20 U.S.C.
United States Code, 2010 Edition
Title 20 - EDUCATION
CHAPTER 28 - HIGHER EDUCATION RESOURCES AND STUDENT ASSISTANCE
SUBCHAPTER IV - STUDENT ASSISTANCE
From the U.S. Government Printing Office, www.gpo.gov

SUBCHAPTER IV—STUDENT ASSISTANCE

Part A—Grants to Students in Attendance at Institutions of Higher Education

Codification

Part A of title IV of the Higher Education Act of 1965, comprising this part, was originally enacted by Pub. L. 89–329, title IV, Nov. 8, 1965, 79 Stat. 1232, and amended by Pub. L. 92–318, June 23, 1972, 86 Stat. 235; Pub. L. 93–380, Aug. 21, 1974, 88 Stat. 484; Pub. L. 94–328, June 30, 1976, 90 Stat. 727; Pub. L. 94–482, Oct. 12, 1976, 90 Stat. 2081; Pub. L. 95–43, June 15, 1977, 91 Stat. 213; Pub. L. 95–336, Aug. 4, 1978, 92 Stat. 451; Pub. L. 95–566, Nov. 1, 1978, 92 Stat. 2402; Pub. L. 96–49, Aug. 13, 1979, 93 Stat. 351; Pub. L. 96–374, Oct. 3, 1980, 94 Stat. 1367; Pub. L. 97–300, Oct. 13, 1982, 96 Stat. 1322; Pub. L. 97–301, Oct. 13, 1982, 96 Stat. 1400; Pub. L. 98–558, Oct. 30, 1984, 98 Stat. 2878; Pub. L. 99–145, Nov. 8, 1985, 99 Stat. 583. Such part is shown herein, however, as having been added by Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1308, without reference to such intervening amendments because of the extensive revision of part A by Pub. L. 99–498.

§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) 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 to assist them in making financial aid available to such students;

(4) providing for special programs and projects designed (A) to identify and encourage qualified youths with financial or cultural need with a potential for postsecondary education, (B) to prepare students from low-income families for postsecondary education, and (C) to provide remedial (including remedial language study) and other services to students; and

(5) providing assistance to institutions of higher education.

(b) Secretary required to carry out purposes

The Secretary shall, in accordance with subparts 1 through 9 of this part, carry out programs to achieve the purposes of this part.

(Pub. L. 89–329, title IV, §400, formerly §401, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1308; renumbered §400, Pub. L. 102–325, title IV, §402(a)(3), July 23, 1992, 106 Stat. 482; amended Pub. L. 105–244, title IV, §401(g)(1), Oct. 7, 1998, 112 Stat. 1652; Pub. L. 111–39, title IV, §401(a)(1), July 1, 2009, 123 Stat. 1938.)

Prior Provisions

A prior section 1070, Pub. L. 89–329, title IV, §401, as added and amended Pub. L. 92–318, title I, §131(b)(1), title X, §1001(c)(1), (2), June 23, 1972, 86 Stat. 247, 381; Pub. L. 94–482, title I, §125, Oct. 12, 1976, 90 Stat. 2096; Pub. L. 96–374, title IV, §401, title XIII, §1391(a)(1), Oct. 3, 1980, 94 Stat. 1401, 1503, stated purpose of program of grants to students in attendance at institutions of higher education, prior to the general revision of this part by Pub. L. 99–498.

Amendments

2009—Subsec. (b). Pub. L. 111–39 substituted “1 through 9” for “1 through 8”.

1998—Subsec. (a)(1). Pub. L. 105–244 substituted “Federal Pell Grants” for “basic educational opportunity grants”.

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 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.

Higher Education Relief Opportunities for Students

Pub. L. 108–76, §§1–5, Aug. 18, 2003, 117 Stat. 904, formerly set out in a note under this section, was transferred to part F–1 (§1098aa et seq.) of this subchapter. Pub. L. 108–76, §6, Aug. 18, 2003, 117 Stat. 908, as amended by Pub. L. 109–78, §1, Sept. 30, 2005, 119 Stat. 2043, formerly set out in the same note under this section, which provided for termination of Pub. L. 108–76 on Sept. 30, 2007, was repealed by Pub. L. 110–93, §2, Sept. 30, 2007, 121 Stat. 999.

Pub. L. 107–122, Jan. 15, 2002, 115 Stat. 2386, known as the Higher Education Relief Opportunities for Students Act of 2001, authorized the Secretary of Education to waive or modify statutory or regulatory provisions applicable to the student financial aid programs under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq., 42 U.S.C. 2751 et seq.) as deemed necessary because of a national emergency, provided sense of Congress as to tuition refunds from institutions of postsecondary education, and provided that the Act ceased to be effective Sept. 30, 2003.

Community Scholarship Mobilization

Pub. L. 105–244, title VIII, part C, Oct. 7, 1998, 112 Stat. 1810, known as the Community Scholarship Mobilization Act, which established regional, State and community program centers to foster development of local entities in high poverty areas that promote higher education goals for low-income students with academic support and scholarship assistance for postsecondary education, was repealed by Pub. L. 110–315, title IX, §931(2), Aug. 14, 2008, 122 Stat. 3456.

Community School Partnerships

Pub. L. 103–382, title V, part B, Oct. 20, 1994, 108 Stat. 4045, which provided for grants to establish community centers giving academic support and postsecondary scholarships to poor students, was repealed by Pub. L. 105–277, div. A, §101(f) [title VIII, §301(a)], Oct. 21, 1998, 112 Stat. 2681–337, 2681–410.

Study of Federal Benefit Coordination

Section 1405 of Pub. L. 102–325 directed Secretary of Education to conduct a study to evaluate the coordination of Federal student financial assistance programs under title IV of the Higher Education Act of 1965 [20 U.S.C. 1070 et seq.; 42 U.S.C. 2751 et seq.] with other programs funded in whole or in part with Federal funds, with Secretary to prepare and submit to appropriate committees of Congress a report on the study not later than 3 years after July 23, 1992, together with such recommendations as the Secretary deemed appropriate, prior to repeal by Pub. L. 105–332, §6(b)(2), Oct. 31, 1998, 112 Stat. 3128.

Olympic Scholarships

Pub. L. 102–325, title XV, §1543, July 23, 1992, 106 Stat. 836, as amended by Pub. L. 105–244, title VIII, §836, Oct. 7, 1998, 112 Stat. 1820; Pub. L. 106–554, §1(a)(1) [title III, §319], Dec. 21, 2000, 114 Stat. 2763, 2763A–49; Pub. L. 107–116, title III, §305(a), Jan. 10, 2002, 115 Stat. 2208; Pub. L. 110–315, title IX, §934, Aug. 14, 2008, 122 Stat. 3460, provided that:

“(a) Scholarships Authorized.—

“(1) In general.—The Secretary of Education is authorized to provide financial assistance to the United States Olympic Education Center or the United States Olympic Training Center to enable such centers to provide financial assistance to athletes who are training at such centers and are pursuing postsecondary education at institutions of higher education (as such term is defined in section 481(a) of the Higher Education Act of 1965 [20 U.S.C. 1088(a)]).

“(2) Award determination.—The amount of the financial assistance provided to an athlete described in paragraph (1) shall be determined in accordance with criteria, and in amounts, specified in the application of the center under subsection (c). Such assistance shall not exceed the athlete's cost of attendance as determined under section 472 of the Higher Education Act of 1965 (20 U.S.C. 1087ll).

“(3) Information on distribution of assistance.—Each center providing such assistance shall annually report to the Secretary such information as the Secretary may reasonably require on the distribution of such assistance among athletes and institutions of higher education. The Secretary shall compile such reports and submit them to the Committees on Education and the Workforce [now Committee on Education and Labor] and Appropriations of the House of Representatives and the Committees on Health, Education, Labor, and Pensions and Appropriations of the Senate.

“(b) Eligibility.—The Secretary of Education shall ensure that financial assistance provided under this part [part E (§1543) of Pub. L. 102–325] is available to both full-time and part-time students who are athletes at centers described in subsection (a).

“(c) Application.—Each center desiring financial assistance under this section shall submit an application to the Secretary of Education at such time, in such manner and accompanied by such information as the Secretary may reasonably require.

“(d) Authorization of Appropriations.—There are authorized to be appropriated $5,000,000 for fiscal year 2009 and such sums as may be necessary for each of the five succeeding fiscal years to carry out this section.

“(e) Designation.—Scholarships awarded under this section shall be known as ‘B.J. Stupak Olympic Scholarships’.”

[Pub. L. 107–116, title III, §305(b), Jan. 10, 2002, 115 Stat. 2208, provided that: “The amendments made by subsection (a) [amending section 1543 of Pub. L. 102–325, set out above] shall apply with respect to any funds appropriated pursuant to section 1543(d) of the Higher Education Amendments of 1992 [section 1543(d) of Pub. L. 102–325, set out above], including funds appropriated pursuant to that section in fiscal years 2000 and 2001, that are available for financial assistance under section 1543 on or after the date of enactment of this Act [Jan. 10, 2002].”]

Persian Gulf Conflict Higher Education Assistance

Pub. L. 102–26, §§4–6, Apr. 9, 1991, 105 Stat. 125–127, provided that:

“SEC. 4. OPERATION DESERT SHIELD/DESERT STORM WAIVER AUTHORITY.

“(a) Purpose.—It is the purpose of this section to ensure that—

“(1) the men and women serving on active duty in connection with Operation Desert Shield or Operation Desert Storm who are borrowers of Stafford Loans or Perkins Loans are not placed in a worse position financially in relation to those loans because of such service;

“(2) the administrative requirements placed on all borrowers of student loans made in accordance with title IV of the Act [20 U.S.C. 1070 et seq.; 42 U.S.C. 2751 et seq.] who are engaged in such military service are minimized to the extent possible without impairing the integrity of the student loan programs, in order to ease the burden on such borrowers, and to avoid inadvertent, technical defaults; and

“(3) the future eligibility of such an individual for Pell Grants is not reduced by the amount of such assistance awarded for a period of instruction that such individual was unable to complete, or for which the individual did not receive academic credit, because he or she was called up for such service.

“(b) Waiver Requirement.—Notwithstanding any other provision of law, unless enacted with specific reference to this section, the Secretary of Education shall waive or modify any statutory or regulatory provision applicable to the student financial aid programs under title IV of the Act that the Secretary deems necessary to achieve the purposes stated in subsection (a), including—

“(1) the length of, and eligibility requirements for, the military deferments authorized under sections 427(a)(2)(C)(ii), 428(b)(1)(M)(ii), and 464(c)(2)(A)(ii) of the Act [20 U.S.C. 1077(a)(2)(C)(ii), 1078(b)(1)(M)(ii), 1087dd(c)(2)(A)(ii)], in order to enable the borrower of a Stafford Loan or a Perkins Loan who is or was serving on active duty in connection with Operation Desert Shield or Operation Desert Storm to obtain a military deferment, under which interest shall accrue and shall, if otherwise payable by the Secretary, be paid by the Secretary of Education, for the duration of such service;

“(2) administrative requirements placed on all borrowers of student loans made in accordance with title IV of the Act who are or were engaged in such military service;

“(3) the number of years for which individuals who are engaged in such military service may be eligible for Pell Grants under subpart 1 of part A of title IV of the Act [20 U.S.C. 1070a et seq.];

“(4) the point at which the borrower of a Stafford Loan who is or was engaged in such military service is required to resume repayment of principal and interest on such loan after the borrower completes a period of deferment under section 427(a)(2)(C)(ii) or 428(b)(1)(M)(ii) of the Act;

“(5) the point at which the borrower of a Stafford Loan who is or was engaged in such military service is required to resume repayment of principal and interest on such loan after the borrower completes a single period of deferment under section 427(a)(2)(C)(i) or 428(b)(1)(M)(i) of the Act subsequent to such service; and

“(6) the modification of the terms ‘annual adjusted family income’ and ‘available income,’ as used in the determination of need for student financial assistance under title IV of the Act for such individual (and the determination of such need for his or her spouse and dependents, if applicable), to mean the sums received in the first calendar year of the award year for which such determination is made, in order to reflect more accurately the financial condition of such individual and his or her family.

“(c) Notice of Waiver.—Notwithstanding section 431 [now 437] of the General Education Provisions Act (20 U.S.C. 1232) and section 553 of title 5, United States Code, the Secretary shall, by notice in the Federal Register, publish the waivers or modifications of statutory and regulatory provisions the Secretary deems necessary to achieve the purposes of this section. Such notice shall include the terms and conditions to be applied in lieu of such statutory and regulatory provisions. The Secretary is not required to exercise the waiver or modification authority under this section on a case-by-case basis.

“(d) Definitions.—For purposes of this Act [probably should be “section”]—

“(1) Individuals ‘serving on active duty in connection with Operation Desert Shield or Operation Desert Storm’ shall include—

“(A) any Reserve of an Armed Force called to active duty under section 672(a) [now 12301(a)], 672(g) [now 12301(g)], 673 [now 12302], 673b [now 12304], 674 [now 12306], or 688 of title 10, United States Code, for service in connection with Operation Desert Shield or Operation Desert Storm, regardless of the location at which such active duty service is performed; and

“(B) for purposes of waivers of administrative requirements under subsection (b)(2) only, any other member of an Armed Force on active duty in connection with Operation Desert Shield or Operation Desert Storm, who has been assigned to a duty station at a location other than the location at which such member is normally assigned.

“(2) The term ‘active duty’ has the meaning given such term in section 101(22) of title 10, United States Code, except that such term does not include active duty for training or attendance at a service school.

“SEC. 5. TUITION REFUNDS OR CREDITS.

“(a) Sense of Congress.—It is the sense of the Congress that all institutions offering postsecondary education should provide a full refund to any member or Reserve of an Armed Force on active duty service in connection with Operation Desert Shield or Operation Desert Storm for that portion of a period of instruction such individual was unable to complete, or for which such individual did not receive academic credit, because he or she was called up for such service. 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.

“(b) Encouragement and Report.—The Secretary of Education shall encourage institutions to provide such refunds or credits, and shall report to the appropriate committees of Congress on the actions taken in accordance with this subsection as well as information he receives regarding any institutions that are not providing such refunds or credits.

“SEC. 6. TERMINATION OF AUTHORITY.

“The provisions of sections 4 and 5 shall cease to be effective on September 30, 1997.”

Pub. L. 102–25, title III, part E (§§371–376), Apr. 6, 1991, 105 Stat. 93, provided that:

“SEC. 371. SHORT TITLE

“This part may be cited as the ‘Persian Gulf Conflict Higher Education Assistance Act’.

“SEC. 372. [Superseded by section 4 of Pub. L. 102–26, set out above.]

“SEC. 373. [Superseded by section 5 of Pub. L. 102–26, set out above.]

“SEC. 374. [Amended section 294d of Title 42, The Public Health and Welfare.]

“SEC. 375. [Superseded by section 6 of Pub. L. 102–26, set out above.]

“SEC. 376. COORDINATION WITH OTHER LAW

“If the Higher Education Technical Amendments of 1991 [Pub. L. 102–26, see Short Title of 1991 Amendment note set out under section 1001 of this title] is enacted, the provisions of sections 4, 5, and 6 of that Act shall supersede sections 372, 373, and 375.”

subpart 1—federal pell grants

Codification

Pub. L. 105–244, title IV, §401(g)(2), Oct. 7, 1998, 112 Stat. 1652, amended subpart heading generally.

§1070a. Federal Pell Grants: amount and determinations; applications

(a) Program authority and method of distribution

(1) For each fiscal year through fiscal year 2017, the Secretary shall pay to each eligible institution such sums as may be necessary to pay to each eligible student (defined in accordance with section 1091 of this title) for each academic year during which that student is in attendance at an institution of higher education, as an undergraduate, a Federal Pell Grant in the amount for which that student is eligible, as determined pursuant to subsection (b) of this section. Not less than 85 percent of such sums shall be advanced to eligible institutions prior to the start of each payment period and shall be based upon an amount requested by the institution as needed to pay eligible students until such time as the Secretary determines and publishes in the Federal Register with an opportunity for comment, an alternative payment system that provides payments to institutions in an accurate and timely manner, except that this sentence shall not be construed to limit the authority of the Secretary to place an institution on a reimbursement system of payment.

(2) Nothing in this section shall be interpreted to prohibit the Secretary from paying directly to students, in advance of the beginning of the academic term, an amount for which they are eligible, in cases where the eligible institution elects not to participate in the disbursement system required by paragraph (1).

(3) Grants made under this subpart shall be known as “Federal Pell Grants”.

(b) Purpose and amount of grants

(1) The purpose of this subpart is to provide a Federal Pell Grant that in combination with reasonable family and student contribution and supplemented by the programs authorized under subparts 3 and 4 of this part, will meet at least 75 percent of a student's cost of attendance (as defined in section 1087ll of this title), unless the institution determines that a greater amount of assistance would better serve the purposes of this section.

(2)(A) The amount of the Federal Pell Grant for a student eligible under this part shall be—

(i) the maximum Federal Pell Grant, as specified in the last enacted appropriation Act applicable to that award year, plus

(ii) the amount of the increase calculated under paragraph (8)(B) for that year, less

(iii) an amount equal to the amount determined to be the expected family contribution with respect to that student for that year.

(B) In any case where a student attends an institution of higher education on less than a full-time basis (including a student who attends an institution of higher education on less than a half-time basis) during any academic year, the amount of the Federal Pell Grant to which that student is entitled shall be reduced in proportion to the degree to which that student is not so attending on a full-time basis, in accordance with a schedule of reductions established by the Secretary for the purposes of this division, 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.

(3) No Federal Pell Grant under this subpart shall exceed the difference between the expected family contribution for a student and the cost of attendance (as defined in section 1087ll 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 plus the amount of the expected family contribution for that student exceeds the cost of attendance for that year, the amount of the Federal Pell Grant shall be reduced until the combination of expected family contribution and the amount of the Federal Pell Grant does not exceed the cost of attendance at such institution.

(4) No Federal Pell Grant shall be awarded to a student under this subpart if the amount of that grant for that student as determined under this subsection for any academic year is less than ten percent of the maximum amount of a Federal Pell Grant award determined under paragraph (2)(A) for such academic year, except that a student who is eligible for a Federal Pell Grant in an amount that is equal to or greater than five percent of such Federal Pell Grant amount but less than ten percent of such Federal Pell Grant amount shall be awarded a Federal Pell grant in the amount of ten percent of such Federal Pell Grant amount.

(5)(A) The Secretary shall award a student not more than two Federal Pell Grants during a single award year to permit such student to accelerate the student's progress toward a degree or certificate if the student is enrolled—

(i) on at least a half-time basis for a period of more than one academic year, or more than two semesters or an equivalent period of time, during a single award year; and

(ii) in a program of instruction at an institution of higher education for which the institution awards an associate or baccalaureate degree or a certificate.


(B) In the case of a student receiving more than one Federal Pell Grant in a single award year under subparagraph (A), the total amount of Federal Pell Grants awarded to such student for the award year may exceed the maximum basic grant level specified in the appropriate appropriations Act for such award year.

(6) Notwithstanding any other provision of this subpart, the Secretary shall allow the amount of the Federal Pell Grant to be exceeded for students participating in a program of study abroad approved for credit by the institution at which the student is enrolled when the reasonable costs of such program are greater than the cost of attendance at the student's home institution, except that the amount of such Federal Pell Grant in any fiscal year shall not exceed the maximum amount of a Federal Pell Grant award determined under paragraph (2)(A), for which a student is eligible during such award year. If the preceding sentence applies, the financial aid administrator at the home institution may use the cost of the study abroad program, rather than the home institution's cost, to determine the cost of attendance of the student.

(7) No Federal Pell Grant shall be awarded under this subpart to any individual who is incarcerated in any Federal or State penal institution or who is subject to an involuntary civil commitment upon completion of a period of incarceration for a forcible or nonforcible sexual offense (as determined in accordance with the Federal Bureau of Investigation's Uniform Crime Reporting Program).

(8) Additional funds.—

(A) In general.—There are authorized to be appropriated, and there 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) the following amounts—

(i) $2,030,000,000 for fiscal year 2008;

(ii) $2,733,000,000 for fiscal year 2009;

(iii) to carry out subparagraph (B) of this paragraph, such sums as may be necessary for fiscal year 2010 and each subsequent fiscal year to provide the amount of increase of the maximum Federal Pell Grant required by clauses (ii) and (iii) of subparagraph (B); and

(iv) to carry out this section, $13,500,000,000 for fiscal year 2011.


(B) Increase in federal pell grants.—The amounts made available pursuant to clauses (i) through (iii) of subparagraph (A) of this paragraph shall be used to increase the amount of the maximum Federal Pell Grant for which a student shall be eligible during an award year, as specified in the last enacted appropriation Act applicable to that award year, by—

(i) $490 for each of the award years 2008–2009 and 2009–2010;

(ii) $690 for each of the award years 2010–2011, 2011–2012, and 2012–2013; and

(iii) the amount determined under subparagraph (C) for each succeeding award year.


(C) Adjustment amounts.—

(i) Award year 2013–2014.—For award year 2013–2014, the amount determined under this subparagraph for purposes of subparagraph (B)(iii) shall be equal to—

(I) $5,550 or the total maximum Federal Pell Grant for the preceding award year (as determined under clause (v)(II)),1 whichever is greater, increased by a percentage equal to the annual adjustment percentage for award year 2013–2014, reduced by

(II) $4,860 or the maximum Federal Pell Grant for which a student was eligible for the preceding award year, as specified in the last enacted appropriation Act applicable to that year, whichever is greater; and

(III) rounded to the nearest $5.


(ii) Award years 2014–2015 through 2017–2018.—For each of the award years 2014–2015 through 2017–2018, the amount determined under this subparagraph for purposes of subparagraph (B)(iii) shall be equal to—

(I) the total maximum Federal Pell Grant for the preceding award year (as determined under clause (v)(II)),1 increased by a percentage equal to the annual adjustment percentage for the award year for which the amount under this subparagraph is being determined, reduced by

(II) $4,860 or the maximum Federal Pell Grant for which a student was eligible for the preceding award year, as specified in the last enacted appropriation Act applicable to that year, whichever is greater; and

(III) rounded to the nearest $5.


(iii) Subsequent award years.—For award year 2018–2019 and each subsequent award year, the amount determined under this subparagraph for purposes of subparagraph (B)(iii) shall be equal to the amount determined under clause (ii) for award year 2017–2018.

(iv) Definitions.—For purposes of this subparagraph—

(I) the term “annual adjustment percentage” as applied to an award year, is equal to the estimated percentage change in the Consumer Price Index (as determined by the Secretary, using the definition in section 1087rr(f) of this title) for the most recent calendar year ending prior to the beginning of that award year; and

(II) the term “total maximum Federal Pell Grant” as applied to a preceding award year, is equal to the sum of—

(aa) the maximum Federal Pell Grant for which a student is eligible during an award year, as specified in the last enacted appropriation Act applicable to that preceding award year; and

(bb) the amount of the increase in the maximum Federal Pell Grant required by this paragraph for that preceding award year.


(D) Program requirements and operations otherwise unaffected.—Except as provided in subparagraphs (B) and (C), nothing in this paragraph shall be construed to alter the requirements and operations of the Federal Pell Grant Program as authorized under this section, or authorize the imposition of additional requirements or operations for the determination and allocation of Federal Pell Grants under this section.

(E) Ratable increases and decreases.—The amounts specified in subparagraph (B) shall be ratably increased or decreased to the extent that funds available under subparagraph (A) exceed or are less than (respectively) the amount required to provide the amounts specified in subparagraph (B).

(F) Availability of funds.—The amounts made available by subparagraph (A) for any fiscal year shall be available beginning on October 1 of that fiscal year, and shall remain available through September 30 of the succeeding fiscal year.

(c) Period of eligibility for grants

(1) 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 defined in paragraph (2) shall not be counted for the purpose of this paragraph.

(2) 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 utilize 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 student is entitled to receive Pell Grant payments concurrently from more than one institution or from the Secretary and an institution.

(4) Notwithstanding paragraph (1), the Secretary may allow, on a case-by-case basis, a student to receive a Federal Pell Grant if the student—

(A) is carrying at least one-half the normal full-time work load for the course of study the student is pursuing, as determined by the institution of higher education; and

(B) is enrolled or accepted for enrollment in a postbaccalaureate program that does not lead to a graduate degree, and in courses required by a State in order for the student to receive a professional certification or licensing credential that is required for employment as a teacher in an elementary school or secondary school in that State,


except that this paragraph shall not apply to a student who is enrolled in an institution of higher education that offers a baccalaureate degree in education.

(5) The period during which a student may receive Federal Pell Grants shall not exceed 18 semesters, or the equivalent of 18 semesters, as determined by the Secretary by regulation. Such regulations shall provide, with respect to a student who received a Federal Pell Grant for a term but was enrolled at a fraction of full-time, that only that same fraction of such semester or equivalent shall count towards such duration limits. The provisions of this paragraph shall apply only to a student who receives a Federal Pell Grant for the first time on or after July 1, 2008.

(d) Applications for grants

(1) The Secretary shall from time to time set dates by which students shall file applications for Federal Pell Grants under this subpart.

(2) Each student desiring a Federal Pell Grant for any year shall file an application therefor containing such information and assurances as the Secretary may deem necessary to enable the Secretary to carry out the functions and responsibilities of this subpart.

(e) Distribution of grants to students

Payments under this section shall be made in accordance with regulations promulgated by the Secretary for such purpose, in such manner as will best accomplish the purpose of this section. Any disbursement allowed to be made by crediting the student's account shall be limited to tuition and fees and, in the case of institutionally owned housing, room and board. The student may elect to have the institution provide other such goods and services by crediting the student's account.

(f) Calculation of eligibility

(1) Each contractor processing applications for awards under this subpart (including a central processor, if any, designated by the Secretary) shall, in a timely manner, furnish to the student financial aid administrator (at each institution of higher education which a student awarded a Federal Pell Grant under this subpart is attending), as a part of its regular output document, the expected family contribution for each such student. Each such student financial aid administrator shall—

(A) examine and assess the data used to calculate the expected family contribution of the student furnished pursuant to this subsection;

(B) recalculate the expected family contribution of the student if there has been a change in circumstances of the student or in the data submitted;

(C) make the award to the student in the correct amount; and

(D) after making such award report the corrected data to such contractor and to a central processor (if any) designated by the Secretary for a confirmation of the correct computation of amount of the expected family contribution for each such student.


(2) Whenever a student receives an award under this subpart that, due to recalculation errors by the institution of higher education, is in excess of the amount which the student is entitled to receive under this subpart, such institution of higher education shall pay to the Secretary the amount of such excess unless such excess can be resolved in a subsequent disbursement to the institution.

(3) Each contractor processing applications for awards under this subpart shall for each academic year after academic year 1986–1987 prepare and submit a report to the Secretary on the correctness of the computations of amount of the expected family contribution, and on the accuracy of the questions on the application form under this subpart for the previous academic year for which the contractor is responsible. The Secretary shall transmit the report, together with the comments and recommendations of the Secretary, to the Committee on Appropriations of the Senate, the Committee on Appropriations of the House of Representatives, and the authorizing committees.

(g) Insufficient appropriations

If, for any fiscal year, the funds appropriated for payments under this subpart are insufficient to satisfy fully all entitlements, as calculated under subsection (b) of this section (but at the maximum grant level specified in such appropriation), the Secretary shall promptly transmit a notice of such insufficiency to each House of the Congress, and identify in such notice the additional amount that would be required to be appropriated to satisfy fully all entitlements (as so calculated at such maximum grant level).

(h) Use of excess funds

(1) If, at the end of a fiscal year, the funds available for making payments under this subpart exceed the amount necessary to make the payments required under this subpart to eligible students by 15 percent or less, then all of the excess funds shall remain available for making payments under this subpart during the next succeeding fiscal year.

(2) If, at the end of a fiscal year, the funds available for making payments under this subpart exceed the amount necessary to make the payments required under this subpart to eligible students by more than 15 percent, then all of such funds shall remain available for making such payments but payments may be made under this paragraph only with respect to entitlements for that fiscal year.

(i) Treatment of institutions and students under other laws

Any institution of higher education which enters into an agreement with the Secretary to disburse to students attending that institution the amounts those students are eligible to receive under this subpart shall not be deemed, by virtue of such agreement, a contractor maintaining a system of records to accomplish a function of the Secretary. Recipients of Pell Grants shall not be considered to be individual grantees for purposes of chapter 81 of title 41.

(j) Institutional ineligibility based on default rates

(1) In general

No institution of higher education shall be an eligible institution for purposes of this subpart if such institution of higher education is ineligible to participate in a loan program under part B or C of this subchapter as a result of a final default rate determination made by the Secretary under part B or C of this subchapter after the final publication of cohort default rates for fiscal year 1996 or a succeeding fiscal year.

(2) Sanctions subject to appeal opportunity

No institution may be subject to the terms of this subsection unless the institution has had the opportunity to appeal the institution's default rate determination under regulations issued by the Secretary for the loan program authorized under part B or C of this subchapter, as applicable. This subsection shall not apply to an institution that was not participating in the loan program authorized under part B or C of this subchapter on October 7, 1998, unless the institution subsequently participates in the loan programs.

(Pub. L. 89–329, title IV, §401, formerly §411, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1309; amended Pub. L. 100–50, §3(a), June 3, 1987, 101 Stat. 337; renumbered §401 and amended Pub. L. 102–325, title IV, §§401(a)–(h), 402(a)(3), July 23, 1992, 106 Stat. 479–482; Pub. L. 103–208, §2(b)(1)–(5), (k)(1), Dec. 20, 1993, 107 Stat. 2458, 2485; Pub. L. 103–322, title II, §20411(a), Sept. 13, 1994, 108 Stat. 1828; Pub. L. 105–244, title IV, §401(a)–(f), (g)(3), (4), Oct. 7, 1998, 112 Stat. 1650–1652; Pub. L. 110–84, title I, §§101(a), 102, Sept. 27, 2007, 121 Stat. 784; Pub. L. 110–315, title I, §103(b)(3), title IV, §401(a)(1), (b), (c)(1), Aug. 14, 2008, 122 Stat. 3088, 3188, 3189; Pub. L. 111–5, div. A, title VIII, §806, Feb. 17, 2009, 123 Stat. 190; Pub. L. 111–39, title IV, §401(a)(2), (3), July 1, 2009, 123 Stat. 1938; Pub. L. 111–152, title II, §2101(a), (b)(1), Mar. 30, 2010, 124 Stat. 1071, 1073.)

Codification

In subsec. (i), “chapter 81 of title 41” substituted for “subtitle D of title V of Public Law 100–690” on authority of Pub. L. 111–350, §6(c), Jan. 4, 2011, 124 Stat. 3854, which Act enacted Title 41, Public Contracts.

Prior Provisions

A prior section 1070a, Pub. L. 89–329, title IV, §411, as added Pub. L. 92–318, title I, §131(b)(1), June 23, 1972, 86 Stat. 248; amended Pub. L. 94–328, §2(f), June 30, 1976, 90 Stat. 727; Pub. L. 94–482, title I, §121(a), (b)(1), (c)–(i), Oct. 12, 1976, 90 Stat. 2091–2093; Pub. L. 95–43, §1(a)(5), June 15, 1977, 91 Stat. 213; Pub. L. 95–566, §2, Nov. 1, 1978, 92 Stat. 2402; Pub. L. 96–49, §5(a)(1), (2)(A), Aug. 13, 1979, 93 Stat. 351; Pub. L. 96–374, title IV, §402, title XIII, §1391(a)(1), Oct. 3, 1980, 94 Stat. 1401, 1503; Pub. L. 97–301, §8(a), Oct. 13, 1982, 96 Stat. 1402, related to basic educational opportunity grants, amount and determinations, and applications, prior to the general revision of this part by Pub. L. 99–498.

A prior section 401 of Pub. L. 89–329 was renumbered section 400 by section 402(a)(3) of Pub. L. 102–325 and is classified to section 1070 of this title.

Another prior section 401 of Pub. L. 89–329, title IV, as added and amended Pub. L. 92–318, title I, §131(b)(1), title X, §1001(c)(1), (2), June 23, 1972, 86 Stat. 247, 381; Pub. L. 94–482, title I, §125, Oct. 12, 1976, 90 Stat. 2096; Pub. L. 96–374, title IV, §401, title XIII, §1391(a)(1), Oct. 3, 1980, 94 Stat. 1401, 1503, which stated purpose of program of grants to students in attendance at institutions of higher education, was classified to section 1070 of this title, prior to the general revision of this part by Pub. L. 99–498.

Amendments

2010—Subsec. (b)(2)(A). Pub. L. 111–152, §2101(a)(1), amended subpar. (A) generally. Prior to amendment, subpar. (A) established grant amounts for academic years 2009–2010 to 2014–2015.

Subsec. (b)(4). Pub. L. 111–152, §2101(b)(1)(A), substituted “maximum amount of a Federal Pell Grant award determined under paragraph (2)(A)” for “maximum basic grant level specified in the appropriate appropriation Act” and substituted “such Federal Pell Grant amount” for “such level” wherever appearing.

Subsec. (b)(6). Pub. L. 111–152, §2101(b)(1)(B), substituted “the maximum amount of a Federal Pell Grant award determined under paragraph (2)(A), for which a student is eligible during such award year” for “the grant level specified in the appropriate Appropriation Act for this subpart for such year”.

Subsec. (b)(8)(A). Pub. L. 111–152, §2101(a)(2)(A)(i), struck out “, to carry out subparagraph (B) of this paragraph” after “are appropriated” in introductory provisions.

Subsec. (b)(8)(A)(iii) to (x). Pub. L. 111–152, §2101(a)(2)(A)(ii), added cls. (iii) and (iv) and struck out former cls. (iii) to (x), which appropriated additional funds for fiscal years 2010 to 2017.

Subsec. (b)(8)(B). Pub. L. 111–152, §2101(a)(2)(B)(i), substituted “clauses (i) through (iii) of subparagraph (A)” for “subparagraph (A)” in introductory provisions.

Subsec. (b)(8)(B)(ii). Pub. L. 111–152, §2101(a)(2)(B)(ii), substituted “, 2011–2012, and 2012–2013” for “and 2011–2012”.

Subsec. (b)(8)(B)(iii). Pub. L. 111–152, §2101(a)(2)(B)(iii), added cl. (iii) and struck out former cl. (iii) which read as follows: “$1,090 for award year 2012–2013.”

Subsec. (b)(8)(C). Pub. L. 111–152, §2101(a)(2)(C), added subpar. (C) and struck out former subpar. (C). Prior to amendment, text read as follows: “The Secretary shall only award an increased amount of a Federal Pell Grant under this section for any award year pursuant to the provisions of this paragraph to students who qualify for a Federal Pell Grant award under the maximum grant award enacted in the annual appropriation Act for such award year without regard to the provisions of this paragraph.”

2009—Subsec. (a)(1). Pub. L. 111–39, §401(a)(2)(A), substituted “manner,” for “manner,,”.

Subsec. (b)(1). Pub. L. 111–39, §401(a)(2)(B), made technical amendment to reference in original act which appears in text as reference to this section.

Subsec. (b)(8)(A)(ii), (iii). Pub. L. 111–5, which directed amendment of par. (9)(A) by substituting “$2,733,000,000” for “$2,090,000,000” in cl. (ii) and “$3,861,000,000” for “$3,030,000,000” in cl. (iii), was executed by making the substitutions in par. (8)(A) to reflect the probable intent of Congress.

Subsec. (b)(8)(A)(vi), (viii). Pub. L. 111–39, §401(a)(2)(C), which directed amendment of par. (9)(A) by substituting “$258,000,000” for “$105,000,000” in cl. (vi) and “$4,452,000,000” for “$4,400,000,000” in cl. (viii) effective Aug. 14, 2008, was executed by making the substitutions in par. (8)(A). Subsec. (b)(8) would have been subsec. (b)(9) on Aug. 14, 2008, but for the probable intent execution of the amendment by Pub. L. 110–84, §101(a)(2). See 2007 Amendment note below.

Subsec. (f)(4). Pub. L. 111–39, §401(a)(3), struck out par. (4) which attributed expected family contribution of zero to certain eligible students whose parent or guardian died as a result of performing military service in Iraq or Afghanistan after Sept. 11, 2001. See section 1070h of this title.

2008—Subsec. (b). Pub. L. 110–315, §401(a)(1)(B), which directed amendment of subsec. (b) by designating the pars. following par. (2), in the order in which such pars. appear, as pars. (3) through (8), was a technical correction to sequence of amendments by Pub. L. 110–84 and required no change in text. See 2007 Amendment notes below.

Subsec. (b)(2)(A). Pub. L. 110–315, §401(a)(1)(A), amended subpar. (A) generally, substituting Pell Grant amounts for academic years 2009 to 2015 for amounts for academic years 1999 to 2004.

Subsec. (b)(4). Pub. L. 110–315, §401(a)(1)(C), substituted “ten percent of the maximum basic grant level specified in the appropriate appropriation Act for such academic year, except that a student who is eligible for a Federal Pell Grant in an amount that is equal to or greater than five percent of such level but less than ten percent of such level shall be awarded a Federal Pell grant in the amount of ten percent of such level” for “$400, except that a student who is eligible for a Federal Pell Grant that is equal to or greater than $200 but less than $400 shall be awarded a Federal Pell Grant of $400”.

Subsec. (b)(5). Pub. L. 110–315, §401(a)(1)(D), added par. (5) and struck out former par. (5) which read: “The Secretary may allow, on a case-by-case basis, a student to receive 2 Pell grants during a single award year, if—

“(i) the student is enrolled full-time in an associate or baccalaureate degree program of study that is 2 years or longer at an eligible institution that is computed in credit hours; and

“(ii) the student completes course work toward completion of an associate or baccalaureate degree that exceeds the requirements for a full academic year as defined by the institution.

“(B) The Secretary shall promulgate regulations implementing this paragraph.”

Subsec. (b)(7). Pub. L. 110–315, §401(a)(1)(E), inserted before period at end “or who is subject to an involuntary civil commitment upon completion of a period of incarceration for a forcible or nonforcible sexual offense (as determined in accordance with the Federal Bureau of Investigation's Uniform Crime Reporting Program)”.

Subsec. (b)(8)(D). Pub. L. 110–315, §401(a)(1)(F)(i), amended subpar. (D) generally. Prior to amendment, subpar. (D) read as follows:

“(D) Formula otherwise unaffected.—Except as provided in subparagraphs (B) and (C), nothing in this paragraph shall be construed to alter the requirements of this section, or authorize the imposition of additional requirements, for the determination and allocation of Federal Pell Grants under this section.”

Subsec. (b)(8)(F). Pub. L. 110–315, §401(a)(1)(F)(ii), amended subpar. (F) generally. Prior to amendment, subpar. (F) read as follows:

“(F) Use of fiscal year funds for award years.—The amounts made available by subparagraph (A) for any fiscal year shall be available and remain available for use under subparagraph (B) for the award year that begins in such fiscal year.”

Subsec. (c)(5). Pub. L. 110–315, §401(b), added par. (5).

Subsec. (f)(3). Pub. L. 110–315, §103(b)(3), substituted “to the Committee on Appropriations of the Senate, the Committee on Appropriations of the House of Representatives, and the authorizing committees” for “to the Committee on Appropriations and the Committee on Labor and Human Resources of the Senate and the Committee on Appropriations and the Committee on Education and the Workforce of the House of Representatives”.

Subsec. (f)(4). Pub. L. 110–315, §401(c)(1), added par. (4).

2007—Subsec. (a)(1). Pub. L. 110–84, §102(a), substituted “fiscal year 2017” for “fiscal year 2004”.

Subsec. (b)(3) to (7). Pub. L. 110–84, §101(a), redesignated pars. (4) to (8) as (3) to (7), respectively, and struck out former par. (3) which related to the amount of a student's basic grant for any academic year for which an appropriation Act provided a maximum basic grant of more than $2,700.

Subsec. (b)(8). Pub. L. 110–84, §101(a)(2), which directed redesignation of par. (9) as (8), was executed by redesignating the par. (9) enacted by Pub. L. 110–84, §102(b), as (8) to reflect the probable intent of Congress. See below. Former par. (8) redesignated (7).

Subsec. (b)(9). Pub. L. 110–84, §102(b), added par. (9).

1998—Pub. L. 105–244, §401(g)(3)(A), substituted “Federal Pell” for “Basic educational opportunity” in section catchline.

Subsec. (a)(1). Pub. L. 105–244, §401(g)(3)(C), substituted “Federal Pell Grant” for “basic grant”.

Pub. L. 105–244, §401(a), substituted “For each fiscal year through fiscal year 2004, the Secretary shall” for “The Secretary shall, during the period beginning July 1, 1972, and ending September 30, 1998,” and inserted “until such time as the Secretary determines and publishes in the Federal Register with an opportunity for comment, an alternative payment system that provides payments to institutions in an accurate and timely manner,” after “pay eligible students”.

Subsec. (a)(3). Pub. L. 105–244, §401(g)(3)(B), substituted “Grants made” for “Basic grants made”.

Subsec. (b)(1). Pub. L. 105–244, §401(g)(3)(C), substituted “Federal Pell Grant” for “basic grant”.

Subsec. (b)(2)(A). Pub. L. 105–244, §401(b), amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: “The amount of the basic grant for a student eligible under this part shall be—

“(i) $3,700 for academic year 1993–1994,

“(ii) $3,900 for academic year 1994–1995,

“(iii) $4,100 for academic year 1995–1996,

“(iv) $4,300 for academic year 1996–1997, and

“(v) $4,500 for academic year 1997–1998,

less an amount equal to the amount determined to be the expected family contribution with respect to that student for that year.”

Subsec. (b)(2)(B). Pub. L. 105–244, §401(g)(3)(C), substituted “Federal Pell Grant” for “basic grant”.

Subsec. (b)(3). Pub. L. 105–244, §401(c), amended par. (3) generally. Prior to amendment, par. (3) read as follows:

“(3)(A) For any academic year for which an appropriation Act provides a maximum basic grant in an amount in excess of $2,400, the amount of a student's basic grant shall equal $2,400 plus—

“(i) one-half of the amount by which such maximum basic grant exceeds $2,400; plus

“(ii) the lesser of—

“(I) the remaining one-half of such excess; or

“(II) the sum of the student's tuition and the student's allowance determined under subparagraph (B), if applicable.

“(B) For purposes of subparagraph (A)(ii)(II), a student's allowance is $750 if the student has dependent care expenses (as defined in section 1087ll(8) of this title) or disability related expenses (as defined in section 1087ll(9) of this title).”

Subsec. (b)(4), (5). Pub. L. 105–244, §401(g)(3)(C), substituted “Federal Pell Grant” for “basic grant” wherever appearing.

Subsec. (b)(6). Pub. L. 105–244, §401(d), designated existing provisions as subpar. (A), redesignated former subpars. (A) and (B) as cls. (i) and (ii), respectively, and added subpar. (B).

Subsec. (b)(7), (8). Pub. L. 105–244, §401(g)(3)(C), substituted “Federal Pell Grant” for “basic grant” wherever appearing.

Subsec. (c)(1). Pub. L. 105–244, §401(g)(3)(D), substituted “Federal Pell Grants” for “basic grants”.

Subsec. (c)(4). Pub. L. 105–244, §401(g)(3)(C), substituted “Federal Pell Grant” for “basic grant” in introductory provisions.

Pub. L. 105–244, §401(e), added par. (4).

Subsec. (d)(1). Pub. L. 105–244, §401(g)(3)(D), substituted “Federal Pell Grants” for “basic grants”.

Subsecs. (d)(2), (f)(1). Pub. L. 105–244, §401(g)(3)(C), substituted “Federal Pell Grant” for “basic grant”.

Subsec. (f)(3). Pub. L. 105–244, §401(g)(4), substituted “Education and the Workforce” for “Education and Labor”.

Subsec. (j). Pub. L. 105–244, §401(f), added subsec. (j).

1994—Subsec. (b)(8). Pub. L. 103–322 amended par. (8) generally. Prior to amendment, par. (8) read as follows:

“(8)(A) No basic grant shall be awarded to an incarcerated student under this subpart that exceeds the sum of the amount of tuition and fees normally assessed by the institution of higher education for the course of study such student is pursuing plus an allowance (determined in accordance with regulations issued by the Secretary) for books and supplies associated with such course of study, except that no basic grant shall be awarded to any incarcerated student serving under sentence of death or any life sentence without eligibility for parole or release.

“(B) Basic grants under this subpart shall only be awarded to incarcerated individuals in a State if such grants are used to supplement and not supplant the level of postsecondary education assistance provided by such State to incarcerated individuals in fiscal year 1988.”

1993—Subsec. (a)(1). Pub. L. 103–208, §2(b)(1), inserted before period at end of second sentence “, except that this sentence shall not be construed to limit the authority of the Secretary to place an institution on a reimbursement system of payment”.

Subsec. (b)(2)(B). Pub. L. 103–208, §2(k)(1), amended directory language of Pub. L. 102–325, §401(d)(2)(A). See 1992 Amendment note below.

Subsec. (b)(6). Pub. L. 103–208, §2(b)(2)–(4), substituted “single award year” for “single 12-month period” in introductory provisions, “an associate or baccalaureate” for “a baccalaureate” in subpar. (A), and “an associate or baccalaureate” for “a bachelor's” in subpar. (B).

Subsec. (i). Pub. L. 103–208, §2(b)(5), substituted “subtitle D of title V” for “part D of title V”.

1992—Subsec. (a)(1). Pub. L. 102–325, §401(a), substituted “September 30, 1998” for “September 30, 1992” and “subsection (b) of this section” for “paragraph (2)”.

Subsec. (a)(3). Pub. L. 102–325, §401(b), substituted “Federal Pell Grants” for “Pell Grants”.

Subsec. (b)(1). Pub. L. 102–325, §401(c), struck out “(A) as determined under paragraph (2), will meet 60 percent of a student's cost of attendance (as defined in section 1070a–6 of this title); and (B)” after “basic grant that” and substituted “family and student” for “parental or independent student”, “subparts 3 and 4” for “subparts 2 and 3”, and “will meet at least 75 percent” for “will meet 75 percent”.

Subsec. (b)(2)(A)(i) to (v). Pub. L. 102–325, §401(d)(1), added cls. (i) to (v) and struck out former cls. (i) to (v) which read as follows:

“(i) $2,300 for academic year 1987–1988,

“(ii) $2,500 for academic year 1988–1989,

“(iii) $2,700 for academic year 1989–1990,

“(iv) $2,900 for academic year 1990–1991, and

“(v) $3,100 for academic year 1991–1992,”.

Subsec. (b)(2)(B). Pub. L. 102–325, §401(d)(2)(A), as amended by Pub. L. 103–208, §2(k)(1), inserted “(including a student who attends an institution of higher education on less than a half-time basis)” in first sentence after “full-time basis” the first time appearing.

Pub. L. 102–325, §401(d)(2)(B), inserted “, computed in accordance with this subpart” before period at end of first sentence.

Subsec. (b)(3). Pub. L. 102–325, §401(d)(3), amended par. (3) generally. Prior to amendment, par. (3) read as follows: “The amount of a basic grant to which a student is entitled under this subpart for any academic year shall not exceed 60 percent of the cost of attendance (as defined in section 1070a–6 of this title) at the institution at which the student is in attendance for that year.”

Subsec. (b)(4). Pub. L. 102–325, §401(d)(4), substituted “section 1087ll” for “section 1070a–6”.

Subsec. (b)(5). Pub. L. 102–325, §401(d)(5), substituted “$400, except that a student who is eligible for a basic grant that is equal to or greater than $200 but less than $400 shall be awarded a basic grant of $400” for “$200”.

Subsec. (b)(6) to (8). Pub. L. 102–325, §401(d)(6), added pars. (6) to (8) and struck out former pars. (6) and (7) which limited or prohibited basic grants from funds appropriated for fiscal years prior to 1992 to students attending on a less than half-time basis.

Subsec. (c)(1). Pub. L. 102–325, §401(e)(1), substituted “any period during which the student is enrolled in a noncredit or remedial course of study as defined in paragraph (2) shall not be counted for the purpose of this paragraph.” for “—

“(A) such period may not exceed the full-time equivalent of—

“(i) 5 academic years in the case of an undergraduate degree or certificate program normally requiring 4 years or less;

“(ii) 6 academic years in the case of an undergraduate degree or certificate program normally requiring more than 4 years;

“(B) any period during which the student is enrolled in a noncredit or remedial course of study as defined in paragraph (2) shall not be counted for the purpose of subparagraph (A); and

“(C) an institution of higher education at which the student is in attendance may waive subparagraph (A) for undue hardship based on—

“(i) the death of a relative of the student;

“(ii) the personal injury or illness of the student; or

“(iii) special circumstances as determined by the institution.”

Subsec. (c)(2). Pub. L. 102–325, §401(e)(2), inserted at end “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.”

Subsec. (f)(1). Pub. L. 102–325, §401(f)(1), substituted “, as a part of its regular output document, the expected family contribution” for “an estimate of the eligibility index” in introductory provisions and “expected family contribution” for “eligibility index” in subpars. (A), (B), and (D).

Subsec. (f)(3). Pub. L. 102–325, §401(f)(2), substituted “expected family contribution” for “eligibility index”.

Subsec. (g). Pub. L. 102–325, §401(g), struck out “Adjustments for” before “insufficient appropriations” in heading and amended text generally. Prior to amendment, text read as follows:

“(1) If, for any fiscal year, the funds appropriated for payments under this subpart are insufficient to satisfy fully all entitlements, as calculated under subsection (b) of this section, the amount paid with respect to each entitlement shall be—

“(A) the full amount for any student whose expected family contribution is $200 or less, or

“(B) a percentage of that entitlement, as determined in accordance with a schedule of reductions established by the Secretary for this purpose, for any student whose expected family contribution is more than $200.

“(2) Any schedule established by the Secretary for the purpose of paragraph (1)(B) of this subsection shall contain a single linear reduction formula in which the percentage reduction increases uniformly as the entitlement decreases, and shall provide that if an entitlement is reduced to less than $100, no payment shall be made.”

Subsec. (i). Pub. L. 102–325, §401(h), substituted “Treatment of institutions and students under other laws” for “Noncontractor status of institutions” in heading and inserted at end of text “Recipients of Pell Grants shall not be considered to be individual grantees for purposes of part D of title V of Public Law 100–690.”

1987—Subsec. (g)(2). Pub. L. 100–50 substituted “paragraph (1)(B)” for “paragraph (1)”.

Effective Date of 2010 Amendment

Pub. L. 111–152, title II, §2101(c), Mar. 30, 2010, 124 Stat. 1073, provided that: “The amendments made by subsections (a) and (b) [amending this section and sections 1070a–14, 1085, 1090, 1092f, and 1161y of this title] shall take effect on July 1, 2010.”

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, §401(a)(2), Aug. 14, 2008, 122 Stat. 3189, provided that:

“(A) In general.—Except as provided in subparagraph (B), the amendments made by paragraph (1) [amending this section] shall take effect on July 1, 2009.

“(B) Special rule.—The amendments made by subparagraph (F) of paragraph (1) [amending this section] shall take effect on the date of enactment of this Act [Aug 14, 2008].”

Pub. L. 110–315, title IV, §401(c)(2), Aug. 14, 2008, 122 Stat. 3190, provided that: “The amendment made by paragraph (1) [amending this section] shall take effect on July 1, 2009.”

Effective Date of 2007 Amendment

Pub. L. 110–84, §1(c), Sept. 27, 2007, 121 Stat. 784, provided that: “Except as otherwise expressly provided, the amendments made by this Act [enacting subpart 9 of this part and sections 1098e, 1098f, 1099d, 1099e, and 1141 of this title, amending this section and sections 1070a–13, 1077a, 1078, 1078–3, 1085, 1087–1, 1087e, 1087h, 1087dd, 1087ff, 1087oo to 1087tt, and 1087vv of this title, repealing section 1078–9 of this title, and amending provisions set out as a note under section 1078 of this title] shall be effective on October 1, 2007.”

Pub. L. 110–84, title I, §101(b), Sept. 27, 2007, 121 Stat. 784, provided that: “The amendments made by subsection (a) [amending this section] shall be effective with respect to determinations of Federal Pell Grant amounts for award years beginning on or after July 1, 2007.”

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 1994 Amendment

Section 20411(b) of Pub. L. 103–322 provided that: “The amendment made by this section [amending this section] shall apply with respect to periods of enrollment beginning on or after the date of enactment of this Act [Sept. 13, 1994].”

Effective Date of 1993 Amendment

Amendment by section 2(b)(1), (3)–(5), (k)(1) of Pub. L. 103–208 effective as if included in the Higher Education Amendments of 1992, Pub. L. 102–325, and amendment by section 2(b)(2) of Pub. L. 103–208 effective on and after Dec. 20, 1993, see section 5(a), (b)(2) of Pub. L. 103–208, set out as a note under section 1051 of this title.

Effective Date of 1992 Amendment

Section 410 of Pub. L. 102–325 provided that: “The changes made in part A of title IV of the Act [20 U.S.C. 1070 et seq.] by the amendments made by this part [part A (§§401–410) of title IV of Pub. L. 102–325, see Tables for classification] shall take effect on the date of enactment of this Act [July 23, 1992], except—

“(1) as otherwise provided in such part A;

“(2) that the changes made in section 411 [this section], relating to Pell Grants, shall apply to the awarding of Pell Grants for periods of enrollment beginning on or after July 1, 1993; and

“(3) that the changes in section 413C(a)(2) [20 U.S.C. 1070b–2(a)(2)], relating to the Federal share for the supplemental educational opportunity grant program, shall apply to funds provided for such program for the award years beginning on or after July 1, 1993.”

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.

Section 401(b)(3), (4) of Pub. L. 99–498 provided that:

“(3) Section 411(c) of the Act [20 U.S.C. 1070a(c)] as amended by this section shall apply only to individuals who receive a Pell Grant for the first time for a period of enrollment beginning on or after July 1, 1987.

“(4) Section 411(f) of the Act [20 U.S.C. 1070a(f)] as amended by this section shall apply to the awarding of Pell Grants for periods of enrollment beginning on or after July 1, 1987.”

Study of Pell Grant Eligibility for Less Than Half-Time Students

Section 1306 of Pub. L. 99–498 directed Secretary to conduct a study and report to Congress not later than Sept. 30, 1988, on the number of less than half-time students who would be eligible for Pell grants by reason of having an expected family contribution of $0 and of $0–$200 for the appropriate academic years, prior to repeal by Pub. L. 105–332, §6(a), Oct. 31, 1998, 112 Stat. 3127.

Maximum Pell Grants

Provisions limiting the maximum Pell grant that a student may receive were contained in the following appropriation acts:

Pub. L. 111–242, §164(b), as added by Pub. L. 111–322, title I, §1(a)(2), Dec. 22, 2010, 124 Stat. 3521.

Pub. L. 111–117, div. D, title III, Dec. 16, 2009, 123 Stat. 3267.

Pub. L. 111–8, div. F, title III, Mar. 11, 2009, 123 Stat. 789.

Pub. L. 111–5, div. A, title VIII, Feb. 17, 2009, 123 Stat. 183.

Pub. L. 110–161, div. G, title III, Dec. 26, 2007, 121 Stat. 2195.

Pub. L. 109–289, div. B, title II, §20633(b), as added by Pub. L. 110–5, §2, Feb. 15, 2007, 121 Stat. 36.

Pub. L. 109–149, title III, Dec. 30, 2005, 119 Stat. 2868.

Pub. L. 108–447, div. F, title III, Dec. 8, 2004, 118 Stat. 3148.

Pub. L. 108–199, div. E, title III, Jan. 23, 2004, 118 Stat. 261.

Pub. L. 108–7, div. G, title III, Feb. 20, 2003, 117 Stat. 330.

Pub. L. 107–116, title III, Jan. 10, 2002, 115 Stat. 2205.

Pub. L. 106–554, §1(a)(1) [title III], Dec. 21, 2000, 114 Stat. 2763, 2763A–37.

Pub. L. 106–113, div. B, §1000(a)(4) [title III], Nov. 29, 1999, 113 Stat. 1535, 1501A–251.

Pub. L. 105–277, div. A, §101(f) [title III], Oct. 21, 1998, 112 Stat. 2681–337, 2681–369.

Pub. L. 105–78, title III, Nov. 13, 1997, 111 Stat. 1501.

Pub. L. 104–208, div. A, title I, §101(e) [title III], Sept. 30, 1996, 110 Stat. 3009–233, 3009–257.

Pub. L. 104–134, title I, §101(d) [title III], Apr. 26, 1996, 110 Stat. 1321–211, 1321–232; renumbered title I, Pub. L. 104–140, §1(a), May 2, 1996, 110 Stat. 1327.

Pub. L. 104–99, title I, §119, Jan. 26, 1996, 110 Stat. 30, prior to repeal by Pub. L. 104–134, title I, §101(d) [title V, §518], Apr. 26, 1996, 110 Stat. 1321–211, 1321–248; renumbered title I, Pub. L. 104–140, §1(a), May 2, 1996, 110 Stat. 1327.

Pub. L. 103–333, title III, Sept. 30, 1994, 108 Stat. 2564.

Pub. L. 103–112, title III, Oct. 21, 1993, 107 Stat. 1104.

Pub. L. 102–394, title III, Oct. 6, 1992, 106 Stat. 1816.

Pub. L. 102–170, title III, Nov. 26, 1991, 105 Stat. 1131.

Pub. L. 101–517, title III, Nov. 5, 1990, 104 Stat. 2212.

Pub. L. 101–166, title III, Nov. 21, 1989, 103 Stat. 1182.

Pub. L. 100–436, title III, Sept. 20, 1988, 102 Stat. 1704.

Pub. L. 100–202, §101(h) [title III], Dec. 22, 1987, 101 Stat. 1329–256, 1329–279.

1 So in original. Probably should be “clause (iv)(II)),”.

§1070a–1. Academic competitiveness grants

(a) Academic competitiveness grant program authorized

The Secretary shall award grants, in the amounts specified in subsection (d)(1), to eligible students to assist the eligible students in paying their college education expenses.

(b) Designation

A grant under this section—

(1) for the first or second year of a program of undergraduate education shall be known as an “Academic Competitiveness Grant”; and

(2) for the third, fourth, or fifth year of a program of undergraduate education shall be known as a “National Science and Mathematics Access to Retain Talent Grant” or a “National SMART Grant”.

(c) Definition of eligible student

In this section the term “eligible student” means a student who, for the award year for which the determination of eligibility is made for a grant under this section—

(1) is eligible for a Federal Pell Grant;

(2) is enrolled or accepted for enrollment in an institution of higher education on not less than a half-time basis; and

(3) in the case of a student enrolled or accepted for enrollment in—

(A) the first year of a program of undergraduate education at a two- or four-year degree-granting institution of higher education (including a program of not less than one year for which the institution awards a certificate)—

(i) has successfully completed, after January 1, 2006, a rigorous secondary school program of study that prepares students for college and is recognized as such by the State official designated for such recognition, or with respect to any private or home school, the school official designated for such recognition for such school, consistent with State law, which recognized program shall be reported to the Secretary; and

(ii) has not been previously enrolled in a program of undergraduate education, except as part of a secondary school program of study;


(B) the second year of a program of undergraduate education at a two- or four-year degree-granting institution of higher education (including a program of not less than two years for which the institution awards a certificate)—

(i)(I) successfully completes, after January 1, 2005, but before July 1, 2009, a rigorous secondary school program of study established by a State or local educational agency and recognized as such by the Secretary; or

(II) successfully completes, on or after July 1, 2009, a rigorous secondary school program of study that prepares students for college—

(aa)(AA) that is recognized as such by the official designated for such recognition consistent with State law; and

(BB) about which the designated official has reported to the Secretary, at such time as the Secretary may reasonably require, in order to assist financial aid administrators to determine that the student is an eligible student under this section; or

(bb) that is recognized as such by the Secretary in regulations promulgated to carry out this section, as such regulations were in effect on May 6, 2008; and


(ii) has obtained a cumulative grade point average of at least 3.0 (or the equivalent as determined under regulations prescribed by the Secretary) at the end of the first year of such program of undergraduate education;


(C) the third or fourth year of a program of undergraduate education at a four-year degree-granting institution of higher education—

(i) is certified by the institution to be pursuing a major in—

(I) the physical, life, or computer sciences, mathematics, technology, or engineering (as determined by the Secretary pursuant to regulations); or

(II) a critical foreign language; and


(ii) has obtained a cumulative grade point average of at least 3.0 (or the equivalent as determined under regulations prescribed by the Secretary) in the coursework required for the major described in clause (i);


(D) the third or fourth year of a program of undergraduate education at an institution of higher education (as defined in section 1001(a) of this title), is attending an institution that demonstrates, to the satisfaction of the Secretary, that the institution—

(i) offers a single liberal arts curriculum leading to a baccalaureate degree, under which students are not permitted by the institution to declare a major in a particular subject area, and the student—

(I)(aa) studies, in such years, a subject described in subparagraph (C)(i) that is at least equal to the requirements for an academic major at an institution of higher education that offers a baccalaureate degree in such subject, as certified by an appropriate official from the institution; and

(bb) has obtained a cumulative grade point average of at least 3.0 (or the equivalent as determined under regulations prescribed by the Secretary) in the relevant coursework; or

(II) is required, as part of the student's degree program, to undertake a rigorous course of study in mathematics, biology, chemistry, and physics, which consists of at least—

(aa) 4 years of study in mathematics; and

(bb) 3 years of study in the sciences, with a laboratory component in each of those years; and


(ii) offered such curriculum prior to February 8, 2006; or


(E) the fifth year of a program of undergraduate education that requires 5 full years of coursework, as certified by the appropriate official of the degree-granting institution of higher education, for which a baccalaureate degree is awarded by a degree-granting institution of higher education—

(i) is certified by the institution of higher education to be pursuing a major in—

(I) the physical, life, or computer sciences, mathematics, technology, or engineering (as determined by the Secretary pursuant to regulations); or

(II) a critical foreign language; and


(ii) has obtained a cumulative grade point average of at least 3.0 (or the equivalent, as determined under regulations prescribed by the Secretary) in the coursework required for the major described in clause (i).

(d) Grant award

(1) Amounts

(A) In general

The Secretary shall award a grant under this section in the amount of—

(i) $750 for an eligible student under subsection (c)(3)(A);

(ii) $1,300 for an eligible student under subsection (c)(3)(B);

(iii) $4,000 for an eligible student under subparagraph (C) or (D) of subsection (c)(3), for each of the two years described in such subparagraphs; or

(iv) $4,000 for an eligible student under subsection (c)(3)(E).

(B) Limitation; ratable reduction

Notwithstanding subparagraph (A)—

(i) in any case in which a student attends an institution of higher education on less than a full-time basis, the amount of the grant that such student may receive shall be reduced in the same manner as a Federal Pell Grant is reduced under section 1070a(b)(2)(B) of this title;

(ii) the amount of such grant, in combination with the Federal Pell Grant assistance and other student financial assistance available to such student, shall not exceed the student's cost of attendance;

(iii) if the amount made available under subsection (e) for any fiscal year is less than the amount required to be provided grants to all eligible students in the amounts determined under subparagraph (A) and clause (i) of this subparagraph, then the amount of the grant to each eligible student shall be ratably reduced; and

(iv) if additional amounts are appropriated for any such fiscal year, such reduced amounts shall be increased on the same basis as they were reduced.

(2) Limitations

(A) No grants for previous credit

The Secretary may not award a grant under this section to any student for any year of a program of undergraduate education for which the student received credit before February 8, 2006.

(B) Number of grants

The Secretary may not award more than one grant to a student described in subsection (c)(3) for each year of study described in such subsection.

(3) Calculation of grant payments

An institution of higher education shall make payments of a grant awarded under this section in the same manner, using the same payment periods, as such institution makes payments for Federal Pell Grants under section 1070a of this title.

(e) Funding

(1) Authorization and appropriation of funds

There are authorized to be appropriated, and there are appropriated, out of any money in the Treasury not otherwise appropriated, for the Department of Education to carry out this section—

(A) $790,000,000 for fiscal year 2006;

(B) $850,000,000 for fiscal year 2007;

(C) $920,000,000 for fiscal year 2008;

(D) $960,000,000 for fiscal year 2009; and

(E) $1,010,000,000 for fiscal year 2010.

(2) Availability of funds

Funds made available under paragraph (1) for a fiscal year shall remain available for the succeeding fiscal year.

(f) Recognition of programs of study

The Secretary shall recognize not less than one rigorous secondary school program of study in each State under subparagraphs (A) and (B) of subsection (c)(3) for the purpose of determining student eligibility under such subsection.

(g) Sunset provision

The authority to make grants under this section shall expire at the end of award year 2010–2011.

(Pub. L. 89–329, title IV, §401A, as added Pub. L. 109–171, title VIII, §8003, Feb. 8, 2006, 120 Stat. 155; amended Pub. L. 110–227, §10(a), May 7, 2008, 122 Stat. 748; Pub. L. 110–315, title IV, §402(a)(1), Aug. 14, 2008, 122 Stat. 3190.)

Prior Provisions

A prior section 1070a–1, Pub. L. 89–329, title IV, §411A, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1312; amended Pub. L. 100–50, §3(b)(1), June 3, 1987, 101 Stat. 337; Pub. L. 100–369, §7(c), July 18, 1988, 102 Stat. 837, related to family contribution schedule for Pell Grants and data elements, prior to repeal by Pub. L. 102–325, title IV, §401(i), July 23, 1992, 106 Stat. 482.

Amendments

2008—Subsec. (a). Pub. L. 110–227, §10(a)(1), added subsec. (a) and struck out former subsec. (a) which established Academic Competitiveness Grants and Academic Competitiveness Council and required report to Congress.

Subsec. (b)(1). Pub. L. 110–227, §10(a)(2)(A), substituted “year” for “academic year”.

Subsec. (b)(2). Pub. L. 110–227, §10(a)(2), substituted “third, fourth, or fifth” for “third or fourth” and “year” for “academic year”.

Subsec. (c). Pub. L. 110–227, §10(a)(3)(A), in introductory provisions, struck out “full-time” before “student who, for the” and substituted “award” for “academic” and “is made for a grant under this section” for “is made”.

Subsec. (c)(1), (2). Pub. L. 110–227, §10(a)(3)(B), added pars. (1) and (2) and struck out former pars. (1) and (2) which read as follows:

“(1) is a citizen of the United States;

“(2) is eligible for a Federal Pell Grant; and”.

Subsec. (c)(3). Pub. L. 110–227, §10(a)(3)(C)(i), struck out “academic” before “year of” wherever appearing.

Subsec. (c)(3)(A). Pub. L. 110–227, §10(a)(3)(C)(ii)(I), substituted, in introductory provisions, “the first year of a program of undergraduate education at a two- or four-year degree-granting institution of higher education (including a program of not less than one year for which the institution awards a certificate)—” for “the first year of a program of undergraduate education at a two- or four-year degree-granting institution of higher education—”.

Subsec. (c)(3)(A)(i). Pub. L. 110–315, §402(a)(1)(A)(i), added cl. (i) and struck out former cl. (i) which read as follows: “has successfully completed, after January 1, 2006, a rigorous secondary school program of study established by a State or local educational agency and recognized as such by the Secretary; and”. See Effective Date of 2008 Amendment notes below.

Pub. L. 110–227, §10(a)(3)(C)(ii)(II), added cl. (i) and struck out former cl. (i), as amended by Pub. L. 110–315, §402(a)(1)(A)(i), which read as follows:

“(I) successfully completes, after January 1, 2006, but before July 1, 2009, a rigorous secondary school program of study established by a State or local educational agency and recognized as such by the Secretary; or

“(II) successfully completes, on or after July 1, 2009, a rigorous secondary school program of study that prepares students for college—

“(aa)(AA) that is recognized as such by the official designated for such recognition consistent with State law; and

“(BB) about which the designated official has reported to the Secretary, at such time as the Secretary may reasonably require, in order to assist financial aid administrators to determine that the student is an eligible student under this section; or

“(bb) that is recognized as such by the Secretary in regulations promulgated to carry out this section, as such regulations were in effect on May 6, 2008; and”.

See Effective Date of 2008 Amendment notes below.

Subsec. (c)(3)(A)(ii). Pub. L. 110–227, §10(a)(3)(C)(ii)(III), inserted “, except as part of a secondary school program of study” before semicolon.

Subsec. (c)(3)(B). Pub. L. 110–227, §10(a)(3)(C)(iii)(I), in introductory provisions, substituted “year of a program of undergraduate education at a two- or four-year degree-granting institution of higher education (including a program of not less than two years for which the institution awards a certificate)” for “year of a program of undergraduate education at a two- or four-year degree-granting institution of higher education”.

Subsec. (c)(3)(B)(i). Pub. L. 110–315, §402(a)(1)(A)(ii), added cl. (i) and struck out former cl. (i) which read as follows: “has successfully completed, after January 1, 2005, a rigorous secondary school program of study established by a State or local educational agency and recognized as such by the Secretary; and”.

Subsec. (c)(3)(C)(i). Pub. L. 110–227, §10(a)(3)(C)(iv)(I), inserted “certified by the institution to be” after “is” in introductory provisions.

Subsec. (c)(3)(C)(i)(II). Pub. L. 110–227, §10(a)(3)(C)(iv)(II), added subcl. (II) and struck out former subcl. (II) which read as follows: “a foreign language that the Secretary, in consultation with the Director of National Intelligence, determines is critical to the national security of the United States; and”.

Subsec. (c)(3)(D), (E). Pub. L. 110–227, §10(a)(3)(C)(iii)(II), (iv)(III), (v), added subpars. (D) and (E).

Subsec. (d)(1)(A). Pub. L. 110–227, §10(a)(4)(A)(i), inserted heading, substituted “subparagraph (C) or (D) of subsection (c)(3), for each of the two years described in such subparagraphs; or” for “subsection (c)(3)(C).” in cl. (iii), and added cl. (iv).

Subsec. (d)(1)(B). Pub. L. 110–227, §10(a)(4)(A)(ii), inserted heading, added cl. (i), and redesignated former cls. (i) to (iii) as (ii) to (iv), respectively.

Subsec. (d)(2), (3). Pub. L. 110–227, §10(a)(4)(B), (C), added pars. (2) and (3) and struck out former par. (2). Prior to amendment, text read as follows: “The Secretary shall not award a grant under this section—

“(A) to any student for an academic year of a program of undergraduate education described in subparagraph (A), (B), or (C) of subsection (c)(3) for which the student received credit before February 8, 2006; or

“(B) to any student for more than—

“(i) one academic year under subsection (c)(3)(A);

“(ii) one academic year under subsection (c)(3)(B); or

“(iii) two academic years under subsection (c)(3)(C).”

Subsec. (e)(2). Pub. L. 110–315, §402(a)(1)(B), amended par. (2) generally. Prior to amendment, text read as follows: “If, at the end of a fiscal year, the funds available for awarding grants under this section exceed the amount necessary to make such grants in the amounts authorized by subsection (d), then all of the excess funds shall remain available for awarding grants under this section during the subsequent fiscal year.” See Effective Date of 2008 Amendment notes below.

Pub. L. 110–227, §10(a)(5), added par. (2) and struck out former par. (2), as amended by Pub. L. 110–315, §402(a)(1)(B). Prior to amendment, text read as follows: “The amounts made available by paragraph (1) for any fiscal year shall be available from October 1 of that fiscal year and remain available through September 30 of the succeeding fiscal year.” See Effective Date of 2008 Amendment notes below.

Subsec. (f). Pub. L. 110–227, §10(a)(6), substituted “not less than one” for “at least one” and “subparagraphs (A) and (B) of subsection (c)(3)” for “subsection (c)(3)(A) and (B)”.

Subsec. (g). Pub. L. 110–227, §10(a)(7), substituted “award” for “academic”.

Effective Date of 2008 Amendment

Pub. L. 110–315, title IV, §402(a)(2), Aug. 14, 2008, 122 Stat. 3191, provided that: “The amendment made by paragraph (1)(B) [amending this section] shall take effect on October 1, 2008.”

Pub. L. 110–227, §10(b), May 7, 2008, 122 Stat. 752, as amended by Pub. L. 110–315, title IV, §402(a)(3), Aug. 14, 2008, 122 Stat. 3191, provided that: “The amendments made by subsection (a) [amending this section] shall take effect on July 1, 2009.”

Effective Date

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

§§1070a–2 to 1070a–6. Repealed. Pub. L. 102–325, title IV, §401(i), July 23, 1992, 106 Stat. 482

Section 1070a–2, Pub. L. 89–329, title IV, §411B, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1313; amended Pub. L. 100–50, §3(b)(2), (c)–(f)(1), (4), (5), (g), June 3, 1987, 101 Stat. 337, 338; Pub. L. 102–54, §13(g)(1)(B), June 13, 1991, 105 Stat. 275, related to eligibility determination for dependent students.

Section 1070a–3, Pub. L. 89–329, title IV, §411C, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1316; amended Pub. L. 100–50, §3(b)(3), (c)(1), (f)(2), (4), (5), (g), (h)(2), June 3, 1987, 101 Stat. 337, 338; Pub. L. 100–369, §7(c), July 18, 1988, 102 Stat. 837; Pub. L. 102–54, §13(g)(1)(C), June 13, 1991, 105 Stat. 275, related to eligibility determination for independent students with dependents other than a spouse.

Section 1070a–4, Pub. L. 89–329, title IV, §411D, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1319; amended Pub. L. 100–50, §3(b)(4), (c)(1), (f)(3), (4), (g), June 3, 1987, 101 Stat. 337, 338; Pub. L. 100–369, §7(c), July 18, 1988, 102 Stat. 837; Pub. L. 102–54, §13(g)(1)(D), June 13, 1991, 105 Stat. 275, related to eligibility determination for single independent students or for married independent students without other dependents.

Section 1070a–5, Pub. L. 89–329, title IV, §411E, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1322, related to regulations and updated tables.

Section 1070a–6, Pub. L. 89–329, title IV, §411F, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1323; amended Pub. L. 100–50, §3(h)(1), (i)–(m), June 3, 1987, 101 Stat. 338, 339; Pub. L. 100–369, §7(a), (c), July 18, 1988, 102 Stat. 836, 837; Pub. L. 101–610, title I, §185(1), (2), Nov. 16, 1990, 104 Stat. 3167, related to definitions and determinations.

subpart 2—federal early outreach and student services programs

Codification

Pub. L. 102–325, title IV, §402(a)(2), (4), July 23, 1992, 106 Stat. 482, added subpart 2 and redesignated former subpart 2 comprising sections 1070b to 1070b–3 of this title as subpart 3.

Division 1—Federal TRIO Programs

§1070a–11. Program authority; authorization of appropriations

(a) Grants and contracts authorized

The Secretary shall, in accordance with the provisions of this division, carry out a program of making grants and contracts designed to identify qualified individuals from disadvantaged backgrounds, to prepare them for a program of postsecondary education, to provide support services for such students who are pursuing programs of postsecondary education, to motivate and prepare students for doctoral programs, and to train individuals serving or preparing for service in programs and projects so designed.

(b) Recipients, duration, and size

(1) Recipients

For the purposes described in subsection (a) of this section, the Secretary is authorized, without regard to section 6101 of title 41, 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, 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 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 shall be awarded for a period of 2 years; and

(C) grants under section 1070a–18 of this title shall be awarded for a period determined by the Secretary.

(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 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 in such manner and form, and containing such information and assurances, as the Secretary may reasonably require.

(2) Considerations

(A) Prior experience

In making grants under this division, the Secretary shall consider each applicant's prior experience of high quality service delivery, as determined under subsection (f), under the particular program for which funds are sought. The level of consideration given the factor of prior experience shall not vary from the level of consideration given such factor during fiscal years 1994 through 1997, except that grants made under section 1070a–18 of this title shall not be given prior experience consideration.

(B) Participant need

In making grants under this division, the Secretary shall consider the number, percentages, and needs of eligible participants in the area, institution of higher education, or secondary school to be served to aid such participants in preparing for, enrolling in, or succeeding in postsecondary education, as appropriate to the particular program for which the eligible entity is applying.

(3) Order of awards; program fraud

(A) Except with respect to grants made under sections 1070a–17 and 1070a–18 of this title and as provided in subparagraph (B), the Secretary 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) and adjusted for prior experience in accordance with paragraph (2) of this subsection.

(B) The Secretary shall not provide assistance to a program otherwise eligible for assistance under this division, if the Secretary has determined that such program has involved the fraudulent use of funds under this division.

(4) Peer review process

(A) The Secretary shall ensure that, to the extent practicable, members of groups underrepresented in higher education, including African Americans, Hispanics, Native Americans, Alaska Natives, Asian Americans, and Native American Pacific Islanders (including Native Hawaiians), are represented as readers of applications submitted under this division. The Secretary shall also ensure that persons from urban and rural backgrounds are represented as readers.

(B) The Secretary shall ensure that each application submitted under this division is read by at least three readers who are not employees of the Federal Government (other than as readers of applications).

(5) Number of applications for grants and contracts

The Secretary shall not limit the number of applications submitted by an entity under any program authorized under this division if the additional applications describe programs serving different populations or different campuses.

(6) Coordination with other programs for disadvantaged students

The Secretary shall encourage coordination of programs assisted under this division with other programs for disadvantaged students operated by the sponsoring institution or agency, regardless of the funding source of such programs. The Secretary shall not limit an entity's eligibility to receive funds under this division because such entity sponsors a program similar to the program to be assisted under this division, regardless of the funding source of such program. The Secretary shall permit the Director of a program receiving funds under this division to administer one or more additional programs for disadvantaged students operated by the sponsoring institution or agency, regardless of the funding sources of such programs. The Secretary shall, as appropriate, require each applicant for funds under the programs authorized by this division to identify and make available services under such program, including mentoring, tutoring, and other services provided by such program, to foster care youth (including youth in foster care and youth who have left foster care after reaching age 13) or to homeless children and youths as defined in section 11434a of title 42.

(7) Application status

The Secretary shall inform each entity operating programs under this division regarding the status of their application for continued funding at least 8 months prior to the expiration of the grant or contract. The Secretary, in the case of an entity that is continuing to operate a successful program under this division, shall ensure that the start-up date for a new grant or contract for such program immediately follows the termination of the preceding grant or contract so that no interruption of funding occurs for such successful reapplicants. The Secretary shall inform each entity requesting assistance under this division for a new program regarding the status of their application at least 8 months prior to the proposed startup date of such program.

(8) Review and notification by the Secretary

(A) Guidance

Not later than 180 days after August 14, 2008, the Secretary shall issue nonregulatory guidance regarding the rights and responsibilities of applicants with respect to the application and evaluation process for programs and projects assisted under this division, including applicant access to peer review comments. The guidance shall describe the procedures for the submission, processing, and scoring of applications for grants under this division, including—

(i) the responsibility of applicants to submit materials in a timely manner and in accordance with the processes established by the Secretary under the authority of the General Education Provisions Act [20 U.S.C. 1221 et seq.];

(ii) steps the Secretary will take to ensure that the materials submitted by applicants are processed in a proper and timely manner;

(iii) steps the Secretary will take to ensure that prior experience points for high quality service delivery are awarded in an accurate and transparent manner;

(iv) steps the Secretary will take to ensure the quality and integrity of the peer review process, including assurances that peer reviewers will consider applications for grants under this division in a thorough and complete manner consistent with applicable Federal law; and

(v) steps the Secretary will take to ensure that the final score of an application, including prior experience points for high quality service delivery and points awarded through the peer review process, is determined in an accurate and transparent manner.

(B) Updated guidance

Not later than 45 days before the date of the commencement of each competition for a grant under this division that is held after the expiration of the 180-day period described in subparagraph (A), the Secretary shall update and publish the guidance described in such subparagraph.

(C) Review

(i) In general

With respect to any competition for a grant under this division, an applicant may request a review by the Secretary if the applicant—

(I) has evidence of a specific technical, administrative, or scoring error made by the Department, an agent of the Department, or a peer reviewer, with respect to the scoring or processing of a submitted application; and

(II) has otherwise met all of the requirements for submission of the application.

(ii) Technical or administrative error

In the case of evidence of a technical or administrative error listed in clause (i)(I), the Secretary shall review such evidence and provide a timely response to the applicant. If the Secretary determines that a technical or administrative error was made by the Department or an agent of the Department, the application of the applicant shall be reconsidered in the peer review process for the applicable grant competition.

(iii) Scoring error

In the case of evidence of a scoring error listed in clause (i)(I), when the error relates to either prior experience points for high quality service delivery or to the final score of an application, the Secretary shall—

(I) review such evidence and provide a timely response to the applicant; and

(II) if the Secretary determines that a scoring error was made by the Department or a peer reviewer, adjust the prior experience points or final score of the application appropriately and quickly, so as not to interfere with the timely awarding of grants for the applicable grant competition.

(iv) Error in peer review process

(I) Referral to secondary review

In the case of a peer review process error listed in clause (i)(I), if the Secretary determines that points were withheld for criteria not required in Federal statute, regulation, or guidance governing a program assisted under this division or the application for a grant for such program, or determines that information pertaining to selection criteria was wrongly determined to be missing from an application by a peer reviewer, then the Secretary shall refer the application to a secondary review panel.

(II) Timely review; replacement score

The secondary review panel described in subclause (I) shall conduct a secondary review in a timely fashion, and the score resulting from the secondary review shall replace the score from the initial peer review.

(III) Composition of secondary review panel

The secondary review panel shall be composed of reviewers each of whom—

(aa) did not review the application in the original peer review;

(bb) is a member of the cohort of peer reviewers for the grant program that is the subject of such secondary review; and

(cc) to extent practicable, has conducted peer reviews in not less than two previous competitions for the grant program that is the subject of such secondary review.

(IV) Final score

The final peer review score of an application subject to a secondary review under this clause shall be adjusted appropriately and quickly using the score awarded by the secondary review panel, so as not to interfere with the timely awarding of grants for the applicable grant competition.

(V) Qualification for secondary review

To qualify for a secondary review under this clause, an applicant shall have evidence of a scoring error and demonstrate that—

(aa) points were withheld for criteria not required in statute, regulation, or guidance governing the Federal TRIO programs or the application for a grant for such programs; or

(bb) information pertaining to selection criteria was wrongly determined to be missing from the application.

(v) Finality

(I) In general

A determination by the Secretary under clause (i), (ii), or (iii) shall not be reviewable by any officer or employee of the Department.

(II) Scoring

The score awarded by a secondary review panel under clause (iv) shall not be reviewable by any officer or employee of the Department other than the Secretary.

(vi) Funding of applications with certain adjusted scores

To the extent feasible based on the availability of appropriations, the Secretary shall fund applications with scores that are adjusted upward under clauses (ii), (iii), and (iv) to equal or exceed the minimum cut off score for the applicable grant competition.

(d) Outreach

(1) In general

The Secretary shall conduct outreach activities to ensure that entities eligible for assistance under this division submit applications proposing programs that serve geographic areas and eligible populations which have been underserved by the programs assisted under this division.

(2) Notice

In carrying out the provisions of paragraph (1), the Secretary shall notify the entities described in subsection (b) of this section of the availability of assistance under this subsection not less than 120 days prior to the deadline for submission of applications under this division and shall consult national, State, and regional organizations about candidates for notification.

(3) Technical assistance

The Secretary shall provide technical training to applicants for projects and programs authorized under this division. The Secretary shall give priority to serving programs and projects that serve geographic areas and eligible populations which have been underserved by the programs assisted under this division. Technical training activities shall include the provision of information on authorizing legislation, goals and objectives of the program, required activities, eligibility requirements, the application process and application deadlines, and assistance in the development of program proposals and the completion of program applications. Such training shall be furnished at conferences, seminars, and workshops to be conducted at not less than 10 sites throughout the United States to ensure that all areas of the United States with large concentrations of eligible participants are served.

(4) Special rule

The Secretary may contract with eligible entities to conduct the outreach activities described in this subsection.

(e) Documentation of status as a low-income individual

(1) Except in the case of an independent student, as defined in section 1087vv(d) of this title, documentation of an individual's status pursuant to subsection (h)(4) shall be made by providing the Secretary with—

(A) a signed statement from the individual's parent or legal guardian;

(B) verification from another governmental source;

(C) a signed financial aid application; or

(D) a signed United States or Puerto Rico income tax return.


(2) In the case of an independent student, as defined in section 1087vv(d) of this title, documentation of an individual's status pursuant to subsection (h)(4) shall be made by providing the Secretary 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), 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, shall be eligible to participate in programs under sections 1070a–12, 1070a–13, 1070a–14, and 1070a–16 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 shall determine an eligible entity's prior experience of high quality service delivery, as required under subsection (c)(2), based on the outcome criteria described in paragraphs (2) and (3).

(2) Disaggregation of relevant data

The outcome criteria under this subsection shall be disaggregated by low-income students, first generation college students, and individuals with disabilities, in the schools and institutions of higher education served by the program to be evaluated.

(3) Contents of outcome criteria

The outcome criteria under this subsection shall measure, annually and for longer periods, the quality and effectiveness of programs authorized under this division and shall include the following:

(A) For programs authorized under section 1070a–12 of this title, 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 enrollment of such students;

(iii) the graduation of such students from secondary school with a regular secondary school diploma in the standard number of years;

(iv) the completion by such students of a rigorous secondary school program of study that will make such students eligible for programs such as the Academic Competitiveness Grants Program;

(v) the enrollment of such students in an institution of higher education; and

(vi) to the extent practicable, the postsecondary education completion of such students.


(B) For programs authorized under section 1070a–13 of this title, 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 for the period;

(ii) such students’ school performance, as measured by the grade point average, or its equivalent;

(iii) such students’ academic performance, as measured by standardized tests, including tests required by the students’ State;

(iv) the retention in, and graduation from, secondary school of such students;

(v) the completion by such students of a rigorous secondary school program of study that will make such students eligible for programs such as the Academic Competitiveness Grants Program;

(vi) the enrollment of such students in an institution of higher education; and

(vii) to the extent practicable, the postsecondary education completion of such students.


(C) For programs authorized under section 1070a–14 of this title—

(i) the extent to which the eligible entity met or exceeded the entity's objectives regarding the retention in postsecondary education of the students served by the program;

(ii)(I) in the case of an entity that is an institution of higher education offering a baccalaureate degree, the extent to which the entity met or exceeded the entity's objectives regarding the percentage of such students’ completion of the degree programs in which such students were enrolled; or

(II) in the case of an entity that is an institution of higher education that does not offer a baccalaureate degree, the extent to which such students met or exceeded the entity's objectives regarding—

(aa) the completion of a degree or certificate by such students; and

(bb) the transfer of such students to institutions of higher education that offer baccalaureate degrees;


(iii) the extent to which the entity met or exceeded the entity's objectives regarding the delivery of service to a total number of students, as agreed upon by the entity and the Secretary for the period; and

(iv) the extent to which the entity met or exceeded the entity's objectives regarding the students served under the program who remain in good academic standing.


(D) For programs authorized under section 1070a–15 of this title, 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 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, 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 diploma or its recognized equivalent, who were served by the program, in programs leading to such diploma or equivalent;

(ii) the enrollment of secondary school graduates who were served by the program in programs of postsecondary education;

(iii) the delivery of service to a total number of students served by the program, as agreed upon by the entity and the Secretary for the period; and

(iv) the provision of assistance to students served by the program in completing financial aid applications and college admission applications.

(4) Measurement of progress

In order to determine the extent to which each outcome criterion described in paragraph (2) or (3) is met or exceeded, the Secretary shall compare the agreed upon target for the criterion, as established in the eligible entity's application approved by the Secretary, with the results for the criterion, measured as of the last day of the applicable time period for the determination for the outcome criterion.

(g) Authorization of appropriations

For the purpose of making grants and contracts under this division, there are authorized to be appropriated $900,000,000 for fiscal year 2009 and such sums as may be necessary for each of the five succeeding fiscal years. Of the amount appropriated under this division, the Secretary may use no more than ½ of 1 percent of such amount to obtain additional qualified readers and additional staff to review applications, to increase the level of oversight monitoring, to support impact studies, program assessments and reviews, and to provide technical assistance to potential applicants and current grantees. In expending these funds, the Secretary shall give priority to the additional administrative requirements provided in the Higher Education Amendments of 1992, to outreach activities, and to obtaining additional readers.

(h) Definitions

For the purpose of this division:

(1) Different campus

The term “different campus” means a site of an institution of higher education that—

(A) is geographically apart from the main campus of the institution;

(B) is permanent in nature; and

(C) offers courses in educational programs leading to a degree, certificate, or other recognized educational credential.

(2) Different population

The term “different population” means a group of individuals that an eligible entity desires to serve through an application for a grant under this division, and that—

(A) is separate and distinct from any other population that the entity has applied for a grant under this division to serve; or

(B) while sharing some of the same needs as another population that the eligible entity has applied for a grant under this division to serve, has distinct needs for specialized services.

(3) First generation college student

The term “first generation college student” means—

(A) an individual both of whose parents did not complete a baccalaureate degree; or

(B) in the case of any individual who regularly resided with and received support from only one parent, an individual whose only such parent did not complete a baccalaureate degree.

(4) Low-income individual

The term “low-income individual” means an individual from a family whose taxable income for the preceding year did not exceed 150 percent of an amount equal to the poverty level determined by using criteria of poverty established by the Bureau of the Census.

(5) Veteran eligibility

No veteran shall be deemed ineligible to participate in any program under this division by reason of such individual's age who—

(A) served on active duty for a period of more than 180 days and was discharged or released therefrom under conditions other than dishonorable;

(B) served on active duty and was discharged or released therefrom because of a service connected disability;

(C) was a member of a reserve component of the Armed Forces called to active duty for a period of more than 30 days; or

(D) was a member of a reserve component of the Armed Forces who served on active duty in support of a contingency operation (as that term is defined in section 101(a)(13) of title 10) on or after September 11, 2001.

(6) Waiver

The Secretary may waive the service requirements in subparagraph (A), (B), or (C) of paragraph (5) if the Secretary determines the application of the service requirements to a veteran will defeat the purpose of a program under this division.

(Pub. L. 89–329, title IV, §402A, as added Pub. L. 102–325, title IV, §402(a)(4), July 23, 1992, 106 Stat. 482; amended Pub. L. 103–208, §2(b)(6)–(9), Dec. 20, 1993, 107 Stat. 2458; Pub. L. 105–244, title I, §102(b)(1), title IV, §402(a), Oct. 7, 1998, 112 Stat. 1622, 1652; Pub. L. 110–315, title IV, §403(a), Aug. 14, 2008, 122 Stat. 3191; Pub. L. 111–39, title IV, §401(a)(4), July 1, 2009, 123 Stat. 1938.)

References in Text

The General Education Provisions Act, referred to in subsec. (c)(8)(A)(i), is title IV of Pub. L. 90–247, Jan. 2, 1968, 81 Stat. 814, which is classified generally to chapter 31 (§1221 et seq.) of this title. For complete classification of this Act to the Code, see section 1221 of this title and Tables.

The Higher Education Amendments of 1992, referred to in subsec. (g), is Pub. L. 102–325, July 23, 1992, 106 Stat. 448. For complete classification of this Act to the Code, see Short Title of 1992 Amendment note set out under section 1001 of this title and Tables.

References to Subpart 2, 3, or 4 of This Part Deemed To Refer to Subpart 3, 4, or 2 of This Part

Section 402(b) of Pub. L. 102–325 provided that: “Reference in any provision of law (other than the Act [20 U.S.C. 1001 et seq.]) to subpart 2, 3, or 4 of part A of title IV of the Act shall, after the date of enactment of this Act [July 23, 1992], be deemed to refer to subpart 3 [20 U.S.C. 1070b et seq.], 4 [20 U.S.C. 1070c et seq.], or 2 [20 U.S.C. 1070a–11 et seq.] of such part, respectively.”

Codification

In subsec. (b)(1), “section 6101 of title 41” substituted for “section 3709 of the Revised Statutes (41 U.S.C. 5)” on authority of Pub. L. 111–350, §6(c), Jan. 4, 2011, 124 Stat. 3854, which Act enacted Title 41, Public Contracts.

Amendments

2009—Subsec. (b)(1). Pub. L. 111–39, §401(a)(4)(A), substituted “organizations, including” for “organizations including”.

Subsec. (c)(8)(C)(iv)(I). Pub. L. 111–39, §401(a)(4)(B), inserted “to be” after “determined”.

2008—Subsec. (b)(1). Pub. L. 110–315, §403(a)(1)(A), inserted “including community-based organizations with experience in serving disadvantaged youth” after “private agencies and organizations” and substituted “, as appropriate to the purposes of the program” for “in exceptional circumstances”.

Subsec. (b)(2). Pub. L. 110–315, §403(a)(1)(B)(i), substituted “5 years” for “4 years” in introductory provisions.

Subsec. (b)(2)(A). Pub. L. 110–315, §403(a)(1)(B)(ii), amended subpar. (A) generally. Prior to amendment subpar. (A) read as follows: “the Secretary shall award such grants or contracts for 5 years to applicants whose peer review scores were in the highest 10 percent of scores of all applicants receiving grants or contracts in each program competition for the same award year;”.

Subsec. (b)(3). Pub. L. 110–315, §403(a)(1)(C), added par. (3) and struck out former par. (3). Prior to amendment, text read as follows: “Unless the institution or agency requests a smaller amount, individual grants under this division shall be no less than—

“(A) $170,000 for programs authorized by sections 1070a–14 and 1070a–17 of this title;

“(B) $180,000 for programs authorized by sections 1070a–12 and 1070a–16 of this title; and

“(C) $190,000 for programs authorized by sections 1070a–13 and 1070a–15 of this title.”

Subsec. (c)(2). Pub. L. 110–315, §403(a)(2)(A), inserted par. heading, designated former par. heading as subpar. (A) heading and existing provisions as subpar. (A), substituted “high quality service delivery, as determined under subsection (f),” for “service delivery”, and added subpar. (B).

Subsec. (c)(3)(B). Pub. L. 110–315, §403(a)(2)(B), substituted “shall not” for “is not required to”.

Subsec. (c)(5). Pub. L. 110–315, §403(a)(2)(C), substituted “different campuses” for “campuses”.

Subsec. (c)(6). Pub. L. 110–315, §403(a)(2)(D), inserted at end “The Secretary shall, as appropriate, require each applicant for funds under the programs authorized by this division to identify and make available services under such program, including mentoring, tutoring, and other services provided by such program, to foster care youth (including youth in foster care and youth who have left foster care after reaching age 13) or to homeless children and youths as defined in section 11434a of title 42.”

Subsec. (c)(8). Pub. L. 110–315, §403(a)(2)(E), added par. (8).

Subsec. (e)(1), (2). Pub. L. 110–315, §403(a)(3)(A), substituted “subsection (h)(4)” for “subsection (g)(2)” in introductory provisions.

Subsec. (e)(3). Pub. L. 110–315, §403(a)(3)(B), added par. (3).

Subsec. (f). Pub. L. 110–315, §403(a)(5), added subsec. (f). Former subsec. (f) redesignated (g).

Subsec. (g). Pub. L. 110–315, §403(a)(6), substituted “$900,000,000 for fiscal year 2009 and such sums as may be necessary for each of the five succeeding fiscal years” for “$700,000,000 for fiscal year 1999, and such sums as may be necessary for each of the 4 succeeding fiscal years” and struck out last sentence which read as follows: “The Secretary shall report to Congress by October 1, 1994, on the use of these funds.”

Pub. L. 110–315, §403(a)(4), redesignated subsec. (f) as (g). Former subsec. (g) redesignated (h).

Subsec. (h). Pub. L. 110–315, §403(a)(7)(A), (B), added pars. (1) and (2) and redesignated former pars. (1) to (4) as (3) to (6), respectively.

Pub. L. 110–315, §403(a)(4), redesignated subsec. (g) as (h).

Subsec. (h)(5)(A). Pub. L. 110–315, §403(a)(7)(C)(i), struck out “, any part of which occurred after January 31, 1955,” after “more than 180 days” and “or” after semicolon.

Subsec. (h)(5)(B). Pub. L. 110–315, §403(a)(7)(C)(ii), struck out “after January 31, 1955,” after “active duty” and substituted a semicolon for period at end.

Subsec. (h)(5)(C), (D). Pub. L. 110–315, §403(a)(7)(C)(iii), added subpars. (C) and (D).

Subsec. (h)(6). Pub. L. 110–315, §403(a)(7)(D), substituted “subparagraph (A), (B), or (C) of paragraph (5)” for “subparagraph (A) or (B) of paragraph (3)”.

1998—Subsec. (b)(2)(C). Pub. L. 105–244, §402(a)(1), added subpar. (C).

Subsec. (b)(3). Pub. L. 105–244, §402(a)(2), amended heading and text of par. (3) generally. Prior to amendment, text read as follows: “In any year in which the appropriations authorized under this division exceed the prior year appropriation as adjusted for inflation, the Secretary shall use 80 percent of the amount appropriated above the current services level to bring each award up to the minimum grant level or the amount requested by the institution or agency, whichever is less. The minimum grant level (A) for programs authorized under section 1070a–14 or 1070a–17 of this title, shall not be less than $170,000 for fiscal year 1993; (B) for programs authorized under section 1070a–12 or 1070a–16 of this title shall not be less than $180,000 for fiscal year 1994; and (C) for programs authorized under section 1070a–13 or 1070a–15 of this title shall not be less than $190,000 for fiscal year 1995.”

Subsec. (c). Pub. L. 105–244, §402(a)(3), amended subsec. (c) generally, revising and restating former pars. (1) to (6), relating to procedures for awarding grants and contracts, as pars. (1) to (7).

Subsec. (c)(2). Pub. L. 105–244, §102(b)(1), substituted “section 1011g” for “section 1145d–1”.

Subsec. (f). Pub. L. 105–244, §402(a)(4), substituted “$700,000,000 for fiscal year 1999” for “$650,000,000 for fiscal year 1993”.

Subsec. (g)(4). Pub. L. 105–244, §402(a)(5), added par. (4).

1993—Subsec. (b)(2). Pub. L. 103–208, §2(b)(6), added par. (2) and struck out former par. (2) which read as follows: “Grants or contracts made under this division shall be awarded for a period of 4 years, except that the Secretary shall award such grants or contracts for 5 years to applicants whose peer review scores were in the highest 10 percent of scores of all applicants receiving grants or contracts in each program competition for the same award year.”

Subsec. (c)(1). Pub. L. 103–208, §2(b)(7), inserted before period at end of second sentence “, except that in the case of the programs authorized in sections 1070a–15 and 1070a–17 of this title, the level of consideration given to prior experience shall be the same as the level of consideration given this factor in the other programs authorized in this division”.

Subsec. (c)(2)(A). Pub. L. 103–208, §2(b)(8), inserted “with respect to grants made under section 1070a–17 of this title, and” after “Except”.

Subsec. (e). Pub. L. 103–208, §2(b)(9), amended subsec. (e) generally. Prior to amendment, subsec. (e) read as follows: “Documentation of an individual's status pursuant to subsection (g)(2) of this section shall be made—

“(1) in the case of an individual who is eighteen years of age or younger or a dependent student by providing the Secretary with a signed statement from the parent or legal guardian, verification from another governmental source, a signed financial aid application, or a signed United States or Puerto Rican income tax return; and

“(2) in the case of an individual who is age 18 or older or who is an independent student, by providing the Secretary with a signed statement from the individual, verification from another governmental source, a signed financial aid form, or a signed United States or Puerto Rican income tax return.”

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 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 section 2(b)(6), (8), (9) of Pub. L. 103–208 effective as if included in the Higher Education Amendments of 1992, Pub. L. 102–325, except as otherwise provided, and amendment by section 2(b)(7) of Pub. L. 103–208 effective on and after Dec. 20, 1993, see section 5(a), (b)(2) of Pub. L. 103–208 set out as a note under section 1051 of this title.

Advanced Placement Fee Payment Program

Pub. L. 105–244, title VIII, §810, Oct. 7, 1998, 112 Stat. 1808, which authorized grants to States to enable States to reimburse low-income individuals to cover part or all of the cost of advanced placement test fees, required dissemination of information regarding availability of payments, set forth requirements for approval of applications and funding rules, authorized regulations, required annual report, defined terms, and authorized appropriations, was repealed by Pub. L. 107–110, title X, §1011(2), Jan. 8, 2002, 115 Stat. 1986.

Similar provisions were contained in Pub. L. 102–325, title XV, §1545, July 23, 1992, 106 Stat. 837, which was repealed by Pub. L. 107–110, title X, §1011(1), Jan. 8, 2002, 115 Stat. 1986.

§1070a–12. Talent search

(a) Program authority

The Secretary shall carry out a program to be known as talent search which shall be designed—

(1) to identify qualified youths with potential for education at the postsecondary level and to encourage such youths to complete secondary school and to undertake a program of postsecondary education;

(2) to publicize the availability of, and facilitate the application for, student financial assistance available to persons who pursue a program of postsecondary education; and

(3) to encourage persons who have not completed programs of education at the secondary or postsecondary level to enter or reenter, and complete such programs.

(b) Required services

Any project assisted under this section shall provide—

(1) connections to high quality academic tutoring services, to enable students to complete secondary or postsecondary courses;

(2) advice and assistance in secondary course selection and, if applicable, initial postsecondary course selection;

(3) assistance in preparing for college entrance examinations and completing college admission applications;

(4)(A) information on the full range of Federal student financial aid programs and benefits (including Federal Pell Grant awards and loan forgiveness) and resources for locating public and private scholarships; and

(B) assistance in completing financial aid applications, including the Free Application for Federal Student Aid described in section 1090(a) of this title;

(5) guidance on and assistance in—

(A) secondary school reentry;

(B) alternative education programs for secondary school dropouts that lead to the receipt of a regular secondary school diploma;

(C) entry into general educational development (GED) programs; or

(D) postsecondary education; and


(6) connections to education or counseling services designed to improve the financial literacy and economic literacy of students or the students’ parents, including financial planning for postsecondary education.

(c) Permissible services

Any project assisted under this section may provide services such as—

(1) academic tutoring, which may include instruction in reading, writing, study skills, mathematics, science, and other subjects;

(2) personal and career counseling or activities;

(3) information and activities designed to acquaint youth with the range of career options available to the youth;

(4) exposure to the campuses of institutions of higher education, as well as cultural events, academic programs, and other sites or activities not usually available to disadvantaged youth;

(5) workshops and counseling for families of students served;

(6) mentoring programs involving elementary or secondary school teachers or counselors, faculty members at institutions of higher education, students, or any combination of such persons; and

(7) programs and activities as described in subsection (b) or paragraphs (1) through (6) of this subsection that are specially designed for students who are limited English proficient, students from groups that are traditionally underrepresented in postsecondary education, students with disabilities, students who are homeless children and youths (as such term is defined in section 11434a of title 42), 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 shall—

(1) require an assurance that not less than two-thirds of the individuals participating in the project proposed to be carried out under any application be low-income individuals who are first generation college students;

(2) require that such participants be persons who either have completed 5 years of elementary education or are at least 11 years of age but not more than 27 years of age, unless the imposition of any such limitation with respect to any person would defeat the purposes of this section or the purposes of section 1070a–16 of this title;

(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; 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.

(Pub. L. 89–329, title IV, §402B, as added Pub. L. 102–325, title IV, §402(a)(4), July 23, 1992, 106 Stat. 486; amended Pub. L. 105–244, title IV, §402(b), Oct. 7, 1998, 112 Stat. 1654; Pub. L. 110–315, title IV, §403(b), Aug. 14, 2008, 122 Stat. 3198.)

Amendments

2008—Subsec. (a)(2). Pub. L. 110–315, §403(b)(1)(A), inserted “, and facilitate the application for,” after “the availability of”.

Subsec. (a)(3). Pub. L. 110–315, §403(b)(1)(B), substituted “to enter or reenter, and complete” for “, but who have the ability to complete such programs, to reenter”.

Subsecs. (b), (c). Pub. L. 110–315, §403(b)(3), added subsecs. (b) and (c) and struck out former subsec. (b) which related to permissible services. Former subsec. (c) redesignated (d).

Subsec. (d). Pub. L. 110–315, §403(b)(2), (4), redesignated subsec. (c) as (d) and substituted “projects under this section” for “talent search projects under this division” in introductory provisions.

1998—Subsec. (b)(4). Pub. L. 105–244, §402(b)(1), added par. (4) and struck out former par. (4) which read as follows: “guidance on secondary school reentry or entry to general educational development (GED) programs or other alternative education programs for secondary school dropouts;”.

Subsec. (b)(5). Pub. L. 105–244, §402(b)(2), inserted before semicolon “, or activities designed to acquaint individuals from disadvantaged backgrounds with careers in which the individuals are particularly underrepresented”.

Subsec. (b)(8). Pub. L. 105–244, §402(b)(3), substituted “families” for “parents”.

Subsec. (b)(9). Pub. L. 105–244, §402(b)(4), inserted “or counselors” after “teachers”.

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.

§1070a–13. Upward bound

(a) Program authority

The Secretary shall carry out a program to be known as upward bound which shall be designed to generate skills and motivation necessary for success in education beyond secondary school.

(b) Required services

Any project assisted under this section shall provide—

(1) academic tutoring to enable students to complete secondary or postsecondary courses, which may include instruction in reading, writing, study skills, mathematics, science, and other subjects;

(2) advice and assistance in secondary and postsecondary course selection;

(3) assistance in preparing for college entrance examinations and completing college admission applications;

(4)(A) information on the full range of Federal student financial aid programs and benefits (including Federal Pell Grant awards and loan forgiveness) and resources for locating public and private scholarships; and

(B) assistance in completing financial aid applications, including the Free Application for Federal Student Aid described in section 1090(a) of this title;

(5) guidance on and assistance in—

(A) secondary school reentry;

(B) alternative education programs for secondary school dropouts that lead to the receipt of a regular secondary school diploma;

(C) entry into general educational development (GED) programs; or

(D) postsecondary education; and


(6) education or counseling services designed to improve the financial literacy and economic literacy of students or the students’ parents, including financial planning for postsecondary education.

(c) Additional required services for multiple-year grant recipients

Any project assisted under this section which has received funding for two or more years shall include, as part of the core curriculum in the next and succeeding years, instruction in mathematics through precalculus, laboratory science, foreign language, composition, and literature.

(d) Permissible services

Any project assisted under this section may provide such services as—

(1) exposure to cultural events, academic programs, and other activities not usually available to disadvantaged youth;

(2) information, activities, and instruction designed to acquaint youth participating in the project with the range of career options available to the youth;

(3) on-campus residential programs;

(4) mentoring programs involving elementary school or secondary school teachers or counselors, faculty members at institutions of higher education, students, or any combination of such persons;

(5) work-study positions where youth participating in the project are exposed to careers requiring a postsecondary degree;

(6) special services, including mathematics and science preparation, to enable veterans to make the transition to postsecondary education; and

(7) programs and activities as described in subsection (b), subsection (c), or paragraphs (1) through (6) of this subsection that are specially designed for students who are limited English proficient, students from groups that are traditionally underrepresented in postsecondary education, students with disabilities, students who are homeless children and youths (as such term is defined in section 11434a of title 42), 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 shall—

(1) require an assurance that not less than two-thirds of the youths participating in the project proposed to be carried out under any application be low-income individuals who are first generation college students;

(2) require an assurance that the remaining youths participating in the project proposed to be carried out under any application be low-income individuals, first generation college students, or students who have a high risk for academic failure;

(3) require that there be a determination by the institution, with respect to each participant in such project that the participant has a need for academic support in order to pursue successfully a program of education beyond secondary school;

(4) require that such participants be persons who have completed 8 years of elementary education and are at least 13 years of age but not more than 19 years of age, unless the imposition of any such limitation would defeat the purposes of this section; and

(5) require an assurance that no student will be denied participation in a project assisted under this section because the student will enter the project after the 9th grade.

(f) Maximum stipends

Youths participating in a project proposed to be carried out under any application may be paid stipends not in excess of $60 per month during the summer school recess, for a period not to exceed three months, except that youth participating in a work-study position under subsection (d)(5) of this section may be paid a stipend of $300 per month during the summer school recess, for a period not to exceed three months. Youths participating in a project proposed to be carried out under any application may be paid stipends not in excess of $40 per month during the remaining period of the year.

(g) Additional funds

(1) Authorization and appropriation

There are authorized to be appropriated, and there are appropriated to the Secretary, from funds not otherwise appropriated, $57,000,000 for each of the fiscal years 2008 through 2011 to carry out paragraph (2), except that any amounts that remain unexpended for such purpose for each of such fiscal years may be available for technical assistance and administration costs for the Upward Bound program. The authority to award grants under this subsection shall expire at the end of fiscal year 2011.

(2) Use of funds

The amounts made available by paragraph (1) shall be available to provide assistance to all Upward Bound projects that did not receive assistance in fiscal year 2007 and that have a grant score above 70. Such assistance shall be made available in the form of 4-year grants.

(h) Absolute priority prohibited in Upward Bound Program

Upon enactment of this subsection and except as otherwise expressly provided by amendment to this section, the Secretary shall not continue, implement, or enforce the absolute priority for the Upward Bound Program published by the Department of Education in the Federal Register on September 22, 2006 (71 Fed. Reg. 55447 et seq.). This subsection shall not be applied retroactively. In implementing this subsection, the Department shall allow the programs and participants chosen in the grant cycle to which the priority applies to continue their grants and participation without a further recompetition. The entities shall not be required to apply the absolute priority conditions or restrictions to future participants.

(Pub. L. 89–329, title IV, §402C, as added Pub. L. 102–325, title IV, §402(a)(4), July 23, 1992, 106 Stat. 487; amended Pub. L. 103–208, §2(b)(10), Dec. 20, 1993, 107 Stat. 2459; Pub. L. 105–244, title IV, §402(c), Oct. 7, 1998, 112 Stat. 1654; Pub. L. 110–84, title I, §103, Sept. 27, 2007, 121 Stat. 786; Pub. L. 110–315, title IV, §403(c), Aug. 14, 2008, 122 Stat. 3199.)

Amendments

2008—Subsec. (b). Pub. L. 110–315, §403(c)(1), added subsec. (b) and struck out former subsec. (b) which related to permissible services.

Subsec. (c). Pub. L. 110–315, §403(c)(2), substituted “Additional required services for multiple-year grant recipients” for “Required services” in heading and “project assisted under this section” for “upward bound project assisted under this division” in text.

Subsec. (d). Pub. L. 110–315, §403(c)(4), added subsec. (d). Former subsec. (d) redesignated (e).

Subsec. (e). Pub. L. 110–315, §403(c)(3), (5)(A), redesignated subsec. (d) as (e) and substituted “projects under this section” for “upward bound projects under this division” in introductory provisions. Former subsec. (e) redesignated (f).

Subsec. (e)(2). Pub. L. 110–315, §403(c)(5)(B), substituted “low-income individuals, first generation college students, or students who have a high risk for academic failure;” for “either low-income individuals or first generation college students;”.

Subsec. (e)(5). Pub. L. 110–315, §403(c)(5)(C)–(E), added par. (5).

Subsec. (f). Pub. L. 110–315, §403(c)(3), (6), redesignated subsec. (e) as (f) and substituted “during the summer school recess, for a period not to exceed three months” for “during June, July, and August” in two places, and “subsection (d)(5)” for “subsection (b)(10)”. Former subsec. (f) redesignated (g).

Subsec. (g). Pub. L. 110–315, §403(c)(3), redesignated subsec. (f) as (g).

Subsec. (h). Pub. L. 110–315, §403(c)(7), added subsec. (h).

2007—Subsec. (f). Pub. L. 110–84 added subsec. (f).

1998—Subsec. (b)(2). Pub. L. 105–244, §402(c)(1)(A), substituted “counseling and workshops” for “personal counseling”.

Subsec. (b)(9). Pub. L. 105–244, §402(c)(1)(B), inserted “or counselors” after “teachers” and struck out “and” after semicolon.

Subsec. (b)(10), (11). Pub. L. 105–244, §402(c)(1)(D), added pars. (10) and (11). Former par. (10) redesignated (12).

Subsec. (b)(12). Pub. L. 105–244, §402(c)(1)(E), substituted “(11)” for “(9)”.

Pub. L. 105–244, §402(c)(1)(C), redesignated par. (10) as (12).

Subsec. (e). Pub. L. 105–244, §402(c)(2), substituted “except that youth participating in a work-study position under subsection (b)(10) of this section may be paid a stipend of $300 per month during June, July, and August. 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.” for “and not in excess of $40 per month during the remaining period of the year.”

1993—Subsec. (c). Pub. L. 103–208 substituted “foreign” for “and foreign”.

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 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.

§1070a–14. Student support services

(a) Program authority

The Secretary shall carry out a program to be known as student support services which shall be designed—

(1) to increase college retention and graduation rates for eligible students;

(2) to increase the transfer rates of eligible students from 2-year to 4-year institutions;

(3) to foster an institutional climate supportive of the success of students who are limited English proficient, students from groups that are traditionally underrepresented in postsecondary education, students with disabilities, students who are homeless children and youths (as such term is defined in section 11434a of title 42), 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;

(4) education or counseling services designed to improve the financial literacy and economic literacy of students, including financial planning for postsecondary education;

(5) activities designed to assist students participating in the project in applying for admission to, and obtaining financial assistance for enrollment in, graduate and professional programs; and

(6) activities designed to assist students enrolled in two-year institutions of higher education in applying for admission to, and obtaining financial assistance for enrollment in, a four-year program of postsecondary education.

(c) Permissible services

A project assisted under this section may provide services such as—

(1) individualized counseling for personal, career, and academic matters provided by assigned counselors;

(2) information, activities, and instruction designed to acquaint students participating in the project with the range of career options available to the students;

(3) exposure to cultural events and academic programs not usually available to disadvantaged students;

(4) mentoring programs involving faculty or upper class students, or a combination thereof;

(5) securing temporary housing during breaks in the academic year for—

(A) students who are homeless children and youths (as such term is defined in section 11434a of title 42) 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) or paragraphs (1) through (4) of this subsection that are specially designed for students who are limited English proficient, students from groups that are traditionally underrepresented in postsecondary education, students with disabilities, students who are homeless children and youths (as such term is defined in section 11434a of title 42), 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) may, in addition, use such funds to provide grant aid to students. A grant provided under this paragraph shall not exceed the Federal Pell Grant amount, determined under section 1070a(b)(2)(A) of this title, 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, for the current academic year. 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 of this subchapter; or

(B) students who have completed their first 2 years of postsecondary education and who are receiving Federal Pell Grants under subpart 1 of part A of this subchapter if the institution demonstrates to the satisfaction of the Secretary that—

(i) these students are at high risk of dropping out; and

(ii) it will first meet the needs of all its eligible first- and second-year students for services under this paragraph.

(3) Determination of need

A grant provided to a student under paragraph (1) shall not be considered in determining that student's need for grant or work assistance under this subchapter and part C of subchapter I of chapter 34 of title 42, except that in no case shall the total amount of student financial assistance awarded to a student under this subchapter exceed that student's cost of attendance, as defined in section 1087ll of this title.

(4) Matching required

A recipient of a grant who uses such funds for the purpose described in paragraph (1) shall match the funds used for such purpose, in cash, from non-Federal funds, in an amount that is not less than 33 percent of the total amount of funds used for that purpose. This paragraph shall not apply to any grant recipient that is an institution of higher education eligible to receive funds under part A or B of subchapter III or subchapter V of this chapter.

(5) Reservation

In no event may a recipient use more than 20 percent of the funds received under this section for grant aid.

(6) Supplement, not supplant

Funds received by a grant recipient that are used under this subsection shall be used to supplement, and not supplant, non-Federal funds expended for student support services programs.

(e) Requirements for approval of applications

In approving applications for projects under this section for any fiscal year, the Secretary shall—

(1) require an assurance that not less than two-thirds of the persons participating in the project proposed to be carried out under any application—

(A) be individuals with disabilities; or

(B) be low-income individuals who are first generation college students;


(2) require an assurance that the remaining students participating in the project proposed to be carried out under any application be low-income individuals, first generation college students, or individuals with disabilities;

(3) require an assurance that not less than one-third of the individuals with disabilities participating in the project be low-income individuals;

(4) require that there be a determination by the institution, with respect to each participant in such project, that the participant has a need for academic support in order to pursue successfully a program of education beyond secondary school;

(5) require that such participants be enrolled or accepted for enrollment at the institution which is the recipient of the grant or contract; and

(6) consider, in addition to such other criteria as the Secretary may prescribe, the institution's effort, and where applicable past history, in—

(A) providing sufficient financial assistance to meet the full financial need of each student in the project; and

(B) maintaining the loan burden of each such student at a manageable level.

(Pub. L. 89–329, title IV, §402D, as added Pub. L. 102–325, title IV, §402(a)(4), July 23, 1992, 106 Stat. 488; amended Pub. L. 103–208, §2(b)(11), Dec. 20, 1993, 107 Stat. 2459; Pub. L. 105–244, title IV, §402(d), Oct. 7, 1998, 112 Stat. 1655; Pub. L. 106–554, §1(a)(1) [title III, §317(a)], Dec. 21, 2000, 114 Stat. 2763, 2763A–48; Pub. L. 110–315, title IV, §403(d), Aug. 14, 2008, 122 Stat. 3201; Pub. L. 111–152, title II, §2101(b)(2), Mar. 30, 2010, 124 Stat. 1073.)

Amendments

2010—Subsec. (d)(1). Pub. L. 111–152 substituted “exceed the Federal Pell Grant amount, determined under section 1070a(b)(2)(A) of this title, 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, for” for “exceed the maximum appropriated Pell Grant or, be less than the minimum appropriated Pell Grant, for”.

2008—Subsec. (a)(3), (4). Pub. L. 110–315, §403(d)(1), added pars. (3) and (4) and struck out former par. (3) which read as follows: “to foster an institutional climate supportive of the success of low-income and first generation college students and individuals with disabilities.”

Subsec. (b). Pub. L. 110–315, §403(d)(3), added subsec. (b) and struck out former subsec. (b) which related to permissible services.

Subsecs. (c), (d). Pub. L. 110–315, §403(d)(2), (3), added subsec. (c) and redesignated former subsec. (c) as (d). Former subsec. (d) redesignated (e).

Subsec. (d)(1). Pub. L. 110–315, §403(d)(4), substituted “subsection (c)” for “subsection (b)”.

Subsec. (e). Pub. L. 110–315, §403(d)(2), (5), redesignated subsec. (d) as (e) and substituted “projects under this section” for “student support services projects under this division” in introductory provisions.

2000—Subsecs. (c), (d). Pub. L. 106–554 added subsec. (c) and redesignated former subsec. (c) as (d).

1998—Subsec. (c)(6). Pub. L. 105–244 amended par. (6) generally. Prior to amendment, par. (6) read as follows: “require an assurance from the institution which is the recipient of the grant or contract that each student enrolled in the project will be offered sufficient financial assistance to meet that student's full financial need.”

1993—Subsec. (c)(2). Pub. L. 103–208 struck out “either” after “application”.

Effective Date of 2010 Amendment

Amendment by Pub. L. 111–152 effective July 1, 2010, see section 2101(c) of Pub. L. 111–152, set out as a note under section 1070a of this title.

Effective Date of 2000 Amendment

Pub. L. 106–554, §1(a)(1) [title III, §317(b)], Dec. 21, 2000, 114 Stat. 2763, 2763A–49, provided that: “The amendments made by subsection (a) [amending this section] shall apply with respect to student support services grants awarded on or after the date of enactment of this Act [Dec. 21, 2000].”

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.

§1070a–15. Postbaccalaureate achievement program authority

(a) Program authority

The Secretary shall carry out a program to be known as the “Ronald E. McNair Postbaccalaureate Achievement Program” that shall be designed to provide disadvantaged college students with effective preparation for doctoral study.

(b) Required services

A project assisted under this section shall provide—

(1) opportunities for research or other scholarly activities at the institution or at graduate centers designed to provide students with effective preparation for doctoral study;

(2) summer internships;

(3) seminars and other educational activities designed to prepare students for doctoral study;

(4) tutoring;

(5) academic counseling; and

(6) activities designed to assist students participating in the project in securing admission to and financial assistance for enrollment in graduate programs.

(c) Permissible services

A project assisted under this section may provide services such as—

(1) education or counseling services designed to improve the financial literacy and economic literacy of students, including financial planning for postsecondary education;

(2) mentoring programs involving faculty members at institutions of higher education, students, or any combination of such persons; and

(3) exposure to cultural events and academic programs not usually available to disadvantaged students.

(d) Requirements

In approving applications for projects assisted under this section for any fiscal year, the Secretary shall require—

(1) an assurance that not less than two-thirds of the individuals participating in the project proposed to be carried out under any application be low-income individuals who are first generation college students;

(2) an assurance that the remaining persons participating in the project proposed to be carried out be from a group that is underrepresented in graduate education, including—

(A) Alaska Natives, as defined in section 7546 of this title;

(B) Native Hawaiians, as defined in section 7517 of this title; and

(C) Native American Pacific Islanders, as defined in section 1059g of this title;


(3) an assurance that participants be enrolled in a degree program at an eligible institution having an agreement with the Secretary in accordance with the provisions of section 1094 of this title; 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 shall consider in making awards to institutions under this section—

(1) the quality of research and other scholarly activities in which students will be involved;

(2) the level of faculty involvement in the project and the description of the research in which students will be involved; and

(3) the institution's plan for identifying and recruiting participants including students enrolled in projects authorized under this section.

(f) Maximum stipends

Students participating in research under a project under this section may receive an award that—

(1) shall include a stipend not to exceed $2,800 per annum; and

(2) may include, in addition, the costs of summer tuition, summer room and board, and transportation to summer programs.

(g) Funding

From amounts appropriated pursuant to the authority of section 1070a–11(g) of this title, the Secretary shall, to the extent practicable, allocate funds 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.

(Pub. L. 89–329, title IV, §402E, as added Pub. L. 102–325, title IV, §402(a)(4), July 23, 1992, 106 Stat. 489; amended Pub. L. 105–244, title IV, §402(e), Oct. 7, 1998, 112 Stat. 1655; Pub. L. 110–315, title IV, §403(e), Aug. 14, 2008, 122 Stat. 3203; Pub. L. 111–39, title IV, §401(a)(5), July 1, 2009, 123 Stat. 1938.)

Amendments

2009—Subsec. (d)(2)(C). Pub. L. 111–39 struck out period before semicolon at end.

2008—Subsec. (b). Pub. L. 110–315, §403(e)(1)(A), (B), inserted “Required” before “services” in heading and, in introductory provisions, substituted “A project assisted under this section shall provide—” for “A postbaccalaureate achievement project assisted under this section may provide services such as—”.

Subsec. (b)(5) to (8). Pub. L. 110–315, §403(e)(1)(C)–(E), inserted “and” after the semicolon in par. (5), substituted a period for the semicolon in par. (6), and struck out pars. (7) and (8) which read as follows:

“(7) mentoring programs involving faculty members at institutions of higher education, students, or any combination of such persons; and

“(8) exposure to cultural events and academic programs not usually available to disadvantaged students.”

Subsec. (c). Pub. L. 110–315, §403(e)(3), added subsec. (c). Former subsec. (c) redesignated (d).

Subsec. (d). Pub. L. 110–315, §403(e)(2), (4)(A), redesignated subsec. (c) as (d) and struck out “postbaccalaureate achievement” after “applications for” in introductory provisions. Former subsec. (d) redesignated (e).

Subsec. (d)(2). Pub. L. 110–315, §403(e)(4)(B), inserted “, including—” and added subpars. (A) to (C) before semicolon.

Subsec. (e). Pub. L. 110–315, §403(e)(2), redesignated subsec. (d) as (e). Former subsec. (e) redesignated (f).

Subsec. (f). Pub. L. 110–315, §403(e)(2), (5), redesignated subsec. (e) as (f) and substituted “project under this section” for “postbaccalaureate achievement project” in introductory provisions. Former subsec. (f) redesignated (g).

Subsec. (g). Pub. L. 110–315, §403(e)(2), (6), redesignated subsec. (f) as (g) and substituted “section 1070a–11(g)” for “section 1070a–11(f)” and “2009 through 2014” for “1993 through 1997”.

1998—Subsec. (e)(1). Pub. L. 105–244 substituted “$2,800” for “$2,400”.

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 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.

§1070a–16. Educational opportunity centers

(a) Program authority; services provided

The Secretary shall carry out a program to be known as educational opportunity centers which shall be designed—

(1) to provide information with respect to financial and academic assistance available for individuals desiring to pursue a program of postsecondary education;

(2) to provide assistance to such persons in applying for admission to institutions at which a program of postsecondary education is offered, including preparing necessary applications for use by admissions and financial aid officers; and

(3) to improve the financial literacy and economic literacy of students, including—

(A) basic personal income, household money management, and financial planning skills; and

(B) basic economic decisionmaking skills.

(b) Permissible services

An educational opportunity center assisted under this section may provide services such as—

(1) public information campaigns designed to inform the community regarding opportunities for postsecondary education and training;

(2) academic advice and assistance in course selection;

(3) assistance in completing college admission and financial aid applications;

(4) assistance in preparing for college entrance examinations;

(5) education or counseling services designed to improve the financial literacy and economic literacy of students;

(6) guidance on secondary school reentry or entry to a general educational development (GED) program or other alternative education programs for secondary school dropouts;

(7) individualized personal, career, and academic counseling;

(8) tutorial services;

(9) career workshops and counseling;

(10) mentoring programs involving elementary or secondary school teachers, faculty members at institutions of higher education, students, or any combination of such persons; and

(11) programs and activities as described in paragraphs (1) through (10) that are specially designed for students who are limited English proficient, students from groups that are traditionally underrepresented in postsecondary education, students with disabilities, students who are homeless children and youths (as such term is defined in section 11434a of title 42), 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 shall—

(1) require an assurance that not less than two-thirds of the persons participating in the project proposed to be carried out under any application be low-income individuals who are first generation college students;

(2) require that such participants be persons who are at least nineteen years of age, unless the imposition of such limitation with respect to any person would defeat the purposes of this section or the purposes of section 1070a–12 of this title; 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.

(Pub. L. 89–329, title IV, §402F, as added Pub. L. 102–325, title IV, §402(a)(4), July 23, 1992, 106 Stat. 490; amended Pub. L. 110–315, title IV, §403(f), Aug. 14, 2008, 122 Stat. 3203.)

Amendments

2008—Subsec. (a)(3). Pub. L. 110–315, §403(f)(1), added par. (3).

Subsec. (b)(5), (6). Pub. L. 110–315, §403(f)(2)(A), (B), added par. (5) and redesignated former par. (5) as (6). Former par. (6) redesignated (7).

Subsec. (b)(7). Pub. L. 110–315, §403(f)(2)(C), added par. (7) and struck out former par. (7) which read as follows: “personal counseling;”.

Pub. L. 110–315, §403(f)(2)(A), redesignated former par. (6) as (7). Former par. (7) redesignated (8).

Subsec. (b)(8) to (10). Pub. L. 110–315, §403(f)(2)(A), redesignated pars. (7) to (9) as (8) to (10), respectively. Former par. (10) redesignated (11).

Subsec. (b)(11). Pub. L. 110–315, §403(f)(2)(D), added par. (11) and struck out former par. (11) which read as follows: “programs and activities as described in paragraphs (1) through (9) which are specially designed for students of limited English proficiency.”

Pub. L. 110–315, §403(f)(2)(A), redesignated par. (10) as (11).

§1070a–17. Staff development activities

(a) Secretary's authority

For the purpose of improving the operation of the programs and projects authorized by this division, the Secretary is authorized to make grants to institutions of higher education and other public and private nonprofit institutions and organizations to provide training for staff and leadership personnel employed in, participating in, or preparing for employment in, such programs and projects.

(b) Contents of training programs

Such training shall include conferences, internships, seminars, workshops, and the publication of manuals designed to improve the operation of such programs and projects and shall be carried out in the various regions of the Nation in order to ensure that the training opportunities are appropriate to meet the needs in the local areas being served by such programs and projects. Such training shall be offered annually for new directors of projects funded under this division as well as annually on the following topics and other topics chosen by the Secretary:

(1) Legislative and regulatory requirements for the operation of programs funded under this division.

(2) Assisting students in receiving adequate financial aid from programs assisted under this subchapter and part C of subchapter I of chapter 34 of title 42 and other programs.

(3) The design and operation of model programs for projects funded under this division.

(4) The use of appropriate educational technology in the operation of projects assisted under this division.

(5) Strategies for recruiting and serving hard to reach populations, including students who are limited English proficient, students from groups that are traditionally underrepresented in postsecondary education, students with disabilities, students who are homeless children and youths (as such term is defined in section 11434a of title 42), 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 professional associations of persons having special knowledge with respect to the needs and problems of such programs and projects.

(Pub. L. 89–329, title IV, §402G, as added Pub. L. 102–325, title IV, §402(a)(4), July 23, 1992, 106 Stat. 491; amended Pub. L. 105–244, title IV, §402(f), Oct. 7, 1998, 112 Stat. 1655; Pub. L. 110–315, title IV, §403(g), Aug. 14, 2008, 122 Stat. 3204.)

Amendments

2008—Subsec. (b)(5). Pub. L. 110–315 added par. (5).

1998—Subsec. (a). Pub. L. 105–244, §402(f)(1), inserted “participating in,” after “leadership personnel employed in,”.

Subsec. (b)(4). Pub. L. 105–244, §402(f)(2), added par. (4).

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.

§1070a–18. Reports, evaluations, and grants for project improvement and dissemination

(a) Reports to the authorizing committees

(1) In general

The Secretary shall submit annually, to the authorizing committees, a report that documents the performance of all programs funded under this division. Such report shall—

(A) be submitted not later than 12 months after the eligible entities receiving funds under this division are required to report their performance to the Secretary;

(B) focus on the programs’ performance on the relevant outcome criteria determined under section 1070a–11(f)(4) of this title;

(C) aggregate individual project performance data on the outcome criteria in order to provide national performance data for each program;

(D) include, when appropriate, descriptive data, multi-year data, and multi-cohort data; and

(E) include comparable data on the performance nationally of low-income students, first-generation students, and students with disabilities.

(2) Information

The Secretary shall provide, with each report submitted under paragraph (1), information on the impact of the secondary review process described in section 1070a–11(c)(8)(C)(iv) of this title, 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 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 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. The evaluation of the programs and projects assisted under section 1070a–13 of this title 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 that is described in subparagraph (A) shall examine the characteristics of the students who benefit most from the Upward Bound program under section 1070a–13 of this title 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) shall identify institutional, community, and program or project practices that are effective in—

(i) enhancing the access of low-income individuals and first-generation college students to postsecondary education;

(ii) the preparation of such individuals and students for postsecondary education; and

(iii) fostering the success of the individuals and students in postsecondary education.

(B) Primary purpose

Any evaluation conducted under this division shall have as the evaluation's primary purpose the identification of particular practices that further the achievement of the outcome criteria determined under section 1070a–11(f)(4) of this title.

(C) Dissemination and use of evaluation findings

The Secretary shall disseminate to eligible entities and make available to the public the practices identified under subparagraph (B). The practices may be used by eligible entities that receive assistance under this division after the dissemination.

(3) Special rule related to evaluation participation

The Secretary shall not require an eligible entity, as a condition for receiving, or that receives, assistance under any program or project under this division to participate in an evaluation under this section that—

(A) requires the eligible entity to recruit additional students beyond those the program or project would normally recruit; or

(B) results in the denial of services for an eligible student under the program or project.

(4) Consideration

When designing an evaluation under this subsection, the Secretary shall continue to consider—

(A) the burden placed on the program participants or the eligible entity; and

(B) whether the evaluation meets generally accepted standards of institutional review boards.

(c) Grants

The Secretary may award grants to institutions of higher education or other private and public institutions and organizations, that are carrying out a program or project assisted under this division prior to October 7, 1998, to enable the institutions and organizations to expand and leverage the success of such programs or projects by working in partnership with other institutions, community-based organizations, or combinations of such institutions and organizations, that are not receiving assistance under this division and are serving low-income students and first generation college students, in order to—

(1) disseminate and replicate best practices of programs or projects assisted under this division; and

(2) provide technical assistance regarding programs and projects assisted under this division.

(d) Results

In order to improve overall program or project effectiveness, the results of evaluations and grants described in this section shall be disseminated by the Secretary to similar programs or projects assisted under this subpart, as well as other individuals concerned with postsecondary access for and retention of low-income individuals and first-generation college students.

(Pub. L. 89–329, title IV, §402H, as added Pub. L. 102–325, title IV, §402(a)(4), July 23, 1992, 106 Stat. 491; amended Pub. L. 105–244, title IV, §402(g), Oct. 7, 1998, 112 Stat. 1655; Pub. L. 110–315, title IV, §403(h), Aug. 14, 2008, 122 Stat. 3204.)

Amendments

2008—Pub. L. 110–315, §403(h)(1), substituted “Reports, evaluations, and grants for project improvement and dissemination” for “Evaluations and grants for project improvement and dissemination partnership projects” in section catchline.

Subsec. (a). Pub. L. 110–315, §403(h)(3), added subsec. (a). Former subsec. (a) redesignated (b).

Subsec. (b). Pub. L. 110–315, §403(h)(2), (4), redesignated subsec. (a) as (b), added pars. (1) to (4), and struck out former pars. (1) and (2) which read as follows:

“(1) In general.—For the purpose of improving the effectiveness of the programs and projects assisted under this division, the Secretary may make grants to or enter into contracts with institutions of higher education and other public and private institutions and organizations to evaluate the effectiveness of the programs and projects assisted under this division.

“(2) Practices.—The evaluations described in paragraph (1) shall identify institutional, community, and program or project practices that are particularly effective in enhancing the access of low-income individuals and first-generation college students to postsecondary education, the preparation of the individuals and students for postsecondary education, and the success of the individuals and students in postsecondary education. Such evaluations shall also investigate the effectiveness of alternative and innovative methods within Federal TRIO programs of increasing access to, and retention of, students in postsecondary education.”

Former subsec. (b) redesignated (c).

Subsecs. (c), (d). Pub. L. 110–315, §403(h)(2), redesignated subsecs. (b) and (c) as (c) and (d), respectively.

1998—Pub. L. 105–244 amended section generally, revising and restating former subsecs. (a) to (c) relating to evaluation for project improvement.

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.

Division 2—Gaining Early Awareness and Readiness for Undergraduate Programs

Codification

Chapter 2 of subpart 2 of part A of title IV of the Higher Education Act of 1965, comprising this division, was originally added to Pub. L. 89–329, title IV, by Pub. L. 102–325, title IV, §402(a)(4), July 23, 1992, 106 Stat. 492, and amended by Pub. L. 103–208, Dec. 20, 1993, 107 Stat. 2457; Pub. L. 103–382, Oct. 20, 1994, 108 Stat. 3518; Pub. L. 104–193, Aug. 22, 1996, 110 Stat. 2105. Chapter 2 is shown herein, however, as having been added by Pub. L. 105–244, title IV, §403, Oct. 7, 1998, 112 Stat. 1656, without reference to those intervening amendments because of the extensive revision of chapter 2 by Pub. L. 105–244.

§1070a–21. Early intervention and college awareness program authorized

(a) Program authorized

The Secretary is authorized, in accordance with the requirements of this division, to establish a program that encourages eligible entities to provide support, and maintain a commitment, to eligible low-income students, including students with disabilities, to assist the students in obtaining a secondary school diploma (or its recognized equivalent) and to prepare for and succeed in postsecondary education, by providing—

(1) financial assistance, academic support, additional counseling, mentoring, outreach, and supportive services to secondary school students, including students with disabilities, to reduce—

(A) the risk of such students dropping out of school; or

(B) the need for remedial education for such students at the postsecondary level; and


(2) information to students and their families about the advantages of obtaining a postsecondary education and, college financing options for the students and their families.

(b) Awards

(1) In general

From funds appropriated under section 1070a–28 of this title for each fiscal year, the Secretary shall make awards to eligible entities described in paragraphs (1) and (2) of subsection (c) of this section to enable the entities to carry out the program authorized under subsection (a) of this section.

(2) Award period

The Secretary may award a grant under this division to an eligible entity described in paragraphs (1) and (2) of subsection (c) for—

(A) six years; or

(B) in the case of an eligible entity that applies for a grant under this division for seven years to enable the eligible entity to provide services to a student through the student's first year of attendance at an institution of higher education, seven years.

(3) Priority

In making awards to eligible entities described in subsection (c)(1), the Secretary shall—

(A) give priority to eligible entities that—

(i) on the day before August 14, 2008, carried out successful educational opportunity programs under this division (as this division was in effect on such day); and

(ii) have a prior, demonstrated commitment to early intervention leading to college access through collaboration and replication of successful strategies; and


(B) ensure that students served under this division on the day before August 14, 2008, continue to receive assistance through the completion of secondary school.

(c) “Eligible entity” defined

For the purposes of this division, the term “eligible entity” means—

(1) a State; or

(2) a partnership—

(A) consisting of—

(i) one or more local educational agencies; and

(ii) one or more degree granting institutions of higher education; and


(B) which may include not less than two other community organizations or entities, such as businesses, professional organizations, State agencies, institutions or agencies sponsoring programs authorized under subpart 4, or other public or private agencies or organizations.

(Pub. L. 89–329, title IV, §404A, as added Pub. L. 105–244, title IV, §403, Oct. 7, 1998, 112 Stat. 1656; amended Pub. L. 110–315, title IV, §404(a), Aug. 14, 2008, 122 Stat. 3206.)

Prior Provisions

A prior section 1070a–21, Pub. L. 89–329, title IV, §404A, as added Pub. L. 102–325, title IV, §402(a)(4), July 23, 1992, 106 Stat. 492; amended Pub. L. 103–208, §2(b)(12), Dec. 20, 1993, 107 Stat. 2459, authorized establishment of early intervention program, prior to the general amendment of this division by Pub. L. 105–244.

Amendments

2008—Subsec. (a). Pub. L. 110–315, §404(a)(1), added subsec. (a) and struck out former subsec. (a). Prior to amendment, text read as follows: “The Secretary is authorized, in accordance with the requirements of this division, to establish a program that—

“(1) encourages eligible entities to provide or maintain a guarantee to eligible low-income students who obtain a secondary school diploma (or its recognized equivalent), of the financial assistance necessary to permit the students to attend an institution of higher education; and

“(2) supports eligible entities in providing—

“(A) additional counseling, mentoring, academic support, outreach, and supportive services to elementary school, middle school, and secondary school students who are at risk of dropping out of school; and

“(B) information to students and their parents about the advantages of obtaining a postsecondary education and the college financing options for the students and their parents.”

Subsec. (b)(2), (3). Pub. L. 110–315, §404(a)(2), added pars. (2) and (3) and struck out former par. (2) which related to priority in making awards to eligible entities.

Subsec. (c)(2). Pub. L. 110–315, §404(a)(3), added par. (2) and struck out former par. (2). Prior to amendment, text read as follows: “a partnership consisting of—

“(A) one or more local educational agencies acting on behalf of—

“(i) one or more elementary schools or secondary schools; and

“(ii) the secondary schools that students from the schools described in clause (i) would normally attend;

“(B) one or more degree granting institutions of higher education; and

“(C) at least two community organizations or entities, such as businesses, professional associations, community-based organizations, philanthropic organizations, State agencies, institutions or agencies sponsoring programs authorized under subpart 4 of this part, or other public or private agencies or organizations.”

Effective Date

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

Evaluation of Tuition Guaranty Programs

Pub. L. 102–325, title XIV, §1407, July 23, 1992, 106 Stat. 819, directed Secretary of Education to conduct study of effectiveness of programs for disadvantaged children that promise the child financial resources needed to pursue postsecondary education in exchange for child's commitment to achieve satisfactory elementary and secondary education, and to submit reports regarding study by June 30, 1996, and by Jan. 1, 1997, to committees of Congress, prior to repeal by Pub. L. 105–332, §6(b)(2), Oct. 31, 1998, 112 Stat. 3128.

§1070a–22. Requirements

(a) Funding rules

In awarding grants from the amount appropriated under section 1070a–28 of this title for a fiscal year, the Secretary shall make available—

(1) to eligible entities described in section 1070a–21(c)(1) of this title, not less than 33 percent of such amount;

(2) to eligible entities described in section 1070a–21(c)(2) of this title, 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, 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.

(b) Coordination

Each eligible entity shall ensure that the activities assisted under this division are, to the extent practicable, coordinated with, and complement and enhance—

(1) services under this division provided by other eligible entities serving the same school district or State; and

(2) related services under other Federal or non-Federal programs.

(c) Designation of fiscal agent

An eligible entity described in section 1070a–21(c)(2) of this title shall designate an institution of higher education or a local educational agency as the fiscal agent for the eligible entity.

(d) Cohort approach

(1) In general

The Secretary shall require that eligible entities described in section 1070a–21(c)(2) of this title—

(A) provide services under this division to at least one grade level of students, beginning not later than 7th grade, in a participating school that has a 7th grade and in which at least 50 percent of the students enrolled are eligible for free or reduced-price lunch under the Richard B. Russell National School Lunch Act [42 U.S.C. 1751 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);

(B) ensure that the services are provided through the 12th grade to students in the participating grade level and provide the option of continued services through the student's first year of attendance at an institution of higher education to the extent the provision of such services was described in the eligible entity's application for assistance under this division; and

(C) provide services under this division to students who have received services under a previous GEAR UP grant award but have not yet completed the 12th grade.

(2) Coordination requirement

In order for the Secretary to require the cohort approach described in paragraph (1), the Secretary shall, where applicable, ensure that the cohort approach is done in coordination and collaboration with existing early intervention programs and does not duplicate the services already provided to a school or community.

(e) Supplement, not supplant

Grant funds awarded under this division shall be used to supplement, and not supplant, other Federal, State, and local funds that would otherwise be expended to carry out activities assisted under this division.

(Pub. L. 89–329, title IV, §404B, as added Pub. L. 105–244, title IV, §403, Oct. 7, 1998, 112 Stat. 1657; amended Pub. L. 106–78, title VII, §752(b)(8), Oct. 22, 1999, 113 Stat. 1169; Pub. L. 110–315, title IV, §404(b), Aug. 14, 2008, 122 Stat. 3207.)

References in Text

The Richard B. Russell National School Lunch Act, referred to in subsec. (d)(1)(A), is act June 4, 1946, ch. 281, 60 Stat. 230, which is classified generally to chapter 13 (§1751 et seq.) of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see Short Title note set out under section 1751 of Title 42 and Tables.

Prior Provisions

A prior section 1070a–22, Pub. L. 89–329, title IV, §404B, as added Pub. L. 102–325, title IV, §402(a)(4), July 23, 1992, 106 Stat. 492; amended Pub. L. 103–208, §2(b)(13), (14), Dec. 20, 1993, 107 Stat. 2459, related to State eligibility and State plan, prior to the general amendment of this division by Pub. L. 105–244.

Amendments

2008—Subsec. (a). Pub. L. 110–315, §404(b)(1), added subsec. (a) and struck out former subsec. (a) which related to funding rules.

Subsecs. (b), (c). Pub. L. 110–315, §404(b)(2), (3), redesignated subsecs. (c) and (d) as (b) and (c), respectively, and struck out former subsec. (b). Text read as follows: “Each eligible entity described in section 1070a–21(c)(1) of this title, and each eligible entity described in section 1070a–21(c)(2) of this title that conducts a scholarship component under section 1070a–25 of this title, shall use not less than 25 percent and not more than 50 percent of grant funds received under this division for the early intervention component of an eligible entity's program under this division, except that the Secretary may waive the 50 percent limitation if the eligible entity demonstrates that the eligible entity has another means of providing the students with financial assistance that is described in the plan submitted under section 1070a–23 of this title.”

Subsec. (d). Pub. L. 110–315, §404(b)(3), redesignated subsec. (g) as (d). Former subsec. (d) redesignated (c).

Subsec. (d)(1)(B), (C). Pub. L. 110–315, §404(b)(4), inserted “and provide the option of continued services through the student's first year of attendance at an institution of higher education to the extent the provision of such services was described in the eligible entity's application for assistance under this division” after “grade level” in par. (B) and added par. (C).

Subsec. (e). Pub. L. 110–315, §404(b)(2), (5), added subsec. (e) and struck out former subsec. (e). Prior to amendment, text read as follows: “An eligible entity described in section 1070a–21(c)(2) of this title shall have a full-time program coordinator or a part-time program coordinator, whose primary responsibility is a project under section 1070a–23 of this title.”

Subsec. (f). Pub. L. 110–315, §404(b)(2), struck out subsec. (f). Text read as follows: “An eligible entity described in 1070a–21(c)(2) of this title shall ensure that the activities assisted under this division will not displace an employee or eliminate a position at a school assisted under this division, including a partial displacement such as a reduction in hours, wages or employment benefits.”

Subsec. (g). Pub. L. 110–315, §404(b)(3), redesignated subsec. (g) as (d).

1999—Subsec. (g)(1)(A). Pub. L. 106–78 substituted “Richard B. Russell National School Lunch Act” for “National School Lunch Act”.

§1070a–23. Applications

(a) Application required for eligibility

(1) In general

In order for an eligible entity to qualify for a grant under this division, the eligible entity shall submit to the Secretary an application for carrying out the program under this division.

(2) Contents

Each application submitted pursuant to paragraph (1) shall be in such form, contain or be accompanied by such information or assurances, and be submitted at such time as the Secretary may reasonably require. Each such application shall, at a minimum—

(A) describe the activities for which assistance under this division is sought, including how the eligible entity will carry out the required activities described in section 1070a–24(a) of this title;

(B) describe, in the case of an eligible entity described in section 1070a–21(c)(2) of this title that chooses to provide scholarships, or an eligible entity described in section 1070a–21(c)(1) of this title, how the eligible entity will meet the requirements of section 1070a–25 of this title;

(C) describe, in the case of an eligible entity described in section 1070a–21(c)(2) of this title that requests a reduced match percentage under subsection (b)(2), how such reduction will assist the entity to provide the scholarships described in subsection (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;

(E) provide assurances that activities assisted under this division will not displace an employee or eliminate a position at a school assisted under this division, including a partial displacement such as a reduction in hours, wages, or employment benefits;

(F) describe, in the case of an eligible entity described in section 1070a–21(c)(1) of this title that chooses to use a cohort approach, or an eligible entity described in section 1070a–21(c)(2) of this title, 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, 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;


(G) describe how the eligible entity will coordinate programs under this division with other existing Federal, State, or local programs to avoid duplication and maximize the number of students served;

(H) provide such additional assurances as the Secretary determines necessary to ensure compliance with the requirements of this division;

(I) provide information about the activities that will be carried out by the eligible entity to support systemic changes from which future cohorts of students will benefit; and

(J) describe the sources of matching funds that will enable the eligible entity to meet the matching requirement described in subsection (b).

(b) Matching requirement

(1) In general

The Secretary shall not approve an application submitted under subsection (a) unless such application—

(A) provides that the eligible entity will provide, from State, local, institutional, or private funds, not less than 50 percent of the cost of the program, which matching funds may be provided in cash or in kind and may be accrued over the full duration of the grant award period, except that the eligible entity shall make substantial progress towards meeting the matching requirement in each year of the grant award period;

(B) specifies the methods by which matching funds will be paid; and

(C) includes provisions designed to ensure that funds provided under this division shall supplement and not supplant funds expended for existing programs.

(2) Special rule

Notwithstanding the matching requirement described in paragraph (1)(A), the Secretary may by regulation modify the percentage requirement described in paragraph (1)(A) for eligible entities described in section 1070a–21(c)(2) of this title. The Secretary 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 and requests that contributions to the eligible entity's scholarship fund established under section 1070a–25 of this title 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 described in its application are no longer available and the eligible entity has exhausted all revenues for replacing such matching funds.

(c) Methods for complying with matching requirement

An eligible entity may count toward the matching requirement described in subsection (b)(1)(A)—

(1) the amount of the financial assistance obligated to students from State, local, institutional, or private funds under this division, including pre-existing non-Federal financial assistance programs, including—

(A) the amount contributed to a student scholarship fund established under section 1070a–25 of this title; and

(B) the amount of the costs of administering the scholarship program under section 1070a–25 of this title;


(2) the amount of tuition, fees, room or board waived or reduced for recipients of financial assistance under this division;

(3) the amount expended on documented, targeted, long-term mentoring and counseling provided by volunteers or paid staff of nonschool organizations, including businesses, religious organizations, community groups, postsecondary educational institutions, nonprofit and philanthropic organizations, and other organizations; and

(4) other resources recognized by the Secretary, including equipment and supplies, cash contributions from non-Federal sources, transportation expenses, in-kind or discounted program services, indirect costs, and facility usage.

(d) Peer review panels

The Secretary shall convene peer review panels to assist in making determinations regarding the awarding of grants under this division.

(Pub. L. 89–329, title IV, §404C, as added Pub. L. 105–244, title IV, §403, Oct. 7, 1998, 112 Stat. 1658; amended Pub. L. 110–315, title IV, §404(c), Aug. 14, 2008, 122 Stat. 3208.)

Prior Provisions

A prior section 1070a–23, Pub. L. 89–329, title IV, §404C, as added Pub. L. 102–325, title IV, §402(a)(4), July 23, 1992, 106 Stat. 493; amended Pub. L. 103–208, §2(b)(15)–(17), Dec. 20, 1993, 107 Stat. 2459; Pub. L. 104–193, title I, §110(h)(1), Aug. 22, 1996, 110 Stat. 2172, related to early intervention, prior to the general amendment of this division by Pub. L. 105–244. See section 1070a–24 of this title.

Amendments

2008—Pub. L. 110–315, §404(c)(1), substituted “Applications” for “Eligible entity plans” in section catchline.

Subsec. (a). Pub. L. 110–315, §404(c)(2)(A), substituted “Application” for “Plan” in heading.

Subsec. (a)(1). Pub. L. 110–315, §404(c)(2)(B), substituted “an application” for “a plan” and struck out at end “Such plan shall provide for the conduct of a scholarship component if required or undertaken pursuant to section 1070a–25 of this title and an early intervention component required pursuant to section 1070a–24 of this title.”

Subsec. (a)(2). Pub. L. 110–315, §404(c)(2)(C), added par. (2) and struck out former par. (2). Prior to amendment, text read as follows: “Each plan submitted pursuant to paragraph (1) shall be in such form, contain or be accompanied by such information or assurances, and be submitted at such time as the Secretary may require by regulation. Each such plan shall—

“(A) describe the activities for which assistance under this division is sought; and

“(B) provide such additional assurances as the Secretary determines necessary to ensure compliance with the requirements of this division.”

Subsec. (b)(1). Pub. L. 110–315, §404(c)(3)(A), substituted “an application” for “a plan” and “such application” for “such plan” in introductory provisions.

Subsec. (b)(1)(A). Pub. L. 110–315, §404(c)(3)(B), which directed insertion of “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” after “in cash or in-kind”, was executed by making the insertion after “in cash or in kind” to reflect the probable intent of Congress.

Subsec. (b)(2). Pub. L. 110–315, §404(c)(3)(C), inserted at end “The Secretary may approve an eligible entity's request for a reduced match percentage—” and subpars. (A) and (B).

Subsec. (c)(1). Pub. L. 110–315, §404(c)(4)(A), substituted “obligated to students from State, local, institutional, or private funds under this division, including pre-existing non-Federal financial assistance programs, including—” and subpars. (A) and (B) for “paid to students from State, local, institutional, or private funds under this division;”.

Subsec. (c)(4). Pub. L. 110–315, §404(c)(4)(B)–(D), added par. (4).

§1070a–24. Activities

(a) Required activities

Each eligible entity receiving a grant under this division shall provide comprehensive mentoring, outreach, and supportive services to students participating in the programs under this division. Such activities shall include the following:

(1) Providing information regarding financial aid for postsecondary education to participating students in the cohort described in section 1070a–22(d)(1)(A) of this title or to priority students described in subsection (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 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, providing for the scholarships described in section 1070a–25 of this title.

(b) Permissible activities for States and partnerships

An eligible entity that receives a grant under this division may use grant funds to carry out one or more of the following activities:

(1) Providing tutors and mentors, who may include adults or former participants of a program under this division, for eligible students.

(2) Conducting outreach activities to recruit priority students described in subsection (d) to participate in program activities.

(3) Providing supportive services to eligible students.

(4) Supporting the development or implementation of rigorous academic curricula, which may include college preparatory, Advanced Placement, or International Baccalaureate programs, and providing participating students access to rigorous core academic courses that reflect challenging State academic standards.

(5) Supporting dual or concurrent enrollment programs between the secondary school and institution of higher education partners of an eligible entity described in section 1070a–21(c)(2) of this title, and other activities that support participating students in—

(A) meeting challenging State academic standards;

(B) successfully applying for postsecondary education;

(C) successfully applying for student financial aid; and

(D) developing graduation and career plans.


(6) Providing special programs or tutoring in science, technology, engineering, or mathematics.

(7) In the case of an eligible entity described in section 1070a–21(c)(2) of this title, providing support for scholarships described in section 1070a–25 of this title.

(8) Introducing eligible students to institutions of higher education, through trips and school-based sessions.

(9) Providing an intensive extended school day, school year, or summer program that offers—

(A) additional academic classes; or

(B) assistance with college admission applications.


(10) Providing other activities designed to ensure secondary school completion and postsecondary education enrollment of at-risk children, such as—

(A) the identification of at-risk children;

(B) after-school and summer tutoring;

(C) assistance to at-risk children in obtaining summer jobs;

(D) academic counseling;

(E) financial literacy and economic literacy education or counseling;

(F) volunteer and parent involvement;

(G) encouraging former or current participants of a program under this division to serve as peer counselors;

(H) skills assessments;

(I) personal and family counseling, and home visits;

(J) staff development; and

(K) programs and activities described in this subsection that are specially designed for students who are limited English proficient.


(11) Enabling eligible students to enroll in Advanced Placement or International Baccalaureate courses, or college entrance examination preparation courses.

(12) Providing services to eligible students in the participating cohort described in section 1070a–22(d)(1)(A) of this title, through the first year of attendance at an institution of higher education.

(13) Fostering and improving parent and family involvement in elementary and secondary education by promoting the advantages of a college education, and emphasizing academic admission requirements and the need to take college preparation courses, through parent engagement and leadership activities.

(14) Disseminating information that promotes the importance of higher education, explains college preparation and admission requirements, and raises awareness of the resources and services provided by the eligible entities to eligible students, their families, and communities.

(15) In the event that matching funds described in the application are no longer available, engaging entities described in section 1070a–21(c)(2) of this title 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) and the permissible activities described in subsection (b), an eligible entity described in section 1070a–21(c)(1) of this title receiving funds under this division may use grant funds to carry out one or more of the following activities:

(1) Providing technical assistance to—

(A) secondary schools that are located within the State; or

(B) partnerships described in section 1070a–21(c)(2) of this title that are located within the State.


(2) Providing professional development opportunities to individuals working with eligible cohorts of students described in section 1070a–22(d)(1)(A) of this title.

(3) Providing administrative support to help build the capacity of eligible entities described in section 1070a–21(c)(2) of this title to compete for and manage grants awarded under this division.

(4) Providing strategies and activities that align efforts in the State to prepare eligible students to attend and succeed in postsecondary education, which may include the development of graduation and career plans.

(5) Disseminating information on the use of scientifically valid research and best practices to improve services for eligible students.

(6)(A) Disseminating information on effective coursework and support services that assist students in obtaining the goals described in subparagraph (B)(ii).

(B) Identifying and disseminating information on best practices with respect to—

(i) increasing parental involvement; and

(ii) preparing students, including students with disabilities and students who are limited English proficient, to succeed academically in, and prepare financially for, postsecondary education.


(7) Working to align State academic standards and curricula with the expectations of postsecondary institutions and employers.

(8) Developing alternatives to traditional secondary school that give students a head start on attaining a recognized postsecondary credential (including an industry-recognized certificate, an apprenticeship, or an associate's or a bachelor's degree), including school designs that give students early exposure to college-level courses and experiences and allow students to earn transferable college credits or an associate's degree at the same time as a secondary school diploma.

(9) Creating community college programs for drop-outs that are personalized drop-out recovery programs that allow drop-outs to complete a regular secondary school diploma and begin college-level work.

(d) Priority students

For eligible entities not using a cohort approach, the eligible entity shall treat as a priority student any student in secondary school who is—

(1) eligible to be counted under section 6333(c) of this title;

(2) eligible for assistance under a State program funded under part A or E of title IV of the Social Security Act (42 U.S.C. 601 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 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, the activities required by this section may be provided by service providers such as community-based organizations, schools, institutions of higher education, public and private agencies, nonprofit and philanthropic organizations, businesses, institutions and agencies sponsoring programs authorized under subpart 4, and other organizations the State determines appropriate.

(Pub. L. 89–329, title IV, §404D, as added Pub. L. 105–244, title IV, §403, Oct. 7, 1998, 112 Stat. 1659; amended Pub. L. 106–78, title VII, §752(b)(8), Oct. 22, 1999, 113 Stat. 1169; Pub. L. 110–315, title IV, §404(d), Aug. 14, 2008, 122 Stat. 3210.)

References in Text

The Social Security Act, referred to in subsec. (d)(2), is act Aug. 14, 1935, ch. 531, 49 Stat. 620. Parts A and E of title IV of the Act are classified generally to parts A (§601 et seq.) and E (§670 et seq.) of subchapter IV of chapter 7 of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see section 1305 of Title 42 and Tables.

The McKinney-Vento Homeless Assistance Act, referred to in subsec. (d)(3), is Pub. L. 100–77, July 22, 1987, 101 Stat. 482. Subtitle B of title VII of the Act is classified generally to part B (§11431 et seq.) of subchapter VI of chapter 119 of Title 42, The Public Health and Welfare. For complete classification of this Act to the Code, see Short Title note set out under section 11301 of Title 42 and Tables.

Prior Provisions

A prior section 1070a–24, Pub. L. 89–329, title IV, §404D, as added Pub. L. 102–325, title IV, §402(a)(4), July 23, 1992, 106 Stat. 495; amended Pub. L. 103–208, §2(b)(18), (19), Dec. 20, 1993, 107 Stat. 2459, related to scholarship component, prior to the general amendment of this division by Pub. L. 105–244. See section 1070a–25 of this title.

Amendments

2008—Pub. L. 110–315 amended section generally. Prior to amendment, section consisted of subsecs. (a) to (d) providing for services, use of funds, priority students, and allowable providers relating to early intervention.

1999—Subsec. (c)(2). Pub. L. 106–78 substituted “Richard B. Russell National School Lunch Act” for “National School Lunch Act”.

§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 shall establish or maintain a financial assistance program that awards scholarships to students in accordance with the requirements of this section. The Secretary 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.

(2) Partnerships

An eligible entity described in section 1070a–21(c)(2) of this title may award scholarships to eligible students in accordance with the requirements of this section.

(b) Limitation

(1) In general

Subject to paragraph (2), each eligible entity described in section 1070a–21(c)(1) of this title that receives a grant under this division shall use not less than 25 percent and not more than 50 percent of the grant funds for activities described in section 1070a–24 of this title (except for the activity described in subsection (a)(4) of such section), with the remainder of such funds to be used for a scholarship program under this section in accordance with such subsection.

(2) Exception

Notwithstanding paragraph (1), the Secretary may allow an eligible entity to use more than 50 percent of grant funds received under this division for such activities, if the eligible entity demonstrates that the eligible entity has another means of providing the students with the financial assistance described in this section and describes such means in the application submitted under section 1070a–23 of this title.

(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 for such award year.

(e) Portability of assistance

(1) In general

Each eligible entity described in section 1070a–21(c)(1) of this title 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) or 1070a–24(d) of this title, an amount that is not less than the minimum scholarship amount described in subsection (d), multiplied by the number of students the eligible entity estimates will meet the requirements of paragraph (2).

(2) Requirement for portability

Funds held in reserve under paragraph (1) shall be made available to an eligible student when the eligible student has—

(A) completed a secondary school diploma, its recognized equivalent, or another recognized alternative standard for individuals with disabilities; and

(B) enrolled in an institution of higher education.

(3) Qualified educational expenses

Funds available to an eligible student under this subsection may be used for—

(A) tuition, fees, books, supplies, and equipment required for the enrollment or attendance of the eligible student at an institution of higher education; and

(B) in the case of an eligible student with special needs, expenses for special needs services that are incurred in connection with such enrollment or attendance.

(4) Return of funds

(A) Redistribution

(i) In general

Funds held in reserve under paragraph (1) that are not used by an eligible student within six years of the student's scheduled completion of secondary school may be redistributed by the eligible entity to other eligible students.

(ii) Return of excess to the Secretary

If, after meeting the requirements of paragraph (1) and, if applicable, redistributing excess funds in accordance with clause (i) of this subparagraph, an eligible entity has funds held in reserve under paragraph (1) that remain available, the eligible entity shall return such remaining reserved funds to the Secretary for distribution to other grantees under this division in accordance with the funding rules described in section 1070a–22(a) of this title.

(B) Nonparticipating entity

Notwithstanding subparagraph (A), in the case of an eligible entity that does not receive assistance under this subpart for six fiscal years, the eligible entity shall return any funds held in reserve under paragraph (1) that are not awarded or obligated to eligible students to the Secretary for distribution to other grantees under this division.

(f) Relation to other assistance

Scholarships provided under this section shall not be considered for the purpose of awarding Federal grant assistance under this subchapter and part C of subchapter I of chapter 34 of title 42, except that in no case shall the total amount of student financial assistance awarded to a student under this subchapter and part C of subchapter I of chapter 34 of title 42 exceed such student's total cost of attendance.

(g) Eligible students

A student eligible for assistance under this section is a student who—

(1) is less than 22 years old at time of first scholarship award under this section;

(2) receives a secondary school diploma or its recognized equivalent on or after January 1, 1993;

(3) is enrolled or accepted for enrollment in a program of undergraduate instruction at an institution of higher education that is located within the State's boundaries, except that, at the State's option, an eligible entity may offer scholarship program portability for recipients who attend institutions of higher education outside such State; and

(4) who participated in the activities required under section 1070a–24(a) of this title.

(Pub. L. 89–329, title IV, §404E, as added Pub. L. 105–244, title IV, §403, Oct. 7, 1998, 112 Stat. 1661; amended Pub. L. 110–315, title IV, §404(e), Aug. 14, 2008, 122 Stat. 3213.)

Prior Provisions

A prior section 1070a–25, Pub. L. 89–329, title IV, §404E, as added Pub. L. 102–325, title IV, §402(a)(4), July 23, 1992, 106 Stat. 495; amended Pub. L. 103–208, §2(b)(20), Dec. 20, 1993, 107 Stat. 2459, related to distribution of funds, prior to the general amendment of this division by Pub. L. 105–244.

Amendments

2008—Subsecs. (b), (c). Pub. L. 110–315, §404(e)(3), added subsecs. (b) and (c). Former subsecs. (b) and (c) redesignated (d) and (f), respectively.

Subsec. (d). Pub. L. 110–315, §404(e)(4), substituted “the minimum Federal Pell Grant award under section 1070a of this title for such award year” for “the lesser of—

“(1) 75 percent of the average cost of attendance for an in-State student, in a 4-year program of instruction, at public institutions of higher education in such State, as determined in accordance with regulations prescribed by the Secretary; or

“(2) the maximum Federal Pell Grant funded under section 1070a of this title for such fiscal year”.

Pub. L. 110–315, §404(e)(2), redesignated subsec. (b) as (d). Former subsec. (d) redesignated (g).

Subsec. (e). Pub. L. 110–315, §404(e)(1), (5), added subsec. (e) and struck out former subsec. (e). Prior to amendment, text read as follows: “The Secretary shall ensure that each eligible entity places a priority on awarding scholarships to students who will receive a Federal Pell Grant for the academic year for which the scholarship is awarded under this section.”

Subsec. (f). Pub. L. 110–315, §404(e)(1), (2), redesignated subsec. (c) as (f) and struck out former subsec. (f). Text read as follows: “An eligible entity may consider students who have successfully participated in programs funded under division 1 of this subpart to have met the requirements of subsection (d)(4) of this section.”

Subsec. (g). Pub. L. 110–315, §404(e)(2), redesignated subsec. (d) as (g).

Subsec. (g)(4). Pub. L. 110–315, §404(e)(6), substituted “activities required under section 1070a–24(a) of this title” for “early intervention component required under section 1070a–24 of this title”.

Effective Date of 2008 Amendment

Pub. L. 110–315, title IV, §404(i), as added by Pub. L. 111–39, title IV, §401(c), July 1, 2009, 123 Stat. 1940, provided that:

“(1) In general.—The amendments made by subsection (e) [amending this section] shall apply to grants made under chapter 2 of subpart 2 of part A of title IV of the Higher Education Act of 1965 (20 U.S.C. 1070a–21 et seq.) on or after the date of enactment of this Act [Aug. 14, 2008], except that a recipient of a grant under such chapter that is made prior to such date may elect to apply the requirements contained in the amendments made by subsection (e) to that grant if the grant recipient informs the Secretary of the election.

“(2) Special rule.—A grant recipient may make the election described in paragraph (1) only if the election does not decrease the amount of the scholarship promised to an individual student under the grant.”

§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, if applicable, that a student may be eligible to receive.

(Pub. L. 89–329, title IV, §404F, as added Pub. L. 105–244, title IV, §403, Oct. 7, 1998, 112 Stat. 1662; amended Pub. L. 106–78, title VII, §752(b)(8), Oct. 22, 1999, 113 Stat. 1169; Pub. L. 110–315, title IV, §404(f), Aug. 14, 2008, 122 Stat. 3214.)

Prior Provisions

A prior section 1070a–26, Pub. L. 89–329, title IV, §404F, as added Pub. L. 102–325, title IV, §402(a)(4), July 23, 1992, 106 Stat. 496; amended Pub. L. 103–208, §2(b)(21), (22), Dec. 20, 1993, 107 Stat. 2459, related to evaluation and report, prior to the general amendment of this division by Pub. L. 105–244. See section 1070a–27 of this title.

Amendments

2008—Pub. L. 110–315 added subsecs. (a) and (b) and struck out former subsecs. (a) and (b), which related to the provision of 21st Century Scholar Certificates and required that such Certificates be personalized for each student.

1999—Subsec. (a)(2). Pub. L. 106–78 substituted “Richard B. Russell National School Lunch Act” for “National School Lunch Act”.

§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) of this section and shall submit to the Secretary a copy of such evaluation. The evaluation shall permit service providers to track eligible student progress during the period such students are participating in the activities and shall be consistent with the standards developed by the Secretary pursuant to subsection (b) of this section.

(b) Evaluation standards

The Secretary shall prescribe standards for the evaluation described in subsection (a) of this section. Such standards shall—

(1) provide for input from eligible entities and service providers; and

(2) ensure that data protocols and procedures are consistent and uniform.

(c) Federal evaluation

In order to evaluate and improve the impact of the activities assisted under this division, the Secretary shall, from not more than 0.75 percent of the funds appropriated under section 1070a–28 of this title 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; 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.

(d) Report

The Secretary shall biennially report to Congress regarding the activities assisted under this division and the evaluations conducted pursuant to this section.

(Pub. L. 89–329, title IV, §404G, as added Pub. L. 105–244, title IV, §403, Oct. 7, 1998, 112 Stat. 1662; amended Pub. L. 110–315, title IV, §404(g), Aug. 14, 2008, 122 Stat. 3215.)

Prior Provisions

A prior section 1070a–27, Pub. L. 89–329, title IV, §404G, as added Pub. L. 102–325, title IV, §402(a)(4), July 23, 1992, 106 Stat. 496; amended Pub. L. 103–208, §2(b)(23), Dec. 20, 1993, 107 Stat. 2459; Pub. L. 103–382, title III, §354, Oct. 20, 1994, 108 Stat. 3967, authorized appropriations for grants under this division, prior to the general amendment of this division by Pub. L. 105–244. See section 1070a–28 of this title.

Amendments

2008—Subsec. (c). Pub. L. 110–315 inserted at end “Such evaluation shall include a separate analysis of—” and pars. (1) and (2).

§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.

(Pub. L. 89–329, title IV, §404H, as added Pub. L. 105–244, title IV, §403, Oct. 7, 1998, 112 Stat. 1663; amended Pub. L. 110–315, title IV, §404(h), Aug. 14, 2008, 122 Stat. 3215.)

Amendments

2008—Pub. L. 110–315 substituted “$400,000,000 for fiscal year 2009 and such sums as may be necessary for each of the five succeeding fiscal years” for “$200,000,000 for fiscal year 1999 and such sums as may be necessary for each of the 4 succeeding fiscal years”.

Division 3—[Repealed]

Codification

Chapter 3 of subpart 2 of part A of title IV of the Higher Education Act of 1965, which comprised this division, was originally added to Pub. L. 89–329, title IV, by Pub. L. 102–325, title IV, §402(a)(4), July 23, 1992, 106 Stat. 497. Chapter 3, which related to academic achievement incentive scholarships, was set out as having been added by Pub. L. 105–244, title IV, §404, Oct. 7, 1998, 112 Stat. 1663, without reference to Pub. L. 102–325 because of the extensive revision of chapter 3 by Pub. L. 105–244.

§§1070a–31 to 1070a–35. Repealed. Pub. L. 110–315, title IV, §405, Aug. 14, 2008, 122 Stat. 3215

Section 1070a–31, Pub. L. 89–329, title IV, §406A, as added Pub. L. 105–244, title IV, §404, Oct. 7, 1998, 112 Stat. 1663, authorized scholarships to students who graduate from secondary school after May 1, 2000.

A prior section 1070a–31, Pub. L. 89–329, title IV, §406A, as added Pub. L. 102–325, title IV, §402(a)(4), July 23, 1992, 106 Stat. 497, authorized award of Presidential Access Scholarships, prior to the general amendment of this division by Pub. L. 105–244.

Section 1070a–32, Pub. L. 89–329, title IV, §406B, as added Pub. L. 105–244, title IV, §404, Oct. 7, 1998, 112 Stat. 1663, related to scholarship program requirements.

A prior section 1070a–32, Pub. L. 89–329, title IV, §406B, as added Pub. L. 102–325, title IV, §402(a)(4), July 23, 1992, 106 Stat. 497, related to scholarship program requirements, prior to the general amendment of this division by Pub. L. 105–244.

Section 1070a–33, Pub. L. 89–329, title IV, §406C, as added Pub. L. 105–244, title IV, §404, Oct. 7, 1998, 112 Stat. 1664, related to eligibility of scholars.

A prior section 1070a–33, Pub. L. 89–329, title IV, §406C, as added Pub. L. 102–325, title IV, §402(a)(4), July 23, 1992, 106 Stat. 497, related to eligibility of scholars, prior to the general amendment of this division by Pub. L. 105–244.

Section 1070a–34, Pub. L. 89–329, title IV, §406D, as added Pub. L. 105–244, title IV, §404, Oct. 7, 1998, 112 Stat. 1664, related to student requirements.

A prior section 1070a–34, Pub. L. 89–329, title IV, §406D, as added Pub. L. 102–325, title IV, §402(a)(4), July 23, 1992, 106 Stat. 498, related to eligible early intervention programs, prior to the general amendment of this division by Pub. L. 105–244.

Section 1070a–35, Pub. L. 89–329, title IV, §407E [406E], as added Pub. L. 105–244, title IV, §404, Oct. 7, 1998, 112 Stat. 1664, authorized appropriations for fiscal year 1999 and the 4 succeeding fiscal years.

A prior section 1070a–35, Pub. L. 89–329, title IV, §406E, as added Pub. L. 102–325, title IV, §402(a)(4), July 23, 1992, 106 Stat. 498, related to student eligibility, prior to the general amendment of this division by Pub. L. 105–244.

Prior sections 1070a–36 and 1070a–37 were omitted in the general amendment of this division by Pub. L. 105–244.

Section 1070a–36, Pub. L. 89–329, title IV, §406F, as added Pub. L. 102–325, title IV, §402(a)(4), July 23, 1992, 106 Stat. 499, related to early intervention scholarship agreement.

Section 1070a–37, Pub. L. 89–329, title IV, §406G, as added Pub. L. 102–325, title IV, §402(a)(4), July 23, 1992, 106 Stat. 499, authorized appropriations to carry out this division.

Division 4—Model Program Community Partnership and Counseling Grants

§§1070a–41 to 1070a–43. Repealed. Pub. L. 105–244, title IV, §405, Oct. 7, 1998, 112 Stat. 1664

Section 1070a–41, Pub. L. 89–329, title IV, §408A, as added Pub. L. 102–325, title IV, §402(a)(4), July 23, 1992, 106 Stat. 500, authorized grants to develop model programs.

Section 1070a–42, Pub. L. 89–329, title IV, §408B, as added Pub. L. 102–325, title IV, §402(a)(4), July 23, 1992, 106 Stat. 500, related to collection and dissemination of information about programs.

Section 1070a–43, Pub. L. 89–329, title IV, §408C, as added Pub. L. 102–325, title IV, §402(a)(4), July 23, 1992, 106 Stat. 501, authorized appropriations to carry out this division.

Effective Date of Repeal

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

Division 5—Public Information

§§1070a–51 to 1070a–53. Repealed. Pub. L. 105–244, title IV, §405, Oct. 7, 1998, 112 Stat. 1664

Section 1070a–51, Pub. L. 89–329, title IV, §409A, as added Pub. L. 102–325, title IV, §402(a)(4), July 23, 1992, 106 Stat. 501; amended Pub. L. 103–208, §2(b)(24), Dec. 20, 1993, 107 Stat. 2459, authorized contract to establish and maintain database and information line.

Section 1070a–52, Pub. L. 89–329, title IV, §409B, as added Pub. L. 102–325, title IV, §402(a)(4), July 23, 1992, 106 Stat. 501, related to early awareness information program.

Section 1070a–53, Pub. L. 89–329, title IV, §409C, as added Pub. L. 102–325, title IV, §402(a)(4), July 23, 1992, 106 Stat. 502, authorized appropriations to carry out this division.

Effective Date of Repeal

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

Division 6—National Student Savings Demonstration Program

§1070a–61. Repealed. Pub. L. 105–244, title IV, §405, Oct. 7, 1998, 112 Stat. 1664

Section, Pub. L. 89–329, title IV, §410A, as added Pub. L. 102–325, title IV, §402(a)(4), July 23, 1992, 106 Stat. 502, related to national student savings demonstration program.

Effective Date of Repeal

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

Division 7—Preeligibility Form

§1070a–71. Repealed. Pub. L. 105–244, title IV, §405, Oct. 7, 1998, 112 Stat. 1664

Section, Pub. L. 89–329, title IV, §410B, as added Pub. L. 102–325, title IV, §402(a)(4), July 23, 1992, 106 Stat. 503, related to information on eligibility for assistance.

Effective Date of Repeal

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

Division 8—Technical Assistance for Teachers and Counselors

§1070a–81. Repealed. Pub. L. 105–244, title IV, §405, Oct. 7, 1998, 112 Stat. 1664

Section, Pub. L. 89–329, title IV, §410C, as added Pub. L. 102–325, title IV, §402(a)(4), July 23, 1992, 106 Stat. 504, related to technical assistance grants.

Effective Date of Repeal

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

subpart 3—federal supplemental educational opportunity grants

Codification

Pub. L. 102–325, title IV, §§402(a)(2), 403(a), July 23, 1992, 106 Stat. 482, 505, redesignated subpart 2 as 3 and inserted “Federal” before “Supplemental” in heading and redesignated former subpart 3 as 4.

§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 E of this subchapter.

(b) Authorization of appropriations

(1) For the purpose of enabling the Secretary to make payments to institutions of higher education which have made agreements with the Secretary in accordance with section 1070b–2(a) of this title, 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.

(Pub. L. 89–329, title IV, §413A, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1328; amended Pub. L. 102–325, title IV, §403(b), July 23, 1992, 106 Stat. 505; Pub. L. 105–244, title IV, §406(a), Oct. 7, 1998, 112 Stat. 1664.; Pub. L. 110–315, title IV, §406(a), Aug. 14, 2008, 122 Stat. 3215.)

Prior Provisions

A prior section 1070b, Pub. L. 89–329, title IV, §413A, as added Pub. L. 92–318, title I, §131(b)(1), June 23, 1972, 86 Stat. 251; amended Pub. L. 94–482, title I, §122(a), Oct. 12, 1976, 90 Stat. 2094; Pub. L. 96–49, §5(a)(3), Aug. 13, 1979, 93 Stat. 352; Pub. L. 96–374, title IV, §403(a), (b), title XIII, §1391(a)(1), Oct. 3, 1980, 94 Stat. 1404, 1405, 1503, related to program of supplemental educational opportunity grants purpose, authorization of appropriations, and initial year payment provisions, prior to the general revision of this part by Pub. L. 99–498.

Amendments

2008—Subsec. (b)(1). Pub. L. 110–315 substituted “such sums as may be necessary for fiscal year 2009 and each of the five succeeding fiscal years” for “$675,000,000 for fiscal year 1999 and such sums as may be necessary for the 4 succeeding fiscal years”.

1998—Subsec. (b)(1). Pub. L. 105–244 substituted “1999” for “1993”.

1992—Subsec. (b). Pub. L. 102–325 amended subsec. (b) generally, substituting present provisions for provisions authorizing appropriation of $490,000,000 for fiscal year 1987 and such sums as necessary for 4 succeeding fiscal years.

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.

§1070b–1. Amount and duration of grants

(a) Amount of grant

(1) Except as provided in paragraph (3), from the funds received by it for such purpose under this subpart, an institution which awards a supplemental grant to a student for an academic year under this subpart shall, for each year, pay to that student an amount not to exceed the lesser of (A) the amount determined by the institution, in accordance with the provisions of part E of this subchapter, to be needed by that student to enable the student to pursue a course of study at the institution or in a program of study abroad that is approved for credit by the institution at which the student is enrolled, or (B) $4,000.

(2) If the amount determined under paragraph (1) with respect to a student for any academic year is less than $100, no payment shall be made to that student for that year. For a student enrolled for less than a full academic year, the minimum payment required shall be reduced proportionately.

(3) For students participating in study abroad programs, the institution shall consider all reasonable costs associated with such study abroad when determining student eligibility. The amount of grant to be awarded in such cases may exceed the maximum amount of $4,000 by as much as $400 if reasonable study abroad costs exceed the cost of attendance at the home institution.

(b) Period for receipt of grants; continuing eligibility

(1) The period during which a student may receive supplemental grants shall be the period required for the completion of the first undergraduate baccalaureate course of study being pursued by that student.

(2) A supplemental grant awarded under this subpart shall entitle the student (to whom it is awarded) to payments pursuant to such grant only if the student meets the requirements of section 1091 of this title, except as provided in section 1070b–2(c) of this title.

(c) Distribution of grant during academic year

Nothing in this section shall be construed to prohibit an institution from making payments of varying amounts from a supplemental grant to a student during an academic year to cover costs for a period which are not applicable to other periods of such academic year.

(Pub. L. 89–329, title IV, §413B, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1328; amended Pub. L. 102–325, title IV, §403(c), July 23, 1992, 106 Stat. 505.)

Prior Provisions

A prior section 1070b–1, Pub. L. 89–329, title IV, §413B, as added Pub. L. 92–318, title I, §131(b)(1), June 23, 1972, 86 Stat. 252; amended Pub. L. 96–374, title IV, §403(c), Oct. 3, 1980, 94 Stat. 1405, related to amount and duration of supplemental educational opportunity grants, prior to the general revision of this part by Pub. L. 99–498.

Amendments

1992—Subsec. (a)(1). Pub. L. 102–325, §403(c)(1), substituted “Except as provided in paragraph (3), from” for “From” in introductory provisions and inserted “or in a program of study abroad that is approved for credit by the institution at which the student is enrolled” after “course of study at the institution” in subpar. (A).

Subsec. (a)(3). Pub. L. 102–325, §403(c)(2), added par. (3).

§1070b–2. Agreements with institutions; selection of recipients

(a) Institutional eligibility

Assistance may be made available under this subpart only to an institution which—

(1) has, in accordance with section 1094 of this title, an agreement with the Secretary 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 determines, pursuant to regulations establishing objective criteria for such determinations, that a larger Federal share is required to further the purpose of this subpart; and

(3) agrees that the non-Federal share of awards made under this subpart shall be made from the institution's own resources, including—

(A) institutional grants and scholarships;

(B) tuition or fee waivers;

(C) State scholarships; and

(D) foundation or other charitable organization funds.

(b) Eligibility for selection

Awards may be made under this subpart only to a student who—

(1) is an eligible student under section 1091 of this title; and

(2) makes application at a time and in a manner consistent with the requirements of the Secretary and that institution.

(c) Selection of individuals and determination of amount of awards

(1) From among individuals who are eligible for supplemental grants for each fiscal year, the institution shall, in accordance with the agreement under section 1094 of this title, and within the amount allocated to the institution for that purpose for that year under section 1070b–3 of this title, select individuals who are to be awarded such grants and determine, in accordance with section 1070b–1 of this title, the amounts to be paid to them.

(2)(A) In carrying out paragraph (1) of this subsection, each institution of higher education shall, in the agreement made under section 1094 of this title, assure that the selection procedures—

(i) will be designed to award supplemental grants under this subpart, first, to students with exceptional need, and

(ii) will give a priority for supplemental grants under this subpart to students who receive Pell Grants and meet the requirements of section 1091 of this title.


(B) For the purpose of subparagraph (A), the term “students with exceptional need” means students with the lowest expected family contributions at the institution.

(d) Use of funds for less-than-full-time students

If the institution's allocation under this subpart is directly or indirectly based in part on the financial need demonstrated by students who are independent students or attending the institution on less than a full-time basis, then a reasonable proportion of the allocation shall be made available to such students.

(e) Use and transfer of funds for administrative expenses

An agreement entered into pursuant to this section shall provide that funds granted to an institution of higher education may be used only to make payments to students participating in a grant program authorized under this subpart, except that an institution may use a portion of the sums allocated to it under this subpart to meet administrative expenses in accordance with section 1096 of this title.

(Pub. L. 89–329, title IV, §413C, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1329; amended Pub. L. 102–325, title IV, §403(d)–(f), July 23, 1992, 106 Stat. 506; Pub. L. 103–208, §2(b)(25), Dec. 20, 1993, 107 Stat. 2459; Pub. L. 105–244, title IV, §406(b), Oct. 7, 1998, 112 Stat. 1665.)

Prior Provisions

A prior section 1070b–2, Pub. L. 89–329, title IV, §413C, as added Pub. L. 92–318, title I, §131(b)(1), June 23, 1972, 86 Stat. 253; amended Pub. L. 94–482, title I, §122(b), Oct. 12, 1976, 90 Stat. 2094; Pub. L. 96–374, title IV, §403(d), Oct. 3, 1980, 94 Stat. 1405, related to selection of recipients of supplemental educational opportunity grants and agreements with institutions, prior to the general revision of this part by Pub. L. 99–498.

Amendments

1998—Subsec. (d). Pub. L. 105–244 amended heading and text of subsec. (d) generally. Prior to amendment, text read as follows: “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 less than full time and if the total financial need of all such students attending the institution exceeds 5 percent of the total financial need of all students attending such institution, then at least 5 percent of such allotment shall be made available to such students.”

1993—Subsec. (d). Pub. L. 103–208 substituted “and” for “, a reasonable proportion of the institution's allocation shall be made available to such students, except that” and “5 percent of the total financial need” for “5 percent of the need”.

1992—Subsec. (a)(2). Pub. L. 102–325, §403(d), amended par. (2) generally. Prior to amendment, par. (2) read as follows: “agrees that the Federal share of awards under this subpart will not exceed—

“(A) 95 percent of such awards in fiscal year 1989,

“(B) 90 percent of such awards in fiscal year 1990, and

“(C) 85 percent of such awards in fiscal year 1991,

except that the Federal share may be exceeded if the Secretary determines, pursuant to regulations establishing objective criteria for such determinations, that a larger Federal share is required to further the purpose of this subpart; and”.

Subsec. (d). Pub. L. 102–325, §403(e), inserted “who are independent students or” after “demonstrated by students” and inserted before period at end “, except that if the total financial need of all such students attending the institution exceeds 5 percent of the need of all students attending such institution, then at least 5 percent of such allotment shall be made available to such students”.

Subsec. (e). Pub. L. 102–325, §403(f), struck out before period at end “, and may transfer such funds in accordance with the provisions of section 1095 of this title”.

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 on and after July 1, 1994, see section 5(b)(6) of Pub. L. 103–208, set out as a note under section 1051 of this title.

Effective Date of 1992 Amendment

Amendment by Pub. L. 102–325 effective July 23, 1992, except that changes in subsec. (a)(2) of this section, relating to Federal share for supplemental educational opportunity grant program, applicable to funds provided for such program for award years beginning on or after July 1, 1993, see section 410 of Pub. L. 102–325, set out as a note under section 1070a 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.

Section 401(b)(5) of Pub. L. 99–498 provided that: “Section 413C(c)(2) of the Act [20 U.S.C. 1070b–2(c)(2)] as amended by this section shall apply to the awarding of grants under subpart 2 of part A of title IV of the Act [this subpart] for periods of enrollment beginning on or after July 1, 1987.”

§1070b–3. Allocation of funds

(a) Allocation based on previous allocation

(1) From the amount appropriated pursuant to section 1070b(b) of this title for each fiscal year, the Secretary shall first allocate to each eligible institution an amount equal to 100 percent of the amount such institution received under subsections (a) and (b) of this section for fiscal year 1999 (as such subsections were in effect with respect to allocations for such fiscal year).

(2)(A) From the amount so appropriated, the Secretary shall next allocate to each eligible institution that began participation in the program under this subpart after fiscal year 1999 but is not a first or second time participant, an amount equal to the greater of—

(i) $5,000; or

(ii) 90 percent of the amount received and used under this subpart for the first year it participated in the program.


(B) From the amount so appropriated, the Secretary shall next allocate to each eligible institution that began participation in the program under this subpart after fiscal year 1999 and is a first or second time participant, an amount equal to the greatest of—

(i) $5,000;

(ii) an amount equal to (I) 90 percent of the amount received and used under this subpart in the second preceding fiscal year by eligible institutions offering comparable programs of instruction, divided by (II) the number of students enrolled at such comparable institutions in such fiscal year, multiplied by (III) the number of students enrolled at the applicant institution in such fiscal year; or

(iii) 90 percent of the institution's allocation under this part for the preceding fiscal year.


(C) Notwithstanding subparagraphs (A) and (B) of this paragraph, the Secretary shall allocate to each eligible institution which—

(i) was a first-time participant in the program in fiscal year 2000 or any subsequent fiscal year, and

(ii) received a larger amount under this subsection in the second year of participation,


an amount equal to 90 percent of the amount it received under this subsection in its second year of participation.

(3)(A) If the amount appropriated for any fiscal year is less than the amount required to be allocated to all institutions under paragraph (1) of this subsection, then the amount of the allocation to each such institution shall be ratably reduced.

(B) If the amount appropriated for any fiscal year is more than the amount required to be allocated to all institutions under paragraph (1) but less than the amount required to be allocated to all institutions under paragraph (2), then—

(i) the Secretary shall allot the amount required to be allocated to all institutions under paragraph (1), and

(ii) the amount of the allocation to each institution under paragraph (2) shall be ratably reduced.


(C) If additional amounts are appropriated for any such fiscal year, such reduced amounts shall be increased on the same basis as they were reduced (until the amount allocated equals the amount required to be allocated under paragraphs (1) and (2) of this subsection).

(4)(A) Notwithstanding any other provision of this section, the Secretary may allocate an amount equal to not more than 10 percent of the amount by which the amount appropriated in any fiscal year to carry out this part exceeds $700,000,000 among eligible institutions described in subparagraph (B).

(B) In order to receive an allocation pursuant to subparagraph (A) an institution shall be an eligible institution from which 50 percent or more of the Pell Grant recipients attending such eligible institution graduate from or transfer to a 4-year institution of higher education.

(b) Allocation of excess based on fair share

(1) From the remainder of the amount appropriated pursuant to section 1070b(b) of this title for each year (after making the allocations required by subsection (a) of this section), the Secretary shall allocate to each eligible institution which has an excess eligible amount an amount which bears the same ratio to such remainder as such excess eligible amount bears to the sum of the excess eligible amounts of all such eligible institutions (having such excess eligible amounts).

(2) For any eligible institution, the excess eligible amount is the amount, if any, by which—

(A)(i) the amount of that institution's need (as determined under subsection (c) of this section), divided by (ii) the sum of the need of all institutions (as so determined), multiplied by (iii) the amount appropriated pursuant to section 1070b(b) of this title of the fiscal year; exceeds

(B) the amount required to be allocated to that institution under subsection (a) of this section.

(c) Determination of institution's need

(1) The amount of an institution's need is equal to—

(A) the sum of the need of the institution's eligible undergraduate students; minus

(B) the sum of grant aid received by students under subparts 1 and 3 1 of this part.


(2) To determine the need of an institution's eligible undergraduate students, the Secretary shall—

(A) establish various income categories for dependent and independent undergraduate students;

(B) establish an expected family contribution for each income category of dependent and independent undergraduate students, determined on the basis of the average expected family contribution (computed in accordance with part E of this subchapter) of a representative sample within each income category for the second preceding fiscal year;

(C) compute 75 percent of the average cost of attendance for all undergraduate students;

(D) multiply the number of eligible dependent students in each income category by 75 percent of the average cost of attendance for all undergraduate students determined under subparagraph (C), minus the expected family contribution determined under subparagraph (B) for that income category, except that the amount computed by such subtraction shall not be less than zero;

(E) add the amounts determined under subparagraph (D) for each income category of dependent students;

(F) multiply the number of eligible independent students in each income category by 75 percent of the average cost of attendance for all undergraduate students determined under subparagraph (C), minus the expected family contribution determined under subparagraph (B) for that income category, except that the amount computed by such subtraction shall not be less than zero;

(G) add the amounts determined under subparagraph (F) for each income category of independent students; and

(H) add the amounts determined under subparagraphs (E) and (G).


(3)(A) For purposes of paragraph (2), the term “average cost of attendance” means the average of the attendance costs for undergraduate students, which shall include (i) tuition and fees determined in accordance with subparagraph (B), (ii) standard living expenses determined in accordance with subparagraph (C), and (iii) books and supplies determined in accordance with subparagraph (D).

(B) The average undergraduate tuition and fees described in subparagraph (A)(i) shall be computed on the basis of information reported by the institution to the Secretary, which shall include (i) total revenue received by the institution from undergraduate tuition and fees for the second year preceding the year for which it is applying for an allocation, and (ii) the institution's enrollment for such second preceding year.

(C) The standard living expense described in subparagraph (A)(ii) is equal to 150 percent of the difference between the income protection allowance for a family of five with one in college and the income protection allowance for a family of six with one in college for a single independent student.

(D) The allowance for books and supplies described in subparagraph (A)(iii) is equal to $600.

(d) Reallocation of excess allocations

(1) If an institution returns to the Secretary any portion of the sums allocated to such institution under this section for any fiscal year the Secretary shall, in accordance with regulations, reallocate such excess to other institutions.

(2) If under paragraph (1) of this subsection an institution returns more than 10 percent of its allocation, the institution's allocation for the next fiscal year shall be reduced by the amount returned. The Secretary may waive this paragraph for a specific institution if the Secretary finds that enforcing this paragraph would be contrary to the interest of the program.

(e) Filing deadlines

The Secretary shall, from time to time, set dates before which institutions must file applications for allocations under this part.

(Pub. L. 89–329, title IV, §413D, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1330; amended Pub. L. 100–50, §4, June 3, 1987, 101 Stat. 340; Pub. L. 102–325, title IV, §403(g), (h), July 23, 1992, 106 Stat. 506; Pub. L. 103–208, §2(b)(26), Dec. 20, 1993, 107 Stat. 2459; Pub. L. 105–244, title IV, §406(c)(1), (2), Oct. 7, 1998, 112 Stat. 1665; Pub. L. 110–315, title IV, §406(b), (c), Aug. 14, 2008, 122 Stat. 3215.)

References in Text

Subpart 3 of this part, referred to in subsec. (c)(1)(B), was redesignated subpart 4 by Pub. L. 102–325, title IV, §402(a)(2), July 23, 1992, 106 Stat. 482, and former subpart 2 [this subpart] was redesignated as subpart 3.

Prior Provisions

A prior section 1070b–3, Pub. L. 89–329, title IV, §413D, as added Pub. L. 92–318, title I, §131(b)(1), June 23, 1972, 86 Stat. 254; amended Pub. L. 96–374, title IV, §403(e), (f), title XIII, §1391(a)(1), Oct. 3, 1980, 94 Stat. 1405, 1406, 1503, related to apportionment and allocation of funds for supplemental educational opportunity grants, prior to the general revision of this part by Pub. L. 99–498.

Amendments

2008—Subsec. (a)(1). Pub. L. 110–315, §406(c), substituted “such institution received under subsections (a) and (b) of this section for fiscal year 1999 (as such subsections were in effect with respect to allocations for such fiscal year)” for “such institution received and used under this subpart for fiscal year 1985”.

Subsec. (c)(3)(D). Pub. L. 110–315, §406(b), substituted “$600” for “$450”.

1998—Subsec. (a)(1). Pub. L. 105–244, §406(c)(1)(A), which directed substitution of “received under subsections (a) and (b) of this section for fiscal year 1999 (as such subsections were in effect with respect to allocations for such fiscal year)” for “received and used under this part for fiscal year 1985”, could not be executed because the phrase “received and used under this part for fiscal year 1985” did not appear in text.

Subsec. (a)(2)(A), (B). Pub. L. 105–244, §406(c)(1)(B)(i), substituted “1999” for “1985” in introductory provisions.

Subsec. (a)(2)(C)(i). Pub. L. 105–244, §406(c)(1)(B)(ii), substituted “2000” for “1986”.

Subsec. (b). Pub. L. 105–244, §406(c)(2)(A), (D), redesignated subsec. (c) as (b) and struck out heading and text of former subsec. (b). Text read as follows: “From one-quarter of the remainder of the amount appropriated pursuant to section 1070b(b) of this title for any fiscal year (after making the allocations required by subsection (a) of this section), the Secretary shall allocate to each eligible institution an amount which bears the same ratio to such one-quarter as the amount the eligible institution receives for such fiscal year under subsection (a) of this section bears to the amount all such institutions receive under such subsection (a) of this section.”

Subsec. (c). Pub. L. 105–244, §406(c)(2)(D), redesignated subsec. (d) as (c). Former subsec. (c) redesignated (b).

Subsec. (c)(1). Pub. L. 105–244, §406(c)(2)(B), substituted “the remainder” for “three-quarters of the remainder”.

Subsec. (c)(2)(A)(i). Pub. L. 105–244, §406(c)(2)(C), substituted “subsection (c)” for “subsection (d)”.

Subsecs. (d) to (f). Pub. L. 105–244, §406(c)(2)(D), redesignated subsecs. (e) and (f) as (d) and (e), respectively. Former subsec. (d) redesignated (c).

1993—Subsec. (d)(3)(C). Pub. L. 103–208 substituted “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 “three-fourths in the Pell Grant family size offset”.

1992—Subsec. (a)(4). Pub. L. 102–325, §403(g), added par. (4).

Subsec. (e). Pub. L. 102–325, §403(h), designated existing provisions as par. (1) and added par. (2).

1987—Subsec. (d)(2)(D). Pub. L. 100–50, §4(a)(1), added subpar. (D) and struck out former subpar. (D) which read as follows: “multiply the number of eligible dependent students in each income category by the lesser of—

“(i) 75 percent of the average cost of attendance for all undergraduate students determined under subparagraph (C); or

“(ii) the average cost of attendance for all undergraduate students minus the expected family contribution determined under subparagraph (B) for that income category, except that the amount computed by such subtraction shall not be less than zero;”.

Subsec. (d)(2)(F). Pub. L. 100–50, §4(a)(2), added subpar. (F) and struck out former subpar. (F) which read as follows: “multiply the number of eligible independent students in each income category by the lesser of—

“(i) 75 percent of the average cost of attendance for all undergraduate students determined under subparagraph (C); or

“(ii) the average cost of attendance for all undergraduate students minus the expected family contribution determined under subparagraph (B) for that income category, except that the amount computed by such subtraction for any income category shall not be less than zero;”.

Subsec. (d)(3)(A). Pub. L. 100–50, §4(b)(1), struck out “and for graduate and professional students” after “undergraduate students”.

Subsec. (d)(3)(B). Pub. L. 100–50, §4(b)(2), struck out “and graduate and professional” after “average undergraduate” and struck out “and graduate” after “from undergraduate”.

Effective Date of 1998 Amendment

Pub. L. 105–244, title IV, §406(c)(3), Oct. 7, 1998, 112 Stat. 1665, provided that: “The amendments made by this subsection [amending this section] shall apply with respect to allocations of amounts appropriated pursuant to section 413A(b) of the Higher Education Act of 1965 [20 U.S.C. 1070b(b)] for fiscal year 2000 or any succeeding fiscal year.”

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 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 401(b)(6) of Pub. L. 99–498, as added by Pub. L. 100–50, §22(a)(2), June 3, 1987, 101 Stat. 361, provided that: “The changes made in section 413D of the Act [this section] shall apply with respect to the allocation of funds for the academic year 1988–1989 and succeeding academic years.”

1 See References in Text note below.

§1070b–4. Carryover and carryback authority

(a) Carryover authority

Of the sums made available to an eligible institution under this subpart for a fiscal year, not more than 10 percent may, at the discretion of the institution, remain available for expenditure during the succeeding fiscal year to carry out the program under this subpart.

(b) Carryback authority

(1) In general

Of the sums made available to an eligible institution under this subpart for a fiscal year, not more than 10 percent may, at the discretion of the institution, be used by the institution for expenditure for the fiscal year preceding the fiscal year for which the sums were appropriated.

(2) Use of carried-back funds

An eligible institution may make grants to students after the end of the academic year, but prior to the beginning of the succeeding fiscal year, from such succeeding fiscal year's appropriations.

(Pub. L. 89–329, title IV, §413E, as added Pub. L. 105–244, title IV, §406(d), Oct. 7, 1998, 112 Stat. 1665.)

Effective Date

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

subpart 4—leveraging educational assistance partnership program

Codification

Pub. L. 105–244, title IV, §407(a)(1), Oct. 7, 1998, 112 Stat. 1666, amended heading generally.

Pub. L. 102–325, title IV, §402(a)(1), (2), July 23, 1992, 106 Stat. 482, redesignated former subpart 3 as 4 and repealed former subpart 4, comprising sections 1070d to 1070d–1d, which authorized special programs for students from disadvantaged backgrounds.

§1070c. Purpose; appropriations authorized

(a) Purpose of subpart

It is the purpose of this subpart to make incentive grants available to States to assist States in—

(1) providing grants to—

(A) eligible students attending institutions of higher education or participating in programs of study abroad that are approved for credit by institutions of higher education at which such students are enrolled; and

(B) eligible students for campus-based community service work-study; and


(2) carrying out the activities described in section 1070c–3a of this title.

(b) Authorization of appropriations; availability

(1) In general

There are authorized to be appropriated to carry out this subpart $200,000,000 for fiscal year 2009 and such sums as may be necessary for each of the five succeeding fiscal years.

(2) Reservation

For any fiscal year for which the amount appropriated under paragraph (1) exceeds $30,000,000, the excess amount shall be available to carry out section 1070c–3a of this title.

(3) Availability

Sums appropriated pursuant to the authority of paragraph (1) for any fiscal year shall remain available for payments to States under this subpart until the end of the fiscal year succeeding the fiscal year for which such sums were appropriated.

(Pub. L. 89–329, title IV, §415A, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1332; amended Pub. L. 102–325, title IV, §404(a), July 23, 1992, 106 Stat. 506; Pub. L. 105–244, title IV, §407(b), (c)(1), Oct. 7, 1998, 112 Stat. 1666, 1667; Pub. L. 106–554, §1(a)(1) [title III, §316(1)], Dec. 21, 2000, 114 Stat. 2763, 2763A–47; Pub. L. 110–315, title IV, §407(a), Aug. 14, 2008, 122 Stat. 3215.)

Prior Provisions

A prior section 1070c, Pub. L. 89–329, title IV, §415A, as added Pub. L. 92–318, title I §131(b)(1), June 23, 1972, 86 Stat. 255; amended Pub. L. 94–482, title I, §123(a), (c)(1), Oct. 12, 1976, 90 Stat. 2094; Pub. L. 95–43, §1(b)(3), June 15, 1977, 91 Stat. 218; Pub. L. 96–49, §5(a)(4), Aug. 13, 1979, 93 Stat. 352; Pub. L. 96–374, title IV, §404(a), Oct. 3, 1980, 94 Stat. 1406, related to purpose and authorization of appropriations for grants to States for State student incentives, prior to the general revision of this part by Pub. L. 99–498.

Amendments

2008—Subsec. (b)(1), (2). Pub. L. 110–315 added pars. (1) and (2) and struck out former pars. (1) and (2) which related to appropriations and reservation of funding for section 1070c–3a of this title for fiscal year 1999 and the 4 succeeding fiscal years.

2000—Subsec. (a)(2). Pub. L. 106–554, which directed amendment of section 415 of the Higher Education Act of 1965 in section 415A(a)(2) by substituting “section 1070c–3a of this title” for “section 1070c–4 of this title”, was executed by making the substitution in subsec. (a)(2) of this section, which is section 415A of the Higher Education Act of 1965, to reflect the probable intent of Congress.

1998—Subsec. (a). Pub. L. 105–244, §407(c)(1), amended heading and text of subsec. (a) generally. Prior to amendment, text read as follows: “It is the purpose of this subpart to make incentive grants available to States to assist States in providing grants to—

“(1) eligible students attending institutions of higher education or participating in programs of study abroad that are approved for credit by institutions of higher education at which such students are enrolled; and

“(2) eligible students for campus-based community service work-study.”

Subsec. (b)(1). Pub. L. 105–244, §407(b)(1), substituted “1999” for “1993”.

Subsec. (b)(2), (3). Pub. L. 105–244, §407(b)(2), (3), added par. (2) and redesignated former par. (2) as (3).

1992—Pub. L. 102–325 amended section generally. Prior to amendment, section read as follows:

“(a) Purpose of Subpart.—It is the purpose of this subpart to make incentive grants available to the States to assist them in providing grants to eligible students attending institutions of higher education and grants to eligible students for campus-based community service work learning study.

“(b) Authorization of Appropriations; Availability.—(1) There are authorized to be appropriated $85,000,000 for fiscal year 1987, and such sums as may be necessary for the 4 succeeding fiscal years.

“(2) Sums appropriated pursuant to paragraph (1) for any fiscal year shall remain available for payments to States under this subpart until the end of the fiscal year succeeding the fiscal year for which such sums were appropriated.”

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.

§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 and not reserved under section 1070c(b)(2) of this title for any fiscal year, the Secretary shall allot to each State an amount which bears the same ratio to such sums as the number of students who are deemed eligible in such State for participation in the grant program authorized by this subpart bears to the total number of such students in all the States, except that no State shall receive less than the State received for fiscal year 1979.

(2) For the purpose of this subsection, the number of students who are deemed eligible in a State for participation in the grant program authorized by this subpart, and the number of such students in all the States, shall be determined for the most recent year for which satisfactory data are available.

(b) Reallotment

The amount of any State's allotment under subsection (a) of this section for any fiscal year which the Secretary determines will not be required for such fiscal year for the leveraging educational assistance partnership program of that State shall be available for reallotment from time to time, on such dates during such year as the Secretary may fix, to other States in proportion to the original allotments to such States under such part for such year, but with such proportionate amount for any of such States being reduced to the extent it exceeds the sum the Secretary estimates such State needs and will be able to use for such year for carrying out the State plan. The total of such reductions shall be similarly reallotted among the States whose proportionate amounts were not so reduced. Any amount reallotted to a State under this part during a year from funds appropriated pursuant to section 1070c(b)(1) of this title shall be deemed part of its allotment under subsection (a) of this section for such year.

(c) Allotments subject to continuing compliance

The Secretary shall make payments for continuing incentive grants only to States which continue to meet the requirements of section 1070c–2(b) of this title.

(Pub. L. 89–329, title IV, §415B, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1333; amended Pub. L. 105–244, title IV, §407(a)(2)(A), (c)(2), Oct. 7, 1998, 112 Stat. 1666, 1667.)

Prior Provisions

A prior section 1070c–1, Pub. L. 89–329, title IV, §415B, as added Pub. L. 92–318, title I, §131(b)(1), June 23, 1972, 86 Stat. 256; amended Pub. L. 94–482, title I, §123(c)(2), Oct. 12, 1976, 90 Stat. 2094; Pub. L. 96–374, title IV, §404(b), title XIII, §1391(a)(1), Oct. 3, 1980, 94 Stat. 1407, 1503, related to allotment among States of amounts for grants to States for State student incentives, prior to the general revision of this part by Pub. L. 99–498.

Amendments

1998—Subsec. (a)(1). Pub. L. 105–244, §407(c)(2), inserted “and not reserved under section 1070c(b)(2) of this title” after “1070c(b)(1) of this title”.

Subsec. (b). Pub. L. 105–244, §407(a)(2)(A), substituted “leveraging educational assistance partnership” for “State student grant incentive”.

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.

§1070c–2. Applications for leveraging educational assistance partnership programs

(a) Submission and contents of applications

A State which desires to obtain a payment under this subpart for any fiscal year shall submit annually an application therefor through the State agency administering its program under this subpart as of July 1, 1985, unless the Governor of that State so designates, in writing, a different agency to administer the program. The application shall contain such information as may be required by, or pursuant to, regulation for the purpose of enabling the Secretary to make the determinations required under this subpart.

(b) Payment of Federal share of grants made by qualified program

From a State's allotment under this subpart for any fiscal year the Secretary is authorized to make payments to such State for paying up to 50 percent of the amount of student grants pursuant to a State program which—

(1) is administered by a single State agency;

(2) provides that such grants will be in amounts not to exceed the lesser of $12,500 or the student's cost of attendance per academic year (A) for attendance on a full-time basis at an institution of higher education, and (B) for campus-based community service work learning study jobs;

(3) provides that—

(A) not more than 20 percent of the allotment to the State for each fiscal year may be used for the purpose described in paragraph (2)(B);

(B) grants for the campus-based community work learning study jobs may be made only to students who are otherwise eligible for assistance under this subpart; and

(C) grants for such jobs be made in accordance with the provisions of section 2753(b)(1) of title 42;


(4) provides for the selection of recipients of such grants or of such State work-study jobs on the basis of substantial financial need determined annually on the basis of criteria established by the State and approved by the Secretary, except that for the purpose of collecting data to make such determination of financial need, no student or parent shall be charged a fee that is payable to an entity other than such State;

(5) provides that, effective with respect to any academic year beginning on or after October 1, 1978, all nonprofit institutions of higher education in the State are eligible to participate in the State program, except in any State in which participation of nonprofit institutions of higher education is in violation of the constitution of the State or in any State in which participation of nonprofit institutions of higher education is in violation of a statute of the State which was enacted prior to October 1, 1978;

(6) provides for the payment of the non-Federal portion of such grants or of such work-study jobs from funds supplied by such State which represent an additional expenditure for such year by such State for grants or work-study jobs for students attending institutions of higher education over the amount expended by such State for such grants or work-study jobs, if any, during the second fiscal year preceding the fiscal year in which such State initially received funds under this subpart;

(7) provides that if the State's allocation under this subpart is based in part on the financial need demonstrated by students who are independent students or attending the institution less than full time, a reasonable proportion of the State's allocation shall be made available to such students;

(8) provides for State expenditures under such program of an amount not less than the average annual aggregate expenditures for the preceding three fiscal years or the average annual expenditure per full-time equivalent student for such years;

(9) provides (A) for such fiscal control and fund accounting procedures as may be necessary to assure proper disbursement of and accounting for Federal funds paid to the State agency under this subpart, and (B) for the making of such reports, in such form and containing such information, as may be reasonably necessary to enable the Secretary to perform his functions under this subpart;

(10) for any academic year beginning after June 30, 1987, provides the non-Federal share of the amount of student grants or work-study jobs under this subpart through State funds for the program under this subpart; and

(11) provides notification to eligible students that such grants are—

(A) Leveraging Educational Assistance Partnership Grants; and

(B) funded by the Federal Government, the State, and, where applicable, other contributing partners.

(c) Reservation and disbursement of allotments and reallotments

Upon his approval of any application for a payment under this subpart, the Secretary shall reserve from the applicable allotment (including any applicable reallotment) available therefor, the amount of such payment, which (subject to the limits of such allotment or reallotment) shall be equal to the Federal share of the cost of the students’ incentive grants or work-study jobs covered by such application. The Secretary shall pay such reserved amount, in advance or by way of reimbursement, and in such installments as the Secretary may determine. The Secretary may amend the reservation of any amount under this section, either upon approval of an amendment of the application or upon revision of the estimated cost of the student grants or work-study jobs with respect to which such reservation was made. If the Secretary approves an upward revision of such estimated cost, the Secretary may reserve the Federal share of the added cost only from the applicable allotment (or reallotment) available at the time of such approval.

(Pub. L. 89–329, title IV, §415C, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1333; amended Pub. L. 102–325, title IV, §404(b)–(d), July 23, 1992, 106 Stat. 507; Pub. L. 103–208, §2(b)(27), Dec. 20, 1993, 107 Stat. 2459; Pub. L. 105–244, title IV, §407(a)(2)(B), Oct. 7, 1998, 112 Stat. 1666; Pub. L. 110–315, title IV, §407(b), Aug. 14, 2008, 122 Stat. 3215.)

Prior Provisions

A prior section 1070c–2, Pub. L. 89–329, title IV, §415C, as added Pub. L. 92–318, title I, §131(b)(1), June 23, 1972, 86 Stat. 256; amended Pub. L. 94–482, title I, §123(b), Oct. 12, 1976, 90 Stat. 2094; Pub. L. 95–43, §1(a)(6), June 15, 1977, 91 Stat. 213; Pub. L. 95–566, §3, Nov. 1, 1978, 92 Stat. 2403; Pub. L. 96–374, title IV, §404(c), title XIII, §1391(a)(1), (2), Oct. 3, 1980, 94 Stat. 1407, 1503, related to payment of grants to States for State student incentives, prior to the general revision of this part by Pub. L. 99–498.

Amendments

2008—Subsec. (b)(2). Pub. L. 110–315, §407(b)(1), substituted “not to exceed the lesser of $12,500 or the student's cost of attendance per academic year” for “not in excess of $5,000 per academic year”.

Subsec. (b)(9). Pub. L. 110–315, §407(b)(2), struck out “and” after semicolon.

Subsec. (b)(10). Pub. L. 110–315, §407(b)(3), struck out “a direct appropriation of” before “State funds” and substituted “; and” for period at end.

Subsec. (b)(11). Pub. L. 110–315, §407(b)(4), added par. (11).

1998—Pub. L. 105–244 substituted “leveraging educational assistance partnership” for “State student incentive grant” in section catchline.

1993—Subsec. (b)(7). Pub. L. 103–208 substituted a semicolon for period at end.

1992—Subsec. (b)(2). Pub. L. 102–325, §404(b), substituted “$5,000” for “$2,500”.

Subsec. (b)(4). Pub. L. 102–325, §404(c), inserted before semicolon at end “, except that for the purpose of collecting data to make such determination of financial need, no student or parent shall be charged a fee that is payable to an entity other than such State”.

Subsec. (b)(7). Pub. L. 102–325, §404(d), amended par. (7) generally. Prior to amendment, par. (7) read as follows: “provides that, if the institution's allocation under this subpart is based in part on the financial need demonstrated by students attending the institution less than full time, a reasonable proportion of the institution's allocation shall be made available to such students;”.

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.

§1070c–3. Administration of State programs; judicial review

(a) Disapproval of applications; suspension of eligibility

(1) The Secretary shall not finally disapprove any application for a State program submitted under section 1070c–2 of this title, or any modification thereof, without first affording the State agency submitting the program reasonable notice and opportunity for a hearing.

(2) Whenever the Secretary, after reasonable notice and opportunity for hearing to the State agency administering a State program approved under this subpart, finds—

(A) that the State program has been so changed that it no longer complies with the provisions of this subpart, or

(B) that in the administration of the program there is a failure to comply substantially with any such provisions,


the Secretary shall notify such State agency that the State will not be regarded as eligible to participate in the program under this subpart until he is satisfied that there is no longer any such failure to comply.

(b) Review of decisions

(1) If any State is dissatisfied with the Secretary's final action with respect to the approval of its State program submitted under this subpart or with his final action under subsection (a) of this section, such State may appeal to the United States court of appeals for the circuit in which such State is located. The summons and notice of appeal may be served at any place in the United States. The Commissioner shall forthwith certify and file in the court the transcript of the proceedings and the record on which he based his action.

(2) The findings of fact by the Secretary, if supported by substantial evidence, shall be conclusive; but the court, for good cause shown, may remand the case to the Secretary to take further evidence, and the Secretary may thereupon make new or modified findings of fact and may modify his previous action, and shall certify to the court the transcript and record of further proceedings. Such new or modified findings of fact shall likewise be conclusive if supported by substantial evidence.

(3) The court shall have jurisdiction to affirm the action of the Secretary or to set it aside, in whole or in part. The judgment of the court shall be subject to review by the Supreme Court of the United States upon certiorari or certification as provided in title 28, section 1254.

(Pub. L. 89–329, title IV, §415D, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1335.)

Prior Provisions

A prior section 1070c–3, Pub. L. 89–329, title IV, §415D, as added Pub. L. 92–318, title I, §131(b)(1), June 23, 1972, 86 Stat. 257; amended Pub. L. 96–374, title XIII, §1391(a)(1), (2), Oct. 3, 1980, 94 Stat. 1503, related to administration of State programs and judicial review, prior to the general revision of this part by Pub. L. 99–498.

§1070c–3a. Grants for access and persistence

(a) Purpose

It is the purpose of this section to expand college access and increase college persistence by making allotments to States to enable the States to—

(1) expand and enhance partnerships with institutions of higher education, early information and intervention, mentoring, or outreach programs, private corporations, philanthropic organizations, and other interested parties, including community-based organizations, in order to—

(A) carry out activities under this section; and

(B) provide coordination and cohesion among Federal, State, and local governmental and private efforts that provide financial assistance to help low-income students attend an institution of higher education;


(2) provide need-based grants for access and persistence to eligible low-income students;

(3) provide early notification to low-income students of the students’ eligibility for financial aid; and

(4) encourage increased participation in early information and intervention, mentoring, or outreach programs.

(b) Allotments to States

(1) In general

(A) Authorization

From sums reserved under section 1070c(b)(2) of this title for each fiscal year, the Secretary shall make an allotment to each State that submits an application for an allotment in accordance with subsection (c) to enable the State to pay the Federal share, as described in paragraph (2), of the cost of carrying out the activities under subsection (d).

(B) Determination of allotment

In making allotments under subparagraph (A), the Secretary shall consider the following:

(i) Continuation of award

Except as provided in clause (ii), if a State continues to meet the specifications established in such State's application under subsection (c), the Secretary shall make an allotment to such State that is not less than the allotment made to such State for the previous fiscal year.

(ii) Special continuation and transition rule

If a State that applied for and received an allotment under this section for fiscal year 2010 pursuant to subsection (j) meets the specifications established in the State's application under subsection (c) for fiscal year 2011, then the Secretary shall make an allotment to such State for fiscal year 2011 that is not less than the allotment made pursuant to subsection (j) to such State for fiscal year 2010 under this section (as this section was in effect on the day before August 14, 2008).

(iii) Priority

The Secretary shall give priority in making allotments to States that meet the requirements described in paragraph (2)(B)(ii).

(2) Federal share

(A) In general

The Federal share of the cost of carrying out the activities under subsection (d) for any fiscal year shall not exceed 66.66 percent.

(B) Different percentages

The Federal share under this section shall be determined in accordance with the following:

(i) The Federal share of the cost of carrying out the activities under subsection (d) shall be 57 percent if a State applies for an allotment under this section in partnership with any number of degree-granting institutions of higher education in the State whose combined full-time enrollment represents less than a majority of all students attending institutions of higher education in the State, and—

(I) philanthropic organizations that are located in, or that provide funding in, the State; or

(II) private corporations that are located in, or that do business in, the State.


(ii) The Federal share of the cost of carrying out the activities under subsection (d) shall be 66.66 percent if a State applies for an allotment under this section in partnership with any number of degree-granting institutions of higher education in the State whose combined full-time enrollment represents a majority of all students attending institutions of higher education in the State, and—

(I) philanthropic organizations that are located in, or that provide funding in, the State; or

(II) private corporations that are located in, or that do business in, the State.

(C) Non-Federal share

(i) In general

The non-Federal share under this section may be provided in cash or in kind, fairly evaluated.

(ii) In-kind contribution

For the purpose of calculating the non-Federal share under this subparagraph, an in-kind contribution is a non-cash contribution that—

(I) has monetary value, such as the provision of—

(aa) room and board; or

(bb) transportation passes; and


(II) helps a student meet the cost of attendance at an institution of higher education.

(iii) Effect on need analysis

For the purpose of calculating a student's need in accordance with part E, an in-kind contribution described in clause (ii) shall not be considered an asset or income of the student or the student's parent.

(c) Application for allotment

(1) In general

(A) Submission

A State that desires to receive an allotment under this section on behalf of a partnership described in paragraph (3) shall submit an application to the Secretary at such time, in such manner, and containing such information as the Secretary may require.

(B) Content

An application submitted under subparagraph (A) shall include the following:

(i) A description of the State's plan for using the allotted funds.

(ii) An assurance that the State will provide matching funds, in cash or in kind, from State, institutional, philanthropic, or private funds, of not less than 33.33 percent of the cost of carrying out the activities under subsection (d). The State shall specify the methods by which matching funds will be paid. A State that uses non-Federal funds to create or expand partnerships with entities described in subsection (a)(1), in which such entities match State funds for student scholarships, may apply such matching funds from such entities toward fulfilling the State's matching obligation under this clause.

(iii) An assurance that the State will use funds provided under this section to supplement, and not supplant, Federal and State funds available for carrying out the activities under this subchapter and part C of subchapter I of chapter 34 of title 42.

(iv) An assurance that early information and intervention, mentoring, or outreach programs exist within the State or that there is a plan to make such programs widely available.

(v) A description of the organizational structure that the State has in place to administer the activities under subsection (d), including a description of how the State will compile information on degree completion of students receiving grants under this section.

(vi) A description of the steps the State will take to ensure that students who receive grants under this section persist to degree completion.

(vii) An assurance that the State has a method in place, such as acceptance of the automatic zero expected family contribution determination described in section 1087ss(c) of this title, to identify eligible low-income students and award State grant aid to such students.

(viii) An assurance that the State will provide notification to eligible low-income students that grants under this section are—

(I) Leveraging Educational Assistance Partnership Grants; and

(II) funded by the Federal Government and the State, and, where applicable, other contributing partners.

(2) State agency

The State agency that submits an application for a State under section 1070c–2(a) of this title shall be the same State agency that submits an application under paragraph (1) for such State.

(3) Partnership

In applying for an allotment under this section, the State agency shall apply for the allotment in partnership with—

(A) not less than one public and one private degree-granting institution of higher education that are located in the State, if applicable;

(B) new or existing early information and intervention, mentoring, or outreach programs located in the State; and

(C) not less than one—

(i) philanthropic organization located in, or that provides funding in, the State; or

(ii) private corporation located in, or that does business in, the State.

(4) Roles of partners

(A) State agency

A State agency that is in a partnership receiving an allotment under this section—

(i) shall—

(I) serve as the primary administrative unit for the partnership;

(II) provide or coordinate non-Federal share funds, and coordinate activities among partners;

(III) encourage each institution of higher education in the State to participate in the partnership;

(IV) make determinations and early notifications of assistance as described under subsection (d)(2); and

(V) annually report to the Secretary on the partnership's progress in meeting the purpose of this section; and


(ii) may provide early information and intervention, mentoring, or outreach programs.

(B) Degree-granting institutions of higher education

A degree-granting institution of higher education that is in a partnership receiving an allotment under this section—

(i) shall—

(I) recruit and admit participating qualified students and provide such additional institutional grant aid to participating students as agreed to with the State agency;

(II) provide support services to students who receive grants for access and persistence under this section and are enrolled at such institution; and

(III) assist the State in the identification of eligible students and the dissemination of early notifications of assistance as agreed to with the State agency; and


(ii) may provide funding for early information and intervention, mentoring, or outreach programs or provide such services directly.

(C) Programs

An early information and intervention, mentoring, or outreach program that is in a partnership receiving an allotment under this section shall provide direct services, support, and information to participating students.

(D) Philanthropic organization or private corporation

A philanthropic organization or private corporation that is in a partnership receiving an allotment under this section shall provide funds for grants for access and persistence for participating students, or provide funds or support for early information and intervention, mentoring, or outreach programs.

(d) Authorized activities

(1) In general

(A) Establishment of partnership

Each State receiving an allotment under this section shall use the funds to establish a partnership to award grants for access and persistence to eligible low-income students in order to increase the amount of financial assistance such students receive under this subpart for undergraduate education expenses.

(B) Amount of grants

The amount of a grant for access and persistence awarded by a State to a student under this section shall be not less than—

(i) the average undergraduate tuition and mandatory fees at the public institutions of higher education in the State where the student resides that are of the same type of institution as the institution of higher education the student attends; minus

(ii) other Federal and State aid the student receives.

(C) Special rules

(i) Partnership institutions

A State receiving an allotment under this section may restrict the use of grants for access and persistence under this section by awarding the grants only to students attending institutions of higher education that are participating in the partnership.

(ii) Out-of-State institutions

If a State provides grants through another program under this subpart to students attending institutions of higher education located in another State, grants awarded under this section may be used at institutions of higher education located in another State.

(2) Early notification

(A) In general

Each State receiving an allotment under this section shall annually notify low-income students in grades seven through 12 in the State, and their families, of their potential eligibility for student financial assistance, including an access and persistence grant, to attend an institution of higher education.

(B) Content of notice

The notice under subparagraph (A)—

(i) shall include—

(I) information about early information and intervention, mentoring, or outreach programs available to the student;

(II) information that a student's eligibility for a grant for access and persistence is enhanced through participation in an early information and intervention, mentoring, or outreach program;

(III) an explanation that student and family eligibility for, and participation in, other Federal means-tested programs may indicate eligibility for a grant for access and persistence and other student aid programs;

(IV) a nonbinding estimate of the total amount of financial aid that a low-income student with a similar income level may expect to receive, including an estimate of the amount of a grant for access and persistence and an estimate of the amount of grants, loans, and all other available types of aid from the major Federal and State financial aid programs;

(V) an explanation that in order to be eligible for a grant for access and persistence, at a minimum, a student shall—

(aa) meet the requirement under paragraph (3);

(bb) graduate from secondary school; and

(cc) enroll at an institution of higher education—

(AA) that is a partner in the partnership; or

(BB) with respect to which attendance is permitted under subsection (d)(1)(C)(ii);


(VI) information on any additional requirements (such as a student pledge detailing student responsibilities) that the State may impose for receipt of a grant for access and persistence under this section; and

(VII) instructions on how to apply for a grant for access and persistence and an explanation that a student is required to file a Free Application for Federal Student Aid authorized under section 1090(a) of this title to be eligible for such grant and assistance from other Federal and State 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 that is a partner in the partnership or qualifies under subsection (d)(1)(C)(ii);

(II) annual Federal and State spending for higher education; and

(III) other aid received by the student at the time of the student's enrollment at such institution of higher education.

(3) Eligibility

In determining which students are eligible to receive grants for access and persistence, the State shall ensure that each such student complies with the following subparagraph (A) or (B):

(A) Meets not less than two of the following criteria, with priority given to students meeting all of the following criteria:

(i) Has an expected family contribution equal to zero, as determined under part E, or a comparable alternative based upon the State's approved criteria in section 1070c–2(b)(4) of this title.

(ii) Qualifies for the State's maximum undergraduate award, as authorized under section 1070c–2(b) of this title.

(iii) Is participating in, or has participated in, a Federal, State, institutional, or community early information and intervention, mentoring, or outreach program, as recognized by the State agency administering activities under this section.


(B) Is receiving, or has received, a grant for access and persistence under this section, in accordance with paragraph (5).

(4) Grant award

Once a student, including those students who have received early notification under paragraph (2) from the State, applies for admission to an institution that is a partner in the partnership, files a Free Application for Federal Student Aid and any related State form, and is determined eligible by the State under paragraph (3), the State shall—

(A) issue the student a preliminary award certificate for a grant for access and persistence with estimated award amounts; and

(B) inform the student that payment of the grant for access and persistence award amounts is subject to certification of enrollment and award eligibility by the institution of higher education.

(5) Duration of award

An eligible student who receives a grant for access and persistence under this section shall receive such grant award for each year of such student's undergraduate education in which the student remains eligible for assistance under this subchapter and part C of subchapter I of chapter 34 of title 42, including pursuant to section 1091(c) of this title, and remains financially eligible as determined by the State, except that the State may impose reasonable time limits to degree completion.

(e) Administrative cost allowance

A State that receives an allotment under this section may reserve not more than two percent of the funds made available annually through the allotment for State administrative functions required to carry out this section.

(f) Statutory and regulatory relief for institutions of higher education

The Secretary may grant, upon the request of an institution of higher education that is in a partnership described in subsection (b)(2)(B)(ii) and that receives an allotment under this section, a waiver for such institution from statutory or regulatory requirements that inhibit the ability of the institution to successfully and efficiently participate in the activities of the partnership.

(g) Applicability rule

The provisions of this subpart that are not inconsistent with this section shall apply to the program authorized by this section.

(h) Maintenance of effort requirement

Each State receiving an allotment under this section for a fiscal year shall provide the Secretary with an assurance that the aggregate amount expended per student or the aggregate expenditures by the State, from funds derived from non-Federal sources, for the authorized activities described in subsection (d) for the preceding fiscal year were not less than the amount expended per student or the aggregate expenditure by the State for the activities for the second preceding fiscal year.

(i) Special rule

Notwithstanding subsection (h), for purposes of determining a State's share of the cost of the authorized activities described in subsection (d), the State shall consider only those expenditures from non-Federal sources that exceed the State's total expenditures for need-based grants, scholarships, and work-study assistance for fiscal year 1999 (including any such assistance provided under this subpart).

(j) Continuation and transition

For the two-year period that begins on August 14, 2008, the Secretary shall continue to award grants under section 1070c–3a of this title as such section existed on the day before August 14, 2008, to States 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 shall submit a report describing the activities and the impact of the partnerships under this section to the authorizing committees.

(Pub. L. 89–329, title IV, §415E, as added Pub. L. 105–244, title IV, §407(c)(2), Oct. 7, 1998, 112 Stat. 1666; amended Pub. L. 106–554, §1(a)(1) [title III, §316(2), (3)], Dec. 21, 2000, 114 Stat. 2763, 2763A–47; Pub. L. 110–315, title IV, §407(c), Aug. 14, 2008, 122 Stat. 3216; Pub. L. 111–39, title IV, §401(a)(6), July 1, 2009, 123 Stat. 1938.)

Prior Provisions

A prior section 415E of Pub. L. 89–329 was renumbered section 415F and is classified to section 1070c–4 of this title.

Another prior section 415E of Pub. L. 89–329 was classified to section 1070c–4 of this title prior to repeal by Pub. L. 96–374.

Amendments

2009—Subsec. (b)(1)(B). Pub. L. 111–39 substituted “Except as provided in clause (ii), if a” for “If a” in cl. (i), added cl. (ii), and redesignated former cl. (ii) as (iii).

2008—Pub. L. 110–315 amended section generally. Prior to amendment, section consisted of subsecs. (a) to (g) relating to a special leveraging educational assistance partnership program.

2000—Subsec. (c). Pub. L. 106–554, §1(a)(1) [title III, §316(2)], which directed amendment of section 415 of the Higher Education Act of 1965 in section 415E by adding subsec. (c) and striking out former subsec. (c), was executed to this section, which is section 415E of the Higher Education Act of 1965, to reflect the probable intent of Congress. Prior to amendment, subsec. (c) listed the activities for which States receiving a grant under this section were authorized to use the grant funds.

Subsecs. (f), (g). Pub. L. 106–554, §1(a)(1) [title III, §316(3)], which directed amendment of section 415 of the Higher Education Act of 1965 in section 415E by adding subsecs. (f) and (g), was executed by adding subsecs. (f) and (g) to this section, which is section 415E of the Higher Education Act of 1965, to reflect the probable intent of Congress.

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

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

§1070c–4. “Community service” defined

For the purpose of this subpart, the term “community service” means services, including direct service, planning, and applied research which are identified by an institution of higher education, through formal or informal consultation with local nonprofit, governmental, and community-based organizations, and which—

(1) are designed to improve the quality of life for community residents, particularly low-income individuals, or to solve particular problems related to the needs of such residents, including but not limited to, such fields as health care, child care, education, literacy training, welfare, social services, public safety, crime prevention and control, transportation, recreation, housing and neighborhood improvement, rural development, and community improvement; and

(2) provide participating students with work-learning opportunities related to their educational or vocational programs or goals.

(Pub. L. 89–329, title IV, §415F, formerly §415E, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1336; amended Pub. L. 100–50, §5, June 3, 1987, 101 Stat. 340; renumbered §415F, Pub. L. 105–244, title IV, §407(c)(1), Oct. 7, 1998, 112 Stat. 1666.)

Prior Provisions

A prior section 1070c–4, Pub. L. 89–329, title IV, §415E, as added Pub. L. 94–482, title I, §123(c)(3), Oct. 12, 1976, 90 Stat. 2094; amended Pub. L. 95–43, §1(a)(7), June 15, 1977, 91 Stat. 213, related to a program of bonus allotments, prior to repeal by Pub. L. 96–374, title IV, §404(d), Oct. 3, 1980, 94 Stat. 1407, eff. Oct. 1, 1980.

Amendments

1987—Par. (1). Pub. L. 100–50 substituted “literacy” for “literary”.

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.

§§1070d to 1070d–1d. Repealed. Pub. L. 102–325, title IV, §402(a)(1), July 23, 1992, 106 Stat. 482

Section 1070d, Pub. L. 89–329, title IV, §417A, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1336, related to program authority and authorization of appropriations.

A prior section 1070d, Pub. L. 89–329, title IV, §417A, as added Pub. L. 96–374, title IV, §405, Oct. 3, 1980, 94 Stat. 1407, authorized a program of grants and contracts to assist students from disadvantaged backgrounds, prior to the general revision of this part by Pub. L. 99–498.

Another prior section 1070d, Pub. L. 89–329, title IV, §417A, as added Pub. L. 92–318, title I, §131(b)(1), June 23, 1972, 86 Stat. 258; amended Pub. L. 94–482, title I, §124(a), Oct. 12, 1976, 90 Stat. 2094; Pub. L. 96–49, §5(a)(5), Aug. 13, 1979, 93 Stat. 352; Pub. L. 96–374, title XIII, §1391(a)(1), Oct. 3, 1980, 94 Stat. 1503, authorized the Secretary of Education to carry out special programs for students from disadvantaged backgrounds and authorized appropriations for such programs, prior to the general revision of this subpart by Pub. L. 96–374.

Section 1070d–1, Pub. L. 89–329, title IV, §417B, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1337, authorized a talent search program.

A prior section 1070d–1, Pub. L. 89–329, title IV, §417B, as added Pub. L. 96–374, title IV, §405, Oct. 3, 1980, 94 Stat. 1408, authorized a talent search program, prior to the general revision of this part by Pub. L. 99–498.

Another prior section 1070d–1, Pub. L. 89–329, title IV, §417B, as added Pub. L. 92–318, title I, §131(b)(1), June 23, 1972, 86 Stat. 258; amended Pub. L. 93–380, title VIII, §833(a), Aug. 21, 1974, 88 Stat. 603; Pub. L. 94–482, title I, §124(b), (c), Oct. 12, 1976, 90 Stat. 2094, 2095; Pub. L. 95–566, §4, Nov. 1, 1978, 92 Stat. 2403; Pub. L. 96–374, title XIII, §1391(a)(1), Oct. 3, 1980, 94 Stat. 1503, specified the authorized activities of the Secretary of Education in carrying out special programs for students from disadvantaged backgrounds, prior to the general revision of this subpart by Pub. L. 96–374.

Section 1070d–1a, Pub. L. 89–329, title IV, §417C, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1338, authorized an upward bound program.

A prior section 1070d–1a, Pub. L. 89–329, title IV, §417C, as added Pub. L. 96–374, title IV, §405, Oct. 3, 1980, 94 Stat. 1409, authorized an upward bound program, prior to the general revision of this part by Pub. L. 99–498.

Section 1070d–1b, Pub. L. 89–329, title IV, §417D, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1339; amended Pub. L. 100–50, §6, June 3, 1987, 101 Stat. 340; Pub. L. 100–418, title VI, §6271, Aug. 23, 1988, 102 Stat. 1523, related to student support services program.

A prior section 1070d–1b, Pub. L. 89–329, title IV, §417D, as added Pub. L. 96–374, title IV, §405, Oct. 3, 1980, 94 Stat. 1410, authorized a special services for disadvantaged students program, prior to the general revision of this part by Pub. L. 99–498.

Section 1070d–1c, Pub. L. 89–329, title IV, §417E, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1340, authorized an educational opportunity centers program.

A prior section 1070d–1c, Pub. L. 89–329, title IV, §417E, as added Pub. L. 96–374, title IV, §405, Oct. 3, 1980, 94 Stat. 1410, authorized an educational opportunity centers program, prior to the general revision of this part by Pub. L. 99–498.

Section 1070d–1d, Pub. L. 89–329, title IV, §417F, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1341, related to staff development activities.

A prior section 1070d–1d, Pub. L. 89–329, title IV, §417F, as added Pub. L. 96–374, title IV, §405, Oct. 3, 1980, 94 Stat. 1411, authorized grants for staff training, prior to the general revision of this part by Pub. L. 99–498.

subpart 5—special programs for students whose families are engaged in migrant and seasonal farmwork

§1070d–2. Maintenance and expansion of existing programs

(a) Program authority

The Secretary shall maintain and expand existing secondary and postsecondary high school equivalency program and college assistance migrant program projects located at institutions of higher education or at private nonprofit organizations working in cooperation with institutions of higher education.

(b) Services provided by high school equivalency program

The services authorized by this subpart for the high school equivalency program include—

(1) recruitment services to reach persons—

(A)(i) who are 16 years of age and over; or

(ii) who are beyond the age of compulsory school attendance in the State in which such persons reside and are not enrolled in school;

(B)(i) who themselves, or whose immediate family, have spent a minimum of 75 days during the past 24 months in migrant and seasonal farmwork; or

(ii) who are eligible to participate, or have participated within the preceding 2 years, in programs under part C of title I of the Elementary and Secondary Education Act of 1965 [20 U.S.C. 6391 et seq.] or section 2912 of title 29; and

(C) who lack a high school diploma or its equivalent;


(2) educational services which provide instruction designed to help students obtain a general education diploma which meets the guidelines established by the State in which the project is located for high school equivalency;

(3) supportive services which include the following:

(A) personal, vocational, and academic counseling;

(B) placement services designed to place students in a university, college, or junior college program (including preparation for college entrance examinations), or in military service or career positions; and

(C) health services;


(4) information concerning, and assistance in obtaining, available student financial aid;

(5) stipends for high school equivalency program participants;

(6) housing for those enrolled in residential programs;

(7) exposure to cultural events, academic programs, and other educational and cultural activities usually not available to migrant youth;

(8) other essential supportive services (such as transportation and child care), as needed to ensure the success of eligible students; and

(9) other activities to improve persistence and retention in postsecondary education.

(c) Services provided by college assistance migrant program

(1) Services authorized by this subpart for the college assistance migrant program include—

(A) outreach and recruitment services to reach persons who themselves or whose immediate family have spent a minimum of 75 days during the past 24 months in migrant and seasonal farmwork or who have participated or are eligible to participate, in programs under part C of title I of the Elementary and Secondary Education Act of 1965 [20 U.S.C. 6391 et seq.] or section 2912 of title 29, 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; and

(viii) other assistance necessary to assist students in completing their first year of college;


(D) housing support for students living in institutional facilities and commuting students;

(E) exposure to cultural events, academic programs, and other activities not usually available to migrant youth;

(F) internships; and

(G) other essential supportive services (such as transportation and child care) as necessary to ensure the success of eligible students.


(2) A recipient of a grant to operate a college assistance migrant program under this subpart shall provide followup services for migrant students after such students have completed their first year of college, and shall not use more than 10 percent of such grant for such followup services. Such followup services may include—

(A) monitoring and reporting the academic progress of students who participated in the project during such student's first year of college and during such student's subsequent years in college;

(B) referring such students to on- or off-campus providers of counseling services, academic assistance, or financial aid, and coordinating such services, assistance, and aid with other non-program services, assistance, and aid, including services, assistance, and aid provided by community-based organizations, which may include mentoring and guidance; and

(C) for students attending two-year institutions of higher education, encouraging the students to transfer to four-year institutions of higher education, where appropriate, and monitoring the rate of transfer of such students.

(d) Management plan required

Each project application shall include a management plan which contains assurances that the grant recipient will coordinate the project, to the extent feasible, with other local, State, and Federal programs to maximize the resources available for migrant students, and that staff shall have a demonstrated knowledge and be sensitive to the unique characteristics and needs of the migrant and seasonal farmworker population, and provisions for:

(1) staff in-service training;

(2) training and technical assistance;

(3) staff travel;

(4) student travel;

(5) interagency coordination; and

(6) an evaluation plan.

(e) Five-year grant period; consideration of prior experience

Except under extraordinary circumstances, the Secretary shall award grants for a 5-year period. For the purpose of making grants under this subpart, the Secretary shall consider the prior experience of service delivery under the particular project for which funds are sought by each applicant. Such prior experience shall be awarded the same level of consideration given this factor for applicants for programs in accordance with section 1070a–11(c)(2) of this title.

(f) Minimum allocations

The Secretary shall not allocate an amount less than—

(1) $180,000 for each project under the high school equivalency program, and

(2) $180,000 for each project under the college assistance migrant program.

(g) Reservation and allocation of funds

From the amounts made available under subsection (i), the Secretary—

(1) may reserve not more than a total of ½ of one percent for outreach activities, technical assistance, and professional development programs relating to the programs under subsection (a);

(2) for any fiscal year for which the amount appropriated to carry out this section is equal to or greater than $40,000,000, shall, in awarding grants from the remainder of such amounts—

(A) make available not less than 45 percent of such remainder for the high school equivalency programs and not less than 45 percent of such remainder for the college assistance migrant programs;

(B) award the rest of such remainder for high school equivalency programs or college assistance migrant programs based on the number, quality, and promise of the applications; and

(C) consider the need to provide an equitable geographic distribution of such grants; and


(3) for any fiscal year for which the amount appropriated to carry out this section is less than $40,000,000, shall, in awarding grants from the remainder of such amounts make available the same percentage of funds to the high school equivalency program and to the college assistance migrant program as was made available for each such program for the fiscal year preceding the fiscal year for which the grant was made.

(h) Data collection

The Secretary shall—

(1) annually collect data on persons receiving services authorized under this subpart regarding such persons’ rates of secondary school graduation, entrance into postsecondary education, and completion of postsecondary education, as applicable;

(2) not less often than once every two years, prepare and submit to the authorizing committees a report based on the most recently available data under paragraph (1); and

(3) make such report available to the public.

(i) Authorization of appropriations

For the purpose of making grants and contracts under this section, there are authorized to be appropriated $75,000,000 for fiscal year 2009 and such sums as may be necessary for the each of the five succeeding fiscal years.

(Pub. L. 89–329, title IV, §418A, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1341; amended Pub. L. 100–50, §7, June 3, 1987, 101 Stat. 340; Pub. L. 102–325, title IV, §405, July 23, 1992, 106 Stat. 507; Pub. L. 103–382, title III, §391(e)(1), (2), Oct. 20, 1994, 108 Stat. 4022; Pub. L. 105–244, title IV, §408, Oct. 7, 1998, 112 Stat. 1667; Pub. L. 105–277, div. A, §101(f) [title VIII, §405(d)(15)(A), (f)(12)(A)], Oct. 21, 1998, 112 Stat. 2681–337, 2681–421, 2681–431; Pub. L. 110–315, title IV, §408, Aug. 14, 2008, 122 Stat. 3223.)

References in Text

The Elementary and Secondary Education Act of 1965, referred to in subsecs. (b)(1)(B)(ii) and (c)(1)(A), is Pub. L. 89–10, Apr. 11, 1965, 79 Stat. 27, as amended. Part C of title I of the Act is classified generally to part C (§6391 et seq.) of subchapter I of chapter 70 of this title. For complete classification of this Act to the Code, see Short Title note set out under section 6301 of this title and Tables.

Prior Provisions

A prior section 1070d–2, Pub. L. 89–329, title IV, §418A, as added Pub. L. 96–374, title IV, §406, Oct. 3, 1980, 94 Stat. 1411, related to secondary and postsecondary high school equivalency programs and college assistance migrant programs, prior to the general revision of this part by Pub. L. 99–498.

Another prior section 1070d–2, Pub. L. 89–329, title IV, §418A, as added Pub. L. 94–482, title I, §125, Oct. 12, 1976, 90 Stat. 2096; amended Pub. L. 96–49, §5(a)(6), Aug. 13, 1979, 93 Stat. 352, provided for the Educational Information Centers program, prior to repeal by Pub. L. 96–374, title I, §101(b), Oct. 3, 1980, 94 Stat. 1383. See section 1070d–1c of this title.

A prior section 1070d–3, Pub. L. 89–329, title IV, §418B, as added Pub. L. 94–482, title I, §125, Oct. 12, 1976, 90 Stat. 2097, related to administration by States of Educational Information Centers program, prior to repeal by Pub. L. 96–374, title I, §101(b), Oct. 3, 1980, 94 Stat. 1383, eff. Oct. 1, 1980.

Amendments

2008—Subsec. (b)(1)(B)(i). Pub. L. 110–315, §408(1)(A), substituted “immediate family” for “parents”.

Subsec. (b)(3)(B). Pub. L. 110–315, §408(1)(B), inserted “(including preparation for college entrance examinations)” after “junior college program”.

Subsec. (b)(5). Pub. L. 110–315, §408(1)(C), struck out “weekly” before “stipends”.

Subsec. (b)(7). Pub. L. 110–315, §408(1)(D), struck out “and” after semicolon.

Subsec. (b)(8). Pub. L. 110–315, §408(1)(E), inserted “(such as transportation and child care)” after “services” and substituted “; and” for period at end.

Subsec. (b)(9). Pub. L. 110–315, §408(1)(F), added par. (9).

Subsec. (c)(1)(A). Pub. L. 110–315, §408(2)(A)(i), substituted “immediate family” for “parents” and struck out “(or such part's predecessor authority)” before “or section 2912”.

Subsec. (c)(1)(B). Pub. L. 110–315, §408(2)(A)(ii)(I), inserted “to improve placement, persistence, and retention in postsecondary education,” after “services” in introductory provisions.

Subsec. (c)(1)(B)(i). Pub. L. 110–315, §408(2)(A)(ii)(II), substituted “career, and economic education or personal finance” for “and career”.

Subsec. (c)(1)(E) to (G). Pub. L. 110–315, §408(2)(A)(iii)–(vi), struck out “and” at end of subpar. (E), added subpar. (F), redesignated former subpar. (F) as (G) and, in par. (G), substituted “essential supportive services (such as transportation and child care)” for “support services”.

Subsec. (c)(2)(A). Pub. L. 110–315, §408(2)(B)(i), struck out “and” after semicolon.

Subsec. (c)(2)(B). Pub. L. 110–315, §408(2)(B)(ii), substituted “, 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” for period at end.

Subsec. (c)(2)(C). Pub. L. 110–315, §408(2)(B)(iii), added subpar. (C).

Subsec. (e). Pub. L. 110–315, §408(3), substituted “section 1070a–11(c)(2)” for “section 1070a–11(c)(1)”.

Subsec. (f)(1), (2). Pub. L. 110–315, §408(4), substituted “$180,000” for “$150,000”.

Subsecs. (g) to (i). Pub. L. 110–315, §408(6)–(8), added subsecs. (g) to (i) and struck out former subsecs. (h) and (i), which related to data collection and to authorization of appropriations.

Pub. L. 110–315, §408(5), redesignated subsecs. (g) and (h) as (h) and (i), respectively.

1998—Subsecs. (b)(1)(B)(ii), (c)(1)(A). Pub. L. 105–277, §101(f) [title VIII, §405(f)(12)(A)], struck out “section 1672 of title 29 or” before “section 2912 of title 29”.

Pub. L. 105–277, §101(f) [title VIII, §405(d)(15)(A)], substituted “section 1672 of title 29 or section 2912 of title 29” for “section 1672 of title 29”.

Subsec. (d). Pub. L. 105–244, §408(a), inserted “that the grant recipient will coordinate the project, to the extent feasible, with other local, State, and Federal programs to maximize the resources available for migrant students, and” after “contains assurances” in introductory provisions.

Subsec. (e). Pub. L. 105–244, §408(d), substituted “in accordance with section 1070a–11(c)(1) of this title” for “authorized by subpart 4 of this part in accordance with section 1070d(b)(2) of this title.”

Subsec. (g). Pub. L. 105–244, §408(c)(2), added subsec. (g). Former subsec. (g) redesignated (h).

Pub. L. 105–244, §408(b), substituted “1999” for “1993” in pars. (1) and (2).

Subsec. (h). Pub. L. 105–244, §408(c)(1), redesignated subsec. (g) as (h).

1994—Subsec. (b)(1)(B)(ii). Pub. L. 103–382, §391(e)(1), substituted “part C” for “subpart 1 of part D of chapter 1”.

Subsec. (c)(1)(A). Pub. L. 103–382, §391(e)(2), substituted “part C” for “subpart 1 of part D of chapter 1” and inserted “(or such part's predecessor authority)” after “1965”.

1992—Subsec. (b)(1). Pub. L. 102–325, §405(a)(1)(A), added par. (1) and struck out former par. (1) which read as follows: “recruitment services to reach persons who are 17 years of age and over, who themselves or whose parents have spent a minimum of 75 days during the past 24 months in migrant and seasonal farmwork, and who lack a high school diploma or its equivalent;”.

Subsec. (b)(4). Pub. L. 102–325, §405(a)(1)(B), inserted comma after “concerning” and after “obtaining”.

Subsec. (c). Pub. L. 102–325, §405(a)(2), (b), designated existing provisions as par. (1), redesignated former par. (1) as subpar. (A) and amended it generally, redesignated par. (2) and its subpars. (A) to (E) as subpar. (B) and cls. (i) to (v), respectively, redesignated par. (3) and its subpars. (A) to (H) as subpar. (C) and cls. (i) to (viii), respectively, redesignated pars. (4) to (6) as subpars. (D) to (F), respectively, and added par. (2). Prior to amendment, par. (1) read as follows: “outreach and recruitment services to reach persons who themselves or whose parents have spent a minimum of 75 days during the past 24 months in migrant and seasonal farmwork, and who meet the minimum qualifications for attendance at a college or university;”.

Subsec. (e). Pub. L. 102–325, §405(c), substituted “Five-year” for “Three-year” in heading and “5-year” for “3-year” in text.

Subsec. (g). Pub. L. 102–325, §405(d), amended subsec. (g) generally, substituting present provisions for former provisions which authorized appropriations for fiscal years 1987 through 1991.

1987—Subsec. (g). Pub. L. 100–50 amended subsec. (g) generally. Prior to amendment, subsec. (g) read as follows: “There is authorized to be appropriated for this part $9,000,000 for fiscal year 1987, and such sums as may be necessary for the 4 succeeding fiscal years.”

Effective Date of 1998 Amendments

Amendment by section 101(f) [title VIII, §405(d)(15)(A)] of Pub. L. 105–277 effective Oct. 21, 1998, and amendment by section 101(f) [title VIII, §405(f)(12)(A)] of Pub. L. 105–277 effective July 1, 2000, see section 101(f) [title VIII, §405(g)(1), (2)(B)] of Pub. L. 105–277, set out as a note under section 3502 of Title 5, Government Organization and Employees.

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 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.

subpart 6—robert c. byrd honors scholarship program

§1070d–31. Statement of purpose

It is the purpose of this subpart to establish a Robert C. Byrd Honors Scholarship Program to promote student excellence and achievement and to recognize exceptionally able students who show promise of continued excellence.

(Pub. L. 89–329, title IV, §419A, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1343.)

Prior Provisions

A prior section 1070d–31, Pub. L. 89–329, title IV, §419A, as added Pub. L. 98–558, title VIII, §801(a), Oct. 30, 1984, 98 Stat. 2900; amended Pub. L. 99–145, title XVI, §1627(a), Nov. 8, 1985, 99 Stat. 779, provided statement of purpose for Robert C. Byrd Honors Scholarship Program, prior to the general revision of this part by Pub. L. 99–498.

§1070d–32. Repealed. Pub. L. 102–325, title IV, §406(a), July 23, 1992, 106 Stat. 508

Section, Pub. L. 89–329, title IV, §419B, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1343, defined terms used in this subpart.

A prior section 1070d–32, Pub. L. 89–329, title IV, §419B, as added Pub. L. 98–558, title VIII, §801(a), Oct. 30, 1984, 98 Stat. 2900, defined terms used in this subpart, prior to the general revision of this part by Pub. L. 99–498.

§1070d–33. Scholarships authorized

(a) Program authority

The Secretary is authorized, in accordance with the provisions of this subpart, to make grants to States to enable the States to award scholarships to individuals who have demonstrated outstanding academic achievement and who show promise of continued academic achievement.

(b) Period of award

Scholarships under this section shall be awarded for a period of not less than 1 or more than 4 years during the first 4 years of study at any institution of higher education eligible to participate in any programs assisted under this subchapter and part C of subchapter I of chapter 34 of title 42. The State educational agency administering the program in a State shall have discretion to determine the period of the award (within the limits specified in the preceding sentence), except that—

(1) if the amount appropriated for this subpart for any fiscal year exceeds the amount appropriated for this subpart for fiscal year 1993, the Secretary shall identify to each State educational agency the number of scholarships available to that State under section 1070d–34(b) of this title that are attributable to such excess; and

(2) the State educational agency shall award not less than that number of scholarships for a period of 4 years.

(c) Use at any institution permitted

A student awarded a scholarship under this subpart may attend any institution of higher education.

(d) Byrd Scholars

Individuals awarded scholarships under this subpart shall be known as “Byrd Scholars”.

(Pub. L. 89–329, title IV, §419C, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1344; amended Pub. L. 102–325, title IV, §406(b), July 23, 1992, 106 Stat. 508; Pub. L. 103–208, §2(b)(28), Dec. 20, 1993, 107 Stat. 2459; Pub. L. 111–39, title IV, §401(a)(7), July 1, 2009, 123 Stat. 1939.)

Prior Provisions

A prior section 1070d–33, Pub. L. 89–329, title IV, §419C, as added Pub. L. 98–558, title VIII, §801(a), Oct. 30, 1984, 98 Stat. 2900; amended Pub. L. 99–145, title XVI, §1627(b), Nov. 8, 1985, 99 Stat. 779, authorized the award of scholarships under Robert C. Byrd Honors Scholarship Program, prior to the general revision of this part by Pub. L. 99–498.

Amendments

2009—Subsec. (b)(1). Pub. L. 111–39 inserted “and” after semicolon at end.

1993—Subsec. (b). Pub. L. 103–208 substituted “for a period of not less than 1 or more than 4 years during the first 4 years of study” for “for a period of not more than 4 years for the first 4 years of study” and inserted at end “The State educational agency administering the program in a State shall have discretion to determine the period of the award (within the limits specified in the preceding sentence), except that—

“(1) if the amount appropriated for this subpart for any fiscal year exceeds the amount appropriated for this subpart for fiscal year 1993, the Secretary shall identify to each State educational agency the number of scholarships available to that State under section 1070d–34(b) of this title that are attributable to such excess;

“(2) the State educational agency shall award not less than that number of scholarships for a period of 4 years.”

1992—Subsec. (b). Pub. L. 102–325 amended subsec. (b) generally. Prior to amendment, subsec. (b) read as follows: “Scholarships under this section shall be awarded for a period of one academic year for the first year of study at an institution of higher education.”

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 1993 Amendment

Amendment by Pub. L. 103–208 effective on and after Dec. 20, 1993, see section 5(b)(2) of Pub. L. 103–208, set out as a note under section 1051 of this title.

§1070d–34. Allocation among States

(a) Allocation formula

From the sums appropriated pursuant to the authority of section 1070d–41 of this title for any fiscal year, the Secretary shall allocate to each State that has an agreement under section 1070d–35 of this title an amount equal to $1,500 multiplied by the number of scholarships determined by the Secretary to be available to such State in accordance with subsection (b) of this section.

(b) Number of scholarships available

The number of scholarships to be made available in a State for any fiscal year shall bear the same ratio to the number of scholarships made available to all States as the State's population ages 5 through 17 bears to the population ages 5 through 17 in all the States, except that not less than 10 scholarships shall be made available to any State.

(c) Use of census data

For the purpose of this section, the population ages 5 through 17 in a State and in all the States shall be determined by the most recently available data, satisfactory to the Secretary, from the Bureau of the Census.

(d) Consolidation by Insular Areas prohibited

Notwithstanding section 1469a of title 48, funds 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 with other funds received by the Insular Area from any department 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 who may be selected to receive a scholarship under this subpart for the first time for any of the fiscal years 2000 through 2004—

(A) there shall be 10 scholarships in the aggregate awarded to such students for each of the fiscal years 2000 through 2004; and

(B) the Pacific Regional Educational Laboratory shall administer the program under this subpart in the case of scholarships for students in the Freely Associated States.

(2) Termination of eligibility

A student from the Freely Associated States shall not be eligible to receive a scholarship under this subpart after September 30, 2004.

(Pub. L. 89–329, title IV, §419D, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1344; amended Pub. L. 102–325, title IV, §406(c), July 23, 1992, 106 Stat. 509; Pub. L. 103–208, §2(b)(29), Dec. 20, 1993, 107 Stat. 2460; Pub. L. 105–244, title IV, §409(a), Oct. 7, 1998, 112 Stat. 1668; Pub. L. 111–39, title IV, §401(a)(8), July 1, 2009, 123 Stat. 1939.)

Prior Provisions

A prior section 1070d–34, Pub. L. 89–329, title IV, §419D, as added Pub. L. 98–558, title VIII, §801(a), Oct. 30, 1984, 98 Stat. 2901, related to allocation among States of amounts for Robert C. Byrd Honors Scholarship Program, prior to the general revision of this part by Pub. L. 99–498.

Amendments

2009—Subsec. (d). Pub. L. 111–39 made technical amendment to reference in original act which appears in text as reference to section 1469a of title 48.

1998—Subsec. (e). Pub. L. 105–244 added subsec. (e).

1993—Subsec. (d). Pub. L. 103–208 added subsec. (d).

1992—Pub. L. 102–325 amended section generally. Prior to amendment, section read as follows: “From the sums appropriated pursuant to section 1070d–41 of this title for any fiscal year, the Secretary shall allocate to each State having an agreement under section 1070d–35 of this title—

“(1) $1,500 multiplied by the number of individuals in the State eligible for scholarships pursuant to section 1070d–37(b) of this title, plus

“(2) $10,000, plus 5 percent of the amount to which a State is eligible under paragraph (1) of this section.”

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 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 on and after Oct. 1, 1993, see section 5(b)(1) of Pub. L. 103–208, set out as a note under section 1051 of this title.

§1070d–35. Agreements

The Secretary shall enter into an agreement with each State desiring to participate in the scholarship program authorized by this subpart. Each such agreement shall include provisions designed to assure that—

(1) the State educational agency will administer the scholarship program authorized by this subpart in the State;

(2) the State educational agency will comply with the eligibility and selection provisions of this subpart;

(3) the State educational agency will conduct outreach activities to publicize the availability of scholarships under this subpart to all eligible students in the State, with particular emphasis on activities designed to assure that students from low-income and moderate-income families have access to the information on the opportunity for full participation in the scholarship program authorized by this subpart; and

(4) the State educational agency will pay to each individual in the State who is awarded a scholarship under this subpart $1,500.

(Pub. L. 89–329, title IV, §419E, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1344; amended Pub. L. 102–325, title IV, §406(g)(2), (3), July 23, 1992, 106 Stat. 509.)

Prior Provisions

A prior section 1070d–35, Pub. L. 89–329, title IV, §419E, as added Pub. L. 98–558, title VIII, §801(a), Oct. 30, 1984, 98 Stat. 2901; amended Pub. L. 99–145, title XVI, §1627(c), Nov. 8, 1985, 99 Stat. 779, related to agreements with States for participation in the Robert C. Byrd Honors Scholarship Program, prior to the general revision of this part by Pub. L. 99–498.

Amendments

1992—Par. (3). Pub. L. 102–325, §406(g)(2)(A), inserted “and” after semicolon.

Par. (4). Pub. L. 102–325, §406(g)(2)(B), substituted “$1,500.” for “$1,500 at an awards ceremony in accordance with section 1070d–39 of this title; and”.

Par. (5). Pub. L. 102–325, §406(g)(3), which directed that par. (5) be struck out without specifying the section to which the amendment applied, was executed by striking out par. (5) of this section to reflect the probable intent of Congress. Prior to amendment, par. (5) read as follows: “the State educational agency will use the amount of the allocation described in paragraph (2) of section 1070d–34 of this title for administrative expenses, including the conduct of the awards ceremony required by section 1070d–39 of this title.”

§1070d–36. Eligibility of scholars

(a) High school graduation or equivalent and admission to institution required

Each student awarded a scholarship under this subpart shall be a graduate of a public or private secondary school (or a home school, whether treated as a home school or a private school under State law) or have the equivalent of a certificate of graduation as recognized by the State in which the student resides and must have been admitted for enrollment at an institution of higher education.

(b) Selection based on promise of academic achievement

Each student awarded a scholarship under this subpart must demonstrate outstanding academic achievement and show promise of continued academic achievement.

(Pub. L. 89–329, title IV, §419F, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1344; amended Pub. L. 110–315, title IV, §409(a), Aug. 14, 2008, 122 Stat. 3225.)

Prior Provisions

A prior section 1070d–36, Pub. L. 89–329, title IV, §419F, as added Pub. L. 98–558, title VIII, §801(a), Oct. 30, 1984, 98 Stat. 2901, related to eligibility of students for scholarships under Robert C. Byrd Honors Scholarship Program, prior to the general revision of this part by Pub. L. 99–498.

Amendments

2008—Subsec. (a). Pub. L. 110–315 inserted “(or a home school, whether treated as a home school or a private school under State law)” after “public or private secondary school”.

§1070d–37. Selection of scholars

(a) Establishment of criteria

The State educational agency is authorized to establish the criteria for the selection of scholars under this subpart.

(b) Adoption of procedures

The State educational agency shall adopt selection procedures designed to ensure an equitable geographic distribution of awards within the State (and in the case of the Federated States of Micronesia, the Republic of the Marshall Islands, the Virgin Islands, American Samoa, the Commonwealth of the Northern Mariana Islands, Guam, or Palau (until such time as the Compact of Free Association is ratified), not to exceed 10 individuals will be selected from such entities).

(c) Consultation requirement

In carrying out its responsibilities under subsections (a) and (b) of this section, the State educational agency shall consult with school administrators, school boards, teachers, counselors, and parents.

(d) Timing of selection

The selection process shall be completed, and the awards made, prior to the end of each secondary school academic year.

(Pub. L. 89–329, title IV, §419G, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1345; amended Pub. L. 102–325, title IV, §406(d), July 23, 1992, 106 Stat. 509; Pub. L. 103–208, §2(b)(30), Dec. 20, 1993, 107 Stat. 2460.)

References in Text

For ratification of Compact of Free Association with the Republic of Palau, referred to in subsec. (b), see Proc. No. 6726, Sept. 27, 1994, 59 F.R. 49777, set out as a note under section 1931 of Title 48, Territories and Insular Possessions.

Prior Provisions

A prior section 1070d–37, Pub. L. 89–329, title IV, §419G, as added Pub. L. 98–558, title VIII, §801(a), Oct. 30, 1984, 98 Stat. 2901, related to selection of merit scholars under Robert C. Byrd Honors Scholarship Program, prior to the general revision of this part by Pub. L. 99–498.

Amendments

1993—Subsec. (b). Pub. L. 103–208 substituted “the Federated States of Micronesia, the Republic of the Marshall Islands,” for “the District of Columbia, the Commonwealth of Puerto Rico,”.

1992—Subsec. (b). Pub. L. 102–325, §406(d)(1), amended subsec. (b) generally. Prior to amendment, subsec. (b) read as follows: “The State educational agency shall adopt selection procedures which are designed to assure that 10 individuals will be selected from among residents of each congressional district in a State (and in the case of the District of Columbia and the Commonwealth of Puerto Rico not to exceed 10 individuals will be selected in such District or Commonwealth).”

Subsec. (d). Pub. L. 102–325, §406(d)(2), added subsec. (d).

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.

§1070d–38. Stipends and scholarship conditions

(a) Amount of award

Each student awarded a scholarship under this subpart shall receive a stipend of $1,500 for the academic year of study for which the scholarship is awarded, except that in no case shall the total amount of financial aid awarded to such student exceed such student's total cost-of-attendance.

(b) Use of award

The State educational agency shall establish procedures to assure that a scholar awarded a scholarship under this subpart pursues a course of study at an institution of higher education.

(Pub. L. 89–329, title IV, §419H, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1345; amended Pub. L. 102–325, title IV, §406(e), July 23, 1992, 106 Stat. 509.)

Prior Provisions

A prior section 1070d–38, Pub. L. 89–329, title IV, §419H, as added Pub. L. 98–558, title VIII, §801(a), Oct. 30, 1984, 98 Stat. 2902, related to stipends and scholarship conditions for students receiving scholarships under Robert C. Byrd Honors Scholarship Program, prior to the general revision of this part by Pub. L. 99–498.

Amendments

1992—Subsec. (a). Pub. L. 102–325 inserted before period at end “, except that in no case shall the total amount of financial aid awarded to such student exceed such student's total cost-of-attendance”.

§1070d–39. Repealed. Pub. L. 102–325, title IV, §406(g)(1), July 23, 1992, 106 Stat. 509

Section, Pub. L. 89–329, title IV, §419I, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1345, related to awards ceremony.

A prior section 1070d–39, Pub. L. 89–329, title IV, §419I, as added Pub. L. 98–558, title VIII, §801(a), Oct. 30, 1984, 98 Stat. 2902, related to ceremony for awarding scholarships under Robert C. Byrd Honors Scholarship Program, prior to the general revision of this part by Pub. L. 99–498.

§1070d–40. Construction of needs provisions

Except as provided in section 1087kk of this title, 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 and part C of subchapter I of chapter 34 of title 42 or any other provision of Federal law relating to educational assistance.

(Pub. L. 89–329, title IV, §419J, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1345; amended Pub. L. 102–325, title IV, §406(f), July 23, 1992, 106 Stat. 509.)

Prior Provisions

A prior section 1070d–40, Pub. L. 89–329, title IV, §419J, as added Pub. L. 98–558, title VIII, §801(a), Oct. 30, 1984, 98 Stat. 2902, provided that receipt of scholarship under Robert C. Byrd Honors Scholarship Program not be counted for needs test for education grant or loan, prior to the general revision of this part by Pub. L. 99–498.

Amendments

1992—Pub. L. 102–325 substituted “Except as provided in section 1087kk of this title, nothing” for “Nothing”.

§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.

(Pub. L. 89–329, title IV, §419K, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1346; amended Pub. L. 102–325, title IV, §406(h), July 23, 1992, 106 Stat. 509; Pub. L. 105–244, title IV, §409(b), Oct. 7, 1998, 112 Stat. 1668; Pub. L. 110–315, title IV, §409(b), Aug. 14, 2008, 122 Stat. 3225.)

Prior Provisions

A prior section 1070d–41, Pub. L. 89–329, title IV, §419K, as added Pub. L. 98–558, title VIII, §801(a), Oct. 30, 1984, 98 Stat. 2902, authorized appropriations for fiscal years 1986 to 1988 to carry out Robert C. Byrd Honors Scholarship Program, prior to the general revision of this part by Pub. L. 99–498.

Amendments

2008—Pub. L. 110–315 substituted “such sums as may be necessary for fiscal year 2009 and each of the five succeeding fiscal years” for “$45,000,000 for fiscal year 1999 and such sums as may be necessary for each of the 4 succeeding fiscal years”.

1998—Pub. L. 105–244 substituted “$45,000,000 for fiscal year 1999” for “$10,000,000 for fiscal year 1993”.

1992—Pub. L. 102–325 amended section generally. Prior to amendment, section read as follows: “There are authorized to be appropriated for this subpart $8,000,000 for fiscal year 1987, and such sums as may be necessary for the 4 succeeding fiscal years.”

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.

subpart 7—child care access means parents in school

Prior Provisions

A prior subpart 7, consisted of sections 1070e and 1070e–1 and related to assistance to institutions of higher education, prior to the repeal of sections 1070e and 1070e–1 by Pub. L. 102–325, title IV, §§407, 408, July 23, 1992, 106 Stat. 510.

§1070e. Child care access means parents in school

(a) Purpose

The purpose of this section is to support the participation of low-income parents in postsecondary education through the provision of campus-based child care services.

(b) Program authorized

(1) Authority

The Secretary may award grants to institutions of higher education to assist the institutions in providing campus-based child care services to low-income students.

(2) Amount of grants

(A) In general

The amount of a grant awarded to an institution of higher education under this section for a fiscal year shall not exceed 1 percent of the total amount of all Federal Pell Grant funds awarded to students enrolled at the institution of higher education for the preceding fiscal year.

(B) Minimum

(i) In general

Except as provided in clause (ii), a grant under this section shall be awarded in an amount that is not less than $10,000.

(ii) Increase trigger

For any fiscal year for which the amount appropriated under the authority of subsection (g) is equal to or greater than $20,000,000, a grant under this section shall be awarded in an amount that is not less than $30,000.

(3) Duration; renewal; and payments

(A) Duration

The Secretary shall award a grant under this section for a period of 4 years.

(B) Payments

Subject to subsection (e)(2) of this section, the Secretary shall make annual grant payments under this section.

(4) Eligible institutions

An institution of higher education shall be eligible to receive a grant under this section for a fiscal year if the total amount of all Federal Pell Grant funds awarded to students enrolled at the institution of higher education for the preceding fiscal year equals or exceeds $350,000, except that for any fiscal year for which the amount appropriated to carry out this section is equal to or greater than $20,000,000, this sentence shall be applied by substituting “$250,000” for “$350,000”.

(5) Use of funds

Grant funds under this section shall be used by an institution of higher education to support or establish a campus-based child care program primarily serving the needs of low-income students enrolled at the institution of higher education. Grant funds under this section may be used to provide before and after school services to the extent necessary to enable low-income students enrolled at the institution of higher education to pursue postsecondary education.

(6) Construction

Nothing in this section shall be construed to prohibit an institution of higher education that receives grant funds under this section from serving the child care needs of the community served by the institution.

(7) Definition of low-income student

For the purpose of this section, the term “low-income student” means a student—

(A) who is eligible to receive a Federal Pell Grant for the award year for which the determination is made; or

(B) who would otherwise be eligible to receive a Federal Pell Grant for the award year for which the determination is made, except that the student fails to meet the requirements of—

(i) section 1070a(c)(1) of this title because the student is enrolled in a graduate or first professional course of study; or

(ii) section 1091(a)(5) of this title because the student is in the United States for a temporary purpose.

(8) Publicity

The Secretary shall publicize the availability of grants under this section in appropriate periodicals, in addition to publication in the Federal Register, and shall inform appropriate educational organizations of such availability.

(c) Applications

An institution of higher education desiring a grant under this section shall submit an application to the Secretary at such time, in such manner, and accompanied by such information as the Secretary may require. Each application shall—

(1) demonstrate that the institution is an eligible institution described in subsection (b)(4) of this section;

(2) specify the amount of funds requested;

(3) demonstrate the need of low-income students at the institution for campus-based child care services by including in the application—

(A) information regarding student demographics;

(B) an assessment of child care capacity on or near campus;

(C) information regarding the existence of waiting lists for existing child care;

(D) information regarding additional needs created by concentrations of poverty or by geographic isolation; and

(E) other relevant data;


(4) contain a description of the activities to be assisted, including whether the grant funds will support an existing child care program or a new child care program;

(5) identify the resources, including technical expertise and financial support, the institution will draw upon to support the child care program and the participation of low-income students in the program, such as accessing social services funding, using student activity fees to help pay the costs of child care, using resources obtained by meeting the needs of parents who are not low-income students, and accessing foundation, corporate or other institutional support, and demonstrate that the use of the resources will not result in increases in student tuition;

(6) contain an assurance that the institution will meet the child care needs of low-income students through the provision of services, or through a contract for the provision of services;

(7) describe the extent to which the child care program will coordinate with the institution's early childhood education curriculum, to the extent the curriculum is available, to meet the needs of the students in the early childhood education program at the institution, and the needs of the parents and children participating in the child care program assisted under this section;

(8) in the case of an institution seeking assistance for a new child care program—

(A) provide a timeline, covering the period from receipt of the grant through the provision of the child care services, delineating the specific steps the institution will take to achieve the goal of providing low-income students with child care services;

(B) specify any measures the institution will take to assist low-income students with child care during the period before the institution provides child care services; and

(C) include a plan for identifying resources needed for the child care services, including space in which to provide child care services, and technical assistance if necessary;


(9) contain an assurance that any child care facility assisted under this section will meet the applicable State or local government licensing, certification, approval, or registration requirements; and

(10) contain a plan for any child care facility assisted under this section to become accredited within 3 years of the date the institution first receives assistance under this section.

(d) Priority

The Secretary shall give priority in awarding grants under this section to institutions of higher education that submit applications describing programs that—

(1) leverage significant local or institutional resources, including in-kind contributions, to support the activities assisted under this section; and

(2) utilize a sliding fee scale for child care services provided under this section in order to support a high number of low-income parents pursuing postsecondary education at the institution.

(e) Reporting requirements; continuing eligibility

(1) Reporting requirements

(A) Reports

Each institution of higher education receiving a grant under this section shall report to the Secretary annually.

(B) Contents

The report shall include—

(i) data on the population served under this section;

(ii) information on campus and community resources and funding used to help low-income students access child care services;

(iii) information on progress made toward accreditation of any child care facility; and

(iv) information on the impact of the grant on the quality, availability, and affordability of campus-based child care services.

(2) Continuing eligibility

The Secretary shall make continuation awards under this section to an institution of higher education only if the Secretary determines, on the basis of the reports submitted under paragraph (1), that the institution is making a good faith effort to ensure that low-income students at the institution have access to affordable, quality child care services.

(f) Construction

No funds provided under this section shall be used for construction, except for minor renovation or repair to meet applicable State or local health or safety requirements.

(g) Authorization of appropriations

There are authorized to be appropriated to carry out this section such sums as may be necessary for fiscal year 2009 and each of the five succeeding fiscal years.

(Pub. L. 89–329, title IV, §419N, as added Pub. L. 105–244, title IV, §410, Oct. 7, 1998, 112 Stat. 1668; amended Pub. L. 110–315, title IV, §410, Aug. 14, 2008, 122 Stat. 3225.)

Prior Provisions

A prior section 1070e, Pub. L. 89–329, title IV, §420, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1346, related to payments to institutions of higher education, prior to repeal by Pub. L. 102–325, title IV, §407, July 23, 1992, 106 Stat. 510.

Another prior section 1070e, Pub. L. 89–329, title IV, §420, formerly §419, as added Pub. L. 92–318, title X, §1001(a), June 23, 1972, 86 Stat. 375; amended Pub. L. 96–374, title XIII, §1391(a)(1), Oct. 3, 1980, 94 Stat. 1503; renumbered Pub. L. 98–558, title VIII, §801(b)(1), Oct. 30, 1984, 98 Stat. 2902, related to payments to institutions of higher education, prior to the general amendment of this part by Pub. L. 99–498.

A prior section 1070e–1, Pub. L. 89–329, title IV, §420A, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1348; amended Pub. L. 100–50, §8, June 3, 1987, 101 Stat. 341; Pub. L. 102–54, §13(g)(2), June 13, 1991, 105 Stat. 275; Pub. L. 102–83, §5(c)(2), Aug. 6, 1991, 105 Stat. 406, related to veterans education outreach program, prior to repeal by Pub. L. 102–325, title IV, §408, July 23, 1992, 106 Stat. 510.

Another prior section 1070e–1, Pub. L. 89–329, title IV, §420A, formerly §420, as added Pub. L. 92–318, title X, §1001(a), June 23, 1972, 86 Stat. 378; amended Pub. L. 93–380, title VIII, §834(a), Aug. 21, 1974, 88 Stat. 604; Pub. L. 94–482, title I, §126(a)–(c), Oct. 12, 1976, 90 Stat. 2098; Pub. L. 95–336, §6(a), Aug. 4, 1978, 92 Stat. 453; Pub. L. 96–49, §5(a)(7), Aug. 13, 1979, 93 Stat. 352; Pub. L. 96–374, title IV, §407, Oct. 3, 1980, 94 Stat. 1412; Pub. L. 97–300, title I, §183, Oct. 13, 1982, 96 Stat. 1357; renumbered §420A, Pub. L. 98–558, title VIII, §801(b)(2), Oct. 30, 1984, 98 Stat. 2902, related to veterans’ cost-of-instruction payments to institutions of higher education, prior to the general amendment of this part by Pub. L. 99–498.

Amendments

2008—Subsec. (b)(2)(B). Pub. L. 110–315, §410(a), designated existing provisions as cl. (i), inserted heading, substituted “Except as provided in clause (ii), a grant” for “A grant”, and added cl. (ii).

Subsec. (b)(4). Pub. L. 110–315, §410(b), inserted “, 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’ ” before period at end.

Subsec. (b)(7). Pub. L. 110–315, §410(c), amended par. (7) generally. Prior to amendment, text read as follows: “For the purpose of this section, the term ‘low-income student’ means a student who is eligible to receive a Federal Pell Grant for the fiscal year for which the determination is made.”

Subsec. (b)(8). Pub. L. 110–315, §410(d), added par. (8).

Subsec. (e)(1)(A). Pub. L. 110–315, §410(e)(1), substituted “annually” for “18 months, and 36 months, after receiving the first grant payment under this section”.

Subsec. (e)(2). Pub. L. 110–315, §410(e)(2), substituted “continuation awards” for “the third annual grant payment” and “the reports” for “the 18-month report”.

Subsec. (g). Pub. L. 110–315, §410(f), substituted “such sums as may be necessary for fiscal year 2009 and each of the five succeeding fiscal years” for “$45,000,000 for fiscal year 1999 and such sums as may be necessary for each of the 4 succeeding fiscal years”.

Effective Date

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

subpart 8—[Repealed]

Codification

Subpart 8 of part A of title IV of the Higher Education Act of 1965, which comprised this subpart, was originally added to Pub. L. 89–329, title IV, by Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1352, and amended by Pub. L. 100–50, June 3, 1987, 101 Stat. 335; Pub. L. 102–325, July 23, 1992, 106 Stat. 448. Subpart 8, which related to learning anytime anywhere partnerships, was set out as having been added by Pub. L. 105–244, title IV, §411, Oct. 7, 1998, 112 Stat. 1671, without reference to those intervening amendments because of the extensive revision of subpart 8 by Pub. L. 105–244.

§§1070f to 1070f–6. Repealed. Pub. L. 110–315, title IV, §411, Aug. 14, 2008, 122 Stat. 3226

Section 1070f, Pub. L. 89–329, title IV, §420D, as added Pub. L. 105–244, title IV, §411, Oct. 7, 1998, 112 Stat. 1671, set out congressional findings.

A prior section 1070f, Pub. L. 89–329, title IV, §420B, as added Pub. L. 99–498, title IV, §401(a), Oct. 17, 1986, 100 Stat. 1352; amended Pub. L. 100–50, §9, June 3, 1987, 101 Stat. 341; Pub. L. 102–325, title IV, §409, July 23, 1992, 106 Stat. 510, related to special child care services for disadvantaged college students, prior to the general amendment of this subpart by Pub. L. 105–244.

Section 1070f–1, Pub. L. 89–329, title IV, §420E, as added Pub. L. 105–244, title IV, §411, Oct. 7, 1998, 112 Stat. 1672, related to the purpose of this subpart and the program authorized.

Section 1070f–2, Pub. L. 89–329, title IV, §420F, as added Pub. L. 105–244, title IV, §411, Oct. 7, 1998, 112 Stat. 1672, related to grant application.

Section 1070f–3, Pub. L. 89–329, title IV, §420G, as added Pub. L. 105–244, title IV, §411, Oct. 7, 1998, 112 Stat. 1672, set out authorized activities for funding.

Section 1070f–4, Pub. L. 89–329, title IV, §420H, as added Pub. L. 105–244, title IV, §411, Oct. 7, 1998, 112 Stat. 1673, provided for a matching requirement limiting Federal funds to not more than 50 percent of the cost of a project.

Section 1070f–5, Pub. L. 89–329, title IV, §420I, as added Pub. L. 105–244, title IV, §411, Oct. 7, 1998, 112 Stat. 1673, required that the Secretary use a peer review process to review applications and make recommendations for funding.

Section 1070f–6, Pub. L. 89–329, title IV, §420J, as added Pub. L. 105–244, title IV, §411, Oct. 7, 1998, 112 Stat. 1673, authorized appropriations for fiscal year 1999 and each of the 4 succeeding fiscal years.

subpart 9—teach grants

§1070g. Definitions

For the purposes of this subpart:

(1) Eligible institution

The term “eligible institution” means an institution of higher education, as defined in section 1002 of this title, that the Secretary determines—

(A) provides high quality teacher preparation and professional development services, including extensive clinical experience as a part of pre-service preparation;

(B) is financially responsible;

(C) provides pedagogical course work, or assistance in the provision of such coursework, including the monitoring of student performance, and formal instruction related to the theory and practices of teaching; and

(D) provides supervision and support services to teachers, or assistance in the provision of such services, including mentoring focused on developing effective teaching skills and strategies.

(2) Post-baccalaureate

The term “post-baccalaureate” means a program of instruction for individuals who have completed a baccalaureate degree, that does not lead to a graduate degree, and that consists of courses required by a State in order for a teacher candidate to receive a professional certification or licensing credential that is required for employment as a teacher in an elementary school or secondary school in that State, except that such term shall not include any program of instruction offered by an eligible institution that offers a baccalaureate degree in education.

(3) Teacher candidate

The term “teacher candidate” means a student or teacher described in subparagraph (A) or (B) of section 1070g–2(a)(2) of this title.

(Pub. L. 89–329, title IV, §420L, as added Pub. L. 110–84, title I, §104, Sept. 27, 2007, 121 Stat. 786; amended Pub. L. 110–153, §3(1), Dec. 21, 2007, 121 Stat. 1824.)

Amendments

2007—Par. (1)(B). Pub. L. 110–153 substituted “responsible” for “sound”.

Effective Date

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

§1070g–1. Program established

(a) Program authority

(1) Payments required

The Secretary shall pay to each eligible institution such sums as may be necessary to pay to each teacher candidate who files an application and agreement in accordance with section 1070g–2 of this title, and who qualifies under paragraph (2) of section 1070g–2(a) of this title, a TEACH Grant in the amount of $4,000 for each year during which that teacher candidate is in attendance at the institution.

(2) References

Grants made under paragraph (1) shall be known as “Teacher Education Assistance for College and Higher Education Grants” or “TEACH Grants”.

(b) Payment methodology

(1) Prepayment

Not less than 85 percent of any funds provided to an eligible institution under subsection (a) shall be advanced to the eligible institution prior to the start of each payment period and shall be based upon an amount requested by the institution as needed to pay teacher candidates until such time as the Secretary determines and publishes in the Federal Register with an opportunity for comment, an alternative payment system that provides payments to institutions in an accurate and timely manner, except that this sentence shall not be construed to limit the authority of the Secretary to place an institution on a reimbursement system of payment.

(2) Direct payment

Nothing in this section shall be interpreted to prohibit the Secretary from paying directly to teacher candidates, in advance of the beginning of the academic term, an amount for which teacher candidates are eligible, in cases where the eligible institution elects not to participate in the disbursement system required by paragraph (1).

(3) Distribution of grants to teacher candidates

Payments under this subpart shall be made, in accordance with regulations promulgated by the Secretary for such purpose, in such manner as will best accomplish the purposes of this subpart. Any disbursement allowed to be made by crediting the teacher candidate's account shall be limited to tuition and fees and, in the case of institutionally-owned housing, room and board. The teacher candidate may elect to have the institution provide other such goods and services by crediting the teacher candidate's account.

(c) Reductions in amount

(1) Part-time students

In any case where a teacher candidate attends an eligible institution on less than a full-time basis (including a teacher candidate who attends an eligible institution on less than a half-time basis) during any year, the amount of a grant under this subpart for which that teacher candidate is eligible shall be reduced in proportion to the degree to which that teacher candidate is not attending on a full-time basis, in accordance with a schedule of reductions established by the Secretary for the purposes of this subpart, computed in accordance with this subpart. Such schedule of reductions shall be established by regulation and published in the Federal Register in accordance with section 1089 of this title.

(2) No exceeding cost

The amount of a grant awarded under this subpart, in combination with Federal assistance and other assistance the student may receive, shall not exceed the cost of attendance (as defined in section 1087ll of this title) at the eligible institution at which that teacher candidate is in attendance.

(d) Period of eligibility for grants

(1) Undergraduate and post-baccalaureate students

The period during which an undergraduate or post-baccalaureate student may receive grants under this subpart shall be the period required for the completion of the first undergraduate baccalaureate or post-baccalaureate course of study being pursued by the teacher candidate at the eligible institution at which the teacher candidate is in attendance, except that—

(A) any period during which the teacher candidate is enrolled in a noncredit or remedial course of study as described in paragraph (3) shall not be counted for the purpose of this paragraph; and

(B) the total amount that a teacher candidate may receive under this subpart for undergraduate or post-baccalaureate study shall not exceed $16,000.

(2) Graduate students

The period during which a graduate student may receive grants under this subpart shall be the period required for the completion of a master's degree course of study pursued by the teacher candidate at the eligible institution at which the teacher candidate is in attendance, except that the total amount that a teacher candidate may receive under this subpart for graduate study shall not exceed $8,000.

(3) Remedial course; study abroad

Nothing in this section shall be construed to exclude from eligibility courses of study which are noncredit or remedial in nature (including courses in English language acquisition) which are determined by the eligible institution to be necessary to help the teacher candidate be prepared for the pursuit of a first undergraduate baccalaureate or post-baccalaureate degree or certificate or, in the case of courses in English language instruction, to be necessary to enable the teacher candidate to utilize already existing knowledge, training, or skills. Nothing in this section shall be construed to exclude from eligibility programs of study abroad that are approved for credit by the home institution at which the teacher candidate is enrolled.

(Pub. L. 89–329, title IV, §420M, as added Pub. L. 110–84, title I, §104, Sept. 27, 2007, 121 Stat. 787; amended Pub. L. 110–153, §3(2), Dec. 21, 2007, 121 Stat. 1824.)

Amendments

2007—Subsecs. (a)(1), (c)(1). Pub. L. 110–153, §3(2)(A), substituted “year” for “academic year”.

Subsec. (c)(2). Pub. L. 110–153, §3(2)(B), substituted “other assistance the student may receive” for “other student assistance” and struck out at end “If, with respect to any teacher candidate for any academic year, it is determined that the amount of a TEACH Grant exceeds the cost of attendance for that year, the amount of the TEACH Grant shall be reduced until such grant does not exceed the cost of attendance at the eligible institution.”

§1070g–2. Applications; eligibility

(a) Applications; demonstration of eligibility

(1) Filing required

The Secretary shall periodically set dates by which teacher candidates shall file applications for grants under this subpart. Each teacher candidate desiring a grant under this subpart for any year shall file an application containing such information and assurances as the Secretary may determine necessary to enable the Secretary to carry out the functions and responsibilities of this subpart.

(2) Demonstration of TEACH Grant eligibility

Each application submitted under paragraph (1) shall contain such information as is necessary to demonstrate that—

(A) if the applicant is an enrolled student—

(i) the student is an eligible student for purposes of section 1091 of this title;

(ii) the student—

(I) has a grade point average that is determined, under standards prescribed by the Secretary, to be comparable to a 3.25 average on a zero to 4.0 scale, except that, if the student is in the first year of a program of undergraduate education, such grade point average shall be determined on the basis of the student's cumulative secondary school grade point average; or

(II) displayed high academic aptitude by receiving a score above the 75th percentile on at least one of the batteries in an undergraduate, post-baccalaureate, or graduate school admissions test; and


(iii) the student is completing coursework and other requirements necessary to begin a career in teaching, or plans to complete such coursework and requirements prior to graduating; or


(B) if the applicant is a current or prospective teacher applying for a grant to obtain a graduate degree—

(i) the applicant is a teacher or a retiree from another occupation with expertise in a field in which there is a shortage of teachers, such as mathematics, science, special education, English language acquisition, or another high-need subject; or

(ii) the applicant is or was a teacher who is using high-quality alternative certification routes, such as Teach for America, to get certified.

(b) Agreements to serve

Each application under subsection (a) shall contain or be accompanied by an agreement by the applicant that—

(1) the applicant will—

(A) serve as a full-time teacher for a total of not less than 4 academic years within 8 years after completing the course of study for which the applicant received a TEACH Grant under this subpart;

(B) teach in a school described in section 1087ee(a)(2)(A) of this title;

(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 documented as high-need by the Federal Government, State government, or local educational agency, and approved by the Secretary;


(D) submit evidence of such employment in the form of a certification by the chief administrative officer of the school upon completion of each year of such service; and

(E) comply with the requirements for being a highly qualified teacher as defined in section 7801 of this title;


(2) in the event that the applicant is determined to have failed or refused to carry out such service obligation, the sum of the amounts of any TEACH Grants received by such applicant will be treated as a loan and collected from the applicant in accordance with subsection (c) and the regulations thereunder; and

(3) contains, or is accompanied by, a plain-language disclosure form developed by the Secretary that clearly describes the nature of the TEACH Grant award, the service obligation, and the loan repayment requirements that are the consequence of the failure to complete the service obligation.

(c) Repayment for failure to complete service

In the event that any recipient of a grant under this subpart fails or refuses to comply with the service obligation in the agreement under subsection (b), the sum of the amounts of any TEACH Grants received by such recipient shall, upon a determination of such a failure or refusal in such service obligation, be treated as a Federal Direct Unsubsidized Stafford Loan under part C, and shall be subject to repayment, together with interest thereon accruing from the date of the grant award, in accordance with terms and conditions specified by the Secretary in regulations under this subpart.

(d) Additional administrative provisions

(1) Change of high-need designation

If a recipient of an initial grant under this subpart has acquired an academic degree, or expertise, in a field that was, at the time of the recipient's application for that grant, designated as high need in accordance with subsection (b)(1)(C)(vii), but is no longer so designated, the grant recipient may fulfill the service obligation described in subsection (b)(1) by teaching in that field.

(2) Extenuating circumstances

The Secretary shall establish, by regulation, categories of extenuating circumstances under which a recipient of a grant under this subpart who is unable to fulfill all or part of the recipient's service obligation may be excused from fulfilling that portion of the service obligation.

(Pub. L. 89–329, title IV, §420N, as added Pub. L. 110–84, title I, §104, Sept. 27, 2007, 121 Stat. 788; amended Pub. L. 110–315, title IV, §412(a)(1), Aug. 14, 2008, 122 Stat. 3226.)

Amendments

2008—Subsec. (b)(3). Pub. L. 110–315, §412(a)(1)(A), added par. (3).

Subsec. (d). Pub. L. 110–315, §412(a)(1)(B), added subsec. (d).

Effective Date of 2008 Amendment

Pub. L. 110–315, title IV, §412(b), Aug. 14, 2008, 122 Stat. 3227, provided that: “The amendments made by subsection (a)(1) [amending this section] shall take effect on July 1, 2010.”

§1070g–3. Program period and funding

Beginning on July 1, 2008, there shall be available to the Secretary to carry out this subpart, from funds not otherwise appropriated, such sums as may be necessary to provide TEACH Grants in accordance with this subpart to each eligible applicant.

(Pub. L. 89–329, title IV, §420O, as added Pub. L. 110–84, title I, §104, Sept. 27, 2007, 121 Stat. 790.)

§1070g–4. Program report

Not later than two years after August 14, 2008, and every two years thereafter, the Secretary shall prepare and submit to the authorizing committees a report on TEACH grants with respect to the schools and students served by recipients of such grants. Such report shall take into consideration information related to—

(1) the number of TEACH grant recipients;

(2) the degrees obtained by such recipients;

(3) the location, including the school, local educational agency, and State, where the recipients completed the service agreed to under section 1070g–2(b) of this title and the subject taught;

(4) the duration of such service; and

(5) any other data necessary to conduct such evaluation.

(Pub. L. 89–329, title IV, §420P, as added Pub. L. 110–315, title IV, §412(a)(2), Aug. 14, 2008, 122 Stat. 3227.)

subpart 10—scholarships for veteran's dependents

§1070h. Scholarships for veteran's dependents

(a) Definition of eligible veteran's dependent

The term “eligible veteran's dependent” means a dependent or an independent student—

(1) whose parent or guardian was a member of the Armed Forces of the United States and died as a result of performing military service in Iraq or Afghanistan after September 11, 2001; and

(2) who, at the time of the parent or guardian's death, was—

(A) less than 24 years of age; or

(B) enrolled at an institution of higher education on a part-time or full-time basis.

(b) Grants

(1) In general

The Secretary shall award a grant to each eligible veteran's dependent to assist in paying the eligible veteran's dependent's cost of attendance at an institution of higher education.

(2) Designation

Grants made under this section shall be known as “Iraq and Afghanistan Service Grants”.

(c) Prevention of double benefits

No eligible veteran's dependent may receive a grant under both this section and section 1070a of this title.

(d) Terms and conditions

The Secretary shall award grants under this section in the same manner, and with the same terms and conditions, including the length of the period of eligibility, as the Secretary awards Federal Pell Grants under section 1070a of this title, except that—

(1) the award rules and determination of need applicable to the calculation of Federal Pell Grants, shall not apply to grants made under this section;

(2) the provisions of subsection (a)(3), subsection (b)(1), the matter following subsection (b)(2)(A)(v),1 subsection (b)(3), and subsection (f), of section 1070a of this title shall not apply; and

(3) a grant made under this section to an eligible veteran's dependent for any award year shall equal the maximum Federal Pell Grant available for that award year, except that such a grant under this section—

(A) shall not exceed the cost of attendance of the eligible veteran's dependent for that award year; and

(B) shall be adjusted to reflect the attendance by the eligible veteran's dependent on a less than full-time basis in the same manner as such adjustments are made under section 1070a of this title.

(e) Estimated financial assistance

For purposes of determinations of need under part E, a grant awarded under this section shall not be treated as estimated financial assistance as described in sections 1087kk(3) and 1087vv(j) of this title.

(f) Authorization and appropriations of funds

There are authorized to be appropriated, and there are appropriated, out of any money in the Treasury not otherwise appropriated, for the Secretary to carry out this section, such sums as may be necessary for fiscal year 2010 and each succeeding fiscal year.

(Pub. L. 89–329, title IV, §420R, as added Pub. L. 111–39, title IV, §401(a)(9), July 1, 2009, 123 Stat. 1939.)

References in Text

Section 1070a(b)(2)(A) of this title, referred to in subsec. (d)(2), as originally enacted, contained cls. (i) to (vi) followed by concluding provisions. Section 1070a(b)(2)(A) of this title was amended generally by section 2101(a)(1) of Pub. L. 111–152 and, as so amended, no longer contains either a cl. (v) or concluding provisions.

Effective Date

Pub. L. 111–39, title IV, §401(b), July 1, 2009, 123 Stat. 1940, provided that: “The amendment made by subsection (a)(9) [enacting this subpart] shall take effect on July 1, 2010.”

1 See References in Text note below.

Part B—Federal Family Education Loan Program

Codification

Part B of title IV of the Higher Education Act of 1965, comprising this part, was originally enacted by Pub. L. 89–329, title IV, Nov. 8, 1965, 79 Stat. 1236, and amended by Pub. L. 89–698, Oct. 29, 1966, 80 Stat. 1066; Pub. L. 89–752, Nov. 3, 1966, 80 Stat. 1240; Pub. L. 89–794, Nov. 8, 1966, 80 Stat. 1451; Pub. L. 90–460, Aug. 3, 1968, 82 Stat. 634; Pub. L. 90–575, Oct. 16, 1968, 82 Stat. 1014; Pub. L. 91–206, Mar. 10, 1970, 84 Stat. 49; Pub. L. 92–318, June 23, 1972, 86 Stat. 235; Pub. L. 93–269, Apr. 18, 1974, 88 Stat. 87; Pub. L. 93–604, Jan. 2, 1975, 88 Stat. 1959; Pub. L. 94–273, Apr. 21, 1976, 90 Stat. 375; Pub. L. 94–328, June 30, 1976, 90 Stat. 727; Pub. L. 94–482, Oct. 12, 1976, 90 Stat. 2081; S. Res. 4, Feb. 4, 1977; Pub. L. 95–43, June 15, 1977, 91 Stat. 213; Pub. L. 95–561, Nov. 1, 1978, 92 Stat. 2143; Pub. L. 95–566, Nov. 1, 1978, 92 Stat. 2402; Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2549; Pub. L. 95–630, Nov. 10, 1978, 92 Stat. 3641; S. Res. 30, Mar. 7, 1979; Pub. L. 96–49, Aug. 13, 1979, 93 Stat. 351; Pub. L. 96–88, Oct. 17, 1979, 93 Stat. 668; Pub. L. 96–374, Oct. 3, 1980, 94 Stat. 1367; Pub. L. 97–35, Aug. 13, 1981, 95 Stat. 357; Pub. L. 97–115, Dec. 29, 1981, 95 Stat. 1595; Pub. L. 97–301, Oct. 13, 1982, 96 Stat. 1400; Pub. L. 98–79, Aug. 15, 1983, 97 Stat. 476; Pub. L. 99–272, Apr. 7, 1986, 100 Stat. 82; Pub. L. 99–320, May 23, 1986, 100 Stat. 491. Such part is shown herein, however, as having been added by Pub. L. 99–498, title IV, §402(a), Oct. 17, 1986, 100 Stat. 1353, without reference to such intervening amendments because of the extensive revision of part B by Pub. L. 99–498.

§1071. Statement of purpose; nondiscrimination; and appropriations authorized

(a) Purpose; discrimination prohibited

(1) Purpose

The purpose of this part is to enable the Secretary—

(A) to encourage States and nonprofit private institutions and organizations to establish adequate loan insurance programs for students in eligible institutions (as defined in section 1085 of this title),

(B) to provide a Federal program of student loan insurance for students or lenders who do not have reasonable access to a State or private nonprofit program of student loan insurance covered by an agreement under section 1078(b) of this title,

(C) to pay a portion of the interest on loans to qualified students which are insured under this part, and

(D) to guarantee a portion of each loan insured under a program of a State or of a nonprofit private institution or organization which meets the requirements of section 1078(a)(1)(B) of this title.

(2) Discrimination by creditors prohibited

No agency, organization, institution, bank, credit union, corporation, or other lender who regularly extends, renews, or continues credit or provides insurance under this part shall exclude from receipt or deny the benefits of, or discriminate against any borrower or applicant in obtaining, such credit or insurance on the basis of race, national origin, religion, sex, marital status, age, or handicapped status.

(b) Authorization of appropriations

For the purpose of carrying out this part—

(1) there are authorized to be appropriated to the student loan insurance fund (established by section 1081 of this title) (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,

(2) there are authorized to be appropriated, for payments under section 1078 of this title with respect to interest on student loans and for payments under section 1087 of this title, 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 for the reserve funds of State and nonprofit 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) and (b) of this title, and (B) such sums as may be necessary for making advances pursuant to section 1072(c) of this title, for the reserve funds of State and nonprofit 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 to guaranty agencies, 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.


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 and 1078 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) of subsection (b) or any other provision of law—

(1) no new loans (including consolidation loans) may be made or insured under this part after June 30, 2010; and

(2) no funds are authorized to be appropriated, or may be expended, under this chapter and part C of subchapter I of chapter 34 of title 42 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.

(Pub. L. 89–329, title IV, §421, as added Pub. L. 99–498, title IV, §402(a), Oct. 17, 1986, 100 Stat. 1353; amended Pub. L. 100–297, title II, §2601(a), Apr. 28, 1988, 102 Stat. 330; Pub. L. 100–369, §8, July 18, 1988, 102 Stat. 837; Pub. L. 102–325, title IV, §411(a)(2), (c), July 23, 1992, 106 Stat. 510, 511; Pub. L. 105–244, title IV, §411, Oct. 7, 1998, 112 Stat. 1673; Pub. L. 109–171, title VIII, §8004(a), Feb. 8, 2006, 120 Stat. 158; Pub. L. 110–227, §6(a), May 7, 2008, 122 Stat. 746; Pub. L. 111–152, title II, §2201, Mar. 30, 2010, 124 Stat. 1074.)

References in Text

The Higher Education Amendments of 1986, referred to in subsec. (b), is Pub. L. 99–498, Oct. 17, 1986, 100 Stat. 1268. For complete classification of this Act to the Code, see Short Title note set out under section 1001 of this title and Tables.

Codification

Another section 411 of Pub. L. 105–244 enacted subpart 8 (§1070f et seq.) of part A of this subchapter.

Prior Provisions

A prior section 1071, Pub. L. 89–329, title IV, §421, Nov. 8, 1965, 79 Stat. 1236; Pub. L. 90–460, §§2(b)(3), 3(a), Aug. 3, 1968, 82 Stat. 635, 636; Pub. L. 90–575, title I, §§113(b)(1), 114(a), 119(b), Oct. 16, 1968, 82 Stat. 1021, 1027; Pub. L. 94–482, title I, §127(a), Oct. 12, 1976, 90 Stat. 2099; Pub. L. 95–43, §1(a)(8)–(10), June 15, 1977, 91 Stat. 213; Pub. L. 96–374, title XIII, §1391(a)(1), (2), Oct. 3, 1980, 94 Stat. 1503; Pub. L. 98–79, §6, Aug. 15, 1983, 97 Stat. 482, related to statement of purpose of, appropriations for, and implementation of programs to provide low-interest insured loans to students in institutions of higher education, prior to the general revision of this part by Pub. L. 99–498.

Amendments

2010—Subsec. (b). Pub. L. 111–152, §2201(1), inserted “, 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” after “expended” in concluding provisions.

Subsec. (d). Pub. L. 111–152, §2201(2), added subsec. (d).

2008—Subsec. (b)(6). Pub. L. 110–227 added par. (6).

2006—Subsec. (b)(5). Pub. L. 109–171 substituted “a loan processing and issuance fee” for “an administrative cost allowance”.

1998—Subsec. (d). Pub. L. 105–244 struck out heading and text of subsec. (d). Text read as follows: “Notwithstanding any other provision of this part, no new loan guarantees shall be issued after June 30, 1994, if the Secretary does not issue final regulations implementing the changes made to this part under the Higher Education Amendments of 1992 prior to that date. The authority to issue new loan guarantees shall resume upon the Secretary's issuance of such regulations. This subsection shall not provide the basis for avoiding any requirements for notice and public hearing on such regulations.”

1992—Subsec. (c). Pub. L. 102–325, §411(a)(2), added subsec. (c) and struck out former subsec. (c) which read as follows: “The program established under this part shall be referred to as the ‘Robert T. Stafford Student Loan Program’. Loans made under this part shall be known as ‘Stafford Loans’.”

Subsec. (d). Pub. L. 102–325, §411(c), added subsec. (d).

1988—Subsec. (c). Pub. L. 100–369 substituted “shall be referred” for “may be referred” and inserted provision identifying loans made under this part as “Stafford Loans”.

Pub. L. 100–297 added subsec. (c).

Effective Date of 2008 Amendment

Pub. L. 110–227, §6(b), May 7, 2008, 122 Stat. 746, provided that: “The amendments made by subsection (a) [amending this section] shall take effect on the date of enactment of this Act [May 7, 2008].”

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.

Effective Date of 1992 Amendment

Amendment by Pub. L. 102–325 effective July 23, 1992, with changes in the designation or names of loans or programs under this part effective with respect to applications or other documents (used in making such loans) that are printed after July 23, 1992, see section 432 of Pub. L. 102–325, set out as a note under section 1078 of this title.

Effective Date of 1988 Amendment

Pub. L. 100–297, title VI, §6303, Apr. 28, 1988, 102 Stat. 431, as amended by Pub. L. 100–351, June 27, 1988, 102 Stat. 661; Pub. L. 106–400, §2, Oct. 30, 2000, 114 Stat. 1675, provided that:

“(a) General Rule.—Except as otherwise provided, this Act and the amendments made by this Act [see Tables for classification] shall take effect July 1, 1988.

“(b) Special Rules.—(1) Any provision of this Act or any amendment made by this Act which authorizes appropriations for fiscal year 1988 shall take effect on the date of the enactment of this Act [Apr. 28, 1988].

“(2) The provisions of section 2402, relating to the National Center for Vocational Research, shall take effect on April 10, 1988.

“(3) The amendments made by section 3403 [amending sections 1221e and 1221e–1 of this title] shall take effect for assessments made after September 30, 1989, with respect to State data.

“(4) Allotments to States made under chapters 1 and 2 of title I of the Elementary and Secondary Education Act of 1965 [formerly 20 U.S.C. 2701 et seq., 2911 et seq.] and under the Adult Education Act [formerly 20 U.S.C. 1201 et seq.] from amounts appropriated by the joint resolution entitled ‘Joint resolution making further continuing appropriations for the fiscal year 1988, and for other purposes’, approved December 22, 1987 (Public Law 100–202), shall be computed in accordance with the provisions of law applicable to allotments to States under chapters 1 and 2 of the Education Consolidation and Improvement Act of 1981 [formerly 20 U.S.C. 3801 et seq., 3811 et seq.] and under the Adult Education Act, respectively, as such Acts were in effect on the day before the date of the enactment of this Act [Apr. 28, 1988].

“(5) Amounts appropriated by the joint resolution entitled ‘Joint resolution making further continuing appropriations for the fiscal year 1988, and for other purposes’, approved December 22, 1987 (Public Law 100–202), for the following programs shall be awarded in accordance with the applicable provisions of law in effect on the day before the date of the enactment of this Act [Apr. 28, 1988]:

“(A) Programs under subchapter D of chapter 2 of the Education Consolidation and Improvement Act of 1981 [formerly 20 U.S.C. 3851 et seq.], except that projects under section 583(c) [formerly 20 U.S.C. 3851(c)] may not be reviewed by a program significance panel.

“(B) National programs under the Adult Education Act [formerly 20 U.S.C. 1201 et seq.].

“(C) Programs under the Indian Education Act [Pub. L. 92–318, title IV, see Tables for classification].

“(D) Programs under title II of the Education for Economic Security Act [formerly 20 U.S.C. 3961 et seq.].

“(E) The program under section 702 of the McKinney-Vento Homeless Assistance Act [formerly 42 U.S.C. 11421].

“(6) The provisions of part A of title II of this Act [§§2001 to 2034 of Pub. L. 100–297, amending sections 236 et seq. and 631 et seq. of this title], excluding sections 2014(e) and 2018 [amending section 238 of this title and enacting provisions set out as a note under section 238 of this title], shall apply only with respect to amounts appropriated for fiscal years beginning after September 30, 1988.

“(7) The amendments made by section 6001 [amending section 11421 of Title 42, The Public Health and Welfare], relating to literacy training of homeless adults, shall take effect on October 1, 1988.

“(8) Any election under section 5209(b)(1) [25 U.S.C. 2508(b)(1)] conveyed to the Secretary prior to August 1, 1988, shall take effect for the fiscal year beginning on October 1, 1988, and thereafter.”

Effective Date

Section 402(b)–(d) of Pub. L. 99–498, as amended by Pub. L. 100–50, §22(b), June 3, 1987, 101 Stat. 361, provided that:

“(b) Effective Dates.—The changes made in part B of title IV of the Act [20 U.S.C. 1071 et seq.] by the amendment made by subsection (a) of this section shall take effect on the date of enactment of this Act [Oct. 17, 1986], except—

“(1) as otherwise provided in such part B;

“(2) the changes in sections 427(a)(2)(C) and 428(b)(1)(M) of the Act [20 U.S.C. 1077(a)(2)(C), 1078(b)(1)(M)] (other than clauses (viii), (ix), and (x) of each such section) shall apply only to loans to new borrowers that (A) are made to cover the cost of instruction for periods of enrollment beginning on or after July 1, 1987; or (B) are disbursed on or after July 1, 1987;

“(3) the changes made in sections 425(a), 428(b)(1)(A), and 428(b)(1)(B) of the Act [20 U.S.C. 1075(a), 1078(b)(1)(A), (B)] shall apply with respect only to loans disbursed on or after January 1, 1987, or made to cover the costs of instruction for periods of enrollment beginning on or after January 1, 1987;

“(4) the changes made in subsections (a), (b), and (d) of section 433 of the Act [20 U.S.C. 1083(a), (b), (d)] shall apply with respect only to loans disbursed on or after January 1, 1987, or made to cover the costs of instruction for periods of enrollment beginning on or after January 1, 1987;

“(5) the changes in section 428(b)(1)(H) [20 U.S.C. 1078(b)(1)(H)] shall apply with respect only to loans for which the borrower files an application on or after July 1, 1987;

“(6) the changes in sections 435(d)(5) and 438(d) of the Act [20 U.S.C. 1085(d)(5), 1087–1(d)] shall take effect 30 days after the date of enactment of this Act [Oct. 17, 1986]; and

“(7) the changes made in section 438(b) [20 U.S.C. 1087–1(b)] shall take effect with respect to loans disbursed on or after 30 days after the date of enactment of this Act [Oct. 17, 1986] or made to cover the costs of instruction for periods of enrollment beginning on or after 30 days after the date of enactment of this Act.

“(c) Changes Effective Without Regard to Regulations; Republication of Regulations.—The changes made in part B of title IV of the Act [20 U.S.C. 1071 et seq.] by the amendment made by subsection (a) of this section shall be effective in accordance with subsection (b) of this section without regard to whether such changes are reflected in the regulations prescribed by the Secretary of Education for the purpose of such part.

“(d) New Borrowers.—For the purpose of this section, 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, insured, or guaranteed under part B of title IV of the Act [20 U.S.C. 1071 et seq.].”

Study of Role of Guaranty Agencies

Section 1401 of Pub. L. 102–325 directed Secretary of Education to review role of guaranty agencies within Federal Family Education Loan Program by examining administrative and financial operations of such agencies and the relationships between guaranty agencies and State governments and report to Congress within 1 year of July 23, 1992, on the review, prior to repeal by Pub. L. 105–332, §6(b)(2), Oct. 31, 1998, 112 Stat. 3128.

General Accounting Office Reports

Sections 1311 to 1314 of Pub. L. 99–498, as amended by Pub. L. 100–50, §23(6), June 3, 1987, 101 Stat. 362, directed Comptroller General to conduct studies on practices of State guaranty agencies and multistate guarantors under the student loan program, on the feasibility and efficiency of permitting students to establish multiple year lines of credit with eligible lenders, on the impact of the multiple disbursement system on the ability of students and institutions of higher education to meet expenses, and on the cost, efficiency, and impact of the consolidation loan program established by Pub. L. 99–498, and directed Comptroller General to make and submit a report to Congress on each study not later than two years after Oct. 17, 1986, prior to repeal by Pub. L. 105–332, §6(a), Oct. 31, 1998, 112 Stat. 3127.

§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, the Secretary is authorized to make advances to any State with which the Secretary has made an agreement pursuant to section 1078(b) of this title for the purpose of helping to establish or strengthen the reserve fund of the student loan insurance program covered by that agreement. If for any fiscal year a State does not have a student loan insurance program covered by an agreement made pursuant to section 1078(b) of this title, and the Secretary determines after consultation with the chief executive officer of that State that there is no reasonable likelihood that the State will have such a student loan insurance program for such year, the Secretary may make advances for such year for the same purpose to one or more nonprofit private institutions or organizations with which the Secretary has made an agreement pursuant to section 1078(b) of this title in order to enable students in the State to participate in a program of student loan insurance covered by such an agreement. The Secretary may make advances under this subsection both to a State program (with which he has such an agreement) and to one or more nonprofit private institutions or organizations (with which he has such an agreement) in that State if he determines that such advances are necessary in order that students in each eligible institution have access through such institution to a student loan insurance program which meets the requirements of section 1078(b)(1) of this title.

(2) Matching requirement

No advance shall be made after June 30, 1968, unless matched by an equal amount from non-Federal sources. Such equal amount may include the unencumbered non-Federal portion of a reserve fund. As used in the preceding sentence, the term “unencumbered non-Federal portion” means the amount (determined as of the time immediately preceding the making of the advance) of the reserve fund less the greater of—

(A) the sum of—

(i) advances made under this section prior to July 1, 1968;

(ii) an amount equal to twice the amount of advances made under this section after June 30, 1968, and before the advance for purposes of which the determination is made; and

(iii) the proceeds of earnings on advances made under this section; or


(B) any amount which is required to be maintained in such fund pursuant to State law or regulation, or by agreement with lenders, as a reserve against the insurance of outstanding loans.


Except as provided in section 1078(c)(9)(E) or (F) of this title, such unencumbered non-Federal portion shall not be subject to recall, repayment, or recovery by the Secretary.

(3) Terms and conditions; repayment

Advances pursuant to this subsection shall be upon such terms and conditions (including conditions relating to the time or times of payment) consistent with the requirements of section 1078(b) of this title as the Secretary determines will best carry out the purpose of this section. Advances made by the Secretary under this subsection shall be repaid within such period as the Secretary may deem to be appropriate in each case in the light of the maturity and solvency of the reserve fund 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 to nonprofit private institutions and organizations for the benefit of students in any State and to such State may not exceed an amount which bears the same ratio to such sums as the population of such State aged 18 to 22, inclusive, bears to the population of all the States aged 18 to 22 inclusive, but such advances may otherwise be in such amounts as the Secretary determines will best achieve the purposes for which they are made. The amount available for advances to any State shall not be less than $25,000 and any additional funds 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.

(2) Calculation of population

For the purpose of this subsection, the population aged 18 to 22, inclusive, of each State and of all the States shall be determined by the Secretary on the basis of the most recent satisfactory data available to him.

(c) Advances for insurance obligations

(1) Use for payment of insurance obligations

From sums appropriated pursuant to section 1071(b)(4)(B) of this title, the Secretary shall advance to each State which has an agreement with the Secretary under section 1078(c) of this title 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's insurance obligations under such program.

(2) Amount of advances

(A) Except as provided in subparagraph (B), the amount to be advanced to each such State shall be equal to 10 percent of the principal amount of loans made by lenders and insured by such agency on those loans on which the first payment of principal became due during the fiscal year immediately preceding the fiscal year in which the advance is made.

(B) The amount of any advance determined according to subparagraph (A) of this paragraph shall be reduced by—

(i) the amount of any advance or advances made to such State pursuant to this subsection at an earlier date; and

(ii) the amount of the unspent balance of the advances made to a State pursuant to subsection (a) of this section.


Notwithstanding subparagraph (A) and the preceding sentence of this subparagraph, but subject to subparagraph (D) of this paragraph, the amount of any advance to a State described in paragraph (5)(A) for the first year of its eligibility under such paragraph, and the amount of any advance to any State described in paragraph (5)(B) for each year of its eligibility under such paragraph, shall not be less than $50,000.

(C) For the purpose of subparagraph (B), the unspent balance of the advances made to a State pursuant to subsection (a) of this section shall be that portion of the balance of the State's reserve fund (remaining at the time of the State's first request for an advance pursuant to this subsection) which bears the same ratio to such balance as the Federal advances made and not returned by such State, pursuant to subsection (a) of this section, bears to the total of all past contributions to such reserve funds from all sources (other than interest on investment of any portion of the reserve fund) contributed since the date such State executed an agreement pursuant to section 1078(b) of this title.

(D) If the sums appropriated for any fiscal year for paying the amounts determined under subparagraphs (A) and (B) are not sufficient to pay such amounts in full, then such amounts shall be reduced—

(i) by ratably reducing that portion of the amount allocated to each State which exceeds $50,000; and

(ii) if further reduction is required, by equally reducing the $50,000 minimum allocation of each State.


If additional sums become available for paying such amounts for any fiscal year during which the preceding sentence has been applied, such reduced amounts shall be increased on the same basis as they were reduced.

(3) Use of earnings for insurance obligations

The earnings, if any, on any investments of advances received pursuant to this subsection must be used for making payments under the State's insurance obligations.

(4) Repayment of advances

Advances made by the Secretary under this subsection shall, subject to subsection (d) of this section, be repaid within such period as the Secretary may deem to be appropriate and shall be deposited in the fund established by section 1081 of this title.

(5) Limitation on number of advances

Except as provided in paragraph (7), advances pursuant to this subsection shall be made to a State—

(A) in the case of a State which is actively carrying on a program under an agreement pursuant to section 1078(b) of this title which was entered into before October 12, 1976, upon such date as such State 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 which enters into an agreement pursuant to section 1078(b) of this title 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 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 does not have a student loan insurance program covered by an agreement made pursuant to section 1078(b) of this title, and the Secretary determines after consultation with the chief executive officer of that State that there is no reasonable likelihood that the State will have such a student loan insurance program for such year, the Secretary may make advances pursuant to this subsection for such year for the same purpose to one or more nonprofit private institutions or organizations with which he has made an agreement pursuant to subsection (c), as well as subsection (b), of section 1078 of this title and subparagraph (B) of this paragraph in order to enable students in that State to participate in a program of student loan insurance covered by such agreements.

(B) The Secretary may enter into an agreement with a private nonprofit institution or organization for the purpose of this paragraph under which such institution or organization—

(i) agrees to establish within such State at least one office with sufficient staff to handle written, electronic, and telephone inquiries from students, eligible lenders, and other persons in the State, to encourage maximum commercial lender participation within the State, and to conduct periodic visits to at least the major eligible lenders within the State;

(ii) agrees that its insurance will not be denied any student because of his or her choice of eligible institutions; and

(iii) certifies that it is neither an eligible institution, nor has any substantial affiliation with an eligible institution.

(7) Emergency advances

The Secretary is authorized to make advances, on terms and conditions satisfactory to the Secretary, to a guaranty agency—

(A) in accordance with section 1078(j) of this title, in order to ensure that the guaranty agency shall make loans as the lender-of-last-resort; or

(B) if the Secretary is seeking to terminate the guaranty agency's agreement, or assuming the guaranty agency's functions, in accordance with section 1078(c)(9)(F)(v) of this title, in order to assist the agency in meeting its immediate cash needs, ensure the uninterrupted payment of claims, or ensure that the guaranty agency shall make loans as described in subparagraph (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 under this section shall be repaid in accordance with this subsection and shall be deposited in the fund established by section 1081 of this title. The Secretary shall, in accordance with the requirements of paragraph (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 under paragraph (1), the Secretary—

(A) shall consider the solvency and maturity of the reserve and insurance funds of the guaranty agency assisted by such advances, as determined by the Comptroller General taking into account the requirements of State law as in effect on October 17, 1986;

(B) shall not seek repayment of such advances from any State described in subsection (c)(5)(B) of this section during any year of its eligibility under such subsection; and

(C) shall not seek repayment of such advances from any State if such repayment encumbers the reserve fund requirement of State law as in effect on October 17, 1986.

(e) Correction for errors under reduction of excess cash reserves

(1) In general

The Secretary shall pay any guaranty agency the amount of reimbursement of claims under section 1078(c)(1) of this title, 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) 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 and if (A) such erroneous information is verified by an audited financial statement of the reserve fund, signed by a certified public accountant, and (B) such audited financial statement is provided to the Secretary 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 shall, within 30 days after July 23, 1992, pay the full amount of payments withheld or canceled under paragraph (3) of this subsection to any guaranty agency which—

(1) was required to eliminate excess cash reserves, based on the maximum cash reserve (as described in subsection (e) of this section as in effect on September 1, 1988) permitted at the end of 1986;

(2) appealed the Secretary's demand that such agency should eliminate such excess cash reserves and received a waiver of a portion of the amount of such excess cash reserves to be eliminated;

(3) had payments under section 1078(c)(1) of this title or section 1078(f) of this title 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) of this section as in effect on September 1, 1988) permitted at the end of 1986; and

(4) according to a Department of Education review that was completed and forwarded to such guaranty agency prior to January 1, 1992, is expected to become insolvent during or before 1996 and the payments withheld or canceled under paragraph (3) of this subsection are a factor in such agency's impending insolvency.

(g) Preservation and recovery of guaranty agency reserves

(1) Authority to recover funds

Notwithstanding any other provision of law, the reserve funds of the guaranty agencies, and any assets purchased with such reserve funds, regardless of who holds or controls the reserves or assets, shall be considered to be the property of the United States to be used in the operation of the program authorized by this part. However, the Secretary may not require the return of all reserve funds of a guaranty agency to the Secretary unless the Secretary determines that such return is in the best interest of the operation of the program authorized by this part, or to ensure the proper maintenance of such agency's funds or assets or the orderly termination of the guaranty agency's operations and the liquidation of its assets. The reserves shall be maintained by each guaranty agency to pay program expenses and contingent liabilities, as authorized by the Secretary, except that—

(A) the Secretary may direct a guaranty agency to return to the Secretary a portion of its reserve fund which the Secretary determines is unnecessary to pay the program expenses and contingent liabilities of the guaranty agency;

(B) the Secretary may direct the guaranty agency to require the return, to the guaranty agency or to the Secretary, of any reserve funds or assets held by, or under the control of, any other entity, which the Secretary determines are necessary to pay the program expenses and contingent liabilities of the guaranty agency, or which are required for the orderly termination of the guaranty agency's operations and the liquidation of its assets;

(C) the Secretary may direct a guaranty agency, or such agency's officers or directors, to cease any activities involving expenditure, use or transfer of the guaranty agency's reserve funds or assets which the Secretary determines is a misapplication, misuse, or improper expenditure of such funds or assets; and

(D) any such determination under subparagraph (A) or (B) shall be based on standards prescribed by regulations that are developed through negotiated rulemaking and that include procedures for administrative due process.

(2) Termination provisions in contracts

(A) To ensure that the funds and assets of the guaranty agency are preserved, any contract with respect to the administration of a guaranty agency's reserve funds, or the administration of any assets purchased or acquired with the reserve funds of the guaranty agency, that is entered into or extended by the guaranty agency, or any other party on behalf of or with the concurrence of the guaranty agency, after August 10, 1993, shall provide that the contract is terminable by the Secretary upon 30 days notice to the contracting parties if the Secretary determines that such contract includes an impermissible transfer of the reserve funds or assets, or is otherwise inconsistent with the terms or purposes of this section.

(B) The Secretary may direct a guaranty agency to suspend or cease activities under any contract entered into by or on behalf of such agency after January 1, 1993, if the Secretary determines that the misuse or improper expenditure of such guaranty agency's funds or assets or such contract provides unnecessary or improper benefits to such agency's officers or directors.

(3) Penalties

Violation of any direction issued by the Secretary under this subsection may be subject to the penalties described in section 1097 of this title.

(4) Availability of funds

Any funds that are returned or otherwise recovered by the Secretary pursuant to this subsection shall be available for expenditure for expenses pursuant to section 1087h of this title.

(h) Recall of reserves; limitations on use of reserve funds and assets

(1) In general

Notwithstanding any other provision of law, the Secretary shall, except as otherwise provided in this subsection, recall $1,000,000,000 from the reserve funds held by guaranty agencies on September 1, 2002.

(2) Deposit

Funds recalled by the Secretary under this subsection shall be deposited in the Treasury.

(3) Required share

The Secretary shall require each guaranty agency to return reserve funds under paragraph (1) based on the agency's required share of recalled reserve funds held by guaranty agencies as of September 30, 1996. For purposes of this paragraph, a guaranty agency's required share of recalled reserve funds shall be determined as follows:

(A) The Secretary shall compute each guaranty agency's reserve ratio by dividing (i) the amount held in the agency's reserve funds as of September 30, 1996 (but reflecting later accounting or auditing adjustments approved by the Secretary), by (ii) the original principal amount of all loans for which the agency has an outstanding insurance obligation as of such date, including amounts of outstanding loans transferred to the agency from another guaranty agency.

(B) If the reserve ratio of any guaranty agency as computed under subparagraph (A) exceeds 2.0 percent, the agency's required share shall include so much of the amounts held in the agency's reserve funds as exceed a reserve ratio of 2.0 percent.

(C) If any additional amount is required to be recalled under paragraph (1) (after deducting the total of the required shares calculated under subparagraph (B)), such additional amount shall be obtained by imposing on each guaranty agency an equal percentage reduction in the amount of the agency's reserve funds remaining after deduction of the amount recalled under subparagraph (B), except that such percentage reduction under this subparagraph shall not result in the agency's reserve ratio being reduced below 0.58 percent. The equal percentage reduction shall be the percentage obtained by dividing—

(i) the additional amount required to be recalled (after deducting the total of the required shares calculated under subparagraph (B)), by

(ii) the total amount of all such agencies’ reserve funds remaining (after deduction of the required shares calculated under such subparagraph).


(D) If any additional amount is required to be recalled under paragraph (1) (after deducting the total of the required shares calculated under subparagraphs (B) and (C)), such additional amount shall be obtained by imposing on each guaranty agency with a reserve ratio (after deducting the required shares calculated under such subparagraphs) in excess of 0.58 percent an equal percentage reduction in the amount of the agency's reserve funds remaining (after such deduction) that exceed a reserve ratio of 0.58 percent. The equal percentage reduction shall be the percentage obtained by dividing—

(i) the additional amount to be recalled under paragraph (1) (after deducting the amount recalled under subparagraphs (B) and (C)), by

(ii) the total amount of all such agencies’ reserve funds remaining (after deduction of the required shares calculated under such subparagraphs) that exceed a reserve ratio of 0.58 percent.

(4) Restricted accounts required

(A) In general

Within 90 days after the beginning of each of the fiscal years 1998 through 2002, each guaranty agency shall transfer a portion of the agency's required share determined under paragraph (3) to a restricted account established by the agency that is of a type selected by the agency with the approval of the Secretary. Funds transferred to such restricted accounts shall be invested in obligations issued or guaranteed by the United States or in other similarly low-risk securities.

(B) Requirement

A guaranty agency shall not use the funds in such a restricted account for any purpose without the express written permission of the Secretary, except that a guaranty agency may use the earnings from such restricted account for default reduction activities.

(C) Installments

In each of fiscal years 1998 through 2002, each guaranty agency shall transfer the agency's required share to such restricted account in 5 equal annual installments, except that—

(i) a guaranty agency that has a reserve ratio (as computed under subparagraph (3)(A)) equal to or less than 1.10 percent may transfer the agency's required share to such account in 4 equal installments beginning in fiscal year 1999; and

(ii) a guaranty agency may transfer such required share to such account in accordance with such other payment schedules as are approved by the Secretary.

(5) Shortage

If, on September 1, 2002, the total amount in the restricted accounts described in paragraph (4) is less than the amount the Secretary is required to recall under paragraph (1), the Secretary shall require the return of the amount of the shortage from other reserve funds held by guaranty agencies under procedures established by the Secretary. The Secretary shall first attempt to obtain the amount of such shortage from each guaranty agency that failed to transfer the agency's required share to the agency's restricted account in accordance with paragraph (4).

(6) Enforcement

(A) In general

The Secretary may take such reasonable measures, and require such information, as may be necessary to ensure that guaranty agencies comply with the requirements of this subsection.

(B) Prohibition

If the Secretary determines that a guaranty agency has failed to transfer to a restricted account any portion of the agency's required share under this subsection, the agency may not receive any other funds under this part until the Secretary determines that the agency has so transferred the agency's required share.

(C) Waiver

The Secretary may waive the requirements of subparagraph (B) for a guaranty agency described in such subparagraph if the Secretary determines that there are extenuating circumstances beyond the control of the agency that justify such waiver.

(7) Limitation

(A) Restriction on other authority

The Secretary shall not have any authority to direct a guaranty agency to return reserve funds under subsection (g)(1)(A) of this section during the period from August 5, 1997, through September 30, 2002.

(B) Use of termination collections

Any reserve funds directed by the Secretary to be returned to the Secretary under subsection (g)(1)(B) of this section during such period that do not exceed a guaranty agency's required share of recalled reserve funds under paragraph (3)—

(i) shall be used to satisfy the agency's required share of recalled reserve funds; and

(ii) shall be deposited in the restricted account established by the agency under paragraph (4), without regard to whether such funds exceed the next installment required under such paragraph.

(C) Use of sanctions collections

Any reserve funds directed by the Secretary to be returned to the Secretary under subsection (g)(1)(C) of this section during such period that do not exceed a guaranty agency's next installment under paragraph (4)—

(i) shall be used to satisfy the agency's next installment; and

(ii) shall be deposited in the restricted account established by the agency under paragraph (4).

(D) Balance available to Secretary

Any reserve funds directed by the Secretary to be returned to the Secretary under subparagraph (B) or (C) of subsection (g)(1) of this section that remain after satisfaction of the requirements of subparagraphs (B) and (C) of this paragraph shall be deposited in the Treasury.

(8) Definitions

For the purposes of this subsection:

(A) Default reduction activities

The term “default reduction activities” means activities to reduce student loan defaults that improve, strengthen, and expand default prevention activities, such as—

(i) establishing a program of partial loan cancellation to reward disadvantaged borrowers for good repayment histories with their lenders;

(ii) establishing a financial and debt management counseling program for high-risk borrowers that provides long-term training (beginning prior to the first disbursement of the borrower's first student loan and continuing through the completion of the borrower's program of education or training) in budgeting and other aspects of financial management, including debt management;

(iii) establishing a program of placement counseling to assist high-risk borrowers in identifying employment or additional training opportunities; and

(iv) developing public service announcements that would detail consequences of student loan default and provide information regarding a toll-free telephone number established by the guaranty agency for use by borrowers seeking assistance in avoiding default.

(B) Reserve funds

The term “reserve funds” when used with respect to a guaranty agency—

(i) includes any reserve funds in cash or liquid assets held by the guaranty agency, or held by, or under the control of, any other entity; and

(ii) does not include buildings, equipment, or other nonliquid assets.

(i) Additional recall of reserves

(1) In general

Notwithstanding any other provision of law and subject to paragraph (4), the Secretary shall recall, from reserve funds held in the Federal Student Loan Reserve Funds established under section 1072a of this title by guaranty agencies—

(A) $85,000,000 in fiscal year 2002;

(B) $82,500,000 in fiscal year 2006; and

(C) $82,500,000 in fiscal year 2007.

(2) Deposit

Funds recalled by the Secretary under this subsection shall be deposited in the Treasury.

(3) Required share

The Secretary shall require each guaranty agency to return reserve funds under paragraph (1) on the basis of the agency's required share. For purposes of this paragraph, a guaranty agency's required share shall be determined as follows:

(A) Equal percentage

The Secretary shall require each guaranty agency to return an amount representing an equal percentage reduction in the amount of reserve funds held by the agency on September 30, 1996.

(B) Calculation

The equal percentage reduction shall be the percentage obtained by dividing—

(i) $250,000,000, by

(ii) the total amount of all guaranty agencies’ reserve funds held on September 30, 1996, less any amounts subject to recall under subsection (h) of this section.

(C) Special rule

Notwithstanding subparagraphs (A) and (B), the percentage reduction under subparagraph (B) shall not result in the depletion of the reserve funds of any agency which charges the 1.0 percent insurance premium pursuant to section 1078(b)(1)(H) of this title 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) and as a result of the preceding sentence, such additional amount shall be obtained by imposing on each guaranty agency to which the preceding sentence does not apply, an equal percentage reduction in the amount of the agency's remaining reserve funds.

(4) Offset of required shares

If any guaranty agency returns to the Secretary any reserve funds in excess of the amount required under this subsection or subsection (h) of this section, the total amount required to be returned under paragraph (1) shall be reduced by the amount of such excess reserve funds returned.

(5) Definition of reserve funds

The term “reserve funds” when used with respect to a guaranty agency—

(A) includes any reserve funds in cash or liquid assets held by the guaranty agency, or held by, or under the control of, any other entity; and

(B) does not include buildings, equipment, or other nonliquid assets.

(Pub. L. 89–329, title IV, §422, as added Pub. L. 99–498, title IV, §402(a), Oct. 17, 1986, 100 Stat. 1354; amended Pub. L. 100–203, title III, §§3001(a), 3002(a), Dec. 22, 1987, 101 Stat. 1330–36, 1330–38; Pub. L. 102–325, title IV, §§412, 416(p)(8), July 23, 1992, 106 Stat. 511, 527; Pub. L. 103–66, title IV, §§4041(a), (2)(A), 4042, Aug. 10, 1993, 107 Stat. 354, 357; Pub. L. 103–208, §2(c)(1), Dec. 20, 1993, 107 Stat. 2460; Pub. L. 105–33, title VI, §6101(a), Aug. 5, 1997, 111 Stat. 648; Pub. L. 105–244, title IV, §412, Oct. 7, 1998, 112 Stat. 1673.)

Codification

Amendment by Pub. L. 103–208 (which was effective as if included in Pub. L. 102–325) was executed to this section as amended by Pub. L. 102–325 and Pub. L. 103–66, to reflect the probable intent of Congress.

Prior Provisions

A prior section 1072, Pub. L. 89–329, title IV, §422, Nov. 8, 1965, 79 Stat. 1236; Pub. L. 89–752, §11, Nov. 3, 1966, 80 Stat. 1243; Pub. L. 90–575, title I, §114(b), (c), Oct. 16, 1968, 82 Stat. 1021, 1022; Pub. L. 94–482, title I, §127(a), Oct. 12, 1976, 90 Stat. 2100; Pub. L. 95–43, §1(a)(11)–(13), June 15, 1977, 91 Stat. 213, 214; Pub. L. 95–561, title XIII, §1322(a), Nov. 1, 1978, 92 Stat. 2363; Pub. L. 96–374, title XIII, §1391(a)(1), Oct. 3, 1980, 94 Stat. 1503; Pub. L. 99–272, title XVI, §16011, Apr. 7, 1986, 100 Stat. 339, authorized advances to establish or strengthen reserve funds of State and nonprofit private loan insurance programs, prior to the general revision of this part by Pub. L. 99–498.

Amendments

1998—Subsec. (a)(2). Pub. L. 105–244, §412(1), substituted “section 1078(c)(9)(E)” for “section 1078(c)(10)(E)” in concluding provisions.

Subsec. (c)(6)(B)(i). Pub. L. 105–244, §412(2)(A), substituted “written, electronic,” for “written”.

Subsec. (c)(7)(A). Pub. L. 105–244, §412(2)(B), struck out “during the transition from the Federal Family Education Loan Program under this part to the Federal Direct Student Loan Program under part C of this subchapter” after “lender-of-last-resort”.

Subsec. (c)(7)(B). Pub. L. 105–244, §412(2)(C), substituted “section 1078(c)(9)(F)(v)” for “section 1078(c)(10)(F)(v)”.

Subsec. (g)(1). Pub. L. 105–244, §412(3), struck out “or the program authorized by part C of this subchapter” after “program authorized by this part” in first and second sentences.

Subsec. (i). Pub. L. 105–244, §412(4), added subsec. (i).

1997—Subsec. (h). Pub. L. 105–33 added subsec. (h).

1993—Subsec. (c)(7). Pub. L. 103–66, §4041(a)(2)(A), substituted “to a guaranty agency—” and subpars. (A) and (B) for “to a guaranty agency in accordance with section 1078(c)(10)(F)(v) of this title in order to assist the agency in meeting its immediate cash needs and ensure the uninterrupted payment of default claims by lenders.”

Subsec. (c)(7)(B). Pub. L. 103–208 substituted a period for semicolon at end. See Codification note above.

Subsec. (g). Pub. L. 103–66, §4042, added subsec. (g).

1992—Subsec. (a)(2). Pub. L. 102–325, §412(1), inserted at end “Except as provided in section 1078(c)(10)(E) or (F) of this title, such unencumbered non-Federal portion shall not be subject to recall, repayment, or recovery by the Secretary.”

Subsec. (c)(5), (7). Pub. L. 102–325, §416(p)(8), substituted “Except as provided in paragraph (7), advances” for “Advances” in par. (5) and added par. (7).

Subsecs. (e), (f). Pub. L. 102–325, §412(2), added subsecs. (e) and (f).

1987—Subsec. (e). Pub. L. 100–203, §3002(a), struck out subsec. (e) which related to reduction of excess cash reserves.

Pub. L. 100–203, §3001(a), added subsec. (e).

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 1987 Amendment

Section 3002(a) of Pub. L. 100–203 provided that the amendment made by that section 3002(a) is effective Sept. 30, 1989.

§1072a. Federal Student Loan Reserve Fund

(a) Establishment

Each guaranty agency shall, not later than 60 days after October 7, 1998, deposit all funds, securities, and other liquid assets contained in the reserve fund established pursuant to section 1072 of this title into a Federal Student Loan Reserve Fund (in this section and section 1072b of this title referred to as the “Federal Fund”), which shall be an account of a type selected by the agency, with the approval of the Secretary.

(b) Investment of funds

Funds transferred to the Federal Fund shall be invested in obligations issued or guaranteed by the United States or a State, or in other similarly low-risk securities selected by the guaranty agency, with the approval of the Secretary. Earnings from the Federal Fund shall be the sole property of the Federal Government.

(c) Additional deposits

After the establishment of the Federal Fund, a guaranty agency shall deposit into the Federal Fund—

(1) all amounts received from the Secretary as payment of reinsurance on loans pursuant to section 1078(c)(1) of this title;

(2) from amounts collected on behalf of the obligation of a defaulted borrower, a percentage amount equal to the complement of the reinsurance percentage in effect when payment under the guaranty agreement was made—

(A) with respect to the defaulted loan pursuant to sections 1078(c)(6)(A) 1 and 1078–6(a)(1)(B) of this title; and

(B) with respect to a loan that the Secretary has repaid or discharged under section 1087 of this title;


(3) insurance premiums collected from borrowers pursuant to sections 1078(b)(1)(H) and 1078–8(h) of this title;

(4) all amounts received from the Secretary as payment for supplemental preclaims activity performed prior to October 7, 1998;

(5) 70 percent of amounts received after October 7, 1998, from the Secretary as payment for administrative cost allowances for loans upon which insurance was issued prior to October 7, 1998; and

(6) other receipts as specified in regulations of the Secretary.

(d) Uses of funds

Subject to subsection (f) of this section, the Federal Fund may only be used by a guaranty agency—

(1) to pay lender claims pursuant to sections 1078(b)(1)(G), 1078(j), and 1087 of this title; and

(2) to pay into the Agency Operating Fund established pursuant to section 1072b of this title (in this section and section 1072b of this title referred to as the “Operating Fund”) a default aversion fee in accordance with section 1078(l) of this title.

(e) Ownership of Federal Fund

The Federal Fund, and any nonliquid asset (such as a building or equipment) developed or purchased by the guaranty agency in whole or in part with Federal reserve funds, regardless of who holds or controls the Federal reserve funds or such asset, shall be considered to be the property of the United States, prorated based on the percentage of such asset developed or purchased with Federal reserve funds, which property shall be used in the operation of the program authorized by this part, as provided in subsection (d) of this section. The Secretary may restrict or regulate the use of such asset only to the extent necessary to reasonably protect the Secretary's prorated share of the value of such asset. The Secretary may direct a guaranty agency, or such agency's officers or directors, to cease any activity involving expenditures, use, or transfer of the Federal Fund administered by the guaranty agency that the Secretary determines is a misapplication, misuse, or improper expenditure of the Federal Fund or the Secretary's share of such asset.

(f) Transition

(1) In general

In order to establish the Operating Fund, each guaranty agency may transfer not more than 180 days’ cash expenses for normal operating expenses (not including claim payments) as a working capital reserve as defined in Office of Management and Budget Circular A–87 (Cost Accounting Standards) from the Federal Fund for deposit into the Operating Fund for use in the performance of the guaranty agency's duties under this part. Such transfers may occur during the first 3 years following the establishment of the Operating Fund. However, no agency may transfer in excess of 45 percent of the balance, as of September 30, 1998, of the agency's Federal Fund to the agency's Operating Fund during such 3-year period. In determining the amount that may be transferred, the agency shall ensure that sufficient funds remain in the Federal Fund to pay lender claims within the required time periods and to meet the reserve recall requirements of this section and subsections (h) and (i) of section 1072 of this title.

(2) Special rule

A limited number of guaranty agencies may transfer interest earned on the Federal Fund to the Operating Fund during the first 3 years after October 7, 1998, if the guaranty agency demonstrates to the Secretary that—

(A) the cash flow in the Operating Fund will be negative without the transfer of such interest; and

(B) the transfer of such interest will substantially improve the financial circumstances of the guaranty agency.

(3) Repayment provisions

Each guaranty agency shall begin repayment of sums transferred pursuant to this subsection not later than the start of the fourth year after the establishment of the Operating Fund, and shall repay all amounts transferred not later than 5 years from the date of the establishment of the Operating Fund. With respect to amounts transferred from the Federal Fund, the guaranty agency shall not be required to repay any interest on the funds transferred and subsequently repaid. The guaranty agency shall provide to the Secretary a reasonable schedule for repayment of the sums transferred and an annual financial analysis demonstrating the agency's ability to comply with the schedule and repay all outstanding sums transferred.

(4) Prohibition

If a guaranty agency transfers funds from the Federal Fund in accordance with this section, and fails to make scheduled repayments to the Federal Fund, the agency may not receive any other funds under this part until the Secretary determines that the agency has made such repayments. The Secretary shall pay to the guaranty agency any funds withheld in accordance with this paragraph immediately upon making the determination that the guaranty agency has made all such repayments.

(5) Waiver

The Secretary may—

(A) waive the requirements of paragraph (3), but only with respect to repayment of interest that was transferred in accordance with paragraph (2); and

(B) waive paragraph (4);


for a guaranty agency, if the Secretary determines that there are extenuating circumstances (such as State constitutional prohibitions) beyond the control of the agency that justify such a waiver.

(6) Extension of repayment period for interest

(A) Extension permitted

The Secretary shall extend the period for repayment of interest that was transferred in accordance with paragraph (2) from 2 years to 5 years if the Secretary determines that—

(i) the cash flow of the Operating Fund will be negative as a result of repayment as required by paragraph (3);

(ii) the repayment of the interest transferred will substantially diminish the financial circumstances of the guaranty agency; and

(iii) the guaranty agency has demonstrated—

(I) that the agency is able to repay all transferred funds by the end of the 8th year following the date of establishment of the Operating Fund; and

(II) that the agency will be financially sound on the completion of repayment.

(B) Repayment of income on transferred funds

All repayments made to the Federal Fund during the 6th, 7th, and 8th years following the establishment of the Operating Fund of interest that was transferred shall include the sums transferred plus any income earned from the investment of the sums transferred after the 5th year.

(7) Investment of Federal funds

Funds transferred from the Federal Fund to the Operating Fund for operating expenses shall be invested in obligations issued or guaranteed by the United States or a State, or in other similarly low-risk securities selected by the guaranty agency, with the approval of the Secretary.

(8) Special rule

In calculating the minimum reserve level required by section 1078(c)(9)(A) of this title, the Secretary shall include all amounts owed to the Federal Fund by the guaranty agency in the calculation.

(Pub. L. 89–329, title IV, §422A, as added Pub. L. 105–244, title IV, §413(a), Oct. 7, 1998, 112 Stat. 1674; amended Pub. L. 110–315, title IV, §438(a)(1), Aug. 14, 2008, 122 Stat. 3258.)

References in Text

Section 1078(c)(6)(A) of this title, referred to in subsec. (c)(2)(A), was redesignated section 1078(c)(6)(A)(i) of this title by Pub. L. 109–171, title VIII, §8014(d)(3)(A), (B), Feb. 8, 2006, 120 Stat. 170.

Amendments

2008—Subsec. (d)(1). Pub. L. 110–315 substituted “and 1087” for “1087, and 1087–2(q)”.

Effective Date

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

1 See References in Text note below.

§1072b. Agency Operating Fund

(a) Establishment

Each guaranty agency shall, not later than 60 days after October 7, 1998, establish a fund designated as the Operating Fund.

(b) Investment of funds

Funds deposited into the Operating Fund shall be invested at the discretion of the guaranty agency in accordance with prudent investor standards.

(c) Additional deposits

After the establishment of the Operating Fund, the guaranty agency shall deposit into the Operating Fund—

(1) the loan processing and issuance fee paid by the Secretary pursuant to section 1078(f) of this title;

(2) 30 percent of amounts received after October 7, 1998, from the Secretary as payment for administrative cost allowances for loans upon which insurance was issued prior to October 7, 1998;

(3) the account maintenance fee paid by the Secretary in accordance with section 1087h of this title;

(4) the default aversion fee paid in accordance with section 1078(l) of this title;

(5) amounts remaining pursuant to section 1078(c)(6)(B) 1 of this title from collection on defaulted loans held by the agency, after payment of the Secretary's equitable share, excluding amounts deposited in the Federal Fund pursuant to section 1072a(c)(2) of this title; and

(6) other receipts as specified in regulations of the Secretary.

(d) Uses of funds

(1) In general

Funds in the Operating Fund shall be used for application processing, loan disbursement, enrollment and repayment status management, default aversion activities (including those described in section 1072(h)(8) of this title), default collection activities, school 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.

(2) Special rule

The guaranty agency may, in the agency's discretion, transfer funds from the Operating Fund to the Federal Fund for use pursuant to section 1072a of this title. Such transfer shall be irrevocable, and any funds 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 that are directly related to the collection of the loan on which a default claim has been paid to the participating lender, including the due diligence activities required pursuant to regulations of the Secretary.

(B) Default aversion activities

The term “default aversion activities” means activities of a guaranty agency that are directly related to providing collection assistance to the lender on a delinquent loan, prior to the loan's being legally in a default status, including due diligence activities required pursuant to regulations of the Secretary.

(C) Enrollment and repayment status management

The term “enrollment and repayment status management” means activities of a guaranty agency that are directly related to ascertaining the student's enrollment status, including prompt notification to the lender of such status, an audit of the note or written agreement to determine if the provisions of that note or agreement are consistent with the records of the guaranty agency as to the principal amount of the loan guaranteed, and an examination of the note or agreement to assure that the repayment provisions are consistent with the provisions of this part.

(e) Ownership and regulation of Operating Fund

(1) Ownership

The Operating Fund, with the exception of funds transferred from the Federal Fund in accordance with section 1072a(f) of this title, shall be considered to be the property of the guaranty agency.

(2) Regulation

Except as provided in paragraph (3), the Secretary may not regulate the uses or expenditure of moneys in the Operating Fund, but the Secretary may require such necessary reports and audits as provided in section 1078(b)(2) of this title.

(3) Exception

Notwithstanding paragraphs (1) and (2), during any period in which funds are owed to the Federal Fund as a result of transfer under section 1072a(f) of this title—

(A) moneys in the Operating Fund may only be used for expenses related to the student loan programs authorized under this part; and

(B) the Secretary may regulate the uses or expenditure of moneys in the Operating Fund.

(Pub. L. 89–329, title IV, §422B, as added Pub. L. 105–244, title IV, §413(b), Oct. 7, 1998, 112 Stat. 1677.)

References in Text

Section 1078(c)(6)(B) of this title, referred to in subsec. (c)(5), was redesignated section 1078(c)(6)(A)(ii) of this title by Pub. L. 109–171, title VIII, §8014(d)(3)(A), (B), Feb. 8, 2006, 120 Stat. 170.

Effective Date

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

1 See References in Text note below.

§1073. Effects of adequate non-Federal programs

(a) Federal insurance barred to lenders with access to State or private insurance

Except as provided in subsection (b) of this section, the Secretary shall not issue certificates of insurance under section 1079 of this title to lenders in a State if the Secretary determines that every eligible institution has reasonable access in that State to a State or private nonprofit student loan insurance program which is covered by an agreement under section 1078(b) of this title.

(b) Exceptions

The Secretary may issue certificates of insurance under section 1079 of this title to a lender in a State—

(1) for insurance of a loan made to a student borrower who does not, by reason of the borrower's residence, have access to loan insurance under the loan insurance program of such State (or under any private nonprofit loan insurance program which has received an advance under section 1072 of this title for the benefit of students in such State);

(2) for insurance of all the loans made to student borrowers by a lender who satisfies the Secretary that, by reason of the residence of such borrowers, such lender will not have access to any single State or nonprofit private loan insurance program which will insure substantially all of the loans such lender intends to make to such student borrowers; or

(3) under such circumstances as may be approved by the guaranty agency in such State, for the insurance of a loan to a borrower for whom such lender previously was issued such a certificate if the loan covered by such certificate is not yet repaid.

(Pub. L. 89–329, title IV, §423, as added Pub. L. 99–498, title IV, §402(a), Oct. 17, 1986, 100 Stat. 1358.)

Prior Provisions

A prior section 1073, Pub. L. 89–329, title IV, §423, Nov. 8, 1965, 79 Stat. 1237; Pub. L. 90–575, title I, §119(a), Oct. 16, 1968, 82 Stat. 1026; Pub. L. 94–482, title I, §127(a), Oct. 12, 1976, 90 Stat. 2103; Pub. L. 95–43, §1(a)(14), June 15, 1977, 91 Stat. 214; Pub. L. 96–374, title XIII, §1391(a)(1), Oct. 3, 1980, 94 Stat. 1503, limited participation in Federal loan insurance programs, prior to the general revision of this part by Pub. L. 99–498.

§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) 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 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) of this section, Federal loan insurance quotas applicable to eligible lenders, or to States or areas, and may from time to time reassign unused portions of these quotas.

(Pub. L. 89–329, title IV, §424, as added Pub. L. 99–498, title IV, §402(a), Oct. 17, 1986, 100 Stat. 1358; amended Pub. L. 102–325, title IV, §411(b)(1), July 23, 1992, 106 Stat. 510; Pub. L. 105–33, title VI, §6104(1), Aug. 5, 1997, 111 Stat. 652; Pub. L. 105–244, title IV, §414, Oct. 7, 1998, 112 Stat. 1679; Pub. L. 109–171, title VIII, §8004(b)(1), Feb. 8, 2006, 120 Stat. 158; Pub. L. 110–315, title IV, §421, Aug. 14, 2008, 122 Stat. 3227; Pub. L. 111–152, title II, §2202, Mar. 30, 2010, 124 Stat. 1074.)

Prior Provisions

A prior section 1074, Pub. L. 89–329, title IV, §424, Nov. 8, 1965, 79 Stat. 1237; Pub. L. 90–460, §1(a)(1), Aug. 3, 1968, 82 Stat. 634; Pub. L. 90–575, title I, §112(a), Oct. 16, 1968, 82 Stat. 1020; Pub. L. 92–318, title I, §132(a), June 23, 1972, 86 Stat. 261; Pub. L. 94–328, §2(a), June 30, 1976, 90 Stat. 727; Pub. L. 94–482, title I, §127(a), Oct. 12, 1976, 90 Stat. 2103; Pub. L. 96–374, title IV, §411(a), title XIII, §1391(a)(1), Oct. 3, 1980, 94 Stat. 1415, 1503; Pub. L. 99–272, title XVI, §16018(a)(1), Apr. 7, 1986, 100 Stat. 348, related to new loans under Federal loan insurance program, prior to the general revision of this part by Pub. L. 99–498.

Amendments

2010—Subsec. (a). Pub. L. 111–152 substituted “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.” for “September 30, 1976, and for each of the succeeding fiscal years ending prior to October 1, 2014. Thereafter, Federal loan insurance pursuant to this part may be granted only for loans made (or for loan installments paid pursuant to lines of credit) to enable students, who have obtained prior loans insured under this part, to continue or complete their educational program; but no insurance may be granted for any loan made or installment paid after September 30, 2018.”

2008—Subsec. (a). Pub. L. 110–315 substituted “October 1, 2014” for “October 1, 2012” and “September 30, 2018” for “September 30, 2016”.

2006—Subsec. (a). Pub. L. 109–171 substituted “October 1, 2012” for “October 1, 2004” and “September 30, 2016” for “September 30, 2008”.

1998—Subsec. (a). Pub. L. 105–244 substituted “October 1, 2004” for “October 1, 2002” and “September 30, 2008” for “September 30, 2006”.

1997—Subsec. (a). Pub. L. 105–33 substituted “October 1, 2002” for “October 1, 1998” and “September 30, 2006” for “September 30, 2002”.

1992—Subsec. (a). Pub. L. 102–325 substituted “October 1, 1998” for “October 1, 1992” and “September 30, 2002” for “September 30, 1997”.

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.

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.

§1075. Limitations on individual federally insured loans and on Federal loan insurance

(a) Annual and aggregate limits

(1) Annual limits

(A) The total of loans made to a student in any academic year or its equivalent (as determined by the Secretary) which may be covered by Federal loan insurance under this part may not exceed—

(i) in the case of a student at an eligible institution who has not successfully completed the first year of a program of undergraduate education—

(I) $3,500, if such student is enrolled in a program whose length is at least one academic year in length (as determined under section 1088 of this title); and

(II) if such student is enrolled in a program of undergraduate education which is less than one academic year, the maximum annual loan amount that such student may receive may not exceed the amount that bears the same ratio to the amount specified in subclause (I) as the length of such program measured in semester, trimester, quarter, or clock hours bears to one academic year;


(ii) in the case of a student at an eligible institution who has successfully completed such first year but has not successfully completed the remainder of a program of undergraduate education—

(I) $4,500; or

(II) if such student is enrolled in a program of undergraduate education, the remainder of which is less than one academic year, the maximum annual loan amount that such student may receive may not exceed the amount that bears the same ratio to the amount specified in subclause (I) as such remainder measured in semester, trimester, quarter, or clock hours bears to one academic year;


(iii) in the case of a student at an eligible institution who has successfully completed the first and second years of a program of undergraduate education but has not successfully completed the remainder of such program—

(I) $5,500; or

(II) if such student is enrolled in a program of undergraduate education, the remainder of which is less than one academic year, the maximum annual loan amount that such student may receive may not exceed the amount that bears the same ratio to the amount specified in subclause (I) as such remainder measured in semester, trimester, quarter, or clock hours bears to one academic year; and


(iv) in the case of a graduate or professional student (as defined in regulations of the Secretary) at an eligible institution, $8,500.


(B) The annual insurable limits contained in subparagraph (A) shall not apply in cases where the Secretary determines, pursuant to regulations, that a higher amount is warranted in order to carry out the purpose of this part with respect to students engaged in specialized training requiring exceptionally high costs of education. The annual insurable limit per student shall not be deemed to be exceeded by a line of credit under which actual payments by the lender to the borrower will not be made in any year in excess of the annual limit.

(C) For the purpose of subparagraph (A), the number of years that a student has completed in a program of undergraduate education shall include any prior enrollment in an eligible program of undergraduate education for which the student was awarded an associate or baccalaureate degree, if such degree is required by the institution for admission to the program in which the student is enrolled.

(2) Aggregate limits

(A) The aggregate insured unpaid principal amount for all such insured loans made to any student shall not at any time exceed—

(i) $23,000, in the case of any student who has not successfully completed a program of undergraduate education, excluding loans made under section 1078–1 1 or 1078–2 of this title; and

(ii) $65,500, in the case of any graduate or professional student (as defined by regulations of the Secretary) and (I) including any loans which are insured by the Secretary under this section, or by a guaranty agency, made to such student before the student became a graduate or professional student),2 but (II) excluding loans made under section 1078–1 1 or 1078–2 of this title,


except that the Secretary may increase the limit applicable to students who are pursuing programs which the Secretary determines are exceptionally expensive.

(B) The Secretary may increase the aggregate insurable limit applicable to students who are pursuing programs which the Secretary determines are exceptionally expensive.

(b) Level of insurance coverage based on default rate

(1) Reduction for defaults in excess of 5 or 9 percent

(A) Except as provided in subparagraph (B), the insurance liability on any loan insured by the Secretary under this part shall be 100 percent of the unpaid balance of the principal amount of the loan plus interest, except that—

(i) if, for any fiscal year, the total amount of payments under section 1080 of this title by the Secretary to any eligible lender as described in section 1085(d)(1)(D) of this title exceeds 5 percent of the sum of the loans made by such lender which are insured by the Secretary 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), 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), shall be equal to 80 percent of the amount of such portion.


(B) Notwithstanding subparagraph (A), the provisions of clauses (i) and (ii) of such subparagraph shall not apply to an eligible lender as described in section 1085(d)(1)(D) of this title for the fiscal year in which such lender begins to carry on a loan program insured by the Secretary, or for any of the 4 succeeding fiscal years.

(C) The applicable date with respect to a loan made by an eligible lender as described in section 1085(d)(1)(D) of this title shall be—

(i) the 90th day after the adjournment of the next regular session of the appropriate State legislature which convenes after October 12, 1976, or

(ii) if the primary source of lending capital for such lender is derived from the sale of bonds, and the constitution of the appropriate State prohibits a pledge of such State's credit as security against such bonds, the day which is one year after such 90th day.

(2) Computation of amounts in repayment

For the purpose of this subsection, the sum of the loans made by a lender which are insured by the Secretary and which are in repayment shall be the original principal amount of loans made by such lender which are insured by the Secretary reduced by—

(A) the amount the Secretary has been required to pay to discharge his or her insurance obligations under this part;

(B) the original principal amount of loans insured by the Secretary which have been fully repaid;

(C) the original principal amount insured on those loans for which payment of first installment of principal has not become due pursuant to section 1077(a)(2)(B) of this title or such first installment need not be paid pursuant to section 1077(a)(2)(C) of this title; and

(D) the original principal amount of loans repaid by the Secretary under section 1087 of this title.

(3) Payments to assignees

For the purpose of this subsection, payments by the Secretary under section 1080 of this title 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 or 1087 of this title.

(Pub. L. 89–329, title IV, §425, as added Pub. L. 99–498, title IV, §402(a), Oct. 17, 1986, 100 Stat. 1359; amended Pub. L. 100–50, §10(a), June 3, 1987, 101 Stat. 341; Pub. L. 102–325, title IV, §413, July 23, 1992, 106 Stat. 512; Pub. L. 103–208, §2(c)(2), (3), Dec. 20, 1993, 107 Stat. 2460, 2461; Pub. L. 105–244, title IV, §415, Oct. 7, 1998, 112 Stat. 1679; Pub. L. 109–171, title VIII, §8005(a), Feb. 8, 2006, 120 Stat. 158.)

References in Text

Section 1078–1 of this title, referred to in subsec. (a)(2)(A), was repealed by Pub. L. 103–66, title IV, §4047(b)–(d), Aug. 10, 1993, 107 Stat. 364, eff. July 1, 1994, except with respect to loans provided under that section as it existed prior to Aug. 10, 1993. Subsequently, a new section 1078–1, relating to voluntary flexible agreements with guaranty agencies, was enacted by Pub. L. 105–244, title IV, §418, Oct. 7, 1998, 112 Stat. 1691.

Prior Provisions

A prior section 1075, Pub. L. 89–329, title IV, §425, Nov. 8, 1965, 79 Stat. 1238; Pub. L. 90–575, title I, §§116(b)(1), 120(a)(2), Oct. 16, 1968, 82 Stat. 1023, 1027; Pub. L. 92–318, title I, §§132A(a), 132B(a), June 23, 1972, 86 Stat. 261, 262; Pub. L. 94–482, title I, §127(a), Oct. 12, 1976, 90 Stat. 2104; Pub. L. 95–43, §1(a)(15)–(17), June 15, 1977, 91 Stat. 214; Pub. L. 95–566, §5(b)(2), Nov. 1, 1978, 92 Stat. 2403; Pub. L. 96–374, title IV, §412(a), (b), (f), title XIII, §1391(a)(1), Oct. 3, 1980, 94 Stat. 1416, 1417, 1503; Pub. L. 97–35, title V, §535(a), (b), Aug. 13, 1981, 95 Stat. 455; Pub. L. 99–272, title XVI, §16013(e)(1), Apr. 7, 1986, 100 Stat. 341, limited Federal loan insurance, prior to the general revision of this part by Pub. L. 99–498.

Amendments

2006—Subsec. (a)(1)(A)(i)(I). Pub. L. 109–171, §8005(a)(1), substituted “$3,500” for “$2,625”.

Subsec. (a)(1)(A)(ii)(I). Pub. L. 109–171, §8005(a)(2), substituted “$4,500” for “$3,500”.

1998—Subsec. (a)(1)(A)(i)(I). Pub. L. 105–244, §415(1)(A), inserted “and” after semicolon.

Subsec. (a)(1)(A)(i)(II), (III). Pub. L. 105–244, §415(1)(B), added subcl. (II) and struck out former subcls. (II) and (III) which read as follows:

“(II) $1,750, if such student is enrolled in a program whose length is less than one academic year, but at least 2/3 of such an academic year; and

“(III) $875, if such student is enrolled in a program whose length is less than 2/3, but at least 1/3, of such an academic year;”.

Subsec. (a)(1)(A)(iii)(II). Pub. L. 105–244, §415(2), inserted “and” after semicolon at end.

1993—Subsec. (a)(1)(A)(ii), (iii). Pub. L. 103–208, §2(c)(2)(A), added cls. (ii) and (iii) and struck out former cls. (ii) and (iii) which read as follows:

“(ii) the case of a student who has successfully completed such first year but has not successfully completed the remainder of a program of undergraduate study—

“(I) $3,500, if such student is enrolled in a program whose length is at least one academic year in length (as determined under section 1088 of this title);

“(II) $2,325, if such student is enrolled in a program whose length is less than one academic year, but at least 2/3 of such an academic year; and

“(III) $1,175, if such student is enrolled in a program whose length is less than 2/3, but at least 1/3, of such an academic year;

“(iii) in the case of a student at an eligible institution who has successfully completed such first and second year but has not successfully completed the remainder of a program of undergraduate study—

“(I) $5,500, if such student is enrolled in a program whose length is at least one academic year in length (as determined under section 1088 of this title);

“(II) $3,675, if such student is enrolled in a program whose length is less than one academic year, but at least 2/3 of such an academic year; and

“(III) $1,825, if such student is enrolled in a program whose length is less than 2/3, but at least 1/3, of such an academic year; and”.

Subsec. (a)(1)(A)(iv). Pub. L. 103–208, §2(c)(2)(B), substituted a period for semicolon at end.

Subsec. (a)(1)(C). Pub. L. 103–208, §2(c)(3), added subpar. (C).

1992—Subsec. (a)(1)(A). Pub. L. 102–325, §413(1), added cls. (i) to (iv) and struck out former cls. (i) to (iii) which read as follows:

“(i) $2,625, in the case of a student who has not successfully completed the first and second year of a program of undergraduate education;

“(ii) $4,000, in the case of a student who has successfully completed such first and second year but who has not successfully completed the remainder of a program of undergraduate education; or

“(iii) $7,500, in the case of a graduate or professional student (as defined in regulations of the Secretary).”

Subsec. (a)(2)(A). Pub. L. 102–325, §413(2), added cls. (i) and (ii) and concluding provision and struck out former cls. (i) and (ii) which read as follows:

“(i) $17,250, in the case of any student who has not successfully completed a program of undergraduate education, excluding loans made under section 1078–1 or 1078–2 of this title; and

“(ii) $54,750, in the case of any graduate or professional student (as defined by regulations of the Secretary and including any loans which are insured by the Secretary under this part, or by a guaranty agency, made to such person before he or she became a graduate or professional student), excluding loans made under section 1078–1 or 1078–2 of this title.”

1987—Subsec. (a)(2)(A)(i). Pub. L. 100–50, §10(a)(1), inserted “, excluding loans made under section 1078–1 or 1078–2 of this title” after “undergraduate education”.

Subsec. (a)(2)(A)(ii). Pub. L. 100–50, §10(a)(2), inserted “, excluding loans made under section 1078–1 or 1078–2 of this title” after “graduate or professional student)”.

Effective Date of 2006 Amendment

Pub. L. 109–171, title VIII, §8005(e), Feb. 8, 2006, 120 Stat. 159, provided that: “The amendments made by subsections (a), (b), and (d) [amending this section and sections 1078 and 1078–8 of this title] shall be effective July 1, 2007.”

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 section 2(c)(2) of Pub. L. 103–208 effective on and after July 1, 1994 and amendment by section 2(c)(3) of Pub. L. 103–208 effective on and after Dec. 20, 1993, see section 5(b)(2), (6) of Pub. L. 103–208 set out as a note under section 1051 of this title.

Effective Date of 1992 Amendment

Amendment by Pub. L. 102–325 effective July 23, 1992, with changes made in subsec. (a), relating to annual and aggregate loan limits, applicable with respect to loans for which first disbursement is made on or after July 1, 1993, except that changes made in subsec. (a)(1)(A)(i) applicable with respect to loans for which first disbursement is made on or after Oct. 1, 1992, and except that changes made in subsec. (a)(1)(A)(iv) applicable with respect to loans to cover costs of instruction for periods of enrollment beginning on or after Oct. 1, 1993, see section 432 of Pub. L. 102–325, set out as a note under section 1078 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 that subsec. (a) of this section applicable only to loans disbursed on or after Jan. 1, 1987, or made to cover the costs of instruction for periods of enrollment beginning on or after Jan. 1, 1987, see section 402(b) of Pub. L. 99–498, set out as a note under section 1071 of this title.

1 See References in Text note below.

2 So in original. There is no opening parenthesis.

§1076. Sources of funds

Loans made by eligible lenders in accordance with this part shall be insurable by the Secretary whether made from funds fully owned by the lender or from funds held by the lender in a trust or similar capacity and available for such loans.

(Pub. L. 89–329, title IV, §426, as added Pub. L. 99–498, title IV, §402(a), Oct. 17, 1986, 100 Stat. 1361.)

Prior Provisions

A prior section 1076, Pub. L. 89–329, title IV, §426, Nov. 8, 1965, 79 Stat. 1238; Pub. L. 94–482, title I, §127(a), Oct. 12, 1976, 90 Stat. 2106; Pub. L. 96–374, title XIII, §1391(a)(1), Oct. 3, 1980, 94 Stat. 1503, related to insurability of loans made from funds owned by lender or held by lender in trust, prior to the general revision of this part by Pub. L. 99–498.

§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, a loan by an eligible lender shall be insurable by the Secretary 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, (B) has agreed to notify promptly the holder 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) of this section) of the principal amount of the loan in installments over a period of not less than 5 years (unless sooner repaid or unless the student, during the 6 months preceding the start of the repayment period, specifically requests that repayment be made over a shorter period) nor more than 10 years beginning 6 months after the month in which the student ceases to carry at an eligible institution at least one-half the normal full-time academic workload as determined by the institution, except—

(i) as provided in subparagraph (C);

(ii) that the note or other written instrument may contain such reasonable provisions relating to repayment in the event of default in the payment of interest or in the payment of the cost of insurance premiums, or other default by the borrower, as may be authorized by regulations of the Secretary in effect at the time the loan is made; and

(iii) that the lender and the student, after the student ceases to carry at an eligible institution at least one-half the normal full-time academic workload as determined by the institution, may agree to a repayment schedule which begins earlier, or is of shorter duration, than required by this subparagraph, but in the event a borrower has requested and obtained a repayment period of less than 5 years, the borrower may at any time prior to the total repayment of the loan, have the repayment period extended so that the total repayment period is not less than 5 years;


(C) provides that periodic installments of principal need not be paid, but interest shall accrue and be paid, during any period—

(i) during which the borrower—

(I) is pursuing at least a half-time course of study as determined by an eligible institution; or

(II) is pursuing a course of study pursuant to a graduate fellowship program approved by the Secretary, or pursuant to a rehabilitation training program for individuals with disabilities approved by the Secretary,


 except that no borrower shall be eligible for a deferment under this clause, or a loan made under this part (other than a loan made under section 1078–2 or 1078–3 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; or

(iii) not in excess of 3 years for any reason which the lender determines, in accordance with regulations prescribed by the Secretary under section 1085(o) of this title, has caused or will cause the borrower to have an economic hardship;


and provides that any such period shall not be included in determining the 10-year period described in subparagraph (B);

(D) provides for interest on the unpaid principal balance of the loan at a yearly rate, not exceeding the applicable maximum rate prescribed in section 1077a of this title, 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 under this part, and that the lender will enter into such agreements with the Secretary as may be necessary for the purpose of section 1087 of this title;

(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,1 of disclosure of information concerning such loan to consumer reporting agencies under section 1080a of this title, 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;

(H) provides that, no more than 6 months prior to the date on which the borrower's first payment on a loan is due, the lender shall offer the borrower the option of repaying the loan in accordance with a graduated or income-sensitive repayment schedule established by the lender and in accordance with the regulations of the Secretary; and

(I) contains such other terms and conditions, consistent with the provisions of this part and with the regulations issued by the Secretary pursuant to this part, as may be agreed upon by the parties to such loan, including, if agreed upon, a provision requiring the borrower to pay the lender, in addition to principal and interest, amounts equal to the insurance premiums payable by the lender to the Secretary with respect to such loan;


(3) the funds borrowed by a student are disbursed to the institution by check or other means that is payable to and requires the endorsement or other certification by such student, except—

(A) that nothing in this subchapter and part C of subchapter I of chapter 34 of title 42 shall be interpreted—

(i) to allow the Secretary to require checks to be made copayable to the institution and the borrower; or

(ii) to prohibit the disbursement of loan proceeds by means other than by check; and


(B) in the case of any student who is studying outside the United States in a program of study abroad that is approved for credit by the home institution at which such student is enrolled, the funds shall, at the request of the borrower, be delivered directly to the student and the checks may be endorsed, and fund transfers authorized, pursuant to an authorized power-of-attorney; and


(4) the funds borrowed by a student are disbursed in accordance with section 1078–7 of this title.

(b) Special rules for multiple disbursement

For the purpose of subsection (a)(4) of this section—

(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 or 1078–3 of this title, or made to a student to cover the cost of attendance at an eligible institution outside the United States.

(c) Special repayment rules

Except as provided in subsection (a)(2)(H) of this section, 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.

(Pub. L. 89–329, title IV, §427, as added Pub. L. 99–498, title IV, §402(a), Oct. 17, 1986, 100 Stat. 1361; amended Pub. L. 100–50, §10(b), (c), June 3, 1987, 101 Stat. 341; Pub. L. 100–369, §§5(b)(1), 7(c), 11(a), July 18, 1988, 102 Stat. 836–838; Pub. L. 101–239, title II, §§2002(a)(1), 2004(b)(2), Dec. 19, 1989, 103 Stat. 2111, 2116; Pub. L. 102–164, title VI, §§601(a), 602(a), Nov. 15, 1991, 105 Stat. 1065, 1066; Pub. L. 102–325, title IV, §414, July 23, 1992, 106 Stat. 513; Pub. L. 103–208, §2(c)(4), Dec. 20, 1993, 107 Stat. 2461; Pub. L. 110–315, title IV, §432(b)(1), Aug. 14, 2008, 122 Stat. 3246.)

Prior Provisions

A prior section 1077, Pub. L. 89–329, title IV, §427, Nov. 8, 1965, 79 Stat. 1238; Pub. L. 89–794, title XI, §1101(b)(1), Nov. 8, 1966, 80 Stat. 1476; Pub. L. 90–460, §2(a)(1), Aug. 3, 1968, 82 Stat. 635; Pub. L. 90–575, title I, §§113(b)(2), 116(b)(2), 117(c), 120(c)(2), Oct. 16, 1968, 82 Stat. 1021, 1023, 1026, 1027; Pub. L. 92–318, title I, §§132B(b), 132C(c), June 23, 1972, 86 Stat. 262, 263; Pub. L. 94–482, title I, §127(a), Oct. 12, 1976, 90 Stat. 2106; Pub. L. 95–43, §1(a)(9), (18), June 15, 1977, 91 Stat. 213, 214; Pub. L. 95–566, §5(a)(1), Nov. 1, 1978, 92 Stat. 2403; Pub. L. 96–374, title IV, §§413(a), (c), 415(a)(2), (b)(1), 416(a)(2), 423(a)(1), title XIII, §1391(a)(1), Oct. 3, 1980, 94 Stat. 1417–1421, 1432, 1503; Pub. L. 97–35, title V, §537(b)(1), (d)(2), (e)(1), Aug. 13, 1981, 95 Stat. 456, 457; Pub. L. 98–79, §10[(a)], Aug. 15, 1983, 97 Stat. 484; Pub. L. 99–272, title XVI, §§16012(a), 16013(b), 16017(b)(1), Apr. 7, 1986, 100 Stat. 339, 340, 347, set out conditions for Federal loan insurance, prior to the general revision of this part by Pub. L. 99–498.

Amendments

2008—Subsec. (a)(2)(G)(i). Pub. L. 110–315, §432(b)(1)(A), substituted “consumer reporting agencies” for “credit bureau organizations”.

Subsec. (a)(2)(G)(ii). Pub. L. 110–315, §432(b)(1)(B), substituted “consumer reporting agencies” for “organizations”.

1993—Subsec. (a)(2)(C)(i). Pub. L. 103–208 inserted “section” before “1078–2 or 1078–3”.

1992—Subsec. (a)(2)(A). Pub. L. 102–325, §414(a), amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: “is made without security and without endorsement, except that prior to making a loan insurable by the Secretary under this part a lender shall—

“(i) obtain a credit report, from at least one national credit bureau organization, with respect to a loan applicant who will be at least 21 years of age as of July 1 of the award year for which assistance is being sought, for which the lender may charge the applicant an amount not to exceed the lesser of $25 or the actual cost of obtaining the credit report; and

“(ii) require an applicant of the age specified in clause (i) who, in the judgment of the lender in accordance with the regulations of the Secretary, has an adverse credit history, to obtain a credit worthy cosigner in order to obtain the loan, provided that, for purposes of this clause, an insufficient or nonexistent credit history may not be considered to be an adverse credit history;”.

Subsec. (a)(2)(C). Pub. L. 102–325, §414(b), amended subpar. (C) generally, revising and restating as cls. (i) to (iii) provisions formerly contained in cls. (i) to (xi).

Subsec. (a)(2)(G) to (I). Pub. L. 102–325, §414(c)(1), struck out “and” at end of subpar. (G), added subpar. (H), and redesignated former subpar. (H) as (I).

Subsec. (a)(3). Pub. L. 102–325, §414(d), amended par. (3) generally. Prior to amendment, par. (3) read as follows: “the funds borrowed by a student are disbursed to the institution by check or other means that is payable to and requires the endorsement or other certification by such student, except nothing in this subchapter and part C of subchapter I of chapter 34 of title 42 shall be interpreted to allow the Secretary to require checks to be made co-payable to the institution and the borrower or to prohibit the disbursement of loan proceeds by means other than by check; and”.

Subsec. (c). Pub. L. 102–325, §414(c)(2), (e), substituted “Special repayment rules” for “Minimum repayment rate” in heading and in text “Except as provided in subsection (a)(2)(H) of this section, the total” for “The total” and “(but in no instance less than the amount of interest due and payable)” for “, except that in the case of a husband and wife, both of whom have such loans outstanding, the total of the combined payments for such a couple during any year shall not be less than $600 or the balance of all such loans, whichever is less”.

1991—Subsec. (a)(2)(A). Pub. L. 102–164, §601(a), amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: “is made without security and without endorsement, except that if the borrower is a minor and such note or other written agreement executed by the borrower would not, under the applicable law, create a binding obligation, endorsement may be required;”.

Subsec. (d). Pub. L. 102–164, §602(a), added subsec. (d).

1989—Subsec. (a)(2)(C)(i). Pub. L. 101–239, §2002(a)(1), 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”.

Subsec. (a)(4). Pub. L. 101–239, §2004(b)(2), amended par. (4) generally. Prior to amendment, par. (4) read as follows: “in the case of any loan made for any period of enrollment that ends more than 180 days (or 6 months) after the date disbursement is scheduled to occur, and for an amount of $1,000 or more, the proceeds of the loan will, subject to subsection (b) of this section, be disbursed directly by the lender in two or more installments, none of which exceeds one-half of the loan, with the second installment being disbursed after not less than one-third of such period (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).”

1988—Subsec. (a)(2)(C)(v). Pub. L. 100–369, §7(c), 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.

Subsec. (a)(2)(C)(vii). Pub. L. 100–369, §11(a), inserted “after January 1, 1986,” after “service”.

Subsec. (b)(2). Pub. L. 100–369, §5(b)(1), substituted “section 1078–2 or 1078–3” for “section 1078–1, 1078–2, or 1078–3”.

1987—Subsec. (a)(2)(C)(vi). Pub. L. 100–50, §10(b)(1), inserted “nonprofit” before “private”.

Subsec. (a)(2)(C)(vii). Pub. L. 100–50, §10(b)(2), 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.

Subsec. (a)(4). Pub. L. 100–50, §10(c), substituted “$1,000 or more” for “more than $1,000”.

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 1003 of this title.

Effective Date of 1992 Amendment

Amendment by Pub. L. 102–325 effective July 23, 1992, except that changes made in subsec. (a)(2)(C), relating to deferments, applicable with respect to loans for which first disbursement is made on or after July 1, 1993, to an individual who is a new borrower on date such individual applies for a loan, and except that changes made in subsec. (a)(2)(H), relating to offering graduated or income sensitive repayment options, applicable with respect to loans for which first disbursement is made on or after July 1, 1993, to an individual who is a new borrower on date such individual applies for a loan, see section 432 of Pub. L. 102–325, set out as a note under section 1078 of this title.

Effective Date of 1989 Amendment

Section 2002(a)(4) of Pub. L. 101–239 provided that: “The amendments made by this subsection [amending this section and sections 1078 and 1087dd of this title] shall apply to any loan made, insured, or guaranteed under part B or part E of title IV of the Higher Education Act of 1965 [20 U.S.C. 1071 et seq., 1087aa et seq.], including a loan made before the enactment of this Act [Dec. 19, 1989], and shall take effect on January 1, 1990, except that such amendments shall not apply with respect to any portion of a period of deferment granted to a borrower under section 427(a)(2)(C)(i), 428(b)(1)(M)(i), or 464(c)(2)(A)(i) of the Higher Education Act of 1965 [sections 1077(a)(2)(C)(i), 1078(b)(1)(M)(i), 1087dd(c)(2)(A)(i) of this title] for service in a medical internship or residency program that is completed prior to the effective date of this section [Dec. 19, 1989].”

Section 2004(c) of Pub. L. 101–239 provided that: “The amendments made by this section [enacting section 1078–7 of this title and amending this section and section 1078 of this title] shall apply with respect to loans made to cover the cost of instruction for periods of enrollment beginning on or after January 1, 1990.”

Effective Date of 1988 Amendment

Section 11(b) of Pub. L. 100–369 provided that: “The amendments made by subsection (a) [amending this section and section 1078 of this title] and section 10(b) of the Higher Education Technical Amendments Act of 1987 [section 10(b) of Pub. L. 100–50, amending this section and section 1078 of this title] shall apply with respect to loans made, insured or guaranteed under part B of the Higher Education Act of 1965 [probably means part B of title IV of Pub. L. 89–329 which is classified to this part], on, before, or after the date of enactment of the Higher Education Technical Amendments Act of 1987 [June 3, 1987].”

Amendment by section 5(b)(1) of Pub. L. 100–369 effective with respect to loans made on or after Oct. 1, 1988, and amendment by section 7(c) of Pub. L. 100–369 effective July 18, 1988, see section 13(b) of Pub. L. 100–369, set out as a note under section 1091 of this title.

Effective Date of 1987 Amendment

Amendment by section 10(b) of Pub. L. 100–50 applicable with respect to loans made, insured or guaranteed under this part on, before, or after June 3, 1987, see section 11(b) of Pub. L. 100–369, set out as an Effective Date of 1988 Amendment note above.

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 that subsec. (a)(2)(C) (other than cls. (viii), (ix), and (x) thereof) of this section shall apply only to loans to new borrowers made to cover the costs of instruction for periods of enrollment beginning on or after July 1, 1987, or disbursed on or after July 1, 1987, see section 402(b) of Pub. L. 99–498, set out as a note under section 1071 of this title.

1 So in original. The comma probably should not appear.

§1077a. Applicable interest rates

(a) Rates to be consistent for borrower's entire debt

With respect to any loan to cover the cost of instruction for any period of instruction beginning on or after January 1, 1981, the rate of interest applicable to any borrower shall—

(1) not exceed 7 percent per year on the unpaid principal balance of the loan in the case of any borrower who, on the date of entering into the note or other written evidence of that loan, has an outstanding balance of principal or interest on any loan made, insured, or guaranteed under this part, for which the interest rate does not exceed 7 percent;

(2) except as provided in paragraph (3), be 9 percent per year on the unpaid principal balance of the loan in the case of any borrower who, on the date of entering into the note or other written evidence of that loan, has no outstanding balance of principal or interest on any loan described in paragraph (1) or any loan for which the interest rate is determined under paragraph (1); or

(3) be 8 percent per year on the unpaid principal balance of the loan for a loan to cover the cost of education for any period of enrollment beginning on or after a date which is 3 months after a determination made under subsection (b) of this section in the case of any borrower who, on the date of entering into the note or other written evidence of the loan, has no outstanding balance of principal or interest on any loan for which the interest rate is determined under paragraph (1) or (2) of this subsection.

(b) Reduction for new borrowers after decline in Treasury bill rates

If for any 12-month period beginning on or after January 1, 1981, the Secretary, after consultation with the Secretary of the Treasury, determines that the average of the bond equivalent rates of 91-day Treasury bills auctioned for such 12-month period is equal to or less than 9 percent, the interest rate for loans under this part shall be the rate prescribed in subsection (a)(3) of this section for borrowers described in such subsection.

(c) Rates for supplemental loans for students and loans for parents

(1) In general

Except as otherwise provided in this subsection, the applicable rate of interest on loans made pursuant to section 1078–1 1 or 1078–2 of this title on or after October 1, 1981, shall be 14 percent per year on the unpaid principal balance of the loan.

(2) Reduction of rate after decline in Treasury bill rates

If for any 12-month period beginning on or after October 1, 1981, the Secretary, after consultation with the Secretary of the Treasury, determines that the average of the bond equivalent rates of 91-day Treasury bills auctioned for such 12-month period is equal to or less than 14 percent, the applicable rate of interest for loans made pursuant to section 1078–1 1 or 1078–2 of this title on and after the first day of the first month beginning after the date of publication of such determination shall be 12 percent per year on the unpaid principal balance of the loan.

(3) Increase of rate after increase in Treasury bill rates

If for any 12-month period beginning on or after the date of publication of a determination under paragraph (2), the Secretary, after consultation with the Secretary of the Treasury, determines that the average of the bond equivalent rates of 91-day Treasury bills auctioned for such 12-month period exceeds 14 percent, the applicable rate of interest for loans made pursuant to section 1078–1 1 or 1078–2 of this title on and after the first day of the first month beginning after the date of publication of that determination under this paragraph shall be 14 percent per year on the unpaid principal balance of the loan.

(4) Availability of variable rates

(A) For any loan made pursuant to section 1078–1 1 or 1078–2 of this title and disbursed on or after July 1, 1987, or any loan made pursuant to such section prior to such date that is refinanced pursuant to section 1078–1(d) 1 or 1078–2(d) of this title, the applicable rate of interest during any 12-month period beginning on July 1 and ending on June 30 shall be determined under subparagraph (B), except that such rate shall not exceed 12 percent.

(B)(i) For any 12-month period beginning on July 1 and ending on or before June 30, 2001, the rate determined under this subparagraph is determined on the preceding June 1 and is equal to—

(I) the bond equivalent rate of 52-week Treasury bills auctioned at the final auction held prior to such June 1; plus

(II) 3.25 percent.


(ii) For any 12-month period beginning on July 1 of 2001 or any succeeding year, the rate determined under this subparagraph is determined on the preceding June 26 and is equal to—

(I) the weekly average 1-year constant maturity Treasury yield, as published by the Board of Governors of the Federal Reserve System, for the last calendar week ending on or before such June 26; plus

(II) 3.25 percent.


(C) The Secretary shall determine the applicable rate of interest under subparagraph (B) after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of determination.

(D) Notwithstanding subparagraph (A)—

(i) for any loan made pursuant to section 1078–1 1 of this title for which the first disbursement is made on or after October 1, 1992—

(I) subparagraph (B) shall be applied by substituting “3.1” for “3.25”; and

(II) the interest rate shall not exceed 11 percent; and


(ii) for any loan made pursuant to section 1078–2 of this title for which the first disbursement is made on or after October 1, 1992—

(I) subparagraph (B) shall be applied by substituting “3.1” for “3.25”; and

(II) the interest rate shall not exceed 10 percent.


(E) Notwithstanding subparagraphs (A) and (D) for any loan made pursuant to section 1078–2 of this title for which the first disbursement is made on or after July 1, 1994—

(i) subparagraph (B) shall be applied by substituting “3.1” for “3.25”; and

(ii) the interest rate shall not exceed 9 percent.

(d) Interest rates for new borrowers after July 1, 1988

Notwithstanding subsections (a) and (b) of this section, with respect to any loan (other than a loan made pursuant to sections 1078–1,1 1078–2, and 1078–3 of this title) to cover the cost of instruction for any period of enrollment beginning on or after July 1, 1988, to any borrower who, on the date of entering into the note or other written evidence of the loan, has no outstanding balance of principal or interest on any loan made, insured, or guaranteed under this part, the applicable rate of interest shall be—

(1) 8 percent per year on the unpaid principal balance of the loan during the period beginning on the date of the disbursement of the loan and ending 4 years after the commencement of repayment; and

(2) 10 percent per year on the unpaid principal balance of the loan during the remainder of the repayment period.

(e) Interest rates for new borrowers after October 1, 1992

(1) In general

Notwithstanding subsections (a), (b), and (d) of this section, with respect to any loan (other than a loan made pursuant to sections 1078–1,1 1078–2 and 1078–3 of this title) for which the first disbursement is made on or after October 1, 1992, to any borrower who, on the date of entering into the note or other written evidence of the loan, has no outstanding balance of principal or interest on any loan made, insured, or guaranteed under section 1077, 1078, or 1078–8 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 shall determine the applicable rate of interest under paragraph (1) after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of determination.

(f) Interest rates for new loans after July 1, 1994

(1) In general

Notwithstanding subsections (a), (b), (d), and (e) of this section, with respect to any loan made, insured, or guaranteed under this part (other than a loan made pursuant to section 1078–2 or 1078–3 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 shall determine the applicable rate of interest under paragraph (1) after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of determination.

(g) In school and grace period rules

(1) General rule

Notwithstanding the provisions of subsection (f) of this section, but subject to subsection (h) of this section, with respect to any loan under section 1078 or 1078–8 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) or 1077(a)(2)(C) of this title,


shall not exceed the rate determined under paragraph (2).

(2) Rate determination

For purposes of paragraph (1), the rate determined under this paragraph shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to—

(A) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction prior to such June 1; plus

(B) 2.5 percent,


except that such rate shall not exceed 8.25 percent.

(3) Consultation

The Secretary shall determine the applicable rate of interest under this subsection after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of determination.

(h) Interest rates for new loans after July 1, 1998

(1) In general

Notwithstanding subsections (a), (b), (d), (e), (f), and (g) of this section, with respect to any loan made, insured, or guaranteed under this part (other than a loan made pursuant to sections 1078–2 and 1078–3 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; plus

(B) 1.0 percent,


except that such rate shall not exceed 8.25 percent.

(2) Interest rates for new PLUS loans after July 1, 1998

Notwithstanding subsections (a), (b), (d), (e), (f), and (g) of this section, with respect to any loan made under section 1078–2 of this title for which the first disbursement is made on or after July 1, 1998, paragraph (1) shall be applied—

(A) by substituting “2.1 percent” for “1.0 percent” in subparagraph (B); and

(B) by substituting “9.0 percent” for “8.25 percent” in the matter following such subparagraph.

(3) Consultation

The Secretary shall determine the applicable rate of interest under this subsection after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of determination.

(i) Treatment of excess interest payments on new borrower accounts resulting from decline in Treasury bill rates

(1) Excess interest on 10 percent loans

If, with respect to a loan for which the applicable interest rate is 10 percent under subsection (d) of this section at the close of any calendar quarter, the sum of the average of the bond equivalent rates of 91-day Treasury bills auctioned for that quarter and 3.25 percent is less than 10 percent, then an adjustment shall be made to a borrower's account—

(A) by calculating excess interest in the amount computed under paragraph (2) of this subsection; and

(B)(i) during any period in which a student is eligible to have interest payments paid on his or her behalf by the Government pursuant to section 1078(a) of this title, 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, 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 of the loan on the last day of the calendar year in which such quarter falls, to the loan account of the borrower so as to reduce the principal balance of such account. No such credit shall be made to the loan account of a borrower who on the last day of the calendar year is delinquent for more than 30 days in making a required payment on the loan, but the excess interest shall be calculated and credited to the Secretary. Any credit which is to be made to a borrower's account pursuant to this subsection shall be made effective commencing no later than 30 days following the last day of the calendar year in which the quarter falls for which the credit is being made. Nothing in this subsection shall be construed to require refunding any repayment of a loan. At the option of the lender, the amount of such adjustment may be distributed to the borrower either by reduction in the amount of the periodic payment on loan, by reducing the number of payments that shall be made with respect to the loan, or by reducing the amount of the final payment of the loan. Nothing in this paragraph shall be construed to require the lender to make additional disclosures pursuant to section 1083(b) of this title.

(6) Publication of Treasury bill rate

For the purpose of enabling holders of loans to make the determinations and adjustments provided for in this subsection, the Secretary shall for each calendar quarter commencing with the quarter beginning on July 1, 1987, publish a notice of the average of the bond equivalent rates of 91-day Treasury bills auctioned for such quarter. Such notice shall be published not later than 7 days after the end of the quarter to which the notice relates.

(7) Conversion to variable rate

(A) Subject to subparagraphs (C) and (D), a lender or holder shall convert the interest rate on a loan that is made pursuant to this part and is subject to the provisions of this subsection to a variable rate. Such conversion shall occur not later than January 1, 1995, and, commencing on the date of conversion, the applicable interest rate for each 12-month period beginning on July 1 and ending on June 30 shall be determined by the Secretary on the June 1 preceding each such 12-month period and be equal to the sum of (i) the bond equivalent rate of the 91-day Treasury bills auctioned at the final auction prior to such June 1; and (ii) 3.25 percent in the case of loans described in paragraph (1), or 3.10 percent in the case of loans described in paragraph (3).

(B) In connection with the conversion specified in subparagraph (A) for any period prior to such conversion, and subject to paragraphs (C) and (D), a lender or holder shall convert the interest rate to a variable rate on a loan that is made pursuant to this part and is subject to the provisions of this subsection to a variable rate. The interest rates for such period shall be reset on a quarterly basis and the applicable interest rate for any quarter or portion thereof shall equal the sum of (i) the average of the bond equivalent rates of 91-Treasury bills auctioned for the preceding 3-month period, and (ii) 3.25 percent in the case of loans described in paragraph (1) or 3.10 percent in the case of loans described in paragraph (3). The rebate of excess interest derived through this conversion shall be provided to the borrower as specified in paragraph (5) for loans described in paragraph (1) or to the Government and borrower as specified in paragraph (3).

(C) A lender or holder of a loan being converted pursuant to this paragraph shall complete such conversion on or before January 1, 1995. The lender or holder shall notify the borrower that the loan shall be converted to a variable interest rate and provide a description of the rate to the borrower not later than 30 days prior to the conversion. The notice shall advise the borrower that such rate shall be calculated in accordance with the procedures set forth in this paragraph and shall provide the borrower with a substantially equivalent benefit as the adjustment otherwise provided for under this subsection. Such notice may be incorporated into the disclosure required under section 1083(b) of this title 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) or (B) shall not be subject to any other provisions of this subsection.

(j) Interest rates for new loans between July 1, 1998, and October 1, 1998

(1) In general

Notwithstanding subsection (h) of this section, but subject to paragraph (2), with respect to any loan made, insured, or guaranteed under this part (other than a loan made pursuant to section 1078–2 or 1078–3 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) of this section, with respect to any loan under this part (other than a loan made pursuant to section 1078–2 or 1078–3 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) or 1077(a)(2)(C) of this title,


shall be determined under paragraph (1) by substituting “1.7 percent” for “2.3 percent”.

(3) PLUS loans

Notwithstanding subsection (h) of this section, with respect to any loan under section 1078–2 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 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 shall determine the applicable rate of interest under this subsection after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of determination.

(k) Interest rates for new loans on or after October 1, 1998, and before July 1, 2006

(1) In general

Notwithstanding subsection (h) of this section 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 or 1078–3 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) of this section, with respect to any loan under this part (other than a loan made pursuant to section 1078–2 or 1078–3 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) or 1078(b)(1)(M) of this title,


shall be determined under paragraph (1) by substituting “1.7 percent” for “2.3 percent”.

(3) PLUS loans

Notwithstanding subsection (h) of this section, with respect to any loan under section 1078–2 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 be determined under paragraph (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 for which the application is received by an eligible lender 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 shall determine the applicable rate of interest under this subsection after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of determination.

(l) Interest rates for new loans on or after July 1, 2006, and before July 1, 2010

(1) In general

Notwithstanding subsection (h) 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 or 1078–3 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) of this section, with respect to any loan under section 1078–2 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 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 for which the application is received by an eligible lender 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) 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, 1078–3, or 1078–8 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 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) and (d) of this section—

(1) the term “period of instruction” shall, at the discretion of the lender, be any academic year, semester, trimester, quarter, or other academic period; or shall be the period for which the loan is made as determined by the institution of higher education; and

(2) the term “period of enrollment” shall be the period for which the loan is made as determined by the institution of higher education and shall coincide with academic terms such as academic year, semester, trimester, quarter, or other academic period as defined by such institution.

(Pub. L. 89–329, title IV, §427A, as added Pub. L. 99–498, title IV, §402(a), Oct. 17, 1986, 100 Stat. 1364; amended Pub. L. 100–50, §10(d)(1), June 3, 1987, 101 Stat. 342; Pub. L. 102–325, title IV, §415, July 23, 1992, 106 Stat. 514; Pub. L. 103–66, title IV, §4101, Aug. 10, 1993, 107 Stat. 364; Pub. L. 103–208, §2(c)(5)–(10), Dec. 20, 1993, 107 Stat. 2461; Pub. L. 105–178, title VIII, §8301(a)(1), June 9, 1998, 112 Stat. 496; Pub. L. 105–244, title IV, §416(a)(1), Oct. 7, 1998, 112 Stat. 1679; Pub. L. 106–554, §1(a)(1) [title III, §318(a)], Dec. 21, 2000, 114 Stat. 2763, 2763A–49; Pub. L. 107–139, §1(a)(1), (c), Feb. 8, 2002, 116 Stat. 8, 9; Pub. L. 109–171, title VIII, §8006(a), Feb. 8, 2006, 120 Stat. 159; Pub. L. 110–84, title II, §201(a)(1), Sept. 27, 2007, 121 Stat. 790; Pub. L. 111–152, title II, §2203, Mar. 30, 2010, 124 Stat. 1074.)

References in Text

Section 1078–1 of this title, referred to in subsecs. (c) to (e)(1), was repealed by Pub. L. 103–66, title IV, §4047(b)–(d), Aug. 10, 1993, 107 Stat. 364, eff. July 1, 1994, except with respect to loans provided under that section as it existed prior to Aug. 10, 1993. Subsequently, a new section 1078–1, relating to voluntary flexible agreements with guaranty agencies, was enacted by Pub. L. 105–244, title IV, §418, Oct. 7, 1998, 112 Stat. 1691.

Codification

Amendments by section 2(c)(6)–(10) of Pub. L. 103–208 (which were effective as if included in Pub. L. 102–325) were executed to this section as amended by Pub. L. 102–325 and Pub. L. 103–66, to reflect the probable intent of Congress.

Prior Provisions

A prior section 1077a, Pub. L. 89–329, title IV, §427A, as added Pub. L. 96–374, title IV, §415(a)(1), Oct. 3, 1980, 94 Stat. 1419; amended Pub. L. 97–35, title V, §534(a)(1), Aug. 13, 1981, 95 Stat. 454; Pub. L. 98–79, §5(a), (b)(1), Aug. 15, 1983, 97 Stat. 481, 482, prescribed applicable interest rates on loans, prior to the general revision of this part by Pub. L. 99–498.

Amendments

2010—Subsec. (l). Pub. L. 111–152, §2203(1), inserted “and before July 1, 2010” in heading.

Subsec. (l)(1), (2). Pub. L. 111–152, §2203(2), (3), inserted “and before July 1, 2010,” after “July 1, 2006,”.

Subsec. (l)(3). Pub. L. 111–152, §2203(4), inserted “and that was disbursed before July 1, 2010,” after “July 1, 2006,”.

Subsec. (l)(4). Pub. L. 111–152, §2203(5)(A), substituted “July 1, 2010” for “July 1, 2012” in introductory provisions.

Subsec. (l)(4)(D), (E). Pub. L. 111–152, §2203(5)(B), struck out subpars. (D) and (E) which read as follows:

“(D) For a loan for which the first disbursement is made on or after July 1, 2010, and before July 1, 2011, 4.5 percent on the unpaid principal balance of the loan.

“(E) For a loan for which the first disbursement is made on or after July 1, 2011, and before July 1, 2012, 3.4 percent on the unpaid principal balance of the loan.”

2007—Subsec. (l)(4). Pub. L. 110–84 added par. (4).

2006—Subsec. (l)(2). Pub. L. 109–171 substituted “8.5 percent” for “7.9 percent”.

2002—Subsec. (k). Pub. L. 107–139, §1(c), substituted “2006” for “2003” in heading and “July 1, 2006,” for “July 1, 2003,” wherever appearing in text.

Subsecs. (l) to (n). Pub. L. 107–139, §1(a)(1), added subsec. (l) and redesignated former subsecs. (l) and (m) as (m) and (n), respectively.

2000—Subsec. (c)(4)(B). Pub. L. 106–554 amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: “For any 12-month period beginning on July 1 and ending on June 30, 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.”

1998—Subsec. (j). Pub. L. 105–178, §8301(a)(1)(B), added subsec. (j). Former subsec. (j) redesignated (k).

Subsec. (k). Pub. L. 105–244, §416(a)(1)(B), added subsec. (k). Former subsec. (k) redesignated (l).

Pub. L. 105–178, §8301(a)(1)(A), redesignated subsec. (j) as (k). Former subsec. (k) redesignated (l).

Subsec. (l). Pub. L. 105–244, §416(a)(1)(A), redesignated subsec. (k) as (l). Former subsec. (l) redesignated (m).

Pub. L. 105–178, §8301(a)(1)(A), redesignated subsec. (k) as (l).

Subsec. (m). Pub. L. 105–244, §416(a)(1)(A), redesignated subsec. (l) as (m).

1993—Subsec. (c)(4)(E). Pub. L. 103–66, §4101(1), added subpar. (E).

Subsec. (e)(1). Pub. L. 103–208, §2(c)(5), substituted “under section 1077, 1078, or 1078–8 of this title” for “under this part”.

Subsecs. (f) to (h). Pub. L. 103–66, §4101(3), added subsecs. (f) to (h). Former subsecs. (f) to (h) redesignated (i) to (k), respectively.

Subsec. (i). Pub. L. 103–66, §4101(2), redesignated subsec. (f) as (i).

Subsec. (i)(1)(B). Pub. L. 103–208, §2(c)(6), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: “by crediting the excess interest to the reduction of principal to the extent provided for under paragraph (5) of this subsection.” See Codification note above.

Subsec. (i)(2)(B). Pub. L. 103–208, §2(c)(7), substituted “average daily principal balance” for “outstanding principal balance” and “during” for “at the end of”. See Codification note above.

Subsec. (i)(4)(B). Pub. L. 103–208, §2(c)(8), substituted “average daily principal balance” for “outstanding principal balance” and “during” for “at the end of”. See Codification note above.

Subsec. (i)(5). Pub. L. 103–208, §2(c)(9)(A)(i), (B), substituted “paragraphs (2) and (4)” for “paragraph (2)” in first sentence and inserted “, but the excess interest shall be calculated and credited to the Secretary” after “required payment on the loan” in second sentence. See Codification note above.

Pub. L. 103–208, §2(c)(9)(A)(ii), which directed substitution of “principal” for “principle” in first sentence, could not be executed because the word “principle” does not appear in text.

Subsec. (i)(7). Pub. L. 103–208, §2(c)(10), added par. (7). See Codification note above.

Subsecs. (j), (k). Pub. L. 103–66, §4101(2), redesignated subsecs. (g) and (h) as (j) and (k), respectively.

1992—Subsec. (c)(4)(D). Pub. L. 102–325, §415(a), added subpar. (D).

Subsec. (e). Pub. L. 102–325, §415(c)(2), added subsec. (e). Former subsec. (e) redesignated (f).

Pub. L. 102–325, §415(b), amended par. (1) heading and substituted “paragraph (5)” for “paragraph (3)” in par. (1)(B), amended par. (2) heading, added pars. (3) and (4), redesignated former par. (3) as (5), struck out “or” before “by reducing the number” and inserted “, 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” before period at end, redesignated former par. (4) as (6), and struck out former par. (5) which provided for study of treatment of excess interest payments provisions.

Subsecs. (f) to (h). Pub. L. 102–325, §415(c)(1), redesignated subsecs. (e) to (g) as (f) to (h), respectively.

1987—Subsec. (c)(4)(A). Pub. L. 100–50, §10(d)(1)(A), (B), substituted “and disbursed on or after July 1, 1987” for “to cover the cost of instruction for any period of enrollment beginning on or after July 1, 1987” and “any 12-month period beginning on or after July 1 and ending on June 30” for “any calendar year”.

Subsec. (c)(4)(B). Pub. L. 100–50, §10(d)(1)(C), added subpar. (B) and struck out former subpar. (B) which read as follows: “For any calendar year, the rate determined under this subparagraph is determined on December 15 preceding such calendar year and is equal to—

“(i) the average of the bond equivalent rates of 91-day Treasury bills auctioned during the 12 months ending on November 30 preceding such calendar year; plus

“(ii) 3.75 percent.”

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.

Effective Date of 1998 Amendment

Pub. L. 105–244, title IV, §416(c), Oct. 7, 1998, 112 Stat. 1682, provided that: “The amendments made by this section [amending this section and sections 1078–2, 1078–3, and 1087–1 of this title] shall apply with respect to any loan made, insured, or guaranteed under part B of title IV of the Higher Education Act of 1965 [20 U.S.C. 1071 et seq.] for which the first disbursement is made on or after October 1, 1998, and before July 1, 2003, except that such amendments shall apply with respect to any loan made under section 428C of such Act [20 U.S.C. 1078–3] for which the application is received by an eligible lender on or after October 1, 1998, and before July 1, 2003.”

Effective Date of 1993 Amendment

Amendment by section 2(c)(5) of Pub. L. 103–208 effective on and after Dec. 20, 1993, and amendment by section 2(c)(6)–(10) of Pub. L. 103–208 effective, except as otherwise provided, as if included in the Higher Education Amendments of 1992, Pub. L. 102–325, see section 5(a), (b)(2) of Pub. L. 103–208, set out as a note under section 1051 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.

1 See References in Text note below.

§1078. Federal payments to reduce student interest costs

(a) Federal interest subsidies

(1) Types of loans that qualify

Each student who has received a loan for study at an eligible institution for which the first disbursement is made before July 1, 2010, and—

(A) which is insured by the Secretary under this part; or

(B) which is insured under a program of a State or of a nonprofit private institution or organization which was contracted for, and paid to the student, within the period specified in paragraph (5), and which—

(i) in the case of a loan insured prior to July 1, 1967, was made by an eligible lender and is insured under a program which meets the requirements of subparagraph (E) of subsection (b)(1) of this section and provides that repayment of such loan shall be in installments beginning not earlier than 60 days after the student ceases to pursue a course of study (as described in subparagraph (D) of subsection (b)(1) of this section) at an eligible institution, or

(ii) in the case of a loan insured after June 30, 1967, was made by an eligible lender and is insured under a program covered by an agreement made pursuant to subsection (b) of this section,


shall be entitled to have paid on his or her behalf and for his or her account to the holder of the loan a portion of the interest on such loan under circumstances described in paragraph (2).

(2) Additional requirements to receive subsidy

(A) Each student qualifying for a portion of an interest payment under paragraph (1) shall—

(i) have provided to the lender a statement from the eligible institution, at which the student has been accepted for enrollment, or at which the student is in attendance, which—

(I) sets forth the loan amount for which the student shows financial need; and

(II) sets forth a schedule for disbursement of the proceeds of the loan in installments, consistent with the requirements of section 1078–7 of this title;


(ii) meet the requirements of subparagraph (B); and

(iii) have provided to the lender at the time of application for a loan made, insured, or guaranteed under this part, the student's driver's number, if any.


(B) For the purpose of clause (ii) of subparagraph (A), a student shall qualify for a portion of an interest payment under paragraph (1) if the eligible institution has determined and documented the student's amount of need for a loan based on the student's estimated cost of attendance, estimated financial assistance, and, for the purpose of an interest payment pursuant to this section, expected family contribution (as determined under part E of this subchapter), subject to the provisions of subparagraph (D).

(C) For the purpose of this paragraph—

(i) a student's cost of attendance shall be determined under section 1087ll 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), subpart 3 of part A of this subchapter, and part C of subchapter I of chapter 34 of title 42 and part D of this subchapter; 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 et seq.]; and

(bb) any veterans’ education benefits as defined in section 1087vv(c) of this title; and


(iii) the determination of need and of the amount of a loan by an eligible institution under subparagraph (B) with respect to a student shall be calculated in accordance with part E of this subchapter.


(D) An eligible institution may not, in carrying out the provisions of subparagraphs (A) and (B) of this paragraph, provide a statement which certifies the eligibility of any student to receive any loan under this part in excess of the maximum amount applicable to such loan.

(E) For the purpose of subparagraphs (B) and (C) of this paragraph, any loan obtained by a student under section 1078–1 1 or 1078–8 of this title or a parent under section 1078–2 of this title or under any State-sponsored or private loan program for an academic year for which the determination is made may be used to offset the expected family contribution of the student for that year.

(3) Amount of interest subsidy

(A)(i) Subject to section 1087–1(c) of this title, 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 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 beginning of the repayment period of the loan, or

(II) which accrues during a period in which principal need not be paid (whether or not such principal is in fact paid) by reason of a provision described in subsection (b)(1)(M) of this section or in section 1077(a)(2)(C) of this title.


(ii) Such portion of the interest on a loan shall not exceed, for any period, the amount of the interest on that loan which is payable by the student after taking into consideration the amount of any interest on that loan which the student is entitled to have paid on his or her behalf for that period under any State or private loan insurance program.

(iii) The holder of a loan with respect to which payments are required to be made under this section shall be deemed to have a contractual right, as against the United States, to receive from the Secretary the portion of interest which has been so determined without administrative delay after the receipt by the Secretary of an accurate and complete request for payment pursuant to paragraph (4).

(iv) The Secretary shall pay this portion of the interest to the holder of the loan on behalf of and for the account of the borrower at such times as may be specified in regulations in force when the applicable agreement entered into pursuant to subsection (b) of this section was made, or, if the loan was made by a State or is insured under a program which is not covered by such an agreement, at such times as may be specified in regulations in force at the time the loan was paid to the student.

(v) A lender may not receive interest on a loan for any period that precedes the date that is—

(I) in the case of a loan disbursed by check, 10 days before the first disbursement of the loan;

(II) in the case of a loan disbursed by electronic funds transfer, 3 days before the first disbursement of the loan; or

(III) in the case of a loan disbursed through an escrow agent, 3 days before the first disbursement of the loan.


(B) If—

(i) a State student loan insurance program is covered by an agreement under subsection (b) of this section,

(ii) a statute of such State limits the interest rate on loans insured by such program to a rate which is less than the applicable interest rate under this part, and

(iii) the Secretary determines that subsection (d) of this section does not make such statutory limitation inapplicable and that such statutory limitation threatens to impede the carrying out of the purpose of this part,


then the Secretary may pay an administrative cost allowance to the holder of each loan which is insured under such program and which is made during the period beginning on the 60th day after October 16, 1968, and ending 120 days after the adjournment of such State's first regular legislative session which adjourns after January 1, 1969. Such administrative cost allowance shall be paid over the term of the loan in an amount per year (determined by the Secretary) which shall not exceed 1 percent of the unpaid principal balance of the loan.

(4) Submission of statements by holders on amount of payment

Each holder of a loan with respect to which payments of interest are required to be made by the Secretary shall submit to the Secretary, at such time or times and in such manner as the Secretary may prescribe, statements containing such information as may be required by or pursuant to regulation for the purpose of enabling the Secretary to determine the amount of the payment which he must make with respect to that loan.

(5) Duration of authority to make interest subsidized loans

The period referred to in subparagraph (B) of paragraph (1) of this subsection shall begin on November 8, 1965, and end at the close of June 30, 2010.

(6) Assessment of borrower's financial condition not prohibited or required

Nothing in this chapter and part C of subchapter I of chapter 34 of title 42 or any other Act shall be construed to prohibit or require, unless otherwise specifically provided by law, a lender to evaluate the total financial situation of a student making application for a loan under this part, or to counsel a student with respect to any such loan, or to make a decision based on such evaluation and counseling with respect to the dollar amount of any such loan.

(7) Loans that have not been consummated

Lenders may not charge interest or receive interest subsidies or special allowance payments for loans for which the disbursement checks have not been cashed or for which electronic funds transfers have not been completed.

(b) Insurance program agreements to qualify loans for interest subsidies

(1) Requirements of insurance program

Any State or any nonprofit private institution or organization may enter into an agreement with the Secretary for the purpose of entitling students who receive loans which are insured under a student loan insurance program of that State, institution, or organization to have made on their behalf the payments provided for in subsection (a) of this section if the Secretary determines that the student loan insurance program—

(A) authorizes the insurance in any academic year, as defined in section 1088(a)(2) of this title, or its equivalent (as determined under regulations of the Secretary) for any student who is carrying at an eligible institution 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 who has not successfully completed the first year of a program of undergraduate education—

(I) $3,500, if such student is enrolled in a program whose length is at least one academic year in length; and

(II) if such student is enrolled in a program of undergraduate education which is less than 1 academic year, the maximum annual loan amount that such student may receive may not exceed the amount that bears the same ratio to the amount specified in subclause (I) as the length of such program measured in semester, trimester, quarter, or clock hours bears to 1 academic year;


(ii) in the case of a student at an eligible institution who has successfully completed such first year but has not successfully completed the remainder of a program of undergraduate education—

(I) $4,500; or

(II) if such student is enrolled in a program of undergraduate education, the remainder of which is less than one academic year, the maximum annual loan amount that such student may receive may not exceed the amount that bears the same ratio to the amount specified in subclause (I) as such remainder measured in semester, trimester, quarter, or clock hours bears to one academic year;


(iii) in the case of a student at an eligible institution who has successfully completed the first and second years of a program of undergraduate education but has not successfully completed the remainder of such program—

(I) $5,500; or

(II) if such student is enrolled in a program of undergraduate education, the remainder of which is less than one academic year, the maximum annual loan amount that such student may receive may not exceed the amount that bears the same ratio to the amount specified in subclause (I) as such remainder measured in semester, trimester, quarter, or clock hours bears to one academic year;


(iv) in the case of a student who has received an associate or baccalaureate degree and is enrolled in an eligible program for which the institution requires such degree for admission, the number of years that a student has completed in a program of undergraduate education shall, for the purposes of clauses (ii) and (iii), include any prior enrollment in the eligible program of undergraduate education for which the student was awarded such degree;

(v) in the case of a graduate or professional student (as defined in regulations of the Secretary) at an eligible institution, $8,500; and

(vi) in the case of a student enrolled in coursework specified in sections 1091(b)(3)(B) and 1091(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 required for employment as a teacher in an elementary school or secondary school;


except in cases where the Secretary determines, pursuant to regulations, that a higher amount is warranted in order to carry out the purpose of this part with respect to students engaged in specialized training requiring exceptionally high costs of education, but the annual insurable limit per student shall not be deemed to be exceeded by a line of credit under which actual payments by the lender to the borrower will not be made in any years in excess of the annual limit;

(B) provides that the aggregate insured unpaid principal amount for all such insured loans made to any student shall be any amount up to a maximum of—

(i) $23,000, in the case of any student who has not successfully completed a program of undergraduate education, excluding loans made under section 1078–1 1 or 1078–2 of this title; and

(ii) $65,500, in the case of any graduate or professional student (as defined by regulations of the Secretary), and (I) including any loans which are insured by the Secretary under this section, or by a guaranty agency, made to such student before the student became a graduate or professional student, but (II) excluding loans made under section 1078–1 1 or 1078–2 of this title,


except that the Secretary may increase the limit applicable to students who are pursuing programs which the Secretary determines are exceptionally expensive;

(C) authorizes the insurance of loans to any individual student for at least 6 academic years of study or their equivalent (as determined under regulations of the Secretary);

(D) provides that (i) the student borrower shall be entitled to accelerate without penalty the whole or any part of an insured loan, (ii) the student borrower may annually change the selection of a repayment plan under this part, and (iii) the note, or other written evidence of any loan, may contain such reasonable provisions relating to repayment in the event of default by the borrower as may be authorized by regulations of the Secretary in effect at the time such note or written evidence was executed, and shall contain a notice that repayment may, following a default by the borrower, be subject to income contingent repayment in accordance with subsection (m) of this section;

(E) subject to subparagraphs (D) and (L), and except as provided by subparagraph (M), provides that—

(i) not more than 6 months prior to the date on which the borrower's first payment is due, the lender shall offer the borrower of a loan made, insured, or guaranteed under this section or section 1078–8 of this title, the option of repaying the loan in accordance with a standard, graduated, income-sensitive, or extended repayment schedule (as described in paragraph (9)) established by the lender in accordance with regulations of the Secretary; and

(ii) repayment of loans shall be in installments in accordance with the repayment plan selected under paragraph (9) and commencing at the beginning of the repayment period determined under paragraph (7);


(F) authorizes interest on the unpaid balance of the loan at a yearly rate not in excess (exclusive of any premium for insurance which may be passed on to the borrower) of the rate required by section 1077a of this title;

(G) insures 98 percent of the unpaid principal of loans insured under the program, except that—

(i) such program shall insure 100 percent of the unpaid principal of loans made with funds advanced pursuant to subsection (j);

(ii) for any loan for which the first disbursement of principal is made on or after July 1, 2006, and before July 1, 2010, the preceding provisions of this subparagraph shall be applied by substituting “97 percent” for “98 percent”; and

(iii) notwithstanding the preceding provisions of this subparagraph, such program shall insure 100 percent of the unpaid principal amount of exempt claims as defined in subsection (c)(1)(G);


(H) provides—

(i) for loans for which the date of guarantee of principal is before July 1, 2006, for the collection of a single insurance premium equal to not more than 1.0 percent of the principal amount of the loan, by deduction proportionately from each installment payment of the proceeds of the loan to the borrower, and ensures that the proceeds of the premium will not be used for incentive payments to lenders; or

(ii) for loans for which the date of guarantee of principal is on or after July 1, 2006, and that are first disbursed before July 1, 2010, for the collection, and the deposit into the Federal Student Loan Reserve Fund under section 1072a of this title 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) and (2) of this section;

(J) provides that a student may obtain insurance under the program for a loan for any year of study at an eligible institution;

(K) in the case of a State program, provides that such State program is administered by a single State agency, or by one or more nonprofit private institutions or organizations under supervision of a single State agency;

(L) provides that the total of the payments by borrower—

(i) except as otherwise provided by a repayment plan selected by the borrower under clause (ii), (iii), or (v) of paragraph (9)(A), during any year of any repayment period with respect to the aggregate amount of all loans to that borrower which are insured under this part shall not, unless the borrower and the lender otherwise agree, be less than $600 or the balance of all such loans (together with interest thereon), whichever amount is less (but in no instance less than the amount of interest due and payable, notwithstanding any payment plan under paragraph (9)(A)); and

(ii) for a monthly or other similar payment period with respect to the aggregate of all loans held by the lender may, when the amount of a monthly or other similar payment is not a multiple of $5, be rounded to the next highest whole dollar amount that is a multiple of $5;


(M) provides that periodic installments of principal need not be paid, but interest shall accrue and be paid by the Secretary, during any period—

(i) during which the borrower—

(I) is pursuing at least a half-time course of study as determined by an eligible institution, except that no borrower, notwithstanding the provisions of the promissory note, shall be required to borrow an additional loan under this subchapter and part C of subchapter I of chapter 34 of title 42 in order to be eligible to receive a deferment under this clause; or

(II) is pursuing a course of study pursuant to a graduate fellowship program approved by the Secretary, or pursuant to a rehabilitation training program for disabled individuals approved by the Secretary,


 except that no borrower shall be eligible for a deferment under this clause, or loan made under this part (other than a loan made under section 1078–2 or 1078–3 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; or

(II) is performing qualifying National Guard duty during a war or other military operation or national emergency,


 and for the 180-day period following the demobilization date for the service described in subclause (I) or (II); or

(iv) not in excess of 3 years for any reason which the lender determines, in accordance with regulations prescribed by the Secretary under section 1085(o) of this title, has caused or will cause the borrower to have an economic hardship;


(N) provides that funds borrowed by a student—

(i) are disbursed to the institution by check or other means that is payable to, and requires the endorsement or other certification by, such student;

(ii) in the case of a student who is studying outside the United States in a program of study abroad that is approved for credit by the home institution at which such student is enrolled, and only after verification of the student's enrollment by the lender or guaranty agency, are, at the request of the student, disbursed directly to the student by the means described in clause (i), unless such student requests that the check be endorsed, or the funds transfer be authorized, pursuant to an authorized power-of-attorney; or

(iii) in the case of a student who is studying outside the United States in a program of study at an eligible foreign institution, are, at the request of the foreign institution, disbursed directly to the student, only after verification of the student's enrollment by the lender or guaranty agency by the means described in clause (i).2


(O) provides that the proceeds of the loans will be disbursed in accordance with the requirements of section 1078–7 of this title;

(P) requires the borrower to notify the institution concerning any change in local address during enrollment and requires the borrower and the institution at which the borrower is in attendance promptly to notify the holder of the loan, directly or through the guaranty agency, concerning (i) any change of permanent address, (ii) when the student ceases to be enrolled on at least a half-time basis, and (iii) any other change in status, when such change in status affects the student's eligibility for the loan;

(Q) provides for the guarantee of loans made to students and parents under sections 1078–1 1 and 1078–2 of this title;

(R) with respect to lenders which are eligible institutions, provides for the insurance of loans by only such institutions as are located within the geographic area served by such guaranty agency;

(S) provides no restrictions with respect to the insurance of loans for students who are otherwise eligible for loans under such program if such a student is accepted for enrollment in or is attending an eligible institution within the State, or if such a student is a legal resident of the State and is accepted for enrollment in or is attending an eligible institution outside that State;

(T) authorizes (i) the limitation of the total number of loans or volume of loans, made under this part to students attending a particular eligible institution during any academic year; and (ii) the limitation, suspension, or termination of the eligibility of an eligible institution if—

(I) such institution is ineligible for the emergency action, limitation, suspension, or termination of eligible institutions under regulations issued by the Secretary or is ineligible pursuant to criteria, rules, or regulations issued under the student loan insurance program which are substantially the same as regulations with respect to emergency action, limitation, suspension, or termination of such eligibility issued by the Secretary;

(II) there is a State constitutional prohibition affecting the eligibility of such an institution;

(III) such institution fails to make timely refunds to students as required by regulations issued by the Secretary or has not satisfied within 30 days of issuance a final judgment obtained by a student seeking such a refund;

(IV) such institution or an owner, director, or officer of such institution is found guilty in any criminal, civil, or administrative proceeding, or such institution or an owner, director, or officer of such institution is found liable in any civil or administrative proceeding, regarding the obtaining, maintenance, or disbursement of State or Federal grant, loan, or work assistance funds; or

(V) such institution or an owner, director, or officer of such institution has unpaid financial liabilities involving the improper acquisition, expenditure, or refund of State or Federal financial assistance funds;


except that, if a guaranty agency limits, suspends, or terminates the participation of an eligible institution, the Secretary shall apply that limitation, suspension, or termination to all locations of such institution, unless the Secretary finds, within 30 days of notification of the action by the guaranty agency, that the guaranty agency's action did not comply with the requirements of this section;

(U) provides (i) for the eligibility of all lenders described in section 1085(d)(1) of this title 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 constitutional prohibition affecting the eligibility of a lender, (ii) assurances that the guaranty agency will report to the Secretary 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 and part C of subchapter I of chapter 34 of title 42 for any lender fiscal year (except that each lender described in section 1085(d)(1)(A)(ii)(III) of this title 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, the results of which shall be submitted to the Secretary, or (II) with regard to a lender that is audited under chapter 75 of title 31, such audit shall be deemed to satisfy the requirements of subclause (I) for the period covered by such audit, except that the Secretary may waive the requirements of this clause (iii) if the lender submits to the Secretary the results of an audit conducted for other purposes that the Secretary determines provides the same information as the audits required by this clause;

(V) provides authority for the guaranty agency to require a participation agreement between the guaranty agency and each eligible institution within the State in which it is designated, as a condition for guaranteeing loans made on behalf of students attending the institution;

(W) provides assurances that the agency will implement all requirements of the Secretary for uniform claims and procedures pursuant to section 1082(l) of this title;

(X) provides information to the Secretary in accordance with subsection (c)(9) of this section and maintains reserve funds determined by the Secretary to be sufficient in relation to such agency's guarantee obligations; and

(Y) provides that—

(i) the lender shall determine the eligibility of a borrower for a deferment described in subparagraph (M)(i) based on—

(I) receipt of a request for deferment from the borrower and documentation of the borrower's eligibility for the deferment;

(II) receipt of a newly completed loan application that documents the borrower's eligibility for a deferment;

(III) receipt of student status information documenting that the borrower is enrolled on at least a half-time basis; or

(IV) the lender's confirmation of the borrower's half-time enrollment status through use of the National Student Loan Data System, if the confirmation is requested by the institution of higher education;


(ii) the lender will notify the borrower of the granting of any deferment under clause (i)(II) or (III) of this subparagraph and of the option to continue paying on the loan; and

(iii) the lender shall, at the time the lender grants a deferment to a borrower who received a loan under section 1078–8 of this title 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 of any such loan will be required to submit to the Secretary, at such time or times and in such manner as the Secretary may prescribe, statements containing such information as may be required by or pursuant to regulation for the purpose of enabling the Secretary to determine the amount of the payment which must be made with respect to that loan;

(B) include such other provisions as may be necessary to protect the United States from the risk of unreasonable loss and promote the purpose of this part, including such provisions as may be necessary for the purpose of section 1087 of this title, and as are agreed to by the Secretary and the guaranty agency, as the case may be;

(C) provide for making such reports, in such form and containing such information, including financial information, as the Secretary may reasonably require to carry out the Secretary's functions under this part and protect the financial interest of the United States, and for keeping such records and for affording such access thereto as the Secretary may find necessary to assure the correctness and verification of such reports;

(D) provide for—

(i) conducting, except as provided in clause (ii), financial and compliance audits of the guaranty agency on at least an annual basis and covering the period since the most recent audit, conducted by a qualified, independent organization or person in accordance with standards established by the Comptroller General for the audit of governmental organizations, programs, and functions, and as prescribed in regulations of the Secretary, the results of which shall be submitted to the Secretary; or

(ii) with regard to a guaranty program of a State which is audited under chapter 75 of title 31, deeming such audit to satisfy the requirements of clause (i) for the period of time covered by such audit;


(E)(i) provide that any guaranty agency may transfer loans which are insured under this part to any other guaranty agency with the approval of the holder of the loan and such other guaranty agency; and

(ii) provide that the lender (or the holder of the loan) shall, not later than 120 days after the borrower has left the eligible institution, notify the borrower of the date on which the repayment period begins; and

(F) provide that, if the sale, other transfer, or assignment of a loan made under this part to another holder will result in a change in the identity of the party to whom the borrower must send subsequent payments or direct any communications concerning the loans, then—

(i) the transferor and the transferee will be required, not later than 45 days from the date the transferee acquires a legally enforceable right to receive payment from the borrower on such loan, either jointly or separately to provide a notice to the borrower of—

(I) the sale or other transfer;

(II) the identity of the transferee;

(III) the name and address of the party to whom subsequent payments or communications must be sent;

(IV) the telephone numbers of both the transferor and the transferee;

(V) the effective date of the transfer;

(VI) the date on which the current servicer (as of the date of the notice) will stop accepting payments; and

(VII) the date on which the new servicer will begin accepting payments; and


(ii) the transferee will be required to notify the guaranty agency, and, upon the request of an institution of higher education, the guaranty agency shall notify the last such institution the student attended prior to the beginning of the repayment period of any loan made under this part, of—

(I) any sale or other transfer of the loan; and

(II) the address and telephone number by which contact may be made with the new holder concerning repayment of the loan,


except that this subparagraph (F) shall only apply if the borrower is in the grace period described in section 1077(a)(2)(B) of this title or subsection (b)(7) of this section or is in repayment status.

(3) Restrictions on inducements, payments, mailings, and advertising

A guaranty agency shall not—

(A) offer, directly or indirectly, premiums, payments, stock or other securities, prizes, travel, entertainment expenses, tuition payment or reimbursement, or other inducements to—

(i) any institution of higher education, any employee of an institution of higher education, or any individual or entity in order to secure applicants for loans made under this part; or

(ii) any lender, or any agent, employee, or independent contractor of any lender or guaranty agency, in order to administer or market loans made under this part (other than a loan made as part of the guaranty agency's lender-of-last-resort program pursuant to subsection (j)), for the purpose of securing the designation of the guaranty agency as the insurer of such loans;


(B) conduct unsolicited mailings, by postal or electronic means, of student loan application forms to students enrolled in secondary schools or postsecondary educational institutions, or to the families of such students, except that applications may be mailed, by postal or electronic means, to students or borrowers who have previously received loans guaranteed under this part by the guaranty agency;

(C) perform, for an institution of higher education participating in a program under this subchapter and part C of subchapter I of chapter 34 of title 42, any function that such institution is required to perform under this subchapter and part C of subchapter I of chapter 34 of title 42, except that the guaranty agency may perform functions on behalf of such institution in accordance with section 1092(b) or 1092(l) of this title;

(D) pay, on behalf of an institution of higher education, another person to perform any function that such institution is required to perform under this subchapter and part C of subchapter I of chapter 34 of title 42, except that the guaranty agency may perform functions on behalf of such institution in accordance with section 1092(b) or 1092(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 to provide technical assistance to institutions of higher education comparable to the technical assistance provided to institutions of higher education by the Department.

(4) Special rule

With respect to the graduate fellowship program referred to in paragraph (1)(M)(i)(II), the Secretary shall approve any course of study at a foreign university that is accepted for the completion of a recognized international fellowship program by the administrator of such a program. Requests for deferment of repayment of loans under this part by students engaged in graduate or postgraduate fellowship-supported study (such as pursuant to a Fulbright grant) outside the United States shall be approved until completion of the period of the fellowship.

(5) Guaranty agency information transfers

(A) Until such time as the Secretary has implemented section 1092b of this title and is able to provide to guaranty agencies the information required by such section, any guaranty agency may request information regarding loans made after January 1, 1987, to students who are residents of the State for which the agency is the designated guarantor, from any other guaranty agency insuring loans to such students.

(B) Upon a request pursuant to subparagraph (A), a guaranty agency shall provide—

(i) the name and the social security number of the borrower; and

(ii) the amount borrowed and the cumulative amount borrowed.


(C) Any costs associated with fulfilling the request of a guaranty agency for information on students shall be paid by the guaranty agency requesting the information.

(6) State guaranty agency information request of State licensing boards

Each guaranty agency is authorized to enter into agreements with each appropriate State licensing board under which the State licensing board, upon request, will furnish the guaranty agency with the address of a student borrower in any case in which the location of the student borrower is unknown or unavailable to the guaranty agency.

(7) Repayment period

(A) In the case of a loan made under section 1077 of this title 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, the repayment period shall exclude any period of authorized deferment or forbearance, and shall begin as described in subparagraph (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 or 1078–3 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) 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 is called or ordered to active duty for a period of more than 30 days (as defined in section 101(d)(2) 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 and part C of subchapter I of chapter 34 of title 42 shall be interpreted to prohibit the disbursement of loan proceeds by means other than by check or to allow the Secretary to require checks to be made co-payable to the institution and the borrower.

(9) Repayment plans

(A) Design and selection

In accordance with regulations promulgated by the Secretary, the lender shall offer a borrower of a loan made under this part the plans described in this subparagraph for repayment of such loan, including principal and interest thereon. No plan may require a borrower to repay a loan in less than 5 years unless the borrower, during the 6 months immediately preceding the start of the repayment period, specifically requests that repayment be made over of 3 a shorter period. The borrower may choose from—

(i) a standard repayment plan, with a fixed annual repayment amount paid over a fixed period of time, not to exceed 10 years;

(ii) a graduated repayment plan paid over a fixed period of time, not to exceed 10 years;

(iii) an income-sensitive repayment plan, with income-sensitive repayment amounts paid over a fixed period of time, not to exceed 10 years, except that the borrower's scheduled payments shall not be less than the amount of interest due;

(iv) for new borrowers on or after October 7, 1998, who accumulate (after October 7, 1998) outstanding loans under this part totaling more than $30,000, an extended repayment plan, with a fixed annual or graduated repayment amount paid over an extended period of time, not to exceed 25 years, except that the borrower shall repay annually a minimum amount determined in accordance with paragraph (1)(L)(i); and

(v) beginning July 1, 2009, an income-based repayment plan that enables a borrower who has a partial financial hardship to make a lower monthly payment in accordance with section 1098e of this title, 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 made on behalf of a dependent student or for a consolidation loan under section 1078–3 of this title, if the proceeds of such loan were used to discharge the liability of a loan under section 1078–2 of this title 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), the lender shall provide the borrower with a repayment plan described in subparagraph (A)(i).

(c) Guaranty agreements for reimbursing losses

(1) Authority to enter into agreements

(A) The Secretary may enter into a guaranty agreement with any guaranty agency, whereby the Secretary shall undertake to reimburse it, under such terms and conditions as the Secretary may establish, with respect to losses (resulting from the default of the student borrower) on the unpaid balance of the principal and accrued interest of any insured loan. The guaranty agency shall be deemed to have a contractual right against the United States, during the life of such loan, to receive reimbursement according to the provisions of this subsection. Upon receipt of an accurate and complete request by a guaranty agency for reimbursement with respect to such losses, the Secretary shall pay promptly and without administrative delay. Except as provided in subparagraph (B) of this paragraph and in paragraph (7), the amount to be paid a guaranty agency as reimbursement under this subsection shall be equal to 95 percent of the amount expended by it in discharge of its insurance obligation incurred under its loan insurance program. A guaranty agency shall file a claim for reimbursement with respect to losses under this subsection within 30 days after the guaranty agency discharges its insurance obligation on the loan.

(B) Notwithstanding subparagraph (A)—

(i) if, for any fiscal year, the amount of such reimbursement payments by the Secretary under this subsection exceeds 5 percent of the loans which are insured by such guaranty agency under such program and which were in repayment at the end of the preceding fiscal year, the amount to be paid as reimbursement under this subsection for such excess shall be equal to 85 percent of the amount of such excess; and

(ii) if, for any fiscal year, the amount of such reimbursement payments exceeds 9 percent of such loans, the amount to be paid as reimbursement under this subsection for such excess shall be equal to 75 percent of the amount of such excess.


(C) For the purpose of this subsection, the amount of loans of a guaranty agency which are in repayment shall be the original principal amount of loans made by a lender which are insured by such a guaranty agency reduced by—

(i) the amount the insurer has been required to pay to discharge its insurance obligations under this part;

(ii) the original principal amount of loans insured by it which have been fully repaid; and

(iii) the original principal amount insured on those loans for which payment of the first installment of principal has not become due pursuant to subsection (b)(1)(E) of this section or such first installment need not be paid pursuant to subsection (b)(1)(M) of this section.


(D) Notwithstanding any other provisions of this section, in the case of a loan made pursuant to a lender-of-last-resort program, the Secretary shall apply the provisions of—

(i) the fourth sentence of subparagraph (A) by substituting “100 percent” for “95 percent”;

(ii) subparagraph (B)(i) by substituting “100 percent” for “85 percent”; and

(iii) subparagraph (B)(ii) by substituting “100 percent” for “75 percent”.


(E) Notwithstanding any other provisions of this section, in the case of an outstanding loan transferred to a guaranty agency from another guaranty agency pursuant to a plan approved by the Secretary in response to the insolvency of the latter such guarantee agency, the Secretary shall apply the provision of—

(i) the fourth sentence of subparagraph (A) by substituting “100 percent” for “95 percent”;

(ii) subparagraph (B)(i) by substituting “90 percent” for “85 percent”; and

(iii) subparagraph (B)(ii) by substituting “80 percent” for “75 percent”.


(F)(i) Notwithstanding any other provisions of this section, in the case of exempt claims, the Secretary shall apply the provisions of—

(I) the fourth sentence of subparagraph (A) by substituting “100 percent” for “95 percent”;

(II) subparagraph (B)(i) by substituting “100 percent” for “85 percent”; and

(III) subparagraph (B)(ii) by substituting “100 percent” for “75 percent”.


(ii) For purposes of clause (i) of this subparagraph, the term “exempt claims” means claims with respect to loans for which it is determined that the borrower (or the student on whose behalf a parent has borrowed), without the lender's or the institution's knowledge at the time the loan was made, provided false or erroneous information or took actions that caused the borrower or the student to be ineligible for all or a portion of the loan or for interest benefits thereon.

(G) Notwithstanding any other provision of this section, the Secretary shall exclude a loan made pursuant to a lender-of-last-resort program when making reimbursement payment calculations under subparagraphs (B) and (C).

(2) Contents of guaranty agreements

The guaranty agreement—

(A) shall set forth such administrative and fiscal procedures as may be necessary to protect the United States from the risk of unreasonable loss thereunder, to ensure proper and efficient administration of the loan insurance program, and to assure that due diligence will be exercised in the collection of loans insured under the program, including (i) a requirement that each beneficiary of insurance on the loan submit proof that the institution was contacted and other reasonable attempts were made to locate the borrower (when the location of the borrower is unknown) and proof that contact was made with the borrower (when the location is known) and (ii) requirements establishing procedures to preclude consolidation lending from being an excessive proportion of guaranty agency recoveries on defaulted loans under this part;

(B) shall provide for making such reports, in such form and containing such information, as the Secretary may reasonably require to carry out the Secretary's functions under this subsection, and for keeping such records and for affording such access thereto as the Secretary may find necessary to assure the correctness and verification of such reports;

(C) shall set forth adequate assurances that, with respect to so much of any loan insured under the loan insurance program as may be guaranteed by the Secretary pursuant to this subsection, the undertaking of the Secretary under the guaranty agreement is acceptable in full satisfaction of State law or regulation requiring the maintenance of a reserve;

(D) shall provide that if, after the Secretary has made payment under the guaranty agreement pursuant to paragraph (1) of this subsection with respect to any loan, any payments are made in discharge of the obligation incurred by the borrower with respect to such loan (including any payments of interest accruing on such loan after such payment by the Secretary), there shall be paid over to the Secretary (for deposit in the fund established by section 1081 of this title) such proportion of the amounts of such payments as is determined (in accordance with paragraph (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 only to the extent required for the purpose of paragraph (8); and (ii) except as the Secretary 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) will be promptly deposited in or credited to the accounts maintained for the purpose of section 1072(c) of this title;

(F) set forth adequate assurances that the guaranty agency will not engage in any pattern or practice which results in a denial of a borrower's access to loans under this part because of the borrower's race, sex, color, religion, national origin, age, handicapped status, income, attendance at a particular eligible institution within the area served by the guaranty agency, length of the borrower's educational program, or the borrower's academic year in school;

(G) shall prohibit the Secretary from making any reimbursement under this subsection to a guaranty agency when a default claim is based on an inability to locate the borrower, unless the guaranty agency, at the time of filing for reimbursement, certifies to the Secretary that diligent attempts, including contact with the institution, have been made to locate the borrower through the use of reasonable skip-tracing techniques in accordance with regulations prescribed by the Secretary; and

(H) set forth assurances that—

(i) upon the request of an eligible institution, the guaranty agency shall, subject to clauses (ii) and (iii), furnish to the institution information with respect to students (including the names and addresses of such students) who received loans made, insured, or guaranteed under this part for attendance at the eligible institution and for whom default aversion assistance activities have been requested under subsection (l) of this section;

(ii) the guaranty agency shall not require the payment from the institution of any fee for such information; and

(iii) the guaranty agency will require the institution to use such information only to assist the institution in reminding students of their obligation to repay student loans and shall prohibit the institution from disseminating the information for any other purpose.


(I) may include such other provisions as may be necessary to promote the purpose of this part.

(3) Forbearance

A guaranty agreement under this subsection—

(A) shall contain provisions providing that—

(i) upon request, a lender shall grant a borrower forbearance, renewable at 12-month intervals, on terms agreed to by the parties to the loan with the approval of the insurer and documented in accordance with paragraph (10), and otherwise consistent with the regulations of the Secretary, if the borrower—

(I) is serving in a medical or dental internship or residency program, the successful completion of which is required to begin professional practice or service, or is serving in a medical or dental internship or residency program leading to a degree or certificate awarded by an institution of higher education, a hospital, or a health care facility that offers postgraduate training, provided that if the borrower qualifies for a deferment under section 1077(a)(2)(C)(vii) of this title 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 or subsection (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 and part C of subchapter I of chapter 34 of title 42 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, and, pursuant to that eligibility, the interest is being paid on such loan under subsection (o) of this section;


(ii) the length of the forbearance granted by the lender—

(I) under clause (i)(I) shall equal the length of time remaining in the borrower's medical or dental internship or residency program, if the borrower is not eligible to receive a deferment described in such clause, or such length of time remaining in the program after the borrower has exhausted the borrower's eligibility for such deferment;

(II) under clause (i)(II) or (IV) shall not exceed 3 years; or

(III) under clause (i)(III) shall not exceed the period for which the borrower is serving in a position described in such clause; and


(iii) no administrative or other fee may be charged in connection with the granting of a forbearance under clause (i), and no adverse information regarding a borrower may be reported to a consumer reporting agency solely because of the granting of such forbearance;


(B) may, to the extent provided in regulations of the Secretary, contain provisions that permit such forbearance for the benefit of the student borrower as may be agreed upon by the parties to an insured loan and approved by the insurer;

(C) shall contain provisions that specify that—

(i) the form of forbearance granted by the lender pursuant to this paragraph, other than subparagraph (A)(i)(IV), shall be temporary cessation of payments, unless the borrower selects forbearance in the form of an extension of time for making payments, or smaller payments than were previously scheduled;

(ii) the form of forbearance granted by the lender pursuant to subparagraph (A)(i)(IV) shall be the temporary cessation of all payments on the loan other than payments of interest on the loan that are made under subsection (o) of this section;

(iii) the lender shall, at the time of granting a borrower forbearance, provide information to the borrower to assist the borrower in understanding the impact of capitalization of interest on the borrower's loan principal and total amount of interest to be paid during the life of the loan; and

(iv) the lender shall contact the borrower not less often than once every 180 days during the period of forbearance to inform the borrower of—

(I) the amount of unpaid principal and the amount of interest that has accrued since the last statement of such amounts provided to the borrower by the lender;

(II) the fact that interest will accrue on the loan for the period of forbearance;

(III) the amount of interest that will be capitalized, and the date on which capitalization will occur;

(IV) the option of the borrower to pay the interest that has accrued before the interest is capitalized; and

(V) the borrower's option to discontinue the forbearance at any time; and


(D) shall contain provisions that specify that—

(i) forbearance for a period not to exceed 60 days may be granted if the lender reasonably determines that such a suspension of collection activity is warranted following a borrower's request for deferment, forbearance, a change in repayment plan, or a request to consolidate loans, in order to collect or process appropriate supporting documentation related to the request, and

(ii) during such period interest shall accrue but not be capitalized.


Guaranty agencies shall not be precluded from permitting the parties to such a loan from entering into a forbearance agreement solely because the loan is in default. The Secretary shall permit lenders to exercise administrative forbearances that do not require the agreement of the borrower, under conditions authorized by the Secretary. Such forbearances shall include (i) forbearances for borrowers who are delinquent at the time of the granting of an authorized period of deferment under subsection (b)(1)(M) of this section or section 1077(a)(2)(C) of this title, 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.

(5) Applicability to existing loans

In the case of any guaranty agreement with a guaranty agency, the Secretary may, in accordance with the terms of this subsection, undertake to guarantee loans described in paragraph (1) which are insured by such guaranty agency and are outstanding on the date of execution of the guaranty agreement, but only with respect to defaults occurring after the execution of such guaranty agreement or, if later, after its effective date.

(6) Secretary's equitable share

(A) For the purpose of paragraph (2)(D), the Secretary's equitable share of payments made by the borrower shall be that portion of the payments remaining after the guaranty agency with which the Secretary has an agreement under this subsection has deducted from such payments—

(i) a percentage amount equal to the complement of the reinsurance percentage in effect when payment under the guaranty agreement was made with respect to the loan; and

(ii) an amount equal to 24 percent of such payments for use in accordance with section 1072b of this title, 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 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 part C of subchapter I of chapter 34 of title 42; and

(II) remit to the Secretary a portion of the collection charge under subclause (I) equal to 8.5 percent of the outstanding principal and interest of such defaulted loan; and


(ii) on and after October 1, 2009, remit to the Secretary the entire amount charged under clause (i)(I) with respect to each defaulted loan that is paid off with excess consolidation proceeds.


(C) For purposes of subparagraph (B), the term “excess consolidation proceeds” means, with respect to any guaranty agency for any Federal fiscal year beginning on or after October 1, 2009, the proceeds of consolidation of defaulted loans under this subchapter and part C of subchapter I of chapter 34 of title 42 that exceed 45 percent of the agency's total collections on defaulted loans in such Federal fiscal year.

(7) New programs eligible for 100 percent reinsurance

(A) Notwithstanding paragraph (1)(C), the amount to be paid a guaranty agency for any fiscal year—

(i) which begins on or after October 1, 1977 and ends before October 1, 1991; and

(ii) which is either the fiscal year in which such guaranty agency begins to actively carry on a student loan insurance program which is subject to a guaranty agreement under subsection (b) of this section, or is one of the 4 succeeding fiscal years,


shall be 100 percent of the amount expended by such guaranty agency in discharge of its insurance obligation insured under such program.

(B) Notwithstanding the provisions of paragraph (1)(C), the Secretary may pay a guaranty agency 100 percent of the amount expended by such agency in discharge of such agency's insurance obligation for any fiscal year which—

(i) begins on or after October 1, 1991; and

(ii) is the fiscal year in which such guaranty agency begins to actively carry on a student loan insurance program which is subject to a guaranty agreement under subsection (b) of this section or is one of the 4 succeeding fiscal years.


(C) The Secretary shall continuously monitor the operations of those guaranty agencies to which the provisions of subparagraph (A) or (B) are applicable and revoke the application of such subparagraph to any such guaranty agency which the Secretary determines has not exercised reasonable prudence in the administration of such program.

(8) Assignment to protect Federal fiscal interest

If the Secretary determines that the protection of the Federal fiscal interest so requires, a guaranty agency shall assign to the Secretary any loan of which it is the holder and for which the Secretary has made a payment pursuant to paragraph (1) of this subsection.

(9) Guaranty agency reserve level

(A) Each guaranty agency which has entered into an agreement with the Secretary pursuant to this subsection shall maintain in the agency's Federal Student Loan Reserve Fund established under section 1072a of this title 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 from another guaranty agency pursuant to a plan of the Secretary in response to the insolvency of the latter such guaranty agency.

(B) The Secretary shall collect, on an annual basis, information from each guaranty agency having an agreement under this subsection to enable the Secretary to evaluate the financial solvency of each such agency. The information collected shall include the level of such agency's current reserves, cash disbursements and accounts receivable.

(C) If (i) any guaranty agency falls below the required minimum reserve level in any 2 consecutive years, (ii) any guaranty agency's Federal reimbursement payments are reduced to 85 percent pursuant to paragraph (1)(B)(i), or (iii) the Secretary determines that the administrative or financial condition of a guaranty agency jeopardizes such agency's continued ability to perform its responsibilities under its guaranty agreement, then the Secretary shall require the guaranty agency to submit and implement a management plan acceptable to the Secretary within 45 working days of any such event.

(D)(i) If the Secretary is not seeking to terminate the guaranty agency's agreement under subparagraph (E), or assuming the guaranty agency's functions under subparagraph (F), a management plan described in subparagraph (C) shall include the means by which the guaranty agency will improve its financial and administrative condition to the required level within 18 months.

(ii) If the Secretary is seeking to terminate the guaranty agency's agreement under subparagraph (E), or assuming the guaranty agency's functions under subparagraph (F), a management plan described in subparagraph (C) shall include the means by which the Secretary and the guaranty agency shall work together to ensure the orderly termination of the operations, and liquidation of the assets, of the guaranty agency.

(E) The Secretary may terminate a guaranty agency's agreement in accordance with subparagraph (F) if—

(i) a guaranty agency required to submit a management plan under this paragraph fails to submit a plan that is acceptable to the Secretary;

(ii) the Secretary determines that a guaranty agency has failed to improve substantially its administrative and financial condition;

(iii) the Secretary determines that the guaranty agency is in danger of financial collapse;

(iv) the Secretary determines that such action is necessary to protect the Federal fiscal interest; or

(v) the Secretary determines that such action is necessary to ensure the continued availability of loans to student or parent borrowers.


(F) If a guaranty agency's agreement under this subsection is terminated pursuant to subparagraph (E), then the Secretary shall assume responsibility for all functions of the guaranty agency under the loan insurance program of such agency. In performing such functions the Secretary is authorized to—

(i) permit the transfer of guarantees to another guaranty agency;

(ii) revoke the reinsurance agreement of the guaranty agency at a specified date, so as to require the merger, consolidation, or termination of the guaranty agency;

(iii) transfer guarantees to the Department of Education for the purpose of payment of such claims and process such claims using the claims standards of the guaranty agency, if such standards are determined by the Secretary to be in compliance with this chapter and part C of subchapter I of chapter 34 of title 42;

(iv) design and implement a plan to restore the guaranty agency's viability;

(v) provide the guaranty agency with additional advance funds in accordance with section 1072(c)(7) of this title, with such restrictions on the use of such funds as is determined appropriate by the Secretary, in order to—

(I) meet the immediate cash needs of the guaranty agency;

(II) ensure the uninterrupted payment of claims; or

(III) ensure that the guaranty agency will make loans as the lender-of-last-resort, in accordance with subsection (j) of this section;


(vi) use all funds and assets of the guaranty agency to assist in the activities undertaken in accordance with this subparagraph and take appropriate action to require the return, to the guaranty agency or the Secretary, of any funds or assets provided by the guaranty agency, under contract or otherwise, to any person or organization; or

(vii) take any other action the Secretary determines necessary to ensure the continued availability of loans made under this part to residents of the State or States in which the guaranty agency did business, the full honoring of all guarantees issued by the guaranty agency prior to the Secretary's assumption of the functions of such agency, and the proper servicing of loans guaranteed by the guaranty agency prior to the Secretary's assumption of the functions of such agency, and to avoid disruption of the student loan program.


(G) Notwithstanding any other provision of Federal or State law, if the Secretary has terminated or is seeking to terminate a guaranty agency's agreement under subparagraph (E), or has assumed a guaranty agency's functions under subparagraph (F)—

(i) no State court may issue any order affecting the Secretary's actions with respect to such guaranty agency;

(ii) any contract with respect to the administration of a guaranty agency's reserve funds, or the administration of any assets purchased or acquired with the reserve funds of the guaranty agency, that is entered into or extended by the guaranty agency, or any other party on behalf of or with the concurrence of the guaranty agency, after August 10, 1993, shall provide that the contract is terminable by the Secretary upon 30 days notice to the contracting parties if the Secretary determines that such contract includes an impermissible transfer of the reserve funds or assets, or is otherwise inconsistent with the terms or purposes of this section; and

(iii) no provision of State law shall apply to the actions of the Secretary in terminating the operations of a guaranty agency.


(H) Notwithstanding any other provision of law, the Secretary's liability for any outstanding liabilities of a guaranty agency (other than outstanding student loan guarantees under this part), the functions of which the Secretary has assumed, shall not exceed the fair market value of the reserves of the guaranty agency, minus any necessary liquidation or other administrative costs.

(I) The Secretary shall not take any action under subparagraph (E) or (F) without giving the guaranty agency notice and the opportunity for a hearing that, if commenced after September 24, 1998, shall be on the record.

(J) Notwithstanding any other provision of law, the information transmitted to the Secretary pursuant to this paragraph shall be confidential and exempt from disclosure under section 552 of title 5, relating to freedom of information, or any other Federal law.

(K) The Secretary, within 6 months after the end of each fiscal year, shall submit to the authorizing committees a report specifying the Secretary's assessment of the fiscal soundness of the guaranty agency system.

(10) Documentation of forbearance agreements

For the purposes of paragraph (3), the terms of forbearance agreed to by the parties shall be documented by confirming the agreement of the borrower by notice to the borrower from the lender, and by recording the terms in the borrower's file.

(d) Usury laws inapplicable

No provision of any law of the United States (other than this chapter and part C of subchapter I of chapter 34 of title 42 and section 527 of the Appendix to title 50) or of any State (other than a statute applicable principally to such State'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 under a program covered by an agreement made pursuant to subsection (b) of this section.

(e) Repealed. Pub. L. 110–315, title IV, §422(h), Aug. 14, 2008, 122 Stat. 3231

(f) Payments of certain costs

(1) 4 Payment for certain activities

(A) In general

The Secretary—

(i) for loans originated during fiscal years beginning on or after October 1, 1998, and before October 1, 2003, and in accordance with the provisions of this paragraph, shall, except as provided in subparagraph (C), pay to each guaranty agency, a loan processing and issuance fee equal to 0.65 percent of the total principal amount of the loans on which insurance was issued under this part during such fiscal year by such agency; and

(ii) for loans originated on or after October 1, 2003, and first disbursed before July 1, 2010, and in accordance with the provisions of this paragraph, shall, except as provided in subparagraph (C), pay to each guaranty agency, a loan processing and issuance fee equal to 0.40 percent of the total principal amount of the loans on which insurance was issued under this part during such fiscal year by such agency.

(B) Payment

The payment required by subparagraph (A) shall be paid on a quarterly basis. The guaranty agency shall be deemed to have a contractual right against the United States to receive payments according to the provisions of this paragraph. Payments shall be made promptly and without administrative delay to any guaranty agency submitting an accurate and complete application under this subparagraph.

(C) Requirement for payment

No payment may be made under this paragraph for loans for which the disbursement checks have not been cashed or for which electronic funds transfers have not been completed.

(g) Action on insurance program and guaranty agreements

If a nonprofit private institution or organization—

(1) applies to enter into an agreement with the Secretary under subsections (b) and (c) of this section with respect to a student loan insurance program to be carried on in a State with which the Secretary does not have an agreement under subsection (b) of this section, and

(2) as provided in the application, undertakes to meet the requirements of section 1072(c)(6)(B)(i), (ii), and (iii) of this title,


the Secretary shall consider and act upon such application within 180 days, and shall forthwith notify the authorizing committees of his actions.

(h) Repealed. Pub. L. 110–315, title IV, §438(a)(2)(B), Aug. 14, 2008, 122 Stat. 3258

(i) Multiple disbursement of loans

(1) Escrow accounts administered by escrow agent

Any guaranty agency or eligible lender (hereafter in this subsection referred to as the “escrow agent”) may enter into an agreement with any other eligible lender that is not an eligible institution or an agency or instrumentality of the State (hereafter in this subsection referred to as the “lender”) for the purpose of authorizing disbursements of the proceeds of a loan to a student. Such agreement shall provide that the lender will pay the proceeds of such loans into an escrow account to be administered by the escrow agent in accordance with the provisions of paragraph (2) of this subsection. Such agreement may allow the lender to make payments into the escrow account in amounts that do not exceed the sum of the amounts required for disbursement of initial or subsequent installments to borrowers and to make such payments not more than 10 days prior to the date of the disbursement of such installment to such borrowers. Such agreement shall require the lender to notify promptly the eligible institution when funds are escrowed under this subsection for a student at such institution.

(2) Authority of escrow agent

Each escrow agent entering into an agreement under paragraph (1) of this subsection is authorized to—

(A) make the disbursements in accordance with the note evidencing the loan;

(B) commingle the proceeds of all loans paid to the escrow agent pursuant to the escrow agreement entered into under such paragraph (1);

(C) invest the proceeds of such loans in obligations of the Federal Government or obligations which are insured or guaranteed by the Federal Government;

(D) retain interest or other earnings on such investment; and

(E) return to the lender undisbursed funds when the student ceases to carry at an eligible institution at least one-half of the normal full-time academic workload as determined by the institution.

(j) Lenders-of-last-resort

(1) General requirement

In each State, the guaranty agency or an eligible lender in the State described in section 1085(d)(1)(D) of this title shall, before July 1, 2010, make loans directly, or through an agreement with an eligible lender or lenders, to eligible students and parents who are otherwise unable to obtain loans under this part (except for consolidation loans under section 1078–3 of this title) or who attend an institution of higher education in the State that is designated under paragraph (4). Loans made under this subsection shall not exceed the amount of the need of the borrower, as determined under subsection (a)(2)(B) of this section, nor be less than $200. No loan under section 1078, 1078–2, or 1078–8 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 shall consider the request of any eligible lender, as defined under section 1085(d)(1)(A) of this title, to serve as the lender-of-last-resort pursuant to this subsection.

(2) Rules and operating procedures

The guaranty agency shall develop rules and operating procedures for the lender-of-last-resort program designed to ensure that—

(A) the program establishes operating hours and methods of application designed to facilitate application by students and ensure a response within 60 days after the student's original complete application is filed under this subsection;

(B) consistent with standards established by the Secretary, students applying for loans under this subsection shall not be subject to additional eligibility requirements or requests for additional information beyond what is required under this subchapter and part C of subchapter I of chapter 34 of title 42 in order to receive a loan under this part from an eligible lender, nor, in the case of students and parents applying for loans under this subsection because of an inability to otherwise obtain loans under this part (except for consolidation loans under section 1078–3 of this title), be required to receive more than two rejections from eligible lenders 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; and

(D) appropriate steps are taken to ensure that borrowers receiving loans under the program are appropriately counseled on their loan obligation.

(3) Advances to guaranty agencies for lender-of-last-resort services

(A) In order to ensure the availability of loan capital, the Secretary is authorized to provide a guaranty agency designated for a State with additional advance funds in accordance with subparagraph (C) and section 1072(c)(7) of this title, with such restrictions on the use of such funds as are determined appropriate by the Secretary, in order to ensure that the guaranty agency 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.

(B) Notwithstanding any other provision in this part, a guaranty agency serving as a lender-of-last-resort under this paragraph shall be paid a fee, established by the Secretary, for making such loans in lieu of interest and special allowance subsidies, and shall be required to assign such loans to the Secretary on demand. Upon such assignment, the portion of the advance represented by the loans assigned shall be considered repaid by such guaranty agency.

(C) The Secretary shall exercise the authority described in subparagraph (A) only if the Secretary determines that eligible borrowers are seeking and are unable to obtain loans under this part or designates an institution of higher education for participation in the program under this subsection under paragraph (4), and that the guaranty agency designated for that State has the capability to provide lender-of-last-resort loans in a timely manner, in accordance with the guaranty agency's obligations under paragraph (1), but cannot do so without advances provided by the Secretary under this paragraph. If the Secretary makes the determinations described in the preceding sentence and determines that it would be cost-effective to do so, the Secretary may provide advances under this paragraph to such guaranty agency. If the Secretary determines that such guaranty agency does not have such capability, or will not provide such loans in a timely fashion, the Secretary may provide such advances to enable another guaranty agency, that the Secretary determines to have such capability, to make lender-of-last-resort loans to eligible borrowers in that State who are experiencing loan access problems or to eligible borrowers who attend an institution in the State that is designated under paragraph (4).

(4) Institution-wide student qualification

Upon the request of an institution of higher education and pursuant to standards developed by the Secretary, the Secretary shall designate such institution for participation in the lender-of-last-resort program under this paragraph.5 If the Secretary designates an institution under this paragraph, the guaranty agency designated for the State in which the institution is located shall make loans, in the same manner as such loans are made under paragraph (1), to students and parent borrowers of the designated institution, regardless of whether the students or parent borrowers are otherwise unable to obtain loans under this part (other than a consolidation loan under section 1078–3 of this title).

(5) Standards developed by the Secretary

In developing standards with respect to paragraph (4), the Secretary may require—

(A) an institution of higher education to demonstrate that, despite due diligence on the part of the institution, the institution has been unable to secure the commitment of eligible lenders willing to make loans under this part to a significant number of students attending the institution;

(B) that, prior to making a request under such paragraph for designation for participation in the lender-of-last-resort program, an institution of higher education shall demonstrate that the institution has met a minimum threshold, as determined by the Secretary, for the number or percentage of students at such institution who have received rejections from eligible lenders for loans under this part; and

(C) any other standards and guidelines the Secretary determines to be appropriate.

(6) Expiration of authority

The Secretary's authority under paragraph (4) to designate institutions of higher education for participation in the program under this subsection shall expire on June 30, 2010.

(7) Expiration of designation

The eligibility of an institution of higher education, or borrowers from such institution, to participate in the program under this subsection pursuant to a designation of the institution by the Secretary under paragraph (4) shall expire on June 30, 2010. After such date, borrowers from an institution designated under paragraph (4) shall be eligible to participate in the program under this subsection as such program existed on the day before May 7, 2008.

(8) Prohibition on inducements and marketing

Each guaranty agency or eligible lender that serves as a lender-of-last-resort under this subsection—

(A) shall be subject to the prohibitions on inducements contained in subsection (b)(3) and the requirements of section 1085(d)(5) of this title; and

(B) shall not advertise, market, or otherwise promote loans under this subsection, except that nothing in this paragraph shall prohibit a guaranty agency from fulfilling its responsibilities under paragraph (2)(C).

(9) Dissemination and reporting

(A) In general

The Secretary shall—

(i) broadly disseminate information regarding the availability of loans made under this subsection;

(ii) during the period beginning July 1, 2008 and ending June 30, 2011, provide to the authorizing committees and make available to the public—

(I) copies of any new or revised plans or agreements made by guaranty agencies or the Department related to the authorities under this subsection;

(II) quarterly reports on—

(aa) the number and amounts of loans originated or approved pursuant to this subsection by each guaranty agency and eligible lender; and

(bb) any related payments by the Department, a guaranty agency, or an eligible lender; and


(III) a budget estimate of the costs to the Federal Government (including subsidy and administrative costs) for each 100 dollars loaned, of loans made pursuant to this subsection between May 7, 2008, and June 30, 2010, disaggregated by type of loan, compared to such costs to the Federal Government during such time period of comparable loans under this part and part C, disaggregated by part and by type of loan; and


(iii) beginning July 1, 2011, provide to the authorizing committees and make available to the public—

(I) copies of any new or revised plans or agreements made by guaranty agencies or the Department related to the authorities under this subsection; and

(II) annual reports on—

(aa) the number and amounts of loans originated or approved pursuant to this subsection by each guaranty agency and eligible lender; and

(bb) any related payments by the Department, a guaranty agency, or an eligible lender.

(B) Separate reporting

The information required to be reported under subparagraph (A)(ii)(II) shall be reported separately for loans originated or approved pursuant to paragraph (4), or payments related to such loans, for the time period in which the Secretary is authorized to make designations under paragraph (4).

(k) Information on defaults

(1) Provision of information to eligible institutions

Notwithstanding any other provision of law, in order to notify eligible institutions of former students who are in default of their continuing obligation to repay student loans, each guaranty agency shall, upon the request of an eligible institution, furnish information with respect to students who were enrolled at the eligible institution and who are in default on the repayment of any loan made, insured, or guaranteed under this part. The information authorized to be furnished under this subsection shall include the names and addresses of such students.

(2) Public dissemination not authorized

Nothing in paragraph (1) of this subsection shall be construed to authorize public dissemination of the information described in paragraph (1).

(3) Borrower location information

Any information provided by the institution relating to borrower location shall be used by the guaranty agency in conducting required skip-tracing activities.

(4) Provision of information to borrowers in default

Each guaranty agency that has received a default claim from a lender regarding a borrower, shall provide the borrower in default, on not less than two separate occasions, with a notice, in simple and understandable terms, of not less than the following information:

(A) The options available to the borrower to remove the borrower's loan from default.

(B) The relevant fees and conditions associated with each option.

(l) Default aversion assistance

(1) Assistance required

Upon receipt of a complete request from a lender received not earlier than the 60th day of delinquency, a guaranty agency having an agreement with the Secretary under subsection (c) of this section shall engage in default aversion activities designed to prevent the default by a borrower on a loan covered by such agreement.

(2) Reimbursement

(A) In general

A guaranty agency, in accordance with the provisions of this paragraph, may transfer from the Federal Student Loan Reserve Fund under section 1072a of this title to the Agency Operating Fund under section 1072b of this title 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 by the guaranty agency 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 may transfer such fees earned under this subsection not more frequently than monthly. Such a fee shall not be paid more than once on any loan for which the guaranty agency averts the default unless—

(i) at least 18 months has elapsed between the date the borrower entered current repayment status and the date the lender filed a subsequent default aversion assistance request; and

(ii) during the period between such dates, the borrower was not more than 30 days past due on any payment of principal and interest on the loan.

(C) Definition

For the purpose of earning the default aversion fee, the term “current repayment status” means that the borrower is not delinquent in the payment of any principal or interest on the loan.

(m) Income contingent and income-based repayment

(1) Authority of Secretary to require

The Secretary may require borrowers who have defaulted on loans made under this part that are assigned to the Secretary under subsection (c)(8) of this section to repay those loans under an income contingent repayment plan or income-based repayment plan, the terms and conditions of which shall be established by the Secretary and the same as, or similar to, an income contingent repayment plan established for purposes of part C of this subchapter or an income-based repayment plan under section 1098e of this title, 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 pursuant to subsection (c)(8) of this section.

(n) Blanket certificate of loan guaranty

(1) In general

Subject to paragraph (3), any guaranty agency that has entered into or enters into any insurance program agreement with the Secretary under this part may—

(A) offer eligible lenders participating in the agency's guaranty program a blanket certificate of loan guaranty that permits the lender to make loans without receiving prior approval from the guaranty agency of individual loans for eligible borrowers enrolled in eligible programs at eligible institutions; and

(B) provide eligible lenders with the ability to transmit electronically data to the agency concerning loans the lender has elected to make under the agency's insurance program via standard reporting formats, with such reporting to occur at reasonable and standard intervals.

(2) Limitations on blanket certificate of guaranty

(A) An eligible lender may not make a loan to a borrower under this section after such lender receives a notification from the guaranty agency that the borrower is not an eligible borrower.

(B) A guaranty agency may establish limitations or restrictions on the number or volume of loans issued by a lender under the blanket certificate of guaranty.

(3) Participation level

During fiscal years 1999 and 2000, the Secretary may permit, on a pilot basis, a limited number of guaranty agencies to offer blanket certificates of guaranty under this subsection. Beginning in fiscal year 2001, any guaranty agency that has an insurance program agreement with the Secretary may offer blanket certificates of guaranty under this subsection.

(4) Report required

The Secretary shall, at the conclusion of the pilot program under paragraph (3), provide a report to the authorizing committees on the impact of the blanket certificates of guaranty on program efficiency and integrity.

(o) Armed Forces student loan interest payment program

(1) Authority

Using funds received by transfer to the Secretary under section 2174 of title 10 for the payment of interest and any special allowance on a loan to a member of the Armed Forces that is made, insured, or guaranteed under this part, the Secretary shall pay the interest and special allowance on such loan as due for a period not in excess of 36 consecutive months. The Secretary may not pay interest or any special allowance on such a loan out of any funds other than funds that have been so transferred.

(2) Forbearance

During the period in which the Secretary is making payments on a loan under paragraph (1), the lender shall grant the borrower forbearance in accordance with the guaranty agreement under subsection (c)(3)(A)(i)(IV) of this section.

(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.

(Pub. L. 89–329, title IV, §428, as added Pub. L. 99–498, title IV, §402(a), Oct. 17, 1986, 100 Stat. 1367; amended Pub. L. 100–50, §10(a)–(c), (e)–(m), June 3, 1987, 101 Stat. 341–343; Pub. L. 100–203, title III, §§3001(b), 3002(b), 3003, Dec. 22, 1987, 101 Stat. 1330–38, 1330–39; Pub. L. 100–369, §§5(b)(2), 7(c), 11(a), July 18, 1988, 102 Stat. 836–838; Pub. L. 101–239, title II, §§2002(a)(2), (b)(1), 2004(b)(1), (3), 2006(b), Dec. 19, 1989, 103 Stat. 2111, 2116, 2118; Pub. L. 101–508, title III, §§3002, 3004(b), Nov. 5, 1990, 104 Stat. 1388–25, 1388–27; Pub. L. 102–26, §9, Apr. 9, 1991, 105 Stat. 128; Pub. L. 102–164, title VI, §§601(b), 602(b), 604, 605(b)(2), Nov. 15, 1991, 105 Stat. 1065, 1066, 1068; Pub. L. 102–325, title IV, §§411(b)(2), 416(a)–(e)(1), (f)–(p)(7), (q)–(t), July 23, 1992, 106 Stat. 510, 516–525, 527–529; Pub. L. 103–66, title IV, §§4041(a)(1), (2)(B), (b), 4043(a), 4044, 4045, 4102(c), 4107(a), (b), 4108(a), (b), 4110(a), 4112(a), 4201(a), Aug. 10, 1993, 107 Stat. 354, 355, 358, 359, 367–370; Pub. L. 103–82, title I, §102(c)(1), Sept. 21, 1993, 107 Stat. 823; Pub. L. 103–208, §2(c)(11)–(28), Dec. 20, 1993, 107 Stat. 2462–2465; Pub. L. 103–382, title III, §355(a), Oct. 20, 1994, 108 Stat. 3967; Pub. L. 105–33, title VI, §§6101(b), 6104(2), Aug. 5, 1997, 111 Stat. 652; Pub. L. 105–244, title IV, §417(a)–(c)(1)(A), (2)–(k), Oct. 7, 1998, 112 Stat. 1682–1690; Pub. L. 107–314, div. A, title VI, §651(b), Dec. 2, 2002, 116 Stat. 2579; Pub. L. 109–171, title VIII, §§8004(b)(2), 8005(b), 8007(a), 8008(a), 8009(b)(1), 8014(a)(1), (b)(1), (c)(1), (d), (e), (j)(1)–(3), Feb. 8, 2006, 120 Stat. 158, 160, 162, 164, 168–171; Pub. L. 110–84, title II, §202(a), title III, §§301, 302(b)(1), 303(a), Sept. 27, 2007, 121 Stat. 791, 796, 797; Pub. L. 110–227, §§3(b), 5(a), May 7, 2008, 122 Stat. 742, 743; Pub. L. 110–315, title I, §103(b)(4), title IV, §§422(a)(1), (b)–(g)(1), (h)–(j), 424(b), 432(b)(2), 438(a)(2), Aug. 14, 2008, 122 Stat. 3088, 3227–3231, 3233, 3246, 3258; Pub. L. 110–350, §2, Oct. 7, 2008, 122 Stat. 3947; Pub. L. 111–39, title IV, §402(a)(1), (b)(1), (f)(1), July 1, 2009, 123 Stat. 1940, 1943; Pub. L. 111–152, title II, §2204, Mar. 30, 2010, 124 Stat. 1075.)

References in Text

The National and Community Service Act of 1990, referred to in subsec. (a)(2)(C)(ii)(II)(aa), is Pub. L. 101–610, Nov. 16, 1990, 104 Stat. 3127. Title I of the Act enacted subchapter I (§12511 et seq.) of chapter 129 of Title 42, The Public Health and Welfare, and amended sections 1070a–6 and 1087vv of this title. For complete classification of this Act to the Code, see Short Title note set out under section 12501 of Title 42 and Tables.

Section 1078–1 of this title, referred to in subsecs. (a)(2)(E) and (b)(1)(B), (Q), was repealed by Pub. L. 103–66, title IV, §4047(b)–(d), Aug. 10, 1993, 107 Stat. 364, eff. July 1, 1994, except with respect to loans provided under that section as it existed prior to Aug. 10, 1993. Subsequently, a new section 1078–1, relating to voluntary flexible agreements with guaranty agencies, was enacted by Pub. L. 105–244, title IV, §418, Oct. 7, 1998, 112 Stat. 1691.

The Higher Education Amendments of 1992, referred to in subsec. (c)(3)(A)(i)(I), is Pub. L. 102–325, July 23, 1992, 106 Stat. 448. For complete classification of this Act to the Code, see Short Title of 1992 Amendment note set out under section 1001 of this title and Tables.

The National and Community Service Trust Act of 1993, referred to in subsec. (c)(3)(A)(i)(III), is Pub. L. 103–82, Sept. 21, 1993, 107 Stat. 785. For complete classification of this Act to the Code, see Short Title of 1993 Amendment note set out under section 12501 of Title 42, The Public Health and Welfare, and Tables.

Codification

Amendments by section 2(c)(17), (26), (27) of Pub. L. 103–208 (which were effective as if included in Pub. L. 102–325) were executed to this section as amended by Pub. L. 102–325, Pub. L. 103–66, and Pub. L. 103–82, to reflect the probable intent of Congress.

Prior Provisions

A prior section 1078, Pub. L. 89–329, title IV, §428, Nov. 8, 1965, 79 Stat. 1240; Pub. L. 90–460, §§1(a)(2), 2(a)(2), (b)(1), (2), 3(b), Aug. 3, 1968, 82 Stat. 634–636; Pub. L. 90–575, title I, §§111(a), (b)(1), 112(b), 113(b)(3), (4), 115(a)(1)–(3), (b), 116(b)(3), 117(a), (b), 120(a)(1), (b), (c)(1), Oct. 16, 1968, 82 Stat. 1020–1027; Pub. L. 92–318, title I, §§132(b), 132A(b), 132C(a), (b), 132D(b)–(d), June 23, 1972, 86 Stat. 261–264; Pub. L. 93–269, §§2–4, Apr. 18, 1974, 88 Stat. 87, 89; Pub. L. 94–328, §2(b), June 30, 1976, 90 Stat. 727; Pub. L. 94–482, title I, §127(a), Oct. 12, 1976, 90 Stat. 2108; S. Res. 4, Feb. 4, 1977; Pub. L. 95–43, §1(a)(19)–(29), June 15, 1977, 91 Stat. 214–216; Pub. L. 95–566, §5(a)(2), (b)(1), (3)–(5), Nov. 1, 1978, 92 Stat. 2403; S. Res. 30, Mar. 7, 1979; Pub. L. 96–49, §5(b), Aug. 13, 1979, 93 Stat. 352; Pub. L. 96–374, title IV, §§411(b), 412(c), (d), (f), 413(b), (d), 414, 415(a)(3)–(5), (b)(2), 417, 423(a)(2), (b)–(d), title XIII, §1391(a)(1), (2), Oct. 3, 1980, 94 Stat. 1416–1420, 1422, 1432, 1503; Pub. L. 97–35, title V, §§532(a), (b)(1), 535(c), (d), 536(b), 537(a)(1), (b)(2), (c), (d)(1), (e)(2), Aug. 13, 1981, 95 Stat. 451, 452, 455–457; Pub. L. 98–79, §10(b), Aug. 15, 1983, 97 Stat. 484; Pub. L. 99–272, title XVI, §§16012(b), 16013(a), (c), (e)(2), (3), 16014(a)(1), (b)(1), (2) formerly (1), (3) formerly (2), 16015(b), 16016, 16018(a)(2), 16021, 16032(c), Apr. 7, 1986, 100 Stat. 340–343, 348, 349, 355, renumbered and amended, Pub. L. 99–320, §2(a), (b), May 23, 1986, 100 Stat. 491, related to Federal interest subsidy payments, prior to the general revision of this part by Pub. L. 99–498.

A prior section 1078a, Pub. L. 91–95, §2, Oct. 22, 1969, 83 Stat. 141; Pub. L. 92–318, title I, §134(a), June 23, 1972, 86 Stat. 270; Pub. L. 93–269, §5, Apr. 18, 1974, 88 Stat. 89; Pub. L. 94–328, §2(c), June 30, 1976, 90 Stat. 727; Pub. L. 94–482, title I, §127(c)(1), Oct. 12, 1976, 90 Stat. 2142, related to special allowances for insured student loans, prior to repeal by Pub. L. 94–482, title I, §127(c)(2), Oct. 12, 1976, 90 Stat. 2142.

Amendments

2010—Subsec. (a)(1). Pub. L. 111–152, §2204(a)(1)(A), inserted “for which the first disbursement is made before July 1, 2010, and” after “eligible institution” in introductory provisions.

Subsec. (a)(5). Pub. L. 111–152, §2204(a)(1)(B), substituted “June 30, 2010.” for “September 30, 2014, except that, in the case of a loan made or insured under a student loan or loan insurance program to enable a student who has obtained a prior loan made or insured under such program to continue his or her education program, such period shall end at the close of September 30, 2018.”

Subsec. (b)(1)(G). Pub. L. 111–152, §2204(b), repealed Pub. L. 110–84, §303. See 2007 Amendment note below.

Subsec. (b)(1)(G)(ii). Pub. L. 111–152, §2204(a)(2)(A), inserted “and before July 1, 2010,” after “July 1, 2006,”.

Subsec. (b)(1)(H)(ii). Pub. L. 111–152, §2204(a)(2)(B), inserted “and that are first disbursed before July 1, 2010,” after “July 1, 2006,”.

Subsec. (f)(1)(A)(ii). Pub. L. 111–152, §2204(a)(3), struck out “during fiscal years beginning” after “originated” and inserted “and first disbursed before July 1, 2010,” after “October 1, 2003,”.

Subsec. (j)(1). Pub. L. 111–152, §2204(a)(4), inserted “, before July 1, 2010,” after “section 1085(d)(1)(D) of this title shall”.

2009—Subsec. (a)(2)(A)(i)(II). Pub. L. 111–39, §402(f)(1)(A), struck out “and” after semicolon at end.

Subsec. (b)(1)(G)(i). Pub. L. 111–39, §402(a)(1), which directed amendment of cl. (i), as amended by section 303 of Pub. L. 110–84, by striking “or 1087–2(q)”, could not be executed because of the repeal of section 303 by Pub. L. 111–152, §2204(b). See 2010 Amendment note above and 2007 Amendment note below.

Subsec. (b)(1)(M)(i). Pub. L. 111–39, §402(f)(1)(B)(i), inserted “section” before “1078–2” in concluding provisions.

Subsec. (b)(3)(A)(i). Pub. L. 111–39, §402(f)(1)(B)(ii), substituted “any institution of higher education, any employee of an institution of higher education, or any individual or entity” for “any institution of higher education or the employees of an institution of higher education”.

Subsec. (b)(3)(C), (D). Pub. L. 111–39, §402(b)(1), inserted “or 1092(l)” after “section 1092(b)”.

Subsec. (b)(4). Pub. L. 111–39, §402(f)(1)(B)(iii), substituted “With respect to the graduate fellowship program referred to in paragraph (1)(M)(i)(II),” for “For the purpose of paragraph (1)(M)(i)(III) of this subsection,”.

Subsec. (b)(7)(B). Pub. L. 111–39, §402(f)(1)(B)(iv)(I), struck out “clause (i) or (ii) of” before “subparagraph (A)”.

Subsec. (b)(7)(D). Pub. L. 111–39, §402(f)(1)(B)(iv)(II), substituted “subparagraph (A)” for “subparagraph (A)(i)”.

Subsec. (c)(9)(K). Pub. L. 111–39, §402(f)(1)(C), substituted “6 months” for “3 months”.

2008—Subsec. (a)(2)(C). Pub. L. 110–315, §422(a)(1), amended subpar. (C) generally. Prior to amendment, subpar. (C) read as follows: “For the purpose of subparagraph (B) and this paragraph—

“(i) a student's cost of attendance shall be determined under section 1087ll 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), subpart 3 of part A of this subchapter, and part C of subchapter I of chapter 34 of title 42 and part D of this subchapter;

“(II) any veterans’ education benefits paid because of enrollment in a postsecondary education institution, including veterans’ education benefits (as defined in section 1087vv(c) of this title, but excluding benefits described in paragraph (2)(E) of such section); plus

“(III) other scholarship, grant, or loan assistance, but excluding any national service education award or post-service benefit under title I of the National and Community Service Act of 1990; and

“(iii) the determination of need and of the amount of a loan by an eligible institution under subparagraph (B) with respect to a student shall be calculated in accordance with part E of this subchapter.”

Subsec. (a)(5). Pub. L. 110–315, §422(b), substituted “2014” for “2012” and “2018” for “2016”.

Subsec. (b)(1)(G)(i). Pub. L. 110–315, §438(a)(2)(A), struck out “or section 1087–2(q) of this title” before semicolon at end.

Subsec. (b)(1)(L)(i). Pub. L. 110–315, §422(e)(2), substituted “clause (ii), (iii), or (v)” for “clause (ii) or (iii)”.

Subsec. (b)(1)(Y)(i). Pub. L. 110–315, §422(c)(1)(A), added cl. (i) and struck out former cl. (i) which read as follows: “the lender shall determine the eligibility of a borrower for a deferment described in subparagraph (M)(i) based on receipt of—

“(I) a request for deferment from the borrower and documentation of the borrower's eligibility for the deferment;

“(II) a newly completed loan application that documents the borrower's eligibility for a deferment; or

“(III) student status information received by the lender that the borrower is enrolled on at least a half-time basis; and”.

Subsec. (b)(1)(Y)(iii). Pub. L. 110–315, §422(c)(1)(B), (C), added cl. (iii).

Subsec. (b)(2)(F)(i)(V) to (VII). Pub. L. 110–315, §422(c)(2), added subcls. (V) to (VII).

Subsec. (b)(3). Pub. L. 110–315, §422(d), amended par. (3) generally. Prior to amendment, text read as follows: “A guaranty agency shall not—

“(A) offer, directly or indirectly, premiums, payments, or other inducements to any educational institution or its employees in order to secure applicants for loans under this part;

“(B) offer, directly or indirectly, any premium, incentive payment, or other inducement to any lender, or any agent, employee, or independent contractor of any lender or guaranty agency, in order to administer or market loans made under this part (other than a loan made under section 1078–8 of this title or a loan made as part of a guaranty agency's lender-of-last-resort program) for the purpose of securing the designation of that guaranty agency as the insurer of such loans;

“(C) conduct unsolicited mailings of student loan application forms to students enrolled in secondary school or a postsecondary institution, or to parents of such students, except that applications may be mailed to borrowers who have previously received loans guaranteed under this part by the guaranty agency; or

“(D) conduct fraudulent or misleading advertising concerning loan availability.

“It shall not be a violation of this paragraph for a guaranty agency to provide assistance to institutions of higher education comparable to the kinds of assistance provided to institutions of higher education by the Department of Education.”

Subsec. (b)(7)(C). Pub. L. 110–315, §424(b), substituted “section 1078–2 or 1078–3” for “section 1078–1 or 1078–3”.

Pub. L. 110–227, §3(b), struck out “, 1078–2,” after “section 1078–1”.

Subsec. (b)(9)(A)(v). Pub. L. 110–315, §422(e)(1), added cl. (v).

Subsec. (c)(2)(H)(i). Pub. L. 110–315, §422(f)(1), substituted “default aversion” for “preclaims”.

Subsec. (c)(3)(A)(iii). Pub. L. 110–315, §432(b)(2), substituted “consumer reporting agency” for “credit bureau organization”.

Subsec. (c)(3)(C)(iii), (iv). Pub. L. 110–315, §422(f)(2), added cls. (iii) and (iv).

Subsec. (c)(9)(K). Pub. L. 110–315, §103(b)(4)(A), substituted “authorizing committees” for “House Committee on Education and the Workforce and the Senate Committee on Labor and Human Resources”.

Subsec. (d). Pub. L. 110–315, §422(g)(1), inserted “and section 527 of the Appendix to title 50” after “(other than this chapter and part C of subchapter I of chapter 34 of title 42” in introductory provisions.

Subsec. (e). Pub. L. 110–315, §422(h), struck out subsec. (e). Text read as follows: “At the time of offering a borrower a loan under this part, and at the time of offering the borrower the option of repaying a loan in accordance with this section, the lender shall provide the borrower with a notice that informs the borrower, in a form prescribed by the Secretary by regulation—

“(1) that all borrowers are eligible for income-sensitive repayment, including through loan consolidation under section 1078–3 of this title;

“(2) the procedures by which the borrower may elect income-sensitive repayment; and

“(3) where and how the borrower may obtain additional information concerning income-sensitive repayment.”

Subsec. (g). Pub. L. 110–315, §103(b)(4)(B), substituted “authorizing committees” for “Committee on Labor and Human Resources of the Senate and the Committee on Education and the Workforce of the House of Representatives” in concluding provisions.

Subsec. (h). Pub. L. 110–315, §438(a)(2)(B), struck out subsec. (h) which related to lending by guaranty agencies.

Subsec. (j)(1). Pub. L. 110–227, §5(a)(1), after second sentence, inserted “No loan under section 1078, 1078–2, or 1078–8 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.”

Pub. L. 110–227, §5(a)(1), in first sentence, substituted “eligible students and parents who are otherwise unable to obtain loans under this part (except for consolidation loans under section 1078–3 of this title) or who attend an institution of higher education in the State that is designated under paragraph (4)” for “students eligible to receive interest benefits paid on their behalf under subsection (a) of this section who are otherwise unable to obtain loans under this part”.

Subsec. (j)(2)(B). Pub. L. 110–227, §5(a)(2), inserted “, in the case of students and parents applying for loans under this subsection because of an inability to otherwise obtain loans under this part (except for consolidation loans under section 1078–3 of this title),” after “lender, nor”.

Subsec. (j)(2)(C) to (E). Pub. L. 110–315, §438(a)(2)(C), inserted “and” at the end of subpar. (C), substituted period for “; and” at the end of subpar. (D), and struck out subpar. (E) which read as follows: “the guaranty agency notifies the Secretary when the guaranty agency believes or has reason to believe that the Secretary may need to exercise the Secretary's authority under section 1087–2(q) of this title.”

Subsec. (j)(3)(C). Pub. L. 110–227, §5(a)(3), inserted “or designates an institution of higher education for participation in the program under this subsection under paragraph (4)” after “under this part” in first sentence and “or to eligible borrowers who attend an institution in the State that is designated under paragraph (4)” after “problems” in third sentence.

Subsec. (j)(4), (5). Pub. L. 110–227, §5(a)(4), added pars. (4) and (5).

Subsec. (j)(6). Pub. L. 110–350, §2(1), substituted “June 30, 2010” for “June 30, 2009”.

Pub. L. 110–227, §5(a)(4), added par. (6).

Subsec. (j)(7). Pub. L. 110–350, §2(2), substituted “June 30, 2010” for “June 30, 2009”.

Pub. L. 110–227, §5(a)(4), added par. (7).

Subsec. (j)(8), (9). Pub. L. 110–227, §5(a)(4), added pars. (8) and (9).

Subsec. (j)(9)(A)(ii). Pub. L. 110–350, §2(3)(A), substituted “June 30, 2011” for “June 30, 2010” in introductory provisions.

Pub. L. 110–315, §103(b)(4)(C), substituted “authorizing committees” for “Committee on Health, Education, Labor, and Pensions of the Senate and the Committee on Education and Labor of the House of Representatives” in introductory provisions.

Subsec. (j)(9)(A)(ii)(III). Pub. L. 110–350, §2(3)(B), substituted “June 30, 2010” for “June 30, 2009”.

Subsec. (j)(9)(A)(iii). Pub. L. 110–350, §2(3)(C), substituted “July 1, 2011” for “July 1, 2010”.

Pub. L. 110–315, §103(b)(4)(C), substituted “authorizing committees” for “Committee on Health, Education, Labor, and Pensions of the Senate and the Committee on Education and Labor of the House of Representatives” in introductory provisions.

Subsec. (k)(4). Pub. L. 110–315, §422(i), added par. (4).

Subsec. (m). Pub. L. 110–315, §422(j)(1), inserted “and income-based” after “Income contingent” in heading.

Subsec. (m)(1). Pub. L. 110–315, §422(j)(2), inserted “or income-based repayment plan” before “, the terms and conditions” and “or an income-based repayment plan under section 1098e of this title, as the case may be” before the period at end.

Subsec. (m)(2). Pub. L. 110–315, §422(j)(3), inserted “or income-based” after “income contingent” in heading.

Subsec. (n)(4). Pub. L. 110–315, §103(b)(4)(D), substituted “authorizing committees” for “Committee on Education and the Workforce of the House of Representatives and the Committee on Labor and Human Resources of the Senate”.

2007—Subsec. (b)(1)(G). Pub. L. 110–84, §303(a), which directed the general amendment of subpar. (G), was repealed by Pub. L. 111–152, §2204(b).

Subsec. (b)(1)(M)(iii). Pub. L. 110–84, §202(a), struck out “not in excess of 3 years” before “during” in introductory provisions, substituted comma for “; or” at end of subcl. (II), and inserted concluding provisions.

Subsec. (c)(1)(D) to (H). Pub. L. 110–84, §302(b)(1), redesignated subpars. (E) to (H) as (D) to (G), respectively, and struck out former subpar. (D) which read as follows: “Reimbursements of losses made by the Secretary on loans submitted for claim by an eligible lender, servicer, or guaranty agency designated for exceptional performance under section 1078–9 of this title shall not be subject to additional review by the Secretary or repurchase by the guaranty agency for any reason other than a determination by the Secretary that the eligible lender, servicer, or guaranty agency engaged in fraud or other purposeful misconduct in obtaining designation for exceptional performance.”

Subsec. (c)(6)(A)(ii). Pub. L. 110–84, §301, amended cl. (ii) generally. Prior to amendment, cl. (ii) read as follows: “an amount equal to 24 percent of such payments for use in accordance with section 1072b of this title, except that, beginning on October 1, 2003, this subparagraph shall be applied by substituting ‘23 percent’ for ‘24 percent’.”

2006—Subsec. (a)(3)(A)(v)(III). Pub. L. 109–171, §8014(j)(1), added subcl. (III).

Subsec. (a)(5). Pub. L. 109–171, §8004(b)(2), substituted “2012” and “2016” for “2004” and “2008”, respectively.

Subsec. (b)(1)(A)(i)(I). Pub. L. 109–171, §8005(b)(1), substituted “$3,500” for “$2,625”.

Subsec. (b)(1)(A)(ii)(I). Pub. L. 109–171, §8005(b)(2), substituted “$4,500” for “$3,500”.

Subsec. (b)(1)(G). Pub. L. 109–171, §8014(a)(1), amended subpar. (G) generally. Prior to amendment, subpar. (G) read as follows: “insures 98 percent of the unpaid principal of loans insured under the program, except that such program shall insure 100 percent of the unpaid principal of loans made with funds advanced pursuant to subsection (j) of this section or section 1087–2(q) of this title;”.

Subsec. (b)(1)(H). Pub. L. 109–171, §8014(b)(1), amended subpar. (H) generally. Prior to amendment, subpar. (H) read as follows: “provides for 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 insures that the proceeds of the premium will not be used for incentive payments to lenders;”.

Subsec. (b)(1)(M)(iii), (iv). Pub. L. 109–171, §8007(a), added cl. (iii) and redesignated former cl. (iii) as (iv).

Subsec. (b)(1)(N)(ii), (iii). Pub. L. 109–171, §8008(a), added cls. (ii) and (iii) and struck out former cl. (ii), which read as follows: “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 or at an eligible foreign institution, are, at the request of the student, disbursed directly to the student by the means described in clause (i), unless such student requests that the check be endorsed, or the funds transfer authorized, pursuant to an authorized power-of-attorney;”.

Subsec. (b)(7)(A). Pub. L. 109–171, §8009(b)(1), substituted “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).” for “shall begin—

“(i) the day after 6 months after the date the student ceases to carry at least one-half the normal full-time academic workload (as determined by the institution); or

“(ii) on an earlier date if the borrower requests and is granted a repayment schedule that provides for repayment to commence at an earlier date.”

Subsec. (c)(1)(A). Pub. L. 109–171, §8014(j)(2), substituted “30 days” for “45 days” in last sentence.

Subsec. (c)(1)(G), (H). Pub. L. 109–171, §8014(c)(1), added subpar. (G) and redesignated former subpar. (G) as (H) and realigned margin.

Subsec. (c)(2)(A). Pub. L. 109–171, §8014(d)(1), inserted “(i)” after “including” and added cl. (ii) before semicolon at end.

Subsec. (c)(2)(D). Pub. L. 109–171, §8014(d)(2), substituted “paragraph (6)(A)” for “paragraph (6)”.

Subsec. (c)(3)(A)(i). Pub. L. 109–171, §8014(e)(1), in introductory provisions, struck out “in writing” after “on terms agreed to” and inserted “and documented in accordance with paragraph (10)” after “approval of the insurer”.

Subsec. (c)(6). Pub. L. 109–171, §8014(d)(3), designated existing provisions as subpar. (A), redesignated former subpars. (A) and (B) as cls. (i) and (ii), respectively, of subpar. (A), and added subpars. (B) and (C).

Subsec. (c)(10). Pub. L. 109–171, §8014(e)(2), added par. (10).

Subsec. (i)(1). Pub. L. 109–171, §8014(j)(3), substituted “10 days” for “21 days” in third sentence.

2002—Subsec. (c)(3)(A)(i)(IV). Pub. L. 107–314, §651(b)(1)(A), added subcl. (IV).

Subsec. (c)(3)(A)(ii)(II). Pub. L. 107–314, §651(b)(1)(B), inserted “or (IV)” after “(i)(II)”.

Subsec. (c)(3)(C). Pub. L. 107–314, §651(b)(1)(C), added subpar. (C) and struck out former subpar. (C) which read as follows: “shall contain provisions that specify that the form of forbearance granted by the lender for purposes of this paragraph shall be the 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; and”.

Subsec. (o). Pub. L. 107–314, §651(b)(2), added subsec. (o).

1998—Subsec. (a)(2)(A)(i). Pub. L. 105–244, §417(a)(1)(A), added subcls. (I) and (II) and struck out former subcls. (I) to (III) which read as follows:

“(I) sets forth such student's estimated cost of attendance (as determined under section 1087ll of this title);

“(II) sets forth such student's estimated financial assistance; and

“(III) sets forth a schedule for disbursement of the proceeds of the loan in installments, consistent with the requirements of section 1078–7 of this title;”.

Subsec. (a)(2)(B). Pub. L. 105–244, §417(a)(1)(B), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: “For the purpose of clause (ii) of subparagraph (A), a student shall qualify for a portion of an interest payment under paragraph (1) if the eligible institution has provided the lender with a statement evidencing a determination of need for a loan (as determined under part E of this subchapter) and the amount of such need, subject to the provisions of subparagraph (D).”

Subsec. (a)(2)(C). Pub. L. 105–244, §417(a)(1)(C), amended subpar. (C) generally. Prior to amendment, subpar. (C) read as follows: “For the purpose of paragraph (1) and this paragraph—

“(i) a student's estimated financial assistance means, for the period for which the loan is sought, the amount of assistance such student will receive under subpart 1 of part A of this subchapter (as determined in accordance with section 1091(b) of this title), subpart 3 of part A of this subchapter, and part C of subchapter I of chapter 34 of title 42 and part D of this subchapter, and any veterans’ education benefits paid because of enrollment in a postsecondary education institution, including veterans’ education benefits (as defined in section 1087vv(c) of this title), plus other scholarship, grant, or loan assistance; and

“(ii) the determination of need and of the amount of a loan by an eligible institution under subparagraph (B) with respect to a student shall be calculated in accordance with part E of this subchapter.”

Subsec. (a)(2)(F). Pub. L. 105–244, §417(a)(1)(D), struck out subpar. (F) which read as follows: “Except as provided in subparagraph (D), an eligible institution may refuse to certify a statement which permits a student to receive a loan under this part or to certify a loan amount that is less than the student's determination of need (as determined under part E of this subchapter), if the reason for such action is documented and provided in written form to each student so affected.”

Subsec. (a)(5). Pub. L. 105–244, §417(a)(2), substituted “September 30, 2004” for “September 30, 2002” and “September 30, 2008” for “September 30, 2006”.

Subsec. (b)(1)(A). Pub. L. 105–244, §417(b)(1)(A), inserted “, as defined in section 1088(a)(2) of this title,” after “academic year” in introductory provisions.

Subsec. (b)(1)(A)(i)(I). Pub. L. 105–244, §417(b)(1)(B)(i), substituted “length; and” for “length (as determined under section 1088 of this title);”.

Subsec. (b)(1)(A)(i)(II), (III). Pub. L. 105–244, §417(b)(1)(B)(ii), added subcl. (II) and struck out former subcls. (II) and (III) which read as follows:

“(II) $1,750, if such student is enrolled in a program whose length is less than one academic year, but at least 2/3 of such an academic year; and

“(III) $875, if such student is enrolled in a program whose length is less than 2/3, but at least 1/3, of such an academic year;”.

Subsec. (b)(1)(A)(vi). Pub. L. 105–244, §417(b)(1)(C)–(E), added cl. (vi).

Subsec. (b)(1)(D)(ii). Pub. L. 105–244, §417(b)(2), amended cl. (ii) generally. Prior to amendment, cl. (ii) read as follows: “the repayment period of any insured loan may not exceed 10 years, and”.

Subsec. (b)(1)(E). Pub. L. 105–244, §417(b)(3), amended subpar. (E) generally. Prior to amendment, subpar. (E) read as follows: “subject to subparagraphs (D) and (L), and except as provided by subparagraph (M), provides that—

“(i) not more than 6 months prior to the date on which the borrower's first payment is due, the lender shall offer the borrower of a loan made, insured, or guaranteed under this section or section 1078–1 of this title, the option of repaying the loan in accordance with a graduated or income-sensitive repayment schedule established by the lender and in accordance with regulations of the Secretary; and

“(ii) repayment of loans shall be in installments over a period of not less than 5 years (unless the student, during the 6 months immediately preceding the start of the repayment period, specifically requests that repayment be made over a shorter period) nor more than 10 years commencing at the beginning of the repayment period determined under paragraph (7) of this subsection;”.

Subsec. (b)(1)(G). Pub. L. 105–244, §417(b)(4), struck out “not less than” after “insures”.

Subsec. (b)(1)(L)(i). Pub. L. 105–244, §417(b)(5), inserted “except as otherwise provided by a repayment plan selected by the borrower under clause (ii) or (iii) of paragraph (9)(A),” before “during any” and “, notwithstanding any payment plan under paragraph (9)(A)” after “due and payable”.

Subsec. (b)(1)(M)(i)(I). Pub. L. 105–244, §417(b)(6)(A), inserted before semicolon “, except that no borrower, notwithstanding the provisions of the promissory note, shall be required to borrow an additional loan under this subchapter and part C of subchapter I of chapter 34 of title 42 in order to be eligible to receive a deferment under this clause”.

Subsec. (b)(1)(M)(ii). Pub. L. 105–244, §417(b)(6)(B), inserted before semicolon “, 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”.

Subsec. (b)(1)(U)(i)(I), (ii). Pub. L. 105–244, §417(b)(7)(A), substituted “emergency action,” for “emergency action,,”.

Subsec. (b)(1)(U)(iii)(I). Pub. L. 105–244, §417(b)(7)(B), inserted “that originates or holds more than $5,000,000 in loans made under this subchapter and part C of subchapter I of chapter 34 of title 42 for any lender fiscal year (except that each lender described in section 1085(d)(1)(A)(ii)(III) of this title shall annually submit the results of an audit required by this clause),” before “at least once a year”.

Subsec. (b)(1)(X). Pub. L. 105–244, §417(b)(8)(B)(i), substituted “subsection (c)(9)” for “subsection (c)(10)”.

Subsec. (b)(1)(Y). Pub. L. 105–244, §417(b)(8)(A), (B)(ii), (C), added subpar. (Y).

Subsec. (b)(3). Pub. L. 105–244, §417(b)(9)(B), inserted concluding provisions.

Subsec. (b)(3)(C). Pub. L. 105–244, §417(b)(9)(A), added subpar. (C) and struck out former subpar. (C) which read as follows: “conduct unsolicited mailings to students enrolled in secondary school of student loan application forms; or”.

Subsec. (b)(7)(D). Pub. L. 105–244, §417(b)(10), added subpar. (D).

Subsec. (b)(9). Pub. L. 105–244, §417(b)(11), added par. (9).

Subsec. (c)(1)(A). Pub. L. 105–244, §417(c)(1)(A)(i), substituted “95 percent” for “98 percent”.

Subsec. (c)(1)(B)(i). Pub. L. 105–244, §417(c)(1)(A)(ii), substituted “85 percent” for “88 percent”.

Subsec. (c)(1)(B)(ii). Pub. L. 105–244, §417(c)(1)(A)(iii), substituted “75 percent” for “78 percent”.

Subsec. (c)(1)(E)(i). Pub. L. 105–244, §417(c)(1)(A)(iv)(I), substituted “95 percent” for “98 percent”.

Subsec. (c)(1)(E)(ii). Pub. L. 105–244, §417(c)(1)(A)(iv)(II), substituted “85 percent” for “88 percent”.

Subsec. (c)(1)(E)(iii). Pub. L. 105–244, §417(c)(1)(A)(iv)(III), substituted “75 percent” for “78 percent”.

Subsec. (c)(1)(F)(i). Pub. L. 105–244, §417(c)(1)(A)(v)(I), substituted “95 percent” for “98 percent”.

Subsec. (c)(1)(F)(ii). Pub. L. 105–244, §417(c)(1)(A)(v)(II), substituted “85 percent” for “88 percent”.

Subsec. (c)(1)(F)(iii). Pub. L. 105–244, §417(c)(1)(A)(v)(III), substituted “75 percent” for “78 percent”.

Subsec. (c)(2)(A). Pub. L. 105–244, §417(c)(2)(A), substituted “proof that the institution was contacted and other reasonable attempts were made” for “proof that reasonable attempts were made”.

Subsec. (c)(2)(G). Pub. L. 105–244, §417(c)(2)(B), substituted “certifies to the Secretary that diligent attempts, including contact with the institution, have been made” for “certifies to the Secretary that diligent attempts have been made”.

Subsec. (c)(2)(H)(ii). Pub. L. 105–244, §417(c)(3), amended cl. (ii) generally. Prior to amendment, cl. (ii) read as follows: “the guaranty agency may require the payment by the institution of a reasonable fee (as determined in accordance with regulations prescribed by the Secretary) for such information; and”.

Subsec. (c)(3)(A)(i). Pub. L. 105–244, §417(c)(4)(A), struck out “written” before “request” in introductory provisions.

Subsec. (c)(3)(D). Pub. L. 105–244, §417(c)(4)(B)–(D), added subpar. (D).

Subsec. (c)(6). Pub. L. 105–244, §417(c)(5), amended heading and text of par. (6) generally, revising and restating provisions relating to Secretary's equitable share.

Subsec. (c)(8). Pub. L. 105–244, §417(c)(6), redesignated subpar. (A) as entire par. and struck out subpar. (B) which read as follows: “An orderly transition from the Federal Family Education Loan Program under this part to the Federal Direct Student Loan Program under part C of this subchapter shall be deemed to be in the Federal fiscal interest, and a guaranty agency shall promptly assign loans to the Secretary under this paragraph upon the Secretary's request.”

Subsec. (c)(9)(A). Pub. L. 105–244, §417(c)(7)(A), substituted “maintain in the agency's Federal Student Loan Reserve Fund established under section 1072a of this title a current minimum reserve level of at least 0.25 percent” for “maintain a current minimum reserve level of at least .5 percent”.

Subsec. (c)(9)(C). Pub. L. 105–244, §417(c)(7)(B), substituted “85 percent pursuant to paragraph (1)(B)(i)” for “80 percent pursuant to subsection (c)(1)(B)(ii) of this section”, struck out “, as appropriate,” after “Secretary shall require”, and substituted “45 working days” for “30 working days”.

Subsec. (c)(9)(E)(iv). Pub. L. 105–244, §417(c)(7)(C)(i), inserted “or” at end.

Subsec. (c)(9)(E)(v). Pub. L. 105–244, §417(c)(7)(C)(ii), substituted a period for “; or” at end.

Subsec. (c)(9)(E)(vi). Pub. L. 105–244, §417(c)(7)(C)(iii), struck out cl. (vi) which read as follows: “the Secretary determines that such action is necessary to ensure an orderly transition from the loan programs under this part to the direct student loan programs under part C of this subchapter.”

Subsec. (c)(9)(F)(vii). Pub. L. 105–244, §417(c)(7)(D), substituted “and to avoid disruption of the student loan program.” for “to avoid disruption of the student loan program, and to ensure an orderly transition from the loan programs under this part to the direct student loan programs under part C of this subchapter.”

Subsec. (c)(9)(I). Pub. L. 105–244, §417(c)(7)(E), inserted “that, if commenced after September 24, 1998, shall be on the record” after “for a hearing”.

Subsec. (c)(9)(K). Pub. L. 105–244, §417(c)(7)(F), substituted “and the Workforce” for “and Labor” and struck out “and the progress of the transition from the loan programs under this part to the direct student loan programs under part C of this subchapter” after “guaranty agency system”.

Subsec. (e). Pub. L. 105–244, §417(d), amended heading and text of subsec. (e) generally. Prior to amendment, subsec. (e) related to payments for lender referral services.

Subsec. (f). Pub. L. 105–244, §417(e), amended heading and text of subsec. (f) generally. Prior to amendment, subsec. (f) authorized the Secretary to make payments to guaranty agencies for fiscal years prior to fiscal year 1994 for certain administrative and other costs and provided for applications for such payments.

Subsec. (g). Pub. L. 105–244, §417(f), substituted “and the Workforce” for “and Labor” in concluding provisions.

Subsec. (j)(3). Pub. L. 105–244, §417(g)(1), struck out “during transition to direct lending” after “services” in heading.

Subsec. (j)(3)(A). Pub. L. 105–244, §417(g)(2), struck out “during the transition from the Federal Family Education Loan Program under this part to the Federal Direct Student Loan Program under part C of this subchapter” after “loan capital” and inserted “designated for a State” after “a guaranty agency” and “subparagraph (C) and” after “funds in accordance with”.

Subsec. (j)(3)(C). Pub. L. 105–244, §417(g)(3), added subpar. (C).

Subsec. (l). Pub. L. 105–244, §417(h), amended heading and text of subsec. (l) generally. Prior to amendment, text read as follows:

“(1) Assistance required.—Upon receipt of a proper request from the lender, a guaranty agency having an agreement with the Secretary under subsection (c) of this section shall engage in preclaims assistance activities (as described in subsection (c)(6)(C)(i)(I) of this section) and supplemental preclaims assistance activities (as described in subsection (c)(6)(C) of this section) with respect to each loan covered by such agreement.

“(2) Payments for supplemental preclaims assistance.—The Secretary shall make payments in accordance with the provisions of this paragraph to any guaranty agency that engages in supplemental preclaims assistance (as defined in subsection (c)(6)(C) of this section) on a loan guaranteed under this part. For each loan on which such assistance is performed and for which a default claim is not presented to the guaranty agency by the lender on or before the 150th day after the loan becomes 120 days delinquent, such payment shall be equal to one percent of the total of the unpaid principal and the accrued unpaid interest of the loan.”

Subsec. (m)(1). Pub. L. 105–244, §417(i), substituted “may require borrowers” for “shall require at least 10 percent of the borrowers”.

Subsec. (n). Pub. L. 105–244, §417(k), added subsec. (n).

Pub. L. 105–244, §417(j), struck out heading and text of subsec. (n) which related to State share of default costs.

1997—Subsec. (a)(5). Pub. L. 105–33, §6104(2), substituted “September 30, 2002,” for “September 30, 1998,” and “September 30, 2006.” for “September 30, 2002.”

Subsec. (c)(9)(A). Pub. L. 105–33, §6101(b), struck out “for the fiscal year of the agency that begins in 1993” after “loans guaranteed by such agency” and struck out at end “The minimum reserve level shall increase to—

“(i) .7 percent of such total attributable amount for the fiscal year of the agency that begins in 1994;

“(ii) .9 percent of such total attributable amount for the fiscal year of the agency that begins in 1995; and

“(iii) 1.1 percent of such total attributable amount for each fiscal year of the agency that begins on or after January 1, 1996.”

1994—Subsec. (c)(1)(G). Pub. L. 103–382 added subpar. (G).

1993—Subsec. (a)(2)(C)(i). Pub. L. 103–208, §2(c)(11), substituted “; and” for period at end.

Subsec. (a)(2)(E). Pub. L. 103–208, §2(c)(12), inserted “or 1078–8” after “1078–1”.

Subsec. (b)(1)(A)(ii), (iii). Pub. L. 103–208, §2(c)(13)(A), added cls. (ii) and (iii) and struck out former cls. (ii) and (iii) which read as follows:

“(ii) in the case of a student who has successfully completed such first year but has not successfully completed the remainder of a program of undergraduate study—

“(I) $3,500, if such student is enrolled in a program whose length is at least one academic year in length (as determined under section 1088 of this title);

“(II) $2,325, if such student is enrolled in a program whose length is less than one academic year, but at least 2/3 of such academic year; and

“(III) $1,175, if such student is enrolled in a program whose length is less than 2/3, but at least 1/3, of such academic year;

“(iii) in the case of a student at an eligible institution who has successfully completed such first and second year but has not successfully completed the remainder of a program of undergraduate study—

“(I) $5,500, if such student is enrolled in a program whose length is at least one academic year in length (as determined under section 1088 of this title);

“(II) $3,675, if such student is enrolled in a program whose length is less than one academic year, but at least 2/3 of such an academic year; and

“(III) $1,825, if such student is enrolled in a program whose length is less than 2/3, but at least 1/3, of such an academic year; and”.

Subsec. (b)(1)(A)(iv), (v). Pub. L. 103–208, §2(c)(13)(B), (C), added cl. (iv) and redesignated former cl. (iv) as (v).

Subsec. (b)(1)(B). Pub. L. 103–208, §2(c)(14), substituted a semicolon for period at end of closing provisions.

Subsec. (b)(1)(D). Pub. L. 103–66, §4043(a)(1), substituted “be subject to income contingent repayment in accordance with subsection (m) of this section;” for “be subject to repayment in accordance with the regulations required by subsection (m) of this section if the Secretary has published the finding required by paragraph (2) of such subsection;”.

Subsec. (b)(1)(G). Pub. L. 103–66, §4108(b), substituted “98 percent” for “100 percent” and inserted before semicolon at end “, except that such program shall insure 100 percent of the unpaid principal of loans made with funds advanced pursuant to subsection (j) of this section or section 1087–2(q) of this title”.

Subsec. (b)(1)(H). Pub. L. 103–66, §4102(c), substituted “1.0 percent” for “3 percent”.

Subsec. (b)(1)(N). Pub. L. 103–208, §2(c)(15), amended subpar. (N) generally. Prior to amendment, subpar. (N) read as follows: “provides that funds borrowed by a student are disbursed to the institution by check or other means that is payable to and requires the endorsement or other certification by such student, except nothing in this subchapter and part C of subchapter I of chapter 34 of title 42 shall be interpreted to allow the Secretary to require checks to be made co-payable to the institution and the borrower or to prohibit the disbursement of loan proceeds by means other than by check and except in the case of students who are studying outside the United States in a program of study abroad that is approved for credit by the home institution at which the student is enrolled, the funds shall, at the request of the borrower, be delivered directly to the student and the checks may be endorsed, and fund transfers authorized, pursuant to an authorized power-of-attorney;”.

Subsec. (b)(1)(U). Pub. L. 103–208, §2(c)(16), inserted a comma after “emergency action” in two places and substituted “this clause” for “this clause;” at end.

Subsec. (b)(1)(V). Pub. L. 103–208, §2(c)(17), redesignated subpar. (X) as (V) and struck out former subpar. (V) which related to procedure and requirements for granting a forbearance while a borrower is enrolled in a medical or dental internship or residency program. See Codification note above.

Subsec. (b)(1)(W). Pub. L. 103–208, §2(c)(17), redesignated subpar. (Y) as (W) and struck out former subpar. (W) which read as follows:

“(i) provides that, upon written request, a lender shall grant a borrower forbearance on such terms as are otherwise consistent with the regulations of the Secretary, during periods in which the borrower is serving in a national service position, for which the borrower receives a national service educational award under the National and Community Service Trust Act of 1993;

“(ii) provides that clauses (iii) and (iv) of subparagraph (V) shall also apply to a forbearance granted under this subparagraph; and

“(iii) provides that interest shall continue to accrue on a loan for which a borrower receives forbearance under this subparagraph and shall be capitalized or paid by the borrower;”. See Codification note above.

Pub. L. 103–82, §102(c)(1)(A), added subpar. (W) and redesignated former subpar. (W) as (X).

Subsec. (b)(1)(X). Pub. L. 103–208, §2(c)(17)(B), redesignated subpar. (Z) as (X). Former subpar. (X) redesignated (V). See Codification note above.

Pub. L. 103–82, §102(c)(1)(A)(i), redesignated subpar. (W) as (X). Former subpar. (X) redesignated (Y).

Subsec. (b)(1)(Y). Pub. L. 103–208, §2(c)(17)(B), redesignated subpar. (Y) as (W). See Codification note above.

Pub. L. 103–82, §102(c)(1)(A)(i), redesignated subpar. (X) as (Y). Former subpar. (Y) redesignated (Z).

Subsec. (b)(1)(Z). Pub. L. 103–208, §2(c)(17)(B), redesignated subpar. (Z) as (X). See Codification note above.

Pub. L. 103–82, §102(c)(1)(A)(i), redesignated subpar. (Y) as (Z).

Subsec. (b)(2)(F)(i). Pub. L. 103–208, §2(c)(18), substituted “either jointly or separately to provide a notice” for “each to provide a separate notice”.

Subsec. (b)(2)(F)(ii). Pub. L. 103–208, §2(c)(19)–(21), substituted “transferee” for “transferor” in introductory provisions, struck out “to another holder” after “the loan” in subcl. (I), and substituted “the new” for “such other” in subcl. (II).

Subsec. (b)(7). Pub. L. 103–208, §2(c)(22), amended par. (7) generally. Prior to amendment, par. (7) read as follows:

“(A) In the case of a loan made under section 1077 of this title or this section, the repayment period shall begin on the day immediately following the expiration of the 6-month period after the student ceases to carry at least one-half the normal full-time academic workload as determined by the institution, 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 or forbearance.

“(B) In the case of a loan made under section 1078–1 or 1078–8 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.

“(C) In the case of a loan made under section 1078–2 or 1078–3 of this title, the repayment period shall begin on the day the loan is disbursed, and shall exclude any period of authorized deferment or forbearance.”

Subsec. (b)(8). Pub. L. 103–208, §2(c)(23), added par. (8).

Subsec. (c)(1)(A). Pub. L. 103–208, §2(c)(24), substituted last sentence for former last sentence which read as follows: “In no case shall a guaranty agency file a claim under this subsection for reimbursement with respect to losses prior to 270 days after the loan becomes delinquent with respect to any installment thereon, or later than 45 days after the guaranty agency discharges its insurance obligation on the loan.”

Pub. L. 103–66, §4108(a)(1), substituted “98 percent” for “100 percent” in fourth sentence.

Subsec. (c)(1)(B), (E), (F). Pub. L. 103–66, §4108(a)(2)–(4), in subpar. (B), substituted “88 percent” for “90 percent” in cl. (i) and “78 percent” for “80 percent” in cl. (ii), and added subpars. (E) and (F).

Subsec. (c)(2)(G). Pub. L. 103–208, §2(c)(25), substituted “certifies” for “demonstrates” before “to the Secretary”.

Subsec. (c)(3)(A). Pub. L. 103–208, §2(c)(26), added subpar. (A) and struck out former subpar. (A) which read as follows: “shall contain provisions providing for forbearance in accordance with subparagraphs (V) and (W) of subsection (b)(1) of this section for the benefit of the student borrower serving in a medical or dental internship or residency program;”. See Codification note above.

Pub. L. 103–82, §102(c)(1)(B), substituted “subparagraphs (V) and (W) of subsection (b)(1)” for “subsection (b)(1)(V)”.

Subsec. (c)(6)(A)(ii). Pub. L. 103–66, §4110(a), substituted “27 percent” for “30 percent”.

Subsec. (c)(8). Pub. L. 103–66, §4044, designated existing provisions as subpar. (A), struck out second and third sentences, and added subpar. (B). Prior to amendment, second and third sentences read as follows: “Prior to making such determination for any guaranty agency, the Secretary shall, in consultation with the guaranty agency, develop criteria to determine whether such agency has made adequate collections efforts. In determining whether a guaranty agency's collection efforts have met such criteria, the Secretary shall consider the agency's record of success in collecting on defaulted loans, the age of the loans, and the amount of recent payments received on the loans.”

Subsec. (c)(9). Pub. L. 103–66, §4107(a), redesignated par. (10) as (9) and struck out former par. (9) which required guaranty agencies to pay reinsurance fees to the Secretary.

Subsec. (c)(10). Pub. L. 103–66, §4107(a)(2), redesignated par. (10) as (9).

Subsec. (c)(10)(C). Pub. L. 103–66, §4045(1), inserted “, as appropriate,” after “the Secretary shall require”.

Subsec. (c)(10)(D). Pub. L. 103–66, §4045(2), designated existing provisions as cl. (i), substituted “If the Secretary is not seeking to terminate the guaranty agency's agreement under subparagraph (E), or assuming the guaranty agency's functions under subparagraph (F), a” for “Each”, and added cl. (ii).

Subsec. (c)(10)(E)(iv) to (vi). Pub. L. 103–66, §4045(3), added cls. (iv) to (vi).

Subsec. (c)(10)(F). Pub. L. 103–66, §4045(4)(A), substituted “If a guaranty” for “Except as provided in subparagraph (G), if a guaranty”.

Subsec. (c)(10)(F)(v). Pub. L. 103–66, §4045(4)(B), amended cl. (v) generally. Prior to amendment, cl. (v) read as follows: “provide the guaranty agency with additional advance funds in accordance with section 1072(c)(7) of this title in order to meet immediate cash needs of the guaranty agency and ensure the uninterrupted payment of claims, with such restrictions on the use of such funds, as determined appropriate by the Secretary; or”.

Subsec. (c)(10)(F)(vi), (vii). Pub. L. 103–66, §4045(4)(C), (D), in cl. (vi), substituted “to avoid” for “and to avoid” before “disruption of the student” and inserted before period at end “, and to ensure an orderly transition from the loan programs under this part to the direct student loan programs under part C of this subchapter”, redesignated cl. (vi) as (vii), and added new cl. (vi).

Subsec. (c)(10)(G). Pub. L. 103–66, §4045(5), (7), added subpar. (G) and struck out former subpar. (G) which read as follows: “The Secretary may not take any action under subparagraph (E) or (F) against any guaranty agency that is backed by the full faith and credit of the State where such guaranty agency is the primary guarantor.”

Subsec. (c)(10)(H) to (J). Pub. L. 103–66, §4045(6), (7), added subpar. (H) and redesignated former subpars. (H) and (I) as (I) and (J), respectively. Former subpar. (J) redesignated (K).

Subsec. (c)(10)(K). Pub. L. 103–66, §4045(6), (8), redesignated subpar. (J) as (K) and substituted “system and the progress of the transition from the loan programs under this part to the direct student loan programs under part C of this subchapter.” for “system, together with recommendations for legislative changes, if necessary, for the maintenance of a strong guaranty agency system.”

Subsec. (e)(1). Pub. L. 103–66, §4041(b)(1), amended heading, designated existing provisions as subpar. (A) and substituted “with which the Secretary has an agreement under subparagraph (B)” for “in any State”, and added subpar. (B).

Subsec. (e)(2). Pub. L. 103–66, §4041(b)(2)(A), in introductory provisions, substituted “with which the Secretary has an agreement under paragraph (1)(B)” for “in a State”.

Subsec. (e)(2)(A). Pub. L. 103–208, §2(c)(27), redesignated former cl. (i), subcl. (I) as (i) and former cl. (i), subcl. (II) as (ii) and struck out cl. (i) designation following subpar. (A) designation. See Codification note above.

Pub. L. 103–66, §4041(b)(2)(B), amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: “such student is either a resident of such State or is accepted for enrollment in or is attending an eligible institution in such State; and”.

Subsec. (e)(3). Pub. L. 103–66, §4041(b)(3), substituted “From funds available for costs of transition under section 1087h of this title, the” for “The”.

Subsec. (e)(5). Pub. L. 103–66, §4041(b)(4), struck out par. (5) which related to authorization of appropriations.

Subsec. (f)(1)(A). Pub. L. 103–66, §4107(b)(1), substituted “For a fiscal year prior to fiscal year 1994, the Secretary” for “The Secretary”.

Subsec. (f)(1)(B). Pub. L. 103–66, §4107(b)(2), inserted “prior to fiscal year 1994” after “any fiscal year”.

Subsec. (j)(2). Pub. L. 103–208, §2(c)(28), substituted “lender-of-last-resort” for “lender of last resort” in introductory provisions.

Subsec. (j)(2)(A) to (E). Pub. L. 103–66, §4041(a)(2)(B), in subpar. (A) inserted before semicolon “and ensure a response within 60 days after the student's original complete application is filed under this subsection”, added subpar. (B), and redesignated former subpars. (B) to (D) as (C) to (E), respectively.

Subsec. (j)(3). Pub. L. 103–66, §4041(a)(1), added par. (3) consisting of subpars. (A) and (B), and struck out former par. (3) relating to limitation on lender-of-last-resort program, consisting of subpars. (A) to (C).

Subsec. (l)(2). Pub. L. 103–66, §4112(a), inserted second sentence and struck out former second sentence which read as follows: “Such payments shall be equal to $50.00 for each loan on which such assistance is performed and for which a default claim is not presented to the guaranty agency by the lender on or before the 150th day after the loan becomes 120 days delinquent.”

Subsec. (m). Pub. L. 103–66, §4043(a)(2), amended par. (1) generally, added par. (2), and struck out former pars. (2) to (4). Prior to amendment, former pars. (1) to (4) related to establishment of terms and conditions, collection mechanism, loans for which income contingent repayment is required, and additional authority, respectively.

Subsec. (n). Pub. L. 103–66, §4201(a), added subsec. (n).

1992—Subsec. (a)(2)(C). Pub. L. 102–325, §416(a)(1), amended cls. (i) and (ii) generally. Prior to amendment, cls. (i) and (ii) read as follows:

“(i) a student's estimated financial assistance means, for the period for which the loan is sought, the amount of assistance such student will receive under subpart 1 of part A of this subchapter (as determined in accordance with section 1091(b) of this title), subpart 2 of part A of this subchapter, part D of this subchapter, and part C of subchapter I of chapter 34 of title 42, and any amount paid the student under chapters 32, 34, and 35 of title 38, plus other scholarship, grant, or loan assistance; and

“(ii) the determination of need and of the amount of a loan by an eligible institution under subparagraph (B) with respect to a student shall be calculated by subtracting from the estimated cost of attendance at the eligible institution the total of the expected family contribution with respect to such student plus any estimated financial assistance reasonably available to such student.”

Subsec. (a)(3)(A)(v). Pub. L. 102–325, §416(a)(2), added cl. (v).

Subsec. (a)(5). Pub. L. 102–325, §411(b)(2), substituted “September 30, 1998” for “September 30, 1992” and “September 30, 2002” for “September 30, 1997”.

Subsec. (a)(7). Pub. L. 102–325, §416(a)(3), added par. (7).

Subsec. (b)(1)(A). Pub. L. 102–325, §416(b)(1)(A), inserted “or in a program of study abroad approved for credit by the eligible home institution at which such student is enrolled” in introductory provisions.

Subsec. (b)(1)(A)(i) to (iv). Pub. L. 102–325, §416(b)(1)(B), added cls. (i) to (iv) and struck out former cls. (i) to (iii) which read as follows:

“(i) $2,625, in the case of a student who has not successfully completed the first and second year of a program of undergraduate education;

“(ii) $4,000, in the case of a student who has successfully completed such first and second year but who has not successfully completed the remainder of a program of undergraduate education; and

“(iii) $7,500, in the case of a graduate or professional student (as defined in regulations of the Secretary);”.

Subsec. (b)(1)(B). Pub. L. 102–325, §416(b)(2), which directed the amendment of subpar. (B) by striking clauses (i) and (ii) and inserting language which contained new cls. (i) and (ii) followed by concluding provisions, was executed by substituting the new cls. (i) and (ii) and concluding provisions for former cls. (i) and (ii) and former concluding provisions to reflect the probable intent of Congress. Prior to amendment, cls. (i) and (ii) and concluding provisions read as follows:

“(i) $17,250, in the case of any student who has not successfully completed a program of undergraduate education, excluding loans made under section 1078–1 or 1078–2 of this title; and

“(ii) $54,750, in the case of any graduate or professional student (as defined by regulations of the Secretary and including any loans which are insured by the Secretary under this part, or by a guaranty agency, made to such student before the student became a graduate or professional student), excluding loans made under section 1078–1 or 1078–2 of this title;

except that the Secretary may increase the limit applicable to students who are pursuing programs which the Secretary determines are exceptionally expensive;”.

Subsec. (b)(1)(D), (E). Pub. L. 102–325, §416(c)(1), amended subpars. (D) and (E) generally. Prior to amendment, subpars. (D) and (E) read as follows:

“(D) provides that (i) the student borrower shall be entitled to accelerate without penalty the whole or any part of an insured loan, (ii) except as provided in subparagraph (M) of this paragraph, the repayment period of any insured loan may not exceed 10 years, and (iii) the note or other written evidence of any loan, may contain such reasonable provisions relating to repayment in the event of default by the borrower as may be authorized by regulations of the Secretary in effect at the time such note or written evidence was executed;

“(E) subject to subparagraphs (D) and (L) of this paragraph and except as provided by subparagraph (M) of this paragraph, provides that repayment of loans shall be in installments over a period of not less than 5 years (unless the student, during the 6 months preceding the start of the repayment period, specifically requests that repayment be made over a shorter period) nor more than 10 years beginning 6 months after the month in which the student ceases to carry at least one-half the normal full-time academic workload as determined by the institution;”.

Subsec. (b)(1)(L)(i). Pub. L. 102–325, §416(d), substituted “(but in no instance less than the amount of interest due and payable)” for “, except that, in the case of a husband and wife, both of whom have such loans outstanding, the total of the combined payments for such a couple during any year shall not be less than $600 or the balance of all such loans, whichever is less”.

Subsec. (b)(1)(M). Pub. L. 102–325, §416(e)(1), amended subpar. (M) generally, revising and restating as cls. (i) to (iii) provisions formerly contained in cls. (i) to (xi).

Subsec. (b)(1)(N). Pub. L. 102–325, §416(f), substituted “except in the case of students who are studying outside the United States in a program of study abroad that is approved for credit by the home institution at which the student is enrolled, the funds shall, at the request of the borrower, be delivered directly to the student and the checks may be endorsed, and fund transfers authorized, pursuant to an authorized power-of-attorney;” for “except in the case of attendance at an institution outside the United States, the funds shall be delivered directly to the student;”.

Subsec. (b)(1)(T). Pub. L. 102–325, §416(g), amended subpar. (T) generally. Prior to amendment, subpar. (T) read as follows: “provides no restrictions with respect to eligible institutions (other than nonresidential correspondence schools) which are more onerous than eligibility requirements for institutions under the Federal student loan insurance program as in effect on January 1, 1985, unless—

“(i) that institution is ineligible under regulations for the emergency action, limitation, suspension, or termination of eligible institutions under the Federal student loan insurance program or is ineligible pursuant to criteria issued under the student loan insurance program which are substantially the same as regulations with respect to such eligibility issued under the Federal student loan insurance program; or

“(ii) there is a State constitutional prohibition affecting the eligibility of such an institution;”.

Subsec. (b)(1)(U)(iii). Pub. L. 102–325, §416(h), added cl. (iii).

Subsec. (b)(1)(V). Pub. L. 102–325, §416(i)(4), (5), added cls. (ii) and (iii) and redesignated former cl. (ii) as (iv).

Pub. L. 102–325, §416(i)(3), which directed the amendment of cl. (ii) by substituting a semicolon for a period at end, could not be executed because the period had been stricken by Pub. L. 102–164, §601(b)(2).

Pub. L. 102–325, §416(i)(1), (2), struck out “and” at end of cl. (i) and inserted “or (ii)” after “clause (i)” in two places in cl. (ii).

Subsec. (b)(1)(W) to (Y). Pub. L. 102–325, §416(j), added subpars. (W) to (Y) and struck out former subpars. (W) and (X) which related to credit reports, credit worthy cosigners, and authorizations for entry of judgments against borrowers in the event of default.

Subsec. (b)(2)(C). Pub. L. 102–325, §416(k)(1), substituted “, including financial information, as the Secretary may reasonably require to carry out the Secretary's functions under this part and protect the financial interest of the United States,” for “, as the Secretary may reasonably require to carry out the Secretary's functions under this part,”.

Subsec. (b)(2)(D)(i). Pub. L. 102–325, §416(k)(2)(A), substituted “on at least an annual basis” for “at least once every 2 years”.

Subsec. (b)(2)(E). Pub. L. 102–325, §416(k)(3), designated existing provisions as cl. (i) and added cl. (ii).

Subsec. (b)(2)(F). Pub. L. 102–325, §416(k)(2)(B), (4), added subpar. (F).

Subsec. (b)(3)(B) to (D). Pub. L. 102–325, §416(l), added subpar. (B) and redesignated former subpars. (B) and (C) as (C) and (D), respectively.

Subsec. (b)(4). Pub. L. 102–325, §416(n), inserted at end sentence relating to requests for deferment of repayment by students engaged in fellowship-supported study outside the United States.

Pub. L. 102–325, §416(m), redesignated par. (5) as (4) and struck out former par. (4) which related to targeted teacher deferment rule.

Subsec. (b)(5). Pub. L. 102–325, §416(m)(2), redesignated par. (6) as (5). Former par. (5) redesignated (4).

Subsec. (b)(6). Pub. L. 102–325, §416(o), added par. (6). Former par. (6) redesignated (5).

Subsec. (b)(7). Pub. L. 102–325, §416(c)(2), added par. (7).

Subsec. (c)(1)(A). Pub. L. 102–325, §416(p)(1), substituted “, or later than 45 days after the guaranty agency discharges its insurance obligation on the loan.” for period at end.

Subsec. (c)(1)(D). Pub. L. 102–325, §416(p)(2), added subpar. (D).

Subsec. (c)(2). Pub. L. 102–325, §416(p)(3), struck out “and” at end of subpar. (F), added subpars. (G) and (H), and redesignated former subpar. (G) as (I).

Subsec. (c)(3). Pub. L. 102–325, §416(p)(4), added subpar. (C) and concluding provisions and struck out former last sentence which read as follows: “Such regulations shall not preclude guaranty agencies from permitting the parties to such a loan from entering into a forbearance agreement solely because the loan is in default.”

Subsec. (c)(7)(A). Pub. L. 102–325, §416(p)(5)(A), substituted “(1)(C)” for “(1)(B)” in introductory provisions and inserted “and ends before October 1, 1991” in cl. (i).

Subsec. (c)(7)(B). Pub. L. 102–325, §416(p)(5)(D), added subpar. (B). Former subpar. (B) redesignated (C).

Subsec. (c)(7)(C). Pub. L. 102–325, §416(p)(5)(B), (C), redesignated subpar. (B) as (C) and inserted “or (B)” after “(A)”.

Subsec. (c)(8). Pub. L. 102–325, §416(p)(6), inserted provisions at end directing Secretary to develop criteria to determine whether agency has made adequate collection efforts and directing Secretary to consider certain factors in making determination.

Subsec. (c)(10). Pub. L. 102–325, §416(p)(7), added par. (10).

Subsec. (f)(1)(A)(i). Pub. L. 102–325, §416(q)(1), substituted “eligible lender” for “commercial lender”.

Subsec. (f)(1)(C). Pub. L. 102–325, §416(q)(2), added subpar. (C).

Subsec. (j). Pub. L. 102–325, §416(r), designated existing provisions as par. (1), inserted par. heading, and added pars. (2) and (3).

Subsec. (k)(3). Pub. L. 102–325, §416(s), added par. (3).

Subsec. (m). Pub. L. 102–325, §416(t), added subsec. (m).

1991—Subsec. (a)(2)(A)(iii). Pub. L. 102–164, §602(b)(1), added cl. (iii).

Subsec. (a)(2)(F). Pub. L. 102–26 amended subpar. (F) generally. Prior to amendment, subpar. (F) read as follows: “Except as provided in subparagraph (D), an eligible institution may not, in carrying out the provisions of subparagraphs (A) and (B) of this paragraph, refuse to provide to any eligible lender which has an agreement under subsection (b) of this section with any guaranty agency, a statement which permits a student to receive any loan under this part, except that, in individual cases where the institution determines that the portion of the student's expenses to be covered by the loan can be met more appropriately, either by the institution or directly by the student, from other sources, the institution may refuse to provide such statement or may reduce the determination of need contained in such statement.”

Subsec. (b)(1)(W). Pub. L. 102–164, §601(b), added subpar. (W).

Subsec. (b)(1)(X). Pub. L. 102–164, §604, added subpar. (X).

Subsec. (c)(6)(D). Pub. L. 102–164, §605(b)(2), struck out subpar. (D) which read as follows: “In the case of a State which enacts and enforces a garnishment law that complies with the requirements of section 1078–5 of this title, subparagraph (A)(ii) shall be applied by substituting ‘35 percent’ for ‘30 percent’.”

1990—Subsec. (a)(2)(F). Pub. L. 101–508, §3004(b), inserted before period at end “, except that, in individual cases where the institution determines that the portion of the student's expenses to be covered by the loan can be met more appropriately, either by the institution or directly by the student, from other sources, the institution may refuse to provide such statement or may reduce the determination of need contained in such statement”.

Subsec. (c)(1)(A). Pub. L. 101–508, §3002(a)(1), struck out before period at end of first sentence “, including the administrative costs of supplemental preclaim assistance for default prevention as defined in paragraph (6)(C)”.

Subsec. (c)(6)(C). Pub. L. 101–508, §3002(a)(2)–(5), in introductory provisions of cl. (i), substituted “subsection (l) of this section” for “this paragraph”, in cl. (i)(I), substituted “generally comparable in intensiveness to the level of preclaims assistance performed, prior to the 120th day of delinquency, by the guaranty agency as of October 16, 1990” for “required or permitted under paragraph (2)(A) of this subsection and subsection (f) of this section”, in cl. (ii), substituted “payment under subsection (l) of this section” for “reimbursement” and “described in division (i)(I) of this subparagraph” for “which the guaranty agency is required or permitted to provide pursuant to paragraph (2)(A) of this subsection and subsection (f) of this section”, and in cl. (iv), struck out first sentence which read as follows: “The costs for each delinquent loan associated with carrying out this subparagraph may not exceed 2 percent of the outstanding principal balance of each such loan subject to the supplemental preclaims assistance authorized by this subparagraph or $100, whichever is less.”

Subsec. (l). Pub. L. 101–508, §3002(b), added subsec. (l).

1989—Subsec. (a)(2)(A)(i)(III). Pub. L. 101–239, §2004(b)(1), added subcl. (III).

Subsec. (b)(1)(M)(i). Pub. L. 101–239, §2002(a)(2), inserted before semicolon at end “, 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 or 1078–3 of this title), while serving in a medical internship or residency program”.

Subsec. (b)(1)(O). Pub. L. 101–239, §2004(b)(3), amended subpar. (O) generally, substituting requirement that student loans be disbursed in accordance with section 1078–7 of this title for provisions requiring that certain loans be disbursed directly by lender in 2 or more installments, none exceeding more than one-half of the loan, or in installments pursuant to escrow provisions in subsec. (i).

Subsec. (b)(1)(T)(i). Pub. L. 101–239, §2006(b)(1), inserted “emergency action,” after “regulations for the”.

Subsec. (b)(1)(U). Pub. L. 101–239, §2006(b), in cl. (i) inserted “emergency action,” after “regulations for the”, and in cl. (ii) inserted “take emergency action,” after “such program to”.

Subsec. (b)(1)(V). Pub. L. 101–239, §2002(b)(1)(A), added subpar. (V).

Subsec. (c)(3). Pub. L. 101–239, §2002(b)(1)(B), amended par. (3) generally. Prior to amendment, par. (3) read as follows: “To the extent provided in regulations of the Secretary, a guaranty agreement under this subsection may contain provisions which 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. Such regulations shall not preclude guaranty agencies from permitting the parties to such a loan from entering into a forbearance agreement solely because the loan is in default.”

1988—Subsec. (b)(1)(M)(v). Pub. L. 100–369, §7(c), 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.

Subsec. (b)(1)(M)(vii). Pub. L. 100–369, §11(a), inserted “after January 1, 1986,” after “service”.

Subsec. (b)(1)(O). Pub. L. 100–369, §5(b)(2), substituted “section 1078–2 or 1078–3” for “section 1078–1, 1078–2, or 1078–3”.

1987—Subsec. (a)(2)(D). Pub. L. 100–50, §10(e), substituted “certifies the eligibility of any student” for “permits the student”.

Subsec. (b)(1)(A)(i). Pub. L. 100–50, §10(f)(1), substituted “first and” for “first or”.

Subsec. (b)(1)(B)(i). Pub. L. 100–50, §10(a)(1), inserted “, excluding loans made under section 1078–1 or 1078–2 of this title” after “undergraduate education”.

Subsec. (b)(1)(B)(ii). Pub. L. 100–50, §10(a)(2), inserted “, excluding loans made under section 1078–1 or 1078–2 of this title” after “graduate or professional student)”.

Subsec. (b)(1)(M)(vi). Pub. L. 100–50, §10(b)(1), inserted “nonprofit” before “private”.

Subsec. (b)(1)(M)(vii). Pub. L. 100–50, §10(b)(2), 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.

Subsec. (b)(1)(N). Pub. L. 100–50, §10(f)(2), inserted “and except in the case of attendance at an institution outside the United States, the funds shall be delivered directly to the student” before semicolon at end.

Subsec. (b)(1)(O). Pub. L. 100–50, §10(c), substituted “$1,000 or more” for “more than $1,000”.

Subsec. (b)(1)(O)(i). Pub. L. 100–50, §10(f)(3), substituted “being disbursed” for “being dispensed”.

Subsec. (b)(1)(P). Pub. L. 100–50, §10(f)(4), added subpar. (P) and struck out former subpar. (P) which read as follows: “requires the borrower and the institution at which the borrower is in attendance to promptly notify the holder of the loan, directly or through the guaranty agency, concerning any change of address or status;”.

Subsec. (b)(1)(T). Pub. L. 100–50, §10(f)(5), inserted “(other than nonresidential correspondence schools)” after “eligible institutions”.

Subsec. (b)(5). Pub. L. 100–50, §10(g), substituted “paragraph (1)(M)(i)(III)” for “paragraph (1)(M)”.

Subsec. (b)(6)(A). Pub. L. 100–50, §10(h)(1), substituted “Until such time as the Secretary has implemented section 1092b of this title and is able to provide to guaranty agencies the information required by such section” for “Prior to the implementation of section 1092b of this title”.

Subsec. (b)(6)(B)(ii). Pub. L. 100–50, §10(h)(2), added cl. (ii) and struck out former cl. (ii) which read as follows: “the amount borrowed, the cumulative amount borrowed, the income reported on the loan application, and the purposes and the cost of attendance of the borrower.”

Subsec. (c)(1)(A). Pub. L. 100–203, §3002(b)(1), substituted “shall be deemed” for “shall, subject to section 1072(e) of this title, be deemed”.

Pub. L. 100–203, §3001(b)(1), substituted “shall, subject to section 1072(e) of this title, be deemed” for “shall be deemed”.

Subsec. (c)(6)(C)(iv). Pub. L. 100–50, §10(i), inserted at end “In the case of accounts brought into repayment status as a result of performing supplemental preclaims assistance, the cost of such assistance is a permissible charge to the borrower (for the cost of collection) for which the borrower shall be liable.”

Subsec. (c)(6)(D). Pub. L. 100–50, §10(j), inserted “and enforces” after “enacts”.

Subsec. (c)(9)(A). Pub. L. 100–203, §3002(b)(2), substituted “an amount equal to” for “an amount, subject to section 1072(e) of this title, equal to” in introductory provisions.

Pub. L. 100–203, §3001(b)(2), substituted “an amount, subject to section 1072(e) of this title, equal to” for “an amount equal to” in introductory provisions.

Subsec. (c)(9)(A)(i), (ii). Pub. L. 100–50, §10(k)(1), inserted “covered” before “loans”.

Subsec. (c)(9)(D). Pub. L. 100–50, §10(k)(2), added subpar. (D).

Subsec. (f)(1)(B). Pub. L. 100–203, §3002(b)(3), substituted “shall be deemed” for “shall, subject to section 1072(e) of this title, be deemed”.

Pub. L. 100–203, §3001(b)(3), substituted “shall, subject to section 1072(e) of this title, be deemed” for “shall be deemed”.

Subsec. (i)(1). Pub. L. 100–50, §10(l), struck out “multiple” after “authorizing” and substituted “21 days” for “45 days”.

Subsec. (j). Pub. L. 100–50, §10(m), inserted provision at end that the guaranty agency consider the request of an eligible lender to serve as the lender-of-last-resort pursuant to this subsection.

Subsec. (k)(1). Pub. L. 100–203, §3003, substituted “Notwithstanding any other provision of law, in” for “In”, “guaranty agency shall” for “guaranty agency may”, and “subsection shall include” for “subsection may include”.

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), except as otherwise provided, see section 3 of Pub. L. 111–39, set out as a note under section 1001 of this title.

Pub. L. 111–39, title IV, §402(a)(2), July 1, 2009, 123 Stat. 1940, provided that: “The amendment made by paragraph (1) [amending this section] shall be effective as if enacted as part of the amendment in [former] section 303(a) of the College Cost Reduction and Access Act (Public Law 110–84) [amending this section], shall take effect on October 1, 2012, and shall apply with respect to loans made on or after such date.”

Effective Date of 2008 Amendment

Pub. L. 110–315, title IV, §422(a)(2), Aug. 14, 2008, 122 Stat. 3228, provided that: “The amendments made by paragraph (1) [amending this section] shall take effect on July 1, 2010.”

Pub. L. 110–315, title IV, §422(g)(3), Aug. 14, 2008, 122 Stat. 3231, provided that: “The amendment made by paragraph (1) [amending this section] shall take effect on the date of enactment of this Act [Aug. 14, 2008], and the amendment made by paragraph (2) [amending section 1087–1 of this title] shall take effect for loans for which the first disbursement is made on or after July 1, 2008.”

Pub. L. 110–315, title IV, §424(c), Aug. 14, 2008, 122 Stat. 3233, provided that: “The amendments made by this section [amending this section and section 1078–2 of this title] shall take effect for loans for which the first disbursement is made on or after July 1, 2008.”

Pub. L. 110–227, §3(c), May 7, 2008, 122 Stat. 742, provided that: “The amendments made by this section [amending this section and section 1078–2 of this title] shall be effective for loans first disbursed on or after July 1, 2008.”

Pub. L. 110–227, §5(b), May 7, 2008, 122 Stat. 746, provided that: “The amendments made by subsection (a) [amending this section] shall take effect on the date of enactment of this Act [May 7, 2008].”

Effective Date of 2007 Amendment

Amendment by sections 202(a), (d) and 301 of 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.

Pub. L. 110–84, title III, §302(c), Sept. 27, 2007, 121 Stat. 796, provided that: “The amendments made by subsections (a) and (b) [amending this section and section 1087–1 of this title and repealing section 1078–9 of this title] shall be effective on October 1, 2007, except that section 428I of the Higher Education Act of 1965 [20 U.S.C. 1078–9] (as in effect on the day before the date of enactment of this Act [Sept. 27, 2007]) shall apply to eligible lenders that received a designation under subsection (a) of such section prior to October 1, 2007, for the remainder of the year for which the designation was made.”

Pub. L. 110–84, title III, §303(b), Sept. 27, 2007, 121 Stat. 797, which provided that amendment by former section 303(a) of Pub. L. 110–84 (amending this section) would be effective on Oct. 1, 2012, and applicable with respect to loans made on or after such date, was repealed by Pub. L. 111–152, title II, §2204(b), Mar. 30, 2010, 124 Stat. 1075.

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 section 8005(b) of Pub. L. 109–171 effective July 1, 2007, see section 8005(e) of Pub. L. 109–171, set out as a note under section 1075 of this title.

Pub. L. 109–171, title VIII, §8007(f), Feb. 8, 2006, 120 Stat. 161, as amended by Pub. L. 110–84, title II, §202(d), Sept. 27, 2007, 121 Stat. 792, provided that: “The amendments made by this section [amending this section and sections 1087e, 1087dd, and 1088 of this title] shall apply with respect to all loans under title IV of the Higher Education Act of 1965 [20 U.S.C. 1070 et seq., 42 U.S.C. 2751 et seq.].”

Pub. L. 109–171, title VIII, §8014(a)(2), Feb. 8, 2006, 120 Stat. 168, provided that: “The amendment made by this subsection [amending this section] shall apply with respect to loans for which the first disbursement of principal is made on or after July 1, 2006.”

Pub. L. 109–171, title VIII, §8014(c)(2), Feb. 8, 2006, 120 Stat. 170, provided that: “The amendments made by this subsection [amending this section] shall apply with respect to loans for which the first disbursement of principal is made on or after July 1, 2006.”

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 section 417(a), (b), (c)(2)–(k) of 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.

Pub. L. 105–244, title IV, §417(c)(1)(B), Oct. 7, 1998, 112 Stat. 1687, provided that: “The amendments made by subparagraph (A) of this paragraph [amending this section] apply to loans for which the first disbursement is made on or after October 1, 1998.”

Effective Date of 1994 Amendment

Section 355(b) of Pub. L. 103–382 provided that: “Subsection (a) [amending this section] and the amendment made by subsection (a) shall take effect on August 10, 1993.”

Effective Date of 1993 Amendments

Amendment by section 2(c)(11), (12), (14)–(17), (22)–(28) of Pub. L. 103–208 effective as if included in the Higher Education Amendments of 1992, Pub. L. 102–325, except as otherwise provided, amendment by section 2(c)(13)(A) of Pub. L. 103–208 effective on and after July 1, 1994, amendment by section 2(c)(13)(B), (C) and (18) of Pub. L. 103–208 effective on and after Dec. 20, 1993, and amendment by section 2(c)(19)–(21) of Pub. L. 103–208 effective on and after 30 days after Dec. 20, 1993, see section 5(a), (b)(2), (3), (6) of Pub. L. 103–208, set out as a note under section 1051 of this title.

Amendment by Pub. L. 103–82 effective Oct. 1, 1993, see section 123 of Pub. L. 103–82, set out as a note under section 1701 of Title 16, Conservation.

Section 4043(b) of Pub. L. 103–66 provided that: “The amendments made by this section [amending this section] shall take effect on July 1, 1994.”

Section 4102(d) of Pub. L. 103–66 provided that: “The amendments made by this section [amending this section and sections 1078–8 and 1087–1 of this title] shall take effect on July 1, 1994.”

Section 4107(c) of Pub. L. 103–66 provided that: “The amendments made by this section [amending this section] shall take effect on October 1, 1993.”

Section 4108(c) of Pub. L. 103–66 provided that: “The amendments made by this section [amending this section] shall apply to any loan for which the first disbursement is made on or after October 1, 1993.”

Section 4110(b) of Pub. L. 103–66 provided that: “The amendment made by subsection (a) [amending this section] shall take effect on October 1, 1993.”

Section 4112(b) of Pub. L. 103–66 provided that: “The amendment made by this section [amending this section] shall take effect on October 1, 1993.”

Section 4201(b) of Pub. L. 103–66 provided that: “The amendment made by this section [amending this section] shall take effect on October 1, 1994.”

Effective Date of 1992 Amendment

Section 432 of Pub. L. 102–325, as amended by Pub. L. 103–208, §2(k)(5), Dec. 20, 1993, 107 Stat. 2486, provided that:

“(a) In General.—The changes made in part B of title IV of the Act [20 U.S.C. 1071 et seq.] by the amendments made by this part [part B (§§411–432) of title IV of Pub. L. 102–325, see Tables for classification] shall take effect on the date of enactment of this Act [July 23, 1992], except—

“(1) as otherwise provided in such part B;

“(2) that the changes made in sections 425(a), 428(b)(1)(A), 428(b)(1)(B), 428A(b), 428B(b) [20 U.S.C. 1075(a), 1078(b)(1)(A), (B), 1078–1(b), 1078–2(b)], relating to annual and aggregate loan limits, shall apply with respect to loans for which the first disbursement is made on or after July 1, 1993, except that—

“(A) the changes made in section 425(a)(1)(A)(i) and 428(b)(1)(A)(i) shall apply with respect to loans for which the first disbursement is made on or after October 1, 1992; and

“(B) the changes made in section 425(a)(1)(A)(iv) and 428(b)(1)(A)(iv) shall apply with respect to loans to cover the costs of instruction for periods of enrollment beginning on or after October 1, 1993;

“(3) that the changes made in sections 427(a)(2)(C), 428(b)(1)(M), and 428B(d)(1) [20 U.S.C. 1077(a)(2)(C), 1078(b)(1)(M), 1078–2(d)(1)], relating to deferments, shall apply with respect to loans for which the first disbursement is made on or after July 1, 1993, to an individual who is a new borrower on the date such individual applies for a loan;

“(4) that the changes made in sections 428(a)(7) and 428(f)(1)(C), relating to payments for unconsummated loans, shall apply with respect to loans made on or after October 1, 1992;

“(5) that the changes made in sections 427(a)(2)(H) and 428(b)(1)(E)(i), relating to offering graduated or income sensitive repayment options, shall apply with respect to loans for which the first disbursement is made on or after July 1, 1993, to an individual who is a new borrower on the date such individual applies for a loan;

“(6) that the changes made in section 428(b)(4), relating to teacher deferment, shall apply with respect to loans for which the first disbursement is made on or after July 1, 1993, to an individual who is a new borrower on the date such individual applies for a loan;

“(7) that section 428(c)(2)(H)(i) as added by such amendments shall be effective on and after October 1, 1992;

“(8) that the changes in section 428(c)(3) with respect to forbearance after a default shall be effective on and after October 1, 1992;

“(9) that the changes made in section 428B(a) [20 U.S.C. 1078–2(a)] with respect to use of credit histories shall apply with respect to loans for which the first disbursement is made on or after July 1, 1993;

“(10) that section 428B(c) as added by such amendments, relating to disbursement of Federal PLUS Loans, shall apply with respect to loans for which the first disbursement is made on or after October 1, 1992;

“(11) that the changes made in section 428C [20 U.S.C. 1078–3], relating to consolidation loans, shall apply with respect to loans under such section for which the application is received by an eligible lender on or after January 1, 1993;

“(12) that section 428H [20 U.S.C. 1078–8] as added by such amendments shall be effective with respect to loans made to cover the cost of instruction for periods of enrollment beginning on or after October 1, 1992;

“(13) that the changes made in section 438 [20 U.S.C. 1087–1] shall apply with respect to loans for which the first disbursement is made on or after October 1, 1992;

“(14) that the changes in section 439(d)(1) [20 U.S.C. 1087–2(d)(1)], relating to facilities loans, shall apply with respect to applications received on or after July 1, 1992; and

“(15) that the changes in the designation or names of loans or programs under part B is [sic] effective with respect to applications or other documents (used in making such loans) that are printed after the date of enactment of this Act.

“(b) New Borrowers.—For purposes of the section, 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, insured, or guaranteed under part B of title IV of the Act [20 U.S.C. 1071 et seq.].”

Effective Date of 1989 Amendment

Amendment by section 2002(a)(2) of Pub. L. 101–239 applicable to any loan made, insured, or guaranteed under this part or part D 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.

Section 2002(b)(2) of Pub. L. 101–239 provided that: “The amendments made by this subsection [amending this section] shall apply with respect to loans made before, on, or after the date of enactment of this Act [Dec. 19, 1989].”

Amendment by section 2004(b)(1), (3) of Pub. L. 101–239 applicable with respect to loans made to cover the cost of instruction for periods of enrollment beginning on or after Jan. 1, 1990, see section 2004(c) of Pub. L. 101–239, set out as a note under section 1077 of this title.

Effective Date of 1988 Amendment

Amendment by section 11(a) of Pub. L. 100–369 applicable with respect to loans made, insured or guaranteed under this part on, before, or after June 3, 1987, see section 11(b) of Pub. L. 100–369, set out as a note under section 1077 of this title.

Amendment by section 5(b)(2) of Pub. L. 100–369 effective with respect to loans made on or after Oct. 1, 1988, and amendment by section 7(c) of Pub. L. 100–369 effective July 18, 1988, see section 13(b) of Pub. L. 100–369, set out as a note under section 1091 of this title.

Effective Date of 1987 Amendments

Section 3002(b)(1)–(3) of Pub. L. 100–203 provided in part that the amendments by section 3002(b)(1)–(3) of Pub. L. 100–203 are effective Sept. 30, 1989.

Amendment by section 10(b) of Pub. L. 100–50 applicable with respect to loans made, insured or guaranteed under this part on, before, or after June 3, 1987, see section 11(b) of Pub. L. 100–369, set out as an Effective Date of 1988 Amendment note under section 1077 of this title.

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, 1987, with subsection (b)(1)(M) (except cls. (viii), (ix), and (x)) applicable only to loans to new borrowers made to cover the costs of instruction for periods of enrollment beginning on or after July 1, 1987, or disbursed on or after July 1, 1987, subsection (b)(1)(A) and (B) applicable with respect only to loans disbursed on or after Jan. 1, 1987, or made to cover the costs of instruction for periods of enrollment beginning on or after Jan. 1, 1987, and subsection (b)(1)(H) applicable with respect only to loans for which the borrower files an application on or after July 1, 1987, see section 402(b) of Pub. L. 99–498, set out as a note under section 1071 of this title.

Construction of 2006 Amendment

Pub. L. 109–171, title VIII, §8007(e), Feb. 8, 2006, 120 Stat. 161, provided that: “Nothing in the amendments made by this section [amending this section and sections 1087e, 1087dd, and 1088 of this title] shall be construed to authorize any refunding of any repayment of a loan.”

Review of Inducements Limitations

Pub. L. 110–227, §5(c), May 7, 2008, 122 Stat. 746, provided that: “Within 90 days after the date of enactment of this Act [May 7, 2008], the Secretary of Education shall review, and as necessary revise, the Department of Education's regulations concerning prohibited guaranty agency inducements to eligible lenders (34 CFR 682.401(e)) to ensure that such agencies do not engage in improper inducements in the expansion of operations of the lender-of-last-resort program as authorized by the amendments made by this section [amending this section]. The Secretary shall submit a report on the review and revision required by this subsection to the Committee on Education and Labor of the House of Representatives and the Committee on Health, Education, Labor, and Pensions of the Senate within 180 days after such date of enactment.”

Guaranteed Student Loan Family Contribution Schedule for the Periods of Instruction Beginning After June 30, 1983

Pub. L. 97–301, §9, Oct. 13, 1982, 96 Stat. 1403, as amended by Pub. L. 98–79, §4(b), Aug. 15, 1983, 97 Stat. 481; Pub. L. 98–511, title VII, §707(7), (8), Oct. 19, 1984, 98 Stat. 2407, 2408; Pub. L. 99–272, title XVI, §16018(b), Apr. 7, 1986, 100 Stat. 348; Pub. L. 99–498, title IV, §408(a)(6), (7), Oct. 17, 1986, 100 Stat. 1495, specified that the family contribution schedule for specific periods of instruction through June 30, 1988, for loans made, insured, or guaranteed under this part be the family contribution schedule for such loans for the period of instruction from July 1, 1982, through June 30, 1983, and required the family contribution schedule for the period of instruction from July 1, 1982, through June 30, 1983, to be modified by the Secretary of Education for use for each of the specific periods of instruction to reflect the most recent and relevant data, prior to repeal by Pub. L. 99–498, title IV, §408(b), Oct. 17, 1986, 100 Stat. 1495, effective with respect to any academic year beginning on or after July 1, 1988, Pub. L. 97–301.

1 See References in Text note below.

2 So in original. The period probably should be a semicolon.

3 So in original.

4 So in original. No par. (2) has been enacted.

5 So in original. Probably should be “subsection.”

6 So in original. The comma probably should not appear.

§1078–1. Voluntary flexible agreements with guaranty agencies

(a) Voluntary agreements

(1) Authority

Subject to paragraph (2),1 the Secretary may enter into a voluntary, flexible agreement with a guaranty agency under this section, in lieu of agreements with a guaranty agency under subsections (b) and (c) of section 1078 of this title. The Secretary may waive or modify any requirement under such subsections, except that the Secretary 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; or

(C) the Federal default fee required by section 1078(b)(1)(H) of this title and the second sentence of section 1078–8(h) of this title.

(2) Eligibility

During fiscal years 1999, 2000, and 2001, the Secretary may enter into a voluntary, flexible agreement with not more than 6 guaranty agencies that had 1 or more agreements with the Secretary under subsections (b) and (c) of section 1078 of this title as of the day before October 7, 1998. Beginning in fiscal year 2002, any guaranty agency or consortium thereof may enter into a voluntary flexible agreement with the Secretary.

(3) Report required

(A) In general

The Secretary, in consultation with the guaranty agencies operating under voluntary flexible agreements, shall report on an annual basis to the authorizing committees regarding the program outcomes that the voluntary flexible agreements have had with respect to—

(i) program integrity and program and cost efficiencies, delinquency prevention, and default aversion, including a comparison of such outcomes to such outcomes for each guaranty agency operating under an agreement under subsection (b) or (c) of section 1078 of this title;

(ii) consumer education programs described in section 1083a of this title; and

(iii) the availability and delivery of student financial aid.

(B) Contents

Each report described in subparagraph (A) shall include—

(i) a description of each voluntary flexible agreement and the performance goals established by the Secretary for each agreement;

(ii) a list of—

(I) guaranty agencies operating under voluntary flexible agreements;

(II) the specific statutory or regulatory waivers provided to each such guaranty agency; and

(III) any other waivers provided to other guaranty agencies under paragraph (1);


(iii) a description of the standards by which each guaranty agency's performance under the guaranty agency's voluntary flexible agreement was assessed and the degree to which each guaranty agency achieved the performance standards;

(iv) an analysis of the fees paid by the Secretary, and the costs and efficiencies achieved under each voluntary flexible agreement; and

(v) an identification of promising practices for program improvement that could be replicated by other guaranty agencies.

(b) Terms of agreement

An agreement between the Secretary and a guaranty agency under this section—

(1) shall be developed by the Secretary, in consultation with the guaranty agency, on a case-by-case basis;

(2) may only include provisions—

(A) specifying the responsibilities of the guaranty agency under the agreement, with respect to—

(i) administering the issuance of insurance on loans made under this part on behalf of the Secretary;

(ii) monitoring insurance commitments made under this part;

(iii) default aversion activities;

(iv) review of default claims made by lenders;

(v) payment of default claims;

(vi) collection of defaulted loans;

(vii) adoption of internal systems of accounting and auditing that are acceptable to the Secretary, and reporting the result thereof to the Secretary in a timely manner, and on an accurate, and auditable basis;

(viii) timely and accurate collection and reporting of such other data as the Secretary may require to carry out the purposes of the programs under this subchapter and part C of subchapter I of chapter 34 of title 42;

(ix) monitoring of institutions and lenders participating in the program under this part; and

(x) informational outreach to schools and students in support of access to higher education;


(B) regarding the fees the Secretary shall pay, in lieu of revenues that the guaranty agency may otherwise receive under this part, to the guaranty agency under the agreement, and other funds that the guaranty agency may receive or retain under the agreement, except that in no case may the cost to the Secretary of the agreement, as reasonably projected by the Secretary, exceed the cost to the Secretary, as similarly projected, in the absence of the agreement;

(C) regarding the use of net revenues, as described in the agreement under this section, for such other activities in support of postsecondary education as may be agreed to by the Secretary and the guaranty agency;

(D) regarding the standards by which the guaranty agency's performance of the agency's responsibilities under the agreement will be assessed, and the consequences for a guaranty agency's failure to achieve a specified level of performance on 1 or more performance standards;

(E) regarding the circumstances in which a guaranty agency's agreement under this section may be ended in advance of the agreement's expiration date;

(F) regarding such other businesses, previously purchased or developed with reserve funds, that relate to the program under this part and in which the Secretary permits the guaranty agency to engage; and

(G) such other provisions as the Secretary may determine to be necessary to protect the United States from the risk of unreasonable loss and to promote the purposes of this part;


(3) shall provide for uniform lender participation with the guaranty agency under the terms of the agreement; and

(4) shall not prohibit or restrict borrowers from selecting a lender of the borrower's choosing, subject to the prohibitions and restrictions applicable to the selection under this chapter and part C of subchapter I of chapter 34 of title 42.

(c) Public notice

(1) In general

The Secretary shall publish in the Federal Register a notice to all guaranty agencies that sets forth—

(A) an invitation for the guaranty agencies to enter into agreements under this section; and

(B) the criteria that the Secretary will use for selecting the guaranty agencies with which the Secretary will enter into agreements under this section.

(2) Agreement notice

The Secretary shall notify the members of the authorizing committees not later than 30 days prior to concluding an agreement under this section. The notice shall contain—

(A) a description of the voluntary flexible agreement and the performance goals established by the Secretary for the agreement;

(B) a list of participating guaranty agencies and the specific statutory or regulatory waivers provided to each guaranty agency;

(C) a description of the standards by which each guaranty agency's performance under the agreement will be assessed; and

(D) a description of the fees that will be paid to each participating guaranty agency.

(3) Waiver notice

The Secretary shall notify the members of the authorizing committees not later than 30 days prior to the granting of a waiver pursuant to subsection (a)(2) 1 of this section to a guaranty agency that is not a party to a voluntary flexible agreement.

(4) Public availability

The text of any voluntary flexible agreement, and any subsequent revisions, and any waivers related to section 1078(b)(3) of this title that are not part of such an agreement, shall be readily available to the public.

(5) Modification notice

The Secretary shall notify the members of the authorizing committees 30 days prior to any modifications to an agreement under this section.

(d) Termination

At the expiration or early termination of an agreement under this section, the Secretary shall reinstate the guaranty agency's prior agreements under subsections (b) and (c) of section 1078 of this title, subject only to such additional requirements as the Secretary 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, and including the guaranty agency's compliance with reserve requirements under sections 1072 and 1078 of this title.

(Pub. L. 89–329, title IV, §428A, as added Pub. L. 105–244, title IV, §418, Oct. 7, 1998, 112 Stat. 1691; amended Pub. L. 109–171, title VIII, §8014(b)(3), (f), Feb. 8, 2006, 120 Stat. 169, 170; Pub. L. 110–315, title I, §103(b)(5), title IV, §423, Aug. 14, 2008, 122 Stat. 3089, 3231.)

References in Text

Paragraph (2) of subsec. (a) of this section, referred to in subsecs. (a)(1) and (c)(3), was struck out by Pub. L. 109–171, §8014(f)(2), and par. (3) was redesignated (2). See 2006 Amendment note below.

Prior Provisions

A prior section 1078–1, Pub. L. 89–329, title IV, §428A, as added Pub. L. 99–498, title IV, §402(a), Oct. 17, 1986, 100 Stat. 1384; amended Pub. L. 100–50, §10(n), (o)(1), (p)(1), (q), (r)(1), June 3, 1987, 101 Stat. 343, 344; Pub. L. 100–369, §§3–5(a), (b)(3), July 18, 1988, 102 Stat. 835, 836; Pub. L. 101–239, title II, §2003(a)(1), (b)(1), (c)(1), Dec. 19, 1989, 103 Stat. 2112, 2114; Pub. L. 101–508, title III, §3006(b), Nov. 5, 1990, 104 Stat. 1388–28; Pub. L. 102–26, §2(c)(1), Apr. 9, 1991, 105 Stat. 123; Pub. L. 102–325, title IV, §417, July 23, 1992, 106 Stat. 529; Pub. L. 103–208, §2(c)(29)–(32), Dec. 20, 1993, 107 Stat. 2465, 2466, related to Federal supplemental loans for students, prior to repeal by Pub. L. 103–66, title IV, §4047(b), (d), Aug. 10, 1993, 107 Stat. 364, effective July 1, 1994.

Another prior section 1078–1, Pub. L. 89–329, title IV, §428A, as added Pub. L. 94–482, title I, §127(a), Oct. 12, 1976, 90 Stat. 2120; amended Pub. L. 95–43, §1(a)(30)–(32), June 15, 1977, 91 Stat. 216; Pub. L. 96–374, title IV, §412(e), (f), title XIII, §1391(a)(1), Oct. 3, 1980, 94 Stat. 1416, 1417, 1503; Pub. L. 97–35, title V, §535(e), Aug. 13, 1981, 95 Stat. 455, related to student loan insurance programs, prior to the general amendment of this part by Pub. L. 99–498.

Amendments

2008—Subsec. (a)(3). Pub. L. 110–315, §423, added par. (3).

Subsec. (c)(2), (3). Pub. L. 110–315, §103(b)(5)(A), (B), substituted “members of the authorizing committees” for “Chairperson and the Ranking Minority Member of the Committee on Labor and Human Resources of the Senate and the Committee on Education and the Workforce of the House of Representatives”.

Subsec. (c)(5). Pub. L. 110–315, §103(b)(5)(C), substituted “members of the authorizing committees” for “Chairperson and the Ranking Minority Members of the Committee on Labor and Human Resources of the Senate and the Committee on Education and the Workforce of the House of Representatives”.

2006—Subsec. (a)(1)(B). Pub. L. 109–171, §8014(f)(1), struck out “unless the Secretary determines that such a waiver is consistent with the purposes of this section and is limited to activities of the guaranty agency within the State or States for which the guaranty agency serves as the designated guarantor” before “; or”.

Subsec. (a)(1)(C). Pub. L. 109–171, §8014(b)(3), added subpar. (C).

Subsec. (a)(2), (3). Pub. L. 109–171, §8014(f)(2), (3), redesignated par. (3) as (2) and struck out heading and text of former par. (2). Text read as follows: “If the Secretary grants a waiver pursuant to paragraph (1)(B), any guaranty agency doing business within the affected State or States may request, and the Secretary shall grant, an identical waiver to such guaranty agency under the same terms and conditions (including service area limitations) as govern the original waiver.”

Subsec. (a)(4). Pub. L. 109–171, §8014(f)(4), struck out par. (4), which required the Secretary to report to congressional committees regarding the impact that the voluntary flexible agreements had on program integrity, program and cost efficiencies, and the availability and delivery of student financial aid.

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.

Effective Date

Section effective Oct. 1, 1998, see section 3 of Pub. L. 105–244, set out as an Effective Date of 1998 Amendment note under section 1001 of this title.

1 See References in Text note below.

§1078–2. Federal PLUS loans

(a) Authority to borrow

(1) Authority and eligibility

Prior to July 1, 2010, a graduate or professional student or the parents of a dependent student shall be eligible to borrow funds under this section in amounts specified in subsection (b) of this section, if—

(A) the graduate or professional student or the parents do not have an adverse credit history as determined pursuant to regulations promulgated by the Secretary;

(B) in the case of a graduate or professional student or parent who has been convicted of, or has pled nolo contendere or guilty to, a crime involving fraud in obtaining funds under this subchapter and part C of subchapter I of chapter 34 of title 42, such graduate or professional student or parent has completed the repayment of such funds to the Secretary, or to the holder in the case of a loan under this subchapter and part C of subchapter I of chapter 34 of title 42 obtained by fraud; and

(C) the graduate or professional student or the parents meet such other eligibility criteria as the Secretary may establish by regulation, after consultation with guaranty agencies, eligible lenders, and other organizations involved in student financial assistance.

(2) Terms, conditions, and benefits

Except as provided in subsections (c), (d), and (e) of this section, loans made under this section shall have the same terms, conditions, and benefits as all other loans made under this part.

(3) Special rules

(A) Parent borrowers

Whenever necessary to carry out the provisions of this section, the terms “student” and “borrower” as used in this part shall include a parent borrower under this section.

(B)(i) Extenuating circumstances

An eligible lender may determine that extenuating circumstances exist under the regulations promulgated pursuant to paragraph (1)(A) if, during the period beginning January 1, 2007, and ending December 31, 2009, an applicant for a loan under this section—

(I) is or has been delinquent for 180 days or fewer on mortgage loan payments or on medical bill payments during such period; and

(II) does not otherwise have an adverse credit history, as determined by the lender in accordance with the regulations promulgated pursuant to paragraph (1)(A), as such regulations were in effect on the day before May 7, 2008.

(ii) Definition of mortgage loan

In this subparagraph, the term “mortgage loan” means an extension of credit to a borrower that is secured by the primary residence of the borrower.

(iii) Rule of construction

Nothing in this subparagraph shall be construed to limit an eligible lender's authority under the regulations promulgated pursuant to paragraph (1)(A) to determine that extenuating circumstances exist.

(b) Limitation based on need

Any loan under this section may be counted as part of the expected family contribution in the determination of need under this subchapter and part C of subchapter I of chapter 34 of title 42, but no loan may be made to any graduate or professional student or any parent under this section for any academic year in excess of (A) the student's estimated cost of attendance, minus (B) other financial aid as certified by the eligible institution under section 1078(a)(2)(A) of this title. The annual insurable limit on account of any student shall not be deemed to be exceeded by a line of credit under which actual payments to the borrower 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 and shall be disbursed by—

(1) an electronic transfer of funds from the lender to the eligible institution; or

(2) a check copayable to the eligible institution and the graduate or professional student or parent borrower.

(d) Payment of principal and interest

(1) Commencement of repayment

Repayment of principal on loans made under this section shall commence not later than 60 days after the date such loan is disbursed by the lender, subject to deferral—

(A)(i) during any period during which the parent borrower or the graduate or professional student borrower meets the conditions required for a deferral under section 1077(a)(2)(C) or 1078(b)(1)(M) of this title; and

(ii) upon the request of the parent borrower, during any period during which the student on whose behalf the loan was borrowed by the parent borrower meets the conditions required for a deferral under section 1077(a)(2)(C)(i)(I) or 1078(b)(1)(M)(i)(I) of this title; and

(B)(i) in the case of a parent borrower, upon the request of the parent borrower, during the 6-month period beginning on the later of—

(I) the day after the date the student on whose behalf the loan was borrowed ceases to carry at least one-half the normal full-time academic workload (as determined by the institution); or

(II) if the parent borrower is also a student, the day after the date such parent borrower ceases to carry at least one-half such a workload; and


(ii) in the case of a graduate or professional student borrower, during the 6-month period beginning on the day after the date such student ceases to carry at least one-half the normal full-time academic workload (as determined by the institution).

(2) Capitalization of interest

(A) In general

Interest on loans made under this section for which payments of principal are deferred pursuant to paragraph (1) shall, if agreed upon by the borrower and the lender—

(i) be paid monthly or quarterly; or

(ii) be added to the principal amount of the loan not more frequently than quarterly by the lender.

(B) Insurable limits

Capitalization of interest under this paragraph shall not be deemed to exceed the annual insurable limit on account of the borrower.

(3) Subsidies prohibited

No payments to reduce interest costs shall be paid pursuant to section 1078(a) of this title 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.

(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.

(e) Refinancing

(1) Refinancing to secure combined payment

An eligible lender may at any time consolidate loans held by it which are made under this section to a borrower, including loans which were made under this section as in effect prior to October 17, 1986, under a single repayment schedule which provides for a single principal payment and a single payment of interest, and shall calculate the repayment period for each included loan from the date of the commencement of repayment of the most recent included loan. Unless the consolidated loan is obtained by a borrower who is electing to obtain variable interest under paragraph (2) or (3), such consolidated loan shall bear interest at the weighted average of the rates of all included loans. The extension of any repayment period of an included loan pursuant to this paragraph shall be reported (if required by them) to the Secretary or guaranty agency insuring the loan, as the case may be, but no additional insurance premiums shall be payable with respect to any such extension. The extension of the repayment period of any included loan shall not require the formal extension of the promissory note evidencing the included loan or the execution of a new promissory note, but shall be treated as an administrative forbearance of the repayment terms of the included loan.

(2) Refinancing to secure variable interest rate

An eligible lender may reissue a loan which was made under this section before July 1, 1987, or under this section as in effect prior to October 17, 1986, in order to permit the borrower to obtain the interest rate provided under section 1077a(c)(4) of this title. A lender offering to reissue a loan or loans for such purpose may charge a borrower 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 with respect to the loan.

(3) Refinancing by discharge of previous loan

A borrower who has applied to an original lender for reissuance of a loan under paragraph (2) and who is denied such reissuance may obtain a loan from another lender for the purpose of discharging the loan from such original lender. A loan made for such purpose—

(A) shall bear interest at the applicable rate of interest provided under section 1077a(c)(4) of this title;

(B) shall not result in the extension of the duration of the note (other than as permitted under subsection (d)(5)(B) of this section);

(C) may be subject to an additional insurance fee but shall not be subject to the administrative cost charge permitted by paragraph (2) of this subsection; and

(D) shall be applied to discharge the borrower from any remaining obligation to the original lender with respect to the original loan.

(4) Certification in lieu of promissory note presentation

Each new lender may accept certification from the original lender of the borrower's original loan in lieu of presentation of the original promissory note.

(f) Verification of immigration status and social security number

A parent who wishes to borrow funds under this section shall be subject to verification of the parent's—

(1) immigration status in the same manner as immigration status is verified for students under section 1091(g) of this title; and

(2) social security number in the same manner as social security numbers are verified for students under section 1091(p) of this title.

(Pub. L. 89–329, title IV, §428B, as added Pub. L. 99–498, title IV, §402(a), Oct. 17, 1986, 100 Stat. 1386; amended Pub. L. 100–50, §10(o), (p)(2), (q), (r)(1), June 3, 1987, 101 Stat. 343, 344; Pub. L. 102–325, title IV, §418, July 23, 1992, 106 Stat. 531; Pub. L. 103–66, title IV, §4109(a), Aug. 10, 1993, 107 Stat. 369; Pub. L. 105–178, title VIII, §8301(a)(2), June 9, 1998, 112 Stat. 497; Pub. L. 105–244, title IV, §§416(a)(2), 419, Oct. 7, 1998, 112 Stat. 1680, 1694; Pub. L. 109–171, title VIII, §§8005(c), 8014(g), Feb. 8, 2006, 120 Stat. 158, 171; Pub. L. 110–227, §§3(a), 4, May 7, 2008, 122 Stat. 742, 743; Pub. L. 110–315, title IV, §424(a), Aug. 14, 2008, 122 Stat. 3232; Pub. L. 111–39, title IV, §402(f)(2), July 1, 2009, 123 Stat. 1943; Pub. L. 111–152, title II, §2205, Mar. 30, 2010, 124 Stat. 1075.)

Prior Provisions

A prior section 1078–2, Pub. L. 89–329, title IV, §428B, as added Pub. L. 96–374, title IV, §419, Oct. 3, 1980, 94 Stat. 1424; amended Pub. L. 97–35, title V, §§532(b)(3), 534(a)(2), (c)(1), (2), Aug. 13, 1981, 95 Stat. 452, 454; Pub. L. 98–79, §12, Aug. 15, 1983, 97 Stat. 484, related to auxiliary loans to assist students, prior to the general revision of this part by Pub. L. 99–498.

Amendments

2010—Subsec. (a)(1). Pub. L. 111–152 substituted “Prior to July 1, 2010, a graduate” for “A graduate” in introductory provisions.

2009—Subsec. (e)(3)(B). Pub. L. 111–39, §402(f)(2)(A), substituted “subsection (d)(5)(B)” for “subsection (c)(5)(B)”.

Subsec. (e)(5). Pub. L. 111–39, §402(f)(2)(B), struck out par. (5) which related to notification to borrowers of availability of refinancing options for certain loans made before Oct. 17, 1986.

2008—Subsec. (a)(3). Pub. L. 110–227, §4, amended par. (3) generally. Prior to amendment, text read as follows: “Whenever necessary to carry out the provisions of this section, the terms ‘student’ and ‘borrower’ as used in this part shall include a parent borrower under this section.”

Subsec. (a)(3)(B)(i)(II). Pub. L. 110–315, §424(a)(1), added subcl. (II) and struck out former subcl. (II) which read as follows: “is not and has not been more than 89 days delinquent on the repayment of any other debt during such period.”

Subsec. (d)(1), (2). Pub. L. 110–315, §424(a)(2), added pars. (1) and (2) and struck out former pars. (1) and (2) which related to commencement of repayment and capitalization of interest.

Pub. L. 110–227, §3(a), amended pars. (1) and (2) generally. Prior to amendment, text related to commencement of repayment and capitalization of interest.

2006—Subsec. (a)(1). Pub. L. 109–171, §8005(c)(1)(A), in introductory provisions, substituted “A graduate or professional student or the parents” for “Parents”.

Subsec. (a)(1)(A). Pub. L. 109–171, §8005(c)(1)(B), substituted “the graduate or professional student or the parents” for “the parents”.

Subsec. (a)(1)(B). Pub. L. 109–171, §8014(g)(1), (3), added subpar. (B). Former subpar. (B) redesignated (C).

Pub. L. 109–171, §8005(c)(1)(C), substituted “the graduate or professional student or the parents” for “the parents”.

Subsec. (a)(1)(C). Pub. L. 109–171, §8014(g)(2), redesignated subpar. (B) as (C).

Subsec. (b). Pub. L. 109–171, §8005(c)(2), substituted “any graduate or professional student or any parent” for “any parent”.

Subsec. (c)(2). Pub. L. 109–171, §8005(c)(3), substituted “graduate or professional student or parent” for “parent”.

Subsec. (d)(1). Pub. L. 109–171, §8005(c)(4), substituted “the graduate or professional student or the parent” for “the parent”.

1998—Subsec. (a). Pub. L. 105–244, §419(1), amended heading and text of subsec. (a) generally. Prior to amendment, text read as follows: “Parents of a dependent student, who do not have an adverse credit history as determined pursuant to regulations of the Secretary, shall be eligible to borrow funds under this section in amounts specified in subsection (b) of this section, and unless otherwise specified in subsections (c), (d), and (e) of this section, such loans shall have the same terms, conditions, and benefits as all other loans made under this part. Whenever necessary to carry out the provisions of this section, the terms ‘student’ and ‘borrower’ as used in this part shall include a parent borrower under this section.”

Subsec. (d)(4). Pub. L. 105–244, §416(a)(2), substituted “section 1077a” for “section 1077a(c)”.

Pub. L. 105–178 which directed substitution of “section 1077a of this title for loans made under this section” for “section 1077a(c) of this title” in “section 428B(d)(4) (20 U.S.C. 1078–2(d)(4))” could not be executed because it did not indicate what act was to be amended.

Subsec. (f). Pub. L. 105–244, §419(2), added subsec. (f).

1993—Subsec. (c). Pub. L. 103–66 inserted “shall be disbursed in accordance with the requirements of section 1078–7 of this title and” after “under this section”.

1992—Pub. L. 102–325, §418(a), substituted “Federal PLUS” for “PLUS” in section catchline.

Subsec. (a). Pub. L. 102–325, §418(b)(1), substituted “subsections (c), (d), and (e)” for “subsections (c) and (d)” and inserted “, who do not have an adverse credit history as determined pursuant to regulations of the Secretary,” after “a dependent student”.

Subsec. (b). Pub. L. 102–325, §418(b)(2), struck out subsec. (b) designation and heading, redesignated par. (3) as subsec. (b), and struck out pars. (1) and (2) which set the annual limit on the amount parents may borrow for one student in any academic year at $4,000 and set the aggregate insured principal amount for insured loans at not to exceed $20,000.

Subsec. (c). Pub. L. 102–325, §418(b)(4), added subsec. (c). Former subsec. (c) redesignated (d).

Subsec. (d). Pub. L. 102–325, §418(c), (d), amended pars. (1) and (2) generally. Prior to amendment, pars. (1) and (2) read as follows:

“(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) during any period during which the parent meets the conditions required for a deferral under clause (i), (viii), or (ix) of section 1077(a)(2)(C) or 1078(b)(1)(M) of this title; and (B) during any period during which the borrower has a dependent student for whom a loan obligation was incurred under this section and who meets the conditions required for a deferral under clause (i) of either such section.

“(2) Capitalization of interest.—Interest on loans made under this section for which payments of principal are deferred pursuant to paragraph (1) of this subsection shall, if agreed upon by the borrower and the lender (A) be paid monthly or quarterly or (B) be added to the principal amount of the loan on a quarterly basis by the lender. Such capitalization of interest shall not be deemed to exceed the annual insurable limit on account of the student.”

Pub. L. 102–325, §418(b)(3), redesignated subsec. (c) as (d). Former subsec. (d) redesignated (e).

Subsec. (e). Pub. L. 102–325, §418(b)(3), redesignated subsec. (d) as (e).

1987—Subsec. (a). Pub. L. 100–50, §10(o)(2)(A), struck out “, but such a parent borrower shall not be eligible for any deferment pursuant to section 1077(a)(2)(C) or 1078(b)(1)(M) of this title except for the deferments allowed (with respect to the student) under clauses (i), (viii), and (ix) of such sections” after “borrower under this section”.

Subsec. (b)(3). Pub. L. 100–50, §10(p)(2), amended first sentence generally, substituting “for any academic year in excess of (A) the student's estimated cost of attendance, minus (B) other financial aid” for “which would cause the combined loans of the parent and the student for any academic year to exceed the student's estimated cost of attendance minus such student's estimated financial assistance”.

Subsec. (c)(1). Pub. L. 100–50, §10(o)(2)(B), struck out “pursuant to sections 1077(a)(2)(C)(i), (viii), and (ix) and 1078(b)(1)(M)(i), (viii), and (ix) of this title” after “subject to deferral” and inserted in lieu cls. (A) and (B).

Subsec. (c)(2). Pub. L. 100–50, §10(o)(1), (2)(C), (q), in introductory provisions, struck out “and interest” after first reference to “principal”, and substituted “pursuant to paragraph (1) of this subsection” for “under sections 1077(a)(2)(C)(i) and 1078(b)(1)(M)(i) of this title”, and, in subpar. (A), inserted “monthly or” before “quarterly”.

Subsec. (d)(1). Pub. L. 100–50, §10(r)(1)(A), inserted “at any time” after “eligible lender may” in first sentence, substituted “the consolidated loan is obtained by a borrower who is electing to obtain variable interest under paragraph (2) or (3)” for “the borrower complies with the requirements of paragraph (2)” in second sentence, and inserted “(if required by them)” after “shall be reported” in third sentence.

Subsec. (d)(2). Pub. L. 100–50, §10(r)(1)(B), inserted “under this section before July 1, 1987, or” before “under this section” and substituted “to reissue a loan or loans” for “to reissue a loan” and “reissuing such loan or loans” for “reissuing such loan”.

Subsec. (d)(5). Pub. L. 100–50, §10(r)(1)(C), substituted “October 1, 1987” for “January 1, 1987” and, in subpar. (B), inserted “and of the practical consequences of such options in terms of interest rates and monthly and total payments for a set of loan examples” before semicolon at end.

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

Amendment by Pub. L. 110–315 effective for loans for which the first disbursement is made on or after July 1, 2008, see section 424(c) of Pub. L. 110–315, set out as a note under section 1078 of this title.

Amendment by section 3(a) of Pub. L. 110–227 effective for loans first disbursed on or after July 1, 2008, see section 3(c) of Pub. L. 110–227, set out as a note under section 1078 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.

Effective Date of 1998 Amendment

Amendment by section 416(a)(2) of Pub. L. 105–244 applicable with respect to any loan made, insured, or guaranteed under this part for which the first disbursement is made on or after Oct. 1, 1998, and before July 1, 2003, except that such amendment is applicable with respect to any loan made under section 1078–3 of this title for which application is received by an eligible lender on or after Oct. 1, 1998, and before July 1, 2003, see section 416(c) of Pub. L. 105–244, set out as a note under section 1077a of this title.

Amendment by section 419 of 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

Section 4109(c) of Pub. L. 103–66 provided that: “The amendments made by this section [amending this section and section 1078–7 of this title] shall be effective with respect to loans for which the first disbursement is made on or after October 1, 1993.”

Effective Date of 1992 Amendment

Amendment by Pub. L. 102–325 effective July 23, 1992, except that changes made in subsec. (b), relating to annual and aggregate loan limits, are applicable with respect to loans for which first disbursement is made on or after July 1, 1993, changes made in subsec. (a) with respect to use of credit histories are applicable with respect to loans for which first disbursement is made on or after July 1, 1993, and subsec. (c), as added by Pub. L. 102–325, relating to disbursement of Federal PLUS Loans, is applicable with respect to loans for which first disbursement is made on or after Oct. 1, 1992, see section 432 of Pub. L. 102–325, set out as a note under section 1078 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.

Amendment of Note or Other Written Evidence of Loan by Eligible Lender at Request of Borrower; Circumstances; Denial of Request

Section 10(r)(2) of Pub. L. 100–50 provided that: “An eligible lender who has refinanced a loan or loans under section 428A(d) [former 20 U.S.C. 1078–1(d)] or 428B(d) [20 U.S.C. 1078–2(d)] between the date of enactment of the Higher Education Amendments of 1986 [Oct. 17, 1986] and July 1, 1987, may, at the request of a borrower or with the written consent of the borrower, amend the note or other written evidence of loan as necessary to comply with the requirements of such sections and section 427A(c)(4) [20 U.S.C. 1077a(c)(4)] as amended by this Act. Any borrower who is denied such a request shall be treated as eligible to obtain a loan from another lender under section 428A(d)(3) or 428B(d)(3), as applicable, for the purposes of discharging the loan from the original lender, and a borrower exercising this option shall not be subject to an additional insurance fee under section 428A(d)(3)(C) or 428B(d)(3)(C).”

§1078–3. Federal consolidation loans

(a) Agreements with eligible lenders

(1) Agreement required for insurance coverage

For the purpose of providing loans to eligible borrowers for consolidation of their obligations with respect to eligible student loans, the Secretary or a guaranty agency shall enter into agreements in accordance with subsection (b) of this section with the following eligible lenders:

(A) the Student Loan Marketing Association or the Holding Company of the Student Loan Marketing Association, including any subsidiary of the Holding Company, created pursuant to section 1087–3 of this title;

(B) State agencies described in subparagraphs (D) and (F) of section 1085(d)(1) of this title; and

(C) other eligible lenders described in subparagraphs (A), (B), (C), (E), and (J) of such section.

(2) Insurance coverage of consolidation loans

Except as provided in section 1079(e) of this title, 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) of this section. Loans covered by such a certificate that is issued by a guaranty agency shall be considered to be insured loans for the purposes of reimbursements under section 1078(c) of this title, but no payment shall be made with respect to such loans under section 1078(f) of this title 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 and part C of subchapter I of chapter 34 of title 42 or to an order for wage garnishment under section 1095a of this title; 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;

(II) is in a grace period preceding repayment; or

(III) is a defaulted borrower who has made arrangements to repay the obligation on the defaulted loans satisfactory to the holders of the defaulted loans.


(B)(i) 1 An individual's status as an eligible borrower under this section or under section 1087e(g) of this title terminates under both sections upon receipt of a consolidation loan under this section or under section 1087e(g) of this title, except that—

(I) an individual who receives eligible student loans after the date of receipt of the consolidation loan may receive a subsequent consolidation loan;

(II) loans received prior to the date of the consolidation loan may be added during the 180-day period following the making of the consolidation loan;

(III) loans received following the making of the consolidation loan may be added during the 180-day period following the making of the consolidation loan;

(IV) loans received prior to the date of the first consolidation loan may be added to a subsequent consolidation loan; and

(V) an individual may obtain a subsequent consolidation loan under section 1087e(g) of this title 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 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; or

(cc) for the purpose of using the no accrual of interest for active duty service members benefit offered under section 1087e(o) of this title.

(4) “Eligible student loans” defined

For the purpose of paragraph (1), the term “eligible student loans” means loans—

(A) made, insured, or guaranteed under this part, and first disbursed before July 1, 2010, including loans on which the borrower has defaulted (but has made arrangements to repay the obligation on the defaulted loans satisfactory to the Secretary or guaranty agency, whichever insured the loans);

(B) made under part D of this subchapter;

(C) made under part C 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 et seq.]; or

(E) made under part E of title VIII of the Public Health Service Act [42 U.S.C. 297a et seq.].

(b) Contents of agreements, certificates of insurance, and loan notes

(1) Agreements with lenders

Any lender described in subparagraph (A), (B), or (C) of subsection (a)(1) of this section who wishes to make consolidation loans under this section shall enter into an agreement with the Secretary or a guaranty agency which provides—

(A) that, in the case of all lenders described in subsection (a)(1) of this section, the lender will make a consolidation loan to an eligible borrower (on request of that borrower) only if the borrower certifies that the borrower has no other application pending for a loan under this section;

(B) that each consolidation loan made by the lender will bear interest, and be subject to repayment, in accordance with subsection (c) of this section;

(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) of this section, and (ii) which is equal to the sum of the unpaid principal and accrued unpaid interest and late charges of all eligible student loans received by the eligible borrower which are selected by the borrower for consolidation;

(D) that the proceeds of each consolidation loan will be paid by the lender to the holder or holders of the loans so selected to discharge the liability on such loans;

(E) that the lender shall offer an income-sensitive repayment schedule, established by the lender in accordance with the regulations promulgated by the Secretary, to the borrower of any consolidation loan made by the lender on or after July 1, 1994, and before July 1, 2010;

(F) that the lender shall disclose to a prospective borrower, in simple and understandable terms, at the time the lender provides an application for a consolidation loan—

(i) whether consolidation would result in a loss of loan benefits under this part or part C, including loan forgiveness, cancellation, and deferment;

(ii) with respect to Federal Perkins Loans under part D—

(I) that if a borrower includes a Federal Perkins Loan under part D in the consolidation loan, the borrower will lose all interest-free periods that would have been available for the Federal Perkins Loan, such as—

(aa) the periods during which no interest accrues on such loan while the borrower is enrolled in school at least half-time;

(bb) the grace period under section 1087dd(c)(1)(A) of this title; and

(cc) the periods during which the borrower's student loan repayments are deferred under section 1087dd(c)(2) of this title;


(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; and

(III) the occupations listed in section 1087ee of this title that qualify for Federal Perkins Loan cancellation under section 1087ee(a) of this title;


(iii) the repayment plans that are available to the borrower;

(iv) the options of the borrower to prepay the consolidation loan, to pay such loan on a shorter schedule, and to change repayment plans;

(v) that borrower benefit programs for a consolidation loan may vary among different lenders;

(vi) the consequences of default on the consolidation loan; and

(vii) that by applying for a consolidation loan, the borrower is not obligated to agree to take the consolidation loan; and


(G) such other terms and conditions as the Secretary or the guaranty agency may specifically require of the lender to carry out this section.

(2) Issuance of certificate of comprehensive insurance coverage

The Secretary shall issue a certificate of comprehensive insurance coverage under section 1079(b) of this title to a lender which has entered into an agreement with the Secretary under paragraph (1) of this subsection. The guaranty agency may issue a certificate of comprehensive insurance coverage to a lender with which it has an agreement under such paragraph. The Secretary shall not issue a certificate to a lender described in subparagraph (B) or (C) of subsection (a)(1) of this section unless the Secretary determines that such lender has first applied to, and has been denied a certificate of insurance by, the guaranty agency which insures the preponderance of its loans (by value).

(3) Contents of certificate

A certificate issued under paragraph (2) shall, at a minimum, provide—

(A) that all consolidation loans made by such lender in conformity with the requirements of this section will be insured by the Secretary or the guaranty agency (whichever is applicable) against loss of principal and interest;

(B) that a consolidation loan will not be insured unless the lender has determined to its satisfaction, in accordance with reasonable and prudent business practices, for each loan being consolidated—

(i) that the loan is a legal, valid, and binding obligation of the borrower;

(ii) that each such loan was made and serviced in compliance with applicable laws and regulations; and

(iii) in the case of loans under this part, that the insurance on such loan is in full force and effect;


(C) the effective date and expiration date of the certificate;

(D) the aggregate amount to which the certificate applies;

(E) the reporting requirements of the Secretary on the lender and an identification of the office of the Department of Education or of the guaranty agency which will process claims and perform other related administrative functions;

(F) the alternative repayment terms which will be offered to borrowers by the lender;

(G) that, if the lender prior to the expiration of the certificate no longer proposes to make consolidation loans, the lender will so notify the issuer of the certificate in order that the certificate may be terminated (without affecting the insurance on any consolidation loan made prior to such termination); and

(H) the terms upon which the issuer of the certificate may limit, suspend, or terminate the lender's authority to make consolidation loans under the certificate (without affecting the insurance on any consolidation loan made prior to such limitation, suspension, or termination).

(4) Terms and conditions of loans

A consolidation loan made pursuant to this section shall be insurable by the Secretary or a guaranty agency pursuant to paragraph (2) only if the loan is made to an eligible borrower who has agreed to notify the holder of the loan promptly concerning any change of address and the loan is evidenced by a note or other written agreement which—

(A) is made without security and without endorsement, except that if the borrower is a minor and such note or other written agreement executed by him or her would not, under applicable law, create a binding obligation, endorsement may be required;

(B) provides for the payment of interest and the repayment of principal in accordance with subsection (c) of this section;

(C)(i) provides that periodic installments of principal need not be paid, but interest shall accrue and be paid in accordance with clause (ii), during any period for which the borrower would be eligible for a deferral under section 1078(b)(1)(M) of this title, and that any such period shall not be included in determining the repayment schedule pursuant to subsection (c)(2) of this section; and

(ii) provides that interest shall accrue and be paid during any such period—

(I) by the Secretary, in the case of a consolidation loan for which the application is received by an eligible lender before November 13, 1997, that consolidated only Federal Stafford Loans for which the student borrower received an interest subsidy under section 1078 of this title;

(II) by the Secretary, in the case of a consolidation loan for which the application is received by an eligible lender on or after November 13, 1997, except that the Secretary shall pay such interest only on that portion of the loan that repays Federal Stafford Loans for which the student borrower received an interest subsidy under section 1078 of this title or Federal Direct Stafford Loans for which the borrower received an interest subsidy under section 1087e of this title; or

(III) by the borrower, or capitalized, in the case of a consolidation loan other than a loan described in subclause (I) or (II);


(D) entitles the borrower to accelerate without penalty repayment of the whole or any part of the loan; and

(E)(i) contains a notice of the system of disclosure concerning such loan to consumer reporting agencies under section 1080a of this title, 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.

(5) Direct loans

If, before July 1, 2010, a borrower is unable to obtain a consolidation loan from a lender with an agreement under subsection (a)(1), or is unable to obtain a consolidation loan with income-sensitive repayment terms or income-based repayment terms acceptable to the borrower from such a lender, or chooses to obtain a consolidation loan for the purposes of using the public service loan forgiveness program offered under section 1087e(m) of this title, the Secretary 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 service members program offered under section 1087e(o) of this title, the Secretary 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 C of this subchapter, pursuant to income-based repayment under section 1098e of this title, 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, such loan shall be repaid using one of the repayment options described in section 1087e(m)(1)(A) of this title. The Secretary shall not offer such loans if, in the Secretary's judgment, the Department of Education does not have the necessary origination and servicing arrangements in place for such loans.

(6) Nondiscrimination in loan consolidation

An eligible lender that makes consolidation loans under this section shall not discriminate against any borrower seeking such a loan—

(A) based on the number or type of eligible student loans the borrower seeks to consolidate, except that a lender is not required to consolidate loans described in subparagraph (D) or (E) of subsection (a)(4) of this section or subsection (d)(1)(C)(ii) of this section;

(B) based on the type or category of institution of higher education that the borrower attended;

(C) based on the interest rate to be charged to the borrower with respect to the consolidation loan; or

(D) with respect to the types of repayment schedules offered to such borrower.

(c) Payment of principal and interest

(1) Interest rate

(A) Notwithstanding subparagraphs (B) and (C), with respect to any loan made under this section for which the application is received by an eligible lender—

(i) on or after October 1, 1998, and before July 1, 2006, the applicable interest rate shall be determined under section 1077a(k)(4) of this title; 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) 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 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, except that the eligible lender 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) of this section and approved by the issuer of such certificate, the lender of a consolidation loan shall establish repayment terms as will promote the objectives of this section, which shall include the establishment of graduated, income-sensitive, or income-based repayment schedules, established by the lender in accordance with the regulations of the Secretary. Except as required by such income-sensitive or income-based repayment schedules, or by the terms of repayment pursuant to income contingent repayment offered by the Secretary under subsection (b)(5) of this section, such repayment terms shall require that if the sum of the consolidation loan and the amount outstanding on other student loans to the individual—

(i) is less than $7,500, then such consolidation loan shall be repaid in not more than 10 years;

(ii) is equal to or greater than $7,500 but less than $10,000, then such consolidation loan shall be repaid in not more than 12 years;

(iii) is equal to or greater than $10,000 but less than $20,000, then such consolidation loan shall be repaid in not more than 15 years;

(iv) is equal to or greater than $20,000 but less than $40,000, then such consolidation loan shall be repaid in not more than 20 years;

(v) is equal to or greater than $40,000 but less than $60,000, then such consolidation loan shall be repaid in not more than 25 years; or

(vi) is equal to or greater than $60,000, then such consolidation loan shall be repaid in not more than 30 years.


(B) The amount outstanding on other student loans which may be counted for the purpose of subparagraph (A) may not exceed the amount of the consolidation loan.

(3) Additional repayment requirements

Notwithstanding paragraph (2)—

(A) except in the case of an income-based repayment schedule under section 1098e of this title, 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 under subsection (b)(5) of this section, 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 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, 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 have, pursuant to subsection (b)(1)(D) of this section, discharged the liability of the borrower on the loans selected for consolidation.

(5) Insurance premiums prohibited

No insurance premium shall be charged to the borrower on any consolidation loan, and no insurance premium shall be payable by the lender to the Secretary with respect to any such loan, but a fee may be payable by the lender to the guaranty agency to cover the costs of increased or extended liability with respect to such loan.

(d) Special program authorized

(1) General rule and definition of eligible student loan

(A) In general

Subject to the provisions of this subsection, the Secretary or a guaranty agency shall enter into agreements with eligible lenders described in subparagraphs (A), (B), and (C) of subsection (a)(1) of this section for the consolidation of eligible student loans.

(B) Applicability rule

Unless otherwise provided in this subsection, the agreements entered into under subparagraph (A) and the loans made under such agreements for the consolidation of eligible student loans under this subsection shall have the same terms, conditions, and benefits as all other agreements and loans made under this section.

(C) “Eligible student loans” defined

For the purpose of this subsection, the term “eligible student loans” means loans—

(i) of the type described in subparagraphs (A), (B), and (C) of subsection (a)(4) of this section; and

(ii) made under subpart I of part A of title VII of the Public Health Service Act [42 U.S.C. 292 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) shall bear interest at a rate not to exceed the rate determined under subparagraph (B).

(B) Determination of the maximum interest rate

For the 12-month period beginning after July 1, 1992, and for each 12-month period thereafter, beginning on July 1 and ending on June 30, the interest rate applicable under subparagraph (A) shall be equal to the average of the bond equivalent rates of the 91-day Treasury bills auctioned for the quarter prior to July 1, for each 12-month period for which the determination is made, plus 3 percent.

(C) Publication of maximum interest rate

The Secretary shall determine the applicable rate of interest under subparagraph (B) after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of such determination.

(3) Special rules

(A) No special allowance rule

No special allowance under section 1087–1 of this title 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).

(B) No interest subsidy rule

No interest subsidy under section 1078(a) of this title shall be paid on behalf of any eligible borrower for any portion of a consolidated loan under this subsection that is attributable to any loan described in paragraph (1)(C)(ii).

(C) Additional reserve rule

Notwithstanding any other provision of this chapter and part C of subchapter I of chapter 34 of title 42, additional reserves shall not be required for any guaranty agency with respect to a loan made under this subsection.

(D) Insurance rule

Any insurance premium paid by the borrower under subpart I of part A of title VII of the Public Health Service Act [42 U.S.C. 292 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].

(4) Regulations

The Secretary is authorized to promulgate such regulations as may be necessary to facilitate carrying out the provisions of this subsection.

(e) Termination of authority

The authority to make loans under this section expires at the close of June 30, 2010. No loan may be made under this section for which the disbursement is on or after July 1, 2010. Nothing in this section shall be construed to authorize the Secretary to promulgate rules or regulations governing the terms or conditions of the agreements and certificates under subsection (b) of this section. Loans made under this section which are insured by the Secretary shall be considered to be new loans made to students for the purpose of section 1074(a) of this title.

(f) Interest payment rebate fee

(1) In general

For any month beginning on or after October 1, 1993, each holder of a consolidation loan under this section for which the first disbursement was made on or after October 1, 1993, shall pay to the Secretary, on a monthly basis and in such manner as the Secretary shall prescribe, a rebate fee calculated on an annual basis equal to 1.05 percent of the principal plus accrued unpaid interest on such loan.

(2) Special rule

For consolidation loans based on applications received during the period from October 1, 1998 through January 31, 1999, inclusive, the rebate described in paragraph (1) shall be equal to 0.62 percent of the principal plus accrued unpaid interest on such loan.

(3) Deposit

The Secretary shall deposit all fees collected pursuant to this subsection into the insurance fund established in section 1081 of this title.

(Pub. L. 89–329, title IV, §428C, as added Pub. L. 99–498, title IV, §402(a), Oct. 17, 1986, 100 Stat. 1388; amended Pub. L. 100–50, §10(s), June 3, 1987, 101 Stat. 345; Pub. L. 102–325, title IV, §419, July 23, 1992, 106 Stat. 532; Pub. L. 102–408, title III, §306(a), (b), Oct. 13, 1992, 106 Stat. 2084, 2086; Pub. L. 103–66, title IV, §§4046(a), (b)(2), 4106(a), Aug. 10, 1993, 107 Stat. 360, 363, 368; Pub. L. 103–208, §2(c)(33)–(37), Dec. 20, 1993, 107 Stat. 2466; Pub. L. 103–382, title III, §356, Oct. 20, 1994, 108 Stat. 3967; Pub. L. 104–208, div. A, title I, §101(e) [title VI, §602(b)(1)(A)(ii)], Sept. 30, 1996, 110 Stat. 3009–233, 3009–283; Pub. L. 105–33, title VI, §6104(3), Aug. 5, 1997, 111 Stat. 652; Pub. L. 105–78, title VI, §609(b)–(e), Nov. 13, 1997, 111 Stat. 1522, 1523; Pub. L. 105–244, title IV, §§416(b)(2), 420, Oct. 7, 1998, 112 Stat. 1682, 1695; Pub. L. 107–139, §1(a)(2), Feb. 8, 2002, 116 Stat. 8; Pub. L. 109–171, title VIII, §§8004(b)(3), 8009(a), (b)(2), (c), Feb. 8, 2006, 120 Stat. 158, 163, 164; Pub. L. 109–234, title VII, §7015(a), (c), (d), June 15, 2006, 120 Stat. 485; Pub. L. 110–84, title II, §203(b)(1), (2), Sept. 27, 2007, 121 Stat. 794, 795; Pub. L. 110–315, title IV, §§425(a)–(b)(2), (c), (d)(1), (e), 432(b)(3), Aug. 14, 2008, 122 Stat. 3233–3235, 3246; Pub. L. 111–39, title IV, §402(c)(1), (f)(3), July 1, 2009, 123 Stat. 1940, 1943; Pub. L. 111–152, title II, §2206(a), Mar. 30, 2010, 124 Stat. 1075.)

References in Text

The Public Health Service Act, referred to in subsecs. (a)(4)(D), (E) and (d)(1)(C)(ii), (3)(D), is act July 1, 1944, ch. 373, 58 Stat. 682. Subparts I and II of part A of title VII of the Act are classified generally to subpart I (§292 et seq.) and subpart II (§292q et seq.), respectively, of part A of subchapter V of chapter 6A of Title 42, The Public Health and Welfare. Part E of title VIII of the Act is classified generally to part E (§297a et seq.) of subchapter VI of chapter 6A of Title 42. For complete classification of this Act to the Code, see Short Title note set out under section 201 of Title 42 and Tables.

Codification

Amendments by section 2(c)(33), (36) of Pub. L. 103–208 (which were effective as if included in Pub. L. 102–325) were executed to this section as amended by Pub. L. 102–325 and Pub. L. 103–66, to reflect the probable intent of Congress.

Prior Provisions

A prior section 1078–3, Pub. L. 89–329, title IV, §428C, as added Pub. L. 99–272, title XVI, §16017(a), Apr. 7, 1986, 100 Stat. 343, related to consolidation loans, prior to the general revision of this part by Pub. L. 99–498.

Amendments

2010—Subsec. (a)(4)(A). Pub. L. 111–152, §2206(a)(1), inserted “, and first disbursed before July 1, 2010” after “under this part”.

Subsec. (b)(1)(E). Pub. L. 111–152, §2206(a)(2)(A), inserted “, and before July 1, 2010” before semicolon.

Subsec. (b)(5). Pub. L. 111–152, §2206(a)(2)(B), substituted “If, before July 1, 2010,” for “In the event that”.

Subsec. (c)(1)(A)(ii). Pub. L. 111–152, §2206(a)(3)(A), inserted “and that is disbursed before July 1, 2010,” after “2006,”.

Subsec. (c)(1)(C). Pub. L. 111–152, §2206(a)(3)(B), inserted “and disbursed before July 1, 2010,” after “1994,”.

Subsec. (e). Pub. L. 111–152, §2206(a)(4), substituted “June 30, 2010. No loan may be made under this section for which the disbursement is on or after July 1, 2010.” for “September 30, 2014.”

2009—Subsec. (a)(4)(E). Pub. L. 111–39, §402(f)(3)(A), substituted “part E” for “subpart II of part B”.

Subsec. (c)(2)(A). Pub. L. 111–39, §402(f)(3)(B), in introductory provisions, substituted “subsection (b)(2)” for “subsection (b)(2)(F)” and inserted comma after “graduated”.

Subsec. (c)(3)(A). Pub. L. 111–39, §402(c)(1), substituted “section 1098e of this title,” for “section 1098e of this title”.

Subsec. (d)(3)(D). Pub. L. 111–39, §402(f)(3)(C), substituted “loan insurance account” for “loan insurance fund”.

Subsec. (f)(3). Pub. L. 111–39, §402(f)(3)(D), substituted “this subsection” for “subsection (a) of this section”.

2008—Subsec. (a)(3)(B)(i)(V)(cc). Pub. L. 110–315, §425(a), added item (cc).

Subsec. (b)(1)(F), (G). Pub. L. 110–315, §425(b)(1), added subpar. (F) and redesignated former subpar. (F) as (G).

Subsec. (b)(4)(E)(i). Pub. L. 110–315, §432(b)(3)(A), substituted “consumer reporting agencies” for “credit bureau organizations”.

Subsec. (b)(4)(E)(ii). Pub. L. 110–315, §432(b)(3)(B), substituted “consumer reporting agencies” for “organizations”.

Subsec. (b)(5). Pub. L. 110–315, §425(c), made technical correction to directory language of Pub. L. 110–84, §203(b)(2)(C). See 2007 Amendment note below.

Pub. L. 110–315, §425(b)(2), substituted “A direct consolidation loan offered under this paragraph” for “Such direct consolidation loan” and inserted after first sentence “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 service members program offered under section 1087e(o) of this title, the Secretary shall offer a Federal Direct Consolidation loan to any such borrower who applies for participation in such program.”

Subsec. (c)(2)(A). Pub. L. 110–315, §425(d)(1)(A), in introductory provisions, substituted “income-sensitive, or income-based” for “or income-sensitive” and inserted “or income-based” after “such income-sensitive”.

Subsec. (c)(3). Pub. L. 110–315, §425(d)(1)(B), inserted “except in the case of an income-based repayment schedule under section 1098e of this title” before “a repayment schedule” in subpar. (A) and added subpar. (C).

Subsec. (e). Pub. L. 110–315, §425(e), substituted “2014” for “2012”.

2007—Subsec. (a)(3)(B)(i)(V). Pub. L. 110–84, §203(b)(1)(A), amended subcl. (V) generally. Prior to amendment, subcl. (V) read as follows: “an individual may obtain a subsequent consolidation loan under section 1087e(g) of this title only for the purposes of obtaining an income contingent repayment plan, and only if the loan has been submitted to the guaranty agency for default aversion.”

Subsec. (a)(3)(B)(i)(V)(aa). Pub. L. 110–84, §203(b)(2)(A), substituted “income contingent repayment or income-based repayment,” for “an income contingent repayment plan,” and inserted “or if the loan is already in default” before semicolon.

Subsec. (b)(5). Pub. L. 110–84, §203(b)(2)(C), as amended by Pub. L. 110–315, §425(c), inserted “, pursuant to income-based repayment under section 1098e of this title,” after “part C of this subchapter” in third sentence.

Pub. L. 110–84, §203(b)(2)(B), inserted “or income-based repayment terms” after “income-sensitive repayment terms” in first sentence.

Pub. L. 110–84, §203(b)(1)(B), (C), inserted “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,” after “from such a lender,” in first sentence and “, except that if a borrower intends to be eligible to use the public service loan forgiveness program under section 1087e(m) of this title, such loan shall be repaid using one of the repayment options described in section 1087e(m)(1)(A) of this title” before period at end of second sentence.

2006—Subsec. (a)(3)(A)(ii)(I). Pub. L. 109–171, §8009(b)(2), inserted “as determined under section 1078(b)(7)(A) of this title” after “repayment status”.

Subsec. (a)(3)(B)(i). Pub. L. 109–171, §8009(a)(1)(A), (B), substituted “under this section or under section 1087e(g) of this title terminates under both sections upon receipt of a consolidation loan under this section or under section 1087e(g) of this title” for “under this section terminates upon receipt of a consolidation loan under this section”.

Subsec. (a)(3)(B)(i)(V). Pub. L. 109–171, §8009(a)(1)(C)–(E), added subcl. (V).

Subsec. (a)(3)(C). Pub. L. 109–171, §8009(c), struck out subpar. (C), which read as follows:

“(C)(i) A married couple, each of whom has eligible student loans, may be treated as if such couple were an individual borrowing under subparagraphs (A) and (B) if such couple agrees to be held jointly and severally liable for the repayment of a consolidation loan, without regard to the amounts of the respective loan obligations that are to be consolidated, and without regard to any subsequent change that may occur in such couple's marital status.

“(ii) Only one spouse in a married couple applying for a consolidation loan under this subparagraph need meet any of the requirements of subsection (b) of this section, except that each spouse shall—

“(I) individually make the initial certification that no other application is pending in accordance with subsection (b)(1)(A) of this section; and

“(II) agree to notify the holder concerning any change of address in accordance with subsection (b)(4) of this section.”

Subsec. (b)(1)(A). Pub. L. 109–234, §7015(a), struck out “and (i) the lender holds an outstanding loan of that borrower which is selected by the borrower for consolidation under this section, except that this clause shall not apply in the case of a borrower with multiple holders of loans under this part, or (ii) the borrower certifies that the borrower has sought and has been unable to obtain a consolidation loan with income-sensitive repayment terms from the holders of the outstanding loans of that borrower (which are so selected for consolidation)” after “loan under this section”.

Subsec. (b)(5). Pub. L. 109–234, §7015(c), reenacted heading without change and substituted in text “In the event that a borrower is unable to obtain a consolidation loan from a lender with an agreement under subsection (a)(1), or is unable to obtain a consolidation loan with income-sensitive repayment terms acceptable to the borrower from such a lender, the Secretary shall offer any such borrower who applies for it, a Federal Direct Consolidation loan. Such direct consolidation loan” for “In the event that a borrower is unable to obtain a consolidation loan from a lender with an agreement under subsection (a)(1) of this section, or is unable to obtain a consolidation loan with income-sensitive repa