homeless youth](/usc/20/1087vv.md?p=n), or [unaccompanied](/usc/20/1087vv.md?p=n), at risk of homelessness, and self-supporting.
- (3) Consider a determination made under this subsection as distinct from a determination of independence under [section 1087vv(d)(9) of this title](/usc/20/1087vv.md?p=d-9).
- (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](/usc/20/1003.md?p=21-A) documentation that the student received Federal or [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=21-A), county, or tribal agency administering a program under part B or E of title IV of the Social Security Act ([42 U.S.C. 621](/usc/42/621.md) et seq. and 670 et seq.);
- (B) a [State](/usc/20/1003.md?p=21-A) 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 ([42 U.S.C. 677](/usc/42/677.md)).
- (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](/usc/20/1088.md?p=a-1).
- (c) **Timing—** A determination of independence under paragraph (2), (8), or (9) of [section 1087vv(d) of this title](/usc/20/1087vv.md?p=d) for a student—
- (1) shall be made as quickly as practicable;
- (2) may be made as early as the year before the [award year](/usc/20/1088.md?p=a-1) 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](/usc/20/1088.md?p=a-1) 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](/usc/20/1087vv.md?p=d) under paragraph (2), (8), or (9) of [section 1087vv(d) of this title](/usc/20/1087vv.md?p=d) for a preceding [award year](/usc/20/1088.md?p=a-1) at an institution shall be presumed to be [independent](/usc/20/1087vv.md?p=d) for each subsequent [award year](/usc/20/1088.md?p=a-1) at the same institution unless—
- (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 [section 1087tt(c) of this title](/usc/20/1087tt.md?p=c), this section, or paragraph (2), (8), or (9) of [section 1087vv(d) of this title](/usc/20/1087vv.md?p=d), based upon a documented determination of independence that was previously made by another financial aid administrator under such provisions in the same or a prior [award year](/usc/20/1088.md?p=a-1).
- (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](/usc/20/1003.md?p=17) to enable a student to utilize the documents for the purposes of subsection [(a)(1)(D)](#a-1-D), [(b)(5)](#b-5), or (d) of this section.
# §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](#b) for the second preceding tax year minus [excludable income](#e) 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](/usc/20/3982.md?p=1)’s ability to indicate a qualified rollover in the second preceding tax year as outlined in [section 1090 of this title](/usc/20/1090.md) or foreign income described in [subsection (b)(5)](#b-5).
- (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 [section 101(2) of title 38](/usc/38/101.md?p=2) and includes individuals who served in the United States Armed Forces as described in sections [101(21)](/usc/38/101.md?p=21), [101(22)](/usc/38/101.md?p=22), and [101(23)](/usc/38/101.md?p=23) of title 38.
- (2) The term “veterans’ education benefits” means veterans’ benefits under the following provisions of law:
- (A) [Chapter 103](/usc/10/chstA-ptIII-ch103.md) of title 10 (Senior Reserve [Officers](/usc/20/1094.md?p=i-5)’ Training Corps).
- (B) [Chapter 106A](/usc/10/chstA-ptIII-ch106A.md) of title 10 (Educational Assistance for Persons Enlisting for [Active Duty](/usc/20/1088.md?p=d-1)).
- (C) [Chapter 1606](/usc/10/chstE-ptIV-ch1606.md) of title 10 (Selected Reserve Educational Assistance Program).
- (D) [Chapter 1607](/usc/10/chstE-ptIV-ch1607.md) of title 10 (Educational Assistance Program for Reserve Component Members Supporting Contingency Operations and Certain Other Operations).
- (E) [Chapter 30](/usc/38/chptIII-ch30.md) of title 38 (All-Volunteer Force Educational Assistance Program, also known as the “Montgomery GI Bill—[active duty](/usc/20/1088.md?p=d-1)”).
- (F) [Chapter 31](/usc/38/chptIII-ch31.md) of title 38 (Training and Rehabilitation for [Veterans](#c-2) with Service-Connected [Disabilities](/usc/20/1003.md?p=6)).
- (G) [Chapter 32](/usc/38/chptIII-ch32.md) of title 38 (Post-Vietnam Era [Veterans](#c-2)’ Educational Assistance Program).
- (H) [Chapter 33](/usc/38/chptIII-ch33.md) of title 38 (Post-9/11 Educational Assistance).
- (I) [Chapter 35](/usc/38/chptIII-ch35.md) of title 38 (Survivors’ and Dependents’ Educational Assistance Program).
- (J) [Section 903](/usc/20/903.md) of the [Department](/usc/20/1003.md?p=4) of Defense Authorization Act, 1981 ([10 U.S.C. 2141](/usc/10/2141.md) note) (Educational Assistance Pilot Program).
- (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” ([42 U.S.C. 402](/usc/42/402.md) note) (Restored Entitlement Program for Survivors, also known as “Quayle benefits”).
- (L) The provisions of [chapter 3](/usc/37/ch3.md) of title 37, related to subsistence allowances for members of the Reserve [Officers](/usc/20/1094.md?p=i-5) Training Corps.
- (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](/usc/20/1088.md?p=a-1);
- (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](/usc/20/1003.md?p=21-A) of legal residence;
- (4) is a [veteran](#c-1) of the Armed Forces of the United States (as defined in [subsection (c)](#c)) or is currently serving on [active duty](/usc/20/1088.md?p=d-1) 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](#n) or is [unaccompanied](#n), 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 [section 1087tt(c) of this title](/usc/20/1087tt.md?p=c) in which the student is unable to contact a [parent](/usc/20/1021.md?p=16) or where contact with [parents](/usc/20/1021.md?p=16) poses a risk to such student, which includes circumstances of—
- (A) human trafficking, as described in the Trafficking Victims Protection Act of 2000 ([22 U.S.C. 7101](/usc/22/7101.md) et seq.);
- (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 [section 25A(a) of title 26](/usc/26/25A.md?p=a);
- (2) if an [applicant](/usc/20/3982.md?p=1) 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 ([42 U.S.C. 12511](/usc/42/12511.md) et seq.), including awards, living allowances, and interest accrual payments; and
- (3) income earned from work under part C of this subchapter.
- (f) **Assets—**
- (1) **In general—** The term “[assets](#f-2)” means the amount in checking and savings accounts, time deposits, money market [funds](/usc/20/4702.md?p=3), investments, trusts, stocks, bonds, derivatives, securities, mutual [funds](/usc/20/4702.md?p=3), tax shelters, [qualified education benefits](#f-4) (except as provided in [paragraph (3)](#f-3)), the annual amount of child support received and the [net value](#g) of real estate, vacation homes, income producing property, and business and farm [assets](#f-2), determined in accordance with [section 1087rr(c) of this title](/usc/20/1087rr.md?p=c).
- (2) **Exclusions—** With respect to determinations of need under this subchapter, the term “assets” shall not include the [net value](#g) of the family’s principal place of residence.
- (3) **Consideration of qualified education benefit—** A [qualified education benefit](#f-4) shall be considered an asset of—
- (A) the student if the student is an [independent](#d) student; or
- (B) the [parent](/usc/20/1021.md?p=16) 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](/usc/20/1021.md?p=16).
- (4) **Definition of qualified education benefit—** In this subsection, the term “qualified education benefit” means—
- (A) a qualified tuition program (as defined in [section 529(b)(1)(A) of title 26](/usc/26/529.md?p=b-1-A)) or other prepaid tuition plan offered by a [State](/usc/20/1003.md?p=21-A); and
- (B) a Coverdell education savings account (as defined in [section 530(b)(1) of title 26](/usc/26/530.md?p=b-1)).
- (g) **Net value—** The term “net value” means the market value at the time of application of the [assets](#f-2) (as defined in [subsection (f)](#f)), minus the outstanding liabilities or indebtedness against the [assets](#f-2).
- (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](/usc/20/1003.md?p=21-A) 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](/usc/26.md), Federal income tax forms, and the Internal Revenue Service shall, for purposes of the tax described in [paragraph (1)](#h-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](/usc/20/1003.md?p=17) may provide by regulation.
- (i) **Other financial assistance—**
- (1) For purposes of determining a student’s eligibility for [funds](/usc/20/4702.md?p=3) 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 ([42 U.S.C. 12511](/usc/42/12511.md) et seq.), but excluding [veterans](#c-2)’ education benefits.
- (2) Notwithstanding [paragraph (1)](#i-1), a tax credit taken under [section 25A of title 26](/usc/26/25A.md), or a distribution that is not includable in gross income under [section 529](/usc/26/529.md) of such title, under another prepaid tuition plan offered by a [State](/usc/20/1003.md?p=21-A), or under a Coverdell education savings account under [section 530](/usc/26/530.md) of such title, shall not be treated as other financial assistance for purposes of [section 1087kk(a)(3)](/usc/20/1087kk.md)[^1] of this title.
- (3) Notwithstanding [paragraph (1)](#i-1) and [section 1087ll](/usc/20/1087ll.md) of this title, assistance not received under this subchapter may be excluded from both other financial assistance and [cost of attendance](/usc/20/1087ll.md?p=a), if that assistance is provided by a [State](/usc/20/1003.md?p=21-A) and is designated by such [State](/usc/20/1003.md?p=21-A) to offset a specific component of the [cost of attendance](/usc/20/1087ll.md?p=a). If that assistance is excluded from either other financial assistance or [cost of attendance](/usc/20/1087ll.md?p=a), it shall be excluded from both.
- (4) Notwithstanding [paragraph (1)](#i-1), payments made and services provided under part E of title IV of the Social Security Act [[42 U.S.C. 670](/usc/42/670.md) et seq.] to or on behalf of any child or youth over whom the [State](/usc/20/1003.md?p=21-A) agency has responsibility for placement, care, or supervision, including the value of vouchers for education and training and amounts expended for room and [board](/usc/20/4702.md?p=2) for youth who are not in foster care but are receiving services under section 477 of such Act [[42 U.S.C. 677](/usc/42/677.md)], shall not be treated as other financial assistance for purposes of [section 1087kk(a)(3)](/usc/20/1087kk.md)[^1] of this title.
- (5) Notwithstanding [paragraph (1)](#i-1), emergency financial assistance provided to the student for unexpected expenses that are a component of the student’s [cost of attendance](/usc/20/1087ll.md?p=a), 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)](/usc/20/1087kk.md)[^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](/usc/20/1021.md?p=16) (or [parents](/usc/20/1021.md?p=16)) and will continue to receive more than half of their support from the [parent](/usc/20/1021.md?p=16) (or [parents](/usc/20/1021.md?p=16)) during the [award year](/usc/20/1088.md?p=a-1).
- (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](/usc/20/1088.md?p=a-1).
- (k) **Family size—**
- (1) **Dependent student—** Except as provided in [paragraph (3)](#k-3), in determining [family size](/usc/20/1070a.md?p=a-2-B) in the case of a dependent student—
- (A) if the [parents](/usc/20/1021.md?p=16) are not divorced or separated, family members include the student’s [parents](/usc/20/1021.md?p=16), and any dependent (within the meaning of [section 152 of title 26](/usc/26/152.md) or an eligible individual for purposes of the credit under [section 24 of title 26](/usc/26/24.md)) of the student’s [parents](/usc/20/1021.md?p=16) for the taxable year used in determining the amount of need of the student for financial assistance under this subchapter;
- (B) if the [parents](/usc/20/1021.md?p=16) are divorced or separated, family members include the [parent](/usc/20/1021.md?p=16) whose income is included in computing available income and any dependent (within the meaning of [section 152 of title 26](/usc/26/152.md) or an eligible individual for purposes of the credit under [section 24 of title 26](/usc/26/24.md)) of that [parent](/usc/20/1021.md?p=16) for the taxable year used in determining the amount of need of the student for financial assistance under this subchapter;
- (C) if the [parents](/usc/20/1021.md?p=16) are divorced and the [parents](/usc/20/1021.md?p=16) whose income is so included are remarried, or if the [parent](/usc/20/1021.md?p=16) was a widow or widower who has remarried, family members also include, in addition to those individuals referred to in [subparagraph (B)](#k-1-B), the new spouse and any dependent (within the meaning of [section 152 of title 26](/usc/26/152.md) or an eligible individual for purposes of the credit under [section 24 of title 26](/usc/26/24.md)) of the new spouse for the taxable year used in determining the amount of need of the student for financial assistance under this subchapter, if that spouse’s income is included in determining the [parent](/usc/20/1021.md?p=16)’s adjusted available income; and
- (D) if the student is not considered as a dependent (within the meaning of [section 152 of title 26](/usc/26/152.md) or an eligible individual for purposes of the credit under [section 24 of title 26](/usc/26/24.md)) of any [parent](/usc/20/1021.md?p=16), the [parents](/usc/20/1021.md?p=16)’ [family size](/usc/20/1070a.md?p=a-2-B) shall include the student and the family members applicable to the [parents](/usc/20/1021.md?p=16)’ situation under subparagraph [(A)](#k-1-A), [(B)](#k-1-B), or [(C)](#k-1-C).
- (2) **Independent student—** Except as provided in [paragraph (3)](#k-3), in determining [family size](/usc/20/1070a.md?p=a-2-B) in the case of an [independent](#d) student—
- (A) family members include the student, the student’s spouse, and any dependent (within the meaning of [section 152 of title 26](/usc/26/152.md) or an eligible individual for purposes of the credit under [section 24 of title 26](/usc/26/24.md)) of that student for the taxable year used in determining the amount of need of the student for financial assistance under this subchapter; and
- (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 [section 152 of title 26](/usc/26/152.md) or an eligible individual for purposes of the credit under [section 24 of title 26](/usc/26/24.md)) of that student for the taxable year used in determining the amount of need of the student for financial assistance under this subchapter.
- (3) **Procedures and modification—** The [Secretary](/usc/20/1003.md?p=17) shall provide procedures for determining [family size](/usc/20/1070a.md?p=a-2-B) 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](/usc/20/3982.md?p=1)’s current household size, including when a divorce settlement only allows a [parent](/usc/20/1021.md?p=16) to file for the Earned Income Tax Credit available under [section 32 of title 26](/usc/26/32.md).
- (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 [section 11434a of title 42](/usc/42/11434a.md).
- (n) **Unaccompanied—** The terms “unaccompanied”, “unaccompanied youth”, or “unaccompanied homeless youth” have the meaning given the term “unaccompanied youth” in [section 11434a of title 42](/usc/42/11434a.md).
# §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](/usc/20/1003.md?p=17) may reduce such minimum of 30 weeks to not less than 26 weeks for good cause, as determined by the [Secretary](/usc/20/1003.md?p=17) on a case-by-case basis, in the case of an [institution of higher education](/usc/20/1001.md?p=a) 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](#b-1) 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](/usc/20/1003.md?p=17);
- (ii) has a verified placement rate of at least 70 percent, as determined in accordance with the regulations of the [Secretary](/usc/20/1003.md?p=17); and
- (iii) satisfies such further criteria as the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) before such program is considered to have satisfied the requirements of this paragraph.
- (3) An otherwise [eligible program](#b-1) 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](/usc/20/1003.md?p=7-A) programs by an accrediting agency or association that—
- (A) is recognized by the [Secretary](/usc/20/1003.md?p=17) under subpart 2 of part H; and
- (B) has evaluation of [distance education](/usc/20/1003.md?p=7-A) programs within the scope of its recognition, as described in [section 1099b(n)(3) of this title](/usc/20/1099b.md?p=n-3).
- (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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=21-A), or any private, for-profit or [nonprofit](/usc/20/1003.md?p=13) organization, which enters into a contract with—
- (1) any [eligible institution](/usc/20/1066a.md?p=1) 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](/usc/20/1085.md?p=j), or any [eligible lender](/usc/20/1019.md?p=4), to administer, through either manual or automated processing, any aspect of such [guaranty agency](/usc/20/1085.md?p=j)’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 [section 101(d)(1) of title 10](/usc/10/101.md?p=d-1), except that such term does not include active duty for training or attendance at a service [school](/usc/20/5802.md?p=a-11).
- (2) **Military operation—** The term “military operation” means a contingency operation as such term is defined in [section 101(a)(13) of title 10](/usc/10/101.md?p=a-13).
- (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](#d-1) under section [12301(a)](/usc/10/12301.md?p=a), [12301(g)](/usc/10/12301.md?p=g), [12302](/usc/10/12302.md), [12304](/usc/10/12304.md), or [12306](/usc/10/12306.md) of title 10 or any retired member of an Armed Force ordered to [active duty](#d-1) under [section 688](/usc/10/688.md) of such title, for service in connection with a war or other [military operation](#d-2) or [national emergency](#d-3), regardless of the location at which such [active duty](#d-1) service is performed; and
- (B) any other member of an Armed Force on [active duty](#d-1) 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 [section 101(d)(5) of title 10](/usc/10/101.md?p=d-5)) under a call to active service authorized by the President or the [Secretary](/usc/20/1003.md?p=17) of Defense for a period of more than 30 consecutive days under [section 502(f) of title 32](/usc/32/502.md?p=f) in connection with a war, other [military operation](#d-2), or a [national emergency](#d-3) declared by the President and supported by Federal [funds](/usc/20/4702.md?p=3).
- (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](/usc/15.md).
- (f) **Definition of educational service agency—** For purposes of parts B, D, and E, the term “[educational service agency](/usc/20/1021.md?p=5)” has the meaning given the term in [section 7801 of this title](/usc/20/7801.md).
# §1088a. Clock and credit hour treatment of diploma nursing schools
Notwithstanding any other provision of this chapter, any regulations promulgated by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=13) hospital-based [school](/usc/20/5802.md?p=a-11) of nursing that awards a diploma at the completion of the [school](/usc/20/5802.md?p=a-11)’s program of education.
# §1089. Master calendar
- (a) **Secretary required to comply with schedule—** To assure adequate notification and timely delivery of student aid [funds](/usc/20/4702.md?p=3) under this subchapter, the [Secretary](/usc/20/1003.md?p=17) shall adhere to the following calendar dates in the year preceding the [award year](/usc/20/1088.md?p=a-1):
- (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](/usc/20/1003.md?p=4);
- (B) by March 1: proposed modifications, updates, and notices pursuant to sections [1087rr](/usc/20/1087rr.md) and [1090(a)(5)](/usc/20/1090.md?p=a-5)[^1] of this title published in the Federal Register;
- (C) by June 1: final modifications, updates, and notices pursuant to sections [1087rr](/usc/20/1087rr.md) and [1090(a)(5)](/usc/20/1090.md?p=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](/usc/20/4702.md?p=3)—
- (A) by August 1: distribution of institutional application for campus-based [funds](/usc/20/4702.md?p=3) (FISAP) to institutions;
- (B) by October 1: final date for submission of FISAP by institutions to the [Department](/usc/20/1003.md?p=4);
- (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](/usc/20/1003.md?p=4);
- (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](/usc/20/1003.md?p=4);
- (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](/usc/20/1003.md?p=17) shall, to the extent practicable, notify [eligible institutions](/usc/20/1066a.md?p=1), [guaranty agencies](/usc/20/1085.md?p=j), lenders, interested software providers, and, upon request, other interested parties, by December 1 prior to the start of an [award year](/usc/20/1088.md?p=a-1) of minimal hardware and software requirements necessary to administer programs under this subchapter.
- (4) The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1088.md?p=a-1) in order to ensure that all participants are informed of all administrative requirements.
- (b) **Timing for reallocations—** With respect to any [funds](/usc/20/4702.md?p=3) reallocated under section [1070b–3(d)](/usc/20/1070b–3.md?p=d), [1087–52(d)](/usc/20/1087–52.md?p=d), or [1087bb(i)](/usc/20/1087bb.md?p=i) of this title, the [Secretary](/usc/20/1003.md?p=17) shall reallocate such [funds](/usc/20/4702.md?p=3) at any time during the course of the year that will best meet the purpose of the programs under subpart 3 of part A, part C, and part E, respectively. However, such reallocation shall occur at least once each year, not later than September 30 of that year.
- (c) **Delay of effective date of late publications—**
- (1) Except as provided in [paragraph (2)](#c-2), any regulatory changes initiated by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1088.md?p=a-1) shall not become effective until the beginning of the second [award year](/usc/20/1088.md?p=a-1) after such November 1 date.
- (2)
- (A) The [Secretary](/usc/20/1003.md?p=17) 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)](#c-1). The [Secretary](/usc/20/1003.md?p=17) may specify in the designation when, and under what conditions, an entity may implement the provision prior to that effective date. The [Secretary](/usc/20/1003.md?p=17) 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)](#c-1), as permitted by [subparagraph (A)](#c-2-A), the provision shall be effective with respect to that entity in accordance with the terms of the [Secretary](/usc/20/1003.md?p=17)’s designation.
- (d) **Notice to Congress—** The [Secretary](/usc/20/1003.md?p=17) shall notify the [authorizing committees](/usc/20/1003.md?p=1) when a deadline included in the calendar described in [subsection (a)](#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](/usc/20/1003.md?p=17) based on the failure of the [Secretary](/usc/20/1003.md?p=17) to adhere to the dates specified in this section.
- (e) **Compliance calendar—** Prior to the beginning of each [award year](/usc/20/1088.md?p=a-1), the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) regarding each report or disclosure; and
- (6) any other information which is pertinent to the content or distribution of the report or disclosure.
# §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](/usc/20/1088.md?p=a-1) 2024–2025 and any subsequent [award year](/usc/20/1088.md?p=a-1) shall file a free application with the [Secretary](/usc/20/1003.md?p=17), known as the “Free Application for Federal Student Aid”, to determine eligibility for such aid, as described in [paragraph (2)](#a-2), and in accordance with [section 1087ss of this title](/usc/20/1087ss.md).
- (2) **Free application—**
- (A) **In general—** The [Secretary](/usc/20/1003.md?p=17) shall make available, for the purposes of [paragraph (1)](#a-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](/usc/20/3982.md?p=1), and, if necessary, the [parents](/usc/20/1021.md?p=16) or spouse of the [applicant](/usc/20/3982.md?p=1), shall provide the [Secretary](/usc/20/1003.md?p=17) with the applicable information described in [clause (ii)](#a-2-B-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](/usc/20/9101.md?p=3) of the [Institute](/usc/20/9101.md?p=6) 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](/usc/20/1003.md?p=21-A) of legal residence and date of residency.
- (X) The following information on [secondary school](/usc/20/1003.md?p=16) completion:
- (aa) Name and location of the [high school](/usc/20/2302.md?p=25) from which the [applicant](/usc/20/3982.md?p=1) received, or will receive prior to the period of enrollment for which aid is sought, a regular [high school](/usc/20/2302.md?p=25) diploma;
- (bb) name and location of the entity from which the [applicant](/usc/20/3982.md?p=1) received, or will receive prior to the period of enrollment for which aid is sought, a recognized equivalent of a regular [high school](/usc/20/2302.md?p=25) diploma; or
- (cc) if the [applicant](/usc/20/3982.md?p=1) completed or will complete prior to the period of enrollment for which aid is sought, a [secondary school](/usc/20/1003.md?p=16) education in a home [school](/usc/20/5802.md?p=a-11) setting that is treated as a home [school](/usc/20/5802.md?p=a-11) or private [school](/usc/20/5802.md?p=a-11) under [State](/usc/20/1003.md?p=21-A) law.
- (XI) Name of each institution where the [applicant](/usc/20/3982.md?p=1) intends to apply for enrollment or continue enrollment.
- (XII) Year in [school](/usc/20/5802.md?p=a-11) for period of enrollment for which aid is sought, including whether [applicant](/usc/20/3982.md?p=1) 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](/usc/20/3982.md?p=1)’s [parents](/usc/20/1021.md?p=16) attended college.
- (XIV) Any required asset information, unless exempt under [section 1087ss of this title](/usc/20/1087ss.md), in which the [applicant](/usc/20/3982.md?p=1) shall indicate—
- (aa) the annual amount of child support received, if applicable; and
- (bb) all required asset information not described in [item (aa)](#a-2-B-ii-XIV-aa).
- (XV) The number of members of the [applicant](/usc/20/3982.md?p=1)’s family who will also be enrolled in an [eligible institution](/usc/20/1066a.md?p=1) of higher education on at least a half-time basis during the same enrollment period as the [applicant](/usc/20/3982.md?p=1).
- (XVI) If the [applicant](/usc/20/3982.md?p=1) 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](/usc/20/3982.md?p=1) turned 13.
- (ee) Has been in foster care at any time since the [applicant](/usc/20/3982.md?p=1) turned 13.
- (ff) Both [parents](/usc/20/1021.md?p=16) have died since the [applicant](/usc/20/3982.md?p=1) 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](/usc/20/1088.md?p=d-1) 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 [section 1087vv(d)(9) of this title](/usc/20/1087vv.md?p=d-9).
- (XVII) If the [applicant](/usc/20/3982.md?p=1) 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 ([42 U.S.C. 1381](/usc/42/1381.md) et seq.).
- (bb) The supplemental nutrition assistance program under the Food and Nutrition Act of 2008 ([7 U.S.C. 2011](/usc/7/2011.md) et seq.), a nutrition assistance program carried out under [section 19](/usc/7/19.md) of such Act ([7 U.S.C. 2028](/usc/7/2028.md)), or a supplemental nutrition assistance program carried out under [section 1841(c) of title 48](/usc/48/1841.md?p=c).
- (cc) The free and reduced price [school](/usc/20/5802.md?p=a-11) lunch program established under the Richard B. Russell National [School](/usc/20/5802.md?p=a-11) Lunch Act ([42 U.S.C. 1751](/usc/42/1751.md) et seq.).
- (dd) The program of block grants for [States](/usc/20/1003.md?p=21-A) for temporary assistance for needy families established under part A of title IV of the Social Security Act ([42 U.S.C. 601](/usc/42/601.md) et seq.).
- (ee) The special supplemental nutrition program for women, infants, and children established by [section 1786 of title 42](/usc/42/1786.md).
- (ff) The Medicaid program under title XIX of the Social Security Act ([42 U.S.C. 1396](/usc/42/1396.md) et seq.).
- (gg) Federal housing assistance programs, including tenant-based assistance under [section 1437f(o)](/usc/42/1437f.md?p=o) of title 42, and public housing, as defined in [section 1437a(b)(1) of title 42](/usc/42/1437a.md?p=b-1).
- (hh) Refundable credit for coverage under a qualified health plan under [section 36B of title 26](/usc/26/36B.md).
- (ii) The Earned Income Tax Credit under [section 32 of title 26](/usc/26/32.md).
- (jj) Any other means-tested program determined by the [Secretary](/usc/20/1003.md?p=17) to be appropriate.
- (XVIII) If the [applicant](/usc/20/3982.md?p=1), or, if necessary, the [parents](/usc/20/1021.md?p=16) or spouse of the [applicant](/usc/20/3982.md?p=1), reported receiving tax exempt payments from an individual retirement plan (as defined in [section 7701 of title 26](/usc/26/7701.md)) distribution or from pensions or annuities on a Federal tax return, information as to how much of the individual retirement plan distribution or pension or annuity disbursement was a qualified rollover.
- (XIX) If the [applicant](/usc/20/3982.md?p=1), or, if necessary, the [parents](/usc/20/1021.md?p=16) or spouse of the [applicant](/usc/20/3982.md?p=1), 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](/usc/20/3982.md?p=1), or, if applicable, the [parents](/usc/20/1021.md?p=16) or spouse of the [applicant](/usc/20/3982.md?p=1), elects to report receiving college grant and scholarship aid included in gross income on a Federal tax return described in [section 1087vv(e)(2) of this title](/usc/20/1087vv.md?p=e-2), information regarding the amount of such aid[^1]
- (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](/usc/20/1088.md?p=a-1), 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](/usc/20/1003.md?p=17) shall provide a process by which an [applicant](/usc/20/3982.md?p=1) shall confirm the accuracy of [family size](/usc/20/1070a.md?p=a-2-B) or update the [family size](/usc/20/1070a.md?p=a-2-B) with respect to such [applicant](/usc/20/3982.md?p=1) for purposes of determining the need of such [applicant](/usc/20/3982.md?p=1) for financial assistance under this subchapter based on a change in [family size](/usc/20/1070a.md?p=a-2-B) from the tax year data used for such determination.
- (v) **Single question for homeless status—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/3982.md?p=1) 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](/usc/20/1003.md?p=17) shall disclose on the FAFSA that the student may, on a case-by-case basis, qualify for an adjustment under [section 1087tt of this title](/usc/20/1087tt.md) to the [cost of attendance](/usc/20/1087ll.md?p=a) or the values of the data items required to calculate the student’s eligibility for a Federal Pell Grant or the student aid index for the student or [parent](/usc/20/1021.md?p=16).
- (C) **Notification and approval of request for tax return information—** The [Secretary](/usc/20/1003.md?p=17) shall notify students and borrowers who wish to submit an application for Federal student financial aid under this subchapter (as well as [parents](/usc/20/1021.md?p=16) 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](/usc/20/1003.md?p=17) to require that such persons affirmatively approve that the Internal Revenue Service disclose their tax return information as described in [section 1098h of this title](/usc/20/1098h.md).
- (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](/usc/20/3982.md?p=1) and, if necessary, the [parents](/usc/20/1021.md?p=16) or spouse of the [applicant](/usc/20/3982.md?p=1) shall provide the [Secretary](/usc/20/1003.md?p=17) with authorization to disclose to an institution, [State higher education agency](/usc/20/1003.md?p=22), and scholarship organizations (designated (prior to December 19, 2019) by the [Secretary](/usc/20/1003.md?p=17) under [subsection (a)(3)(E)](#a-3-E))[^2] as in effect on such date[^3], as specified by the [applicant](/usc/20/3982.md?p=1) and in accordance with [section 1098h of this title](/usc/20/1098h.md), in order for the [applicant](/usc/20/3982.md?p=1)’s eligibility for Federal financial aid programs, [State](/usc/20/1003.md?p=21-A) financial aid programs, institutional financial aid programs, and scholarship programs at scholarship organizations (designated (prior to December 19, 2019) by the [Secretary](/usc/20/1003.md?p=17) under [subsection (a)(3)(E)](#a-3-E))[^2] as in effect on such date[^3], to be determined, the following:
- (I) Information described under [section 6103(l)(13)](/usc/26/6103.md?p=l-13) of title 26.
- (II) All information provided by the [applicant](/usc/20/3982.md?p=1) on the application described by this subsection to determine the [applicant](/usc/20/3982.md?p=1)’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](/usc/20/3982.md?p=1) selects to redisclose information shall not be disclosed to any other institution.
- (ii) **Authorization to disclose to benefits programs—** An [applicant](/usc/20/3982.md?p=1) and, if necessary, the [parents](/usc/20/1021.md?p=16) or spouse of the [applicant](/usc/20/3982.md?p=1) may provide the [Secretary](/usc/20/1003.md?p=17) with authorization to disclose to applicable agencies that handle applications for means-tested Federal benefit programs, as defined in [section 1087ss(b)(4)(H) of this title](/usc/20/1087ss.md?p=b-4-H), all information provided by the [applicant](/usc/20/3982.md?p=1) on the application described by this subsection as well as such [applicant](/usc/20/3982.md?p=1)’s student aid index and scheduled Federal Pell Grant award to assist in identification, outreach and application efforts for the application, award, and administration of such means-tested Federal benefits programs, except such information shall not include Federal tax information as specified in [section 6103(l)(13)(C)](/usc/26/6103.md?p=l-13-C) of title 26.
- (E) **Action by the Secretary—** Upon receiving—
- (i) an application under this section, the [Secretary](/usc/20/1003.md?p=17) shall, as soon as practicable, perform the necessary functions with the Commissioner of Internal Revenue to calculate the [applicant](/usc/20/3982.md?p=1)’s student aid index and scheduled award for a Federal Pell Grant, if applicable, assuming full-time enrollment for an [academic year](/usc/20/1088.md?p=a-2-A), and note to the [applicant](/usc/20/3982.md?p=1) the assumptions relationship to the scheduled award; and
- (ii) an authorization under [subparagraph (D)](#a-2-D), the [Secretary](/usc/20/1003.md?p=17) shall, as soon as practicable, disclose the information described under such subparagraph, as specified by the [applicant](/usc/20/3982.md?p=1), in order for the [applicant](/usc/20/3982.md?p=1)’s eligibility for Federal, [State](/usc/20/1003.md?p=21-A), 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](/usc/20/3982.md?p=1) who has received income earned from work under part C of this subchapter, the [Secretary](/usc/20/1003.md?p=17) shall take the steps necessary to collect information on the amount of such income for the purposes of calculating such [applicant](/usc/20/3982.md?p=1)’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)](#a-2), the [Secretary](/usc/20/1003.md?p=17) shall provide to the [applicant](/usc/20/3982.md?p=1) the following information based on full-time attendance for an [academic year](/usc/20/1088.md?p=a-2-A):
- (i) The estimated dollar amount of a Federal Pell Grant scheduled award for which the [applicant](/usc/20/3982.md?p=1) is eligible for such [award year](/usc/20/1088.md?p=a-1).
- (ii) Information on other types of Federal financial aid for which the [applicant](/usc/20/3982.md?p=1) may be eligible (including situations in which the [applicant](/usc/20/3982.md?p=1) could qualify for 150 percent of a scheduled Federal Pell Grant award and loans made under this subchapter) and how the [applicant](/usc/20/3982.md?p=1) can find additional information regarding such aid.
- (iii) Consumer-tested information regarding each institution selected by the [applicant](/usc/20/3982.md?p=1) in accordance with [paragraph (2)(B)(ii)(XI)](#a-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](/usc/20/1003.md?p=17):
- (aa) Net price by the income categories, as described under [section 1015a(i)(6) of this title](/usc/20/1015a.md?p=i-6), and disaggregated by undergraduate and graduate programs, as applicable.
- (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 [section 1085 of this title](/usc/20/1085.md).
- (iv) If the student is eligible for a student aid index of less than or equal to zero under [section 1087mm of this title](/usc/20/1087mm.md), a notification of the Federal means-tested benefits that they have not already indicated they receive, but for which they may be eligible, and relevant links and information on how to apply for such benefits.
- (v) Information on education tax benefits described in paragraphs (1) and (2) of [section 25A(a) of title 26](/usc/26/25A.md?p=a) or other applicable education tax benefits determined in consultation with the [Secretary](/usc/20/1003.md?p=17) of the Treasury.
- (vi) If the individual identified as a veteran, or as serving (on the date of the application) on [active duty](/usc/20/1088.md?p=d-1) in the Armed Forces for other than training purposes, information on benefits administered by the [Department](/usc/20/1003.md?p=4) of Veteran Affairs or [Department](/usc/20/1003.md?p=4) of Defense, respectively.
- (vii) If applicable, the [applicant](/usc/20/3982.md?p=1)’s current outstanding balance of loans under this subchapter.
- (B) **Information provided to the State—**
- (i) **In general—** The [Secretary](/usc/20/1003.md?p=17) shall redisclose, with authorization from the [applicant](/usc/20/3982.md?p=1) in accordance with [paragraph (2)(D)(i)](#a-2-D-i), to a [State higher education agency](/usc/20/1003.md?p=22) administering [State](/usc/20/1003.md?p=21-A)-based financial aid and serving the [applicant](/usc/20/3982.md?p=1)’s [State](/usc/20/1003.md?p=21-A) of residence, the information described under [section 6103(l)(13)](/usc/26/6103.md?p=l-13) of title 26 and information described in [paragraph (2)(B)](#a-2-B) for the application, award, and administration of grants and other student financial aid provided directly from the [State](/usc/20/1003.md?p=21-A) to be determined by such [State](/usc/20/1003.md?p=21-A). Such information shall include the list of institutions provided by the [applicant](/usc/20/3982.md?p=1) on the application.
- (ii) **Use of information—** A [State](/usc/20/1003.md?p=21-A) agency administering [State](/usc/20/1003.md?p=21-A)-based financial aid—
- (I) shall use the information provided under [clause (i)](#a-3-B-i) solely for the application, award, and administration of [State](/usc/20/1003.md?p=21-A)-based financial aid for which the [applicant](/usc/20/3982.md?p=1) is eligible;
- (II) may use the information, except for the information described under [section 6103(l)(13)](/usc/26/6103.md?p=l-13) of title 26, for [State](/usc/20/1003.md?p=21-A) agency research that does not release any individually identifiable information on any [applicant](/usc/20/3982.md?p=1) to promote college attendance, persistence, and completion;
- (III) may use identifying information provided by student [applicants](/usc/20/3982.md?p=1) on the FAFSA to determine whether or not a graduating secondary student has filed the application in coordination with [local educational agencies](/usc/20/1003.md?p=11) or [secondary schools](/usc/20/1003.md?p=16) to encourage students to complete the application; and
- (IV) may share the application information, excluding the information described under [section 6103(l)(13)](/usc/26/6103.md?p=l-13) of title 26, with any other entity, only if such [applicant](/usc/20/3982.md?p=1) provides explicit written consent of the [applicant](/usc/20/3982.md?p=1), except as provided in [subclause (III)](#a-3-B-ii-III).
- (iii) **Limitation on consent process—** A [State](/usc/20/1003.md?p=21-A) may provide a consent process whereby an [applicant](/usc/20/3982.md?p=1) may elect to share the information described in [clause (i)](#a-3-B-i), except for the information described in [section 6103(l)(13)](/usc/26/6103.md?p=l-13) of title 26, through explicit written consent to Federal, [State](/usc/20/1003.md?p=21-A), or local government agencies or tribal organizations to assist such [applicant](/usc/20/3982.md?p=1) in applying for and receiving Federal, [State](/usc/20/1003.md?p=21-A), or local government assistance, or tribal assistance for any component of the [applicant](/usc/20/3982.md?p=1)’s [cost of attendance](/usc/20/1087ll.md?p=a) that may include financial assistance or non-monetary assistance.
- (iv) **Prohibition—** Any entity that receives [applicant](/usc/20/3982.md?p=1) information under [clause (iii)](#a-3-B-iii) shall not sell, share, or otherwise use [applicant](/usc/20/3982.md?p=1) information other than for the purposes outlined in [clause (iii)](#a-3-B-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](/usc/20/3982.md?p=1);
- (ii) may use the information provided, excluding the information described under section 6013(l)(13)[^4] of [title 26](/usc/26.md), for research that does not release any individually identifiable information on any [applicant](/usc/20/3982.md?p=1), 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](/usc/20/3982.md?p=1).
- (D) **Prohibition—** Any entity that receives [applicant](/usc/20/3982.md?p=1) information under [subparagraph (C)(iii)](#a-3-C-iii) shall not sell, share, or otherwise use [applicant](/usc/20/3982.md?p=1) information other than for the purposes outlined in [subparagraph (C)](#a-3-C).
- (E) **FAFSA information that includes tax return information—** An [applicant](/usc/20/3982.md?p=1)’s FAFSA information that includes return or return information as described in [section 6103(l)(13)](/usc/26/6103.md?p=l-13) of title 26 may be disclosed or redisclosed (which shall include obtaining, sharing, or discussing such information) only in accordance with the procedures described in [section 1098h of this title](/usc/20/1098h.md).
- (4) **Development of form and information exchange—** Prior to the design of the free application under this subsection, the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/3982.md?p=1) 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](/usc/20/1088.md?p=a-1).
- (5) **No additional information requests permitted—** In carrying out this subsection, the [Secretary](/usc/20/1003.md?p=17) may not require additional information to be submitted by an [applicant](/usc/20/3982.md?p=1) (or the [parents](/usc/20/1021.md?p=16) or spouse of an [applicant](/usc/20/3982.md?p=1)) for Federal financial aid through other requirements or reporting, except as required under a process or procedure exercised in accordance with the authority under [section 1087tt of this title](/usc/20/1087tt.md).
- (6) **State-run programs—**
- (A) **In general—** The [Secretary](/usc/20/1003.md?p=17) shall conduct outreach to [States](/usc/20/1003.md?p=21-A) in order to research the benefits to students of [States](/usc/20/1003.md?p=21-A) relying solely on the student aid index, scheduled Pell Grant Award, or the financial data made available, upon authorization by the [applicant](/usc/20/3982.md?p=1), as a result of an application for aid under this subsection for determining the eligibility of the [applicant](/usc/20/3982.md?p=1) for [State](/usc/20/1003.md?p=21-A) provided financial aid.
- (B) **Secretarial review—** If a [State](/usc/20/1003.md?p=21-A) determines that there is a need for additional data elements beyond those provided pursuant to this subsection for determining the eligibility of an [applicant](/usc/20/3982.md?p=1) for [State](/usc/20/1003.md?p=21-A) provided financial aid, the [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=17). The [Secretary](/usc/20/1003.md?p=17) shall make readily available to the public through the [Department](/usc/20/1003.md?p=4)’s websites and other means—
- (i) a list of [States](/usc/20/1003.md?p=21-A) 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 [section 1087ss of this title](/usc/20/1087ss.md) for the purposes of awarding [State](/usc/20/1003.md?p=21-A) scholarships and grant aid;
- (ii) a list of [States](/usc/20/1003.md?p=21-A) that require asset information from students who qualify for the exemption from asset reporting under [section 1087ss of this title](/usc/20/1087ss.md) for the purposes of awarding [State](/usc/20/1003.md?p=21-A) scholarships and grant aid;
- (iii) a list of [States](/usc/20/1003.md?p=21-A) that have indicated that they require additional financial information separate from the Free Application for Federal Student Aid for purposes of awarding [State](/usc/20/1003.md?p=21-A) scholarships and grant aid; and
- (iv) with the publication of the lists under this subparagraph, information about additional resources available to [applicants](/usc/20/3982.md?p=1), including links to such [State](/usc/20/1003.md?p=21-A) websites.
- (7) **Institution-run financial aid—**
- (A) **In general—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/3982.md?p=1), as a result of an application for aid under this subsection for determining the eligibility of the [applicant](/usc/20/3982.md?p=1) for institutional financial aid. The [Secretary](/usc/20/1003.md?p=17) 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 [section 1087ss of this title](/usc/20/1087ss.md) for the purpose of awarding institution-run financial aid;
- (ii) a list of institutions that require asset information from students who qualify for the exemption from asset reporting under [section 1087ss of this title](/usc/20/1087ss.md) for the purpose of awarding institution-run financial aid;
- (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)](#a-7-A-iii), information about additional resources available to [applicants](/usc/20/3982.md?p=1).
- (8) **Security of data—** The [Secretary](/usc/20/1003.md?p=17) shall, in consultation with the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=21-A) and institutions of higher education and secure the transmittal of such data;
- (B) provide guidance to [States](/usc/20/1003.md?p=21-A) and institutions of higher education regarding their obligation to ensure the security of the data provided under this section and [section 6103 of title 26](/usc/26/6103.md); and
- (C) provide guidance on the implementation of [section 6103 of title 26](/usc/26/6103.md), including how it intersects with the provisions of [section 1232g of this title](/usc/20/1232g.md) (commonly known as the “Family Educational Rights and Privacy Act of 1974”), and any additional consent processes that may be available to [applicants](/usc/20/3982.md?p=1) in accordance with [title 26](/usc/26.md) regarding sharing of Federal tax information.
- (9) **Report to Congress—**
- (A) **In general—** Not later than 1 year after December 27, 2020, the [Secretary](/usc/20/1003.md?p=17) shall report to the [authorizing committees](/usc/20/1003.md?p=1) on the progress of the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) shall provide updates to the [authorizing committees](/usc/20/1003.md?p=1)—
- (i) as to the progress and planning described in [subparagraph (A)](#a-9-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](/usc/20/1003.md?p=17) 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 [section 1087tt of this title](/usc/20/1087tt.md) to the [cost of attendance](/usc/20/1087ll.md?p=a) or the values of the data items required to calculate the Federal Pell Grant or the need analysis for the student or [parent](/usc/20/1021.md?p=16). Such disclosure shall specify—
- (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 [section 1087tt of this title](/usc/20/1087tt.md).
- (2) **Consumer testing—**
- (A) **In general—** Not later than 9 months after December 27, 2020, the [Secretary](/usc/20/1003.md?p=17) shall begin consumer testing the design of the Free Application for Federal Student Aid under this section with prospective [first-generation college students](/usc/20/1059e.md?p=b-3), representatives of students (including [low-income students](/usc/20/1161a.md?p=b-1), [English learners](/usc/20/1021.md?p=15), [first-generation college students](/usc/20/1059e.md?p=b-3), adult students, veterans, servicemembers, and prospective students), students’ families (including low-income families, families with [English learners](/usc/20/1021.md?p=15), families with [first-generation college students](/usc/20/1059e.md?p=b-3), and families with prospective students), institutions of higher education, [secondary school](/usc/20/1003.md?p=16) and postsecondary counselors, and [nonprofit](/usc/20/1003.md?p=13) consumer groups.
- (B) **Updates—** For [award year](/usc/20/1088.md?p=a-1) 2024–2025 and at least each fourth succeeding [award year](/usc/20/1088.md?p=a-1) thereafter, the [Secretary](/usc/20/1003.md?p=17) shall update the design of the Free Application for Federal Student Aid based on additional consumer testing with the populations described in [subparagraph (A)](#b-2-A) in order to improve the usability and accessibility of the application.
- (3) **Accessibility of the FAFSA—** The [Secretary](/usc/20/1003.md?p=17) shall—
- (A) in conjunction with the Bureau of the Census, determine the most common languages spoken by [English learner](/usc/20/1021.md?p=15) students and their [parents](/usc/20/1021.md?p=16) 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)](#b-3-A) and make such versions available and accessible to [applicants](/usc/20/3982.md?p=1) 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](/usc/20/1003.md?p=6) 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](/usc/20/3982.md?p=1)’s experience in applying for financial aid, the [Secretary](/usc/20/1003.md?p=17) shall allow an [applicant](/usc/20/3982.md?p=1) who electronically applies for financial assistance under this subchapter for an [academic year](/usc/20/1088.md?p=a-2-A) subsequent to an [academic year](/usc/20/1088.md?p=a-2-A) for which such [applicant](/usc/20/3982.md?p=1) applied for financial assistance under this subchapter to automatically electronically import all of the [applicant](/usc/20/3982.md?p=1)’s (including [parents](/usc/20/1021.md?p=16)’, guardians’, or spouses’, as applicable) identifying, demographic, and [school](/usc/20/5802.md?p=a-11) data from the previous application and to update such information to reflect any circumstances that have changed.
- (5) **Technology accessibility—** The [Secretary](/usc/20/1003.md?p=17) shall make the application under this section available through prevalent technology. Such technology shall, at a minimum, enable [applicants](/usc/20/3982.md?p=1) to—
- (A) save data; and
- (B) submit the application under this subchapter to the [Secretary](/usc/20/1003.md?p=17) through such technology.
- (6) **Verification burden—** The [Secretary](/usc/20/1003.md?p=17) shall—
- (A) to the maximum extent practicable, streamline and simplify the process of verification for [applicants](/usc/20/3982.md?p=1) for Federal financial aid;
- (B) in establishing policies and procedures to verify [applicants](/usc/20/3982.md?p=1)’ eligibility for Federal financial aid, consider—
- (i) the burden placed on low-income [applicants](/usc/20/3982.md?p=1);
- (ii) the risk to low-income [applicants](/usc/20/3982.md?p=1) 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](/usc/20/3982.md?p=1) subject to verification, whether the [applicants](/usc/20/3982.md?p=1) ultimately received Federal financial aid disbursements, the extent to which the student aid index changed for such [applicants](/usc/20/3982.md?p=1) as a result of verification, and the extent to which such [applicants](/usc/20/3982.md?p=1)’ eligibility for Federal financial aid under this subchapter changed.
- (7) **Studies—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=21-A) requiring additional information specified in clauses [(ii)](#a-6-B-ii) and [(iii)](#a-6-B-iii) of subsection (a)(6)(B) on the determination of [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1088.md?p=a-2-A); and
- (II) if available, did not enroll in an [institution of higher education](/usc/20/1001.md?p=a) in the applicable [academic year](/usc/20/1088.md?p=a-2-A);
- (B) the most common barriers faced by [applicants](/usc/20/3982.md?p=1) 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](/usc/20/1003.md?p=17) 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](/usc/20/3982.md?p=1) applied, the [applicant](/usc/20/3982.md?p=1)’s [State](/usc/20/1003.md?p=21-A) of legal residence, and [high school](/usc/20/2302.md?p=25) and public [school](/usc/20/5802.md?p=a-11) 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](/usc/20/3982.md?p=1) applied, the [applicant](/usc/20/3982.md?p=1)’s [State](/usc/20/1003.md?p=21-A) of legal residence, and [high school](/usc/20/2302.md?p=25) and public [school](/usc/20/5802.md?p=a-11) district;
- (C) weekly on the total number of Free Applications for Federal Student Aid submitted, disaggregated by [high school](/usc/20/2302.md?p=25) and public [school](/usc/20/5802.md?p=a-11) 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)](#c-1-D) with respect to homeless youth shall include, at a minimum, for each application cycle—
- (A) the total number of all [applicants](/usc/20/3982.md?p=1) who were determined to be individuals described in [section 1087vv(d)(8) of this title](/usc/20/1087vv.md?p=d-8); and
- (B) the number of [applicants](/usc/20/3982.md?p=1) described in [subparagraph (A)](#c-2-A), disaggregated—
- (i) by [State](/usc/20/1003.md?p=21-A); and
- (ii) by the sources of determination as described in [section 1087uu–2(b) of this title](/usc/20/1087uu–2.md?p=b).
- (3) **Data sharing—** The [Secretary](/usc/20/1003.md?p=17) may enter into data sharing agreements with the appropriate Federal or [State](/usc/20/1003.md?p=21-A) agencies to conduct outreach regarding, and connect [applicants](/usc/20/3982.md?p=1) directly with, the means-tested Federal benefit programs described in [subsection (a)(2)(B)(ii)(XVII)](#a-2-B-ii-XVII) for which the [applicants](/usc/20/3982.md?p=1) may be eligible.
- (d) **Ensuring form usability—**
- (1) **Signature—** Notwithstanding any other provision of this subchapter, the [Secretary](/usc/20/1003.md?p=17) may permit the Free Application for Federal Student Aid to be submitted without a signature, if a signature is subsequently submitted by the [applicant](/usc/20/3982.md?p=1), or if the [applicant](/usc/20/3982.md?p=1) uses an access device provided by the [Secretary](/usc/20/1003.md?p=17).
- (2) **Free preparation authorized—** Notwithstanding any other provision of this subchapter, an [applicant](/usc/20/3982.md?p=1) 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](/usc/20/3982.md?p=1) if the preparer—
- (A) includes, at the time the application is submitted to the [Department](/usc/20/1003.md?p=4), the name, address or employer’s address, social security number or employer identification number, and organizational affiliation of the preparer on the [applicant](/usc/20/3982.md?p=1)’s form;
- (B) is subject to the same penalties as an [applicant](/usc/20/3982.md?p=1) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) under this section. Such application shall be produced, distributed, and processed by the [Secretary](/usc/20/1003.md?p=17), and no [parent](/usc/20/1021.md?p=16) or student shall be charged a fee by the [Secretary](/usc/20/1003.md?p=17), 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](/usc/20/1003.md?p=21-A) income tax form prepared by a paid income tax preparer or preparer service for the primary purpose of filing a Federal or [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=17) shall enable [applicants](/usc/20/3982.md?p=1) 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](/usc/20/3982.md?p=1)’s planned year of enrollment.
- (B) **Certification and testimony requirements—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=1) that the [Department](/usc/20/1003.md?p=4) will meet the October 1 deadline specified in [subparagraph (A)](#d-4-A) for such processing cycle; or
- (II) certify to such committees that the [Department](/usc/20/1003.md?p=4) will not meet such deadline; and
- (ii) in the case of a certification described in [clause (i)(II)](#d-4-B-i-II), on a date that is not later than September 30, testify before the [authorizing committees](/usc/20/1003.md?p=1) 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](/usc/20/1003.md?p=17) shall maintain an electronic method for [applicants](/usc/20/3982.md?p=1) to enter income and [family size](/usc/20/1070a.md?p=a-2-B) information to calculate a non-binding estimate of the [applicant](/usc/20/3982.md?p=1)’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.
# §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](/usc/20/1066a.md?p=1) at which such student is enrolled) leading to a recognized educational credential at an [institution of higher education](/usc/20/1001.md?p=a) that is an [eligible institution](/usc/20/1066a.md?p=1) in accordance with the provisions of [section 1094 of this title](/usc/20/1094.md), except as provided in subsections [(b)(3)](#b-3) and [(b)(4)](#b-4), and not be enrolled in an elementary or [secondary school](/usc/20/1003.md?p=16);
- (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)](#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](/usc/20/4702.md?p=3) at any institution provided for in part E, or a loan made, insured, or guaranteed by the [Secretary](/usc/20/1003.md?p=17) under this subchapter for attendance at any institution;
- (4) file with the [Secretary](/usc/20/1003.md?p=17), 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](/usc/20/4702.md?p=3) under this subchapter, have completed the repayment of such [funds](/usc/20/4702.md?p=3) to the [Secretary](/usc/20/1003.md?p=17), 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 section [1078–2](/usc/20/1078–2.md) or [1078–3](/usc/20/1078–3.md) of this title, or under [section 1078–8 of this title](/usc/20/1078–8.md) pursuant to an exercise of discretion under [section 1087tt of this title](/usc/20/1087tt.md)) for any period of enrollment, a student who is not a graduate or professional student (as defined in regulations of the [Secretary](/usc/20/1003.md?p=17)), and who is enrolled in a program at an institution which has a participation agreement with the [Secretary](/usc/20/1003.md?p=17) to make awards under subpart 1 of part A of this subchapter, shall—
- (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](/usc/20/1078–1.md)[^1] of this title for any period of enrollment, a student shall—
- (A) have received a determination of need for a loan under [section 1078(a)(2)(B) of this title](/usc/20/1078.md?p=a-2-B);
- (B) if determined to have need for a loan under [section 1078 of this title](/usc/20/1078.md), have applied for such a loan; and
- (C) has applied for a loan under [section 1078–8 of this title](/usc/20/1078–8.md), if such student is eligible to apply for such a loan.
- (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](/usc/20/1066a.md?p=1), 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)](#a-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](/usc/20/1066a.md?p=1) necessary for a professional credential or certification from a [State](/usc/20/1003.md?p=21-A) that is required for employment as a teacher in an elementary or [secondary school](/usc/20/1003.md?p=16) in that [State](/usc/20/1003.md?p=21-A),
shall be, notwithstanding [paragraph (1)](#a-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-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](/usc/20/1088.md?p=a-2-A), 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](/usc/20/1088.md?p=a-2-A).
- (2) Whenever a student fails to meet the eligibility requirements of [subsection (a)(2)](#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)](#a-2) for a grant, loan, or work assistance under this subchapter.
- (3) Any [institution of higher education](/usc/20/1001.md?p=a) at which the student is in attendance may waive the provisions of [paragraph (1)](#c-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](/usc/20/5802.md?p=a-11) 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](#d-2) 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](/usc/20/1003.md?p=17), demonstrating that such student can benefit from the education or training being offered. Such examination shall be approved by the [Secretary](/usc/20/1003.md?p=17) on the basis of compliance with such standards for development, administration, and scoring as the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=21-A) shall prescribe. Any such process described or approved by a [State](/usc/20/1003.md?p=21-A) for the purposes of this section shall be effective 6 months after the date of submission to the [Secretary](/usc/20/1003.md?p=17) unless the [Secretary](/usc/20/1003.md?p=17) disapproves such process. In determining whether to approve or disapprove such process, the [Secretary](/usc/20/1003.md?p=17) shall take into account the effectiveness of such process in enabling students without [secondary school](/usc/20/1003.md?p=16) 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](/usc/20/1001.md?p=a) as having the ability to benefit from the education or training offered by the [institution of higher education](/usc/20/1001.md?p=a) 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](/usc/20/1001.md?p=a).
- (B) The student has completed a [secondary school](/usc/20/1003.md?p=16) education in a home [school](/usc/20/5802.md?p=a-11) setting that is treated as a home [school](/usc/20/5802.md?p=a-11) or private [school](/usc/20/5802.md?p=a-11) under [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=21-A) 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”; 50 Stat. 664, chapter 663; [29 U.S.C. 50](/usc/29/50.md) et seq.) (referred to individually in this chapter as an “apprenticeship”, except in [section 171](/usc/29/171.md));[^1]
- (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](/usc/20/1003.md?p=16) 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](/usc/20/1066a.md?p=1) may certify student eligibility for a loan by an [eligible lender](/usc/20/1019.md?p=4) under part B of this subchapter prior to completing the review for accuracy of the information submitted by the [applicant](/usc/20/3982.md?p=1) required by regulations issued under this subchapter, if—
- (1) checks for the loans are mailed to the [eligible institution](/usc/20/1066a.md?p=1) prior to disbursements;
- (2) the disbursement is not made until the review is complete; and
- (3) the [eligible institution](/usc/20/1066a.md?p=1) has no evidence or documentation on which the institution may base a determination that the information submitted by the [applicant](/usc/20/3982.md?p=1) 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](/usc/20/1066a.md?p=1) 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](/usc/20/1088.md?p=a-2-A), 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](/usc/20/1003.md?p=17) 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)](#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](/usc/20/1066a.md?p=1) 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 [section 1324a(b)(1)(B) of title 8](/usc/8/1324a.md?p=b-1-B) to verify eligibility to participate in work-study programs under part C of this subchapter.
- (3) **Verification mechanisms—** The [Secretary](/usc/20/1003.md?p=17) 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)](#g-1) is submitted but the documentation required under [paragraph (2)](#g-2) is not presented or if the documentation required under paragraph (2)(A) is presented but such documentation is not verified under [paragraph (3)](#g-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](/usc/20/1003.md?p=17) shall not take any compliance, disallowance, penalty, or other regulatory action against an [institution of higher education](/usc/20/1001.md?p=a) 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)](#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)](#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)](#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)](#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](/usc/20/1001.md?p=a) that is offered principally through [distance education](/usc/20/1003.md?p=7-A) 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](/usc/20/1001.md?p=a) referred to in [subparagraph (A)](#l-1-A) shall not include an institution or [school](/usc/20/5802.md?p=a-11) described in [section 2302(3)(C) of this title](/usc/20/2302.md?p=3-C).
- (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](/usc/20/1094.md?p=i-5) determines under the discretionary authority provided in [section 1087tt of this title](/usc/20/1087tt.md) that [distance education](/usc/20/1003.md?p=7-A) results in a substantially reduced [cost of attendance](/usc/20/1087ll.md?p=a) to such student.
- (3) **Special rule—** For [award years](/usc/20/1088.md?p=a-1) beginning prior to July 1, 2008, the [Secretary](/usc/20/1003.md?p=17) shall not take any compliance, disallowance, penalty, or other action based on a violation of this subsection against a student or an [eligible institution](/usc/20/1066a.md?p=1) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/1066a.md?p=1) under [subsection (a)(4)](#a-4) and shall enforce the following conditions:
- (1) Except as provided in paragraphs [(2)](#o-2) and [(3)](#o-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](/usc/20/1003.md?p=17) that the social security number provided to an [eligible institution](/usc/20/1066a.md?p=1) 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](/usc/20/1003.md?p=17) that the social security number provided to an [eligible institution](/usc/20/1066a.md?p=1) 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](/usc/20/1085.md?p=j) 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](/usc/20/1085.md?p=j) receives such notice.
- (4) Nothing in this subsection shall permit the [Secretary](/usc/20/1003.md?p=17) to take any compliance, disallowance, penalty, or other regulatory action against—
- (A) any [institution of higher education](/usc/20/1001.md?p=a) 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](/usc/20/1003.md?p=17), in cooperation with the [Secretary](/usc/20/1003.md?p=17) of the Treasury, shall fulfill the data transfer requirements under [section 6103(l)(13)](/usc/26/6103.md?p=l-13) of title 26 and the procedure and requirements outlined in [section 1098h of this title](/usc/20/1098h.md).
- (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 [section 1140 of this title](/usc/20/1140.md).
- (2) **Requirements—** Notwithstanding subsections [(a)](#a), [(c)](#c), and [(d)](#d), in order to receive any grant or work assistance under [section 1070a of this title](/usc/20/1070a.md), subpart 3 of part A, or part C, a [student with an intellectual disability](#q-1) shall—
- (A) be enrolled or accepted for enrollment in a [comprehensive transition and postsecondary program for students with intellectual disabilities](#q-1) at an [institution of higher education](/usc/20/1001.md?p=a);
- (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)](#a-3), [(4)](#a-4), [(5)](#a-5), and [(6)](#a-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](/usc/20/1003.md?p=17) is authorized to waive any statutory provision applicable to the student financial assistance programs under [section 1070a of this title](/usc/20/1070a.md), subpart 3 of part A, or part C (other than a provision of part F related to such a program), or any institutional eligibility provisions of this subchapter, as the [Secretary](/usc/20/1003.md?p=17) determines necessary to ensure that programs enrolling students with intellectual [disabilities](/usc/20/1003.md?p=6) otherwise determined to be eligible under this subsection may receive such financial assistance.
- (4) **Regulations—** Notwithstanding regulations applicable to grant or work assistance awards made under [section 1070a of this title](/usc/20/1070a.md), subpart 3 of part A, and part C (other than a regulation under part F related to such an award), including with respect to [eligible programs](/usc/20/1088.md?p=b-1), instructional time, credit status, and enrollment status as described in [section 1088 of this title](/usc/20/1088.md), the [Secretary](/usc/20/1003.md?p=17) shall promulgate regulations allowing programs enrolling students with intellectual [disabilities](/usc/20/1003.md?p=6) otherwise determined to be eligible under this subsection to receive such awards.
- (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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=4) 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](/usc/20/1088.md?p=a-1) and at least one additional time during such [award year](/usc/20/1088.md?p=a-1).
- (4) **Report to Congress—** The [Secretary](/usc/20/1003.md?p=17) shall prepare and submit to the [authorizing committees](/usc/20/1003.md?p=1), 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 [section 3811(f) of title 50](/usc/50/3811.md?p=f), an individual shall not be ineligible for assistance or a benefit provided under this subchapter if the individual is required under [section 3802 of title 50](/usc/50/3802.md) to present himself for and submit to registration under such section and fails to do so in accordance with any proclamation issued under such section, or in accordance with any rule or regulation issued under such section.
- (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](/usc/20/1003.md?p=21-A), 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](/usc/20/1088.md?p=b-1) under this subchapter offered by an [institution of higher education](/usc/20/1001.md?p=a) (as defined in section [1001](/usc/20/1001.md) or [1002(a)(1)(B)](/usc/20/1002.md?p=a-1-B) of this title);
- (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](#t-1-A) 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](#t-1-A) 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](#t-1-A) 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](/usc/20/1001.md?p=a) (as defined in section [1001](/usc/20/1001.md) or [1002(a)(1)(B)](/usc/20/1002.md?p=a-1-B) of this title) in the [State](/usc/20/1003.md?p=21-A) in which the correctional facility is located, or, in the case of a Federal correctional facility, in the [State](/usc/20/1003.md?p=21-A) in which most of the individuals confined or incarcerated in such facility will reside upon release;
- (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](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=21-A) in which the correctional facility is located or, in the case of a Federal correctional facility, in the [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=21-A) if such job or occupation typically involves prohibitions on the licensure or employment of formerly incarcerated individuals in the [State](/usc/20/1003.md?p=21-A) in which the correctional facility is located, or, in the case of a Federal correctional facility, in the [State](/usc/20/1003.md?p=21-A) in which most of the individuals confined or incarcerated in such facility will reside upon release.
- (2) **Technical assistance—** The [Secretary](/usc/20/1003.md?p=17), 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)](#t-1-B-iii).
- (3) **Federal Pell Grant eligibility—** Notwithstanding [subsection (a)](#a), in order for a [confined or incarcerated individual](#t-1-A) who otherwise meets the eligibility requirements of this subchapter to be eligible to receive a Federal Pell Grant under [section 1070a of this title](/usc/20/1070a.md), the individual shall be enrolled or accepted for enrollment in a [prison education program](#t-1-B).
- (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](/usc/20/1003.md?p=17), in partnership with the [Director](/usc/20/9101.md?p=3) of the [Institute](/usc/20/9101.md?p=6) 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](#t-1-A) 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](#t-1-A), including—
- (I) attainment of a postsecondary degree or credential;
- (II) safety in penal institutions with [prison education programs](#t-1-B);
- (III) the size of waiting lists for [prison education programs](#t-1-B);
- (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](#t-1-A) as part of the [prison education program](#t-1-B) and the efficacy of such services, if offered.
- (B) **Report—** Beginning not later than 1 year after the [Secretary](/usc/20/1003.md?p=17) awards the grant, contract, or cooperative agreement described in [subparagraph (A)](#t-4-A) and annually thereafter, each [institution of higher education](/usc/20/1001.md?p=a) operating a [prison education program](#t-1-B) under this subsection shall submit a report to the [Secretary](/usc/20/1003.md?p=17) on activities assisted and students served under this subsection, which shall include the information, as applicable, contained in [clauses (i) through (iv)](#t-4-A-i..t-4-A-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](/usc/20/1003.md?p=17) shall submit to the [authorizing committees](/usc/20/1003.md?p=1), and make publicly available on the website of the [Department](/usc/20/1003.md?p=4), 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](#t-1-B) at which [confined or incarcerated individuals](#t-1-A) are enrolled and receiving Federal Pell Grants;
- (ii) the number of [confined or incarcerated individuals](#t-1-A) receiving Federal Pell Grants through each [prison education program](#t-1-B);
- (iii) the amount of Federal Pell Grant expenditures for each [prison education program](#t-1-B);
- (iv) the average amount of Federal Pell Grant expenditures per full-time equivalent students in a [prison education program](#t-1-B) compared to the average amount of Federal Pell Grant expenditures per full-time equivalent students not in [prison education programs](#t-1-B);
- (v) the demographics of [confined or incarcerated individuals](#t-1-A) receiving Federal Pell Grants;
- (vi) the [cost of attendance](/usc/20/1087ll.md?p=a) for such individuals;
- (vii) the mode of instruction (such as [distance education](/usc/20/1003.md?p=7-A), in-person instruction, or a combination of such modes) for each [prison education program](#t-1-B);
- (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](#t-1-A) receiving Federal Pell Grants;
- (xi) information on transfers of [confined or incarcerated individuals](#t-1-A) between [prison education programs](#t-1-B);
- (xii) the most common programs and courses offered in [prison education programs](#t-1-B); and
- (xiii) rates of instructor turnover or departure for courses offered in [prison education programs](#t-1-B);
- (B) results of each [prison education program](#t-1-B) at each [institution of higher education](/usc/20/1001.md?p=a), including the information described in [clauses (ii) through (xiii)](#t-5-A-ii..t-5-A-xiii) of subparagraph (A); and
- (C) findings regarding best practices with respect to [prison education programs](#t-1-B).
# §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](/usc/20/1003.md?p=21-A) 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](/usc/20/4702.md?p=3) 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](/usc/20/1085.md?p=j) that has an agreement with the [Secretary](/usc/20/1003.md?p=17) under [section 1078(c) of this title](/usc/20/1078.md?p=c) that is seeking the repayment of the amount due from a borrower on a loan made under part B of this subchapter after such [guaranty agency](/usc/20/1085.md?p=j) reimburses the previous holder of the loan for its loss on account of the default of the borrower;
- (C) an institution that has an agreement with the [Secretary](/usc/20/1003.md?p=17) pursuant to section [1087c](/usc/20/1087c.md) or [1087cc(a)](/usc/20/1087cc.md?p=a) of this title that is seeking the repayment of the amount due from a borrower on a loan made under part D or E of this subchapter after the default of the borrower on such loan; or
- (D) the [Secretary](/usc/20/1003.md?p=17), 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](/usc/20/1003.md?p=17) under this subchapter.
- (b) **Assessment of costs and other charges—** Notwithstanding any provision of [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1085.md?p=j) or the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1001.md?p=a) that has an agreement with the [Secretary](/usc/20/1003.md?p=17) pursuant to [section 1087cc(a) of this title](/usc/20/1087cc.md?p=a) shall not be subject to a defense raised by any borrower based on a claim of infancy.
- (c) **State court judgments—** A judgment of a [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=17) 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.
# §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)](#a-3) and returned in accordance with [subsection (b)](#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)](#a-2-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](#c-1) (as determined under [subsection (c)](#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)](#a-3-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](#c-1).
- (B) **Percentage earned—** For purposes of [subparagraph (A)(i)](#a-3-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)](#d)) as of the [day the student withdrew](#c-1), 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](#c-1) occurs after the student has completed (as determined in accordance with [subsection (d)](#d)) 60 percent of the payment period or period of enrollment.
- (C) **Percentage and amount not earned—** For purposes of [subsection (b)](#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)](#a-3-B); and
- (ii) applying the percentage determined under [clause (i)](#a-3-C-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](#c-1).
- (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](/usc/20/1003.md?p=17)), the [institution of higher education](/usc/20/1001.md?p=a) shall contact the borrower and obtain confirmation that the loan [funds](/usc/20/4702.md?p=3) 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](/usc/20/4702.md?p=3) 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)](#a-3-A), the unearned [funds](/usc/20/4702.md?p=3) shall be returned by the institution or the student, or both, as may be required under paragraphs [(1)](#b-1) and [(2)](#b-2) of subsection (b), to the programs under this subchapter in the order specified in [subsection (b)(3)](#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)](#b-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)](#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)](#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)](#a-3-C-ii) in the order specified in [paragraph (3)](#b-3) minus the amount the institution is required to return under [paragraph (1)](#b-1).
- (B) **Special rule—** The student (or [parent](/usc/20/1021.md?p=16) in the case of [funds](/usc/20/4702.md?p=3) due to a loan borrowed by a [parent](/usc/20/1021.md?p=16) under part B or D) shall return or repay, as appropriate, the amount determined under [subparagraph (A)](#b-2-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](/usc/20/1003.md?p=17).
- (C) **Grant overpayment requirements—**
- (i) **In general—** Notwithstanding subparagraphs [(A)](#b-2-A) and [(B)](#b-2-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)](#b-2-A) and [(B)](#b-2-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](/usc/20/1003.md?p=17) 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](/usc/20/1001.md?p=a) that is located in an area in which the President has declared that a major disaster exists, in accordance with [section 5170 of title 42](/usc/42/5170.md);
- (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](/usc/20/1088.md?p=a-2-A) during which the designation occurred or during the next succeeding [academic year](/usc/20/1088.md?p=a-2-A).
- (E) **Waivers of grant assistance repayment by students affected by disasters—** In addition to the waivers authorized by [subparagraph (D)](#b-2-D), the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1001.md?p=a) that is located in an area in which the President has declared that a major disaster exists, in accordance with [section 5170 of title 42](/usc/42/5170.md);
- (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](/usc/20/1088.md?p=a-2-A) during which the designation occurred or during the next succeeding [academic year](/usc/20/1088.md?p=a-2-A).
- (3) **Order of return of subchapter IV funds—**
- (A) **In general—** Excess [funds](/usc/20/4702.md?p=3) returned by the institution or the student, as appropriate, in accordance with paragraph [(1)](#b-1) or [(2)](#b-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](/usc/20/4702.md?p=3) is required. Such excess [funds](/usc/20/4702.md?p=3) shall be credited in the following order:
- (i) To outstanding balances on loans made under [section 1078–8 of this title](/usc/20/1078–8.md) for the payment period or period of enrollment for which a return of [funds](/usc/20/4702.md?p=3) is required.
- (ii) To outstanding balances on loans made under [section 1078 of this title](/usc/20/1078.md) for the payment period or period of enrollment for which a return of [funds](/usc/20/4702.md?p=3) is required.
- (iii) To outstanding balances on unsubsidized loans (other than [parent](/usc/20/1021.md?p=16) loans) made under part D for the payment period or period of enrollment for which a return of [funds](/usc/20/4702.md?p=3) 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](/usc/20/4702.md?p=3) 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](/usc/20/4702.md?p=3) is required.
- (vi) To outstanding balances on loans made under [section 1078–2 of this title](/usc/20/1078–2.md) for the payment period or period of enrollment for which a return of [funds](/usc/20/4702.md?p=3) is required.
- (vii) To outstanding balances on [parent](/usc/20/1021.md?p=16) loans made under part D for the payment period or period of enrollment for which a return of [funds](/usc/20/4702.md?p=3) is required.
- (B) **Remaining excesses—** If excess [funds](/usc/20/4702.md?p=3) 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](/usc/20/4702.md?p=3) 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](/usc/20/4702.md?p=3) is required.
- (iii) To other assistance awarded under this subchapter for which a return of [funds](/usc/20/4702.md?p=3) 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)](#c-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)](#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](#c-1); 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](#c-1).
- (e) **Effective date—** The provisions of this section shall take effect 2 years after October 7, 1998. An [institution of higher education](/usc/20/1001.md?p=a) may choose to implement such provisions prior to that date.
# §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](/usc/20/1088.md?p=d-1) in the Armed Forces, including such service by a member of the National Guard or Reserve.
- (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](#a) shall not be denied readmission to an [institution of higher education](/usc/20/1001.md?p=a) 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](/usc/20/1001.md?p=a) is necessitated by reason of [service in the uniformed services](#a) shall be entitled to readmission to the [institution of higher education](/usc/20/1001.md?p=a) if—
- (A) the student (or an appropriate [officer](/usc/20/1094.md?p=i-5) of the Armed Forces or official of the [Department](/usc/20/1003.md?p=4) of Defense) gives advance written or verbal notice of such service to the appropriate official at the [institution of higher education](/usc/20/1001.md?p=a);
- (B) the cumulative length of the absence and of all previous absences from that [institution of higher education](/usc/20/1001.md?p=a) by reason of [service in the uniformed services](#a) 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](/usc/20/1001.md?p=a) in accordance with the provisions of [paragraph (4)](#c-4).
- (2) **Exceptions—**
- (A) **Military necessity—** No notice is required under [paragraph (1)(A)](#c-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](/usc/20/1094.md?p=i-5) of the Armed Forces or official of the [Department](/usc/20/1003.md?p=4) of Defense) who did not give advance written or verbal notice of service to the appropriate official at the [institution of higher education](/usc/20/1001.md?p=a) in accordance with [paragraph (1)(A)](#c-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](/usc/20/1001.md?p=a) that the student performed [service in the uniformed services](#a) that necessitated the student’s absence from the [institution of higher education](/usc/20/1001.md?p=a).
- (3) **Applicability—** This section shall apply to a student who is absent from an [institution of higher education](/usc/20/1001.md?p=a) by reason of [service in the uniformed services](#a) 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](/usc/20/1001.md?p=a) 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](#a) 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](/usc/20/1088.md?p=d-1) under section [688](/usc/10/688.md), [12301(a)](/usc/10/12301.md?p=a), [12301(g)](/usc/10/12301.md?p=g), [12302](/usc/10/12302.md), [12304](/usc/10/12304.md), or [12305](/usc/10/12305.md) of title 10 or under section 251, 252,[^1] 359, 360, 367, or 712[^1] of [title 14](/usc/14.md);
- (ii) ordered to or retained on [active duty](/usc/20/1088.md?p=d-1) (other than for training) under any provision of law because of a war or [national emergency](/usc/20/1088.md?p=d-3) declared by the President or the Congress, as determined by the [Secretary](/usc/20/1003.md?p=17) concerned;
- (iii) ordered to [active duty](/usc/20/1088.md?p=d-1) (other than for training) in support, as determined by the [Secretary](/usc/20/1003.md?p=17) concerned, of an operational mission for which personnel have been ordered to [active duty](/usc/20/1088.md?p=d-1) under [section 12304 of title 10](/usc/10/12304.md);
- (iv) ordered to [active duty](/usc/20/1088.md?p=d-1) in support, as determined by the [Secretary](/usc/20/1003.md?p=17) 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 [chapter 13](/usc/10/chstA-ptI-ch13.md) of title 10 or [section 12406 of title 10](/usc/10/12406.md).
- (4) **Notification of intent to return—**
- (A) **In general—** Except as provided in [subparagraph (B)](#c-4-B), a student referred to in [subsection (a)](#a) shall, upon the completion of a period of [service in the uniformed services](#a), notify the [institution of higher education](/usc/20/1001.md?p=a) 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](#a) shall notify the [institution of higher education](/usc/20/1001.md?p=a) 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](/usc/20/1001.md?p=a), but shall be subject to the [institution of higher education](/usc/20/1001.md?p=a)’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](/usc/20/1001.md?p=a) under this section shall provide to the [institution of higher education](/usc/20/1001.md?p=a) 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)](#d).
- (B) **Prohibited documentation demands—** An [institution of higher education](/usc/20/1001.md?p=a) 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](/usc/20/1001.md?p=a) 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](/usc/20/1001.md?p=a).
- (d) **Exception from readmission eligibility—** A student’s eligibility for readmission to an [institution of higher education](/usc/20/1001.md?p=a) under this section by reason of such student’s [service in the uniformed services](#a) 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 [section 1161(a) of title 10](/usc/10/1161.md?p=a).
- (3) A dropping of such person from the rolls pursuant to [section 1161(b) of title 10](/usc/10/1161.md?p=b).
# §1092. Institutional and financial assistance information for students
- (a) **Information dissemination activities—**
- (1) Each [eligible institution](/usc/20/1066a.md?p=1) 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](#a-2). Each [eligible institution](/usc/20/1066a.md?p=1) 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 [[20 U.S.C. 1232g](/usc/20/1232g.md)] (commonly known as the “Family Educational Rights and Privacy Act of 1974”), together with a statement of the procedures required to obtain such information. The information required by this section shall accurately describe—
- (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](/usc/20/4702.md?p=2) 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 [section 1091b of this title](/usc/20/1091b.md) for the return of grant or loan assistance provided under this subchapter; and
- (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)](#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](#a-2) who are seeking information required by this subsection;
- (I) special facilities and services available to students with [disabilities](/usc/20/1003.md?p=6);
- (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](#a-2) 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 [section 1091(a)(2) of this title](/usc/20/1091.md?p=a-2);
- (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)](#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](/usc/20/1161w.md?p=f-1) Survey of Student Engagement, [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=21-A) data systems, or other relevant sources;
- (T) the fire safety report prepared by the institution pursuant to [subsection (i)](#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](/usc/20/1066a.md?p=1) requesting information concerning admission to that institution.
- (3) In calculating the completion or graduation rate under [subparagraph (L)](#a-1-L) of paragraph (1) of this subsection or under [subsection (e)](#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](/usc/20/1066a.md?p=1) 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](#a-2) 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)](#a-1-L) of paragraph (1) the completion or graduation rates of students who leave [school](/usc/20/5802.md?p=a-11) 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)](#a-4-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)](#a-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](/usc/20/1003.md?p=17) shall permit any [institution of higher education](/usc/20/1001.md?p=a) 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](/usc/20/1003.md?p=17), 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](#a-2) showing the completion or graduation rate for students described in [paragraph (4)](#a-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)](#a-7-A-ii), the information disseminated under [paragraph (1)(L)](#a-1-L), or reported under [subsection (e)](#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 [section 1078–8 of this title](/usc/20/1078–8.md) or a Federal Direct Unsubsidized Stafford Loan) who did not receive a Federal Pell Grant, and by recipients of neither a Federal Pell Grant nor a loan made under part B or D (other than a loan made under [section 1078–8 of this title](/usc/20/1078–8.md) or a Federal Direct Unsubsidized Stafford Loan), if the number of students in such subgroup or with such status is sufficient to yield statistically reliable information and reporting will not reveal personally identifiable information about an individual student. If such number is not sufficient for such purposes, then the institution shall note that the institution enrolled too few of such students to so disclose or report with confidence and confidentiality.
- (ii) The requirements of [clause (i)](#a-7-A-i) shall not apply to two-year, degree-granting institutions of higher education until [academic year](/usc/20/1088.md?p=a-2-A) 2011-2012.
- (B)
- (i) In order to assist two-year degree-granting institutions of higher education in meeting the requirements of [paragraph (1)(L)](#a-1-L) and [subsection (e)](#e), the [Secretary](/usc/20/1003.md?p=17), 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](/usc/20/1003.md?p=21-A)[^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)](#a-1-L) and [subsection (e)](#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](/usc/20/1003.md?p=17) shall widely disseminate the recommendations required under this subparagraph to two-year, degree-granting institutions of higher education, the public, and the [authorizing committees](/usc/20/1003.md?p=1) not later than 18 months after the first meeting of the group of representatives convened under [clause (i)](#a-7-B-i).
- (iii) The [Secretary](/usc/20/1003.md?p=17) shall use the recommendations from the group of representatives convened under [clause (i)](#a-7-B-i) to provide technical assistance to two-year, degree-granting institutions of higher education in meeting the requirements of [paragraph (1)(L)](#a-1-L) and [subsection (e)](#e).
- (iv) The [Secretary](/usc/20/1003.md?p=17) may modify the information required to be disseminated or reported under [paragraph (1)(L)](#a-1-L) or [subsection (e)](#e) by a two-year, degree-granting [institution of higher education](/usc/20/1001.md?p=a)—
- (I) based on the recommendations received under this subparagraph from the group of representatives convened under [clause (i)](#a-7-B-i);
- (II) to include additional or alternative measures of student success if the goals of the provisions of [paragraph (1)(L)](#a-1-L) and [subsection (e)](#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](/usc/20/1066a.md?p=1) 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 [section 1078–3 of this title](/usc/20/1078–3.md) or loans under [section 1078–2 of this title](/usc/20/1078–2.md) made on behalf of a student) or made under part D (other than Federal Direct Consolidation Loans or Federal Direct PLUS Loans made on behalf of a student) or made under part E of this subchapter prior to the completion of the course of study for which the borrower enrolled at the institution or at the time of departure from such institution. The counseling required by this subsection shall include—
- (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](/usc/20/1003.md?p=17) under [section 1092(d) of this title](#d);
- (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](/usc/20/1003.md?p=17) under [section 1092(d) of this title](#d);
- (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 [section 1078–3 of this title](/usc/20/1078–3.md) or a Federal Direct Consolidation Loan to discharge the borrower’s loans under parts B, D, and E, including at a minimum—
- (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](/usc/20/1003.md?p=4) 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)](#b-1-A) to the student in writing.
- (2)
- (A) Each [eligible institution](/usc/20/1066a.md?p=1) 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](/usc/20/1085.md?p=j) indicated on the borrower’s student aid records.
- (C) Nothing in this subsection shall be construed to prohibit an [institution of higher education](/usc/20/1001.md?p=a) from utilizing electronic means to provide personalized exit counseling.
- (c) **Financial assistance information personnel—** Each [eligible institution](/usc/20/1066a.md?p=1) 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)](#a). The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) shall make available to [eligible institutions](/usc/20/1066a.md?p=1), [eligible lenders](/usc/20/1019.md?p=4), and [secondary schools](/usc/20/1003.md?p=16) 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](#a-2) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=21-A) that students may qualify for such partial cancellations or deferments when they serve as a paid employee of a tax-exempt organization. The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1066a.md?p=1) and [eligible lenders](/usc/20/1019.md?p=4) at any time that information regarding loan availability is provided to any student.
- (2) The [Secretary](/usc/20/1003.md?p=17), to the extent the information is available, shall compile information describing [State](/usc/20/1003.md?p=21-A) and other prepaid tuition programs and savings programs and disseminate such information to [States](/usc/20/1003.md?p=21-A), [eligible institutions](/usc/20/1066a.md?p=1), students, and [parents](/usc/20/1021.md?p=16) in departmental publications.
- (3) The [Secretary](/usc/20/1003.md?p=17), to the extent practicable, shall update the [Department](/usc/20/1003.md?p=4)’s Internet site to include direct links to databases that contain information on public and private financial assistance programs. The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) shall widely publicize the location of the information described in [paragraph (1)](#d-1) among the public, [eligible institutions](/usc/20/1066a.md?p=1), and [eligible lenders](/usc/20/1019.md?p=4), and promote the use of such information by [prospective students](#a-2), 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](/usc/20/1001.md?p=a) which participates in any program under this subchapter and is attended by students receiving [athletically related student aid](#e-8) shall annually submit a report to the [Secretary](/usc/20/1003.md?p=17) which contains—
- (A) the number of students at the [institution of higher education](/usc/20/1001.md?p=a) who received [athletically related student aid](#e-8) 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](/usc/20/1001.md?p=a), broken down by race and sex;
- (C) the completion or graduation rate for students at the [institution of higher education](/usc/20/1001.md?p=a) who received [athletically related student aid](#e-8) 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](/usc/20/1001.md?p=a), 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](/usc/20/1001.md?p=a) who received [athletically related student aid](#e-8) 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](/usc/20/1001.md?p=a) 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](#e-8), such institution shall provide to the student and the student’s [parents](/usc/20/1021.md?p=16), guidance counselor, and coach the information contained in the report submitted by such institution pursuant to [paragraph (1)](#e-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](/usc/20/1003.md?p=17) determines is substantially comparable to the information described in [paragraph (1)](#e-1), the distribution of the compilation of such data to all [secondary schools](/usc/20/1003.md?p=16) in the United States shall fulfill the responsibility of the institution to provide information to a [prospective student](#a-2) athlete’s guidance counselor and coach.
- (3) For purposes of this subsection, institutions may—
- (A) exclude from the reporting requirements under paragraphs [(1)](#e-1) and [(2)](#e-2) the completion or graduation rates of students and student athletes who leave [school](/usc/20/5802.md?p=a-11) 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)](#e-3-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)](#e-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](/usc/20/1001.md?p=a) described in [paragraph (1)](#e-1) may provide supplemental information to students and the [Secretary](/usc/20/1003.md?p=17) showing the completion or graduation rate when such completion or graduation rate includes students transferring into and out of such institution.
- (5) The [Secretary](/usc/20/1003.md?p=17), using the reports submitted under this subsection, shall compile and publish a report containing the information required under [paragraph (1)](#e-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](/usc/20/1003.md?p=17) shall waive the requirements of this subsection for any [institution of higher education](/usc/20/1001.md?p=a) 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](/usc/20/1003.md?p=17), is substantially comparable to the information required under this subsection.
- (7) The [Secretary](/usc/20/1003.md?p=17), 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](#e-8). 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](/usc/20/1001.md?p=a) 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](/usc/20/1066a.md?p=1) participating in any program under this subchapter, other than a foreign [institution of higher education](/usc/20/1001.md?p=a), shall on August 1, 1991, begin to collect the following information with respect to [campus](#f-6-A-ii) crime statistics and [campus](#f-6-A-ii) 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](/usc/20/3982.md?p=1) for enrollment or employment upon request, an annual security report containing at least the following information with respect to the [campus](#f-6-A-ii) security policies and [campus](#f-6-A-ii) crime statistics of that institution:
- (A) A statement of current [campus](#f-6-A-ii) policies regarding procedures and facilities for students and others to report criminal actions or other emergencies occurring on [campus](#f-6-A-ii) and policies concerning the institution’s response to such reports.
- (B) A statement of current policies concerning security and access to [campus](#f-6-A-ii) facilities, including [campus](#f-6-A-ii) residences, and security considerations used in the maintenance of [campus](#f-6-A-ii) facilities.
- (C) A statement of current policies concerning [campus](#f-6-A-ii) law enforcement, including—
- (i) the law enforcement authority of [campus](#f-6-A-ii) security personnel;
- (ii) the working relationship of [campus](#f-6-A-ii) security personnel with [State](/usc/20/1003.md?p=21-A) 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](#f-6-A-ii) 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](#f-6-A-ii) 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](#f-6-A-ii), in or on noncampus buildings or property, and on [public property](#f-6-A-iv) 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](#f-6-A-ii) 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](#f-6-A-ii) disciplinary action for liquor law violations, drug-related violations, and weapons possession;
- (ii) of the crimes described in [subclauses (I) through (VIII)](#f-1-F-i-I..f-1-F-i-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](/usc/20/1003.md?p=6) of the victim that are reported to [campus](#f-6-A-ii) security authorities or local police agencies, which data shall be collected and reported according to category of prejudice;
- (iii) of [domestic violence](#f-6-A-i), [dating violence](#f-6-A-i), and [stalking](#f-6-A-i) incidents that were reported to [campus](#f-6-A-ii) security authorities or local police agencies; and
- (iv) of [hazing](#f-6-A-vi) incidents that were reported to [campus](#f-6-A-ii) 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](#f-6-A-ii) [student organizations](#f-6-A-vii) which are recognized by the institution and that are engaged in by students attending the institution, including those [student organizations](#f-6-A-vii) with off-[campus](#f-6-A-ii) housing facilities.
- (H) A statement of policy regarding the possession, use, and sale of alcoholic beverages and enforcement of [State](/usc/20/1003.md?p=21-A) underage drinking laws and a statement of policy regarding the possession, use, and sale of illegal drugs and enforcement of Federal and [State](/usc/20/1003.md?p=21-A) drug laws and a description of any drug or alcohol abuse education programs as required under [section 1011i of this title](/usc/20/1011i.md).
- (I) A statement advising the [campus](#f-6-A-ii) community where law enforcement agency information provided by a [State](/usc/20/1003.md?p=21-A) under section 14071(j)[^3] of [title 42](/usc/42.md), 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](#f-6-A-ii), or a computer network address.
- (J) A statement of current [campus](#f-6-A-ii) 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](#f-6-A-ii) 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](#f-6-A-ii), as defined in [paragraph (6)](#f-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.
- (K) A statement of current policies relating to [hazing](#f-6-A-vi) (as defined by the institution), how to report incidents of such [hazing](#f-6-A-vi), and the process used to investigate such incidents of [hazing](#f-6-A-vi), and information on applicable local, [State](/usc/20/1003.md?p=21-A), and Tribal laws on [hazing](#f-6-A-vi) (as defined by such local, [State](/usc/20/1003.md?p=21-A), and Tribal laws).
- (L) A statement of policy regarding prevention and awareness programs related to [hazing](#f-6-A-vi) (as defined by the institution) that includes a description of research-informed [campus](#f-6-A-ii)-wide prevention programs designed to reach students, staff, and faculty, which includes—
- (i) the information referred to in [subparagraph (K)](#f-1-K); and
- (ii) primary prevention strategies intended to stop [hazing](#f-6-A-vi) before [hazing](#f-6-A-vi) occurs, which may include skill building for bystander intervention, information about ethical leadership, and the promotion of strategies for building group cohesion without [hazing](#f-6-A-vi).
- (2) Nothing in this subsection shall be construed to authorize the [Secretary](/usc/20/1003.md?p=17) to require particular policies, procedures, or practices by institutions of higher education with respect to [campus](#f-6-A-ii) crimes or [campus](#f-6-A-ii) security.
- (3) Each institution participating in any program under this subchapter, other than a foreign [institution of higher education](/usc/20/1001.md?p=a), shall make timely reports to the [campus](#f-6-A-ii) community on crimes considered to be a threat to other students and employees described in [paragraph (1)(F)](#f-1-F) that are reported to [campus](#f-6-A-ii) 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](/usc/20/1001.md?p=a), that maintains a police or security [department](/usc/20/1003.md?p=4) 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](/usc/20/1003.md?p=4), 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](/usc/20/1003.md?p=4) or a [campus](#f-6-A-ii) security authority.
- (ii) If new information about an entry into a log becomes available to a police or security [department](/usc/20/1003.md?p=4), 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](/usc/20/1003.md?p=4).
- (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](/usc/20/1001.md?p=a), shall submit to the [Secretary](/usc/20/1003.md?p=17) a copy of the statistics required to be made available under [paragraph (1)(F)](#f-1-F). The [Secretary](/usc/20/1003.md?p=17) shall—
- (A) review such statistics and report to the [authorizing committees](/usc/20/1003.md?p=1) on [campus](#f-6-A-ii) crime statistics by September 1, 2000;
- (B) make copies of the statistics submitted to the [Secretary](/usc/20/1003.md?p=17) available to the public; and
- (C) in coordination with representatives of institutions of higher education, identify exemplary [campus](#f-6-A-ii) security policies, procedures, and practices and disseminate information concerning those policies, procedures, and practices that have proven effective in the reduction of [campus](#f-6-A-ii) crime.
- (6)
- (A) In this subsection:
- (i) The terms “dating violence”, “domestic violence”, and “stalking” have the meaning given such terms in [section 12291(a) of title 34](/usc/34/12291.md?p=a).
- (ii) The term “campus” means—
- (I) any building or property owned or controlled by an [institution of higher education](/usc/20/1001.md?p=a) 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](#f-6-A-vii) recognized by the institution; and
- (II) any building or property (other than a branch [campus](#f-6-A-ii)) owned or controlled by an [institution of higher education](/usc/20/1001.md?p=a) 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.
- (vi) The term “hazing”, for purposes of reporting statistics on hazing incidents under [paragraph (1)(F)(iv)](#f-1-F-iv), means any intentional, knowing, or reckless act committed by a person (whether individually or in concert with other persons) against another person or persons regardless of the willingness of such other person or persons to participate, that—
- (I) is committed in the course of an initiation into, an affiliation with, or the maintenance of membership in, a [student organization](#f-6-A-vii); and
- (II) causes or creates a risk, above the reasonable risk encountered in the course of participation in the [institution of higher education](/usc/20/1001.md?p=a) or the organization (such as the physical preparation necessary for participation in an athletic team), of physical or psychological injury including—
- (aa) whipping, beating, striking, electronic shocking, placing of a harmful substance on someone’s body, or similar activity;
- (bb) causing, coercing, or otherwise inducing sleep deprivation, exposure to the elements, confinement in a small space, extreme calisthenics, or other similar activity;
- (cc) causing, coercing, or otherwise inducing another person to consume food, liquid, alcohol, drugs, or other substances;
- (dd) causing, coercing, or otherwise inducing another person to perform sexual acts;
- (ee) any activity that places another person in reasonable fear of bodily harm through the use of threatening words or conduct;
- (ff) any activity against another person that includes a criminal violation of local, [State](/usc/20/1003.md?p=21-A), Tribal, or Federal law; and
- (gg) any activity that induces, causes, or requires another person to perform a duty or task that involves a criminal violation of local, [State](/usc/20/1003.md?p=21-A), Tribal, or Federal law.
- (vii) The term “student organization”, for purposes of reporting under [paragraph (1)(F)(iv)](#f-1-F-iv) and [paragraph (9)(A)](#f-9-A), means an organization at an [institution of higher education](/usc/20/1001.md?p=a) (such as a club, society, association, varsity or junior varsity athletic team, club sports team, fraternity, sorority, band, or student government) in which two or more of the members are students enrolled at the [institution of higher education](/usc/20/1001.md?p=a), whether or not the organization is established or recognized by the institution.
- (B) In cases where branch [campuses](#f-6-A-ii) of an [institution of higher education](/usc/20/1001.md?p=a), [schools](/usc/20/5802.md?p=a-11) within an [institution of higher education](/usc/20/1001.md?p=a), or administrative divisions within an institution are not within a reasonably contiguous geographic area, such entities shall be considered separate [campuses](#f-6-A-ii) for purposes of the reporting requirements of this section.
- (7) The statistics described in clauses [(i)](#f-1-F-i) and [(ii)](#f-1-F-ii) of paragraph (1)(F) shall be compiled in accordance with the definitions used in the uniform crime reporting system of the [Department](/usc/20/1003.md?p=4) 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](#f-6-A-i), [dating violence](#f-6-A-i), and [stalking](#f-6-A-i), such statistics shall be compiled in accordance with the definitions used in [section 12291(a) of title 34](/usc/34/12291.md?p=a). For [hazing](#f-6-A-vi) incidents referred to in [clause (iv)](#f-1-F-iv) of paragraph (1)(F), such statistics shall be compiled per each single [hazing](#f-6-A-vi) incident and in accordance with the definition of the term “[hazing](#f-6-A-vi)” in [paragraph (6)(A)(vi)](#f-6-A-vi), and if the same person or persons commit more than one hazing act, and the time and place intervals separating each such act are insignificant, such acts shall be reported as a single [hazing](#f-6-A-vi) incident. Such statistics shall not identify victims of crimes or persons accused of crimes.
- (8)
- (A) Each [institution of higher education](/usc/20/1001.md?p=a) 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](/usc/20/1001.md?p=a), shall develop and distribute as part of the report described in [paragraph (1)](#f-1) a statement of policy regarding—
- (i) such institution’s programs to prevent [domestic violence](#f-6-A-i), [dating violence](#f-6-A-i), [sexual assault](#f-6-A-v), and [stalking](#f-6-A-i); and
- (ii) the procedures that such institution will follow once an incident of [domestic violence](#f-6-A-i), [dating violence](#f-6-A-i), [sexual assault](#f-6-A-v), or [stalking](#f-6-A-i) 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)](#f-8-A) shall address the following areas:
- (i) Education programs to promote the awareness of rape, acquaintance rape, [domestic violence](#f-6-A-i), [dating violence](#f-6-A-i), [sexual assault](#f-6-A-v), and [stalking](#f-6-A-i), 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](/usc/20/1001.md?p=a) prohibits the offenses of [domestic violence](#f-6-A-i), [dating violence](#f-6-A-i), [sexual assault](#f-6-A-v), and [stalking](#f-6-A-i);
- (bb) the definition of [domestic violence](#f-6-A-i), [dating violence](#f-6-A-i), [sexual assault](#f-6-A-v), and [stalking](#f-6-A-i) 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](#f-6-A-i), [dating violence](#f-6-A-i), [sexual assault](#f-6-A-v), or [stalking](#f-6-A-i) 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)](#f-8-B-ii..f-8-B-vii); and
- (II) ongoing prevention and awareness campaigns for students and faculty, including information described in [items (aa) through (ff)](#f-8-B-i-I-aa..f-8-B-i-I-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](#f-6-A-i), [dating violence](#f-6-A-i), [sexual assault](#f-6-A-v), or [stalking](#f-6-A-i).
- (iii) Procedures victims should follow if a sex offense, [domestic violence](#f-6-A-i), [dating violence](#f-6-A-i), [sexual assault](#f-6-A-v), or [stalking](#f-6-A-i) has occurred, including information in writing about—
- (I) the importance of preserving evidence as may be necessary to the proof of criminal [domestic violence](#f-6-A-i), [dating violence](#f-6-A-i), [sexual assault](#f-6-A-v), or [stalking](#f-6-A-i), or in obtaining a protection order;
- (II) to whom the alleged offense should be reported;
- (III) options regarding law enforcement and [campus](#f-6-A-ii) authorities, including notification of the victim’s option to—
- (aa) notify proper law enforcement authorities, including on-[campus](#f-6-A-ii) and local police;
- (bb) be assisted by [campus](#f-6-A-ii) 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](#f-6-A-i), [dating violence](#f-6-A-i), [sexual assault](#f-6-A-v), or [stalking](#f-6-A-i), 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](#f-6-A-i), [dating violence](#f-6-A-i), [sexual assault](#f-6-A-v), and [stalking](#f-6-A-i) 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](#f-6-A-i), [dating violence](#f-6-A-i), [sexual assault](#f-6-A-v), or [stalking](#f-6-A-i);
- (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](#f-6-A-ii) 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](#f-6-A-ii) police or local law enforcement.
- (C) A student or employee who reports to an [institution of higher education](/usc/20/1001.md?p=a) that the student or employee has been a victim of [domestic violence](#f-6-A-i), [dating violence](#f-6-A-i), [sexual assault](#f-6-A-v), or [stalking](#f-6-A-i), whether the offense occurred on or off [campus](#f-6-A-ii), shall be provided with a written explanation of the student or employee’s rights and options, as described in [clauses (ii) through (vii)](#f-8-B-ii..f-8-B-vii) of subparagraph (B).
- (9)
- (A) Each institution participating in any program under this subchapter, other than a foreign [institution of higher education](/usc/20/1001.md?p=a), shall develop, in accordance with the institution’s statement of policy relating to [hazing](#f-6-A-vi) under [paragraph (1)(K)](#f-1-K), a report (which shall be referred to as the “[Campus](#f-6-A-ii) [Hazing](#f-6-A-vi) Transparency Report”) summarizing findings concerning any [student organization](#f-6-A-vii) (except that this shall only apply to [student organizations](#f-6-A-vii) that are established or recognized by the institution) found to be in violation of an institution’s standards of conduct relating to [hazing](#f-6-A-vi), as defined by the institution, (hereinafter referred to in this paragraph as a “[hazing](#f-6-A-vi) violation”) that requires the institution to—
- (i) beginning July 1, 2025, collect information with respect to [hazing](#f-6-A-vi) incidents at the institution;
- (ii) not later than 12 months after December 23, 2024, make the [Campus](#f-6-A-ii) [Hazing](#f-6-A-vi) Transparency Report publicly available on the public website of the institution; and
- (iii) not less frequently than 2 times each year, update the [Campus](#f-6-A-ii) [Hazing](#f-6-A-vi) Transparency Report to include, for the period beginning on the date on which the Report was last published and ending on the date on which such update is submitted, each incident involving a [student organization](#f-6-A-vii) for which a finding of responsibility is issued relating to a [hazing](#f-6-A-vi) violation, including—
- (I) the name of such [student organization](#f-6-A-vii);
- (II) a general description of the violation that resulted in a finding of responsibility, including whether the violation involved the abuse or illegal use of alcohol or drugs, the findings of the institution, and any sanctions placed on the [student organization](#f-6-A-vii) by the institution, as applicable; and
- (III) the dates on which—
- (aa) the incident was alleged to have occurred;
- (bb) the investigation into the incident was initiated;
- (cc) the investigation ended with a finding that a [hazing](#f-6-A-vi) violation occurred; and
- (dd) the institution provided notice to the [student organization](#f-6-A-vii) that the incident resulted in a [hazing](#f-6-A-vi) violation.
- (B) The [Campus](#f-6-A-ii) [Hazing](#f-6-A-vi) Transparency Report may include—
- (i) to satisfy the requirements of this paragraph, information that—
- (I) is included as part of a report published by the institution; and
- (II) meets the requirements of the [Campus](#f-6-A-ii) [Hazing](#f-6-A-vi) Transparency Report; and
- (ii) any additional information—
- (I) determined by the institution to be necessary; or
- (II) reported as required by [State](/usc/20/1003.md?p=21-A) law.
- (C) The [Campus](#f-6-A-ii) [Hazing](#f-6-A-vi) Transparency Report shall not include any personally identifiable information, including any information that would reveal personally identifiable information, about any individual student in accordance with section 444 of the General Education Provisions Act [[20 U.S.C. 1232g](/usc/20/1232g.md)] (commonly known as the “Family Educational Rights and Privacy Act of 1974”).
- (D) The institution shall publish, in a prominent location on the public website of the institution, the [Campus](#f-6-A-ii) [Hazing](#f-6-A-vi) Transparency Report, including—
- (i) a statement notifying the public of the annual availability of statistics on [hazing](#f-6-A-vi) pursuant to the report required under [paragraph (1)(F)](#f-1-F), including a link to such report;
- (ii) information about the institution’s policies relating to [hazing](#f-6-A-vi) under [paragraph (1)(K)](#f-1-K) and applicable local, [State](/usc/20/1003.md?p=21-A), and Tribal laws on [hazing](#f-6-A-vi); and
- (iii) the information included in each update required under [subparagraph (A)(iii)](#f-9-A-iii), which shall be maintained for a period of 5 calendar years from the date of publication of such update.
- (E) The institution may include, as part of the publication of the [Campus](#f-6-A-ii) [Hazing](#f-6-A-vi) Transparency Report under [subparagraph (D)](#f-9-D), a description of the purposes of, and differences between—
- (i) the report required under [paragraph (1)(F)](#f-1-F); and
- (ii) the [Campus](#f-6-A-ii) [Hazing](#f-6-A-vi) Transparency Report required under this paragraph.
- (F) For purposes of this paragraph, the definition of “[campus](#f-6-A-ii)” under [paragraph (6)(A)(ii)](#f-6-A-ii) shall not apply.
- (G) An institution described in [subparagraph (A)](#f-9-A) is not required to—
- (i) develop the [Campus](#f-6-A-ii) [Hazing](#f-6-A-vi) Transparency Report under this subsection until such institution has a finding of a [hazing](#f-6-A-vi) violation; or
- (ii) update the [Campus](#f-6-A-ii) [Hazing](#f-6-A-vi) Transparency Report in accordance with [clause (iii)](#f-9-A-iii) of subparagraph (A) for a period described in such clause if such institution does not have a finding of a [hazing](#f-6-A-vi) violation for such period.
- (10) The [Secretary](/usc/20/1003.md?p=17), 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](/usc/20/1001.md?p=a) who requests such assistance.
- (11) Nothing in this section shall be construed to require the reporting or disclosure of privileged information.
- (12) The [Secretary](/usc/20/1003.md?p=17) shall report to the appropriate committees of Congress each [institution of higher education](/usc/20/1001.md?p=a) that the [Secretary](/usc/20/1003.md?p=17) determines is not in compliance with the reporting requirements of this subsection.
- (13) For purposes of reporting the statistics with respect to crimes described in [paragraph (1)(F)](#f-1-F), an [institution of higher education](/usc/20/1001.md?p=a) shall distinguish, by means of separate categories, any criminal offenses that occur—
- (A) on [campus](#f-6-A-ii);
- (B) in or on a [noncampus building or property](#f-6-A-iii);
- (C) on [public property](#f-6-A-iv); and
- (D) in dormitories or other residential facilities for students on [campus](#f-6-A-ii).
- (14) Upon a determination pursuant to [section 1094(c)(3)(B) of this title](/usc/20/1094.md?p=c-3-B) that an [institution of higher education](/usc/20/1001.md?p=a) has substantially misrepresented the number, location, or nature of the crimes required to be reported under this subsection, the [Secretary](/usc/20/1003.md?p=17) shall impose a civil penalty upon the institution in the same amount and pursuant to the same procedures as a civil penalty is imposed under [section 1094(c)(3)(B) of this title](/usc/20/1094.md?p=c-3-B).
- (15)
- (A) Nothing in this subsection may be construed to—
- (i) create a cause of action against any [institution of higher education](/usc/20/1001.md?p=a) 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](/usc/20/4702.md?p=2), or other entity, except with respect to an action to enforce this subsection.
- (16) The [Secretary](/usc/20/1003.md?p=17) shall annually report to the [authorizing committees](/usc/20/1003.md?p=1) regarding compliance with this subsection by institutions of higher education, including an up-to-date report on the [Secretary](/usc/20/1003.md?p=17)’s monitoring of such compliance.
- (17)
- (A) The [Secretary](/usc/20/1003.md?p=17) 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](#f-6-A-ii) safety and emergencies.
- (B) The [Secretary](/usc/20/1003.md?p=17) shall seek the advice and counsel of the Attorney General of the United States and the [Secretary](/usc/20/1003.md?p=17) 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](#f-6-A-i), [dating violence](#f-6-A-i), [sexual assault](#f-6-A-v), and [stalking](#f-6-A-i), including elements of institutional policies that have proven successful based on [evidence-based](/usc/20/2302.md?p=23) outcome measurements.
- (18) No [officer](/usc/20/1094.md?p=i-5), employee, or [agent](/usc/20/1094.md?p=i-1) 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.
- (19) This subsection may be cited as the “Jeanne Clery [Campus](#f-6-A-ii) Safety Act”.
- (g) **Data required—**
- (1) **In general—** Each coeducational [institution of higher education](/usc/20/1001.md?p=a) that participates in any program under this subchapter, and has an intercollegiate athletic program, shall annually, for the immediately preceding [academic year](/usc/20/1088.md?p=a-2-A), 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](#g-5) 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)](#g-1-I-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)](#g-1-J-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)](#g-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](/usc/20/1001.md?p=a) described in [paragraph (1)](#g-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)](#g-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](/usc/20/1001.md?p=a) described in [paragraph (1)](#g-1) shall provide to the [Secretary](/usc/20/1003.md?p=17), within 15 days of the date that the institution makes available the report under [paragraph (1)](#g-1), the information contained in the report.
- (B) The [Secretary](/usc/20/1003.md?p=17) shall ensure that the reports described in [subparagraph (A)](#g-4-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](/usc/20/1003.md?p=17) shall notify all [secondary schools](/usc/20/1003.md?p=16) in all [States](/usc/20/1003.md?p=21-A) regarding the availability of the information made available under [paragraph (1)](#g-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](/usc/20/1001.md?p=a) 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](/usc/20/1001.md?p=a); 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](/usc/20/1003.md?p=17) 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](/usc/20/1094.md?p=i-5) or employee of the [Department](/usc/20/1003.md?p=4) to exercise any direction, supervision, or control over the curriculum, program of instruction, administration, or personnel of any [institution of higher education](/usc/20/1001.md?p=a), or over any accrediting agency or association;
- (C) limit the application of the General Education Provisions Act [[20 U.S.C. 1221](/usc/20/1221.md) et seq.]; or
- (D) create any legally enforceable right on the part of a student to require an [institution of higher education](/usc/20/1001.md?p=a) 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](/usc/20/1066a.md?p=1) 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)](#i-1) shall, on an annual basis, submit to the [Secretary](/usc/20/1003.md?p=17) a copy of the statistics required to be made available under [paragraph (1)(A)](#i-1-A).
- (3) **Current information to campus community—** Each institution described in [paragraph (1)](#i-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](/usc/20/1003.md?p=17) shall—
- (A) make the statistics submitted under [paragraph (1)(A)](#i-1-A) to the [Secretary](/usc/20/1003.md?p=17) 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)](#i-4-B-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](/usc/20/1003.md?p=17) 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 [[20 U.S.C. 1232g](/usc/20/1232g.md)] (commonly known as the “Family Educational Rights and Privacy Act of 1974”) or the regulations issued under section 264 of the Health Insurance Portability and Accountability Act of 1996 ([42 U.S.C. 1320d–2](/usc/42/1320d–2.md) note);
- (C) create a cause of action against any [institution of higher education](/usc/20/1001.md?p=a) or any employee of such an institution for any civil liability; or
- (D) establish any standard of care.
- (6) **Compliance report—** The [Secretary](/usc/20/1003.md?p=17) shall annually report to the [authorizing committees](/usc/20/1003.md?p=1) regarding compliance with this subsection by institutions of higher education, including an up-to-date report on the [Secretary](/usc/20/1003.md?p=17)’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](/usc/20/4702.md?p=2), 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](/usc/20/1001.md?p=a) 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)](#j-1-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](/usc/20/1021.md?p=16) 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](/usc/20/1003.md?p=4); and
- (iii) if, on investigation of the official report, such [department](/usc/20/1003.md?p=4) determines that the missing student has been missing for more than 24 hours, requires—
- (I) such [department](/usc/20/1003.md?p=4) to contact the individual identified by such student under [subparagraph (A)(i)](#j-1-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](/usc/20/1021.md?p=16) or legal guardian of such student; and
- (III) if subclauses [(I)](#j-1-B-iii-I) or [(II)](#j-1-B-iii-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](/usc/20/1001.md?p=a) 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](/usc/20/1066a.md?p=1) 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 [section 1078–3 of this title](/usc/20/1078–3.md) or a loan made on behalf of a student pursuant to [section 1078–2 of this title](/usc/20/1078–2.md)) or made under part D (other than a Federal Direct Consolidation Loan or a Federal Direct PLUS loan made on behalf of a student), ensure that the borrower receives comprehensive information on the terms and conditions of the loan and of the responsibilities the borrower has with respect to such loan in accordance with [paragraph (2)](#l-2). Such information—
- (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](/usc/20/1003.md?p=17) shall encourage institutions to carry out the requirements of [subparagraph (A)](#l-1-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)](#l-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](/usc/20/1003.md?p=17).
- (D) In the case of a loan made under section [1078–2](/usc/20/1078–2.md) or [1078–8](/usc/20/1078–8.md) of this title, a Federal Direct PLUS Loan, or a Federal Direct Unsubsidized Stafford Loan, the option of the borrower to pay the interest while the borrower is in [school](/usc/20/5802.md?p=a-11).
- (E) The definition of half-time enrollment at the institution, during regular terms and summer [school](/usc/20/5802.md?p=a-11), 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](/usc/20/1001.md?p=a) 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 section [1078](/usc/20/1078.md) or [1078–8](/usc/20/1078–8.md) of this title; and
- (II) as appropriate, graduate borrowers of loans under section [1078](/usc/20/1078.md), [1078–2](/usc/20/1078–2.md), or [1078–8](/usc/20/1078–8.md) of this title; or
- (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](/usc/20/1001.md?p=a) participating in any program under this subchapter shall report, on an annual basis, to the [Secretary](/usc/20/1003.md?p=17), any reasonable expenses paid or provided under [section 1650(d) of title 15](/usc/15/1650.md?p=d) to any employee who is employed in the financial aid office of the institution, or who otherwise has responsibilities with respect to [education loans](/usc/20/1094.md?p=i-3) or other financial aid of the institution. Such reports shall include—
- (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](/usc/20/1094.md?p=i-1) 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](/usc/20/1003.md?p=17) shall summarize the information received from institutions of higher education under [paragraph (1)](#m-1) in a report and transmit such report annually to the [authorizing committees](/usc/20/1003.md?p=1).
# §1092a. Combined payment plan
- (a) **Eligibility for plan—** Upon the request of the borrower, a lender described in subparagraph (A), (B), or (C) of [section 1078–3(a)(1) of this title](/usc/20/1078–3.md?p=a-1), or an [eligible lender](/usc/20/1019.md?p=4) as defined in section 719 of the Public Health Service Act ([42 U.S.C. 292o](/usc/42/292o.md)) may, with respect to a consolidation loan made under [section 1078–3 of this title](/usc/20/1078–3.md) (and [section 1087–2(o)](/usc/20/1087–2.md?p=o) of this title as in effect prior to the enactment of [section 1078–3 of this title](/usc/20/1078–3.md)) and loans guaranteed under part A of title VII of the Public Health Service Act ([42 U.S.C. 292](/usc/42/292.md) et seq.), offer a combined payment plan under which the lender shall submit one bill to the borrower for the repayment of all such loans for the monthly or other similar period of repayment.
- (b) **Applicability of other requirements—** A lender offering a combined payment plan shall comply with all provisions of [section 1078–3 of this title](/usc/20/1078–3.md) applicable to loans consolidated or to be consolidated and shall comply with all provisions of part A of title VII of the Public Health Service Act ([42 U.S.C. 292](/usc/42/292.md) et seq.) applicable to loans under that subpart which are made part of the combined payment plan, except that a lender offering a combined payment plan under this section may offer consolidation loans pursuant to [section 1078–3(b)(1)(A) of this title](/usc/20/1078–3.md?p=b-1-A) if such lender holds any outstanding loan of a borrower which is selected for inclusion in a combined payment plan.
- (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 ([42 U.S.C. 292](/usc/42/292.md) et seq.) selected by the borrower for incorporation in the combined payment plan which is not held by such lender and the proceeds of such reissued loan shall be paid by the lender to the holder or holders of the loans so selected to discharge the liability on such loans, if—
- (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 [[42 U.S.C. 292f(e)(3)](/usc/42/292f.md?p=e-3)]) at the time the request for a combined payment plan is made.
- (f) **Notes and insurance certificates—**
- (1) Each loan reissued under [subsection (e)](#e) shall be evidenced by a note executed by the borrower. The [Secretary](/usc/20/1003.md?p=17) 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 ([42 U.S.C. 292](/usc/42/292.md) et seq.) (including the Student Loan Marketing Association). Such certificates shall provide that all loans reissued under this section shall be fully insured against loss of principal and interest. Any insurance issued with respect to loans reissued under this section shall be excluded from the limitation on maximum insurance authority set forth in section 710 of the Public Health Service Act [[42 U.S.C. 292i](/usc/42/292i.md)]. Notwithstanding the provisions of section 729(a)[^1] of the Public Health Service Act, the reissued loan shall be made in an amount, including outstanding principal, capitalized interest, accrued unpaid interest not yet capitalized, and authorized late charges. The proceeds of each such loan will be paid by the lender to the holder of the original loan being reissued and the borrower’s obligation to that holder on that loan shall be discharged.
- (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 ([42 U.S.C. 292](/usc/42/292.md) et seq.), the maximum repayment period for all such loans may extend to the latest date permitted for any individual loan. Any reissued loan may be consolidated with any other Health Education Assistance Loan as provided in the Public Health Service Act [[42 U.S.C. 201](/usc/42/201.md) et seq.], and, with the concurrence of the borrower, repayment of any such loans during any period may be made in amounts that are less than the interest that accrues on such loans during that period.
- (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](/usc/20/1003.md?p=17) 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)](#e).
# §1092b. National Student Loan Data System
- (a) **Development of System—** The [Secretary](/usc/20/1003.md?p=17) shall consult with a representative group of [guaranty agencies](/usc/20/1085.md?p=j), [eligible lenders](/usc/20/1019.md?p=4), and [eligible institutions](/usc/20/1066a.md?p=1) 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](/usc/20/1003.md?p=17) 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](/usc/20/1085.md?p=j) responsible for the guarantee of the loan;
- (4) the [institution of higher education](/usc/20/1001.md?p=a) 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 ([22 U.S.C. 2501](/usc/22/2501.md) et seq.), for service under the Domestic Volunteer Service Act of 1973 [[42 U.S.C. 4950](/usc/42/4950.md) et seq.], and for comparable full-time service as a volunteer for a tax-exempt organization of demonstrated effectiveness;
- (6) the [eligible institution](/usc/20/1066a.md?p=1) 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](/usc/20/1003.md?p=17) has made a payment pursuant to [section 1080(a) of this title](/usc/20/1080.md?p=a) or the [guaranty agency](/usc/20/1085.md?p=j) has made a payment to the previous holder of the loan;
- (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](/usc/20/1003.md?p=17) pursuant to [section 1087 of this title](/usc/20/1087.md).
- (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](/usc/20/1003.md?p=17) may require lenders, [guaranty agencies](/usc/20/1085.md?p=j), 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](/usc/20/1003.md?p=17) 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](/usc/20/1085.md?p=j), [eligible lenders](/usc/20/1019.md?p=4), and [eligible institutions](/usc/20/1066a.md?p=1) of higher education is for legitimate program operations, such as the need to verify the eligibility of a student, potential student, or [parent](/usc/20/1021.md?p=16) 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 [section 1090 of this title](/usc/20/1090.md), and as a part of the exit counseling process under [section 1092(b) of this title](/usc/20/1092.md?p=b), that—
- (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 [section 1232g of this title](/usc/20/1232g.md) (commonly known as the “Family Educational Rights and Privacy Act of 1974”) and other applicable Federal privacy statutes, and a statement of the students’ rights and responsibilities with respect to such statutes;
- (E) explains the measures taken by the [Department](/usc/20/1003.md?p=4) to safeguard the students’ data; and
- (F) includes other information as determined appropriate by the [Secretary](/usc/20/1003.md?p=17);
- (4) requiring [guaranty agencies](/usc/20/1085.md?p=j), [eligible lenders](/usc/20/1019.md?p=4), and [eligible institutions](/usc/20/1066a.md?p=1) of higher education that enter into an agreement with a potential student, student, or [parent](/usc/20/1021.md?p=16) of such student regarding a loan under part B, D, or E, to inform the student or [parent](/usc/20/1021.md?p=16) that such loan shall be—
- (A) submitted to the data system; and
- (B) accessible to [guaranty agencies](/usc/20/1085.md?p=j), [eligible lenders](/usc/20/1019.md?p=4), and [eligible institutions](/usc/20/1066a.md?p=1) of higher education determined by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1085.md?p=j) and [eligible lenders](/usc/20/1019.md?p=4) 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).
- (e) **Requirements for third-party data system access—**
- (1) **In general—** As provided in [paragraph (7)](#d-7) of subsection (d), an authorized person or entity described in [paragraph (2)](#e-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](/usc/20/1003.md?p=17) and published in the Federal Register;
- (B) is obtained using an access device (as defined in [section 1029(e)(1) of title 18](/usc/18/1029.md?p=e-1)) issued by the [Secretary](/usc/20/1003.md?p=17) to the authorized person or entity; and
- (C) is obtained without using any access device (as defined in [section 1029(e)(1) of title 18](/usc/18/1029.md?p=e-1)) issued by the [Secretary](/usc/20/1003.md?p=17) to a student, borrower, or [parent](/usc/20/1021.md?p=16).
- (2) **Authorized person or entity—** An authorized person or entity described in this paragraph means—
- (A) a [guaranty agency](/usc/20/1085.md?p=j), [eligible lender](/usc/20/1019.md?p=4), or [eligible institution](/usc/20/1066a.md?p=1), or a third-party organization acting on behalf of a [guaranty agency](/usc/20/1085.md?p=j), [eligible lender](/usc/20/1019.md?p=4), or [eligible institution](/usc/20/1066a.md?p=1), that is in compliance with applicable Federal law (including regulations and guidance); or
- (B) a licensed attorney representing a student, borrower, or [parent](/usc/20/1021.md?p=16), or another individual who works for a Federal, [State](/usc/20/1003.md?p=21-A), local, or Tribal government or agency, or for a [nonprofit](/usc/20/1003.md?p=13) organization, providing financial or student loan repayment counseling to a student, borrower, or [parent](/usc/20/1021.md?p=16), if—
- (i) that attorney or other individual has never engaged in unfair, deceptive, or abusive practices, as determined by the [Secretary](/usc/20/1003.md?p=17);
- (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](/usc/20/1003.md?p=17);
- (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](/usc/20/1021.md?p=16) to access the system.
- (f) **Reports to Congress—**
- (1) **Annual report—** Not later than September 30 of each fiscal year, the [Secretary](/usc/20/1003.md?p=17) shall prepare and submit to the [authorizing committees](/usc/20/1003.md?p=1) a report describing—
- (A) the effectiveness of existing privacy safeguards in protecting student, borrower, and [parent](/usc/20/1021.md?p=16) 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-7);
- (D) the ability of the [Secretary](/usc/20/1003.md?p=17) 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)](#d-6) or [(7)](#d-7) of subsection (d) during the preceding fiscal year.
- (2) **Study—**
- (A) **In general—** The [Secretary](/usc/20/1003.md?p=17) shall conduct a study regarding—
- (i) available mechanisms for providing students and [parents](/usc/20/1021.md?p=16) with the ability to opt in or opt out of allowing [eligible lenders](/usc/20/1019.md?p=4) 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 [chapter 35](/usc/44/ch35.md) of title 44.
- (B) **Submission of study—** Not later than three years after August 14, 2008, the [Secretary](/usc/20/1003.md?p=17) shall prepare and submit a report on the findings of the study under [subparagraph (A)](#f-2-A) to the [authorizing committees](/usc/20/1003.md?p=1).
- (g) **Standardization of data reporting—**
- (1) **In general—** The [Secretary](/usc/20/1003.md?p=17) shall by regulation prescribe standards and procedures (including relevant definitions) that require all lenders and [guaranty agencies](/usc/20/1085.md?p=j) 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](/usc/20/1085.md?p=j).
- (2) **Activities—** For the purpose of establishing standards under this section, the [Secretary](/usc/20/1003.md?p=17) shall—
- (A) consult with [guaranty agencies](/usc/20/1085.md?p=j), lenders, institutions of higher education, and organizations representing the groups described in [paragraph (1)](#g-1);
- (B) develop standards designed to be implemented by all [guaranty agencies](/usc/20/1085.md?p=j) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=4) 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](/usc/20/1003.md?p=17) shall integrate the National Student Loan Data System with the Pell Grant [applicant](/usc/20/3982.md?p=1) and recipient databases as of January 1, 1994, and any other databases containing information on participation in programs under this subchapter.
# §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](/usc/20/1019.md?p=4) 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](/usc/20/1085.md?p=j) shall ensure that a borrower only have one lender, one holder, one [guaranty agency](/usc/20/1085.md?p=j), 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](/usc/20/1003.md?p=17) of Education, in conjunction with the Federal Trade [Commission](/usc/20/9701.md?p=2), 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](/usc/20/1001.md?p=a). 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)](#a-1) shall be submitted not later than 18 months after November 1, 2000.
- (b) **National awareness activities—** The [Secretary](/usc/20/1003.md?p=17) of Education shall, in conjunction with the Federal Trade [Commission](/usc/20/9701.md?p=2), maintain a scholarship fraud awareness site on the Internet web site of the [Department](/usc/20/1003.md?p=4) of Education. The scholarship fraud awareness site may include the following:
- (1) Appropriate materials from the Project Scholarscam awareness campaign of the [Commission](/usc/20/9701.md?p=2), including examples of common fraudulent schemes.
- (2) A list of companies and individuals who have been convicted of scholarship fraud in Federal or [State](/usc/20/1003.md?p=21-A) court.
- (3) An Internet-based message [board](/usc/20/4702.md?p=2) 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](/usc/20/1003.md?p=4) and the [Commission](/usc/20/9701.md?p=2).
- (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.
# §1092e. College access initiative
- (a) **State-by-State information—** The [Secretary](/usc/20/1003.md?p=17) shall direct each [guaranty agency](/usc/20/1085.md?p=j) with which the [Secretary](/usc/20/1003.md?p=17) has an agreement under [section 1078(c) of this title](/usc/20/1078.md?p=c) to provide to the [Secretary](/usc/20/1003.md?p=17) the information necessary for the development of Internet web links and access for students and families to a comprehensive listing of the postsecondary education opportunities, programs, publications, Internet web sites, and other services available in the [States](/usc/20/1003.md?p=21-A) for which such agency serves as the designated guarantor.
- (b) **Guaranty agency activities—**
- (1) **Plan and activity required—** Each [guaranty agency](/usc/20/1085.md?p=j) with which the [Secretary](/usc/20/1003.md?p=17) has an agreement under [section 1078(c) of this title](/usc/20/1078.md?p=c) shall develop a plan, and undertake the activity necessary, to gather the information required under [subsection (a)](#a) and to make such information available to the public and to the [Secretary](/usc/20/1003.md?p=17) in a form and manner as prescribed by the [Secretary](/usc/20/1003.md?p=17).
- (2) **Activities—** Each [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/1085.md?p=j) shall publicize such information and coordinate such activities with other entities that either provide or distribute such information in the [States](/usc/20/1003.md?p=21-A) for which such [guaranty agency](/usc/20/1085.md?p=j) serves as the designated guarantor.
- (3) **Funding—** The activities required by this section may be funded from the [guaranty agency](/usc/20/1085.md?p=j)’s Operating [Fund](/usc/20/4702.md?p=3) established pursuant to [section 1072b of this title](/usc/20/1072b.md) and, to the extent [funds](/usc/20/4702.md?p=3) remain, from earnings on the restricted account established pursuant to [section 1072(h)(4) of this title](/usc/20/1072.md?p=h-4).
- (4) **Rule of construction—** Nothing in this subsection shall be construed to require a [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/1003.md?p=17) shall ensure the availability of the information provided, by the [guaranty agencies](/usc/20/1085.md?p=j) in accordance with this section, to students, [parents](/usc/20/1021.md?p=16), and other interested individuals, through Internet web links or other methods prescribed by the [Secretary](/usc/20/1003.md?p=17).
- (2) **Guaranty agency responsibility—** The [guaranty agencies](/usc/20/1085.md?p=j) shall ensure that the information required by this section is available without charge in printed format for students and [parents](/usc/20/1021.md?p=16) requesting such information.
- (3) **Publicity—** Not later than 270 days after February 8, 2006, the [Secretary](/usc/20/1003.md?p=17) and [guaranty agencies](/usc/20/1085.md?p=j) 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.
# §1092f. Early awareness and outreach of financial aid eligibility
- (a) **In general—** The [Secretary](/usc/20/1003.md?p=17) 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)](#b), [(c)](#c), and [(d)](#d).
- (b) **Pell Grant early awareness estimates—**
- (1) **In general—** The [Secretary](/usc/20/1003.md?p=17) shall produce a consumer-tested method of estimating student eligibility for Federal Pell Grants under [section 1070a(b) of this title](/usc/20/1070a.md?p=b) utilizing the variables of [family size](/usc/20/1070a.md?p=a-2-B) and adjusted gross income, presented in electronic format. There shall be a method for students to indicate whether they are, or will be in—
- (A) a single-[parent](/usc/20/1021.md?p=16) household;
- (B) a household with two [parents](/usc/20/1021.md?p=16); or
- (C) a household with no children or dependents.
- (2) **Consumer testing—**
- (A) **In general—** The method of estimating eligibility described in [paragraph (1)](#b-1) shall be consumer tested with prospective first-generation students and families as well as [low-income individuals](/usc/20/1059e.md?p=b-4) and families.
- (B) **Updates—** For [award year](/usc/20/1088.md?p=a-1) 2024–2025 and each fourth succeeding [award year](/usc/20/1088.md?p=a-1) thereafter, the design of the method of estimating eligibility shall be updated based on additional consumer testing with the populations described in [subparagraph (A)](#b-2-A).
- (3) **Distribution—** The method of estimating eligibility described in [paragraph (1)](#b-1) shall be—
- (A) made publicly and prominently available on the [Department](/usc/20/1003.md?p=4)’s website; and
- (B) actively shared by the [Secretary](/usc/20/1003.md?p=17) with—
- (i) institutions of higher education participating in programs under this subchapter;
- (ii) all middle and [secondary schools](/usc/20/1003.md?p=16) eligible for [funds](/usc/20/4702.md?p=3) under part A of title I of the Elementary and Secondary Education Act of 1965 [[20 U.S.C. 6311](/usc/20/6311.md) et seq.];
- (iii) [local educational agencies](/usc/20/1003.md?p=11) and middle [schools](/usc/20/5802.md?p=a-11) and [high schools](/usc/20/2302.md?p=25) 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 [[20 U.S.C. 6313(a)(5)](/usc/20/6313.md?p=a-5)]; and
- (iv) agencies responsible for administering means-tested Federal benefit programs, as defined in [section 1087ss(b)(4)(H) of this title](/usc/20/1087ss.md?p=b-4-H).
- (4) **Electronic estimator on FAFSA—** In accordance with subsection (d)(5) of [section 1090 of this title](/usc/20/1090.md), the [Secretary](/usc/20/1003.md?p=17) shall maintain an electronic method for [applicants](/usc/20/3982.md?p=1) to enter income and [family size](/usc/20/1070a.md?p=a-2-B), and level of education sought information to calculate a non-binding estimate (which may include a range, ceiling, or minimum) of the [applicant](/usc/20/3982.md?p=1)’s Federal financial aid available under this subchapter and shall place such calculator on a prominent location on the FAFSA website and in a manner that encourages students to fill out the FAFSA.
- (c) **Early awareness plans—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1059e.md?p=b-4) and families, as follows:
- (1) **Outreach plans for low-income families—**
- (A) **In general—** The [Secretary](/usc/20/1003.md?p=17) 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)](#b), to—
- (i) all middle [schools](/usc/20/5802.md?p=a-11) and [secondary schools](/usc/20/1003.md?p=16) eligible for [funds](/usc/20/4702.md?p=3) under part A of title I of the Elementary and Secondary Education Act of 1965 [[20 U.S.C. 6311](/usc/20/6311.md) et seq.];
- (ii) [local educational agencies](/usc/20/1003.md?p=11) and middle [schools](/usc/20/5802.md?p=a-11) and [high schools](/usc/20/2302.md?p=25) 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 [[20 U.S.C. 6313(a)(5)](/usc/20/6313.md?p=a-5)];
- (iii) households receiving assistance under the supplemental nutrition assistance program established under the Food and Nutrition Act of 2008 ([7 U.S.C. 2011](/usc/7/2011.md) et seq.); and
- (iv) agencies responsible for administering means-tested Federal benefit programs, as defined in [section 1087ss(b)(4)(H) of this title](/usc/20/1087ss.md?p=b-4-H).
- (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)](#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](/usc/20/1003.md?p=21-A)-based financial aid, [state](/usc/20/1003.md?p=21-A)-based college savings programs, and scholarships and other non-governmental sources;
- (ii) describe how the dissemination of information will be conducted by the [Secretary](/usc/20/1003.md?p=17).
- (C) **Reporting and updates—** The [Secretary](/usc/20/1003.md?p=17) shall post the information about the plans under [subparagraph (A)](#c-1-A) and associated goals publicly on the [Department](/usc/20/1003.md?p=4)’s website. On an annual basis, the [Secretary](/usc/20/1003.md?p=17) shall report qualitative and quantitative outcomes regarding the implementation of the plans under [subparagraph (A)](#c-1-A). The [Secretary](/usc/20/1003.md?p=17) shall review and update such plans not less often than every 4 [award years](/usc/20/1088.md?p=a-1) with the goal of progressively increasing the impact of the activities under this paragraph.
- (D) **Partnership—** The [Secretary](/usc/20/1003.md?p=17) may partner with [States](/usc/20/1003.md?p=21-A), [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=17) shall develop interagency coordination plans in order to inform more students and families, including [low-income individuals](/usc/20/1059e.md?p=b-4) 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](/usc/20/1059e.md?p=b-4) or families, in coordination with the following [Secretaries](/usc/20/1003.md?p=17):
- (i) The [Secretary](/usc/20/1003.md?p=17) of the Treasury.
- (ii) The [Secretary](/usc/20/1003.md?p=17) of Labor.
- (iii) The [Secretary](/usc/20/1003.md?p=17) of Health and Human Services.
- (iv) The [Secretary](/usc/20/1003.md?p=17) of Agriculture.
- (v) The [Secretary](/usc/20/1003.md?p=17) of Housing and Urban Development.
- (vi) The [Secretary](/usc/20/1003.md?p=17) of Commerce.
- (vii) The [Secretary](/usc/20/1003.md?p=17) of Veterans Affairs.
- (viii) The [Secretary](/usc/20/1003.md?p=17) of the Interior.
- (B) **Process, activities, and goals—** Each interagency coordination plan under [subparagraph (A)](#c-2-A) shall—
- (i) identify opportunities in which [low-income individuals](/usc/20/1059e.md?p=b-4) 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](/usc/20/1059e.md?p=b-4) and families;
- (ii) identify methods to effectively inform [low-income individuals](/usc/20/1059e.md?p=b-4) 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)](#c-2-B-i) and [(ii)](#c-2-B-ii);
- (iv) establish goals regarding the effects of the activities to be implemented under [clause (iii)](#c-2-B-iii); and
- (v) provide information on how students and families can maintain access to Federal programs that serve [low-income individuals](/usc/20/1059e.md?p=b-4) and families operated by the agencies identified under subsection (A) while attending an [institution of higher education](/usc/20/1001.md?p=a).
- (C) **Plan with Secretary of the Treasury—** The interagency coordination plan under [subparagraph (A)(i)](#c-2-A-i) between the [Secretary](/usc/20/1003.md?p=17) and the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) shall post the information about the interagency coordination plans under this paragraph and associated goals publicly on the [Department](/usc/20/1003.md?p=4)’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](/usc/20/3982.md?p=1) 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](/usc/20/1003.md?p=17) shall solicit voluntary public commitments from entities, such as [States](/usc/20/1003.md?p=21-A), [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1059e.md?p=b-4) and families about their eligibility for Federal aid under this subchapter, as well as [State](/usc/20/1003.md?p=21-A)-based financial aid, if applicable, on an annual basis;
- (ii) increase the number of prospective and current students who are [low-income individuals](/usc/20/1059e.md?p=b-4) 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](/usc/20/1059e.md?p=b-4) 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](/usc/20/1003.md?p=17).
- (C) **Early awareness champions—** Based on data submitted by entities, the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) on the [Department](/usc/20/1003.md?p=4) of Education website to promote best practices.
- (d) **Public awareness campaign—**
- (1) **In general—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17), potential availability of [state](/usc/20/1003.md?p=21-A) need-based financial aid.
- (2) **Coordination—** The public awareness campaign described in [paragraph (1)](#d-1) shall leverage the activities in subsections [(b)](#b) and [(c)](#c) to highlight eligibility among low-income populations. In developing and implementing the campaign, the [Secretary](/usc/20/1003.md?p=17) may work in coordination with [States](/usc/20/1003.md?p=21-A), 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 [section 1087ss(b)(4)(H) of this title](/usc/20/1087ss.md?p=b-4-H)), organizations involved in college access and student financial aid, [secondary schools](/usc/20/1003.md?p=16), [local educational agencies](/usc/20/1003.md?p=11), public libraries, community centers, businesses, employers, workforce investment [boards](/usc/20/4702.md?p=2), and organizations that provide services to individuals who are or were homeless, in foster care, or are disconnected youth.
- (3) **Reporting—** The [Secretary](/usc/20/1003.md?p=17) shall report on the success of the public awareness campaign described in [paragraph (1)](#d-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](/usc/20/3982.md?p=1) for Federal aid under this subchapter publicly on the [Department](/usc/20/1003.md?p=4) of Education website.
# §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](/usc/20/1003.md?p=4) of Education to test the quality and viability of expanded [distance education](#h) programs currently restricted under this chapter;
- (2) to provide for increased student access to higher education through [distance education](#h) programs; and
- (3) to help determine—
- (A) the most effective means of delivering quality education via [distance education](#h) course offerings;
- (B) the specific statutory and regulatory requirements which should be altered to provide greater access to high quality [distance education](#h) programs; and
- (C) the appropriate level of Federal assistance for students enrolled in [distance education](#h) programs.
- (b) **Demonstration programs authorized—**
- (1) **In general—** In accordance with the provisions of [subsection (d)](#d), the [Secretary](/usc/20/1003.md?p=17) is authorized to select institutions of higher education, systems of such institutions, or consortia of such institutions for voluntary participation in a [Distance Education](#h) Demonstration Program that provides participating institutions with the ability to offer [distance education](#h) programs that do not meet all or a portion of the sections or regulations described in [paragraph (2)](#b-2).
- (2) **Waivers—** The [Secretary](/usc/20/1003.md?p=17) is authorized to waive for any [institution of higher education](/usc/20/1001.md?p=a), system of institutions of higher education, or consortium participating in a [Distance Education](#h) Demonstration Program, the requirements of [section 1087ll(5)](/usc/20/1087ll.md)[^1] of this title as the section relates to computer costs, sections [1088(a)](/usc/20/1088.md?p=a) and [1088(b)](/usc/20/1088.md?p=b) of this title as such sections relate to requirements for a minimum number of weeks of instruction, sections [1002(a)(3)(A)](/usc/20/1002.md?p=a-3-A), [1002(a)(3)(B)](/usc/20/1002.md?p=a-3-B), and [1091(l)(1)](/usc/20/1091.md?p=l-1) of this title, or one or more of the regulations prescribed under this part or part F which inhibit the operation of quality [distance education](#h) programs.
- (3) **Eligible applicants—**
- (A) **Eligible institutions—** Except as provided in subparagraphs [(B)](#b-3-B), [(C)](#b-3-C), and [(D)](#b-3-D), only an [institution of higher education](/usc/20/1001.md?p=a) 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](/usc/20/1001.md?p=a) described in [section 1002(a)(1)(C) of this title](/usc/20/1002.md?p=a-1-C) shall not be eligible to participate in the demonstration program authorized under this section.
- (C) **Special rule—** Subject to [subparagraph (B)](#b-3-B), an [institution of higher education](/usc/20/1001.md?p=a) that meets the requirements of subsection (a) of [section 1002 of this title](/usc/20/1002.md), other than the requirement of paragraph [(3)(A)](#b-3-A) or [(3)(B)](#b-3-B) of such subsection, and that provides a 2-year or 4-year program of instruction for which the institution awards an associate or baccalaureate degree, shall be eligible to participate in the demonstration program authorized under this section.
- (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)](#b-2), the [Secretary](/usc/20/1003.md?p=17) may waive the provisions of subchapter I and this part and part H of this subchapter for such university that the [Secretary](/usc/20/1003.md?p=17) determines to be appropriate because of the unique characteristics of such university. In carrying out the preceding sentence, the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) at such time and in such manner as the [Secretary](/usc/20/1003.md?p=17) 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](#h) programs to be offered;
- (B) a description of the statutory and regulatory requirements described in [subsection (b)(2)](#b-2) or, if applicable, [subsection (b)(3)(D)](#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](#h) programs to be offered;
- (D) a description of the students to whom [distance education](#h) 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](/usc/20/1003.md?p=17) may require.
- (d) **Selection—**
- (1) **In general—** For the first year of the demonstration program authorized under this section, the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) determines that such expansion is warranted based on the evaluations conducted in accordance with subsections [(f)](#f) and [(g)](#g).
- (2) **Considerations—** In selecting institutions to participate in the demonstration program in the first or succeeding years of the program, the [Secretary](/usc/20/1003.md?p=17) shall take into account—
- (A) the number and quality of applications received;
- (B) the [Department](/usc/20/1003.md?p=4)’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](#h); and
- (D) ensuring the participation of a diverse group of institutions with respect to size, mission, and geographic distribution.
- (e) **Notification—** The [Secretary](/usc/20/1003.md?p=17) shall make available to the public and to the [authorizing committees](/usc/20/1003.md?p=1) 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](#h) courses to be offered.
- (f) **Evaluations and reports—**
- (1) **Evaluation—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17), 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](#h);
- (D) effective technologies for delivering [distance education](#h) 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](/usc/20/1003.md?p=17) shall review current policies and identify those policies that present impediments to the development and use of [distance education](#h) and other nontraditional methods of expanding access to education.
- (3) **Annual reports—** The [Secretary](/usc/20/1003.md?p=17) shall provide reports to the [authorizing committees](/usc/20/1003.md?p=1) 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 [section 1091(l)(1)](/usc/20/1091.md?p=l-1) of this title, including the progress of such students toward recognized certificates and the degree to which participation in such programs leading to such certificates increased.
- (g) **Oversight—** In conducting the demonstration program authorized under this section, the [Secretary](/usc/20/1003.md?p=17) 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)](#b-2) and [(b)(3)(D)](#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](/usc/20/1003.md?p=21-A) 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.
# §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](/usc/20/1003.md?p=17) shall carry out a program for [States](/usc/20/1003.md?p=21-A), in cooperation with public institutions of higher education, to develop, enhance, and implement comprehensive [articulation agreements](#a) between or among such institutions in a [State](/usc/20/1003.md?p=21-A), and (to the extent practicable) across [State](/usc/20/1003.md?p=21-A) lines, by 2010. Such [articulation agreements](#a) shall be made widely and publicly available on the websites of [States](/usc/20/1003.md?p=21-A) and such institutions. In developing, enhancing, and implementing [articulation agreements](#a), [States](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=17).
- (2) **Technical assistance provided—** The [Secretary](/usc/20/1003.md?p=17) shall provide technical assistance to [States](/usc/20/1003.md?p=21-A) and public institutions of higher education for the purposes of developing and implementing [articulation agreements](#a) in accordance with this subsection.
- (3) **Rule of construction—** Nothing in this subsection shall be construed to authorize the [Secretary](/usc/20/1003.md?p=17) to require particular policies, procedures, or practices by institutions of higher education with respect to [articulation agreements](#a).
# §1094. Program participation agreements
- (a) **Required for programs of assistance; contents—** In order to be an [eligible institution](/usc/20/1066a.md?p=1) for the purposes of any program authorized under this subchapter, an institution must be an [institution of higher education](/usc/20/1001.md?p=a) or an [eligible institution](/usc/20/1066a.md?p=1) (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](/usc/20/1003.md?p=17). 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](/usc/20/4702.md?p=3) 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](/usc/20/4702.md?p=3) received from the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17);
- (B) the appropriate [guaranty agency](/usc/20/1085.md?p=j); and
- (C) the appropriate accrediting agency or association.
- (4) The institution will comply with the provisions of [subsection (c)](#c) of this section and the regulations prescribed under that subsection, relating to fiscal eligibility.
- (5) The institution will submit reports to the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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)](/usc/20/1075.md?p=a), [1078(a)(2)](/usc/20/1078.md?p=a-2), and [1078(b)(1)(A)](/usc/20/1078.md?p=b-1-A) and [(B)](/usc/20/1078.md?p=b-1-B) of this title.
- (7) The institution will comply with the requirements of [section 1092 of this title](/usc/20/1092.md).
- (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](/usc/20/1003.md?p=21-A) licensing requirements of the [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=21-A) grant assistance from the [State](/usc/20/1003.md?p=21-A) in which the institution is located, and will inform such borrowers from another [State](/usc/20/1003.md?p=21-A) of the source for further information concerning such assistance from that [State](/usc/20/1003.md?p=21-A).
- (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](#i-5), employee, or student at the institution.
- (11) In the case of any institution whose students receive financial assistance pursuant to [section 1091(d) of this title](/usc/20/1091.md?p=d), the institution will make available to such students a program proven successful in assisting students in obtaining a certificate of [high school](/usc/20/2302.md?p=25) equivalency.
- (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 [section 1092(f) of this title](/usc/20/1092.md?p=f).
- (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](/usc/20/1066a.md?p=1) under part B or D, will develop a Default Management Plan for approval by the [Secretary](/usc/20/1003.md?p=17) as part of its initial application for certification as an [eligible institution](/usc/20/1066a.md?p=1) and will implement such Plan for two years thereafter.
- (B) Any [institution of higher education](/usc/20/1001.md?p=a) which changes ownership and any [eligible institution](/usc/20/1066a.md?p=1) which changes its status as a [parent](/usc/20/1021.md?p=16) or subordinate institution shall, in order to participate as an [eligible institution](/usc/20/1066a.md?p=1) under part B or D, develop a Default Management Plan for approval by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1021.md?p=16) nor the subordinate institution has a [cohort default rate](/usc/20/1085.md?p=m-1-A) in excess of 10 percent, and (ii) the new owner of such [parent](/usc/20/1021.md?p=16) or subordinate institution does not, and has not, owned any other institution with a [cohort default rate](/usc/20/1085.md?p=m-1-A) in excess of 10 percent.
- (15) The institution acknowledges the authority of the [Secretary](/usc/20/1003.md?p=17), [guaranty agencies](/usc/20/1085.md?p=j), lenders, accrediting agencies, the [Secretary](/usc/20/1003.md?p=17) of Veterans Affairs, and the [State](/usc/20/1003.md?p=21-A) 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](/usc/20/4702.md?p=3) 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](/usc/20/4702.md?p=3) under this subchapter, or has been judicially determined to have committed fraud involving [funds](/usc/20/4702.md?p=3) under this subchapter or contract with an institution or [third party servicer](/usc/20/1088.md?p=c) that has been terminated under [section 1082 of this title](/usc/20/1082.md) involving the acquisition, use, or expenditure of [funds](/usc/20/4702.md?p=3) under this subchapter, or who has been judicially determined to have committed fraud involving [funds](/usc/20/4702.md?p=3) under this subchapter.
- (B) The institution will not knowingly contract with or employ any individual, agency, or organization that has been, or whose [officers](#i-5) or employees have been—
- (i) convicted of, or pled nolo contendere or guilty to, a crime involving the acquisition, use, or expenditure of [funds](/usc/20/4702.md?p=3) under this subchapter; or
- (ii) judicially determined to have committed fraud involving [funds](/usc/20/4702.md?p=3) 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](/usc/20/1003.md?p=17), in a timely manner and to the satisfaction of the [Secretary](/usc/20/1003.md?p=17).
- (18) The institution will meet the requirements established pursuant to [section 1092(g) of this title](/usc/20/1092.md?p=g).
- (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](/usc/20/4702.md?p=3), 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](/usc/20/9701.md?p=2), 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](/usc/20/1003.md?p=17) and accrediting agencies or associations, and will provide evidence to the [Secretary](/usc/20/1003.md?p=17) that the institution has the authority to operate within a [State](/usc/20/1003.md?p=21-A).
- (22) The institution will comply with the refund policy established pursuant to [section 1091b of this title](/usc/20/1091b.md).
- (23)
- (A) The institution, if located in a [State](/usc/20/1003.md?p=21-A) to which [section 20503(b) of title 52](/usc/52/20503.md?p=b) does not apply, will make a good faith effort to distribute a mail voter registration form, requested and received from the [State](/usc/20/1003.md?p=21-A), to each student enrolled in a degree or certificate program and physically in attendance at the institution, and to make such forms widely available to students at the institution.
- (B) The institution shall request the forms from the [State](/usc/20/1003.md?p=21-A) 120 days prior to the deadline for registering to vote within the [State](/usc/20/1003.md?p=21-A). If an institution has not received a sufficient quantity of forms to fulfill this section from the [State](/usc/20/1003.md?p=21-A) within 60 days prior to the deadline for registering to vote in the [State](/usc/20/1003.md?p=21-A), 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 [section 30101(3) of title 52](/usc/52/30101.md?p=3), and to the elections for Governor or other chief executive within such [State](/usc/20/1003.md?p=21-A)).[^1]
- (D) The institution shall be considered in compliance with the requirements of [subparagraph (A)](#a-23-A) for each student to whom the institution electronically transmits a message containing a voter registration form acceptable for use in the [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1002.md?p=b-2) (as defined in [section 1002(b) of this title](/usc/20/1002.md?p=b)), such institution will derive not less than ten percent of such institution’s revenues from sources other than Federal [funds](/usc/20/4702.md?p=3) that are disbursed or delivered to or on behalf of a student to be used to attend such institution (referred to in this paragraph and [subsection (d)](#d) as “Federal education assistance [funds](/usc/20/4702.md?p=3)”), as calculated in accordance with [subsection (d)(1)](#d-1), or will be subject to the sanctions described in [subsection (d)(2)](#d-2).
- (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](#i-5), employees, and [agents](#i-1) shall comply, that—
- (i) prohibits a conflict of interest with the responsibilities of an [officer](#i-5), employee, or [agent](#i-1) of an institution with respect to such loans; and
- (ii) at a minimum, includes the provisions described in [subsection (e)](#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](#i-5), employees, and [agents](#i-1) 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 [section 16 of title 18](/usc/18/16.md)), or a nonforcible sex offense, the report on the results of any disciplinary proceeding conducted by such institution against a student who is the alleged perpetrator of such crime or offense with respect to such crime or offense. If the alleged victim of such crime or offense is deceased as a result of such crime or offense, the next of kin of such victim shall be treated as the alleged victim for purposes of this paragraph.
- (27) In the case of an institution that has entered into a [preferred lender arrangement](#i-6), 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](#i-6). In making such list, the institution shall comply with the requirements of [subsection (h)](#h).
- (28)
- (A) The institution will, upon the request of an [applicant](/usc/20/3982.md?p=1) for a [private education loan](#a-28-B), provide to the [applicant](/usc/20/3982.md?p=1) the form required under [section 1638(e)(3) of title 15](/usc/15/1638.md?p=e-3), and the information required to complete such form, to the extent the institution possesses such information.
- (B) For purposes of this paragraph, the term “private education loan” has the meaning given such term in [section 1650 of title 15](/usc/15/1650.md).
- (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](#i-5) or other designated [officer](#i-5) 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](/usc/20/1003.md?p=17) shall submit to the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) shall, upon receipt of written notice under [paragraph (1)](#b-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](/usc/20/1003.md?p=17) notifies the institution.
- (c) **Audits; financial responsibility; enforcement of standards—**
- (1) Notwithstanding any other provisions of this subchapter, the [Secretary](/usc/20/1003.md?p=17) shall prescribe such regulations as may be necessary to provide for—
- (A)
- (i) except as provided in clauses [(ii)](#c-1-A-ii) and [(iii)](#c-1-A-iii), a financial audit of an [eligible institution](/usc/20/1066a.md?p=1) with regard to the financial condition of the institution in its entirety, and a compliance audit of such institution with regard to any [funds](/usc/20/4702.md?p=3) obtained by it under this subchapter or obtained from a student or a [parent](/usc/20/1021.md?p=16) who has a loan insured or guaranteed by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17), the results of which shall be submitted to the [Secretary](/usc/20/1003.md?p=17) and shall be available to cognizant [guaranty agencies](/usc/20/1085.md?p=j), [eligible lenders](/usc/20/1019.md?p=4), [State](/usc/20/1003.md?p=21-A) agencies, and the appropriate [State](/usc/20/1003.md?p=21-A) agency notifying the [Secretary](/usc/20/1003.md?p=17) under subpart 1 of part H, except that the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1088.md?p=a-1) preceding the audit period;
- (ii) with regard to an [eligible institution](/usc/20/1066a.md?p=1) which is audited under [chapter 75](/usc/31/chstV-ch75.md) of title 31, deeming such audit to satisfy the requirements of [clause (i)](#c-1-A-i) for the period covered by such audit; or
- (iii) at the discretion of the [Secretary](/usc/20/1003.md?p=17), with regard to an [eligible institution](/usc/20/1066a.md?p=1) (other than an [eligible institution](/usc/20/1066a.md?p=1) described in [section 1002(a)(1)(C) of this title](/usc/20/1002.md?p=a-1-C)) that has obtained less than $200,000 in [funds](/usc/20/4702.md?p=3) under this subchapter during each of the 2 [award years](/usc/20/1088.md?p=a-1) that precede the audit period and submits a letter of credit payable to the [Secretary](/usc/20/1003.md?p=17) equal to not less than ½ of the annual potential liabilities of such institution as determined by the [Secretary](/usc/20/1003.md?p=17), deeming an audit conducted every 3 years to satisfy the requirements of [clause (i)](#c-1-A-i), except for the [award year](/usc/20/1088.md?p=a-1) immediately preceding renewal of the institution’s eligibility under [section 1099c(g) of this title](/usc/20/1099c.md?p=g);
- (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](/usc/20/1066a.md?p=1) of a program of student financial aid under this subchapter, including any matter the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1066a.md?p=1);
- (C)
- (i) except as provided in [clause (ii)](#c-1-C-ii), a compliance audit of a [third party servicer](/usc/20/1088.md?p=c) (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](/usc/20/1066a.md?p=1), [guaranty agency](/usc/20/1085.md?p=j), 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](/usc/20/1003.md?p=17), the results of which shall be submitted to the [Secretary](/usc/20/1003.md?p=17); or
- (ii) with regard to a [third party servicer](/usc/20/1088.md?p=c) that is audited under [chapter 75](/usc/31/chstV-ch75.md) of title 31, such audit shall be deemed to satisfy the requirements of [clause (i)](#c-1-C-i) for the period covered by such audit;
- (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](/usc/20/1003.md?p=17), the results of which shall be submitted to the [Secretary](/usc/20/1003.md?p=17); or
- (ii) with regard to a secondary market that is audited under [chapter 75](/usc/31/chstV-ch75.md) of title 31, such audit shall be deemed to satisfy the requirements of [clause (i)](#c-1-D-i) for the period covered by the audit;
- (E) the establishment, by each [eligible institution](/usc/20/1066a.md?p=1) under part B responsible for furnishing to the lender the statement required by [section 1078(a)(2)(A)(i) of this title](/usc/20/1078.md?p=a-2-A-i), of policies and procedures by which the latest known address and enrollment status of any student who has had a loan insured under this part and who has either formally terminated his enrollment, or failed to re-enroll on at least a half-time basis, at such institution, shall be furnished either to the holder (or if unknown, the insurer) of the note, not later than 60 days after such termination or failure to re-enroll;
- (F) the limitation, suspension, or termination of the participation in any program under this subchapter of an [eligible institution](/usc/20/1066a.md?p=1), or the imposition of a civil penalty under [paragraph (3)(B)](#c-3-B) whenever the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) agree to an extension or unless limitation or termination proceedings are initiated by the [Secretary](/usc/20/1003.md?p=17) within that period of time;
- (G) an emergency action against an institution, under which the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/4702.md?p=3) from the institution or its students and withdraw the institution’s authority to obligate [funds](/usc/20/4702.md?p=3) under any program under this subchapter, if the [Secretary](/usc/20/1003.md?p=17)—
- (i) receives information, determined by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/4702.md?p=3), and
- (iii) determines that the likelihood of loss outweighs the importance of the procedures prescribed under [subparagraph (D)](#c-1-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](/usc/20/1003.md?p=17) against the institution within that period of time, and except that the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1088.md?p=c) 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)](#c-3-B), whenever the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) agree to an extension, or unless limitation or termination proceedings are initiated by the [Secretary](/usc/20/1003.md?p=17) against the individual or organization within that period of time; and
- (I) an emergency action against a [third party servicer](/usc/20/1088.md?p=c) that has contracted with an institution to administer any aspect of the institution’s student assistance program under this subchapter, under which the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/4702.md?p=3) 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](/usc/20/1003.md?p=17)—
- (i) receives information, determined by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/4702.md?p=3), and
- (iii) determines that the likelihood of loss outweighs the importance of the procedures prescribed under [subparagraph (F)](#c-1-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](/usc/20/1003.md?p=17) against the individual or organization within that period of time, and except that the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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)](#c-1-H) and [(I)](#c-1-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](/usc/20/1003.md?p=17), the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1066a.md?p=1) has engaged in substantial misrepresentation of the nature of its educational program, its financial charges, or the employability of its graduates, the [Secretary](/usc/20/1003.md?p=17) may suspend or terminate the eligibility status for any or all programs under this subchapter of any otherwise [eligible institution](/usc/20/1066a.md?p=1), in accordance with procedures specified in paragraph (1)(D) of this subsection, until the [Secretary](/usc/20/1003.md?p=17) finds that such practices have been corrected.
- (B)
- (i) Upon determination, after reasonable notice and opportunity for a hearing, that an [eligible institution](/usc/20/1066a.md?p=1)—
- (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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17). 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](/usc/20/1001.md?p=a) 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](/usc/20/1003.md?p=17) shall publish a list of [State](/usc/20/1003.md?p=21-A) agencies which the [Secretary](/usc/20/1003.md?p=17) determines to be reliable authority as to the quality of public postsecondary vocational education in their respective [States](/usc/20/1003.md?p=21-A) for the purpose of determining eligibility for all Federal student assistance programs.
- (5) The [Secretary](/usc/20/1003.md?p=17) shall make readily available to appropriate [guaranty agencies](/usc/20/1085.md?p=j), [eligible lenders](/usc/20/1019.md?p=4), [State](/usc/20/1003.md?p=21-A) agencies notifying the [Secretary](/usc/20/1003.md?p=17) under subpart 1 of part H, and accrediting agencies or associations the results of the audits of [eligible institutions](/usc/20/1066a.md?p=1) conducted pursuant to [paragraph (1)(A)](#c-1-A).
- (6) The [Secretary](/usc/20/1003.md?p=17) is authorized to provide any information collected as a result of audits conducted under this section, together with audit information collected by [guaranty agencies](/usc/20/1085.md?p=j), to any Federal or [State](/usc/20/1003.md?p=21-A) agency having responsibilities with respect to student financial assistance, including those referred to in [subsection (a)(15)](#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](/usc/20/1003.md?p=4) 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](/usc/20/4702.md?p=3) appropriated under this subchapter (in the amount necessary to provide such assistance), including [funds](/usc/20/4702.md?p=3) 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-24), a [proprietary institution of higher education](/usc/20/1002.md?p=b-2) shall—
- (A) use the cash basis of accounting, except in the case of loans described in [subparagraph (D)(i)](#d-1-D-i) that are made by the [proprietary institution of higher education](/usc/20/1002.md?p=b-2);
- (B) consider as revenue only those [funds](/usc/20/4702.md?p=3) 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](/usc/20/4702.md?p=3) 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](/usc/20/4702.md?p=3) under this subchapter, if the program—
- (I) is approved or licensed by the appropriate [State](/usc/20/1003.md?p=21-A) agency;
- (II) is accredited by an accrediting agency recognized by the [Secretary](/usc/20/1003.md?p=17); or
- (III) provides an industry-recognized credential or certification;
- (C) presume that any Federal education assistance [funds](/usc/20/4702.md?p=3) 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](/usc/20/4702.md?p=3) to the student’s account or pays those [funds](/usc/20/4702.md?p=3) directly to the student, except to the extent that the student’s tuition, fees, or other institutional charges are satisfied by—
- (i) grant [funds](/usc/20/4702.md?p=3) provided by non-Federal public agencies or private sources independent of the institution;
- (ii) [funds](/usc/20/4702.md?p=3) provided under a contractual arrangement with a Federal, [State](/usc/20/1003.md?p=21-A), or local government agency for the purpose of providing job training to [low-income individuals](/usc/20/1059e.md?p=b-4) who are in need of that training;
- (iii) [funds](/usc/20/4702.md?p=3) 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](/usc/26.md); or
- (iv) institutional scholarships described in [subparagraph (D)(iii)](#d-1-D-iii);
- (D) include institutional aid as revenue to the [school](/usc/20/5802.md?p=a-11) only as follows:
- (i) in the case of loans made by a [proprietary institution of higher education](/usc/20/1002.md?p=b-2) 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](/usc/20/1002.md?p=b-2) 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)](#d-1-D-i); and
- (iii) in the case of scholarships provided by a [proprietary institution of higher education](/usc/20/1002.md?p=b-2), 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](/usc/20/4702.md?p=3) in that account represent designated [funds](/usc/20/4702.md?p=3) from an outside source or from income earned on those [funds](/usc/20/4702.md?p=3);
- (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 [section 1078–8 of this title](/usc/20/1078–8.md) or that is a Federal Direct Unsubsidized Stafford Loan, treat as revenue received by the institution from sources other than [funds](/usc/20/4702.md?p=3) received under this subchapter, the amount by which the disbursement of such loan received by the institution exceeds the limit on such loan in effect on the day before May 7, 2008; and
- (F) exclude from revenues—
- (i) the amount of [funds](/usc/20/4702.md?p=3) the institution received under part C, unless the institution used those [funds](/usc/20/4702.md?p=3) to pay a student’s institutional charges;
- (ii) the amount of [funds](/usc/20/4702.md?p=3) the institution received under subpart 4 of part A;
- (iii) the amount of [funds](/usc/20/4702.md?p=3) provided by the institution as matching [funds](/usc/20/4702.md?p=3) for a program under this subchapter;
- (iv) the amount of [funds](/usc/20/4702.md?p=3) 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](/usc/20/1002.md?p=b-2) that fails to meet a requirement of [subsection (a)(24)](#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](/usc/20/1002.md?p=b-2) shall demonstrate compliance with all eligibility and certification requirements under [section 1099c of this title](/usc/20/1099c.md) for a minimum of two institutional fiscal years after the institutional fiscal year in which the institution became ineligible.
- (B) **Additional enforcement—** In addition to such other means of enforcing the requirements of this subchapter as may be available to the [Secretary](/usc/20/1003.md?p=17), if a [proprietary institution of higher education](/usc/20/1002.md?p=b-2) fails to meet a requirement of [subsection (a)(24)](#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)](#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](/usc/20/1003.md?p=17) determines that the institution failed to meet the requirement of [subsection (a)(24)](#a-24); or
- (ii) in the case that the [Secretary](/usc/20/1003.md?p=17) determines that the institution failed to meet a requirement of [subsection (a)(24)](#a-24) for two consecutive institutional fiscal years, on the date the institution is determined ineligible in accordance with [subparagraph (A)](#d-2-A).
- (3) **Publication on college navigator website—** The [Secretary](/usc/20/1003.md?p=17) shall publicly disclose on the College Navigator website—
- (A) the identity of any [proprietary institution of higher education](/usc/20/1002.md?p=b-2) that fails to meet a requirement of [subsection (a)(24)](#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](/usc/20/1003.md?p=17) shall submit to the [authorizing committees](/usc/20/1003.md?p=1) a report that contains, for each [proprietary institution of higher education](/usc/20/1002.md?p=b-2) that receives assistance under this subchapter, as provided in the audited financial statements submitted to the [Secretary](/usc/20/1003.md?p=17) by each institution pursuant to the requirements of [subsection (a)(24)](#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](/usc/20/1001.md?p=a)’s code of conduct, as required under [subsection (a)(25)](#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](#e-1-B) 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](#i-5) or employee of the institution, or an [agent](#i-1).
- (2) **Gift ban—**
- (A) **Prohibition—** No [officer](#i-5) 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](#i-3), or [agent](#i-1) who has responsibilities with respect to [education loans](#i-3), shall solicit or accept any [gift](#e-2-B-i) from a lender, guarantor, or servicer of [education loans](#i-3).
- (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](#e-2-B-i)” 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](#i-5) or employee of an institution, or to an [agent](#i-1), as an integral part of a training session that is designed to improve the service of a lender, guarantor, or servicer of [education loans](#i-3) to the institution, if such training contributes to the [professional development](/usc/20/1021.md?p=19) of the [officer](#i-5), employee, or [agent](#i-1).
- (III) Favorable terms, conditions, and borrower benefits on an [education loan](#i-3) 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 [section 1092 of this title](/usc/20/1092.md), as long as—
- (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](#i-3) that are unrelated to [education loans](#i-3) or any contribution from any lender, guarantor, or servicer that is not made in exchange for any advantage related to [education loans](#i-3).
- (VI) [State](/usc/20/1003.md?p=21-A) education grants, scholarships, or financial aid [funds](/usc/20/4702.md?p=3) administered by or on behalf of a [State](/usc/20/1003.md?p=21-A).
- (iii) **Rule for gifts to family members—** For purposes of this paragraph, a [gift](#e-2-B-i) to a family member of an [officer](#i-5) or employee of an institution, to a family member of an [agent](#i-1), or to any other individual based on that individual’s relationship with the [officer](#i-5), employee, or [agent](#i-1), shall be considered a [gift](#e-2-B-i) to the [officer](#i-5), employee, or [agent](#i-1) if—
- (I) the [gift](#e-2-B-i) is given with the knowledge and acquiescence of the [officer](#i-5), employee, or [agent](#i-1); and
- (II) the [officer](#i-5), employee, or [agent](#i-1) has reason to believe the [gift](#e-2-B-i) was given because of the official position of the [officer](#i-5), employee, or [agent](#i-1).
- (3) **Contracting arrangements prohibited—**
- (A) **Prohibition—** An [officer](#i-5) or employee who is employed in the financial aid office of the institution or who otherwise has responsibilities with respect to [education loans](#i-3), or an [agent](#i-1) who has responsibilities with respect to [education loans](#i-3), shall not accept from any lender or [affiliate](#i-2) 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](#i-3).
- (B) **Exceptions—** Nothing in this subsection shall be construed as prohibiting—
- (i) an [officer](#i-5) 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](#i-3), or an [agent](#i-1) who does not have responsibilities with respect to [education loans](#i-3), from performing paid or unpaid service on a [board](/usc/20/4702.md?p=2) of [directors](/usc/20/9101.md?p=3) of a lender, guarantor, or servicer of [education loans](#i-3);
- (ii) an [officer](#i-5) 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](#i-3) as a result of a position held at the institution, or an [agent](#i-1) who has responsibility with respect to [education loans](#i-3), from performing paid or unpaid service on a [board](/usc/20/4702.md?p=2) of [directors](/usc/20/9101.md?p=3) of a lender, guarantor, or servicer of [education loans](#i-3), if the institution has a written conflict of interest policy that clearly sets forth that [officers](#i-5), employees, or [agents](#i-1) must recuse themselves from participating in any decision of the [board](/usc/20/4702.md?p=2) regarding [education loans](#i-3) at the institution; or
- (iii) an [officer](#i-5), employee, or contractor of a lender, guarantor, or servicer of [education loans](#i-3) from serving on a [board](/usc/20/4702.md?p=2) of [directors](/usc/20/9101.md?p=3), or serving as a trustee, of an institution, if the institution has a written conflict of interest policy that the [board](/usc/20/4702.md?p=2) member or trustee must recuse themselves from any decision regarding [education loans](#i-3) 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](/usc/20/1085.md?p=j).
- (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](/usc/20/4702.md?p=3) to be used for private education loans (as defined in [section 1650 of title 15](/usc/15/1650.md)), including [funds](/usc/20/4702.md?p=3) for an [opportunity pool loan](#e-5-B), to students in exchange for the institution providing concessions or promises regarding providing the lender with—
- (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](#i-6) 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)](#e-1) shall be construed to prohibit the institution from requesting or accepting assistance from a lender related to—
- (i) [professional development](/usc/20/1021.md?p=19) 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](/usc/20/1003.md?p=21-A)-declared or federally declared natural disasters, federally declared national disasters, and other localized disasters and emergencies identified by the [Secretary](/usc/20/1003.md?p=17).
- (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](#i-3) or other student financial aid of the institution, and who serves on an [advisory board](/usc/20/1066a.md?p=9), [commission](/usc/20/9701.md?p=2), 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](/usc/20/1066a.md?p=9), [commission](/usc/20/9701.md?p=2), or group.
- (f) **Institutional requirements for teach-outs—**
- (1) **In general—** In the event the [Secretary](/usc/20/1003.md?p=17) initiates the limitation, suspension, or termination of the participation of an [institution of higher education](/usc/20/1001.md?p=a) in any program under this subchapter under the authority of [subsection (c)(1)(F)](#c-1-F) or initiates an emergency action under the authority of [subsection (c)(1)(G)](#c-1-G) and its prescribed regulations, the [Secretary](/usc/20/1003.md?p=17) shall require that institution to prepare a [teach-out plan](#f-2) for submission to the institution’s accrediting agency or association in compliance with [section 1099b(c)(3) of this title](/usc/20/1099b.md?p=c-3), the [Secretary](/usc/20/1003.md?p=17)’s regulations on [teach-out plans](#f-2), and the standards of the institution’s accrediting agency or association.
- (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](/usc/20/1001.md?p=a) 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](/usc/20/1003.md?p=4) shall—
- (1) submit an annual report to the [authorizing committees](/usc/20/1003.md?p=1) identifying all violations of an institution’s code of conduct that the Inspector General has substantiated during the preceding year relating to the [gift](#e-2-B-ii) ban provisions described in [subsection (e)(2)](#e-2); and
- (2) make the report available to the public through the [Department](/usc/20/1003.md?p=4)’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)](#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 [section 1019b(a)(2)(A) of this title](/usc/20/1019b.md?p=a-2-A);
- (ii) why the institution has entered into a [preferred lender arrangement](#i-6) 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](#i-2) provided by the [Secretary](/usc/20/1003.md?p=17) under [paragraph (2)](#h-2), that—
- (i) there are not less than three lenders of loans made under part B that are not [affiliates](#i-2) 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](#i-2) 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](#i-2) of each other lender on the preferred lender list; and
- (II) if a lender is an [affiliate](#i-2) 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](#i-6) 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](/usc/20/1003.md?p=17) may prescribe by regulation.
- (2) **Lender affiliates list—**
- (A) **In general—** The [Secretary](/usc/20/1003.md?p=17) shall maintain and regularly update a list of lender [affiliates](#i-2) of all [eligible lenders](/usc/20/1019.md?p=4), and shall provide such list to institutions for use in carrying out [paragraph (1)(B)](#h-1-B).
- (B) **Use of most recent list—** An institution shall use the most recent list of lender [affiliates](#i-2) provided by the [Secretary](/usc/20/1003.md?p=17) under [subparagraph (A)](#h-2-A) in carrying out [paragraph (1)(B)](#h-1-B).
- (i) **Definitions—** For the purpose of this section:
- (1) **Agent—** The term “agent” has the meaning given the term in [section 1019 of this title](/usc/20/1019.md).
- (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](/usc/20/9101.md?p=3) or trustees of such other person; or
- (C) the [Secretary](/usc/20/1003.md?p=17) 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](#i-3).
- (3) **Education loan—** The term “education loan” has the meaning given the term in [section 1019 of this title](/usc/20/1019.md).
- (4) **Eligible institution—** The term “[eligible institution](/usc/20/1066a.md?p=1)” means any such institution described in [section 1002 of this title](/usc/20/1002.md).
- (5) **Officer—** The term “officer” has the meaning given the term in [section 1019 of this title](/usc/20/1019.md).
- (6) **Preferred lender arrangement—** The term “preferred lender arrangement” has the meaning given the term in [section 1019 of this title](/usc/20/1019.md).
- (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)](#b-2), [subsection (c)(1)(D)](#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](/usc/20/1003.md?p=17) shall allow the institution to use any reasonable means, including stenographers, of recording the hearing.
# §1094a. Regulatory relief and improvement
- (a) **Quality Assurance Program—**
- (1) **In general—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/5802.md?p=a-11) 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](/usc/20/1003.md?p=17), and shall take into consideration current quality assurance goals, as determined by the [Secretary](/usc/20/1003.md?p=17). 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) determines necessary to ensure accountability and compliance with the purposes of the programs under this subchapter. The [Secretary](/usc/20/1003.md?p=17) shall not modify or waive any statutory requirements pursuant to this paragraph.
- (4) **Determination—** The [Secretary](/usc/20/1003.md?p=17) 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](#c) under the requirements of the Quality Assurance Program.
- (5) **Review and evaluation—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=1).
- (b) **Regulatory improvement and streamlining experiments—**
- (1) **In general—** The [Secretary](/usc/20/1003.md?p=17) shall continue the voluntary participation of any experimental sites in existence as of July 1, 2007, unless the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=1). 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](/usc/20/1003.md?p=17) is authorized to periodically select a limited number of additional institutions for voluntary participation as experimental sites to provide recommendations to the [Secretary](/usc/20/1003.md?p=17) on the impact and effectiveness of proposed regulations or new management initiatives.
- (B) **Waivers—** The [Secretary](/usc/20/1003.md?p=17) is authorized to waive, for any institution participating as an experimental site under [subparagraph (A)](#b-3-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 [section 1098a of this title](/usc/20/1098a.md), or regulations prescribed under this subchapter, that will bias the results of the experiment, except that the [Secretary](/usc/20/1003.md?p=17) shall not waive any provisions with respect to award rules (other than an award rule related to an experiment in modular or compressed schedules), grant and loan maximum award amounts, and need analysis requirements unless the waiver of such provisions is authorized by another provision under this subchapter.
- (4) **Determination of success—** For the purposes of [paragraph (1)](#b-1), the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17)’s biennial report under [paragraph (2)](#b-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](/usc/20/1088.md?p=a-1) during which the participating institution indicates the institution’s intention to cease participation.
# §1094b. Assignment of identification numbers
The [Secretary](/usc/20/1003.md?p=17) shall assign to each participant in subchapter IV programs, including institutions, lenders, and [guaranty agencies](/usc/20/1085.md?p=j), a single [Department](/usc/20/1003.md?p=4) 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](/usc/20/1003.md?p=21-A) 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 [section 1087bb of this title](/usc/20/1087bb.md) to the institution’s allotment under section [1070b–3](/usc/20/1070b–3.md) or [1087–52](/usc/20/1087–52.md) of this title (or both); (2) transfer 25 percent of the institution’s allotment under [section 1087–52 of this title](/usc/20/1087–52.md) to the institution’s allotment under section [1070b–3](/usc/20/1070b–3.md) or [1087bb](/usc/20/1087bb.md) of this title (or both); and (3) transfer 25 percent of the institution’s allotment under [section 1070b–3 of this title](/usc/20/1070b–3.md) to the institution’s allotment under [section 1087–52 of this title](/usc/20/1087–52.md). [Funds](/usc/20/4702.md?p=3) transferred to an institution’s allotment under another section may be used as a part of and for the same purposes as [funds](/usc/20/4702.md?p=3) allotted under that section. The [Secretary](/usc/20/1003.md?p=17) shall have no control over such transfer, except as specifically authorized, except for the collection and dissemination of information.
# §1095a. Wage garnishment requirement
- (a) **Garnishment requirements—** Notwithstanding any provision of [State](/usc/20/1003.md?p=21-A) law, a [guaranty agency](/usc/20/1085.md?p=j), or the [Secretary](/usc/20/1003.md?p=17) in the case of loans made, insured or guaranteed under this subchapter that are held by the [Secretary](/usc/20/1003.md?p=17), may garnish the [disposable pay](#e) 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](/usc/20/1003.md?p=17), or, in the case of a loan guaranteed under part B on which the [guaranty agency](/usc/20/1085.md?p=j) received reimbursement from the [Secretary](/usc/20/1003.md?p=17) under [section 1078(c) of this title](/usc/20/1078.md?p=c), with the [guaranty agency](/usc/20/1085.md?p=j) holding the loan, as appropriate, provided that—
- (1) the amount deducted for any pay period may not exceed 15 percent of [disposable pay](#e), 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](/usc/20/1085.md?p=j) or the [Secretary](/usc/20/1003.md?p=17), as appropriate, informing such individual of the nature and amount of the loan obligation to be collected, the intention of the [guaranty agency](/usc/20/1085.md?p=j) or the [Secretary](/usc/20/1003.md?p=17), 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](/usc/20/1085.md?p=j) or the [Secretary](/usc/20/1003.md?p=17), under terms agreeable to the [Secretary](/usc/20/1003.md?p=17), or the head of the [guaranty agency](/usc/20/1085.md?p=j) 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)](#b) on the determination of the [Secretary](/usc/20/1003.md?p=17) or the [guaranty agency](/usc/20/1085.md?p=j), 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)](#a-4), concerning the terms of the repayment schedule;
- (6) the employer shall pay to the [Secretary](/usc/20/1003.md?p=17) or the [guaranty agency](/usc/20/1085.md?p=j) as directed in the withholding order issued in this action, and shall be liable for, and the [Secretary](/usc/20/1003.md?p=17) or the [guaranty agency](/usc/20/1085.md?p=j), as appropriate, may sue the employer in a [State](/usc/20/1003.md?p=21-A) 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](#e) 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](/usc/20/1003.md?p=21-A) 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)](#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)](#a-2), and in accordance with such procedures as the [Secretary](/usc/20/1003.md?p=17) or the head of the [guaranty agency](/usc/20/1085.md?p=j), 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](/usc/20/1003.md?p=17) or the [guaranty agency](/usc/20/1085.md?p=j), as appropriate, shall provide the individual a hearing under [subsection (a)(5)](#a-5) upon request, but such hearing need not be provided prior to issuance of a garnishment order. A hearing under [subsection (a)(5)](#a-5) may not be conducted by an individual under the supervision or control of the head of the [guaranty agency](/usc/20/1085.md?p=j), 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](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=17) 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.
# §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](/usc/20/1003.md?p=17) shall reserve such sums as may be necessary to pay to each institution with which he has an agreement under [section 1094 of this title](/usc/20/1094.md), an amount equal to $5 for each student at that institution who receives assistance under subpart 1 of part A. In addition, an institution which has entered into an agreement with the [Secretary](/usc/20/1003.md?p=17) under subpart 3 of part A or part C,[^1] of this subchapter or under part E of this subchapter shall be entitled for each fiscal year which such institution disburses [funds](/usc/20/4702.md?p=3) to eligible students under any such part to a payment for the purpose set forth in [subsection (b)](#b). The payment for a fiscal year shall be payable from each such allotment by payment in accordance with regulations of the [Secretary](/usc/20/1003.md?p=17) and shall be equal to 5 percent of the institution’s first $2,750,000 of expenditures plus 4 percent of the institution’s expenditures greater than $2,750,000 and less than $5,500,000, plus 3 percent of the institution’s expenditures in excess of $5,500,000 during the fiscal year from the sum of its grants to students under subpart 3 of part A, its expenditures during such fiscal year under part C for compensation of students, and the principal amount of loans made during such fiscal year from its student loan [fund](/usc/20/4702.md?p=3) established under part E, excluding the principal amount of any such loans which the institution has referred under [section 1087cc(a)(4)(B) of this title](/usc/20/1087cc.md?p=a-4-B). In addition, the [Secretary](/usc/20/1003.md?p=17) shall provide for payment to each [institution of higher education](/usc/20/1001.md?p=a) an amount equal to 100 percent of the costs incurred by the institution in implementing and operating the immigration status verification system under [section 1091(g) of this title](/usc/20/1091.md?p=g).
- (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)](#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](/usc/20/4702.md?p=3) available under this section for financial aid services during times and in places that will most effectively accommodate the needs of such students.
# [§1096a. Repealed. Pub. L. 102–325, title IV, § 494, July 23, 1992, 106 Stat. 631 — repealed]
# §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](/usc/20/4702.md?p=3), [assets](/usc/20/1087vv.md?p=f-2), 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](/usc/20/4702.md?p=3), [assets](/usc/20/1087vv.md?p=f-2), 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](/usc/20/1019.md?p=4) 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 [section 1029(e)(1) of title 18](/usc/18/1029.md?p=e-1), issued to another person or obtained by fraud or false statement to access [Department](/usc/20/1003.md?p=4) information technology systems for purposes of obtaining commercial advantage or private financial gain, or in furtherance of any criminal or tortious act in violation of the Constitution or laws of the United States or of any [State](/usc/20/1003.md?p=21-A), shall be fined not more than $20,000, imprisoned for not more than 5 years, or both.
# §1097a. Administrative subpoenas
- (a) **Authority—** To assist the [Secretary](/usc/20/1003.md?p=17) in the conduct of investigations of possible violations of the provisions of this subchapter, the [Secretary](/usc/20/1003.md?p=17) is authorized to require by subpoena the [production](/usc/20/952.md?p=c) of information, documents, reports, answers, records, accounts, papers, and other documentary evidence pertaining to participation in any program under this subchapter. The [production](/usc/20/952.md?p=c) of any such records may be required from any place in a [State](/usc/20/1003.md?p=21-A).
- (b) **Enforcement—** In case of contumacy by, or refusal to obey a subpoena issued to, any person, the [Secretary](/usc/20/1003.md?p=17) 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.
# §1098. Advisory Committee on Student Financial Assistance
- (a) **Establishment and purpose—**
- (1) There is established in the [Department](/usc/20/1003.md?p=4) 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](/usc/20/1003.md?p=1) and to the [Secretary](/usc/20/1003.md?p=17) on student financial aid matters.
- (2) The purpose of the Advisory Committee is—
- (A) to provide extensive knowledge and understanding of the Federal, [State](/usc/20/1003.md?p=21-A), 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](/usc/20/1003.md?p=21-A) and institutional need-based student assistance;
- (E) to make recommendations that will expand and improve partnerships among the Federal Government, [States](/usc/20/1003.md?p=21-A), 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](/usc/20/1003.md?p=17) and the other offices and [officers](/usc/20/1094.md?p=i-5) of the [Department](/usc/20/1003.md?p=4). Notwithstanding [Department](/usc/20/1003.md?p=4) 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](/usc/20/1003.md?p=17). The recommendations of the Committee shall not be subject to review or approval by any [officer](/usc/20/1094.md?p=i-5) in the executive branch, but may be submitted to the [Secretary](/usc/20/1003.md?p=17) for comment prior to submission to the [authorizing committees](/usc/20/1003.md?p=1) in accordance with [subsection (f)](#f). The [Secretary](/usc/20/1003.md?p=17)’s authority to terminate advisory committees of the [Department](/usc/20/1003.md?p=4) 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](/usc/20/1003.md?p=17), 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)](#c-1-A) or [(B)](#c-1-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](/usc/20/1003.md?p=4) 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](/usc/20/1003.md?p=1) and to the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=1) 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](/usc/20/1003.md?p=17).
- (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](/usc/20/1094.md?p=i-5) 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](/usc/20/1003.md?p=4) 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 [section 5703 of title 5](/usc/5/5703.md), for persons in the Government service employed intermittently.
- (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](/usc/5.md) governing appointments in the competitive service, and may be paid without regard to the provisions of [chapter 51](/usc/20/ch51.md) and subchapter III of [chapter 53](/usc/20/ch53.md) of such title relating to classification and General Schedule pay rates, but no individual so appointed shall be paid in excess of the rate authorized for GS–18 of the General Schedule. The Advisory Committee may appoint not more than 1 full-time equivalent, nonpermanent, consultant without regard to the provisions of [title 5](/usc/5.md). The Advisory Committee shall not be required by the [Secretary](/usc/20/1003.md?p=17) to reduce personnel to meet agency personnel reduction goals.
- (2) In carrying out its duties under this chapter, the Advisory Committee shall consult with other Federal agencies, representatives of [State](/usc/20/1003.md?p=21-A) and local governments, and private organizations to the extent feasible.
- (3)
- (A) The Advisory Committee is authorized to secure directly from any executive [department](/usc/20/1003.md?p=4), bureau, agency, [board](/usc/20/4702.md?p=2), [commission](/usc/20/9701.md?p=2), office, independent establishment, or instrumentality information, suggestions, estimates, and statistics for the purpose of this section and each such [department](/usc/20/1003.md?p=4), bureau, agency, [board](/usc/20/4702.md?p=2), [commission](/usc/20/9701.md?p=2), 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 [section 3109 of title 5](/usc/5/3109.md) and to set pay in accordance with such section.
- (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](/usc/20/1003.md?p=21-A), 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](/usc/20/1003.md?p=4) 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](/usc/20/1003.md?p=16) 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](/usc/20/4702.md?p=3), reporting of disbursements and reconciliation;
- (4) conduct a review and analysis of regulations in accordance with [subsection (l)](#l); and
- (5) conduct a study in accordance with [subsection (m)](#m).
- (k) **Term of Committee—** Notwithstanding the sunset and charter provisions of [chapter 10](/usc/5/chptI-ch10.md) of title 5 or any other statute or regulation, the Advisory Committee shall be authorized until October 1, 2015.
- (l) **Review and analysis of regulations—**
- (1) **Recommendations—** The Advisory Committee shall make recommendations to the [Secretary](/usc/20/1003.md?p=17) and the [authorizing committees](/usc/20/1003.md?p=1) for consideration of future legislative action regarding redundant or outdated regulations consistent with the [Secretary](/usc/20/1003.md?p=17)’s requirements under [section 1099c–2 of this title](/usc/20/1099c–2.md).
- (2) **Review and analysis of regulations—**
- (A) **Review of current regulations—** To meet the requirements of [subsection (d)(10)](#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 [section 1002(a)(1)(C) of this title](/usc/20/1002.md?p=a-1-C)), that have received in each of the two most recent [award years](/usc/20/1088.md?p=a-1) prior to August 14, 2008, less than $200,000 in [funds](/usc/20/4702.md?p=3) through this subchapter, may be improved, streamlined, or eliminated.
- (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)](#l-2-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](/usc/20/80r–1.md?p=2) 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)](#l-2), the Advisory Committee shall consult with the [Secretary](/usc/20/1003.md?p=17), 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)](#l-3-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)](#l-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 [section 1098a of this title](/usc/20/1098a.md) resulting from the amendments to this chapter made by the Higher Education Opportunity Act, a report to the [authorizing committees](/usc/20/1003.md?p=1) and the [Secretary](/usc/20/1003.md?p=17) detailing the review panels’ findings and recommendations with respect to the review of regulations; and
- (B) provide periodic updates to the [authorizing committees](/usc/20/1003.md?p=1) 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](/usc/20/1003.md?p=17) and the Inspector General of the [Department](/usc/20/1003.md?p=4) shall provide such assistance and resources to the Advisory Committee as the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/2302.md?p=15), 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](/usc/20/1003.md?p=21-A), 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](/usc/20/1021.md?p=16), students, appropriate representatives of [secondary schools](/usc/20/1003.md?p=16) and institutions of higher education, appropriate [State](/usc/20/1003.md?p=21-A) administrators, administrators of [dual or concurrent enrollment programs](/usc/20/2302.md?p=15), and appropriate [Department](/usc/20/1003.md?p=4) officials.
- (B) **Consultation with the authorizing committees—** The Advisory Committee shall consult on a regular basis with the [authorizing committees](/usc/20/1003.md?p=1) 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](/usc/20/1003.md?p=1) and the [Secretary](/usc/20/1003.md?p=17) 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)](#m-2).
- (B) **Final report—** The Advisory Committee shall, not later than three years after August 14, 2008, prepare and submit to the [authorizing committees](/usc/20/1003.md?p=1) and the [Secretary](/usc/20/1003.md?p=17) 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)](#m-2).
# §1098a. Regional meetings and negotiated rulemaking
- (a) **Meetings—**
- (1) **In general—** The [Secretary](/usc/20/1003.md?p=17) shall obtain public involvement in the development of proposed regulations for this subchapter. The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=21-A) student grant agencies, [guaranty agencies](/usc/20/1085.md?p=j), lenders, secondary markets, loan servicers, [guaranty agency](/usc/20/1085.md?p=j) servicers, and collection agencies.
- (2) **Issues—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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)](#a-1) and before publishing proposed regulations in the Federal Register, the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) from individuals nominated by groups described in [subsection (a)(1)](#a-1), and shall include both representatives of such groups from Washington, D.C., and industry participants. The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) within the 360-day period described in [section 1232(e) of this title](/usc/20/1232.md?p=e).
- (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](/usc/20/1003.md?p=17) determines that applying such a requirement with respect to given regulations is impracticable, unnecessary, or contrary to the public interest (within the meaning of [section 553(b)(3)(B) of title 5](/usc/5/553.md)), and publishes the basis for such determination in the Federal Register at the same time as the proposed regulations in question are first published. All published proposed regulations shall conform to agreements resulting from such negotiated rulemaking unless the [Secretary](/usc/20/1003.md?p=17) reopens the negotiated rulemaking process or provides a written explanation to the participants in that process why the [Secretary](/usc/20/1003.md?p=17) has decided to depart from such agreements. Such negotiated rulemaking shall be conducted in accordance with the provisions of [paragraph (1)](#b-1), and the [Secretary](/usc/20/1003.md?p=17) shall ensure that a clear and reliable record of agreements reached during the negotiations process is maintained.
- (c) **Applicability of chapter 10 of title 5—** [Chapter 10](/usc/5/chptI-ch10.md) of title 5 shall not apply to activities carried out under this section.
- (d) **Authorization of appropriations—** There are authorized to be appropriated in any fiscal year or made available from [funds](/usc/20/4702.md?p=3) 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](/usc/20/4702.md?p=3) are appropriated pursuant to this subsection, the [Secretary](/usc/20/1003.md?p=17) shall make [funds](/usc/20/4702.md?p=3) available to carry out this section from amounts appropriated for the operations and expenses of the [Department](/usc/20/1003.md?p=4) of Education.
# §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 — repealed]
# §1098d. Procedures for cancellations and deferments for eligible disabled veterans
The [Secretary](/usc/20/1003.md?p=17), in consultation with the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) and the [Secretary](/usc/20/1003.md?p=17) of Veterans Affairs jointly shall report to Congress on the progress made in developing and implementing the procedure.
# §1098e. Income-based repayment
- (a) **Definitions—** In this section:
- (1) **Excepted PLUS loan—** The term “excepted PLUS loan” means a loan under [section 1078–2 of this title](/usc/20/1078–2.md), or a Federal Direct PLUS Loan, that is made, insured, or guaranteed on behalf of a dependent student.
- (2) **Excepted consolidation loan—**
- (A) **In general—** The term “excepted consolidation loan” means—
- (i) a consolidation loan under [section 1078–3 of this title](/usc/20/1078–3.md), or a Federal Direct Consolidation Loan, if the proceeds of such loan were used to discharge the liability on an [excepted PLUS loan](#a-1); or
- (ii) a consolidation loan under [section 1078–3 of this title](/usc/20/1078–3.md), or a Federal Direct Consolidation Loan, if the proceeds of such loan were used to discharge the liability on a consolidation loan under [section 1078–3 of this title](/usc/20/1078–3.md), or a Federal Direct Consolidation Loan described in [clause (i)](#a-2-A-i).
- (B) **Exclusion—** The term “[excepted consolidation loan](#a-2-A)” does not include a Federal Direct Consolidation Loan described in [subparagraph (A)](#a-2-A) that, on any date during the period beginning on July 4, 2025, and ending on June 30, 2028, was being repaid—
- (i) pursuant to the Income Contingent Repayment (ICR) plan in accordance with [section 685.209(b) of title 34, Code of Federal Regulations](/cfr/34/685.209.md?p=b) (as in effect on June 30, 2023); or
- (ii) pursuant to another income driven repayment plan.
- (3) **Applicable amount—** The term “applicable amount” means 15 percent of the result obtained by calculating, on at least an annual basis, the amount by which—
- (A) the borrower’s, and the borrower’s spouse’s (if applicable), adjusted gross income; exceeds
- (B) 150 percent of the [poverty line](/usc/20/1003.md?p=14) applicable to the borrower’s [family size](/usc/20/1070a.md?p=a-2-B) as determined under [section 9902(2) of title 42](/usc/42/9902.md?p=2).
- (b) **Income-based repayment program authorized—** Notwithstanding any other provision of this chapter, the [Secretary](/usc/20/1003.md?p=17) 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](#a-1) or [excepted consolidation loan](#a-2-A)), may elect to have the borrower’s aggregate monthly payment for all such loans not exceed the [applicable amount](#a-3) 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)](#b-2)—
- (A) shall, on subsidized loans, be paid by the [Secretary](/usc/20/1003.md?p=17) for a period of not more than 3 years after the date of the borrower’s election under [paragraph (1)](#b-1), except that such period shall not include any period during which the borrower is in deferment due to an economic hardship described in [section 1085(o)](/usc/20/1085.md?p=o) of this title; and
- (B) be capitalized—
- (i) in the case of a subsidized loan, subject to [subparagraph (A)](#b-3-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)](#b-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)](#b-6-A);
- (4) any principal due and not paid under [paragraph (2)](#b-2) shall be deferred;
- (5) the amount of time the borrower makes monthly payments under [paragraph (1)](#b-1) may exceed 10 years;
- (6) if the monthly payment amount calculated under this section for all loans made to the borrower under part B or D (other than an [excepted PLUS loan](#a-1) or [excepted consolidation loan](#a-2-A)) exceeds the monthly amount calculated under [section 1078(b)(9)(A)(i) of this title](/usc/20/1078.md?p=b-9-A-i) or [1087e(d)(1)(A)](/usc/20/1087e.md?p=d-1-A) of this title, based on a 10-year repayment period, when the borrower first made the election described in this subsection (referred to in this paragraph as the “standard monthly repayment amount”), or if the borrower 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](#a-1) or [excepted consolidation loan](#a-2-A)) shall be the standard monthly repayment amount; and
- (B) the amount of time the borrower is permitted to repay such loans may exceed 10 years;
- (7) the [Secretary](/usc/20/1003.md?p=17) 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 [section 1078–2 of this title](/usc/20/1078–2.md) or a Federal Direct PLUS Loan) to a borrower who—
- (A) at any time, elected to participate in income-based repayment under [paragraph (1)](#b-1); and
- (B) for a period of time prescribed by the [Secretary](/usc/20/1003.md?p=17), not to exceed 25 years, meets 1 or more of the following requirements—
- (i) has made reduced monthly payments under [paragraph (1)](#b-1) or [paragraph (6)](#b-6);
- (ii) has made monthly payments of not less than the monthly amount calculated under section [1078(b)(9)(A)(i)](/usc/20/1078.md?p=b-9-A-i) or [1087e(d)(1)(A)](/usc/20/1087e.md?p=d-1-A) of this title, based on a 10-year repayment period, when the borrower first made the election described in this subsection;
- (iii) has made payments of not less than the payments required under a standard repayment plan under section [1078(b)(9)(A)(i)](/usc/20/1078.md?p=b-9-A-i) or [1087e(d)(1)(A)](/usc/20/1087e.md?p=d-1-A) of this title with a repayment period of 10 years;
- (iv) has made payments under an income-contingent repayment plan under [section 1087e(d)(1)(D) of this title](/usc/20/1087e.md?p=d-1-D) (as such section was in effect on the day before the date of the repeal of [section 1087e(e) of this title](/usc/20/1087e.md?p=e); or
- (v) has been in deferment due to an economic hardship described in [section 1085(o)](/usc/20/1085.md?p=o) of this title;
- (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 or the Repayment Assistance Program under [section 1087e(q) of this title](/usc/20/1087e.md?p=q); and
- (9) the special allowance payment to a lender calculated under [section 1087–1(b)(2)(I) of this title](/usc/20/1087–1.md?p=b-2-I), when calculated for a loan in repayment under this section, shall be calculated on the principal balance of the loan and on any accrued interest unpaid by the borrower in accordance with this section.
- (c) **Eligibility determinations; automatic recertification—**
- (1) **In general—** The [Secretary](/usc/20/1003.md?p=17) shall establish procedures for annually determining, in accordance with [paragraph (2)](#c-2), the borrower’s eligibility for income-based repayment, including the 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](#a-1) or [excepted consolidation loan](#a-2-A)), and such other procedures as are necessary to effectively implement income-based repayment under this section. The [Secretary](/usc/20/1003.md?p=17) shall consider, but is not limited to, the procedures established in accordance with [section 1087e(e)(1) of this title](/usc/20/1087e.md?p=e-1) (as in effect on the day before the date of repeal of subsection (e) of [section 1087e of this title](/usc/20/1087e.md)) or in connection with income sensitive repayment schedules under [section 1078(b)(9)(A)(iii) of this title](/usc/20/1078.md?p=b-9-A-iii) or [1078–3(b)(1)(E)](/usc/20/1078–3.md?p=b-1-E) of this title.
- (2) **Automatic recertification—**
- (A) **In general—** The [Secretary](/usc/20/1003.md?p=17) shall establish and implement, with respect to any borrower enrolled in an income-based repayment program under this section or under [section 1087e(q) of this title](/usc/20/1087e.md?p=q), procedures to—
- (i) use return information disclosed under [section 6103(l)(13)](/usc/26/6103.md?p=l-13) of title 26, pursuant to approval provided under [section 1098h of this title](/usc/20/1098h.md), to determine the repayment obligation of the borrower without further action by the borrower;
- (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](/usc/20/1003.md?p=17) may require to determine the repayment obligation of the borrower (or withdraw from the repayment plan under this section or under [section 1087e(q) of this title](/usc/20/1087e.md?p=q), as the case may be); 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)](#c-2-A) shall apply to each borrower of a loan eligible to be repaid under this section or under [section 1087e(q) of this title](/usc/20/1087e.md?p=q), who, on or after the date on which the [Secretary](/usc/20/1003.md?p=17) establishes procedures under such [subparagraph (A)](#c-2-A)—
- (i) selects, or is required to repay such loan pursuant to, an income-based repayment plan under this section or under [section 1087e(q) of this title](/usc/20/1087e.md?p=q); or
- (ii) recertifies income or [family size](/usc/20/1070a.md?p=a-2-B) under such plan.
- (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](/usc/20/1003.md?p=17) 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 and before July 1, 2026—** With respect to any loan made to a [new borrower](/usc/20/1003.md?p=12) on or after July 1, 2014 and before July 1, 2026—
- (1) [subsection (a)(3)(B)](#a-3-B) shall be applied by substituting “10 percent” for “15 percent”; and
- (2) [subsection (b)(7)(B)](#b-7-B) shall be applied by substituting “20 years” for “25 years”.
# §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 section [1078(b)(1)(M)(iii)](/usc/20/1078.md?p=b-1-M-iii), [1087e(f)(2)(C)](/usc/20/1087e.md?p=f-2-C), or [1087dd(c)(2)(A)(iii)](/usc/20/1087dd.md?p=c-2-A-iii) of this title, a borrower of a loan under this subchapter who is a member of the National Guard or other reserve component of the Armed Forces of the United States, or a member of such Armed Forces in a retired status, is called or ordered to [active duty](#b), and is enrolled, or was enrolled within six months prior to the activation, in a program of instruction at an [eligible institution](/usc/20/1066a.md?p=1), shall be eligible for a deferment during the 13 months following the conclusion of such service, except that a deferment under this subsection shall expire upon the borrower’s return to enrolled student status.
- (b) **Active duty—** Notwithstanding [section 1088(d) of this title](/usc/20/1088.md?p=d), in this section, the term “active duty” has the meaning given such term in [section 101(d)(1) of title 10](/usc/10/101.md?p=d-1), except that such term—
- (1) does not include [active duty](#b) for training or attendance at a service [school](/usc/20/5802.md?p=a-11); but
- (2) includes, in the case of members of the National Guard, active [State](/usc/20/1003.md?p=21-A) duty.
# §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 ([20 U.S.C. 1070](/usc/20/1070.md) et seq.) shall not be subject to any disclosure requirements of any [State](/usc/20/1003.md?p=21-A) law.
# §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 [section 1090 of this title](/usc/20/1090.md) by an individual for Federal student financial aid under a program authorized under subpart 1 of part A, part C, or part D, the [Secretary](/usc/20/1003.md?p=17), with respect to such individual and any [parent](/usc/20/1021.md?p=16) or spouse whose financial information, including return information, is required to be provided on such application, shall—
- (A) notify such individuals that—
- (i) if such individuals provide approval under [subparagraph (B)](#a-1-B)—
- (I) the [Secretary](/usc/20/1003.md?p=17) will have the authority to request that the [Secretary](/usc/20/1003.md?p=17) of the Treasury disclose return information of such individuals to authorized persons (as defined in [section 6103(l)(13)](/usc/26/6103.md?p=l-13) of title 26) for the relevant purposes described in such section; and
- (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)](#a-1-A-i-I) and [(II)](#a-1-A-i-II) of clause (i) will result in the [Secretary](/usc/20/1003.md?p=17) 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)](#a-1-A-i-I) and [(II)](#a-1-A-i-II) of subparagraph (A)(i); and
- (C) if an individual is pursuing provisional independent student status due to an unusual circumstance, as described in [section 1087tt of this title](/usc/20/1087tt.md) and provided for in [section 1087uu–2 of this title](/usc/20/1087uu–2.md), require such individual to provide an affirmative approval under [subparagraph (B)](#a-1-B), but not require a [parent](/usc/20/1021.md?p=16) of such individual to provide an affirmative approval under [subparagraph (B)](#a-1-B).
- (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](/usc/20/1003.md?p=17), 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)](#a-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)](#a-1-A-i-I) and [(II)](#a-1-A-i-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 [section 1087e(e)(8) of this title](/usc/20/1087e.md?p=e-8) or the equivalent procedures established under [section 1098e(c)(2)(B) of this title](/usc/20/1098e.md?p=c-2-B), as applicable; or
- (II) provide such information as the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1070a.md?p=a-2-B) 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](/usc/20/1003.md?p=17), with respect to such individual and any spouse of such individual, shall meet the requirements of clauses [(i)](#a-2-A-i) and [(ii)](#a-2-A-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](/usc/20/1003.md?p=6) (within the meaning of [section 1087(a) of this title](/usc/20/1087.md?p=a)) that requires income monitoring, the [Secretary](/usc/20/1003.md?p=17) shall—
- (A) provide to such individual the notification described in [paragraph (1)(A)(i)(I)](#a-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)](#a-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 [section 1087(a)(3)(A) of this title](/usc/20/1087.md?p=a-3-A); or
- (II) the first day on which such loan may no longer be reinstated; or
- (ii) provide such information as the [Secretary](/usc/20/1003.md?p=17) may require to confirm the eligibility of such individual for such discharge.
- (b) **Limit on authority—** The [Secretary](/usc/20/1003.md?p=17) shall only have authority to request that the [Secretary](/usc/20/1003.md?p=17) of the Treasury disclose return information under [section 6103(l)(13)](/usc/26/6103.md?p=l-13) of title 26 with respect to an individual if the [Secretary](/usc/20/1003.md?p=17) of Education has obtained approval under [subsection (a)](#a) for such disclosure.
- (c) **Access to FAFSA information—**
- (1) **Redisclosure of information—** The information in a complete, unredacted [Student Aid Report](#c-4-A) (including any return information disclosed under [section 6103(l)(13)](/usc/26/6103.md?p=l-13) of title 26) with respect to an application described in [subsection (a)(1)](#a-1) of an [applicant](/usc/20/3982.md?p=1) for Federal student financial aid—
- (A) upon request for such information by such [applicant](/usc/20/3982.md?p=1), shall be provided to such [applicant](/usc/20/3982.md?p=1) by—
- (i) the [Secretary](/usc/20/1003.md?p=17); or
- (ii) in a case in which the [Secretary](/usc/20/1003.md?p=17) has requested that institutions of higher education carry out the requirements of this subparagraph, an [institution of higher education](/usc/20/1001.md?p=a) that has received such information; and
- (B) with the [written consent](#c-4-B) by the [applicant](/usc/20/3982.md?p=1) to an [institution of higher education](/usc/20/1001.md?p=a), may be provided by such [institution of higher education](/usc/20/1001.md?p=a) as is necessary to a scholarship granting organization (including a tribal organization (defined in [section 5304 of title 25](/usc/25/5304.md))), or to an organization assisting the [applicant](/usc/20/3982.md?p=1) in applying for and receiving Federal, [State](/usc/20/1003.md?p=21-A), local, or tribal assistance, that is designated by the [applicant](/usc/20/3982.md?p=1) to assist the [applicant](/usc/20/3982.md?p=1) in applying for and receiving financial assistance for any component of the [applicant](/usc/20/3982.md?p=1)’s [cost of attendance](/usc/20/1087ll.md?p=a) (defined in [section 1087ll](/usc/20/1087ll.md) of this title) at that institution.
- (2) **Discussion of information—** A discussion of the information in an application described in [subsection (a)(1)](#a-1) (including any return information disclosed under [section 6103(l)(13)](/usc/26/6103.md?p=l-13) of title 26) of an [applicant](/usc/20/3982.md?p=1) between an [institution of higher education](/usc/20/1001.md?p=a) and the [applicant](/usc/20/3982.md?p=1) may, with the [written consent](#c-4-B) of the [applicant](/usc/20/3982.md?p=1), include an individual selected by the [applicant](/usc/20/3982.md?p=1) (such as an advisor) to participate in such discussion.
- (3) **Restriction on disclosing information—** A person receiving information under paragraph [(1)(B)](#c-1-B) or [(2)](#c-2) with respect to an [applicant](/usc/20/3982.md?p=1) shall not use the information for any purpose other than the express purpose for which consent was granted by the [applicant](/usc/20/3982.md?p=1) and shall not disclose such information to any other person without the express permission of, or request by, the [applicant](/usc/20/3982.md?p=1).
- (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](/cfr/34/668.2.md) (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](/usc/20/3982.md?p=1), which—
- (i) indicates that the information being disclosed includes return information disclosed under [section 6103(l)(13)](/usc/26/6103.md?p=l-13) of title 26 with respect to the [applicant](/usc/20/3982.md?p=1);
- (ii) [states](/usc/20/1003.md?p=21-A) the purpose for which the information is being disclosed; and
- (iii) [states](/usc/20/1003.md?p=21-A) that the information may only be used for the specific purpose and no other purposes.
- (5) **Record keeping requirement—** An [institution of higher education](/usc/20/1001.md?p=a) shall—
- (A) keep a record of each [written consent](#c-4-B) 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](/usc/20/1003.md?p=17).
# §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](/usc/20/1088.md?p=d-1) 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](/usc/20/1088.md?p=d-1) and active service.
- (c) **Reference—** References in this part to “the Act” are references to the Higher Education Act of 1965 ([20 U.S.C. 1001](/usc/20/1001.md) et seq.).
# §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](/usc/20/1003.md?p=17) of Education (referred to in this part as the “[Secretary](/usc/20/1003.md?p=17)”) may waive or modify any statutory or regulatory provision applicable to the student financial assistance programs under title IV of the Act [[20 U.S.C. 1070](/usc/20/1070.md) et seq.] as the [Secretary](/usc/20/1003.md?p=17) deems necessary in connection with a war or other [military operation](/usc/20/1088.md?p=d-2) or [national emergency](/usc/20/1088.md?p=d-3) to provide the waivers or modifications authorized by [paragraph (2)](#a-2).
- (2) **Actions authorized—** The [Secretary](/usc/20/1003.md?p=17) is authorized to waive or modify any provision described in [paragraph (1)](#a-1) as may be necessary to ensure that—
- (A) recipients of student financial assistance under title IV of the Act who are [affected individuals](/usc/20/1098ee.md?p=2) are not placed in a worse position financially in relation to that financial assistance because of their status as [affected individuals](/usc/20/1098ee.md?p=2);
- (B) administrative requirements placed on [affected individuals](/usc/20/1098ee.md?p=2) 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](/usc/20/1098ee.md?p=2) (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](/usc/20/1088.md?p=a-1) for which such determination is made, in order to reflect more accurately the financial condition of such [affected individual](/usc/20/1098ee.md?p=2) and his or her family;
- (D) the calculation under section 484B(b)(2) of the Act ([20 U.S.C. 1091b(b)(2)](/usc/20/1091b.md?p=b-2)) of the amount a student is required to return in the case of an [affected individual](/usc/20/1098ee.md?p=2) may be modified so that no overpayment will be required to be returned or repaid if the institution has documented (i) the student’s status as an [affected individual](/usc/20/1098ee.md?p=2) in the student’s file, and (ii) the amount of any overpayment discharged; and
- (E) institutions of higher education, [eligible lenders](/usc/20/1019.md?p=4), [guaranty agencies](/usc/20/1085.md?p=j), 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](/usc/20/1003.md?p=21-A) or local official in connection with a [national emergency](/usc/20/1088.md?p=d-3), 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](/usc/20/1088.md?p=d-3), including due diligence requirements and reporting deadlines.
- (b) **Notice of waivers or modifications—**
- (1) **In general—** Notwithstanding [section 1232 of this title](/usc/20/1232.md) and [section 553 of title 5](/usc/5/553.md), the [Secretary](/usc/20/1003.md?p=17) shall, by notice in the Federal Register, publish the waivers or modifications of statutory and regulatory provisions the [Secretary](/usc/20/1003.md?p=17) deems necessary to achieve the purposes of this section.
- (2) **Terms and conditions—** The notice under [paragraph (1)](#b-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](/usc/20/1003.md?p=17) is not required to exercise the waiver or modification authority under this section on a case-by-case basis.
- (c) **Impact report—** The [Secretary](/usc/20/1003.md?p=17) shall, not later than 15 months after first exercising any authority to issue a waiver or modification under [subsection (a)](#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)](#a) on [affected individuals](/usc/20/1098ee.md?p=2) and the programs under title IV of the Act [[20 U.S.C. 1070](/usc/20/1070.md) et seq.], and the basis for such determination, and include in such report the [Secretary](/usc/20/1003.md?p=17)’s recommendations for changes to the statutory or regulatory provisions that were the subject of such waiver or modification.
- (d) **No delay in waivers and modifications—** Sections 482(c) and 492 of the Higher Education Act of 1965 ([20 U.S.C. 1089(c)](/usc/20/1089.md?p=c), 1098a) shall not apply to the waivers and modifications authorized or required by this part.
# §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](/usc/20/1098ee.md?p=2) 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](/usc/20/1088.md?p=d-1) or active service; and
- (2) if [affected individuals](/usc/20/1098ee.md?p=2) withdraw from a course of study as a result of such [active duty](/usc/20/1088.md?p=d-1) 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.
# §1098dd. Use of professional judgment
A financial aid administrator shall be considered to be making a necessary adjustment in accordance with [section 1087tt(a) of this title](/usc/20/1087tt.md?p=a) if the administrator makes adjustments with respect to the calculation of the expected student or [parent](/usc/20/1021.md?p=16) contribution (or both) of an [affected individual](/usc/20/1098ee.md?p=2), and adequately documents the need for the adjustment.
# §1098ee. Definitions
In this part:
- (1) **Active duty—** The term “[active duty](/usc/20/1088.md?p=d-1)” has the meaning given such term in [section 101(d)(1) of title 10](/usc/10/101.md?p=d-1), except that such term does not include [active duty](/usc/20/1088.md?p=d-1) for training or attendance at a service [school](/usc/20/5802.md?p=a-11).
- (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](/usc/20/1088.md?p=d-4);
- (B) is performing [qualifying National Guard duty during a war or other military operation or national emergency](/usc/20/1088.md?p=d-5);
- (C) resides or is employed in an area that is declared a disaster area by any Federal, [State](/usc/20/1003.md?p=21-A), or local official in connection with a [national emergency](/usc/20/1088.md?p=d-3); or
- (D) suffered direct economic hardship as a direct result of a war or other [military operation](/usc/20/1088.md?p=d-2) or [national emergency](/usc/20/1088.md?p=d-3), as determined by the [Secretary](/usc/20/1003.md?p=17).
- (3) **Military operation—** The term “[military operation](/usc/20/1088.md?p=d-2)” means a contingency operation as such term is defined in [section 101(a)(13) of title 10](/usc/10/101.md?p=a-13).
- (4) **National emergency—** The term “[national emergency](/usc/20/1088.md?p=d-3)” means a [national emergency](/usc/20/1088.md?p=d-3) 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](/usc/20/1088.md?p=d-4)” shall include service by an individual who is—
- (A) a Reserve of an Armed Force ordered to [active duty](/usc/20/1088.md?p=d-1) under section [12301(a)](/usc/10/12301.md?p=a), [12301(g)](/usc/10/12301.md?p=g), [12302](/usc/10/12302.md), [12304](/usc/10/12304.md), or [12306](/usc/10/12306.md) of title 10 or any retired member of an Armed Force ordered to [active duty](/usc/20/1088.md?p=d-1) under [section 688](/usc/10/688.md) of such title, for service in connection with a war or other [military operation](/usc/20/1088.md?p=d-2) or [national emergency](/usc/20/1088.md?p=d-3), regardless of the location at which such [active duty](/usc/20/1088.md?p=d-1) service is performed; and
- (B) any other member of an Armed Force on [active duty](/usc/20/1088.md?p=d-1) 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](/usc/20/1088.md?p=d-5)” means service as a member of the National Guard on full-time National Guard duty (as defined in [section 101(d)(5) of title 10](/usc/10/101.md?p=d-5)) under a call to active service authorized by the President or the [Secretary](/usc/20/1003.md?p=17) of Defense for a period of more than 30 consecutive days under [section 502(f) of title 32](/usc/32/502.md?p=f), in connection with a war, another [military operation](/usc/20/1088.md?p=d-2), or a [national emergency](/usc/20/1088.md?p=d-3) declared by the President and supported by Federal [funds](/usc/20/4702.md?p=3).
# [§1099. Transferred — transferred]
# §1099a. State responsibilities
- (a) **State responsibilities—** As part of the integrity program authorized by this part, each [State](/usc/20/1003.md?p=21-A), through one [State](/usc/20/1003.md?p=21-A) agency or several [State](/usc/20/1003.md?p=21-A) agencies selected by the [State](/usc/20/1003.md?p=21-A), shall—
- (1) furnish the [Secretary](/usc/20/1003.md?p=17), upon request, information with respect to the process for licensing or other authorization for institutions of higher education to operate within the [State](/usc/20/1003.md?p=21-A);
- (2) notify the [Secretary](/usc/20/1003.md?p=17) promptly whenever the [State](/usc/20/1003.md?p=21-A) revokes a license or other authority to operate an [institution of higher education](/usc/20/1001.md?p=a); and
- (3) notify the [Secretary](/usc/20/1003.md?p=17) promptly whenever the [State](/usc/20/1003.md?p=21-A) has credible evidence that an [institution of higher education](/usc/20/1001.md?p=a) within the [State](/usc/20/1003.md?p=21-A)—
- (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](/usc/20/1001.md?p=a) shall provide evidence to the [Secretary](/usc/20/1003.md?p=17) that the institution has authority to operate within a [State](/usc/20/1003.md?p=21-A) at the time the institution is certified under subpart 3 of this part.
# §1099b. Recognition of accrediting agency or association
- (a) **Criteria required—** No accrediting agency or association may be determined by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) pursuant to this section. The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=21-A), 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](/usc/20/1003.md?p=21-A), 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](/usc/20/1003.md?p=4) 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](/usc/20/1003.md?p=21-A) agency approved by the [Secretary](/usc/20/1003.md?p=17) for the purpose described in [subparagraph (A)](#a-2-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](/usc/20/1003.md?p=17);
- (3) if such agency or association is an agency or association described in—
- (A) [subparagraph (A)(i)](#a-2-A-i) of paragraph (2), then such agency or association is [separate and independent](#b), both administratively and financially of any related, associated, or affiliated trade association or membership organization;
- (B) [subparagraph (B)](#a-2-B) of paragraph (2), then such agency or association has been recognized by the [Secretary](/usc/20/1003.md?p=17) on or before October 1, 1991; or
- (C) [subparagraph (C)](#a-2-C) of paragraph (2) and such agency or association has been recognized by the [Secretary](/usc/20/1003.md?p=17) on or before October 1, 1991, then the [Secretary](/usc/20/1003.md?p=17) may waive the requirement that such agency or association is [separate and independent](#b), 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](/usc/20/1001.md?p=a), including religious missions, and that ensure that the courses or programs of instruction, training, or study offered by the [institution of higher education](/usc/20/1001.md?p=a), including [distance education](/usc/20/1003.md?p=7-A) 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](/usc/20/1003.md?p=7-A) or correspondence education, such agency or association shall, in addition to meeting the other requirements of this subpart, demonstrate to the [Secretary](/usc/20/1003.md?p=17) that—
- (i) the agency or association’s standards effectively address the quality of an institution’s [distance education](/usc/20/1003.md?p=7-A) or correspondence education in the areas identified in [paragraph (5)](#a-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](/usc/20/1003.md?p=7-A) 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](/usc/20/1003.md?p=17), the agency or association shall not be required to obtain the approval of the [Secretary](/usc/20/1003.md?p=17) to expand its scope of accreditation to include [distance education](/usc/20/1003.md?p=7-A) or correspondence education, provided that the agency or association notifies the [Secretary](/usc/20/1003.md?p=17) in writing of the change in scope; and
- (ii) the agency or association requires an institution that offers [distance education](/usc/20/1003.md?p=7-A) or correspondence education to have processes through which the institution establishes that the student who registers in a [distance education](/usc/20/1003.md?p=7-A) 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](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=17), the results of financial or compliance audits, program reviews, and such other information as the [Secretary](/usc/20/1003.md?p=17) may provide to the agency or association;
except that subparagraphs [(A)](#a-5-A), [(H)](#a-5-H), and [(J)](#a-5-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](/usc/20/1001.md?p=a) 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)](#a-6-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)](#a-6-E) shall not be separately appealable by the institution or program;
- (7) such agency or association shall notify the [Secretary](/usc/20/1003.md?p=17) and the appropriate [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=17), and the [State](/usc/20/1003.md?p=21-A) 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)](#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](/usc/20/4702.md?p=2) or chief executive [officer](/usc/20/1094.md?p=i-5) of any related, associated, or affiliated trade association or membership organization;
- (2) among the membership of the [board](/usc/20/4702.md?p=2) 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](/usc/20/4702.md?p=2), 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=7-A);
- (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](/usc/20/1003.md?p=4) notifies the accrediting agency of an action against the institution pursuant to [section 1094(f) of this title](/usc/20/1094.md?p=f);
- (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](/usc/20/1001.md?p=a) 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](/usc/20/1001.md?p=a), 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](/usc/20/1003.md?p=21-A) licensing or authorizing agency, and submits to the [Secretary](/usc/20/1003.md?p=17), 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](/usc/20/1001.md?p=a) 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](/usc/20/1001.md?p=a).
- (d) **Length of recognition—** No accrediting agency or association may be recognized by the [Secretary](/usc/20/1003.md?p=17) for the purpose of this chapter for a period of more than 5 years.
- (e) **Initial arbitration rule—** The [Secretary](/usc/20/1003.md?p=17) may not recognize the accreditation of any [institution of higher education](/usc/20/1001.md?p=a) unless the [institution of higher education](/usc/20/1001.md?p=a) 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](/usc/20/1001.md?p=a) seeking accreditation from, or accredited by, an accrediting agency or association recognized by the [Secretary](/usc/20/1003.md?p=17) for the purpose of this subchapter and involving the denial, withdrawal, or termination of accreditation of the [institution of higher education](/usc/20/1001.md?p=a), 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) shall not recognize the accreditation of any otherwise [eligible institution](/usc/20/1066a.md?p=1) of higher education if the [institution of higher education](/usc/20/1001.md?p=a) is in the process of changing its accrediting agency or association, unless the [eligible institution](/usc/20/1066a.md?p=1) submits to the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) shall not recognize the accreditation of any otherwise [eligible institution](/usc/20/1066a.md?p=1) of higher education if the [institution of higher education](/usc/20/1001.md?p=a) 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](/usc/20/1003.md?p=17) the reasons for accreditation by more than one such agency or association and demonstrates to the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1001.md?p=a) under [section 1002 of this title](/usc/20/1002.md) and subpart 3 of this part or participate in any of the other programs authorized by this chapter if such institution—
- (1) is not currently accredited by any agency or association recognized by the [Secretary](/usc/20/1003.md?p=17);
- (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)](#j), the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1001.md?p=a) under [section 1002 of this title](/usc/20/1002.md) and subpart 3 of this part for a period sufficient to allow such institution to obtain alternative accreditation, if the [Secretary](/usc/20/1003.md?p=17) determines that the reason for the withdrawal, revocation, or termination—
- (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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17), except that—
- (i) such timeframe shall not exceed 12 months unless the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) shall, after notice and opportunity for a hearing, limit, suspend, or terminate the recognition of the agency or association.
- (2) The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1001.md?p=a) 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)](#a-2-A-i), [(2)(B)](#a-2-B), or [(2)(C)](#a-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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=4) of Education or other Federal agencies.
- (n) **Independent evaluation—**
- (1) The [Secretary](/usc/20/1003.md?p=17) shall conduct a comprehensive review and evaluation of the performance of all accrediting agencies or associations which seek recognition by the [Secretary](/usc/20/1003.md?p=17) in order to determine whether such accrediting agencies or associations meet the criteria established by this section. The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17)’s discretion, at representative member institutions.
- (2) The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) shall take these deficiencies into account in the recognition process. The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) decides to recognize an accrediting agency or association, the [Secretary](/usc/20/1003.md?p=17) shall determine the agency or association’s scope of recognition. If the agency or association reviews institutions offering [distance education](/usc/20/1003.md?p=7-A) courses or programs and the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=7-A) courses or programs.
- (4) The [Secretary](/usc/20/1003.md?p=17) shall maintain sufficient documentation to support the conclusions reached in the recognition process, and, if the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) shall by regulation provide procedures for the recognition of accrediting agencies or associations and for the appeal of the [Secretary](/usc/20/1003.md?p=17)’s decisions. Notwithstanding any other provision of law, the [Secretary](/usc/20/1003.md?p=17) shall not promulgate any regulation with respect to the standards of an accreditation agency or association described in [subsection (a)(5)](#a-5).
- (p) **Rule of construction—** Nothing in [subsection (a)(5)](#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](/usc/20/1003.md?p=17) 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)](#a-4-B-i-II) if the enrollment of an institution that offers [distance education](/usc/20/1003.md?p=7-A) or correspondence education that is accredited by such agency or association increases by 50 percent or more within any one institutional fiscal year.
# §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](/usc/20/1003.md?p=17) shall determine the legal authority to operate within a [State](/usc/20/1003.md?p=21-A), the accreditation status, and the administrative capability and financial responsibility of an [institution of higher education](/usc/20/1001.md?p=a) in accordance with the requirements of this section.
- (b) **Single application form—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1001.md?p=a) are met;
- (2) requires a specific description of the relationship between a main campus of an [institution of higher education](/usc/20/1001.md?p=a) 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](/usc/20/1088.md?p=c) of an [institution of higher education](/usc/20/1001.md?p=a); 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](/usc/20/1003.md?p=17) upon request;
- (4) requires such other information as the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) for liabilities and debts incurred in programs administered by the [Secretary](/usc/20/1003.md?p=17).
- (2) Notwithstanding [paragraph (1)](#c-1), if an institution fails to meet criteria prescribed by the [Secretary](/usc/20/1003.md?p=17) regarding ratios that demonstrate financial responsibility, then the institution shall provide the [Secretary](/usc/20/1003.md?p=17) with satisfactory evidence of its financial responsibility in accordance with [paragraph (3)](#c-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](/usc/20/1003.md?p=13) institutions. The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) shall determine an institution to be financially responsible, notwithstanding the institution’s failure to meet the criteria under paragraphs [(1)](#c-1) and [(2)](#c-2), if—
- (A) such institution submits to the [Secretary](/usc/20/1003.md?p=17) third-party financial guarantees that the [Secretary](/usc/20/1003.md?p=17) determines are reasonable, such as performance bonds or letters of credit payable to the [Secretary](/usc/20/1003.md?p=17), which third-party financial guarantees shall equal not less than one-half of the annual potential liabilities of such institution to the [Secretary](/usc/20/1003.md?p=17) for [funds](/usc/20/4702.md?p=3) under this subchapter, including loan obligations discharged pursuant to [section 1087 of this title](/usc/20/1087.md), and to students for refunds of institutional charges, including [funds](/usc/20/4702.md?p=3) under this subchapter;
- (B) such institution has its liabilities backed by the full faith and credit of a [State](/usc/20/1003.md?p=21-A), or its equivalent;
- (C) such institution establishes to the satisfaction of the [Secretary](/usc/20/1003.md?p=17), 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](/usc/20/1003.md?p=17) for liabilities and debts incurred in programs administered by the [Secretary](/usc/20/1003.md?p=17)); or
- (D) such institution has met standards of financial responsibility, prescribed by the [Secretary](/usc/20/1003.md?p=17) by regulation, that indicate a level of financial strength not less than those required in [paragraph (2)](#c-2).
- (4) If an [institution of higher education](/usc/20/1001.md?p=a) 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](/usc/20/1003.md?p=17) pursuant to [paragraph (2)](#c-2), the [Secretary](/usc/20/1003.md?p=17) shall waive that particular requirement for that institution if the institution demonstrates to the satisfaction of the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17), payroll, and payment of trade creditors and withholding taxes; and
- (C) it has substantial equity in [school](/usc/20/5802.md?p=a-11)-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)](#c-2) and [(3)(C)](#c-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](/usc/20/9101.md?p=6) of Certified Public Accountants. Such statement shall be submitted to the [Secretary](/usc/20/1003.md?p=17) 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)](#c-2), the [Secretary](/usc/20/1003.md?p=17) may require that additional audits be submitted.
- (6)
- (A) The [Secretary](/usc/20/1003.md?p=17) shall establish requirements for the maintenance by an [institution of higher education](/usc/20/1001.md?p=a) of sufficient cash reserves to ensure repayment of any required refunds.
- (B) The [Secretary](/usc/20/1003.md?p=17) shall provide for a process under which the [Secretary](/usc/20/1003.md?p=17) shall exempt an [institution of higher education](/usc/20/1001.md?p=a) from the requirements described in [subparagraph (A)](#c-6-A) if the [Secretary](/usc/20/1003.md?p=17) determines that the institution—
- (i) is located in a [State](/usc/20/1003.md?p=21-A) that has a tuition recovery [fund](/usc/20/4702.md?p=3) that ensures that the institution meets the requirements of [subparagraph (A)](#c-6-A);
- (ii) contributes to the [fund](/usc/20/4702.md?p=3); and
- (iii) otherwise has legal authority to operate within the [State](/usc/20/1003.md?p=21-A).
- (d) **Administrative capacity standard—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) determines will contribute to ensuring that the [institution of higher education](/usc/20/1001.md?p=a) will comply with administrative capability required by this subchapter.
- (e) **Financial guarantees from owners—**
- (1) Notwithstanding any other provision of law, the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) determines, in accordance with [paragraph (2)](#e-2), exercise substantial control over such institution, or both, in an amount determined by the [Secretary](/usc/20/1003.md?p=17) to be sufficient to satisfy the institution’s potential liability to the Federal Government, student assistance recipients, and other program participants for [funds](/usc/20/4702.md?p=3) 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](/usc/20/1003.md?p=17) in accordance with [paragraph (2)](#e-2), for financial losses to the Federal Government, student assistance recipients, and other program participants for [funds](/usc/20/4702.md?p=3) under this subchapter, and civil and criminal monetary penalties authorized under this subchapter.
- (2)
- (A) The [Secretary](/usc/20/1003.md?p=17) may determine that an individual exercises substantial control over one or more institutions participating in a program under this subchapter if the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/4702.md?p=2) of [directors](/usc/20/9101.md?p=3), the chief executive [officer](/usc/20/1094.md?p=i-5), or other executive [officer](/usc/20/1094.md?p=i-5) of the institution or of an entity that holds a substantial ownership interest in the institution.
- (B) The [Secretary](/usc/20/1003.md?p=17) may determine that an entity exercises substantial control over one or more institutions participating in a program under this subchapter if the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1021.md?p=16) 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](/usc/20/1003.md?p=17) shall not impose the requirements described in subparagraphs [(A)](#e-1-A) and [(B)](#e-1-B) of paragraph (1) on an institution that—
- (A) has not been subjected to a limitation, suspension, or termination action by the [Secretary](/usc/20/1003.md?p=17) or a [guaranty agency](/usc/20/1085.md?p=j) 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](/usc/20/4702.md?p=3) 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)](#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 [section 1094(c)(1)(G) of this title](/usc/20/1094.md?p=c-1-G), this section shall also apply to individuals or organizations that contract with an institution to administer any aspect of an institution’s student assistance program under this subchapter.
- (6) Notwithstanding any other provision of law, any individual who—
- (A) the [Secretary](/usc/20/1003.md?p=17) determines, in accordance with [paragraph (2)](#e-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](/usc/20/1003.md?p=17); 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](/usc/20/1003.md?p=17) 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 [section 6672(a) of title 26](/usc/26/6672.md?p=a) with respect to the nonpayment of taxes.
- (f) **Actions on applications and site visits—** The [Secretary](/usc/20/1003.md?p=17) shall ensure that prompt action is taken by the [Department](/usc/20/1003.md?p=4) on any application required under [subsection (b)](#b). The personnel of the [Department](/usc/20/1003.md?p=4) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=21-A), [guaranty agencies](/usc/20/1085.md?p=j), 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) shall notify each [institution of higher education](/usc/20/1001.md?p=a) 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](/usc/20/1003.md?p=17) shall promulgate regulations regarding the recertification requirements applicable to an [institution of higher education](/usc/20/1001.md?p=a) outside of the United States that meets the requirements of [section 1002(a)(1)(C) of this title](/usc/20/1002.md?p=a-1-C) and received less than $500,000 in [funds](/usc/20/4702.md?p=3) under part B for the most recent year for which data are available.
- (h) **Provisional certification of institutional eligibility—**
- (1) Notwithstanding subsections [(d)](#d) and [(g)](#g), the [Secretary](/usc/20/1003.md?p=17) may provisionally certify an institution’s eligibility to participate in programs under this subchapter—
- (A) for not more than one complete [award year](/usc/20/1088.md?p=a-1) in the case of an [institution of higher education](/usc/20/1001.md?p=a) seeking an initial certification; and
- (B) for not more than 3 complete [award years](/usc/20/1088.md?p=a-1) 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)](#i), of an [eligible institution](/usc/20/1066a.md?p=1); or
- (iii) the [Secretary](/usc/20/1003.md?p=17) determines that an institution that seeks to renew its certification is, in the judgment of the [Secretary](/usc/20/1003.md?p=17), 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](/usc/20/1003.md?p=17) withdraws the recognition of any accrediting agency, an [institution of higher education](/usc/20/1001.md?p=a) which meets the requirements of accreditation, eligibility, and certification on the day prior to such withdrawal, the [Secretary](/usc/20/1003.md?p=17) may, notwithstanding the withdrawal, continue the eligibility of the [institution of higher education](/usc/20/1001.md?p=a) 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](/usc/20/1003.md?p=17) determines that the institution is unable to meet its responsibilities under its program participation agreement, the [Secretary](/usc/20/1003.md?p=17) may terminate the institution’s participation in programs under this subchapter.
- (i) **Treatment of changes of ownership—**
- (1) An [eligible institution](/usc/20/1066a.md?p=1) 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)](#i-3)) unless it establishes that it meets the requirements of [section 1002 of this title](/usc/20/1002.md) (other than the requirements in subsections [(b)(5)](#b-5) and [(c)(3)](#c-3)[^1]) and this section after such change in control.
- (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](/usc/20/1087vv.md?p=f-2);
- (B) the transfer of the controlling interest of stock of the institution or its [parent](/usc/20/1021.md?p=16) corporation;
- (C) the merger of two or more [eligible institutions](/usc/20/1066a.md?p=1);
- (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](/usc/20/1021.md?p=16) corporation; or
- (F) the transfer of the liabilities of the institution to its [parent](/usc/20/1021.md?p=16) 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](/usc/20/1003.md?p=17) to be a routine business practice.
- (4)
- (A) The [Secretary](/usc/20/1003.md?p=17) may provisionally certify an institution seeking approval of a change in ownership based on the preliminary review by the [Secretary](/usc/20/1003.md?p=17) of a materially complete application that is received by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) has not issued a decision on the application for the change of ownership within that period, the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1066a.md?p=1) of higher education, as defined pursuant to regulations of the [Secretary](/usc/20/1003.md?p=17), 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 sections [1002(b)(1)(E)](/usc/20/1002.md?p=b-1-E) and [1002(c)(1)(C)](/usc/20/1002.md?p=c-1-C) of this title prior to seeking such certification. Such branch is required to be in existence at least 2 years after the branch is certified by the [Secretary](/usc/20/1003.md?p=17) as a branch campus participating in a program under this subchapter, prior to seeking certification as a main campus or free-standing institution.
- (2) The [Secretary](/usc/20/1003.md?p=17) may waive the requirement of [section 1001(a)(2) of this title](/usc/20/1001.md?p=a-2) for a branch that (A) is not located in a [State](/usc/20/1003.md?p=21-A), (B) is affiliated with an [eligible institution](/usc/20/1066a.md?p=1), and (C) was participating in one or more programs under this subchapter on or before January 1, 1992.
- (k) **Treatment of teach-outs at additional locations—**
- (1) **In general—** A location of a closed [institution of higher education](/usc/20/1001.md?p=a) shall be eligible as an additional location of an [eligible institution](/usc/20/1066a.md?p=1) of higher education, as defined pursuant to regulations of the [Secretary](/usc/20/1003.md?p=17), for the purposes of a teach-out described in [section 1094(f) of this title](/usc/20/1094.md?p=f), if such teach-out has been approved by the institution’s accrediting agency.
- (2) **Special rule—** An [institution of higher education](/usc/20/1001.md?p=a) that conducts a teach-out through the establishment of an additional location described in [paragraph (1)](#k-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 sections [1002(b)(1)(E)](/usc/20/1002.md?p=b-1-E) and [1002(c)(1)(C)](/usc/20/1002.md?p=c-1-C) of this title for such additional location; or
- (B) to assume the liabilities of the closed institution.
# §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](/usc/20/1003.md?p=17)—
- (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](/usc/20/1085.md?p=m-1-A) 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](/usc/20/1003.md?p=21-A) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=4);
- (B) all relevant information made available by the [Secretary](/usc/20/1003.md?p=17) of Veterans Affairs;
- (C) all relevant information from accrediting agencies or associations;
- (D) all relevant information available from a [guaranty agency](/usc/20/1085.md?p=j); and
- (E) all relevant information available from [States](/usc/20/1003.md?p=21-A) under subpart 1 of this part.
- (b) **Special administrative rules—** In carrying out paragraphs [(1)](#a-1) and [(2)](#a-2) of subsection (a) and any other relevant provisions of this subchapter, the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1001.md?p=a) resulting from a program review or audit on the gravity of the violation, failure, or misrepresentation;
- (5) inform the appropriate [State](/usc/20/1003.md?p=21-A) and accrediting agency or association whenever the [Secretary](/usc/20/1003.md?p=17) takes action against an [institution of higher education](/usc/20/1001.md?p=a) under this section, [section 1099c of this title](/usc/20/1099c.md), or [section 1082 of this title](/usc/20/1082.md);
- (6) provide to an [institution of higher education](/usc/20/1001.md?p=a) 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](/usc/20/1001.md?p=a)’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](/usc/20/1001.md?p=a)’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)](#b-6) and [(7)](#b-7) are met, and until a final program review is issued, other than to the extent required to comply with [paragraph (5)](#b-5), except that the [Secretary](/usc/20/1003.md?p=17) shall promptly disclose any and all program review reports to the [institution of higher education](/usc/20/1001.md?p=a) under review.
- (c) **Data collection rules—** The [Secretary](/usc/20/1003.md?p=17) shall develop and carry out a plan for the data collection responsibilities described in [paragraph (3)](#a-3) of subsection (a). The [Secretary](/usc/20/1003.md?p=17) shall make the information obtained under such [paragraph (3)](#a-3) readily available to all institutions of higher education, [guaranty agencies](/usc/20/1085.md?p=j), [States](/usc/20/1003.md?p=21-A), and other organizations participating in the programs authorized by this subchapter.
- (d) **Training—** The [Secretary](/usc/20/1003.md?p=17) shall provide training to personnel of the [Department](/usc/20/1003.md?p=4), 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 [section 3403(b) of this title](/usc/20/3403.md?p=b) shall not apply to Secretarial determinations made regarding the appropriate length of instruction for programs measured in clock hours.
# §1099c–2. Review of regulations
- (a) **Review required—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) shall review and evaluate ways in which regulations under and provisions of this chapter affecting [institution of higher education](/usc/20/1001.md?p=a) (other than institutions described in [section 1002(a)(1)(C) of this title](/usc/20/1002.md?p=a-1-C)), that have received in each of the two most recent [award years](/usc/20/1088.md?p=a-1) prior to October 7, 1998, less than $200,000 in [funds](/usc/20/4702.md?p=3) through this subchapter, may be improved, streamlined, or eliminated.
- (c) **Consultation—** In carrying out subsections [(a)](#a) and [(b)](#b), the [Secretary](/usc/20/1003.md?p=17) shall consult with relevant representatives of institutions participating in the programs authorized by this subchapter.
# §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 [section 1078–2 of this title](/usc/20/1078–2.md) made to a [parent](/usc/20/1021.md?p=16) of a dependent student who is a [new borrower](/usc/20/1003.md?p=12) on or after July 1, 2009.
- (2) **Eligible lender—** The term “[eligible lender](/usc/20/1019.md?p=4)” has the meaning given the term in [section 1085 of this title](/usc/20/1085.md).
- (b) **Pilot program—** The [Secretary](/usc/20/1003.md?p=17) shall carry out a pilot program under which the [Secretary](/usc/20/1003.md?p=17) establishes a mechanism for an auction of [eligible Federal PLUS Loans](#a-1) 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](/usc/20/1003.md?p=17) shall plan and implement the pilot program under this subsection. During the planning and implementation, the [Secretary](/usc/20/1003.md?p=17) shall consult with other Federal agencies with knowledge of, and experience with, auction programs, including the Federal Communication [Commission](/usc/20/9701.md?p=2) and the [Department](/usc/20/1003.md?p=4) of the Treasury.
- (2) **Origination and disbursement; applicability of section 1078–2—** Beginning on July 1, 2009, the [Secretary](/usc/20/1003.md?p=17) shall arrange for the origination and disbursement of all [eligible Federal PLUS Loans](#a-1) in accordance with the provisions of this subsection and the provisions of [section 1078–2 of this title](/usc/20/1078–2.md) that are not inconsistent with this subsection.
- (3) **Loan origination mechanism—** The [Secretary](/usc/20/1003.md?p=17) shall establish a loan origination auction mechanism that meets the following requirements:
- (A) **Auction for each State—** The [Secretary](/usc/20/1003.md?p=17) administers an auction under this paragraph for each [State](/usc/20/1003.md?p=21-A), under which [eligible lenders](/usc/20/1019.md?p=4) compete to originate [eligible Federal PLUS Loans](#a-1) under this paragraph at all institutions of higher education within such [State](/usc/20/1003.md?p=21-A).
- (B) **Prequalification process—** The [Secretary](/usc/20/1003.md?p=17) establishes a prequalification process for [eligible lenders](/usc/20/1019.md?p=4) 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](/usc/20/1019.md?p=4) shall meet in order to participate in such an auction;
- (ii) an assessment of each such [eligible lender](/usc/20/1019.md?p=4)’s capacity, including capital capacity, to participate effectively; and
- (iii) a commitment from such [eligible lender](/usc/20/1019.md?p=4) that, if the lender has a winning bid under [subparagraph (F)](#b-3-F), the lender will enter into the agreement required under [subparagraph (G)](#b-3-G).
- (C) **Timing and origination—** Each [State](/usc/20/1003.md?p=21-A) auction takes place every 2 years, and the [eligible lenders](/usc/20/1019.md?p=4) with the winning bids for the [State](/usc/20/1003.md?p=21-A) are the only [eligible lenders](/usc/20/1019.md?p=4) permitted to originate [eligible Federal PLUS Loans](#a-1) made under this paragraph for the cohort of students at the institutions of higher education within the [State](/usc/20/1003.md?p=21-A) until the students graduate from or leave the institutions of higher education.
- (D) **Bids—** Each [eligible lender](/usc/20/1019.md?p=4)’s bid consists of the amount of the special allowance payment (after the application of [section 1087–1(b)(2)(I)(v) of this title](/usc/20/1087–1.md?p=b-2-I-v)) the [eligible lender](/usc/20/1019.md?p=4) proposes to accept from the [Secretary](/usc/20/1003.md?p=17) with respect to the [eligible Federal PLUS Loans](#a-1) made under this paragraph in lieu of the amount determined under [section 1087–1(b)(2)(I) of this title](/usc/20/1087–1.md?p=b-2-I).
- (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](#a-1) made under this paragraph computed under [section 1087–1(b)(2)(I) of this title](/usc/20/1087–1.md?p=b-2-I) (other than clauses [(ii)](/usc/20/1087–1.md?p=b-2-I-ii), [(iii)](/usc/20/1087–1.md?p=b-2-I-iii), [(iv)](/usc/20/1087–1.md?p=b-2-I-iv), and [(vi)](/usc/20/1087–1.md?p=b-2-I-vi) of such section), except that for purposes of the computation under this subparagraph, [section 1087–1(b)(2)(I)(i)(III) of this title](/usc/20/1087–1.md?p=b-2-I-i-III) shall be applied by substituting “1.79 percent” for “2.34 percent”.
- (F) **Winning bids—** The winning bids for each [State](/usc/20/1003.md?p=21-A) auction shall be the 2 bids containing the lowest and the second lowest proposed special allowance payments, subject to [subparagraph (E)](#b-3-E).
- (G) **Agreement with Secretary; compliance—**
- (i) **Agreement—** Each [eligible lender](/usc/20/1019.md?p=4) having a winning bid under [subparagraph (F)](#b-3-F) shall enter into an agreement with the [Secretary](/usc/20/1003.md?p=17) under which the [eligible lender](/usc/20/1019.md?p=4)—
- (I) agrees to originate [eligible Federal PLUS Loans](#a-1) under this paragraph to each borrower who—
- (aa) seeks an [eligible Federal PLUS Loan](#a-1) under this paragraph to enable a dependent student to attend an [institution of higher education](/usc/20/1001.md?p=a) within the [State](/usc/20/1003.md?p=21-A);
- (bb) is eligible for an [eligible Federal PLUS Loan](#a-1); and
- (cc) elects to borrow from the [eligible lender](/usc/20/1019.md?p=4); and
- (II) agrees to accept a special allowance payment (after the application of [section 1087–1(b)(2)(I)(v) of this title](/usc/20/1087–1.md?p=b-2-I-v)) from the [Secretary](/usc/20/1003.md?p=17) with respect to the [eligible Federal PLUS Loans](#a-1) originated under [subclause (I)](#b-3-G-i-I) in the amount proposed in the second lowest winning bid described in [subparagraph (F)](#b-3-F) for the applicable [State](/usc/20/1003.md?p=21-A) auction.
- (ii) **Compliance—** If an [eligible lender](/usc/20/1019.md?p=4) with a winning bid under [subparagraph (F)](#b-3-F) fails to enter into the agreement required under [clause (i)](#b-3-G-i), or fails to comply with the terms of such agreement, the [Secretary](/usc/20/1003.md?p=17) may sanction such [eligible lender](/usc/20/1019.md?p=4) through one or more of the following:
- (I) The assessment of a penalty on such [eligible lender](/usc/20/1019.md?p=4) for any [eligible Federal PLUS Loans](#a-1) that such [eligible lender](/usc/20/1019.md?p=4) fails to originate under this paragraph in accordance with the agreement required under [clause (i)](#b-3-G-i), in the amount of the additional costs (including the amounts of any increase in special allowance payments) incurred by the [Secretary](/usc/20/1003.md?p=17) in obtaining another [eligible lender](/usc/20/1019.md?p=4) to originate such [eligible Federal PLUS Loans](#a-1). The [Secretary](/usc/20/1003.md?p=17) shall collect such penalty by—
- (aa) reducing the amount of any payments otherwise due to such [eligible lender](/usc/20/1019.md?p=4) from the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1019.md?p=4) from such agency by the amount of the penalty, in accordance with [section 3716 of title 31](/usc/31/3716.md).
- (II) A prohibition of bidding by such lender in other auctions under this section.
- (III) The limitation, suspension, or termination of such [eligible lender](/usc/20/1019.md?p=4)’s participation in the loan program under part B.
- (IV) Any other enforcement action the [Secretary](/usc/20/1003.md?p=17) is authorized to take under part B.
- (H) **Sealed bids; confidentiality—** All bids are sealed and the [Secretary](/usc/20/1003.md?p=17) 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)](#b-3-F), the students at the institutions of higher education within the [State](/usc/20/1003.md?p=21-A) that was the subject of the auction shall be served by an [eligible lender](/usc/20/1019.md?p=4) of last resort, as determined by the [Secretary](/usc/20/1003.md?p=17).
- (ii) **Determination of eligible lender of last resort—** Prior to the start of any auction under this paragraph, [eligible lenders](/usc/20/1019.md?p=4) that desire to serve as an [eligible lender](/usc/20/1019.md?p=4) of last resort shall submit an application to the [Secretary](/usc/20/1003.md?p=17) at such time and in such manner as the [Secretary](/usc/20/1003.md?p=17) may determine. Such application shall include an assurance that the [eligible lender](/usc/20/1019.md?p=4) will meet the prequalification requirements described in [subparagraph (B)](#b-3-B).
- (iii) **Geographic location—** The [Secretary](/usc/20/1003.md?p=17) shall identify an [eligible lender](/usc/20/1019.md?p=4) of last resort for each [State](/usc/20/1003.md?p=21-A).
- (iv) **Notification timing—** The [Secretary](/usc/20/1003.md?p=17) shall not identify any [eligible lender](/usc/20/1019.md?p=4) of last resort until after the announcement of all the winning bids for a [State](/usc/20/1003.md?p=21-A) auction for any year.
- (v) **Maximum special allowance—** The [Secretary](/usc/20/1003.md?p=17) is authorized to set a special allowance payment that shall be payable to a lender of last resort for a [State](/usc/20/1003.md?p=21-A) under this subparagraph, which special allowance payment shall be kept confidential, including following the announcement of winning bids. The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=21-A) and the lowest bid submitted in a similar [State](/usc/20/1003.md?p=21-A), as determined by the [Secretary](/usc/20/1003.md?p=17).
- (J) **Guarantee against losses—** Each [eligible Federal PLUS Loan](#a-1) originated under this paragraph shall be insured by a [guaranty agency](/usc/20/1085.md?p=j) in accordance with part B, except that, notwithstanding [section 1078(b)(1)(G) of this title](/usc/20/1078.md?p=b-1-G), such insurance shall be in an amount equal to 99 percent of the unpaid principal and interest due on the loan.
- (K) **Loan fees—** The [Secretary](/usc/20/1003.md?p=17) shall not collect a loan fee under [section 1087–1(d) of this title](/usc/20/1087–1.md?p=d) with respect to an [eligible Federal Plus Loan](#a-1) originated under this paragraph.
- (L) **Consolidation—**
- (i) **In general—** An [eligible lender](/usc/20/1019.md?p=4) who is permitted to originate [eligible Federal PLUS Loans](#a-1) 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](#a-1) made under this paragraph wishes to consolidate the loans, the borrower shall notify the [eligible lender](/usc/20/1019.md?p=4) who originated the loans under this paragraph.
- (iii) **Limitation on eligible lender option to consolidate—** The option described in [clause (i)](#b-3-L-i) shall not apply if—
- (I) the borrower includes in the notification in [clause (ii)](#b-3-L-ii) verification of consolidation terms and conditions offered by an [eligible lender](/usc/20/1019.md?p=4) other than the [eligible lender](/usc/20/1019.md?p=4) described in [clause (i)](#b-3-L-i); and
- (II) not later than 10 days after receiving such notification from the borrower, the [eligible lender](/usc/20/1019.md?p=4) described in [clause (i)](#b-3-L-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)](#b-3-L-iii-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 [section 1078–2 of this title](/usc/20/1078–2.md) and seeks to consolidate such loan with an [eligible Federal PLUS Loan](#a-1) made under this paragraph, then the [eligible lender](/usc/20/1019.md?p=4) that originated the borrower’s loan under this paragraph may include in the consolidation under this subparagraph a Federal Direct PLUS Loan or a loan made on behalf of a dependent student under [section 1078–2 of this title](/usc/20/1078–2.md), but only if—
- (I) in the case of a Federal Direct PLUS Loan, the [eligible lender](/usc/20/1019.md?p=4) 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 [section 1078–2 of this title](/usc/20/1078–2.md), the [eligible lender](/usc/20/1019.md?p=4) agrees, not later than 10 days after the borrower requests such consolidation from the lender, to match the consolidation terms and conditions offered by an [eligible lender](/usc/20/1019.md?p=4) other than the [eligible lender](/usc/20/1019.md?p=4) that originated the borrower’s loans under this paragraph.
- (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](/usc/20/1003.md?p=17) 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 [section 1078–3 of this title](/usc/20/1078–3.md) consolidated under this paragraph shall not be subject to the interest payment rebate fee under [section 1078–3(f) of this title](/usc/20/1078–3.md?p=f).
- (c) **Required initial evaluation—** The [Secretary](/usc/20/1003.md?p=17) and [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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 [section 1078–2 of this title](/usc/20/1078–2.md) in the absence of the pilot program;
- (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](/usc/20/1003.md?p=21-A);
- (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](/usc/20/1021.md?p=16) 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](/usc/20/1003.md?p=21-A), including between rural and non-rural [States](/usc/20/1003.md?p=21-A); 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](/usc/20/1003.md?p=17) and the [Secretary](/usc/20/1003.md?p=17) of the Treasury shall submit to the [authorizing committees](/usc/20/1003.md?p=1)—
- (A) not later than September 1, 2010, a preliminary report regarding the findings of the evaluation described in [subsection (c)](#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](/usc/20/1003.md?p=17) shall include, in each report required under subparagraphs [(A)](#d-1-A), [(B)](#d-1-B), and [(C)](#d-1-C) of paragraph (1), any recommendations, that are based on the findings of the evaluation under [subsection (c)](#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.