---
kind: "section"
citation: "20 U.S.C. § 1087dd"
title: "20"
title_heading: "Education"
number: "1087dd"
heading: "Terms of loans"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/20/1087dd"
units:
  - "Chapter 28 — Higher Education Resources and Student Assistance"
  - "Subchapter IV — Student Assistance"
  - "Part E — Federal Perkins Loans"
---

# §1087dd. Terms of loans

- (a) **Terms and conditions—**
  - (1) [Loans](/usc/20/1066a.md?p=2) from any student [loan](/usc/20/1066a.md?p=2) fund 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](/usc/20/1066a.md?p=2) 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](/usc/20/1066a.md?p=2) fund established pursuant to an agreement under this part shall not exceed—
      - (i) $5,500, in the case of a student who has not successfully completed a program of undergraduate education; or
      - (ii) $8,000, in the case of a [graduate](/usc/20/1061.md?p=1) 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](/usc/20/1066a.md?p=2) made to a student by institutions of higher education from [loan](/usc/20/1066a.md?p=2) funds established pursuant to agreements under this part may not exceed—
      - (i) $60,000, in the case of any [graduate](/usc/20/1061.md?p=1) or professional student (as defined by regulations issued by the [Secretary](/usc/20/1003.md?p=17), and including any [loans](/usc/20/1066a.md?p=2) from such funds made to such person before such person became a [graduate](/usc/20/1061.md?p=1) 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](/usc/20/1066a.md?p=2) from such funds made to such person before such person became such a student; and
      - (iii) $11,000, in the case of any other student.
  - (3) Regulations of the [Secretary](/usc/20/1003.md?p=17) under [paragraph (1)](#a-1) shall be designed to prevent the impairment of the capital student [loan](/usc/20/1066a.md?p=2) funds to the maximum extent practicable and with a view toward the objective of enabling the student to complete his course of study.
  - (4) In the case of a program of study abroad that is approved for credit by the home institution at which a student is enrolled and that has reasonable costs in excess of the home institution’s budget, the annual and aggregate [loan](/usc/20/1066a.md?p=2) 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](/usc/20/1066a.md?p=2) from a student [loan](/usc/20/1066a.md?p=2) fund assisted under this part may be made only to a student who demonstrates financial need in accordance with part F of this subchapter, who meets the requirements of [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](/usc/20/1066a.md?p=2). A student who is in [default](/usc/20/1085.md?p=l) on a [loan](/usc/20/1066a.md?p=2) under this part shall not be eligible for an additional [loan](/usc/20/1066a.md?p=2) under this part unless such [loan](/usc/20/1066a.md?p=2) 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](/usc/20/1087vv.md?p=d) students, then a reasonable portion of the [loans](/usc/20/1066a.md?p=2) made from the institution’s student [loan](/usc/20/1066a.md?p=2) fund 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](/usc/20/1066a.md?p=2) from a student [loan](/usc/20/1066a.md?p=2) fund 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](/usc/20/1066a.md?p=2), together with [interest](/usc/20/1066a.md?p=6) 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](/usc/20/1066a.md?p=2), 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](/usc/20/1066a.md?p=2), payments of principal and [interest](/usc/20/1066a.md?p=6) by the borrower with respect to all [outstanding](/usc/20/1066a.md?p=7) [loans](/usc/20/1066a.md?p=2) made to the student from a student [loan](/usc/20/1066a.md?p=2) fund assisted under this part shall be at a rate equal to not less than $40 per month, except that the institution may, subject to such regulations, permit a borrower to pay less than $40 per month for a period of not more than one year where necessary to avoid hardship to the borrower, but without extending the 10-year maximum repayment period provided for in subparagraph (A) of this paragraph; and
      - (ii) may provide that the total payments by a borrower for a monthly or similar payment period with respect to the aggregate of all [loans](/usc/20/1066a.md?p=2) 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](/usc/20/1066a.md?p=2) shall bear [interest](/usc/20/1066a.md?p=6), on the unpaid balance of the [loan](/usc/20/1066a.md?p=2), at the rate of 5 percent per year in the case of any [loan](/usc/20/1066a.md?p=2) made on or after October 1, 1981, except that no [interest](/usc/20/1066a.md?p=6) shall accrue (i) prior to the beginning date of repayment determined under paragraph [(2)(A)(i)](#c-2-A-i), or (ii) during any period in which repayment is suspended by reason of [paragraph (2)](#c-2);
    - (E) shall provide that the [loan](/usc/20/1066a.md?p=2) shall be made without security and without endorsement;
    - (F) shall provide that the liability to repay the [loan](/usc/20/1066a.md?p=2) 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](/usc/20/1087vv.md?p=c-2) 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](/usc/20/1019.md?p=6), 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](/usc/20/1066a.md?p=2) 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](/usc/20/1066a.md?p=2), 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](/usc/20/1085.md?p=l) on such [loan](/usc/20/1066a.md?p=2) 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](/usc/20/1066a.md?p=6) on, any [loan](/usc/20/1066a.md?p=2) from a student [loan](/usc/20/1066a.md?p=2) fund assisted under this part shall be required during any period—
      - (i) during which the borrower—
        - (I) is pursuing at least a half-time course of study as determined by an [eligible institution](/usc/20/1058.md?p=b); or
        - (II) is pursuing a course of study pursuant to a [graduate](/usc/20/1061.md?p=1) 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](/usc/20/1066a.md?p=2) 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](/usc/20/1019.md?p=6) 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](/usc/20/1066a.md?p=6) on, any [loan](/usc/20/1066a.md?p=2) 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](/usc/20/1066a.md?p=7) [loan](/usc/20/1066a.md?p=2) 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](/usc/20/1066a.md?p=2) or [loans](/usc/20/1066a.md?p=2) 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](/usc/20/1066a.md?p=2).
    - (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/20/1058.md?p=g) 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](/usc/20/1066a.md?p=2) 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](/usc/20/1066a.md?p=2) 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](/usc/20/1066a.md?p=2) under this part by students engaged in [graduate](/usc/20/1061.md?p=1) or post-[graduate](/usc/20/1061.md?p=1) 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](/usc/20/1066a.md?p=2) from the student [loan](/usc/20/1066a.md?p=2) fund established pursuant to such agreement reasonably available (to the extent of the available funds in such fund) to all eligible students in such institutions in need thereof.
- (e) **Forbearance—**
  - (1) The [Secretary](/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](/usc/20/1066a.md?p=6) 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](/usc/20/1066a.md?p=2), 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](/usc/20/1066a.md?p=6) payments to be made on such [loan](/usc/20/1066a.md?p=2) for service in the Armed Forces under [section 2174 of title 10](/usc/10/2174.md) and, pursuant to that eligibility, the [interest](/usc/20/1066a.md?p=6) on such [loan](/usc/20/1066a.md?p=2) 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](/usc/20/1066a.md?p=2) other than payments of [interest](/usc/20/1066a.md?p=6) on the [loan](/usc/20/1066a.md?p=2) 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](/usc/20/1066a.md?p=6) of the United States, in order to encourage repayment of [loans](/usc/20/1066a.md?p=2) made under this part which are in [default](/usc/20/1085.md?p=l), 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](/usc/20/1066a.md?p=2) 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](/usc/20/1066a.md?p=2) fund under this part bears to the institution’s capital contribution to such fund.
  - (2) No compromise repayment of a defaulted [loan](/usc/20/1066a.md?p=2) as authorized by [paragraph (1)](#f-1) may be made unless the student borrower pays—
    - (A) 90 percent of the [loan](/usc/20/1066a.md?p=2) under this part;
    - (B) the [interest](/usc/20/1066a.md?p=6) due on such [loan](/usc/20/1066a.md?p=2); and
    - (C) any collection fees due on such [loan](/usc/20/1066a.md?p=2);

    in a lump sum payment.

- (g) **Discharge—**
  - (1) **In general—** If a student borrower who received a [loan](/usc/20/1066a.md?p=2) 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](/usc/20/1066a.md?p=2) (including the [interest](/usc/20/1066a.md?p=6) 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](/usc/20/1066a.md?p=2) 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](/usc/20/1066a.md?p=2) has been discharged pursuant to this subsection shall be deemed to have assigned to the United States the right to a [loan](/usc/20/1066a.md?p=2) 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](/usc/20/1066a.md?p=2) has been discharged pursuant to this subsection shall not be precluded, because of that discharge, from receiving additional grant, [loan](/usc/20/1066a.md?p=2), or work assistance under this subchapter for which the borrower would be otherwise eligible (but for the [default](/usc/20/1085.md?p=l) on the discharged [loan](/usc/20/1066a.md?p=2)). 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](/usc/20/1066a.md?p=2) that have been discharged pursuant to this subsection.
- (h) **Rehabilitation of loans—**
  - (1) **Rehabilitation—**
    - (A) **In general—** If the borrower of a [loan](/usc/20/1066a.md?p=2) made under this part who has defaulted on the [loan](/usc/20/1066a.md?p=2) makes 9 on-time, consecutive, monthly payments of amounts owed on the [loan](/usc/20/1066a.md?p=2), as determined by the institution, or by the [Secretary](/usc/20/1003.md?p=17) in the case of a [loan](/usc/20/1066a.md?p=2) held by the [Secretary](/usc/20/1003.md?p=17), the [loan](/usc/20/1066a.md?p=2) shall be considered rehabilitated, and the institution that made that [loan](/usc/20/1066a.md?p=2) (or the [Secretary](/usc/20/1003.md?p=17), in the case of a [loan](/usc/20/1066a.md?p=2) 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](/usc/20/1085.md?p=l) was reported remove the [default](/usc/20/1085.md?p=l) from the borrower’s credit history.
    - (B) **Comparable conditions—** As long as the borrower continues to make scheduled repayments on a [loan](/usc/20/1066a.md?p=2) rehabilitated under this paragraph, the rehabilitated [loan](/usc/20/1066a.md?p=2) shall be subject to the same terms and conditions, and qualify for the same benefits and privileges, as other [loans](/usc/20/1066a.md?p=2) made under this part.
    - (C) **Additional assistance—** The borrower of a rehabilitated [loan](/usc/20/1066a.md?p=2) shall not be precluded by [section 1091 of this title](/usc/20/1091.md) from receiving additional grant, [loan](/usc/20/1066a.md?p=2), or work assistance under this subchapter (for which the borrower is otherwise eligible) on the basis of defaulting on the [loan](/usc/20/1066a.md?p=2) prior to such rehabilitation.
    - (D) **Limitations—** A borrower only once may obtain the benefit of this paragraph with respect to rehabilitating a [loan](/usc/20/1066a.md?p=2) under this part.
  - (2) **Restoration of eligibility—** If the borrower of a [loan](/usc/20/1066a.md?p=2) made under this part who has defaulted on that [loan](/usc/20/1066a.md?p=2) makes 6 ontime, consecutive, monthly payments of amounts owed on such [loan](/usc/20/1066a.md?p=2), the borrower’s eligibility for grant, [loan](/usc/20/1066a.md?p=2), 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](/usc/20/1085.md?p=l) and to replenish student [loan](/usc/20/1066a.md?p=2) funds established under this part. Each such incentive repayment program may—
    - (A) offer a reduction of the [interest](/usc/20/1066a.md?p=6) rate on a [loan](/usc/20/1066a.md?p=2) 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](/usc/20/1066a.md?p=2) on which the borrower pays the principal and [interest](/usc/20/1066a.md?p=6) 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](/usc/20/1066a.md?p=2) at the time the early repayment is made; and
    - (C) include such other incentive repayment options as the institution determines will carry out the objectives of this subsection.
  - (2) **Limitation—** No incentive repayment option under an incentive repayment program authorized by this subsection may be paid for with Federal funds, including any Federal funds from the student [loan](/usc/20/1066a.md?p=2) fund, or with institutional funds from the student [loan](/usc/20/1066a.md?p=2) fund.
- (j) **Armed Forces and NOAA Commissioned Officer Corps student loan interest payment programs—**
  - (1) **Authority—** Using funds 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](/usc/20/1066a.md?p=6) on a [loan](/usc/20/1066a.md?p=2) made under this part to a member of the Armed Forces or an [officer](/usc/20/1019.md?p=7) in the commissioned [officer](/usc/20/1019.md?p=7) corps of the National Oceanic and Atmospheric Administration, respectively, the [Secretary](/usc/20/1003.md?p=17) shall pay the [interest](/usc/20/1066a.md?p=6) on the [loan](/usc/20/1066a.md?p=2) as due for a period not in excess of 36 consecutive months. The [Secretary](/usc/20/1003.md?p=17) may not pay [interest](/usc/20/1066a.md?p=6) on such a [loan](/usc/20/1066a.md?p=2) out of any funds other than funds 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](/usc/20/1066a.md?p=2) 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](/usc/20/1066a.md?p=2) 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](/usc/20/1066a.md?p=2) 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.

## Footnotes

[^1]: See References in Text note below.

## Source credit

(Pub. L. 89–329, title IV, § 464, as added Pub. L. 99–498, title IV, § 405(a), Oct. 17, 1986, 100 Stat. 1448; amended Pub. L. 100–50, § 13(i), June 3, 1987, 101 Stat. 349; Pub. L. 100–369, § 7(c), July 18, 1988, 102 Stat. 837; Pub. L. 101–239, title II, § 2002(a)(3), Dec. 19, 1989, 103 Stat. 2111; Pub. L. 102–325, title IV, § 464, July 23, 1992, 106 Stat. 580; Pub. L. 103–208, § 2(f)(9)–(11), Dec. 20, 1993, 107 Stat. 2471; Pub. L. 105–244, title IV, § 464, Oct. 7, 1998, 112 Stat. 1725; Pub. L. 107–314, div. A, title VI, § 651(d), Dec. 2, 2002, 116 Stat. 2580; Pub. L. 109–171, title VIII, § 8007(c), Feb. 8, 2006, 120 Stat. 160; Pub. L. 110–84, title II, § 202(c), Sept. 27, 2007, 121 Stat. 792; Pub. L. 110–315, title IV, §§ 432(b)(7), 464(a), (b)(1), (c), Aug. 14, 2008, 122 Stat. 3246, 3266, 3267; Pub. L. 111–39, title IV, § 405(4), July 1, 2009, 123 Stat. 1947; Pub. L. 115–245, div. B, title III, § 309(d), Sept. 28, 2018, 132 Stat. 3106; Pub. L. 116–259, title II, § 202(b)(2), Dec. 23, 2020, 134 Stat. 1163; Pub. L. 119–21, title VIII, § 82003(a)(2), July 4, 2025, 139 Stat. 348.)

## Notes

### Amendment of Subsection (h)(1)(D)

Pub. L. 119–21, title VIII, § 82003(a)(2), (3), July 4, 2025, 139 Stat. 348, provided that, effective on July 1, 2027, subsection (h)(1)(D) of this section is amended by striking “once” and inserting “twice”. See 2025 Amendment note below.

### Editorial Notes

### References in Text

Section 1087cc(a) of this title, referred to in subsec. (c)(1)(G), was amended by Pub. L. 105–244, title IV, § 463(a)(3), Oct. 7, 1998, 112 Stat. 1724, which redesignated pars. (6) and (7) as (5) and (6), respectively.

### Prior Provisions

A prior section 1087dd, Pub. L. 89–329, title IV, § 464, as added Pub. L. 92–318, title I, § 137(b), June 23, 1972, 86 Stat. 275; amended Pub. L. 94–482, title I, § 130(d)–(g)(1), Oct. 12, 1976, 90 Stat. 2147; Pub. L. 95–43, § 1(a)(39), June 15, 1977, 91 Stat. 217; Pub. L. 96–374, title IV, §§ 442(b)(5), 443, 444, 445(b)(2), 446, 448(c), title XIII, § 1391(a)(1), Oct. 3, 1980, 94 Stat. 1440–1443, 1503; Pub. L. 97–35, title V, § 539, Aug. 13, 1981, 95 Stat. 458; Pub. L. 99–272, title XVI, § 16028, Apr. 7, 1986, 100 Stat. 353, related to terms and conditions of loans, prior to the general revision of this part by Pub. L. 99–498.

### Amendments

2025—Subsec. (h)(1)(D). Pub. L. 119–21 substituted “twice” for “once”.

2020—Subsec. (j). Pub. L. 116–259, § 202(b)(2)(A), substituted “Armed Forces and NOAA Commissioned Officer Corps student loan interest payment programs” for “Armed Forces student loan interest payment program” in heading.

Subsec. (j)(1). Pub. L. 116–259, § 202(b)(2)(B), inserted “or section 3078 of title 33” after “section 2174 of title 10” and “or an officer in the commissioned officer corps of the National Oceanic and Atmospheric Administration, respectively” after “Armed Forces”.

2018—Subsec. (c)(2)(A)(vi). Pub. L. 115–245 added cl. (vi).

2009—Subsec. (c). Pub. L. 111–39, § 405(4)(A), substituted “(i)” for “(I)” and “(ii)” for “(II)” in par. (1)(D) and realigned margins in par. (2)(A)(iii).

Subsec. (g)(5). Pub. L. 111–39, § 405(4)(B), substituted “consumer reporting agencies” for “credit bureaus”.

2008—Subsec. (a)(2)(A). Pub. L. 110–315, § 464(a)(1), substituted “$5,500” for “$4,000” in cl. (i) and “$8,000” for “$6,000” in cl. (ii).

Subsec. (a)(2)(B). Pub. L. 110–315, § 464(a)(2), substituted “$60,000” for “$40,000” in cl. (i), “$27,500” for “$20,000” in cl. (ii), and “$11,000” for “$8,000” in cl. (iii).

Subsec. (c)(1)(F). Pub. L. 110–315, § 464(b)(1)(A), substituted “cancelled—” and cls. (i) to (iv) for “canceled upon the death of the borrower, or if he becomes permanently and totally disabled as determined in accordance with regulations of the Secretary;”.

Subsec. (c)(1)(I). Pub. L. 110–315, § 432(b)(7)(A), substituted “consumer reporting agencies” for “credit bureau organizations”.

Subsec. (e). Pub. L. 110–315, § 464(c)(1), substituted “, as documented in accordance with paragraph (2),” for “, upon written request,” in introductory provisions, designated existing text as par. (1), redesignated former pars. (1) to (3) as subpars. (A) to (C), respectively, and added par. (2).

Subsec. (h)(1)(A). Pub. L. 110–315, §§ 432(b)(7)(B), 464(c)(2), substituted “9 on-time” for “12 ontime” and “consumer” for “credit bureau organization or credit”.

Subsec. (j)(2). Pub. L. 110–315, § 464(c)(3), substituted “subsection (e)(1)(C)” for “subsection (e)(3)”.

Subsec. (k). Pub. L. 110–315, § 464(b)(1)(B), added subsec. (k).

2007—Subsec. (c)(2)(A)(iii). Pub. L. 110–84 struck out “not in excess of 3 years” before “during” in introductory provisions, substituted comma for semicolon at end of subcl. (II), and inserted concluding provisions.

2006—Subsec. (c)(2)(A)(iii) to (v). Pub. L. 109–171 added cl. (iii) and redesignated former cls. (iii) and (iv) as (iv) and (v), respectively.

2002—Subsec. (e)(3). Pub. L. 107–314, § 651(d)(1), added par. (3).

Subsec. (j). Pub. L. 107–314, § 651(d)(2), added subsec. (j).

1998—Subsec. (a)(2). Pub. L. 105–244, § 464(a), amended par. (2) generally. Prior to amendment, par. (2) related to limitations on the total of loans that could be made to a student by an institution of higher education from a loan fund established pursuant to an agreement under this part.

Subsec. (b)(1). Pub. L. 105–244, § 464(b)(1), inserted at end “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.”

Subsec. (b)(2). Pub. L. 105–244, § 464(b)(2), amended par. (2) generally. Prior to amendment, par. (2) read as follows: “If the institution’s capital contribution under section 1087bb of this title 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, and if the total financial need of all such less than full-time and independent students at the institution exceeds 5 percent of the total financial need of all students at such institution, then at least 5 percent of such loans shall be made available to such less than full-time and independent students.”

Subsec. (c)(1)(D). Pub. L. 105–244, § 464(c)(1), struck out “(i) 3 percent per year, (ii) 4 percent per year in the case of any loan made on or after July 1, 1981, or (iii)” after “at the rate of” and substituted “paragraph (2)(A)(i)” for “subparagraph (A)(i)”.

Subsec. (c)(2)(A). Pub. L. 105–244, § 464(c)(2), substituted “subparagraph (A) of paragraph (1)” for “subparagraph (B)” in concluding provisions.

Subsec. (c)(2)(C). Pub. L. 105–244, § 464(c)(3), added subpar. (C).

Subsec. (c)(7). Pub. L. 105–244, § 464(c)(4), added par. (7).

Subsecs. (g) to (i). Pub. L. 105–244, § 464(d), added subsecs. (g) to (i).

1993—Subsec. (c)(2)(B). Pub. L. 103–208, § 2(f)(9), substituted “repayment of” for “repayment or”.

Subsec. (c)(6). Pub. L. 103–208, § 2(f)(10), substituted “Fulbright” for “Fullbright”.

Subsec. (e). Pub. L. 103–208, § 2(f)(11), substituted “principal” for “principle” before “only”.

1992—Subsec. (a)(2). Pub. L. 102–325, § 464(a), amended par. (2) generally. Prior to amendment, par. (2) read as follows: “The aggregate of the loans for all years made by institutions of higher education from loan funds established pursuant to agreements under this part may not exceed—

“(A) $18,000 in the case of any graduate or professional student (as defined by regulations of the Secretary, and including any loans from such funds made to such person before he became a graduate or professional student);

“(B) $9,000 in the case of a student who has successfully completed 2 years of a program of education leading to a bachelor’s degree, but who has not completed the work necessary for such a degree (determined under regulations of the Secretary, and including any loans from such funds made to such person before he became such a student); and

“(C) $4,500 in the case of any other student.”

Subsec. (a)(4). Pub. L. 102–325, § 464(b), added par. (4).

Subsec. (b)(1). Pub. L. 102–325, § 464(c)(1), substituted “this subchapter, who meets the requirements of section 1091 of this title, and who provides the institution with the student’s drivers license number, if any, at the time of application for the loan” for “this subchapter and who meets the requirements of section 1091 of this title”.

Subsec. (b)(2). Pub. L. 102–325, § 464(c)(2), amended par. (2) generally. Prior to amendment, par. (2) read as follows: “If the institution’s Federal capital contribution under section 1087bb of this title is directly or indirectly based in part on the financial need demonstrated by students attending the institution less than full time, a reasonable proportion of the loans under this part shall be made available to such students.”

Subsec. (c)(1)(C)(i). Pub. L. 102–325, § 464(d), substituted “$40” for “$30” in two places.

Subsec. (c)(1)(E). Pub. L. 102–325, § 464(e), struck out “unless the borrower is a minor and the note or other evidence of obligation executed by him would not, under applicable law, create a binding obligation,” before “shall provide”.

Subsec. (c)(2)(A). Pub. L. 102–325, § 464(f), amended subpar. (A) generally, revising and restating as cls. (i) to (iv) provisions formerly contained in cls. (i) to (ix).

Subsec. (c)(2)(B), (C). Pub. L. 102–325, § 464(g)(1), added subpar. (B) and struck out former subpars. (B) and (C) which read as follows:

“(B) Any period during which repayment is deferred under subparagraph (A) shall not be included in computing the 10-year maximum period provided for in subparagraph (A) of paragraph (1).

“(C) No repayment of principal of, or interest on, any loan for any period of study, service, or disability described in subparagraph (A) or any combination thereof shall begin until 6 months after the completion of such period of study, service, disability, or combination thereof.”

Subsec. (c)(4) to (6). Pub. L. 102–325, § 464(g)(2)–(4), added par. (4), redesignated former par. (4) as (5), and added par. (6).

Subsecs. (e), (f). Pub. L. 102–325, § 464(h), added subsecs. (e) and (f).

1989—Subsec. (c)(2)(A)(i). Pub. L. 101–239 inserted before semicolon at end “, 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 or 1078–3 of this title), while serving in a medical internship or residency program”.

1988—Subsec. (c)(2)(A)(v). Pub. L. 100–369 substituted “Internal Revenue Code of 1986” for “Internal Revenue Code of 1954”, which for purposes of codification was translated as “title 26” thus requiring no change in text.

1987—Subsec. (c)(2)(A)(vi). Pub. L. 100–50 inserted “or serving in an internship or residency program leading to a degree or certificate awarded by an institution of higher education, a hospital, or a health care facility that offers postgraduate training” before semicolon at end.

### Statutory Notes and Related Subsidiaries

### Effective Date of 2025 Amendment

Amendment by Pub. L. 119–21 effective on July 1, 2027, see section 82003(a)(3) of Pub. L. 119–21, set out as a note under section 1078–6 of this title.

### Effective Date of 2018 Amendment

Amendment by Pub. L. 115–245 applicable with respect to loans made on or after Sept. 28, 2018, or in repayment on Sept. 28, 2018, see section 309(f) of Pub. L. 115–245, set out as a note under section 1077 of this title.

### Effective Date of 2009 Amendment

Amendment by Pub. L. 111–39 effective as if enacted on the date of enactment of Pub. L. 110–315 (Aug. 14, 2008), see section 3 of Pub. L. 111–39, set out as a note under section 1001 of this title.

### Effective Date of 2008 Amendment

Pub. L. 110–315, title IV, § 464(b)(2), Aug. 14, 2008, 122 Stat. 3267, provided that: “The amendments made by paragraph (1) [amending this section] shall take effect on July 1, 2008.”

### Effective Date of 2007 Amendment

Amendment by Pub. L. 110–84 effective Oct. 1, 2007, see section 1(c) of Pub. L. 110–84, set out as a note under section 1070a of this title.

### Effective Date of 2006 Amendment

Amendment by Pub. L. 109–171 effective July 1, 2006, except as otherwise provided, see section 8001(c) of Pub. L. 109–171, set out as a note under section 1002 of this title.

Amendment by Pub. L. 109–171 applicable with respect to all loans under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.), see section 8007(f) of Pub. L. 109–171, set out as a note under section 1078 of this title.

### Effective Date of 2002 Amendment

Amendment by Pub. L. 107–314 applicable with respect to interest, and any special allowance under section 1087–1 of this title, that accrue for months beginning on or after Oct. 1, 2003, on student loans described in section 2174(c) of Title 10, Armed Forces, that were made before, on, or after such date to members of the Armed Forces who are on active duty (as defined in section 101(d) of Title 10) on or after that date, see section 651(e) of Pub. L. 107–314, set out as an Effective Date note under section 2174 of Title 10.

### Effective Date of 1998 Amendment

Amendment by Pub. L. 105–244 effective Oct. 1, 1998, except as otherwise provided in Pub. L. 105–244, see section 3 of Pub. L. 105–244, set out as a note under section 1001 of this title.

### Effective Date of 1993 Amendment

Amendment by Pub. L. 103–208 effective as if included in the Higher Education Amendments of 1992, Pub. L. 102–325, except as otherwise provided, see section 5(a) of Pub. L. 103–208, set out as a note under section 1051 of this title.

### Effective Date of 1992 Amendment

Pub. L. 102–325, title IV, § 468, July 23, 1992, 106 Stat. 585, as amended by Pub. L. 102–394, title III, § 307(a), Oct. 6, 1992, 106 Stat. 1820, provided that: “The changes made in part E of title IV of the Act [20 U.S.C. 1087aa et seq.] by the amendments made by this part [part E (§§ 461–468) of title IV of Pub. L. 102–325, enacting section 1087ii of this title and amending sections 1087aa to 1087gg of this title] shall take effect on the date of enactment of this Act [July 23, 1992], except that— the changes in section 463(a)(2)(B) [20 U.S.C. 1087cc(a)(2)(B)], relating to the matching of Federal capital contributions, shall apply to funds provided for such program for the award years beginning on or after July 1, 1993; the changes made in section 464(c)(1)(C) [20 U.S.C. 1087dd(c)(1)(C)], relating to minimum monthly payments shall apply with respect to loans for which the first disbursement is made on or after October 1, 1992, to an individual who, on the date the loan is made, has no outstanding balance of principal or interest owing on any loan made under part E of title IV of the Act; the changes made in section 464(c)(2)(A), relating to deferments, shall apply with respect to loans for which the first disbursement is made on or after July 1, 1993; the changes made in section 467 [20 U.S.C. 1087gg], relating to the creation of a Perkins Loan Revolving Fund, shall take effect on September 15, 1997; and the changes in section 464(a)(2)(A), (B) and (C) shall not apply to any loan made for the award year beginning July 1, 1992 provided that the loan does not result in a violation of section 464(a)(2)(A), (B) and (C) as in effect prior to such date of enactment.”

[Pub. L. 102–394, title III, § 307(b), Oct. 6, 1992, 106 Stat. 1820, provided that: “The amendments made by subsection (a) [amending section 468 of Pub. L. 102–325, set out above] shall take effect as if enacted on July 23, 1992.” ]

### Effective Date of 1989 Amendment

Amendment by Pub. L. 101–239 applicable to any loan made, insured, or guaranteed under this part or part B of this subchapter, including a loan made before Dec. 19, 1989, and amendment effective Jan. 1, 1990, but inapplicable with respect to any portion of a period of deferment granted to a borrower under section 1077(a)(2)(C)(i), 1078(b)(1)(M)(i), or 1087dd(c)(2)(A)(i) of this title for service in a medical internship or residency program completed prior to Dec. 19, 1989, see section 2002(a)(4) of Pub. L. 101–239, set out as a note under section 1077 of this title.

### Effective Date of 1987 Amendment

Amendment by Pub. L. 100–50 effective as if enacted as part of the Higher Education Amendments of 1986, Pub. L. 99–498, see section 27 of Pub. L. 100–50, set out as a note under section 1001 of this title.

### Effective Date

Section effective Oct. 17, 1986, except as otherwise provided, see section 2 of Pub. L. 99–498, set out as a note under section 1001 of this title.

Pub. L. 99–498, title IV, § 405(b), Oct. 17, 1986, 100 Stat. 1454, as amended by Pub. L. 100–50, § 22(d), June 3, 1987, 101 Stat. 361, provided that: Section 462 of the Act [20 U.S.C. 1087bb] shall apply with respect to academic year 1988-1989 and succeeding academic years. The changes made in sections 464(c)(1)(A), 464(c)(2), and 465(a)(2)(E) of the Act [20 U.S.C. 1087dd(c)(1)(A), (2), 1087ee(a)(2)(E)] shall apply only to loans made to cover the costs of instruction for periods of enrollment beginning on or after July 1, 1987, to individuals who are new borrowers on that date. Section 463(a)(9) and section 463A of the Act [20 U.S.C. 1087cc(a)(9), 1087cc–1] as amended by this section shall apply only to loans made for periods of enrollment beginning on or after July 1, 1987. For the purpose of this subsection, the term ‘new borrower’ means, with respect to any date, an individual who on that date has no outstanding balance of principal or interest owing on any loan made under part E of title IV of the Act [this part].”

### Construction of 2006 Amendment

Nothing in amendment by Pub. L. 109–171 to be construed to authorize any refunding of any repayment of a loan, see section 8007(e) of Pub. L. 109–171, set out as a note under section 1078 of this title.