20 USC CHAPTER 28, SUBCHAPTER IV, Part D: William D. Ford Federal Direct Loan Program

From Title 20—EDUCATIONCHAPTER 28—HIGHER EDUCATION RESOURCES AND STUDENT ASSISTANCESUBCHAPTER IV—STUDENT ASSISTANCE

Part D—William D. Ford Federal Direct Loan Program

Editorial Notes

Codification

Parts A to J of title IV of the Higher Education Act of 1965, Pub. L. 89–329 ("the HEA"), would typically have been classified to parts A to J of this subchapter. However, part C of title IV of the HEA could not be classified to part C of this subchapter when it was enacted because it amended and related to various provisions of the Economic Opportunity Act of 1964, Pub. L. 88–452, which were classified to Title 42, The Public Health and Welfare. As a result, parts D to J of title IV of the HEA were editorially designated as parts C to I of this subchapter to fill the gap left in the Code by the absence of a part C. That original part C of title IV of the HEA was subsequently repealed, and part C of title I of the Economic Opportunity Act of 1964 was redesignated to become a new part C of title IV of the HEA. In order to merge the pieces of the HEA together after the redesignation and logically realign the part structure of the HEA with that of the Code, part C of title IV of the HEA was editorially transferred from its original location in part C (§2751 et seq.) of subchapter I of chapter 34 of Title 42 to part C (§1087–51 et seq.) of this subchapter, and subsequent parts D to I of title IV of the HEA were redesignated as parts D to I of this subchapter. Part J of title IV of the HEA was omitted instead of redesignated as part J of this subchapter because it had already been transferred to another part of the HEA.

Prior Provisions

A prior part D, consisting of part E of title IV of Pub. L. 89–329, was redesignated part E of this subchapter.

§1087a. Program authority

(a) In general

There are hereby made available, in accordance with the provisions of this part, such sums as may be necessary (1) to make loans to all eligible students (and the eligible parents of such students) in attendance at participating institutions of higher education selected by the Secretary, to enable such students to pursue their courses of study at such institutions during the period beginning July 1, 1994; and (2) for purchasing loans under section 1087i–1 of this title. Loans made under this part shall be made by participating institutions, or consortia thereof, that have agreements with the Secretary to originate loans, or by alternative originators designated by the Secretary to make loans for students in attendance at participating institutions (and their parents).

(b) Designation

(1) Program

The program established under this part shall be referred to as the "William D. Ford Federal Direct Loan Program".

(2) Direct loans

Notwithstanding any other provision of this part, loans made to borrowers under this part that, except as otherwise specified in this part, have the same terms, conditions, and benefits as loans made to borrowers under section 1078 of this title, shall be known as "Federal Direct Stafford/Ford Loans".

(Pub. L. 89–329, title IV, §451, as added Pub. L. 99–498, title IV, §404, Oct. 17, 1986, 100 Stat. 1437; amended Pub. L. 102–325, title IV, §451, July 23, 1992, 106 Stat. 569; Pub. L. 103–66, title IV, §4021, Aug. 10, 1993, 107 Stat. 341; Pub. L. 103–382, title III, §358A, Oct. 20, 1994, 108 Stat. 3968; Pub. L. 110–227, §7(a), May 7, 2008, 122 Stat. 746; Pub. L. 116–260, div. FF, title VII, §702(a)(2), Dec. 27, 2020, 134 Stat. 3138.)

Amendment of Section

Pub. L. 116–260, div. FF, title VII, §§701(b), 702(a)(2), Dec. 27, 2020, 134 Stat. 3137, 3138; Pub. L. 117–103, div. R, §102(a), Mar. 15, 2022, 136 Stat. 819, provided that, effective July 1, 2024, except as otherwise expressly provided, and applicable with respect to award year 2024–2025 and each subsequent award year, as determined under this chapter, this section is amended by adding at the end the following:

(c) Maximum aid

The maximum dollar amount of financial assistance provided under this part to a student shall not exceed the cost of attendance for such student.

See 2020 Amendment note below.

Editorial Notes

Prior Provisions

A prior section 1087a, Pub. L. 89–329, title IV, §451, as added Pub. L. 90–575, title I, §141, Oct. 16, 1968, 82 Stat. 1031; amended Pub. L. 92–318, title I, §136(a), (b)(1), June 23, 1972, 86 Stat. 272, authorized appropriations for cooperative education programs from the fiscal year ending June 30, 1969, through the fiscal year ending prior to July 1, 1975, prior to repeal by Pub. L. 94–482, title I, §129(a), Oct. 12, 1976, 90 Stat. 2144, eff. 30 days after Oct. 12, 1976.

Amendments

2020—Subsec. (c). Pub. L. 116–260 added subsec. (c).

2008—Subsec. (a). Pub. L. 110–227, in first sentence, inserted "(1)" before "to make loans" and "; and (2) for purchasing loans under section 1087i–1 of this title" before period at end and, in second sentence, substituted "Loans made under this part shall" for "Such loans shall".

1994—Pub. L. 103–382 designated existing provisions as subsec. (a), added heading, and added subsec. (b).

1993—Pub. L. 103–66 amended section generally, substituting provisions relating to program authority for former provisions relating to program and payment authority.

1992—Pub. L. 102–325 amended section generally, substituting provisions relating to program and payment authority for Federal direct loan demonstration program for former provisions relating to statement of purpose of income contingent direct loan demonstration project.

Statutory Notes and Related Subsidiaries

Effective Date of 2020 Amendment

Amendment by Pub. L. 116–260 effective July 1, 2024, except as otherwise expressly provided, and applicable with respect to award year 2024–2025 and each subsequent award year, as determined under this chapter, see section 701(b) of Pub. L. 116–260, set out as a note under section 1001 of this title.

Effective Date of 1992 Amendment

Amendment by Pub. L. 102–325 effective Oct. 1, 1992, see section 2 of Pub. L. 102–325, set out as a note under section 1001 of this title.

Income Contingent Loan Distribution of Funds

Pub. L. 102–325, title IV, §452, July 23, 1992, 106 Stat. 575, provided that:

"(a) In General.—After September 30, 1992, and not later than March 31, 1992, the capital balance of the student loan fund established under part D of title IV of the Higher Education Act of 1965 [20 U.S.C. 1087a et seq.] (as such Act was in effect on the date of enactment of this Act [July 23, 1992]) shall be distributed by allowing institutions to transfer any remaining funds, including future collections and all other funds at the institution's discretion, to such institution's part E [20 U.S.C. 1087aa et seq.] account, part C [20 U.S.C. 1087–51 et seq.] fund, or subpart 3 of part A [20 U.S.C. 1070b et seq.] fund under the terms and conditions of the appropriate program.

"(b) Conversion of Existing Loans.—Institutions may, after July 1, 1992, convert all outstanding loans made under part D of title IV of the Higher Education Act of 1965 [20 U.S.C. 1087a et seq.] (as such Act was in effect on such date) to part E [20 U.S.C. 1087aa et seq.] loans, provided that such institution—

"(1) notify the borrower of such conversion;

"(2) obtain a signed part E promissory note from the borrower for the remaining amount outstanding; and

"(3) provide the borrower in writing with a description of all terms and conditions of the new loan."

§1087b. Funds for origination of direct student loans

(a) In general

The Secretary shall provide, on the basis of the need and the eligibility of students at each participating institution, and parents of such students, for such loans, funds for student and parent loans under this part—

(1) directly to an institution of higher education that has an agreement with the Secretary under section 1087d(a) of this title to participate in the direct student loan programs under this part and that also has an agreement with the Secretary under section 1087d(b) of this title to originate loans under this part; or

(2) through an alternative originator designated by the Secretary to students (and parents of students) attending institutions of higher education that have an agreement with the Secretary under section 1087d(a) of this title but that do not have an agreement with the Secretary under section 1087d(b) of this title.

(b) No entitlement to participate or originate

No institution of higher education shall have a right to participate in the programs authorized by this part, to originate loans, or to perform any program function under this part. Nothing in this subsection shall be construed so as to limit the entitlement of an eligible student attending a participating institution (or the eligible parent of such student) to borrow under this part.

(c) Delivery of loan funds

Loan funds shall be paid and delivered to an institution by the Secretary prior to the beginning of the payment period established by the Secretary in a manner that is consistent with payment and delivery of Federal Pell Grants under subpart 1 of part A of this subchapter.

(d) Institutions outside the United States

Loan funds for students (and parents of students) attending institutions outside the United States shall be disbursed through a financial institution located or operating in the United States and designated by the Secretary to serve as the agent of such institutions with respect to the receipt of the disbursements of such loan funds and the transfer of such funds to such institutions. To be eligible to receive funds under this part, an institution outside the United States shall make arrangements with the agent designated by the Secretary under this subsection to receive funds under this part.

(Pub. L. 89–329, title IV, §452, as added Pub. L. 99–498, title IV, §404, Oct. 17, 1986, 100 Stat. 1437; amended Pub. L. 102–325, title IV, §451, July 23, 1992, 106 Stat. 569; Pub. L. 103–66, title IV, §4021, Aug. 10, 1993, 107 Stat. 341; Pub. L. 105–33, title VI, §6102, Aug. 5, 1997, 111 Stat. 652; Pub. L. 105–244, title IV, §401(g)(5), Oct. 7, 1998, 112 Stat. 1652; Pub. L. 111–152, title II, §2209(a), Mar. 30, 2010, 124 Stat. 1077.)

Editorial Notes

Prior Provisions

A prior section 1087b, Pub. L. 89–329, title IV, §452, as added Pub. L. 90–575, title I, §141, Oct. 16, 1968, 82 Stat. 1031, authorized grants for programs of cooperative education, prior to repeal by Pub. L. 94–482, title I, §129(a), Oct. 12, 1976, 90 Stat. 2144, eff. 30 days after Oct. 12, 1976.

Amendments

2010—Subsec. (d). Pub. L. 111–152 added subsec. (d).

1998—Subsec. (c). Pub. L. 105–244 substituted "Federal Pell Grants" for "basic grants".

1997—Subsecs. (b) to (d). Pub. L. 105–33 redesignated subsecs. (c) and (d) as (b) and (c), respectively, and struck out former subsec. (b) which required the Secretary to pay fees to institutions of higher education and alternative loan originators to assist in meeting the cost of loan origination.

1993—Pub. L. 103–66 amended section generally, substituting provisions relating to funds for origination of direct student loans for former provisions relating to payment rules.

1992—Pub. L. 102–325 amended section generally, substituting provisions relating to payment rules for former provisions authorizing demonstration projects.

Statutory Notes and Related Subsidiaries

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 1992 Amendment

Amendment by Pub. L. 102–325 effective Oct. 1, 1992, see section 2 of Pub. L. 102–325, set out as a note under section 1001 of this title.

§1087c. Selection of institutions for participation and origination

(a) General authority

The Secretary shall enter into agreements pursuant to section 1087d(a) of this title with institutions of higher education to participate in the direct student loan program under this part, and agreements pursuant to section 1087d(b) of this title with institutions of higher education, or consortia thereof, to originate loans in such program, for academic years beginning on or after July 1, 1994. Alternative origination services, through which an entity other than the participating institution at which the student is in attendance originates the loan, shall be provided by the Secretary, through 1 or more contracts under section 1087f(b) of this title or such other means as the Secretary may provide, for students attending participating institutions that do not originate direct student loans under this part. Such agreements for the academic year 1994–1995 shall, to the extent feasible, be entered into not later than January 1, 1994.

(b) Selection criteria

(1) Application

Each institution of higher education desiring to participate in the direct student loan program under this part shall submit an application satisfactory to the Secretary containing such information and assurances as the Secretary may require.

(2) Selection procedure

The Secretary shall select institutions for participation in the direct student loan program under this part, and shall enter into agreements with such institutions under section 1087d(a) of this title, from among those institutions that submit the applications described in paragraph (1), and meet such other eligibility requirements as the Secretary shall prescribe.

(c) Selection criteria for origination

(1) In general

The Secretary may enter into a supplemental agreement with an institution (or a consortium of such institutions) that—

(A) has an agreement under subsection ¹ 1087d(a) of this title;

(B) desires to originate loans under this part; and

(2) Selection criteria

The Secretary may approve an institution to originate loans only if such institution—

(A) is not on the reimbursement system of payment for any of the programs under subpart 1 or 3 of part A, part C, or part E of this subchapter;

(B) is not overdue on program or financial reports or audits required under this subchapter;

(C) is not subject to an emergency action, or a limitation, suspension, or termination under section 1078(b)(1)(T), 1082(h), or 1094(c) of this title;

(D) in the opinion of the Secretary, has not had severe performance deficiencies for any of the programs under this subchapter, including such deficiencies demonstrated by audits or program reviews submitted or conducted during the 5 calendar years immediately preceding the date of application;

(E) provides an assurance that such institution has no delinquent outstanding debts to the Federal Government, unless such debts are being repaid under or in accordance with a repayment arrangement satisfactory to the Federal Government, or the Secretary in the Secretary's discretion determines that the existence or amount of such debts has not been finally determined by the cognizant Federal agency; and

(F) meets such other criteria as the Secretary may establish to protect the financial interest of the United States and to promote the purposes of this part.

(d) Eligible institutions

The Secretary may not select an institution of higher education for participation under this section unless such institution is an eligible institution under section 1085(a) of this title.

(e) Consortia

Subject to such requirements as the Secretary may prescribe, eligible institutions of higher education (as determined under subsection (d)) with agreements under section 1087d(a) of this title may apply to the Secretary as consortia to originate loans under this part for students in attendance at such institutions. Each such institution shall be required to meet the requirements of subsection (c) with respect to loan origination.

(Pub. L. 89–329, title IV, §453, as added Pub. L. 99–498, title IV, §404, Oct. 17, 1986, 100 Stat. 1438; amended Pub. L. 102–325, title IV, §451, July 23, 1992, 106 Stat. 569; Pub. L. 103–66, title IV, §4021, Aug. 10, 1993, 107 Stat. 342; Pub. L. 103–208, §2(e), Dec. 20, 1993, 107 Stat. 2470; Pub. L. 105–244, title IV, §451, Oct. 7, 1998, 112 Stat. 1715; Pub. L. 111–39, title IV, §404(b)(1), July 1, 2009, 123 Stat. 1946.)

Editorial Notes

Codification

Amendment by section 2 of 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 1087c, Pub. L. 89–329, title IV, §453, as added Pub. L. 90–575, title I, §141, Oct. 16, 1968, 82 Stat. 1032; amended Pub. L. 92–318, title I, §136(b)(2), June 23, 1972, 86 Stat. 272, authorized grants and contracts for training and research in cooperative education programs, prior to repeal by Pub. L. 94–482, title I, §129(a), Oct. 12, 1976, 90 Stat. 2144, eff. 30 days after Oct. 12, 1976.

Amendments

2009—Subsec. (c)(3). Pub. L. 111–39 struck out par. (3). Text read as follows: "The Secretary shall promulgate and publish in the Federal Register regulations governing the approval of institutions to originate loans under this part in accordance with section 1087g(a)(2) of this title."

1998—Subsec. (a). Pub. L. 105–244, §451(a), amended heading, redesignated par. (1) as entire subsec., and struck out pars. (2) to (4) which provided for transition from loan programs under part B of this subchapter to direct student loan program under this part and defined term "new student loan volume".

Subsec. (b)(2). Pub. L. 105–244, §451(b), substituted "prescribe." for "prescribe, by, to the extent possible—

"(A)(i) categorizing such institutions according to anticipated loan volume, length of academic program, control of the institution, highest degree offered, size of student enrollment, geographic location, annual loan volume, and default experience; and

"(ii) beginning in academic year 1995–1996 selecting institutions that are reasonably representative of each of the categories described pursuant to clause (i); and

"(B) if the Secretary determines it necessary in order to carry out the purposes of subparagraph (A) and attain such reasonable representation (as required by subparagraph (A)), selecting additional institutions."

Subsec. (c)(2). Pub. L. 105–244, §451(c)(1)(A), (B), substituted "Selection criteria" for "Transition selection criteria" in heading and "The Secretary" for "For academic year 1994–1995, the Secretary" in introductory provisions.

Subsec. (c)(2)(A). Pub. L. 105–244, §451(c)(1)(E), redesignated subpar. (B) as (A).

Pub. L. 105–244, §451(c)(1)(C), struck out subpar. (A) which read as follows: "made loans under part E of this subchapter in academic year 1993–1994 and did not exceed the applicable maximum default rate under section 1087bb(g) of this title for the most recent fiscal year for which data are available;".

Subsec. (c)(2)(B) to (D). Pub. L. 105–244, §451(c)(1)(E), redesignated subpars. (C), (D), and (F) as (B) to (D), respectively. Former subpar. (B) redesignated (A).

Subsec. (c)(2)(E). Pub. L. 105–244, §451(c)(1)(E), redesignated subpar. (G) as (E).

Pub. L. 105–244, §451(c)(1)(D), struck out subpar. (E) which read as follows: "in the opinion of the Secretary, has not had significant deficiencies identified by a State postsecondary review entity under subpart 1 of part H of this subchapter;".

Subsec. (c)(2)(F) to (H). Pub. L. 105–244, §451(c)(1)(E), redesignated subpars. (G) and (H) as (E) and (F), respectively. Former subpar. (F) redesignated (D).

Subsec. (c)(3). Pub. L. 105–244, §451(c)(2), struck out "after transition" after "approval" in heading and substituted "The Secretary" for "For academic year 1995–1996 and subsequent academic years, the Secretary" in text.

1993—Pub. L. 103–66 amended section generally, substituting provisions relating to selection of institutions for participation and origination for former provisions relating to selection by Secretary.

Subsec. (b)(2)(B). Pub. L. 103–208 amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: "if the Secretary determines it necessary to carry out the purposes of this part, selecting additional institutions." See Codification note above.

1992—Pub. L. 102–325 amended section generally, substituting provisions relating to selection by the Secretary for former provisions relating to agreements with institutions of higher education.

Statutory Notes and Related Subsidiaries

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

Effective Date of 1992 Amendment

Amendment by Pub. L. 102–325 effective Oct. 1, 1992, see section 2 of Pub. L. 102–325, set out as a note under section 1001 of this title.

¹ So in original. Probably should be "section".

§1087d. Agreements with institutions

(a) Participation agreements

An agreement with any institution of higher education for participation in the direct student loan program under this part shall—

(1) provide for the establishment and maintenance of a direct student loan program at the institution under which the institution will—

(A) identify eligible students who seek student financial assistance at such institution in accordance with section 1091 of this title;

(B) estimate the need of each such student as required by part F of this subchapter for an academic year, except that, any loan obtained by a student under this part with the same terms as loans made under section 1078–8 of this title (except as otherwise provided in this part), or a loan obtained by a parent under this part with the same terms as loans made under section 1078–2 of this title (except as otherwise provided in this part), or obtained under any State-sponsored or private loan program, may be used to offset the expected family contribution of the student for that year;

(C) provide a statement that certifies the eligibility of any student to receive a loan under this part that is not in excess of the annual or aggregate limit applicable to such loan, except that the institution may, in exceptional circumstances identified by the Secretary, refuse to certify a statement that permits a student to receive a loan under this part, or certify a loan amount that is less than the student's determination of need (as determined under part F of this subchapter), if the reason for such action is documented and provided in written form to such student;

(D) set forth a schedule for disbursement of the proceeds of the loan in installments, consistent with the requirements of section 1078–7 of this title; and

(E) provide timely and accurate information—

(i) concerning the status of student borrowers (and students on whose behalf parents borrow under this part) while such students are in attendance at the institution and concerning any new information of which the institution becomes aware for such students (or their parents) after such borrowers leave the institution, to the Secretary for the servicing and collecting of loans made under this part; and

(ii) if the institution does not have an agreement with the Secretary under subsection (b), concerning student eligibility and need, as determined under subparagraphs (A) and (B), to the Secretary as needed for the alternative origination of loans to eligible students and parents in accordance with this part;

(2) provide assurances that the institution will comply with requirements established by the Secretary relating to student loan information with respect to loans made under this part;

(3) provide that the institution accepts responsibility and financial liability stemming from its failure to perform its functions pursuant to the agreement;

(4) provide for the implementation of a quality assurance system, as established by the Secretary and developed in consultation with institutions of higher education, to ensure that the institution is complying with program requirements and meeting program objectives;

(5) provide that the institution will not charge any fees of any kind, however described, to student or parent borrowers for origination activities or the provision of any information necessary for a student or parent to receive a loan under this part, or any benefits associated with such loan; and

(6) include such other provisions as the Secretary determines are necessary to protect the interests of the United States and to promote the purposes of this part.

(b) Origination

An agreement with any institution of higher education, or consortia thereof, for the origination of loans under this part shall—

(1) supplement the agreement entered into in accordance with subsection (a);

(2) include provisions established by the Secretary that are similar to the participation agreement provisions described in paragraphs (1)(E)(ii), (2), (3), (4), (5), and (6) of subsection (a), as modified to relate to the origination of loans by the institution or consortium;

(3) provide that the institution or consortium will originate loans to eligible students and parents in accordance with this part; and

(4) provide that the note or evidence of obligation on the loan shall be the property of the Secretary.

(c) Withdrawal and termination procedures

The Secretary shall establish procedures by which institutions or consortia may withdraw or be terminated from the program under this part.

(Pub. L. 89–329, title IV, §454, as added Pub. L. 99–498, title IV, §404, Oct. 17, 1986, 100 Stat. 1438; amended Pub. L. 100–50, §12, June 3, 1987, 101 Stat. 348; Pub. L. 102–325, title IV, §451, July 23, 1992, 106 Stat. 571; Pub. L. 103–66, title IV, §4021, Aug. 10, 1993, 107 Stat. 345; Pub. L. 111–152, title II, §2210(a), Mar. 30, 2010, 124 Stat. 1078; Pub. L. 116–260, div. FF, title VII, §704(1), Dec. 27, 2020, 134 Stat. 3199.)

Amendment of Subsection (a)(1)(B)

Pub. L. 116–260, div. FF, title VII, §§701(b), 704(1), Dec. 27, 2020, 134 Stat. 3137, 3199; Pub. L. 117–103, div. R, §102(a), Mar. 15, 2022, 136 Stat. 819, provided that, effective July 1, 2024, except as otherwise expressly provided, and applicable with respect to award year 2024–2025 and each subsequent award year, as determined under this chapter, subsection (a)(1)(B) of this section is amended by striking "the expected family contribution" and inserting "the student aid index". See 2020 Amendment note below.

Editorial Notes

Amendments

2020—Subsec. (a)(1)(B). Pub. L. 116–260 substituted "the student aid index" for "the expected family contribution".

2010—Subsec. (a)(4) to (7). Pub. L. 111–152, §2210(a)(1), redesignated pars. (5) to (7) as (4) to (6), respectively, and struck out former par. (4), which read as follows: "provide that students at the institution and their parents (with respect to such students) will be eligible to participate in the programs under part B of this subchapter at the discretion of the Secretary for the period during which such institution participates in the direct student loan program under this part, except that a student or parent may not receive loans under both this part and part B of this subchapter for the same period of enrollment;".

Subsec. (b)(2). Pub. L. 111–152, §2210(a)(2), substituted "(5), and (6)" for "(5), (6), and (7)".

1993—Pub. L. 103–66 amended section generally, substituting provisions relating to agreements with institutions, consisting of subsecs. (a) to (c), for former provisions relating to requirements of agreements, consisting of pars. (1) to (7).

1992—Pub. L. 102–325 amended section generally, substituting provisions relating to requirements of agreements for former provisions relating to terms of loans under pilot program.

1987—Subsec. (a)(4). Pub. L. 100–50 amended par. (4) generally. Prior to amendment, par. (4) read as follows: "The interest rate on all such loans shall be the rate equal to the rate obtained for each calendar year (A) by computing the average of the bond equivalent rates of 91-day Treasury bills auctioned for such 3-month period preceding such year, and (B) by adding 3 percent to the resulting percent."

Statutory Notes and Related Subsidiaries

Effective Date of 2020 Amendment

Effective Date of 2010 Amendment

Pub. L. 111–152, title II, §2210(b), Mar. 30, 2010, 124 Stat. 1078, provided that: "The amendments made by subsection (a) [amending this section] shall take effect on July 1, 2010."

Effective Date of 1992 Amendment

Amendment by Pub. L. 102–325 effective Oct. 1, 1992, see section 2 of Pub. L. 102–325, 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.

§1087e. Terms and conditions of loans

(a) In general

(1) Parallel terms, conditions, benefits, and amounts

Unless otherwise specified in this part, loans made to borrowers under this part shall have the same terms, conditions, and benefits, and be available in the same amounts, as loans made to borrowers, and first disbursed on June 30, 2010, under sections 1078, 1078–2, 1078–3, and 1078–8 of this title.

(2) Designation of loans

Loans made to borrowers under this part that, except as otherwise specified in this part, have the same terms, conditions, and benefits as loans made to borrowers under—

(A) section 1078 of this title shall be known as "Federal Direct Stafford Loans";

(B) section 1078–2 of this title shall be known as "Federal Direct PLUS Loans";

(D) section 1078–8 of this title shall be known as "Federal Direct Unsubsidized Stafford Loans".

(3) Termination of authority to make interest subsidized loans to graduate and professional students

(A) In general

Subject to subparagraph (B) and notwithstanding any provision of this part or part B, for any period of instruction beginning on or after July 1, 2012—

(i) a graduate or professional student shall not be eligible to receive a Federal Direct Stafford loan under this part; and

(ii) the maximum annual amount of Federal Direct Unsubsidized Stafford loans such a student may borrow in any academic year (as defined in section 1088(a)(2) of this title) or its equivalent shall be the maximum annual amount for such student determined under section 1078–8 of this title, plus an amount equal to the amount of Federal Direct Stafford loans the student would have received in the absence of this subparagraph.

(B) Exception

Subparagraph (A) shall not apply to an individual enrolled in course work specified in paragraph (3)(B) or (4)(B) of section 1091(b) of this title.

(b) Interest rate

(1) Rates for FDSL and FDUSL

For Federal Direct Stafford Loans and Federal Direct Unsubsidized Stafford Loans for which the first disbursement is made on or after July 1, 1994, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to—

(A) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to such June 1; plus

(B) 3.1 percent,

except that such rate shall not exceed 8.25 percent.

(2) In school and grace period rules

(A) Notwithstanding the provisions of paragraph (1), but subject to paragraph (3), with respect to any Federal Direct Stafford Loan or Federal Direct Unsubsidized Stafford Loan for which the first disbursement is made on or after July 1, 1995, the applicable rate of interest for interest which accrues—

(i) prior to the beginning of the repayment period of the loan; or

(ii) during the period in which principal need not be paid (whether or not such principal is in fact paid) by reason of a provision described in section 1078(b)(1)(M) or 1077(a)(2)(C) of this title,

shall not exceed the rate determined under subparagraph (B).

(B) For the purpose of subparagraph (A), the rate determined under this subparagraph shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to—

(i) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction prior to such June 1; plus

(ii) 2.5 percent,

except that such rate shall not exceed 8.25 percent.

(3) Out-year rule

Notwithstanding paragraphs (1) and (2), for Federal Direct Stafford Loans and Federal Direct Unsubsidized Stafford Loans made on or after July 1, 1998, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to—

(A) the bond equivalent rate of the security with a comparable maturity as established by the Secretary; plus

(B) 1.0 percent,

except that such rate shall not exceed 8.25 percent.

(4) Rates for FDPLUS

(A)(i) For Federal Direct PLUS Loans for which the first disbursement is made on or after July 1, 1994, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on or before June 30, 2001, be determined on the preceding June 1 and be equal to—

(I) the bond equivalent rate of 52-week Treasury bills auctioned at final auction held prior to such June 1; plus

(II) 3.1 percent,

except that such rate shall not exceed 9 percent.

(ii) For any 12-month period beginning on July 1 of 2001 or any succeeding year, the applicable rate of interest determined under this subparagraph shall be determined on the preceding June 26 and be equal to—

(I) the weekly average 1-year constant maturity Treasury yield, as published by the Board of Governors of the Federal Reserve System, for the last calendar week ending on or before such June 26; plus

(II) 3.1 percent,

except that such rate shall not exceed 9 percent.

(B) For Federal Direct PLUS loans made on or after July 1, 1998, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to—

(i) the bond equivalent rate of the security with a comparable maturity as established by the Secretary; plus

(ii) 2.1 percent,

except that such rate shall not exceed 9 percent.

(5) Temporary interest rate provision

(A) Rates for FDSL and FDUSL

Notwithstanding the preceding paragraphs of this subsection, for Federal Direct Stafford Loans and Federal Direct Unsubsidized Stafford Loans for which the first disbursement is made on or after July 1, 1998, and before October 1, 1998, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to—

(i) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to such June 1; plus

(ii) 2.3 percent,

except that such rate shall not exceed 8.25 percent.

(B) In school and grace period rules

Notwithstanding the preceding paragraphs of this subsection, with respect to any Federal Direct Stafford Loan or Federal Direct Unsubsidized Stafford Loan for which the first disbursement is made on or after July 1, 1998, and before October 1, 1998, the applicable rate of interest for interest which accrues—

(i) prior to the beginning of the repayment period of the loan; or

(ii) during the period in which principal need not be paid (whether or not such principal is in fact paid) by reason of a provision described in section 1078(b)(1)(M) or 1077(a)(2)(C) of this title,

shall be determined under subparagraph (A) by substituting "1.7 percent" for "2.3 percent".

(C) PLUS loans

Notwithstanding the preceding paragraphs of this subsection, with respect to Federal Direct PLUS Loan for which the first disbursement is made on or after July 1, 1998, and before October 1, 1998, the applicable rate of interest shall be determined under subparagraph (A)—

(i) by substituting "3.1 percent" for "2.3 percent"; and

(ii) by substituting "9.0 percent" for "8.25 percent".

(6) Interest rate provision for new loans on or after October 1, 1998, and before July 1, 2006

(A) Rates for FDSL and FDUSL

Notwithstanding the preceding paragraphs of this subsection, for Federal Direct Stafford Loans and Federal Direct Unsubsidized Stafford Loans for which the first disbursement is made on or after October 1, 1998, and before July 1, 2006, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to—

(i) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to such June 1; plus

(ii) 2.3 percent,

except that such rate shall not exceed 8.25 percent.

(B) In school and grace period rules

Notwithstanding the preceding paragraphs of this subsection, with respect to any Federal Direct Stafford Loan or Federal Direct Unsubsidized Stafford Loan for which the first disbursement is made on or after October 1, 1998, and before July 1, 2006, the applicable rate of interest for interest which accrues—

(i) prior to the beginning of the repayment period of the loan; or

(ii) during the period in which principal need not be paid (whether or not such principal is in fact paid) by reason of a provision described in section 1078(b)(1)(M) or 1077(a)(2)(C) of this title,

shall be determined under subparagraph (A) by substituting "1.7 percent" for "2.3 percent".

(C) PLUS loans

Notwithstanding the preceding paragraphs of this subsection, with respect to Federal Direct PLUS Loan for which the first disbursement is made on or after October 1, 1998, and before July 1, 2006, the applicable rate of interest shall be determined under subparagraph (A)—

(i) by substituting "3.1 percent" for "2.3 percent"; and

(ii) by substituting "9.0 percent" for "8.25 percent".

(D) Consolidation loans

Notwithstanding the preceding paragraphs of this subsection, any Federal Direct Consolidation loan for which the application is received on or after February 1, 1999, and before July 1, 2006, shall bear interest at an annual rate on the unpaid principal balance of the loan that is equal to the lesser of—

(i) the weighted average of the interest rates on the loans consolidated, rounded to the nearest higher one-eighth of one percent; or

(ii) 8.25 percent.

(E) Temporary rules for consolidation loans

Notwithstanding the preceding paragraphs of this subsection, any Federal Direct Consolidation loan for which the application is received on or after October 1, 1998, and before February 1, 1999, shall bear interest at an annual rate on the unpaid principal balance of the loan that is equal to—

(i) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to such June 1; plus

(ii) 2.3 percent,

except that such rate shall not exceed 8.25 percent.

(7) Interest rate provision for new loans on or after July 1, 2006 and before July 1, 2013

(A) Rates for FDSL and FDUSL

Notwithstanding the preceding paragraphs of this subsection, for Federal Direct Stafford Loans and Federal Direct Unsubsidized Stafford Loans for which the first disbursement is made on or after July 1, 2006, and before July 1, 2013, the applicable rate of interest shall be 6.8 percent on the unpaid principal balance of the loan.

(B) PLUS loans

Notwithstanding the preceding paragraphs of this subsection, with respect to any Federal Direct PLUS loan for which the first disbursement is made on or after July 1, 2006, and before July 1, 2013, the applicable rate of interest shall be 7.9 percent on the unpaid principal balance of the loan.

(C) Consolidation loans

Notwithstanding the preceding paragraphs of this subsection, any Federal Direct Consolidation loan for which the application is received on or after July 1, 2006, and before July 1, 2013, shall bear interest at an annual rate on the unpaid principal balance of the loan that is equal to the lesser of—

(i) the weighted average of the interest rates on the loans consolidated, rounded to the nearest higher one-eighth of one percent; or

(ii) 8.25 percent.

(D) Reduced rates for undergraduate FDSL

Notwithstanding the preceding paragraphs of this subsection and subparagraph (A) of this paragraph, for Federal Direct Stafford Loans made to undergraduate students for which the first disbursement is made on or after July 1, 2006, and before July 1, 2013, the applicable rate of interest shall be as follows:

(i) For a loan for which the first disbursement is made on or after July 1, 2006, and before July 1, 2008, 6.8 percent on the unpaid principal balance of the loan.

(ii) For a loan for which the first disbursement is made on or after July 1, 2008, and before July 1, 2009, 6.0 percent on the unpaid principal balance of the loan.

(iii) For a loan for which the first disbursement is made on or after July 1, 2009, and before July 1, 2010, 5.6 percent on the unpaid principal balance of the loan.

(iv) For a loan for which the first disbursement is made on or after July 1, 2010, and before July 1, 2011, 4.5 percent on the unpaid principal balance of the loan.

(v) For a loan for which the first disbursement is made on or after July 1, 2011, and before July 1, 2013, 3.4 percent on the unpaid principal balance of the loan.

(8) Interest rate provisions for new loans on or after July 1, 2013

(A) Rates for undergraduate FDSL and FDUSL

Notwithstanding the preceding paragraphs of this subsection, for Federal Direct Stafford Loans and Federal Direct Unsubsidized Stafford Loans issued to undergraduate students, for which the first disbursement is made on or after July 1, 2013, the applicable rate of interest shall, for loans disbursed during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to the lesser of—

(i) a rate equal to the high yield of the 10-year Treasury note auctioned at the final auction held prior to such June 1 plus 2.05 percent; or

(ii) 8.25 percent.

(B) Rates for graduate and professional FDUSL

Notwithstanding the preceding paragraphs of this subsection, for Federal Direct Unsubsidized Stafford Loans issued to graduate or professional students, for which the first disbursement is made on or after July 1, 2013, the applicable rate of interest shall, for loans disbursed during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to the lesser of—

(i) a rate equal to the high yield of the 10-year Treasury note auctioned at the final auction held prior to such June 1 plus 3.6 percent; or

(ii) 9.5 percent.

(C) PLUS loans

Notwithstanding the preceding paragraphs of this subsection, for Federal Direct PLUS Loans, for which the first disbursement is made on or after July 1, 2013, the applicable rate of interest shall, for loans disbursed during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to the lesser of—

(i) a rate equal to the high yield of the 10-year Treasury note auctioned at the final auction held prior to such June 1 plus 4.6 percent; or

(ii) 10.5 percent.

(D) Consolidation loans

Notwithstanding the preceding paragraphs of this subsection, any Federal Direct Consolidation Loan for which the application is received on or after July 1, 2013, shall bear interest at an annual rate on the unpaid principal balance of the loan that is equal to the weighted average of the interest rates on the loans consolidated, rounded to the nearest higher one-eighth of one percent.

(E) Consultation

The Secretary shall determine the applicable rate of interest under this paragraph after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of determination.

(F) Rate

The applicable rate of interest determined under this paragraph for a Federal Direct Stafford Loan, a Federal Direct Unsubsidized Stafford Loan, or a Federal Direct PLUS Loan shall be fixed for the period of the loan.

(9) Repayment incentives

(A) Incentives for loans disbursed before July 1, 2012

Notwithstanding any other provision of this part ¹ with respect to loans for which the first disbursement of principal is made before July 1, 2012,,² the Secretary is authorized to prescribe by regulation such reductions in the interest rate or origination fee paid by a borrower of a loan made under this part as the Secretary determines appropriate to encourage on-time repayment of the loan. Such reductions may be offered only if the Secretary determines the reductions are cost neutral and in the best financial interest of the Federal Government. Any increase in subsidy costs resulting from such reductions shall be completely offset by corresponding savings in funds available for the William D. Ford Federal Direct Loan Program in that fiscal year from section 1087h of this title and other administrative accounts.

(B) Accountability

Prior to publishing regulations proposing repayment incentives with respect to loans for which the first disbursement of principal is made before July 1, 2012, the Secretary shall ensure the cost neutrality of such reductions. The Secretary shall not prescribe such regulations in final form unless an official report from the Director of the Office of Management and Budget to the Secretary and a comparable report from the Director of the Congressional Budget Office to the Congress each certify that any such reductions will be completely cost neutral. Such reports shall be transmitted to the authorizing committees not less than 60 days prior to the publication of regulations proposing such reductions.

(C) No repayment incentives for new loans disbursed on or after July 1, 2012

Notwithstanding any other provision of this part, the Secretary is prohibited from authorizing or providing any repayment incentive not otherwise authorized under this part to encourage on-time repayment of a loan under this part for which the first disbursement of principal is made on or after July 1, 2012, including any reduction in the interest or origination fee rate paid by a borrower of such a loan, except that the Secretary may provide for an interest rate reduction for a borrower who agrees to have payments on such a loan automatically electronically debited from a bank account.

(10) Publication

The Secretary shall determine the applicable rates of interest under this subsection after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of determination.

(c) Loan fee

(1) In general

The Secretary shall charge the borrower of a loan made under this part an origination fee of 4.0 percent of the principal amount of loan.

(2) Subsequent reduction

Paragraph (1) shall be applied to loans made under this part, other than Federal Direct Consolidation loans and Federal Direct PLUS loans—

(A) by substituting "3.0 percent" for "4.0 percent" with respect to loans for which the first disbursement of principal is made on or after February 8, 2006, and before July 1, 2007;

(B) by substituting "2.5 percent" for "4.0 percent" with respect to loans for which the first disbursement of principal is made on or after July 1, 2007, and before July 1, 2008;

(C) by substituting "2.0 percent" for "4.0 percent" with respect to loans for which the first disbursement of principal is made on or after July 1, 2008, and before July 1, 2009;

(D) by substituting "1.5 percent" for "4.0 percent" with respect to loans for which the first disbursement of principal is made on or after July 1, 2009, and before July 1, 2010; and

(E) by substituting "1.0 percent" for "4.0 percent" with respect to loans for which the first disbursement of principal is made on or after July 1, 2010.

(d) Repayment plans

(1) Design and selection

Consistent with criteria established by the Secretary, the Secretary shall offer a borrower of a loan made under this part a variety of plans for repayment of such loan, including principal and interest on the loan. The borrower shall be entitled to accelerate, without penalty, repayment on the borrower's loans under this part. The borrower may choose—

(A) a standard repayment plan, consistent with subsection (a)(1) of this section and with section 1078(b)(9)(A)(i) of this title;

(B) a graduated repayment plan, consistent with section 1078(b)(9)(A)(ii) of this title;

(C) an extended repayment plan, consistent with section 1078(b)(9)(A)(iv) of this title, except that the borrower shall annually repay a minimum amount determined by the Secretary in accordance with section 1078(b)(1)(L) of this title;

(D) an income contingent repayment plan, with varying annual repayment amounts based on the income of the borrower, paid over an extended period of time prescribed by the Secretary, not to exceed 25 years, except that the plan described in this subparagraph shall not be available to the borrower of a Federal Direct PLUS loan made on behalf of a dependent student; and

(E) beginning on July 1, 2009, an income-based repayment plan that enables borrowers who have a partial financial hardship to make a lower monthly payment in accordance with section 1098e of this title, except that the plan described in this subparagraph shall not be available to the borrower of a Federal Direct PLUS Loan made on behalf of a dependent student or a Federal Direct Consolidation Loan, if the proceeds of such loan were used to discharge the liability on such Federal Direct PLUS Loan or a loan under section 1078–2 of this title made on behalf of a dependent student.

(2) Selection by Secretary

If a borrower of a loan made under this part does not select a repayment plan described in paragraph (1), the Secretary may provide the borrower with a repayment plan described in subparagraph (A), (B), or (C) of paragraph (1).

(3) Changes in selections

The borrower of a loan made under this part may change the borrower's selection of a repayment plan under paragraph (1), or the Secretary's selection of a plan for the borrower under paragraph (2), as the case may be, under such terms and conditions as may be established by the Secretary.

(4) Alternative repayment plans

The Secretary may provide, on a case by case basis, an alternative repayment plan to a borrower of a loan made under this part who demonstrates to the satisfaction of the Secretary that the terms and conditions of the repayment plans available under paragraph (1) are not adequate to accommodate the borrower's exceptional circumstances. In designing such alternative repayment plans, the Secretary shall ensure that such plans do not exceed the cost to the Federal Government, as determined on the basis of the present value of future payments by such borrowers, of loans made using the plans available under paragraph (1).

(5) Repayment after default

The Secretary may require any borrower who has defaulted on a loan made under this part to—

(A) pay all reasonable collection costs associated with such loan; and

(B) repay the loan pursuant to an income contingent repayment plan.

(e) Income contingent repayment

(1) Information and procedures

The Secretary may obtain such information as is reasonably necessary regarding the income of a borrower (and the borrower's spouse, if applicable) of a loan made under this part that is, or may be, repaid pursuant to income contingent repayment, for the purpose of determining the annual repayment obligation of the borrower. Returns and return information (as defined in section 6103 of title 26) may be obtained under the preceding sentence only to the extent authorized by section 6103(l)(13) of title 26. The Secretary shall establish procedures for determining the borrower's repayment obligation on that loan for such year, and such other procedures as are necessary to implement effectively income contingent repayment.

(2) Repayment based on adjusted gross income

A repayment schedule for a loan made under this part and repaid pursuant to income contingent repayment shall be based on the adjusted gross income (as defined in section 62 of title 26) of the borrower or, if the borrower is married and files a Federal income tax return jointly with the borrower's spouse, on the adjusted gross income of the borrower and the borrower's spouse.

(3) Additional documents

A borrower who chooses, or is required, to repay a loan made under this part pursuant to income contingent repayment, and for whom adjusted gross income is unavailable or does not reasonably reflect the borrower's current income, shall provide to the Secretary other documentation of income satisfactory to the Secretary, which documentation the Secretary may use to determine an appropriate repayment schedule.

(4) Repayment schedules

Income contingent repayment schedules shall be established by regulations promulgated by the Secretary and shall require payments that vary in relation to the appropriate portion of the annual income of the borrower (and the borrower's spouse, if applicable) as determined by the Secretary.

(5) Calculation of balance due

The balance due on a loan made under this part that is repaid pursuant to income contingent repayment shall equal the unpaid principal amount of the loan, any accrued interest, and any fees, such as late charges, assessed on such loan. The Secretary may promulgate regulations limiting the amount of interest that may be capitalized on such loan, and the timing of any such capitalization.

(6) Notification to borrowers

The Secretary shall establish procedures under which a borrower of a loan made under this part who chooses or is required to repay such loan pursuant to income contingent repayment is notified of the terms and conditions of such plan, including notification of such borrower, that if a borrower considers that special circumstances, such as a loss of employment by the borrower or the borrower's spouse, warrant an adjustment in the borrower's loan repayment, the borrower may contact the Secretary, who shall determine whether such adjustment is appropriate, in accordance with criteria established by the Secretary.

(7) Maximum repayment period

In calculating the extended period of time for which an income contingent repayment plan under this subsection may be in effect for a borrower, the Secretary shall include all time periods during which a borrower of loans under part B, part D, or part E—

(A) is not in default on any loan that is included in the income contingent repayment plan; and

(B)(i) is in deferment due to an economic hardship described in section 1085(o) of this title;

(ii) makes monthly payments under paragraph (1) or (6) of section 1098e(b) of this title;

(iii) makes monthly payments of not less than the monthly amount calculated under section 1078(b)(9)(A)(i) of this title or subsection (d)(1)(A), based on a 10-year repayment period, when the borrower first made the election described in section 1098e(b)(1) of this title;

(iv) makes payments of not less than the payments required under a standard repayment plan under section 1078(b)(9)(A)(i) of this title or subsection (d)(1)(A) with a repayment period of 10 years; or

(v) makes payments under an income contingent repayment plan under subsection (d)(1)(D).

(8) Automatic recertification

(A) In general

The Secretary shall establish and implement, with respect to any borrower described in subparagraph (B), procedures to—

(i) use return information disclosed under section 6103(l)(13) of title 26, pursuant to approval provided under section 1098h of this title, to determine the repayment obligation of the borrower without further action by the borrower;

(ii) allow the borrower (or the spouse of the borrower), at any time, to opt out of disclosure under such section 6103(l)(13) and instead provide such information as the Secretary may require to determine the repayment obligation of the borrower (or withdraw from the repayment plan under this subsection); and

(iii) provide the borrower with an opportunity to update the return information so disclosed before the determination of the repayment obligation of the borrower.

(B) Applicability

Subparagraph (A) shall apply to each borrower of a loan made under this part who, on or after the date on which the Secretary establishes procedures under such subparagraph—

(i) selects, or is required to repay such loan pursuant to, an income-contingent repayment plan; or

(ii) recertifies income or family size under such plan.

(f) Deferment

(1) Effect on principal and interest

A borrower of a loan made under this part who meets the requirements described in paragraph (2) shall be eligible for a deferment, during which periodic installments of principal need not be paid, and interest—

(A) shall not accrue, in the case of a—

(i) Federal Direct Stafford Loan; or

(ii) a Federal Direct Consolidation Loan that consolidated only Federal Direct Stafford Loans, or a combination of such loans and Federal Stafford Loans for which the student borrower received an interest subsidy under section 1078 of this title; or

(B) shall accrue and be capitalized or paid by the borrower, in the case of a Federal Direct PLUS Loan, a Federal Direct Unsubsidized Stafford Loan, or a Federal Direct Consolidation Loan not described in subparagraph (A)(ii).

(2) Eligibility

A borrower of a loan made under this part shall be eligible for a deferment during any period—

(A) during which the borrower—

(i) is carrying at least one-half the normal full-time work load for the course of study that the borrower is pursuing, as determined by the eligible institution (as such term is defined in section 1085(a) of this title) the borrower is attending; 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 subparagraph, or a loan made under this part (other than a Federal Direct PLUS Loan or a Federal Direct Consolidation Loan), while serving in a medical internship or residency program;

(B) not in excess of 3 years during which the borrower is seeking and unable to find full-time employment;

(i) is serving on active duty during a war or other military operation or national emergency; or

(ii) is performing qualifying National Guard duty during a war or other military operation or national emergency,

and for the 180-day period following the demobilization date for the service described in clause (i) or (ii); or

(D) not in excess of 3 years during which the Secretary determines, in accordance with regulations prescribed under section 1085(o) of this title, that the borrower has experienced or will experience an economic hardship.

(3) Deferment for borrowers receiving cancer treatment

(A) Effect on principal and interest

A borrower of a loan made under this part who meets the requirements of subparagraph (B) shall be eligible for a deferment, during which periodic installments of principal need not be paid, and interest shall not accrue.

(B) Eligibility

A borrower of a loan made under this part shall be eligible for a deferment during—

(i) any period in which such borrower is receiving treatment for cancer; and

(ii) the 6 months after such period.

(C) Applicability

This paragraph shall apply with respect to loans—

(i) made on or after September 28, 2018; or

(ii) in repayment on September 28, 2018.

(4) Deferment for dislocated military spouses

(A) Duration and effect on principal and interest

A borrower of a loan made under this part who meets the requirements of subparagraph (B) shall be eligible for a deferment for an aggregate period of 180 days, during which periodic installments of principal need not be paid, and interest—

(i) shall not accrue, in the case of a—

(I) Federal Direct Stafford Loan; or

(II) a Federal Direct Consolidation Loan that consolidated only Federal Direct Stafford Loans, or a combination of such loans and Federal Stafford Loans for which the student borrower received an interest subsidy under section 1078 of this title; or

(ii) shall accrue and be capitalized or paid by the borrower, in the case of a Federal Direct PLUS Loan, a Federal Direct Unsubsidized Stafford Loan, or a Federal Direct Consolidation Loan not described in clause (i)(II).

(B) Eligibility

A borrower of a loan made under this part shall be eligible for a deferment under subparagraph (A) if the borrower—

(i) is the spouse of a member of the Armed Forces serving on active duty; and

(ii) has experienced a loss of employment as a result of relocation to accommodate a permanent change in duty station of such member.

(C) Documentation and approval

(i) In general

A borrower may establish eligibility for a deferment under subparagraph (A) by providing to the Secretary—

(I) the documentation described in clause (ii); or

(II) such other documentation as the Secretary determines appropriate.

(ii) Documentation

The documentation described in this clause is—

(I) evidence that the borrower is the spouse of a member of the Armed Forces serving on active duty;

(II) evidence that a military permanent change of station order was issued to such member; and

(III)(aa) evidence that the borrower is eligible for unemployment benefits due to a loss of employment resulting from relocation to accommodate such permanent change in duty station; or

(bb) a written certification, or an equivalent as approved by the Secretary, that the borrower is registered with a public or private employment agency due to a loss of employment resulting from relocation to accommodate such permanent change in duty station.

(5) "Borrower" defined

For the purpose of this subsection, the term "borrower" means an individual who is a new borrower on the date such individual applies for a loan under this part for which the first disbursement is made on or after July 1, 1993.

(6) Deferments for previous part B loan borrowers

A borrower of a loan made under this part, who at the time such individual applies for such loan, has an outstanding balance of principal or interest owing on any loan made, insured, or guaranteed under part B of this subchapter prior to July 1, 1993, shall be eligible for a deferment under section 1077(a)(2)(C) of this title or section 1078(b)(1)(M) of this title as such sections were in effect on July 22, 1992.

(g) Federal Direct Consolidation Loans

(1) In general

A borrower of a loan made under this part may consolidate such loan with the loans described in section 1078–3(a)(4) of this title, including any loan made under part B and first disbursed before July 1, 2010. To be eligible for a consolidation loan under this part, a borrower shall meet the eligibility criteria set forth in section 1078–3(a)(3) of this title.

(2) Separating joint consolidation loans

(A) In general

(i) Authorization

A married couple, or 2 individuals who were previously a married couple, and who received a joint consolidation loan as such married couple under subparagraph (C) of section 1078–3(a)(3) of this title (as such subparagraph was in effect on June 30, 2006), may apply to the Secretary, in accordance with subparagraph (C) of this paragraph, for each individual borrower in the married couple (or previously married couple) to receive a separate Federal Direct Consolidation Loan under this part.

(ii) Eligibility for borrowers in default

Notwithstanding any other provision of this chapter, a married couple, or 2 individuals who were previously a married couple, who are in default on a joint consolidation loan may be eligible to receive a separate Federal Direct Consolidation Loan under this part in accordance with this paragraph.

(B) Secretarial requirements

Notwithstanding section 1078–3(a)(3)(A) of this title or any other provision of law, for each individual borrower who applies under subparagraph (A), the Secretary shall—

(i) make a separate Federal Direct Consolidation Loan under this part that—

(I) shall be for an amount equal to the product of—

(aa) the unpaid principal and accrued unpaid interest of the joint consolidation loan (as of the date that is the day before such separate consolidation loan is made) and any outstanding charges and fees with respect to such loan; and

(bb) the percentage of the joint consolidation loan attributable to the loans of the individual borrower for whom such separate consolidation loan is being made, as determined—

(AA) on the basis of the loan obligations of such borrower with respect to such joint consolidation loan (as of the date such joint consolidation loan was made); or

(BB) in the case in which both borrowers request, on the basis of proportions outlined in a divorce decree, court order, or settlement agreement; and

(II) has the same rate of interest as the joint consolidation loan (as of the date that is the day before such separate consolidation loan is made); and

(ii) in a timely manner, notify each individual borrower that the joint consolidation loan had been repaid and of the terms and conditions of their new loans.

(C) Application for separate direct consolidation loan

(i) Joint application

Except as provided in clause (ii), to receive separate consolidation loans under this part, both individual borrowers in a married couple (or previously married couple) shall jointly apply under subparagraph (A).

(ii) Separate application

An individual borrower in a married couple (or previously married couple) may apply for a separate consolidation loan under subparagraph (A) separately and without regard to whether or when the other individual borrower in the married couple (or previously married couple) applies under subparagraph (A), in a case in which—

(I) the individual borrower certifies to the Secretary that such borrower—

(aa) has experienced an act of domestic violence (as defined in section 12291 of title 34 from the other individual borrower;

(bb) has experienced economic abuse (as defined in section 12291 of title 34 from the other individual borrower; or

(cc) is unable to reasonably reach or access the loan information of the other individual borrower; or

(II) the Secretary determines that authorizing each individual borrower to apply separately under subparagraph (A) would be in the best fiscal interests of the Federal Government.

(iii) Remaining obligation from separate application

In the case of an individual borrower who receives a separate consolidation loan due to the circumstances described in clause (ii), the other non-applying individual borrower shall become solely liable for the remaining balance of the joint consolidation loan.

(h) Borrower defenses

Notwithstanding any other provision of State or Federal law, the Secretary shall specify in regulations which acts or omissions of an institution of higher education a borrower may assert as a defense to repayment of a loan made under this part, except that in no event may a borrower recover from the Secretary, in any action arising from or relating to a loan made under this part, an amount in excess of the amount such borrower has repaid on such loan.

(i) Loan application and promissory note

The common financial reporting form required in section 1090(a)(1) of this title shall constitute the application for loans made under this part (other than a Federal Direct PLUS loan). The Secretary shall develop, print, and distribute to participating institutions a standard promissory note and loan disclosure form.

(j) Loan disbursement

(1) In general

Proceeds of loans to students under this part shall be applied to the student's account for tuition and fees, and, in the case of institutionally owned housing, to room and board. Loan proceeds that remain after the application of the previous sentence shall be delivered to the borrower by check or other means that is payable to and requires the endorsement or other certification by such borrower.

(2) Payment periods

The Secretary shall establish periods for the payments described in paragraph (1) in a manner consistent with payment of Federal Pell Grants under subpart 1 of part A of this subchapter.

(k) Fiscal control and fund accountability

(1) In general

(A) An institution shall maintain financial records in a manner consistent with records maintained for other programs under this subchapter.

(B) Except as otherwise required by regulations of the Secretary ¹ an institution may maintain loan funds under this part in the same account as other Federal student financial assistance.

(2) Payments and refunds

Payments and refunds shall be reconciled in a manner consistent with the manner set forth for the submission of a payment summary report required of institutions participating in the program under subpart 1 of part A, except that nothing in this paragraph shall prevent such reconciliations on a monthly basis.

(3) Transaction histories

All transaction histories under this part shall be maintained using the same system designated by the Secretary for the provision of Federal Pell Grants under subpart 1 of part A of this subchapter.

(l) Armed Forces and NOAA Commissioned Officer Corps student loan interest payment programs

(1) Authority

Using funds received by transfer to the Secretary under section 2174 of title 10 or section 3078 of title 33 for the payment of interest on a loan made under this part to a member of the Armed Forces or an officer in the commissioned officer corps of the National Oceanic and Atmospheric Administration, respectively, the Secretary shall pay the interest on the loan as due for a period not in excess of 36 consecutive months. The Secretary may not pay interest 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 Secretary shall grant the borrower forbearance, in the form of a temporary cessation of all payments on the loan other than the payments of interest on the loan that are made under that paragraph.

(m) Repayment plan for public service employees

(1) In general

The Secretary shall cancel the balance of interest and principal due, in accordance with paragraph (2), on any eligible Federal Direct Loan not in default for a borrower who—

(A) has made 120 monthly payments on the eligible Federal Direct Loan after October 1, 2007, pursuant to any one or a combination of the following—

(i) payments under an income-based repayment plan under section 1098e of this title;

(ii) payments under a standard repayment plan under subsection (d)(1)(A), based on a 10-year repayment period;

(iii) monthly payments under a repayment plan under subsection (d)(1) or (g) of not less than the monthly amount calculated under subsection (d)(1)(A), based on a 10-year repayment period; or

(iv) payments under an income contingent repayment plan under subsection (d)(1)(D); and

(B)(i) is employed in a public service job at the time of such forgiveness; and

(ii) has been employed in a public service job during the period in which the borrower makes each of the 120 payments described in subparagraph (A).

(2) Loan cancellation amount

After the conclusion of the employment period described in paragraph (1), the Secretary shall cancel the obligation to repay the balance of principal and interest due as of the time of such cancellation, on the eligible Federal Direct Loans made to the borrower under this part.

(3) Definitions

In this subsection:

(A) Eligible Federal Direct Loan

The term "eligible Federal Direct Loan" means a Federal Direct Stafford Loan, Federal Direct PLUS Loan, or Federal Direct Unsubsidized Stafford Loan, or a Federal Direct Consolidation Loan.

(B) Public service job

The term "public service job" means—

(i) a full-time job in emergency management, government (excluding time served as a member of Congress), military service, public safety, law enforcement, public health (including nurses, nurse practitioners, nurses in a clinical setting, and full-time professionals engaged in health care practitioner occupations and health care support occupations, as such terms are defined by the Bureau of Labor Statistics), public education, social work in a public child or family service agency, public interest law services (including prosecution or public defense or legal advocacy on behalf of low-income communities at a nonprofit organization), early childhood education (including licensed or regulated childcare, Head Start, and State funded prekindergarten), public service for individuals with disabilities, public service for the elderly, public library sciences, school-based library sciences and other school-based services, or at an organization that is described in section 501(c)(3) of title 26 and exempt from taxation under section 501(a) of such title; or

(ii) teaching as a full-time faculty member at a Tribal College or University as defined in section 1059c(b) of this title and other faculty teaching in high-needs subject areas or areas of shortage (including nurse faculty, foreign language faculty, and part-time faculty at community colleges), as determined by the Secretary.

(4) Ineligibility for double benefits

No borrower may, for the same service, receive a reduction of loan obligations under both this subsection and section 1078–10, 1078–11, 1078–12, or 1087j of this title.

(n) Identity fraud protection

The Secretary shall take such steps as may be necessary to ensure that monthly Federal Direct Loan statements and other publications of the Department do not contain more than four digits of the Social Security number of any individual.

(o) No accrual of interest for active duty service members

(1) In general

Notwithstanding any other provision of this part and in accordance with paragraphs (2) and (4), interest shall not accrue for an eligible military borrower on a loan made under this part for which the first disbursement is made on or after October 1, 2008.

(2) Consolidation loans

In the case of any consolidation loan made under this part that is disbursed on or after October 1, 2008, interest shall not accrue pursuant to this subsection only on such portion of such loan as was used to repay a loan made under this part for which the first disbursement is made on or after October 1, 2008.

(3) Eligible military borrower

In this subsection, the term "eligible military borrower" means an individual who—

(A)(i) is serving on active duty during a war or other military operation or national emergency; or

(ii) is performing qualifying National Guard duty during a war or other military operation or national emergency; and

(B) is serving in an area of hostilities in which service qualifies for special pay under section 310, or paragraph (1) or (3) of section 351(a), of title 37.

(4) Limitation

An individual who qualifies as an eligible military borrower under this subsection may receive the benefit of this subsection for not more than 60 months.

(p) Disclosures

Each institution of higher education with which the Secretary has an agreement under section 1087c of this title, and each contractor with which the Secretary has a contract under section 1087f of this title, shall, with respect to loans under this part and in accordance with such regulations as the Secretary shall prescribe, comply with each of the requirements under section 1083 of this title that apply to a lender with respect to a loan under part B.

(q) Eligibility for, and interest charges on, Federal Direct Stafford Loans for new borrowers on or after July 1, 2013

(1) In general

Notwithstanding subsection (a) or any other provision of this subchapter, any borrower who was a new borrower on or after July 1, 2013, shall not be eligible for a Federal Direct Stafford Loan if the period of time for which the borrower has received Federal Direct Stafford Loans, in the aggregate, exceeds the period of enrollment described in paragraph (3). Such borrower may still receive any Federal Direct Unsubsidized Stafford Loan for which such borrower is otherwise eligible.

(2) Accrual of interest on Federal Direct Stafford Loans

Notwithstanding subsection (f)(1)(A) or any other provision of this subchapter and beginning on the date upon which a borrower who is enrolled in a program of education or training (including a course of study or program described in paragraph (3)(B) or (4)(B) of section 1091(b) of this title) for which borrowers are otherwise eligible to receive Federal Direct Stafford Loans, becomes ineligible for such loan as a result of paragraph (1), interest on all Federal Direct Stafford Loans that were disbursed to such borrower on or after July 1, 2013, shall accrue. Such interest shall be paid or capitalized in the same manner as interest on a Federal Direct Unsubsidized Stafford Loan is paid or capitalized under section 1078–8(e)(2) of this title.

(3) Period of enrollment

(A) In general

The aggregate period of enrollment referred to in paragraph (1) shall not exceed the lesser of—

(i) a period equal to 150 percent of the published length of the educational program in which the student is enrolled; or

(ii) in the case of a borrower who was previously enrolled in one or more other educational programs that began on or after July 1, 2013, and subject to subparagraph (B), a period of time equal to the difference between—

(I) 150 percent of the published length of the longest educational program in which the borrower was, or is, enrolled; and

(II) any periods of enrollment in which the borrower received a Federal Direct Stafford Loan.

(B) Regulations

The Secretary shall specify in regulation—

(i) how the aggregate period described in subparagraph (A) shall be calculated with respect to a borrower who was or is enrolled on less than a full-time basis; and

(ii) how such aggregate period shall be calculated to include a course of study or program described in paragraph (3)(B) or (4)(B) of section 1091(b) of this title, respectively.

(Pub. L. 89–329, title IV, §455, as added Pub. L. 99–498, title IV, §404, Oct. 17, 1986, 100 Stat. 1439; amended Pub. L. 102–325, title IV, §451, July 23, 1992, 106 Stat. 572; Pub. L. 103–66, title IV, §4021, Aug. 10, 1993, 107 Stat. 346; Pub. L. 103–382, title III, §359, Oct. 20, 1994, 108 Stat. 3968; Pub. L. 105–178, title VIII, §8301(c), June 9, 1998, 112 Stat. 498; Pub. L. 105–244, title IV, §§401(g)(6), 452(a)(1), (b), (c), Oct. 7, 1998, 112 Stat. 1652, 1715-1717; Pub. L. 106–554, §1(a)(1) [title III, §318(b)], Dec. 21, 2000, 114 Stat. 2763, 2763A-49; Pub. L. 107–139, §1(b), (c), Feb. 8, 2002, 116 Stat. 9; Pub. L. 107–314, div. A, title VI, §651(c), Dec. 2, 2002, 116 Stat. 2580; Pub. L. 109–171, title VIII, §§8007(b), 8008(b), (c)(2), (3), 8009(d), Feb. 8, 2006, 120 Stat. 160, 162-164; Pub. L. 110–84, title II, §§201(b), 202(b), 203(b)(3), 205, title IV, §401, Sept. 27, 2007, 121 Stat. 791, 795, 800; Pub. L. 110–315, title I, §103(b)(8), title IV, §§425(b)(3), 451, Aug. 14, 2008, 122 Stat. 3089, 3234, 3261; Pub. L. 111–39, title IV, §404(b)(2), July 1, 2009, 123 Stat. 1946; Pub. L. 111–152, title II, §2211(a), Mar. 30, 2010, 124 Stat. 1078; Pub. L. 112–25, title V, §§502, 503, Aug. 2, 2011, 125 Stat. 266; Pub. L. 112–141, div. F, title III, §§100301, 100302(a), July 6, 2012, 126 Stat. 979; Pub. L. 113–28, §2(a), Aug. 9, 2013, 127 Stat. 506; Pub. L. 114–328, div. A, title VI, §618(e), Dec. 23, 2016, 130 Stat. 2160; Pub. L. 115–245, div. B, title III, §309(a), Sept. 28, 2018, 132 Stat. 3105; Pub. L. 116–91, §4(a), Dec. 19, 2019, 133 Stat. 1192; Pub. L. 116–259, title II, §202(b)(2), Dec. 23, 2020, 134 Stat. 1163; Pub. L. 116–260, div. FF, title VII, §705(a), Dec. 27, 2020, 134 Stat. 3200; Pub. L. 117–200, §2(a), Oct. 11, 2022, 136 Stat. 2219; Pub. L. 118–31, div. A, title X, §1054(a), Dec. 22, 2023, 137 Stat. 397.)

Amendment of Section

Pub. L. 116–260, div. FF, title VII, §§701(b), 705, Dec. 27, 2020, 134 Stat. 3137, 3200; Pub. L. 117–103, div. R, §102(a), Mar. 15, 2022, 136 Stat. 819, provided that, effective July 1, 2024, and applicable with respect to award year 2024–2025 and each subsequent award year, as determined under this chapter, with additional provisions authorizing the Secretary of Education to implement amendment before (but not later than) July 1, 2023, this section is amended by striking out subsec. (q). See 2020 Amendment note below.

Editorial Notes

References in Text

Sections 1077(a)(2)(C) and 1078(b)(1)(M) of this title as such sections were in effect on July 22, 1992, referred to in subsec. (f)(6), means sections 1077(a)(2)(C) and 1078(b)(1)(M) of this title prior to being amended generally by sections 414(b) and 416(e)(1), respectively, of Pub. L. 102–325, title IV, July 23, 1992, 106 Stat. 513, 519.

Subparagraph (C) of section 1078–3(a)(3) of this title (as such subparagraph was in effect on June 30, 2006), referred to in subsec. (g)(2)(A)(i), means section 1078–3(a)(3)(C) of this title prior to being struck out by Pub. L. 109–171, title VIII, §8009(c), Feb. 8, 2006, 120 Stat. 164, effective July 1, 2006. Text of subsec. (a)(3)(C) prior to its repeal is set out in a 2006 Amendment note under section 1078–3 of this title.

Amendments

2023—Subsec. (f)(4) to (6). Pub. L. 118–31 added par. (4) and redesignated former pars. (4) and (5) as (5) and (6), respectively.

2022—Subsec. (g). Pub. L. 117–200 designated existing provisions as par. (1), inserted heading, and added par. (2).

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

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

Subsec. (q). Pub. L. 116–260 struck out subsec. (q) which related to eligibility for, and interest charges on, Federal Direct Stafford Loans for new borrowers on or after July 1, 2013.

2019—Subsec. (e)(6). Pub. L. 116–91, §4(a)(2), substituted "including notification of such borrower, that if a borrower" for "including notification of such borrower—

"(A) that the Internal Revenue Service will disclose to the Secretary tax return information as authorized under section 6103(l)(13) of title 26; and

"(B) that if a borrower"

and struck out "as determined using the information described in subparagraph (A), or the alternative documentation described in paragraph (3)" after "borrower's loan repayment".

Subsec. (e)(8). Pub. L. 116–91, §4(a)(1), added par. (8).

2018—Subsec. (f)(3) to (5). Pub. L. 115–245 added par. (3) and redesignated former pars. (3) and (4) as (4) and (5), respectively.

2016—Subsec. (o)(3)(B). Pub. L. 114–328 inserted ", or paragraph (1) or (3) of section 351(a)," after "section 310".

2013—Subsec. (b)(7). Pub. L. 113–28, §2(a)(1)(A), inserted "and before July 1, 2013" after "on or after July 1, 2006" in heading.

Subsec. (b)(7)(A) to (C). Pub. L. 113–28, §2(a)(1)(B)–(D), inserted "and before July 1, 2013," after "on or after July 1, 2006,".

Subsec. (b)(8) to (10). Pub. L. 113–28, §2(a)(2), (3), added par. (8) and redesignated former pars. (8) and (9) as (9) and (10), respectively.

2012—Subsec. (b)(7)(D). Pub. L. 112–141, §100301(1), substituted "and before July 1, 2013," for "and before July 1, 2012," in introductory provisions.

Subsec. (b)(7)(D)(v). Pub. L. 112–141, §100301(2), substituted "and before July 1, 2013," for "and before July 1, 2012,".

Subsec. (q). Pub. L. 112–141, §100302(a), added subsec. (q).

2011—Subsec. (a)(3). Pub. L. 112–25, §502, added par. (3).

Subsec. (b)(8)(A). Pub. L. 112–25, §503(1), substituted "Incentives for loans disbursed before July 1, 2012" for "In general" in heading and inserted "with respect to loans for which the first disbursement of principal is made before July 1, 2012," after "of this part" in text.

Subsec. (b)(8)(B). Pub. L. 112–25, §503(2), inserted "with respect to loans for which the first disbursement of principal is made before July 1, 2012" after "repayment incentives".

Subsec. (b)(8)(C). Pub. L. 112–25, §503(3), added subpar. (C).

2010—Subsec. (a)(1). Pub. L. 111–152, §2211(a)(1), inserted ", and first disbursed on June 30, 2010," before "under sections 1078".

Subsec. (g). Pub. L. 111–152, §2211(a)(2), inserted ", including any loan made under part B and first disbursed before July 1, 2010" after "section 1078–3(a)(4) of this title" and struck out at end "The Secretary, upon application for such a loan, shall comply with the requirements applicable to a lender under section 1078–3(b)(1)(G) of this title."

2009—Subsec. (d)(1)(C). Pub. L. 111–39, §404(b)(2)(A), substituted "1078(b)(9)(A)(iv)" for "1078(b)(9)(A)(v)".

Subsec. (h). Pub. L. 111–39, §404(b)(2)(B), struck out "(except as authorized under section 1087g(a)(1) of this title)" after "regulations".

Subsec. (k)(1)(B). Pub. L. 111–39, §404(b)(2)(C), struck out ", or in a notice under section 1087g(a)(1) of this title," after "regulations of the Secretary".

2008—Subsec. (b)(8)(B). Pub. L. 110–315, §103(b)(8), 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".

Subsec. (d)(1)(E). Pub. L. 110–315, §451(a), added subpar. (E).

Subsec. (g). Pub. L. 110–315, §425(b)(3), substituted "section 1078–3(b)(1)(G)" for "section 1078–3(b)(1)(F)".

Subsec. (m)(3)(B). Pub. L. 110–315, §451(b)(1), amended subpar. (B) generally. Prior to amendment, text read as follows: "The term 'public service job' means—

"(i) a full-time job in emergency management, government, military service, public safety, law enforcement, public health, public education (including early childhood education), social work in a public child or family service agency, public interest law services (including prosecution or public defense or legal advocacy in low-income communities at a nonprofit organization), public child care, public service for individuals with disabilities, public service for the elderly, public library sciences, school-based library sciences and other school-based services, or at an organization that is described in section 501(c)(3) of title 26 and exempt from taxation under section 501(a) of such title; or

"(ii) teaching as a full-time faculty member at a Tribal College or University as defined in section 1059c(b) of this title and other faculty teaching in high-needs areas, as determined by the Secretary."

Subsec. (m)(4). Pub. L. 110–315, §451(b)(2), added par. (4).

Subsec. (n). Pub. L. 110–315, §451(c), added subsec. (n).

Subsec. (o). Pub. L. 110–315, §451(d), added subsec. (o).

Subsec. (p). Pub. L. 110–315, §451(e), added subsec. (p).

2007—Subsec. (b)(7)(D). Pub. L. 110–84, §201(b), added subpar. (D).

Subsec. (d)(1)(D). Pub. L. 110–84, §203(b)(3), inserted "made on behalf of a dependent student" after "PLUS loan".

Subsec. (e)(7). Pub. L. 110–84, §205, added par. (7).

Subsec. (f)(2)(C). Pub. L. 110–84, §202(b), struck out "not in excess of 3 years" before "during" in introductory provisions, substituted comma for "; or" at end of cl. (ii), and inserted concluding provisions.

Subsec. (m). Pub. L. 110–84, §401, added subsec. (m).

2006—Subsec. (a)(1). Pub. L. 109–171, §8009(d)(1), inserted "1078–3," after "1078–2,".

Subsec. (a)(2)(C), (D). Pub. L. 109–171, §8009(d)(2), added subpar. (C) and redesignated former subpar. (C) as (D).

Subsec. (b)(8)(A). Pub. L. 109–171, §8008(c)(3), inserted "or origination fee" after "reductions in the interest rate".

Subsec. (c). Pub. L. 109–171, §8008(c)(2), designated existing provisions as par. (1), inserted par. (1) heading, and added par. (2).

Subsec. (d)(1)(A) to (C). Pub. L. 109–171, §8008(b), added subpars. (A) to (C) and struck out former subpars. (A) to (C), which read as follows:

"(A) a standard repayment plan, with a fixed annual repayment amount paid over a fixed period of time, consistent with subsection (a)(1) of this section;

"(B) an extended repayment plan, with a fixed annual repayment amount paid over an extended period of time, except that the borrower shall annually repay a minimum amount determined by the Secretary in accordance with section 1078(b)(1)(L) of this title;

"(C) a graduated repayment plan, with annual repayment amounts established at 2 or more graduated levels and paid over a fixed or extended period of time, except that the borrower's scheduled payments shall not be less than 50 percent, nor more than 150 percent, of what the amortized payment on the amount owed would be if the loan were repaid under the standard repayment plan; and".

Subsec. (f)(2)(C), (D). Pub. L. 109–171, §8007(b), added subpar. (C) and redesignated former subpar. (C) as (D).

Subsec. (g). Pub. L. 109–171, §8009(d)(3), substituted "To be eligible for a consolidation loan under this part, a borrower shall meet the eligibility criteria set forth in section 1078–3(a)(3) of this title. The Secretary, upon application for such a loan, shall comply with the requirements applicable to a lender under section 1078–3(b)(1)(F) of this title." for "Loans made under this subsection shall be known as 'Federal Direct Consolidation Loans'."

2002—Subsec. (b)(6) to (9). Pub. L. 107–139, in par. (6) relating to interest rate provision for new loans substituted "2006" for "2003" in heading and "July 1, 2006," for "July 1, 2003," wherever appearing in text, added par. (7), redesignated former par. (7) as (8), and redesignated par. (6) relating to publication of rate in Federal Register as (9).

Subsec. (l). Pub. L. 107–314 added subsec. (l).

2000—Subsec. (b)(4)(A). Pub. L. 106–554 amended subpar. (A) generally. Prior to amendment, subpar. (A) read as follows: "For Federal Direct PLUS Loans for which the first disbursement is made on or after July 1, 1994, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to—

"(i) the bond equivalent rate of 52-week Treasury bills auctioned at final auction held prior to such June 1; plus

"(ii) 3.1 percent,

except that such rate shall not exceed 9 percent."

1998—Subsec. (b)(5). Pub. L. 105–178, §8301(c)(2), which directed amendment of section 455(b) (20 U.S.C. 1087e(b)) by adding par. (5), was executed to this section, which is section 455(b) of Pub. L. 89–329, to reflect the probable intent of Congress. Former par. (5) redesignated (6).

Subsec. (b)(6). Pub. L. 105–244, §452(a)(1), added par. (6) relating to interest rate provision for new loans.

Pub. L. 105–178, §8301(c)(1), which directed amendment of section 455(b) (20 U.S.C. 1087e(b)) by redesignating par. (5) as (6), was executed to this section, which is section 455(b) of Pub. L. 89–329, to reflect the probable intent of Congress.

Subsec. (b)(7). Pub. L. 105–244, §452(b), added par. (7).

Subsec. (g). Pub. L. 105–244, §452(c), struck out "only under such terms and conditions as the Secretary shall establish pursuant to section 1087g(a)(1) of this title or regulations promulgated under this part" after "section 1078–3(a)(4) of this title".

Subsecs. (j)(2), (k)(3). Pub. L. 105–244, §401(g)(6), substituted "Federal Pell Grants" for "basic grants".

1994—Subsec. (f)(3), (4). Pub. L. 103–382 added pars. (3) and (4).

1993—Pub. L. 103–66 amended section generally, substituting provisions relating to terms and conditions of loans for former provisions relating to withdrawal and termination procedures.

1992—Pub. L. 102–325 amended section generally, substituting provisions relating to withdrawal and termination procedures for former provisions relating to feasibility study.

Statutory Notes and Related Subsidiaries

Effective Date of 2023 Amendment

Pub. L. 118–31, div. A, title X, §1054(b), Dec. 22, 2023, 137 Stat. 398, provided that: "The amendments made by subsection (a) [amending this section] shall take effect 90 days after the date of the enactment of this Act [Dec. 22, 2023]."

Effective Date of 2020 Amendment

Pub. L. 116–260, div. FF, title VII, §705(b), Dec. 27, 2020, 134 Stat. 3200, provided that: "Notwithstanding section 701(b) of this Act [div. FF of Pub. L. 116–260, set out as an Effective Date of 2020 Amendment note under section 1001 of this title] and section 455(q) of the Higher Education Act of 1965 (20 U.S.C. 1087e(q)) as in effect on the date of enactment of this Act [Dec. 27, 2020], the Secretary of Education may implement the repeal authorized under subsection (a) [repealing subsec. (q) of this section] before (but not later than) July 1, 2023. The Secretary shall specify in a designation on what date and for which award years the implementation of such repeal will be effective prior to July 1, 2023. The Secretary shall publish any designation under this paragraph in the Federal Register at least 60 days before implementation."

[Effective date of title VII of div. FF of Pub. L. 116–260 was changed from July 1, 2023, to July 1, 2024, by section 102(a) of Pub. L. 117–103, see section 701(b) of div. FF of Pub. L. 116–260, set out as a note under section 1001 of this title. However, the July 1, 2023, implementation dates in section 705(b) of Pub. L. 116–260, set out above, were not correspondingly amended.]

Effective Date of 2018 Amendment

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

Effective Date of 2013 Amendment

Pub. L. 113–28, §2(b), Aug. 9, 2013, 127 Stat. 507, provided that: "The amendments made by subsection (a) [amending this section] shall take effect as if enacted on July 1, 2013."

Effective Date of 2010 Amendment

Pub. L. 111–152, title II, §2211(b), Mar. 30, 2010, 124 Stat. 1078, provided that: "The amendment made by subsection (a)(1) [amending this section] shall apply with respect to loans first disbursed under part D of title IV of the Higher Education Act of 1965 (20 U.S.C. 1087a et seq.) on or after July 1, 2010."

Effective Date of 2009 Amendment

Effective Date of 2007 Amendment

Amendment by sections 201(b), 202(b), 205, and 401 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.

Amendment by section 203(b)(3) of Pub. L. 110–84 effective July 1, 2009, see section 203(c)(1) of Pub. L. 110–84, set out as a note under section 1078–3 of this title.

Effective Date of 2006 Amendment

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

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

Effective Date of 2002 Amendment

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

Effective Date of 1998 Amendment

Amendment by sections 401(g)(6) and 452(b), (c) 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, §452(d), Oct. 7, 1998, 112 Stat. 1717, provided that: "The amendments made by subsection (a) [amending this section] shall apply with respect to any loan made under part D of title IV of the Higher Education Act of 1965 [this part] 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 a Federal Direct Consolidation Loan for which the application is received on or after October 1, 1998, and before July 1, 2003."

Effective Date of 1992 Amendment

Amendment by Pub. L. 102–325 effective Oct. 1, 1992, see section 2 of Pub. L. 102–325, set out as a note under section 1001 of this title.

Construction of 2006 Amendment

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

Limitation on Consolidation Loans During Temporary Interest Rate

Pub. L. 105–244, title IV, §452(a)(2), Oct. 7, 1998, 112 Stat. 1716, provided that: "Notwithstanding section 455(g) of the Higher Education Act of 1965 [subsec. (g) of this section], a borrower who is enrolled or accepted for enrollment in an institution of higher education may not consolidate loans under such section during the period beginning October 1, 1998, and ending February 1, 1999, unless the borrower certifies that the borrower has no outstanding loans made, insured, or guaranteed under title IV of such Act [20 U.S.C. 1070 et seq.] other than loans made under part D of such title [this part]."

Executive Documents

Continued Student Loan Payment Relief During the COVID–19 Pandemic

Memorandum of President of the United States, Aug. 8, 2020, 85 F.R. 49585, provided:

Memorandum for the Secretary of Education

By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered as follows:

Section 1. Policy. The 2019 novel coronavirus known as SARS–CoV–2, the virus causing outbreaks of the disease COVID–19, has significantly disrupted the lives of Americans. In Proclamation 9994 of March 13, 2020 (Declaring a National Emergency Concerning the Novel Coronavirus Disease (COVID–19) Outbreak) [50 U.S.C. 1621 note], I declared, pursuant to the National Emergencies Act (50 U.S.C. 1601 et seq.), that the COVID–19 outbreak in the United States constituted a national emergency (the "national emergency"). The same day, I also determined that the COVID–19 outbreak constituted an emergency of nationwide scope, pursuant to section 501(b) of the Stafford Act (42 U.S.C. 5191(b)).

On March 20, 2020, my Administration took action to provide immediate relief to tens of millions of student loan borrowers during the pandemic caused by COVID–19 by both suspending loan payments and temporarily setting interest rates to 0 percent. This relief has helped many students and parents retain financial stability. And many other Americans have continued to routinely pay down their student loan balances, to more quickly eliminate their loans in the long run. During this time, borrowers have been able to determine the best path forward for themselves.

The original announcement of this policy specified that it would continue for at least 60 days. In the interim, the Coronavirus Aid, Relief, and Economic Security Act [Pub. L. 116–136] provided this same student loan payment relief, but that program is scheduled to expire on September 30, 2020. Currently, many Americans remain unemployed due to the COVID–19 pandemic, and many more have accepted lower wages and reduced hours while States and localities continue to impose social distancing measures. It is therefore appropriate to extend this policy until such time that the economy has stabilized, schools have re-opened, and the crisis brought on by the COVID–19 pandemic has subsided.

Sec. 2. Extension of Student Loan Payment Relief. (a) In light of the national emergency declared on March 13, 2020, the Secretary of Education shall take action pursuant to applicable law to effectuate appropriate waivers of and modifications to the requirements and conditions of economic hardship deferments described in section 455(f)(2)(D) of the Higher Education Act of 1965, as amended, 20 U.S.C. 1087e(f)(2)(D), and provide such deferments to borrowers as necessary to continue the temporary cessation of payments and the waiver of all interest on student loans held by the Department of Education until December 31, 2020.

(b) All persons who wish to continue making student loan payments shall be allowed to do so, notwithstanding the deferments provided pursuant to subsection (a) of this section.

Sec. 3. General Provisions. (a) Nothing in this memorandum shall be construed to impair or otherwise affect:

(i) the authority granted by law to an executive department or agency, or the head thereof; or

(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.

(b) This memorandum shall be implemented consistent with applicable law and subject to the availability of appropriations.

(c) This memorandum is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

(d) You are authorized and directed to publish this memorandum in the Federal Register.

Donald J. Trump.

¹ So in original. Probably should be followed by a comma.

² So in original. The second comma probably should not appear.

§1087f. Contracts

(a) Contracts for supplies and services

(1) In general

The Secretary shall, to the extent practicable, award contracts for origination, servicing, and collection described in subsection (b). In awarding such contracts, the Secretary shall ensure that such services and supplies are provided at competitive prices.

(2) Entities

The entities with which the Secretary may enter into contracts shall include only entities which the Secretary determines are qualified to provide such services and supplies and will comply with the procedures applicable to the award of such contracts. In the case of awarding contracts for the origination, servicing, and collection of loans under this part, the Secretary shall enter into contracts only with entities that have extensive and relevant experience and demonstrated effectiveness. The entities with which the Secretary may enter into such contracts shall include, where practicable, agencies with agreements with the Secretary under sections 1078(b) and (c) of this title, if such agencies meet the qualifications as determined by the Secretary under this subsection and if those agencies have such experience and demonstrated effectiveness. In awarding contracts to such State agencies, the Secretary shall, to the extent practicable and consistent with the purposes of this part, give special consideration to State agencies with a history of high quality performance to perform services for institutions of higher education within their State.

(3) Rule of construction

Nothing in this section shall be construed as a limitation of the authority of any State agency to enter into an agreement for the purposes of this section as a member of a consortium of State agencies.

(b) Contracts for origination, servicing, and data systems

The Secretary may enter into contracts for—

(1) the alternative origination of loans to students attending institutions of higher education with agreements to participate in the program under this part (or their parents), if such institutions do not have agreements with the Secretary under section 1087d(b) of this title;

(2) the servicing and collection of loans made or purchased under this part;

(3) the establishment and operation of 1 or more data systems for the maintenance of records on all loans made or purchased under this part; and

(4) such other aspects of the direct student loan program as the Secretary determines are necessary to ensure the successful operation of the program.

(Pub. L. 89–329, title IV, §456, as added Pub. L. 102–325, title IV, §451, July 23, 1992, 106 Stat. 572; amended Pub. L. 103–66, title IV, §4021, Aug. 10, 1993, 107 Stat. 352; Pub. L. 105–244, title IV, §453, Oct. 7, 1998, 112 Stat. 1717; Pub. L. 110–227, §7(c), May 7, 2008, 122 Stat. 747; Pub. L. 111–152, title II, §2212(a), Mar. 30, 2010, 124 Stat. 1078; Pub. L. 113–67, div. A, title V, §502(1), Dec. 26, 2013, 127 Stat. 1187.)

Editorial Notes

Amendments

2013—Subsec. (a)(4). Pub. L. 113–67, §502(1)(A), struck out par. (4) which related to servicing by eligible not-for-profit servicers.

Subsec. (c). Pub. L. 113–67, §502(1)(B), struck out subsec. (c) which defined eligible not-for-profit servicer for purposes of this section.

2010—Subsec. (a)(4). Pub. L. 111–152, §2212(a)(1)(A), added par. (4).

Subsec. (c). Pub. L. 111–152, §2212(a)(2), added subsec. (c).

2008—Subsec. (b)(2), (3). Pub. L. 110–227 inserted "or purchased" after "loans made".

1998—Subsec. (b)(3). Pub. L. 105–244, §453(1), inserted "and" after semicolon.

Subsec. (b)(4), (5). Pub. L. 105–244, §453(2), (3), redesignated par. (5) as (4) and struck out former par. (4) which read as follows: "services to assist in the orderly transition from the loan programs under part B of this subchapter to the direct student loan program under this part; and".

1993—Pub. L. 103–66 amended section generally, substituting provisions relating to contracts for former provisions relating to terms and conditions.

Statutory Notes and Related Subsidiaries

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

Section effective Oct. 1, 1992, see section 2 of Pub. L. 102–325, set out as an Effective Date of 1992 Amendment note under section 1001 of this title.

Selection of Student Loan Servicer

Pub. L. 117–328, div. H, title III, Dec. 29, 2022, 136 Stat. 4893, provided in part: "That for student loan contracts awarded prior to October 1, 2017, the Secretary [of Education] shall allow student loan borrowers who are consolidating Federal student loans to select from any student loan servicer to service their new consolidated student loan".

Similar provisions were contained in the following prior appropriation acts:

Pub. L. 117–103, div. H, title III, Mar. 15, 2022, 136 Stat. 480.

Pub. L. 116–260, div. H, title III, Dec. 27, 2020, 134 Stat. 1603.

Pub. L. 116–94, div. A, title III, Dec. 20, 2019, 133 Stat. 2592.

Pub. L. 115–245, div. B, title III, Sept. 28, 2018, 132 Stat. 3102.

Pub. L. 115–141, div. H, title III, Mar. 23, 2018, 132 Stat. 746.

Pub. L. 115–31, div. H, title III, May 5, 2017, 131 Stat. 549.

§1087g. Repealed. Pub. L. 111–39, title IV, §404(b)(3), July 1, 2009, 123 Stat. 1946

Section, Pub. L. 89–329, title IV, §457, as added Pub. L. 102–325, title IV, §451, July 23, 1992, 106 Stat. 572; amended Pub. L. 103–66, title IV, §4021, Aug. 10, 1993, 107 Stat. 352, related to regulatory activities associated with implementation of the first year of the direct student loan program authorized by part D, including establishment of closing date for applications not later than Oct. 1, 1993, and publication of list of selected institutions not later than Jan. 1, 1994.

Statutory Notes and Related Subsidiaries

Effective Date of Repeal

Repeal 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 an Effective Date of 2009 Amendment note under section 1001 of this title.

§1087h. Funds for administrative expenses

(a) Administrative expenses

(1) Mandatory funds for fiscal year 2006

For fiscal year 2006, there shall be available to the Secretary, from funds not otherwise appropriated, funds to be obligated for—

(A) administrative costs under this part and part B, including the costs of the direct student loan programs under this part; and

(B) account maintenance fees payable to guaranty agencies under part B and calculated in accordance with subsections (b) and (c),

not to exceed (from such funds not otherwise appropriated) $820,000,000 in fiscal year 2006.

(2) Repealed. Pub. L. 113–67, div. A, title V, §502(2), Dec. 26, 2013, 127 Stat. 1187

(3) Authorization for administrative costs beginning in fiscal years 2007 through 2014

For each of the fiscal years 2007 through 2014, there are authorized to be appropriated such sums as may be necessary for administrative costs under this part and part B, including the costs of the direct student loan programs under this part.

(4) Continuing mandatory funds for account maintenance fees

For each of the fiscal years 2007 through 2021, there shall be available to the Secretary, from funds not otherwise appropriated, funds to be obligated for account maintenance fees payable to guaranty agencies under part B and calculated in accordance with subsection (b).

(5) Account maintenance fees

Account maintenance fees under paragraph (3) ¹ shall be paid quarterly and deposited in the Agency Operating Fund established under section 1072b of this title.

(6) Technical assistance to institutions of higher education

(A) Provision of assistance

The Secretary shall provide institutions of higher education participating, or seeking to participate, in the loan programs under this part with technical assistance in establishing and administering such programs.

(B) Funds

There are authorized to be appropriated, and there are appropriated, to carry out this paragraph (in addition to any other amounts appropriated to carry out this paragraph and out of any money in the Treasury not otherwise appropriated), $50,000,000 for fiscal year 2010.

(C) Definition

In this paragraph, the term "assistance" means the provision of technical support, training, materials, technical assistance, and financial assistance.

(7) Additional payments

(A) Provision of assistance

The Secretary shall provide payments to loan servicers for retaining jobs at locations in the United States where such servicers were operating under part B on January 1, 2010.

(B) Funds

(8) Carryover

The Secretary may carry over funds made available under this section to a subsequent fiscal year.

(b) Calculation basis

Account maintenance fees payable to guaranty agencies under subsection (a)(4) shall be calculated on the basis of 0.06 percent of the original principal amount of outstanding loans on which insurance was issued under part B.

(c) Budget justification

No funds may be expended under this section unless the Secretary includes in the Department of Education's annual budget justification to Congress a detailed description of the specific activities for which the funds made available by this section have been used in the prior and current years (if applicable), the activities and costs planned for the budget year, and the projection of activities and costs for each remaining year for which administrative expenses under this section are made available.

(Pub. L. 89–329, title IV, §458, as added Pub. L. 102–325, title IV, §451, July 23, 1992, 106 Stat. 573; amended Pub. L. 103–66, title IV, §4021, Aug. 10, 1993, 107 Stat. 353; Pub. L. 104–19, title I, §601, July 27, 1995, 109 Stat. 219; Pub. L. 105–33, title VI, §6103, Aug. 5, 1997, 111 Stat. 652; Pub. L. 105–78, title VI, §609(l), Nov. 13, 1997, 111 Stat. 1524; Pub. L. 105–244, title IV, §454, Oct. 7, 1998, 112 Stat. 1717; Pub. L. 109–171, title VIII, §8015, Feb. 8, 2006, 120 Stat. 172; Pub. L. 109–292, §5, Sept. 30, 2006, 120 Stat. 1341; Pub. L. 110–84, title III, §306, Sept. 27, 2007, 121 Stat. 800; Pub. L. 110–315, title IV, §452, Aug. 14, 2008, 122 Stat. 3263; Pub. L. 111–152, title II, §2212(b), Mar. 30, 2010, 124 Stat. 1080; Pub. L. 113–67, div. A, title V, §502(2), Dec. 26, 2013, 127 Stat. 1187; Pub. L. 114–113, div. H, title III, §310, Dec. 18, 2015, 129 Stat. 2638; Pub. L. 115–31, div. H, title III, §309, May 5, 2017, 131 Stat. 552; Pub. L. 115–141, div. H, title III, §309, Mar. 23, 2018, 132 Stat. 750; Pub. L. 115–245, div. B, title III, §307, Sept. 28, 2018, 132 Stat. 3105; Pub. L. 116–94, div. A, title III, §306, Dec. 20, 2019, 133 Stat. 2595; Pub. L. 116–260, div. H, title III, §306, Dec. 27, 2020, 134 Stat. 1608.)

Editorial Notes

References in Text

Paragraph (3), referred to in subsec. (a)(5), was redesignated par. (4) by Pub. L. 111–152, §2212(b)(1)(B).

Amendments

2020—Subsec. (a)(4). Pub. L. 116–260 substituted "2021" for "2020".

2019—Subsec. (a)(4). Pub. L. 116–94 substituted "2020" for "2019".

2018—Subsec. (a)(4). Pub. L. 115–245 substituted "2019" for "2018".

Pub. L. 115–141 substituted "2018" for "2017".

2017—Subsec. (a)(4). Pub. L. 115–31 substituted "2017" for "2016".

2015—Subsec. (a)(4). Pub. L. 114–113 substituted "2016" for "2014".

2013—Subsec. (a)(2). Pub. L. 113–67 struck out par. (2). Text read as follows: "For fiscal years 2010 through 2019, there shall be available to the Secretary, in addition to any other amounts appropriated to carry out this paragraph and out of any money in the Treasury not otherwise appropriated, funds to be obligated for administrative costs of servicing contracts with eligible not-for-profit servicers as described in section 1087f of this title."

2010—Subsec. (a)(2) to (8). Pub. L. 111–152, §2212(b)(1), added pars. (2), (6), and (7) and redesignated former pars. (2), (3), (4), and (5) as (3), (4), (5), and (8), respectively.

Subsec. (b). Pub. L. 111–152, §2212(b)(2), substituted "subsection (a)(4)" for "subsection (a)(3)".

2008—Subsec. (a)(2). Pub. L. 110–315, §452(1), substituted "2014" for "2011" in heading and text.

Subsec. (a)(3). Pub. L. 110–315, §452(2), substituted "2014" for "2011".

2007—Subsec. (b). Pub. L. 110–84 substituted "0.06 percent" for "0.10 percent".

2006—Pub. L. 109–171 reenacted section catchline without change and amended text generally. Prior to amendment, text consisted of subsecs. (a) to (d) relating to administrative expenses, calculation basis for account maintenance fees payable to guaranty agencies, special rules relating to caps on account maintenance fees and insufficient funding, and budget justification for funds expended, respectively.

Subsec. (b). Pub. L. 109–292 substituted "shall be calculated on" for "shall not exceed".

1998—Subsec. (a). Pub. L. 105–244, §454(1), amended heading and text of subsec. (a) generally. Prior to amendment, subsec. (a) related to availability of funds for administrative costs and cost allowances.

Subsec. (b). Pub. L. 105–244, §454(2), amended heading and text of subsec. (b) generally. Prior to amendment, text read as follows: "Funds made available under subsection (a) of this section shall remain available until expended."

Subsec. (c). Pub. L. 105–244, §454(5), added subsec. (c). Former subsec. (c) redesignated (d).

Subsec. (d). Pub. L. 105–244, §454(4), redesignated subsec. (c) as (d).

Pub. L. 105–244, §454(3), struck out heading and text of subsec. (d). Text read as follows: "In the event the Secretary finds it necessary to use the authority provided to the Secretary under subsection (a) of this section to draw funds for administrative expenses from a future year's funds, no funds may be expended under this section unless the Secretary immediately notifies the Committees on Appropriations of the Senate and of the House of Representatives, and the Labor and Human Resources Committee of the Senate and the Education and Labor Committee of the House of Representatives, of such action and explain the reasons for such action."

1997—Subsec. (a). Pub. L. 105–33 amended heading and text of subsec. (a) generally. Prior to amendment, text read as follows: "Each fiscal year, there shall be available to the Secretary of Education from funds available pursuant to section 1072(g) of this title and from funds not otherwise appropriated, funds to be obligated for administrative costs under this part, including the costs of the transition from the loan programs under part B of this subchapter to the direct student loan programs under this part (including the costs of annually assessing the program under this part and the progress of the transition) and transition support (including administrative costs) for the expenses of guaranty agencies in servicing outstanding loans in their portfolios and in guaranteeing new loans, not to exceed (from such funds not otherwise appropriated) $260,000,000 in fiscal year 1994, $284,000,000 in fiscal year 1995, $550,000,000 in fiscal year 1996, $595,000,000 in fiscal year 1997, and $750,000,000 in fiscal year 1998. If in any fiscal year the Secretary determines that additional funds for administrative expenses are needed as a result of such transition or the expansion of the direct student loan programs under this part, the Secretary is authorized to use funds available under this section for a subsequent fiscal year for such expenses, except that the total expenditures by the Secretary (from such funds not otherwise appropriated) shall not exceed $2,439,000,000 in fiscal years 1994 through 1998. The Secretary is also authorized to carry over funds available under this section to a subsequent fiscal year."

Subsec. (a)(1). Pub. L. 105–78 substituted "$507,000,000" for "$532,000,000" in closing provisions.

1995—Subsec. (a). Pub. L. 104–19 substituted "$284,000,000 in fiscal year 1995" for "$345,000,000 in fiscal year 1995" and "$2,439,000,000 in fiscal years 1994 through 1998" for "$2,500,000,000 in fiscal years 1994 through 1998".

1993—Pub. L. 103–66 amended section generally, substituting provisions relating to funds for administrative expenses for former provisions relating to reports.

Statutory Notes and Related Subsidiaries

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

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

Section effective Oct. 1, 1992, see section 2 of Pub. L. 102–325, set out as an Effective Date of 1992 Amendment note under section 1001 of this title.

Funds for Account Maintenance Fees

Pub. L. 118–47, div. D, title III, §306, Mar. 23, 2024, 138 Stat. 692, provided that: "Section 458(a)(4) of the HEA [Higher Education Act of 1965] (20 U.S.C. 1087h(a)) shall be applied by substituting '2024' for '2021'."

Similar provisions were contained in the following prior appropriation acts:

Pub. L. 117–328, div. H, title III, §306, Dec. 29, 2022, 136 Stat. 4897.

Pub. L. 117–103, div. H, title III, §306, Mar. 15, 2022, 136 Stat. 484.

Construction

Pub. L. 105–78, title VI, §609(m), Nov. 13, 1997, 111 Stat. 1524, provided that: "Nothing in this Act [see Tables for classification] or an amendment made by this Act shall be construed to prohibit the Secretary of Education from using funds that are returned or otherwise recovered by the Secretary under section 422(g) of the Higher Education Act of 1965 (20 U.S.C. 1072(g)) including the balances of returned reserve funds, formerly held by the Higher Education Assistance Foundation, that are currently held in Higher Education Assistance Foundation Claims Reserves, Treasury account number 91X6192, for expenditure for expenses pursuant to section 458 of such Act (20 U.S.C. 1087h)."

Use of Funds for Administrative Expenses of William D. Ford Direct Loan Program Prohibited

Pub. L. 104–208, div. A, title I, §101(e) [title III, §304], Sept. 30, 1996, 110 Stat. 3009–233, 3009-261, provided in part that: "Notwithstanding section 458 of the Higher Education Act [of 1965] [20 U.S.C. 1087h], the Secretary may not use funds available under that section or any other section for subsequent fiscal years for administrative expenses of the William D. Ford Direct Loan Program."

Similar provisions were contained in the following prior appropriation act:

Pub. L. 104–134, title I, §101(d) [title III, §305], Apr. 26, 1996, 110 Stat. 1321–211, 1321-236; renumbered title I, Pub. L. 104–140, §1(a), May 2, 1996, 110 Stat. 1327.

¹ See References in Text note below.

§1087i. Authority to sell loans

The Secretary, in consultation with the Secretary of the Treasury, is authorized to sell loans made under this part on such terms as the Secretary determines are in the best interest of the United States, except that any such sale shall not result in any cost to the Federal Government. Notwithstanding any other provision of law, the proceeds of any such sale may be used by the Secretary to offer reductions in the interest rate paid by a borrower of a loan made under this part as the Secretary determines appropriate to encourage on-time repayment in accordance with section 1087e(b)(7) of this title. Such reductions may be offered only if the Secretary determines the reductions are in the best financial interests of the Federal Government.

(Pub. L. 89–329, title IV, §459, as added Pub. L. 105–244, title IV, §455, Oct. 7, 1998, 112 Stat. 1718.)

Editorial Notes

Prior Provisions

A prior section 1087i, Pub. L. 89–329, title IV, §459, as added Pub. L. 102–325, title IV, §451, July 23, 1992, 106 Stat. 575, which related to schedule of regulatory activities by Secretary under Federal direct loan demonstration program, was omitted in the general amendment of this part by Pub. L. 103–66.

Statutory Notes and Related Subsidiaries

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.

§1087i–1. Temporary authority to purchase student loans

(a) Authority to purchase

(1) Authority; determination required

Upon a determination by the Secretary that there is an inadequate availability of loan capital to meet the demand for loans under sections 1078, 1078–2, or 1078–8 of this title, whether as a result of inadequate liquidity for such loans or for other reasons, the Secretary, in consultation with the Secretary of the Treasury, is authorized to purchase, or enter into forward commitments to purchase, from any eligible lender, as defined by section 1085(d)(1) of this title, loans first disbursed under sections 1078, 1078–2, or 1078–8 of this title on or after October 1, 2003, and before July 1, 2010, on such terms as the Secretary, the Secretary of the Treasury, and the Director of the Office of Management and Budget jointly determine are in the best interest of the United States, except that any purchase under this section shall not result in any net cost to the Federal Government (including the cost of servicing the loans purchased), as determined jointly by the Secretary, the Secretary of the Treasury, and the Director of the Office of Management and Budget.

(2) Federal Register notice

The Secretary, the Secretary of the Treasury, and the Director of the Office of Management and Budget, shall jointly publish a notice in the Federal Register prior to any purchase of loans under paragraph (1) that—

(A) establishes the terms and conditions governing the purchases authorized by paragraph (1);

(B) includes an outline of the methodology and factors that the Secretary, the Secretary of the Treasury, and the Director of the Office of Management and Budget, will jointly consider in evaluating the price at which to purchase loans made under section 1078, 1078–2, or 1078–8 of this title; and

(C) describes how the use of such methodology and consideration of such factors used to determine purchase price will ensure that loan purchases do not result in any net cost to the Federal Government (including the cost of servicing the loans purchased).

(3) Temporary authority to purchase rehabilitated loans

(A) Authority

In addition to the authority described in paragraph (1), the Secretary, in consultation with the Secretary of the Treasury, is authorized to purchase, or enter into forward commitments to purchase, from any eligible lender (as defined in section 1085(d)(1) of this title), loans that such lender purchased under section 1078–6 of this title on or after October 1, 2003, and before July 1, 2010, and that are not in default, on such terms as the Secretary, the Secretary of the Treasury, and the Director of the Office of Management and Budget jointly determine are in the best interest of the United States, except that any purchase under this paragraph shall not result in any net cost to the Federal Government (including the cost of servicing the loans purchased), as determined jointly by the Secretary, the Secretary of the Treasury, and the Director of the Office of Management and Budget.

(B) Federal Register notice

The Secretary, the Secretary of the Treasury, and the Director of the Office of Management and Budget shall jointly publish a notice in the Federal Register prior to any purchase of loans under this paragraph that—

(i) establishes the terms and conditions governing the purchases authorized by this paragraph;

(ii) includes an outline of the methodology and factors that the Secretary, the Secretary of the Treasury, and the Director of the Office of Management and Budget will jointly consider in evaluating the price at which to purchase loans rehabilitated pursuant to section 1078–6(a) of this title; and

(iii) describes how the use of such methodology and consideration of such factors used to determine purchase price will ensure that loan purchases do not result in any net cost to the Federal Government (including the cost of servicing the loans purchased).

(b) Proceeds

The Secretary shall require, as a condition of any purchase under subsection (a), that the funds paid by the Secretary to any eligible lender under this section be used—

(1) to ensure continued participation of such lender in the Federal student loan programs authorized under part B of this subchapter; and

(2)(A) in the case of loans purchased pursuant to subsection (a)(1), to originate new Federal loans to students, as authorized under part B of this subchapter; or

(B) in the case of loans purchased pursuant to subsection (a)(3), to originate such new Federal loans to students, or to purchase loans in accordance with section 1078–6(a) of this title.

(c) Maintaining servicing arrangements

The Secretary may, if agreed upon by an eligible lender selling loans under this section, contract with such lender for the servicing of the loans purchased, provided that—

(1) the cost of such servicing arrangement does not exceed the cost the Federal Government would otherwise incur for the servicing of loans purchased, as determined under subsection (a); and

(2) such servicing arrangement is in the best interest of the borrowers whose loans are purchased.

(d) Guaranty agency responsibilities and payments

Notwithstanding any other provision of this chapter, beginning on the date on which the Secretary purchases a loan under this section—

(1) the guaranty agency that insured such loan shall cease to have any obligations, responsibilities, or rights (including rights to any payment) under this chapter for any activity related to the administration of such loan that is carried out or required to be carried out on or after the date of such purchase; and

(2) the insurance issued by such agency pursuant to section 1078(b) of this title for such loan shall cease to be effective with respect to any default on such loan that occurs on or after the date of such purchase.

(e) Reports and cost estimates

The Secretary shall prepare, transmit to the authorizing committees, and make available to the public, the following:

(1) Quarterly reports

(A) Contents

Not later than 60 days after the end of each quarter during the period beginning July 1, 2008, and ending September 30, 2010, a quarterly report on—

(i) the number of loans the Secretary has agreed to purchase, or has purchased, using the authority provided under this section, and the total amount of outstanding principal and accrued interest of such loans, during such period; and

(ii) the number of loans in which the Secretary has purchased a participation interest, and the total amount of outstanding principal and accrued interest of such loans, during such period.

(B) Disaggregated information

For each quarterly report, the information described in clauses (i) and (ii) of subparagraph (A) shall be disaggregated by lender and, for each lender, by category of institution (using the categories described in section 1015a(d) of this title) and type of loan.

(2) Estimates of purchase program costs

Not later than February 15, 2011, an estimate of the costs associated with the program of purchasing loans described in paragraph (1)(A)(i) during the period beginning July 1, 2008, and ending September 30, 2010, and an estimate of the costs associated with the program of purchasing a participation interest in loans described in paragraph (1)(A)(ii) during such period. Each such estimate shall—

(A) contain the same level of detail, and be reported in a similar manner, as the budget estimates provided for the loan program under part B and the direct student loan program under this part in the President's annual budget submission to Congress, except that current and future administrative costs shall also be reported;

(B) include an estimate of the gross and net outlays that have been, or will be, incurred by the Federal Government (including subsidy and administrative costs, and any payments made by the Department to lenders, trusts, or other entities related to such activities) in purchasing such loans or purchasing a participation interest in such loans during such period (as applicable); and

(i) the average amount of the gross and net outlays (including costs and payments) described in subparagraph (B) for each $100 of loans purchased or for which a participation interest was purchased (as applicable) during such period, disaggregated by type of loan; with

(ii) the average amount of such gross and net outlays (including costs and payments) to the Federal Government for each $100 of comparable loans made under this part and part B during such period, disaggregated by part and by type of loan.

(3) Annual cost estimates

Not later than February 15 of the fiscal year following each of the fiscal years 2008, 2009, 2010, and 2011, an annual estimate of the costs associated with the program of purchasing loans described in paragraph (1)(A)(i), and an annual estimate of the costs associated with the program of purchasing a participation interest in loans described in paragraph (1)(A)(ii), that includes the information described in paragraph (2) for such fiscal year.

(f) Expiration of authority

The Secretary's authority to purchase loans under this section shall expire on July 1, 2010.

(Pub. L. 89–329, title IV, §459A, as added Pub. L. 110–227, §7(b), May 7, 2008, 122 Stat. 746; amended Pub. L. 110–315, title IV, §453, Aug. 14, 2008, 122 Stat. 3263; Pub. L. 110–350, §1, Oct. 7, 2008, 122 Stat. 3947; Pub. L. 111–39, title IV, §404(a), July 1, 2009, 123 Stat. 1945.)

Editorial Notes

Amendments

2009—Subsec. (a)(2). Pub. L. 111–39, §404(a)(1)(A), substituted "purchase of loans under paragraph (1)" for "purchase of loans under this section" in introductory provisions.

Subsec. (a)(3). Pub. L. 111–39, §404(a)(1)(B), added par. (3).

Subsec. (b). Pub. L. 111–39, §404(a)(2), amended subsec. (b) generally. Prior to amendment, text read as follows: "The Secretary shall require, as a condition of any purchase under subsection (a), that the funds paid by the Secretary to any eligible lender under this section shall be used: (1) to ensure continued participation of such lender in the Federal student loan programs authorized under part B of this subchapter; and (2) to originate new Federal loans to students, as authorized under part B of this subchapter."

2008—Subsec. (a)(1). Pub. L. 110–350, §1(1), substituted "July 1, 2010" for "July 1, 2009".

Subsecs. (d), (e). Pub. L. 110–315, §453(2), added subsecs. (d) and (e). Former subsec. (d) redesignated (f).

Subsec. (e)(1)(A). Pub. L. 110–350, §1(2)(A), substituted "September 30, 2010" for "September 30, 2009" in introductory provisions.

Subsec. (e)(2). Pub. L. 110–350, §1(2)(A), (B), substituted "February 15, 2011" for "February 15, 2010" and "September 30, 2010" for "September 30, 2009" in introductory provisions.

Subsec. (e)(3). Pub. L. 110–350, §1(2)(C), substituted "2009, 2010, and 2011" for "2009, and 2010".

Subsec. (f). Pub. L. 110–350, §1(1), substituted "July 1, 2010" for "July 1, 2009".

Pub. L. 110–315, §453(1), redesignated subsec. (d) as (f).

Statutory Notes and Related Subsidiaries

Effective Date of 2009 Amendment

§1087i–2. Temporary loan consolidation authority

(a) Temporary loan consolidation authority

(1) In general

A borrower who has 1 or more loans in 2 or more of the categories described in paragraph (2), and who has not yet entered repayment on 1 or more of those loans in any of the categories, may consolidate all of the loans of the borrower that are described in paragraph (2) into a Federal Direct Consolidation Loan during the period described in paragraph (3).

(2) Categories of loans that may be consolidated

The categories of loans that may be consolidated under paragraph (1) are—

(A) loans made under this part;

(B) loans purchased by the Secretary pursuant to section 1087i–1 of this title; and

(C) loans made under part B that are held by an eligible lender, as such term is defined in section 1085(d) of this title.

(3) Time period in which loans may be consolidated

The Secretary may make a Federal Direct Consolidation Loan under this section to a borrower whose application for such Federal Direct Consolidation Loan is received on or after July 1, 2010, and before July 1, 2011.

(b) Terms of loans

A Federal Direct Consolidation Loan made under this section shall have the same terms and conditions as a Federal Direct Consolidation Loan made under section 1087e(g) of this title, except that—

(1) in determining the applicable rate of interest on the Federal Direct Consolidation Loan made under this section (other than on a Federal Direct Consolidation Loan described in paragraph (2)), section 1077a(l)(3) of this title shall be applied without rounding the weighted average of the interest rate on the loans consolidated to the nearest higher one-eighth of 1 percent as described in subparagraph (A) of section 1077a(l)(3) of this title; and

(2) if a Federal Direct Consolidation Loan made under this section that repays a loan which is subject to an interest rate determined under section 1077a(g)(2), (j)(2), or (k)(2) of this title, then the interest rate for such Federal Direct Consolidation Loan shall be calculated—

(A) by using the applicable rate of interest described in section 1077a(g)(2), (j)(2), or (k)(2) of this title, respectively; and

(B) in accordance with section 1077a(l)(3) of this title.

(Pub. L. 89–329, title IV, §459B, as added Pub. L. 111–152, title II, §2206(b), Mar. 30, 2010, 124 Stat. 1075.)

§1087j. Loan cancellation for teachers

(a) Statement of purpose

It is the purpose of this section to encourage individuals to enter and continue in the teaching profession.

(b) Program authorized

The Secretary shall carry out a program of canceling the obligation to repay a qualified loan amount in accordance with subsection (c) for Federal Direct Stafford Loans and Federal Direct Unsubsidized Stafford Loans made under this part for any new borrower on or after October 1, 1998, who—

(1) has been employed as a full-time teacher for 5 consecutive complete school years—

(A) in a school or location that qualifies under section 1087ee(a)(2)(A) of this title for loan cancellation for Perkins loan recipients who teach in such schools or locations; and

(B) if employed as an elementary school or secondary school teacher, is highly qualified as defined in section 9101 ¹ of the Elementary and Secondary Education Act of 1965 [20 U.S.C. 7801], or meets the requirements of subsection (g)(3); and

(2) is not in default on a loan for which the borrower seeks forgiveness.

(c) Qualified loan amounts

(1) In general

The Secretary shall cancel not more than $5,000 in the aggregate of the loan obligation on a Federal Direct Stafford Loan or a Federal Direct Unsubsidized Stafford Loan that is outstanding after the completion of the fifth complete school year of teaching described in subsection (b)(1). No borrower may receive a reduction of loan obligations under both this section and section 1078–10 of this title.

(2) Treatment of consolidation loans

A loan amount for a Federal Direct Consolidation Loan may be a qualified loan amount for the purposes of this subsection only to the extent that such loan amount was used to repay a Federal Direct Stafford Loan, a Federal Direct Unsubsidized Stafford Loan, or a loan made under section 1078 or 1078–8 of this title, for a borrower who meets the requirements of subsection (b), as determined in accordance with regulations prescribed by the Secretary.

(3) Additional amounts for teachers in mathematics, science, or special education

Notwithstanding the amount specified in paragraph (1), the aggregate amount that the Secretary shall cancel under this section shall be not more than $17,500 in the case of—

(A) a secondary school teacher—

(i) who meets the requirements of subsection (b); and

(ii) whose qualifying employment for purposes of such subsection is teaching mathematics or science on a full-time basis; and

(B) an elementary school or secondary school teacher—

(i) who meets the requirements of subsection (b);

(ii) whose qualifying employment for purposes of such subsection is as a special education teacher whose primary responsibility is to provide special education to children with disabilities (as those terms are defined in section 1401 of this title); and

(iii) who, as certified by the chief administrative officer of the public or non-profit private elementary school or secondary school in which the borrower is employed, or, in the case of a teacher who is employed by an educational service agency, as certified by the chief administrative officer of such agency, is teaching children with disabilities that correspond with the borrower's special education training and has demonstrated knowledge and teaching skills in the content areas of the elementary school or secondary school curriculum that the borrower is teaching.

(d) Regulations

The Secretary is authorized to issue such regulations as may be necessary to carry out the provisions of this section.

(e) Construction

Nothing in this section shall be construed to authorize any refunding of any canceled loan.

(f) List

If the list of schools in which a teacher may perform service pursuant to subsection (b) is not available before May 1 of any year, the Secretary may use the list for the year preceding the year for which the determination is made to make such service determination.

(g) Additional eligibility provisions

(1) Continued eligibility

Any teacher who performs service in a school that—

(A) meets the requirements of subsection (b)(1)(A) in any year during such service; and

(B) in a subsequent year fails to meet the requirements of such subsection, may continue to teach in such school and shall be eligible for loan cancellation pursuant to subsection (b).

(2) Prevention of double benefits

No borrower may, for the same voluntary service, receive a benefit under both this section and—

(A) section 1078–11 of this title;

(B) section 1087e(m) of this title; or

(3) Private school teachers

An individual who is employed as a teacher in a private school and is exempt from State certification requirements (unless otherwise applicable under State law), may, in lieu of the requirement of subsection (b)(1)(B), have such employment treated as qualifying employment under this section if such individual is permitted to and does satisfy rigorous subject knowledge and skills tests by taking competency tests in the applicable grade levels and subject areas. For such purposes, the competency tests taken by such a private school teacher shall be recognized by 5 or more States for the purpose of fulfilling the highly qualified teacher requirements under section 9101 ¹ of the Elementary and Secondary Education Act of 1965 [20 U.S.C. 7801], and the score achieved by such teacher on each test shall equal or exceed the average passing score of those 5 States.

(h) "Year" defined

For the purpose of this section, the term "year" where applied to service as a teacher means an academic year as defined by the Secretary.

(Pub. L. 89–329, title IV, §460, as added Pub. L. 105–244, title IV, §456, Oct. 7, 1998, 112 Stat. 1719; amended Pub. L. 108–409, §3(a)(1)(B), (b)(2), Oct. 30, 2004, 118 Stat. 2300, 2301; Pub. L. 109–171, title VIII, §8013(e)(2), Feb. 8, 2006, 120 Stat. 167; Pub. L. 110–315, title IV, §454, Aug. 14, 2008, 122 Stat. 3265; Pub. L. 111–39, title IV, §404(b)(4), July 1, 2009, 123 Stat. 1946.)

Editorial Notes

References in Text

Section 9101 of the Elementary and Secondary Education Act of 1965, referred to in subsecs. (b)(1)(B) and (g)(3), was amended by Pub. L. 114–95 and, as so amended, is now section 8101 of the Act and no longer defines "highly qualified". A reference in this section to the term "highly qualified" as defined in section 9101 of the Act is to be treated as a reference to such term under such section 9101 as in effect on the day before the date of enactment of Pub. L. 114–95. See section 9214(a)(1) of Pub. L. 114–95, set out as a Use of the Term "Highly Qualified" in Other Laws note under section 1070g–2 of this title.

The National and Community Service Act of 1990, referred to in subsec. (g)(2)(D), is Pub. L. 101–610, Nov. 16, 1990, 104 Stat. 3127. Subtitle D of title I of the Act is classified generally to division D of subchapter I (§12601 et seq.) of chapter 129 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 12501 of Title 42 and Tables.

Prior Provisions

A prior section 1087j, Pub. L. 89–329, title IV, §459A, as added Pub. L. 102–325, title IV, §451, July 23, 1992, 106 Stat. 575, which related to funds for administrative expenses under Federal direct loan demonstration program, was omitted in the general amendment of this part by Pub. L. 103–66.

Amendments

2009—Subsec. (c)(1). Pub. L. 111–39, §404(b)(4)(A), inserted at end "No borrower may receive a reduction of loan obligations under both this section and section 1078–10 of this title."

Subsec. (g)(2). Pub. L. 111–39, §404(b)(4)(B), redesignated subpars. (B) to (D) as (A) to (C), respectively, substituted "12601" for "12571" in subpar. (C), and struck out former subpar. (A) which read as follows: "section 1078–10 of this title;".

2008—Subsec. (b). Pub. L. 110–315, §454(c), struck out "(1) In general" before "The Secretary shall", redesignated subpars. (A) and (B) of former par. (1) as pars. (1) and (2), respectively, and cls. (i) and (ii) of former subpar. (A) as subpars. (A) and (B), respectively, of par. (1), realigned margins, and struck out par. (2). Prior to amendment, text of par. (2) read as follows: "No borrower may obtain a reduction of loan obligations under both this section and section 1078–10 of this title."

Subsec. (b)(1)(A)(i). Pub. L. 110–315, §454(a)(1), inserted "or location" after "a school" and "or locations" after "such schools".

Subsec. (c)(1). Pub. L. 110–315, §454(d)(1), substituted "subsection (b)(1)" for "subsection (b)(1)(A)".

Subsec. (c)(3)(A)(i), (B)(i). Pub. L. 110–315, §454(d)(2), substituted "subsection (b)" for "subsection (b)(1)".

Subsec. (c)(3)(B)(iii). Pub. L. 110–315, §454(a)(2), inserted "or, in the case of a teacher who is employed by an educational service agency, as certified by the chief administrative officer of such agency," after "borrower is employed,".

Subsec. (g)(2). Pub. L. 110–315, §454(b), amended par. (2) generally. Prior to amendment, text read as follows: "No borrower may, for the same volunteer service, receive a benefit under both this section and subtitle D of title I of the National and Community Service Act of 1990 (42 U.S.C. 12571 et seq.)".

Subsec. (g)(3). Pub. L. 110–315, §454(d)(3), substituted "subsection (b)(1)(B)" for "subsection (b)(1)(A)(ii)".

2006—Subsec. (b)(1)(A)(ii). Pub. L. 109–171, §8013(e)(2)(A), inserted ", or meets the requirements of subsection (g)(3)" before "; and".

Subsec. (g)(3). Pub. L. 109–171, §8013(e)(2)(B), added par. (3).

2004—Subsec. (b)(1)(A). Pub. L. 108–409, §3(a)(1)(B), added cl. (ii) and struck out former cls. (ii) and (iii) which read as follows:

"(ii) if employed as a secondary school teacher, is teaching a subject area that is relevant to the borrower's academic major as certified by the chief administrative officer of the public or non-profit private secondary school in which the borrower is employed; and

"(iii) if employed as an elementary school teacher, has demonstrated, as certified by the chief administrative officer of the public or nonprofit private elementary school in which the borrower is employed, knowledge and teaching skills in reading, writing, mathematics and other areas of the elementary school curriculum; and".

Subsec. (c)(3). Pub. L. 108–409, §3(b)(2), added par. (3).

Statutory Notes and Related Subsidiaries

Effective Date of 2009 Amendment

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 2004 Amendment; Transition Rule

Amendment by section 3(b)(2) of Pub. L. 108–409 applicable only with respect to eligible individuals who are new borrowers (as defined in section 1003 of this title) on or after Oct. 1, 1998, see section 3(b)(3) of Pub. L. 108–409, as amended, set out as a note under section 1078–10 of this title.

For transition rules relating to amendments made by section 3(a)(1)(B) of Pub. L. 108–409, see section 3(a)(2) of Pub. L. 108–409, set out as a note under section 1078–10 of this title.

Effective Date

¹ See References in Text note below.