Part E—Federal Perkins Loans
Editorial Notes
Codification
This part was added as part E of title IV of
Part E of title IV of the Higher Education Act of 1965,
Prior Provisions
A prior part E, consisting of part F of title IV of
§1087aa. Appropriations authorized
(a) Program authority
The Secretary shall carry out a program assisting in the maintenance of funds at institutions of higher education for the making of loans to undergraduate students in need to pursue their courses of study in such institutions or while engaged in programs of study abroad approved for credit by such institutions. Loans made under this part shall be known as "Federal Perkins Loans".
(b) Authority to make loans
(1) In general
(A) Loans for new undergraduate Federal Perkins Loan borrowers
Through September 30, 2017, an institution of higher education may make a loan under this part to an eligible undergraduate student who, on the date of disbursement of a loan made under this part, has no outstanding balance of principal or interest on a loan made under this part from the student loan fund established under this part by the institution, but only if the institution has awarded all Federal Direct Loans, as referenced under subparagraphs (A) and (D) of
(B) Loans for current undergraduate Federal Perkins Loan borrowers
Through September 30, 2017, an institution of higher education may make a loan under this part to an eligible undergraduate student who, on the date of disbursement of a loan made under this part, has an outstanding balance of principal or interest on a loan made under this part from the student loan fund established under this part by the institution, but only if the institution has awarded all Federal Direct Stafford Loans as referenced under
(C) Loans for certain graduate borrowers
Through September 30, 2016, with respect to an eligible graduate student who has received a loan made under this part prior to October 1, 2015, an institution of higher education that has most recently made such a loan to the student for an academic program at such institution may continue making loans under this part from the student loan fund established under this part by the institution to enable the student to continue or complete such academic program.
(2) No additional loans
An institution of higher education shall not make loans under this part after September 30, 2017.
(3) Prohibition on additional appropriations
No funds are authorized to be appropriated under this chapter or any other Act to carry out the functions described in paragraph (1) for any fiscal year following fiscal year 2015.
(
Editorial Notes
Prior Provisions
A prior section 1087aa,
Another prior section 461 of
Amendments
2015—Subsec. (a).
Subsec. (b).
"(1) For the purpose of enabling the Secretary to make contributions to student loan funds established under this part, there are authorized to be appropriated $300,000,000 for fiscal year 2009 and for each of the five succeeding fiscal years.
"(2) In addition to the funds authorized under paragraph (1), there are hereby authorized to be appropriated such sums for fiscal year 2015 and each of the 5 succeeding fiscal years as may be necessary to enable students who have received loans for academic years ending prior to October 1, 2015, to continue or complete courses of study."
Subsec. (c).
2008—Subsec. (b)(1).
Subsec. (b)(2).
1998—Subsec. (b)(1).
Subsec. (b)(2).
1992—Subsec. (a).
Subsec. (b).
"(1) For the purpose of enabling the Secretary to make contributions to student loan funds established under this part, there are authorized to be appropriated $268,000,000 for fiscal year 1987 and such sums as may be necessary for each of the 4 succeeding fiscal years.
"(2) In addition there are hereby authorized to be appropriated such sums for fiscal year 1991 and each of the five succeeding fiscal years as may be necessary to enable students who have received loans for academic years ending prior to October 1, 1991, to continue or complete courses of study."
Statutory Notes and Related Subsidiaries
Effective Date of 1998 Amendment
Amendment by
Construction of 2015 Amendment
§1087bb. Allocation of funds
(a) Allocation based on previous allocation
(1) From the amount appropriated pursuant to section 1087aa(b) 1 of this title for each fiscal year, the Secretary shall first allocate to each eligible institution an amount equal to—
(A) 100 percent of the amount received under subsections (a) and (b) of this section for fiscal year 1999 (as such subsections were in effect with respect to allocations for such fiscal year), multiplied by
(B) the institution's default penalty, as determined under subsection (e),
except that if the institution has a cohort default rate in excess of the applicable maximum cohort default rate under subsection (f), the institution may not receive an allocation under this paragraph.
(2)(A) From the amount so appropriated, the Secretary shall next allocate to each eligible institution that began participation in the program under this part after fiscal year 1999 but is not a first or second time participant, an amount equal to the greater of—
(i) $5,000; or
(ii) 100 percent of the amount received and expended under this part for the first year it participated in the program.
(B) From the amount so appropriated, the Secretary shall next allocate to each eligible institution that began participation in the program under this part after fiscal year 1999 and is a first or second time participant, an amount equal to the greatest of—
(i) $5,000;
(ii) an amount equal to (I) 90 percent of the amount received and used under this part in the second preceding fiscal year by eligible institutions offering comparable programs of instruction, divided by (II) the number of students enrolled at such comparable institutions in such fiscal year, multiplied by (III) the number of students enrolled at the applicant institution in such fiscal year; or
(iii) 90 percent of the institution's allocation under this part for the preceding fiscal year.
(C) Notwithstanding subparagraphs (A) and (B) of this paragraph, the Secretary shall allocate to each eligible institution which—
(i) was a first-time participant in the program in fiscal year 2000 or any subsequent fiscal year, and
(ii) received a larger amount under this subsection in the second year of participation,
an amount equal to 90 percent of the amount it received under this subsection in its second year of participation.
(D) For any fiscal year after a fiscal year in which an institution receives an allocation under subparagraph (A), (B), or (C), the Secretary shall allocate to such institution an amount equal to the product of—
(i) the amount determined under subparagraph (A), (B), or (C), multiplied by
(ii) the institution's default penalty, as determined under subsection (e),
except that if the institution has a cohort default rate in excess of the applicable maximum cohort default rate under subsection (f), the institution may not receive an allocation under this paragraph.
(3)(A) If the amount appropriated for any fiscal year is less than the amount required to be allocated to all institutions under paragraph (1) of this subsection, then the amount of the allocation to each such institution shall be ratably reduced.
(B) If the amount appropriated for any fiscal year is more than the amount required to be allocated to all institutions under paragraph (1) but less than the amount required to be allocated to all institutions under paragraph (2), then—
(i) the Secretary shall allot the amount required to be allocated to all institutions under paragraph (1), and
(ii) the amount of the allocation to each institution under paragraph (2) shall be ratably reduced.
(C) If additional amounts are appropriated for any such fiscal year, such reduced amounts shall be increased on the same basis as they were reduced (until the amount allocated equals the amount required to be allocated under paragraphs (1) and (2) of this subsection).
(b) Allocation of excess based on share of excess eligible amounts
(1) From the remainder of the amount appropriated pursuant to section 1087aa(b) 1 of this title after making the allocations required by subsection (a) of this section, the Secretary shall allocate to each eligible institution which has an excess eligible amount an amount which bears the same ratio to such remainder as such excess eligible amount bears to the sum of the excess eligible amounts of all such eligible institutions (having such excess eligible amounts).
(2) For any eligible institution, the excess eligible amount is the amount, if any, by which—
(A)(i) that institution's eligible amount (as determined under paragraph (3)), divided by (ii) the sum of the eligible amounts of all institutions (as so determined), multiplied by (iii) the amount appropriated pursuant to section 1087aa(b) 1 of this title for the fiscal year; exceeds
(B) the amount required to be allocated to that institution under subsection (a),
except that an eligible institution which has a cohort default rate in excess of the applicable maximum cohort default rate under subsection (f) may not receive an allocation under this paragraph.
(3) For any eligible institution, the eligible amount of that institution is equal to—
(A) the amount of the institution's self-help need, as determined under subsection (c); minus
(B) the institution's anticipated collections; multiplied by
(C) the institution's default penalty, as determined under subsection (e);
except that, if the institution has a cohort default rate in excess of the applicable maximum cohort default rate under subsection (f), the eligible amount of that institution is zero.
(c) Determination of institution's self-help need
(1) The amount of an institution's self-help need is equal to the sum of the self-help need of the institution's eligible undergraduate students and the self-help need of the institution's eligible graduate and professional students.
(2) To determine the self-help need of an institution's eligible undergraduate students, the Secretary shall—
(A) establish various income categories for dependent and independent undergraduate students;
(B) establish an expected family contribution for each income category of dependent and independent undergraduate students, determined on the basis of the average expected family contribution (computed in accordance with part F of this subchapter) of a representative sample within each income category for the second preceding fiscal year;
(C) compute 25 percent of the average cost of attendance for all undergraduate students;
(D) multiply the number of eligible dependent students in each income category by the lesser of—
(i) 25 percent of the average cost of attendance for all undergraduate students determined under subparagraph (C); or
(ii) the average cost of attendance for all undergraduate students minus the expected family contribution determined under subparagraph (B) for that income category, except that the amount computed by such subtraction shall not be less than zero;
(E) add the amounts determined under subparagraph (D) for each income category of dependent students;
(F) multiply the number of eligible independent students in each income category by the lesser of—
(i) 25 percent of the average cost of attendance for all undergraduate students determined under subparagraph (C); or
(ii) the average cost of attendance for all undergraduate students minus the expected family contribution determined under subparagraph (B) for that income category, except that the amount computed by such subtraction for any income category shall not be less than zero;
(G) add the amounts determined under subparagraph (F) for each income category of independent students; and
(H) add the amounts determined under subparagraphs (E) and (G).
(3) To determine the self-help need of an institution's eligible graduate and professional students, the Secretary shall—
(A) establish various income categories for graduate and professional students;
(B) establish an expected family contribution for each income category of graduate and professional students, determined on the basis of the average expected family contribution (computed in accordance with part F of this subchapter) of a representative sample within each income category for the second preceding fiscal year;
(C) determine the average cost of attendance for all graduate and professional students;
(D) subtract from the average cost of attendance for all graduate and professional students (determined under subparagraph (C)), the expected family contribution (determined under subparagraph (B)) for each income category, except that the amount computed by such subtraction for any income category shall not be less than zero;
(E) multiply the amounts determined under subparagraph (D) by the number of eligible students in each category;
(F) add the amounts determined under subparagraph (E) for each income category.
(4)(A) For purposes of paragraphs (2) and (3), the term "average cost of attendance" means the average of the attendance costs for undergraduate students and for graduate and professional students, which shall include (i) tuition and fees determined in accordance with subparagraph (B), (ii) standard living expenses determined in accordance with subparagraph (C), and (iii) books and supplies determined in accordance with subparagraph (D).
(B) The average undergraduate and graduate and professional tuition and fees described in subparagraph (A)(i) shall be computed on the basis of information reported by the institution to the Secretary, which shall include (i) total revenue received by the institution from undergraduate and graduate tuition and fees for the second year preceding the year for which it is applying for an allocation, and (ii) the institution's enrollment for such second preceding year.
(C) The standard living expense described in subparagraph (A)(ii) is equal to 150 percent of the difference between the income protection allowance for a family of five with one in college and the income protection allowance for a family of six with one in college for a single independent student.
(D) The allowance for books and supplies described in subparagraph (A)(iii) is equal to $600.
(d) Anticipated collections
(1) An institution's anticipated collections are equal to the amount which was collected during the second year preceding the beginning of the award period, multiplied by 1.21.
(2) The Secretary shall establish an appeals process by which the anticipated collections required in paragraph (1) may be waived for institutions with low cohort default rates in the program assisted under this part.
(e) Default penalties
(1) Years preceding fiscal year 2000
For any fiscal year preceding fiscal year 2000, any institution with a cohort default rate that—
(A) equals or exceeds 15 percent, shall establish a default reduction plan pursuant to regulations prescribed by the Secretary, except that such plan shall not be required with respect to an institution that has a default rate of less than 20 percent and that has less than 100 students who have loans under this part in such academic year;
(B) equals or exceeds 20 percent, but is less than 25 percent, shall have a default penalty of 0.9;
(C) equals or exceeds 25 percent, but is less than 30 percent, shall have a default penalty of 0.7; and
(D) equals or exceeds 30 percent shall have a default penalty of zero.
(2) Years following fiscal year 2000
For fiscal year 2000 and any succeeding fiscal year, any institution with a cohort default rate (as defined under subsection (g)) that equals or exceeds 25 percent shall have a default penalty of zero.
(3) Ineligibility
(A) In general
For fiscal year 2000 and any succeeding fiscal year, any institution with a cohort default rate (as defined in subsection (g)) that equals or exceeds 50 percent for each of the 3 most recent years for which data are available shall not be eligible to participate in a program under this part for the fiscal year for which the determination is made and the 2 succeeding fiscal years, unless, within 30 days of receiving notification from the Secretary of the loss of eligibility under this paragraph, the institution appeals the loss of eligibility to the Secretary. The Secretary shall issue a decision on any such appeal within 45 days after the submission of the appeal. Such decision may permit the institution to continue to participate in a program under this part if—
(i) the institution demonstrates to the satisfaction of the Secretary that the calculation of the institution's cohort default rate is not accurate, and that recalculation would reduce the institution's cohort default rate for any of the 3 fiscal years below 50 percent; or
(ii) there are, in the judgment of the Secretary, such a small number of borrowers entering repayment that the application of this subparagraph would be inequitable.
(B) Continued participation
During an appeal under subparagraph (A), the Secretary may permit the institution to continue to participate in a program under this part.
(C) Return of funds
Within 90 days after the date of any termination pursuant to subparagraph (A), or the conclusion of any appeal pursuant to subparagraph (B), whichever is later, the balance of the student loan fund established under this part by the institution that is the subject of the termination shall be distributed as follows:
(i) The Secretary shall first be paid an amount which bears the same ratio to such balance (as of the date of such distribution) as the total amount of Federal capital contributions to such fund by the Secretary under this part bears to the sum of such Federal capital contributions and the capital contributions to such fund made by the institution.
(ii) The remainder of such student loan fund shall be paid to the institution.
(D) Use of returned funds
Any funds returned to the Secretary under this paragraph shall be reallocated to institutions of higher education pursuant to subsection (i).
(E) Definition
For the purposes of subparagraph (A), the term "loss of eligibility" shall be defined as the mandatory liquidation of an institution's student loan fund, and assignment of the institution's outstanding loan portfolio to the Secretary.
(f) Applicable maximum cohort default rate
(1) Award years prior to 2000
For award years prior to award year 2000, the applicable maximum cohort default rate is 30 percent.
(2) Award year 2000 and succeeding award years
For award year 2000 and subsequent years, the applicable maximum cohort default rate is 25 percent.
(g) "Cohort default rate" defined
(1)(A) The term "cohort default rate" means, for any award year in which 30 or more current and former students at the institution enter repayment on loans under this part (received for attendance at the institution), the percentage of those current and former students who enter repayment on such loans (received for attendance at that institution) in that award year who default before the end of the following award year.
(B) For any award year in which less than 30 of the institution's current and former students enter repayment, the term "cohort default rate" means the percentage of such current and former students who entered repayment on such loans in any of the three most recent award years and who default before the end of the award year immediately following the year in which they entered repayment.
(C) A loan on which a payment is made by the institution of higher education, its owner, agency, contractor, employee, or any other entity or individual affiliated with such institution, in order to avoid default by the borrower, is considered as in default for the purposes of this subsection.
(D) In the case of a student who has attended and borrowed at more than one school, the student (and his or her subsequent repayment or default) is attributed to the school for attendance at which the student received the loan that entered repayment in the award year.
(E) In determining the number of students who default before the end of such award year, the institution, in calculating the cohort default rate, shall exclude—
(i) any loan on which the borrower has, after the time periods specified in paragraph (2)—
(I) voluntarily made 6 consecutive payments;
(II) voluntarily made all payments currently due;
(III) repaid in full the amount due on the loan; or
(IV) received a deferment or forbearance, based on a condition that began prior to such time periods;
(ii) any loan which has, after the time periods specified in paragraph (2), been rehabilitated or canceled; and
(iii) any other loan that the Secretary determines should be excluded from such determination.
(F) The Secretary shall prescribe regulations designed to prevent an institution from evading the application to that institution of a cohort default rate determination under this subsection through the use of such measures as branching, consolidation, change of ownership or control or other means as determined by the Secretary.
(2) For purposes of calculating the cohort default rate under this subsection, a loan shall be considered to be in default—
(A) 240 days (in the case of a loan repayable monthly), or
(B) 270 days (in the case of a loan repayable quarterly),
after the borrower fails to make an installment payment when due or to comply with other terms of the promissory note.
(h) Filing deadlines
The Secretary shall, from time to time, set dates before which institutions must file applications for allocations under this part.
(i) Reallocation of excess allocations
(1) In general
(A) If an institution of higher education returns to the Secretary any portion of the sums allocated to such institution under this section for any fiscal year, the Secretary shall reallocate 80 percent of such returned portions to participating institutions in an amount not to exceed such participating institution's excess eligible amounts as determined under paragraph (2).
(B) For the purpose of this subsection, the term "participating institution" means an institution of higher education that—
(i) was a participant in the program assisted under this part in fiscal year 1999; and
(ii) did not receive an allocation under subsection (a) in the fiscal year for which the reallocation determination is made.
(2) Excess eligible amount
For any participating institution, the excess eligible amount is the amount, if any, by which—
(A)(i) that institution's eligible amount (as determined under subsection (b)(3)), divided by (ii) the sum of the eligible amounts of all participating institutions (as determined under paragraph (3)), multiplied by (iii) the amount of funds available for reallocation under this subsection; exceeds
(B) the amount required to be allocated to that institution under subsection (b).
(3) Remainder
The Secretary shall reallocate the remainder of such returned portions in accordance with regulations of the Secretary.
(4) Allocation reductions
If under paragraph (1) of this subsection an institution returns more than 10 percent of its allocation, the institution's allocation for the next fiscal year shall be reduced by the amount returned. The Secretary may waive this paragraph for a specific institution if the Secretary finds that enforcing it is contrary to the interest of the program.
(
Amendment of Section
(1) by striking "the expected family contribution" each place the term appears and inserting "the student aid index";
(2) by striking "an expected family contribution" each place the term appears and inserting "a student aid index"; and
(3) by striking "average expected family contribution" each place the term appears and inserting "average student aid index".
See 2020 Amendment notes below.
Editorial Notes
References in Text
Prior Provisions
A prior section 1087bb,
Amendments
2020—Subsec. (c)(2)(B).
Subsec. (c)(2)(D)(ii), (F)(ii).
Subsec. (c)(3)(B).
Subsec. (c)(3)(D).
2009—Subsec. (a)(1)(A).
2008—Subsec. (c)(4)(D).
1998—Subsec. (a)(1).
Subsec. (a)(1)(A).
Subsec. (a)(1)(B).
Subsec. (a)(2)(A), (B).
Subsec. (a)(2)(C)(i).
Subsec. (a)(2)(D).
Subsec. (a)(2)(D)(ii).
Subsec. (b).
"(1) the amount the eligible institution receives for such fiscal year under subsection (a) of this section, bears to
"(2) the amount all such institutions receive under such subsection (a) of this section."
Subsec. (b)(2).
Subsec. (b)(3).
Subsec. (c).
Subsec. (c)(1).
Subsec. (c)(2).
Subsec. (c)(3).
Subsec. (c)(3)(A).
Subsec. (c)(3)(C).
Subsec. (d).
Subsec. (d)(2).
Subsec. (e).
"(1) For any fiscal year prior to fiscal year 1994, any institution which has a default rate which equals or exceeds 7.5 percent but does not exceed the maximum default rate applicable to the award year under subsection (g) of this section, the institution's default penalty is a percentage equal to the complement of such default rate. For any institution which has a default rate that does not exceed 7.5 percent, the institution's default penalty is equal to one.
"(2) For fiscal year 1994 and any succeeding fiscal year, any institution with a cohort default rate (as defined under subsection (h) of this section) which—
"(A) equals or exceeds 15 percent, shall establish a default reduction plan pursuant to regulations issued by the Secretary;
"(B) equals or exceeds 20 percent, but is less than 25 percent, shall have a default penalty of 0.9;
"(C) equals or exceeds 25 percent, but is less than 30 percent, shall have a default penalty of 0.7; and
"(D) equals or exceeds 30 percent shall have a default penalty of zero."
Subsec. (f).
"(1) For award years 1992 and 1993, the applicable maximum default rate is 15 percent.
"(2) For award year 1994 and subsequent years, the maximum cohort default rate is 30 percent."
Subsec. (g).
Subsec. (g)(1).
"(A) the total principal amount of defaulted loans; by
"(B) the total principal amount of loans made under this part, less the principal amount of all loans made to borrowers who are eligible for deferment under
Subsec. (g)(1)(B).
Subsec. (g)(1)(C), (D).
Subsec. (g)(1)(E).
Subsec. (g)(1)(F).
Subsec. (g)(1)(G).
Subsec. (g)(2).
"(A) amounts that have been repaid or cancelled on such loans;
"(B) loans discharged in bankruptcy;
"(C) loans referred or assigned to the Secretary for collection under paragraph (5)(A), (5)(B)(i), or (6) of
"(D) loans that are in default but on which the borrowers have made satisfactory arrangements to resume payment."
Subsec. (g)(3).
Subsec. (g)(4).
"(A) 240 days (in the case of a loan repayable monthly), or
"(B) 270 days (in the case of a loan repayable quarterly), after the borrower fails to make an installment payment when due or to comply with other terms of the promissory note,
after the borrower fails to make an installment payment when due or to comply with other terms of the promissory note."
Subsecs. (h), (i).
Subsec. (j).
Subsec. (j)(1)(B)(i).
Subsec. (j)(2)(A)(i).
Subsec. (j)(2)(B).
1993—Subsec. (a)(1), (2)(D).
Subsec. (d)(4)(C).
Subsecs. (e)(2), (h)(4)(B).
1992—Subsec. (a)(1)(A).
Subsec. (e).
Subsec. (f).
Subsec. (g).
"(1) For award years 1988, 1989, and 1990, the applicable maximum default rate is 20 percent.
"(2) For award year 1991 and subsequent years, the applicable maximum default rate is 15 percent."
Subsec. (h).
Subsec. (j).
1987—Subsec. (a)(1)(A).
Subsec. (d)(3), (4).
Subsec. (e).
Subsec. (f).
Statutory Notes and Related Subsidiaries
Effective Date of 2020 Amendment
Amendment by
Effective Date of 2009 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by section 462(b)–(e) of
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
Effective Date
Section applicable with respect to academic year 1988-1989 and succeeding academic years, see section 405(b) of
1 See References in Text note below.
§1087cc. Agreements with institutions of higher education
(a) Contents of agreements
An agreement with any institution of higher education for the payment of Federal capital contributions under this part shall—
(1) provide for the establishment and maintenance of a student loan fund for the purpose of this part;
(2) provide for the deposit in such fund of—
(A) Federal capital contributions from funds appropriated under
(B) a capital contribution by an institution in an amount equal to one-third of the Federal capital contributions described in subparagraph (A);
(C) collections of principal and interest on student loans made from deposited funds;
(D) charges collected pursuant to regulations under
(E) any other earnings of the funds;
(3) provide that such student loan fund shall be used only for—
(A) loans to students, in accordance with the provisions of this part;
(B) administrative expenses, as provided in subsection (b);
(C) capital distributions, as provided in
(D) costs of litigation, and other collection costs agreed to by the Secretary in connection with the collection of a loan from the fund (and interest thereon) or a charge assessed pursuant to regulations under
(4) provide that where a note or written agreement evidencing a loan has been in default despite due diligence on the part of the institution in attempting collection thereon—
(A) if the institution has knowingly failed to maintain an acceptable collection record with respect to such loan, as determined by the Secretary in accordance with criteria established by regulation, the Secretary may—
(i) require the institution to assign such note or agreement to the Secretary, without recompense; and
(ii) apportion any sums collected on such a loan, less an amount not to exceed 30 percent of any sums collected to cover the Secretary's collection costs, among other institutions in accordance with
(B) if the institution is not one described in subparagraph (A), the Secretary may allow such institution to refer such note or agreement to the Secretary, without recompense, except that, once every six months, any sums collected on such a loan (less an amount not to exceed 30 percent of any such sums collected to cover the Secretary's collection costs) shall be repaid to such institution and treated as an additional capital contribution under
(5) provide that, if an institution of higher education determines not to service and collect student loans made available from funds under this part, the institution will assign, at the beginning of the repayment period, notes or evidence of obligations of student loans made from such funds to the Secretary and the Secretary shall apportion any sums collected on such notes or obligations (less an amount not to exceed 30 percent of any such sums collected to cover that Secretary's collection costs) among other institutions in accordance with
(6) provide that, notwithstanding any other provision of law, the Secretary will provide to the institution any information with respect to the names and addresses of borrowers or other relevant information which is available to the Secretary, from whatever source such information may be derived;
(7) provide assurances that the institution will comply with the provisions of
(8) provide that the institution of higher education will make loans first to students with exceptional need; and
(9) include such other reasonable provisions as may be necessary to protect the United States from unreasonable risk of loss and as are agreed to by the Secretary and the institution, except that nothing in this paragraph shall be construed to permit the Secretary to require the assignment of loans to the Secretary other than as is provided for in paragraphs (4) and (5).
(b) Administrative expenses
An institution which has entered into an agreement under subsection (a) shall be entitled, for each fiscal year during which it makes student loans from a student loan fund established under such agreement, to a payment in lieu of reimbursement for its expenses in administering its student loan program under this part during such year. Such payment shall be made in accordance with
(c) Cooperative agreements with consumer reporting agencies
(1) For the purpose of promoting responsible repayment of loans made pursuant to this part, the Secretary and each institution of higher education participating in the program under this part shall enter into cooperative agreements with consumer reporting agencies to provide for the exchange of information concerning student borrowers concerning whom the Secretary has received a referral pursuant to
(2) Each cooperative agreement made pursuant to paragraph (1) shall be made in accordance with the requirements of
(A) the date of disbursement and the amount of such loans made to any borrower under this part at the time of disbursement of the loan;
(B) information concerning the repayment and collection of any such loan, including information concerning the status of such loan; and
(C) the date of cancellation of the note upon completion of repayment by the borrower of any such loan, or upon cancellation or discharge of the borrower's obligation on the loan for any reason.
(3) Notwithstanding paragraphs (4) and (5) of subsection (a) of
(4)(A) Except as provided in subparagraph (B), an institution of higher education, after consultation with the Secretary and pursuant to the agreements entered into under paragraph (1), shall disclose at least annually to any consumer reporting agency with which the Secretary has such an agreement the information set forth in paragraph (2), and shall disclose promptly to such consumer reporting agency any changes to the information previously disclosed.
(B) The Secretary may promulgate regulations establishing criteria under which an institution of higher education may cease reporting the information described in paragraph (2) before a loan is paid in full.
(5) Each institution of higher education shall notify the appropriate consumer reporting agencies whenever a borrower of a loan that is made and held by the institution and that is in default makes 6 consecutive monthly payments on such loan, for the purpose of encouraging such consumer reporting agencies to update the status of information maintained with respect to that borrower.
(d) Limitation on use of interest bearing accounts
In carrying out the provisions of subsection (a)(9), the Secretary may not require that any collection agency, collection attorney, or loan servicer collecting loans made under this part deposit amounts collected on such loans in interest bearing accounts, unless such agency, attorney, or servicer holds such amounts for more than 45 days.
(e) Special due diligence rule
In carrying out the provisions of subsection (a)(5) 1 relating to due diligence, the Secretary shall make every effort to ensure that institutions of higher education may use Internal Revenue Service skip-tracing collection procedures on loans made under this part.
(
Editorial Notes
References in Text
Subsection (a)(5) relating to due diligence, referred to in subsec. (e), was redesignated subsec. (a)(4), by
Prior Provisions
A prior section 1087cc,
Amendments
2009—Subsec. (c)(2)(A).
Subsec. (c)(2)(B).
Subsec. (c)(3).
2008—Subsec. (a)(4)(B).
"(i) allow such institution to transfer its interest in such loan to the Secretary, for collection, and the Secretary may use any collections thereon (less an amount not to exceed 30 percent of any such sums collected to cover the Secretary's collection costs) to make allocations to institutions of additional capital contributions in accordance with
"(ii) allow such institution to refer such note or agreement to the Secretary, without recompense, except that any sums collected on such a loan (less an amount not to exceed 30 percent of any such sums collected to cover the Secretary's collection costs) shall be repaid to such institution no later than 180 days after collection by the Secretary and treated as an additional capital contribution;".
Subsec. (a)(9).
Subsec. (c).
Subsec. (c)(1).
Subsec. (c)(2).
Subsec. (c)(4)(A).
Subsec. (c)(5).
1998—Subsec. (a)(2)(B).
"(i) by an institution that—
"(I) is granted permission by the Secretary to participate in an Expanded Lending Option under the program, and
"(II) has a default rate which does not exceed 7.5 percent for award year 1993–1994 and has a cohort default rate which does not exceed 15 percent for award year 1994–1995 or for any succeeding award year,
in an amount not less than the amount of the Federal capital contributions described in subparagraph (A); or
"(ii) by any other institution, in an amount not less than three-seventeenths of such Federal capital contribution in fiscal year 1993, and one-third of such Federal capital contribution in each of the succeeding fiscal years, of the amount of the Federal capital contributions described in subparagraph (A);".
Subsec. (a)(4) to (10).
Subsec. (c)(1).
Subsec. (c)(2).
Subsec. (c)(2)(A).
Subsec. (c)(2)(B).
Subsec. (c)(2)(C).
Subsec. (c)(3).
Subsec. (c)(3)(A), (B).
"(A) 7 years from the date on which the Secretary accepted an assignment or referral of a loan, or
"(B) 7 years from the date the Secretary first reports the account to a consumer reporting agency."
Subsec. (c)(4).
"(A) the amount of loans made to any borrower under this part at the time of the disbursement of the loan; and
"(B) the information set forth in
Subsec. (c)(5).
Subsec. (d).
1993—Subsec. (a)(2)(B)(i)(II).
Subsec. (c)(4).
Subsecs. (d), (e).
1992—Subsec. (a)(2)(B).
Subsec. (c)(3)(B).
Subsec. (c)(4).
1987—Subsec. (a)(4).
Subsec. (b).
Statutory Notes and Related Subsidiaries
Effective Date of 2009 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
Effective Date
Section effective Oct. 17, 1986, except as otherwise provided, see section 2 of
Subsection (a)(9) of this section applicable only to loans made for periods of enrollment beginning on or after July 1, 1987, see section 405(b) of
1 See References in Text note below.
§1087cc–1. Student loan information by eligible institutions
(a) Disclosure required prior to disbursement
Each institution of higher education shall, at or prior to the time such institution makes a loan to a student borrower which is made under this part, provide thorough and adequate loan information on such loan to the student borrower. Any disclosure required by this subsection may be made by an institution of higher education as part of the written application material provided to the borrower, or as part of the promissory note evidencing the loan, or on a separate written form provided to the borrower. The disclosures shall include—
(1) the name of the institution of higher education, and the address to which communications and payments should be sent;
(2) the principal amount of the loan;
(3) the amount of any charges collected by the institution at or prior to the disbursal of the loan and whether such charges are deducted from the proceeds of the loan or paid separately by the borrower;
(4) the stated interest rate on the loan;
(5) the yearly and cumulative maximum amounts that may be borrowed;
(6) an explanation of when repayment of the loan will be required and when the borrower will be obligated to pay interest that accrues on the loan;
(7) a statement as to the minimum and maximum repayment term which the institution may impose, and the minimum monthly payment required by law and a description of any penalty imposed as a consequence of default, such as liability for expenses reasonably incurred in attempts by the Secretary or institutions to collect on a loan;
(8) a statement of the total cumulative balance, including the loan applied for, owed by the student to that lender, and an estimate of the projected monthly payment, given such cumulative balance;
(9) an explanation of any special options the borrower may have for loan consolidation or other refinancing of the loan;
(10) a statement that the borrower has the right to prepay all or part of the loan, at any time, without penalty, a statement summarizing circumstances in which repayment of the loan or interest that accrues on the loan may be deferred, and a brief notice of the program for repayment of loans, on the basis of military service, pursuant to the Department of Defense educational loan repayment program (
(11) a definition of default and the consequences to the borrower if the borrower defaults, together with a statement that the disbursement of, and the default on, a loan under this part, shall be reported to a consumer reporting agency;
(12) to the extent practicable, the effect of accepting the loan on the eligibility of the borrower for other forms of student assistance;
(13) an explanation of any cost the borrower may incur in the making or collection of the loan;
(14) a notice and explanation regarding the end to future availability of loans made under this part;
(15) a notice and explanation that repayment and forgiveness benefits available to borrowers of loans made under part D are not available to borrowers participating in the loan program under this part;
(16) a notice and explanation regarding a borrower's option to consolidate a loan made under this part into a Federal Direct Loan under part D, including any benefit of such consolidation;
(17) with respect to new undergraduate Federal Perkins loan borrowers, as described in
(18) with respect to current undergraduate Federal Perkins loan borrowers, as described in
(b) Disclosure required prior to repayment
Each institution of higher education shall enter into an agreement with the Secretary under which the institution will, prior to the start of the repayment period of the student borrower on loans made under this part, disclose to the student borrower the information required under this subsection. Any disclosure required by this subsection may be made by an institution of higher education either in a promissory note evidencing the loan or loans or in a written statement provided to the borrower. The disclosures shall include—
(1) the name of the institution of higher education, and the address to which communications and payments should be sent;
(2) the scheduled date upon which the repayment period is to begin;
(3) the estimated balance owed by the borrower on the loan or loans covered by the disclosure as of the scheduled date on which the repayment period is to begin (including, if applicable, the estimated amount of interest to be capitalized);
(4) the stated interest rate on the loan or loans, or the combined interest rate of loans with different stated interest rates;
(5) the nature of any fees which may accrue or be charged to the borrower during the repayment period;
(6) the repayment schedule for all loans covered by the disclosure including the date the first installment is due, and the number, amount, and frequency of required payments;
(7) an explanation of any special options the borrower may have for loan consolidation or other refinancing of the loan;
(8) the projected total of interest charges which the borrower will pay on the loan or loans, assuming that the borrower makes payments exactly in accordance with the repayment schedule; and
(9) a statement that the borrower has the right to prepay all or part of the loan or loans covered by the disclosure at any time without penalty.
(c) Costs and effects of disclosures
Such information shall be available without cost to the borrower. The failure of an eligible institution to provide information as required by this section shall not (1) relieve a borrower of the obligation to repay a loan in accordance with its terms, (2) provide a basis for a claim for civil damages, or (3) be deemed to abrogate the obligation of the Secretary to make payments with respect to such loan.
(
Editorial Notes
Prior Provisions
A prior section 1087cc–1,
Amendments
2015—Subsec. (a)(14) to (18).
2009—Subsec. (a).
2008—Subsec. (a)(11).
1996—Subsec. (a)(10).
1993—Subsecs. (d), (e).
"(d)
"(e)
1992—Subsec. (a)(11).
Subsecs. (d), (e).
1987—Subsec. (a)(8).
Subsec. (a)(10).
Statutory Notes and Related Subsidiaries
Effective Date of 2009 Amendment
Amendment by
Effective Date of 1996 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
Effective Date
Section applicable only to loans made for periods of enrollment beginning on or after July 1, 1987, see section 405(b) of
§1087dd. Terms of loans
(a) Terms and conditions
(1) Loans from any student loan fund established pursuant to an agreement under
(2)(A) Except as provided in paragraph (4), the total of loans made to a student in any academic year or its equivalent by an institution of higher education from a loan fund established pursuant to an agreement under this part shall not exceed—
(i) $5,500, in the case of a student who has not successfully completed a program of undergraduate education; or
(ii) $8,000, in the case of a graduate or professional student (as defined in regulations issued by the Secretary).
(B) Except as provided in paragraph (4), the aggregate unpaid principal amount for all loans made to a student by institutions of higher education from loan funds established pursuant to agreements under this part may not exceed—
(i) $60,000, in the case of any graduate or professional student (as defined by regulations issued by the Secretary, and including any loans from such funds made to such person before such person became a graduate or professional student);
(ii) $27,500, in the case of a student who has successfully completed 2 years of a program of education leading to a bachelor's degree but who has not completed the work necessary for such a degree (determined under regulations issued by the Secretary), and including any loans from such funds made to such person before such person became such a student; and
(iii) $11,000, in the case of any other student.
(3) Regulations of the Secretary under paragraph (1) shall be designed to prevent the impairment of the capital student loan funds to the maximum extent practicable and with a view toward the objective of enabling the student to complete his course of study.
(4) In the case of a program of study abroad that is approved for credit by the home institution at which a student is enrolled and that has reasonable costs in excess of the home institution's budget, the annual and aggregate loan limits for the student may exceed the amounts described in paragraphs (2)(A) and (2)(B) by 20 percent.
(b) Demonstration of need and eligibility required
(1) A loan from a student loan fund assisted under this part may be made only to a student who demonstrates financial need in accordance with part F of this subchapter, who meets the requirements of
(2) If the institution's capital contribution under
(c) Contents of loan agreement
(1) Any agreement between an institution and a student for a loan from a student loan fund assisted under this part—
(A) shall be evidenced by note or other written instrument which, except as provided in paragraph (2), provides for repayment of the principal amount of the loan, together with interest thereon, in equal installments (or, if the borrower so requests, in graduated periodic installments determined in accordance with such schedules as may be approved by the Secretary) payable quarterly, bimonthly, or monthly, at the option of the institution, over a period beginning nine months after the date on which the student ceases to carry, at an institution of higher education or a comparable institution outside the United States approved for this purpose by the Secretary, at least one-half the normal full-time academic workload, and ending 10 years and 9 months after such date except that such period may begin earlier than 9 months after such date upon the request of the borrower;
(B) shall include provision for acceleration of repayment of the whole, or any part, of such loan, at the option of the borrower;
(C)(i) may provide, at the option of the institution, in accordance with regulations of the Secretary, that during the repayment period of the loan, payments of principal and interest by the borrower with respect to all outstanding loans made to the student from a student loan fund assisted under this part shall be at a rate equal to not less than $40 per month, except that the institution may, subject to such regulations, permit a borrower to pay less than $40 per month for a period of not more than one year where necessary to avoid hardship to the borrower, but without extending the 10-year maximum repayment period provided for in subparagraph (A) of this paragraph; and
(ii) may provide that the total payments by a borrower for a monthly or similar payment period with respect to the aggregate of all loans held by the institution may, when the amount of a monthly or other similar payment is not a multiple of $5, be rounded to the next highest whole dollar amount that is a multiple of $5;
(D) shall provide that the loan shall bear interest, on the unpaid balance of the loan, at the rate of 5 percent per year in the case of any loan made on or after October 1, 1981, except that no interest shall accrue (i) prior to the beginning date of repayment determined under paragraph (2)(A)(i), or (ii) during any period in which repayment is suspended by reason of paragraph (2);
(E) shall provide that the loan shall be made without security and without endorsement;
(F) shall provide that the liability to repay the loan shall be cancelled—
(i) upon the death of the borrower;
(ii) if the borrower becomes permanently and totally disabled as determined in accordance with regulations of the Secretary;
(iii) if the borrower is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death, has lasted for a continuous period of not less than 60 months, or can be expected to last for a continuous period of not less than 60 months; or
(iv) if the borrower is determined by the Secretary of Veterans Affairs to be unemployable due to a service-connected disability;
(G) shall provide that no note or evidence of obligation may be assigned by the lender, except upon the transfer of the borrower to another institution participating under this part (or, if not so participating, is eligible to do so and is approved by the Secretary for such purpose), to such institution, and except as necessary to carry out section 1087cc(a)(6) 1 of this title;
(H) pursuant to regulations of the Secretary, shall provide for an assessment of a charge with respect to the loan for failure of the borrower to pay all or part of an installment when due, which shall include the expenses reasonably incurred in attempting collection of the loan, to the extent permitted by the Secretary, except that no charge imposed under this subparagraph shall exceed 20 percent of the amount of the monthly payment of the borrower; and
(I) shall contain a notice of the system of disclosure of information concerning default on such loan to consumer reporting agencies under
(2)(A) No repayment of principal of, or interest on, any loan from a student loan fund assisted under this part shall be required during any period—
(i) during which the borrower—
(I) is pursuing at least a half-time course of study as determined by an eligible institution; or
(II) is pursuing a course of study pursuant to a graduate fellowship program approved by the Secretary, or pursuant to a rehabilitation training program for disabled individuals approved by the Secretary,
except that no borrower shall be eligible for a deferment under this clause, or loan made under this part while serving in a medical internship or residency program;
(ii) not in excess of 3 years during which the borrower is seeking and unable to find full-time employment;
(iii) during which the borrower—
(I) is serving on active duty during a war or other military operation or national emergency; or
(II) is performing qualifying National Guard duty during a war or other military operation or national emergency,
and for the 180-day period following the demobilization date for the service described in subclause (I) or (II);
(iv) not in excess of 3 years for any reason which the lender determines, in accordance with regulations prescribed by the Secretary under
(v) during which the borrower is engaged in service described in
(vi) during which the borrower is receiving treatment for cancer and the 6 months after such period;
and provides that any such period shall not be included in determining the 10-year period described in subparagraph (A) of paragraph (1).
(B) No repayment of principal of, or interest on, any loan for any period described in subparagraph (A) shall begin until 6 months after the completion of such period.
(C) An individual with an outstanding loan balance who meets the eligibility criteria for a deferment described in subparagraph (A) as in effect on October 7, 1998, shall be eligible for deferment under this paragraph notwithstanding any contrary provision of the promissory note under which the loan or loans were made, and notwithstanding any amendment (or effective date provision relating to any amendment) to this section made prior to the date of such deferment.
(3)(A) The Secretary is authorized, when good cause is shown, to extend, in accordance with regulations, the 10-year maximum repayment period provided for in subparagraph (A) of paragraph (1) with respect to individual loans.
(B) Pursuant to uniform criteria established by the Secretary, the repayment period for any student borrower who during the repayment period is a low-income individual may be extended for a period not to exceed 10 years and the repayment schedule may be adjusted to reflect the income of that individual.
(4) The repayment period for a loan made under this part shall begin on the day immediately following the expiration of the period, specified in paragraph (1)(A), after the student ceases to carry the required academic workload, unless the borrower requests and is granted a repayment schedule that provides for repayment to commence at an earlier point in time, and shall exclude any period of authorized deferment, forbearance, or cancellation.
(5) The institution may elect—
(A) to add the amount of any charge imposed under paragraph (1)(H) to the principal amount of the loan as of the first day after the day on which the installment was due and to notify the borrower of the assessment of the charge; or
(B) to make the amount of the charge payable to the institution not later than the due date of the next installment.
(6) Requests for deferment of repayment of loans under this part by students engaged in graduate or post-graduate fellowship-supported study (such as pursuant to a Fulbright grant) outside the United States shall be approved until completion of the period of the fellowship.
(7) There shall be excluded from the 9-month period that begins on the date on which a student ceases to carry at least one-half the normal full-time academic workload (as described in paragraph (1)(A)) any period not to exceed 3 years during which a borrower who is a member of a reserve component of the Armed Forces named in
(d) Availability of loan fund to all eligible students
An agreement under this part for payment of Federal capital contributions shall include provisions designed to make loans from the student loan fund established pursuant to such agreement reasonably available (to the extent of the available funds in such fund) to all eligible students in such institutions in need thereof.
(e) Forbearance
(1) The Secretary shall ensure that, as documented in accordance with paragraph (2), an institution of higher education shall grant a borrower forbearance of principal and interest or principal only, renewable at 12-month intervals for a period not to exceed 3 years, on such terms as are otherwise consistent with the regulations issued by the Secretary and agreed upon in writing by the parties to the loan, if—
(A) the borrower's debt burden equals or exceeds 20 percent of such borrower's gross income;
(B) the institution determines that the borrower should qualify for forbearance for other reasons; or
(C) the borrower is eligible for interest payments to be made on such loan for service in the Armed Forces under
(2) For the purpose of paragraph (1), the terms of forbearance agreed to by the parties shall be documented by—
(A) confirming the agreement of the borrower by notice to the borrower from the institution of higher education; and
(B) recording the terms in the borrower's file.
(f) Special repayment rule authority
(1) Subject to such restrictions as the Secretary may prescribe to protect the interest of the United States, in order to encourage repayment of loans made under this part which are in default, the Secretary may, in the agreement entered into under this part, authorize an institution of higher education to compromise on the repayment of such defaulted loans in accordance with paragraph (2). The Federal share of the compromise repayment shall bear the same relation to the institution's share of such compromise repayment as the Federal capital contribution to the institution's loan fund under this part bears to the institution's capital contribution to such fund.
(2) No compromise repayment of a defaulted loan as authorized by paragraph (1) may be made unless the student borrower pays—
(A) 90 percent of the loan under this part;
(B) the interest due on such loan; and
(C) any collection fees due on such loan;
in a lump sum payment.
(g) Discharge
(1) In general
If a student borrower who received a loan made under this part on or after January 1, 1986, is unable to complete the program in which such student is enrolled due to the closure of the institution, then the Secretary shall discharge the borrower's liability on the loan (including the interest and collection fees) and shall subsequently pursue any claim available to such borrower against the institution and the institution's affiliates and principals, or settle the loan obligation pursuant to the financial responsibility standards described in
(2) Assignment
A borrower whose loan has been discharged pursuant to this subsection shall be deemed to have assigned to the United States the right to a loan refund in an amount that does not exceed the amount discharged against the institution and the institution's affiliates and principals.
(3) Eligibility for additional assistance
The period during which a student was unable to complete a course of study due to the closing of the institution shall not be considered for purposes of calculating the student's period of eligibility for additional assistance under this subchapter.
(4) Special rule
A borrower whose loan has been discharged pursuant to this subsection shall not be precluded, because of that discharge, from receiving additional grant, loan, or work assistance under this subchapter for which the borrower would be otherwise eligible (but for the default on the discharged loan). The amount discharged under this subsection shall be treated as an amount canceled under
(5) Reporting
The Secretary or institution, as the case may be, shall report to consumer reporting agencies with respect to loans that have been discharged pursuant to this subsection.
(h) Rehabilitation of loans
(1) Rehabilitation
(A) In general
If the borrower of a loan made under this part who has defaulted on the loan makes 9 on-time, consecutive, monthly payments of amounts owed on the loan, as determined by the institution, or by the Secretary in the case of a loan held by the Secretary, the loan shall be considered rehabilitated, and the institution that made that loan (or the Secretary, in the case of a loan held by the Secretary) shall request that any consumer reporting agency to which the default was reported remove the default from the borrower's credit history.
(B) Comparable conditions
As long as the borrower continues to make scheduled repayments on a loan rehabilitated under this paragraph, the rehabilitated loan shall be subject to the same terms and conditions, and qualify for the same benefits and privileges, as other loans made under this part.
(C) Additional assistance
The borrower of a rehabilitated loan shall not be precluded by
(D) Limitations
A borrower only once may obtain the benefit of this paragraph with respect to rehabilitating a loan under this part.
(2) Restoration of eligibility
If the borrower of a loan made under this part who has defaulted on that loan makes 6 ontime, consecutive, monthly payments of amounts owed on such loan, the borrower's eligibility for grant, loan, or work assistance under this subchapter shall be restored to the extent that the borrower is otherwise eligible. A borrower only once may obtain the benefit of this paragraph with respect to restored eligibility.
(i) Incentive repayment program
(1) In general
Each institution of higher education may establish, with the approval of the Secretary, an incentive repayment program designed to reduce default and to replenish student loan funds established under this part. Each such incentive repayment program may—
(A) offer a reduction of the interest rate on a loan on which the borrower has made 48 consecutive, monthly repayments, but in no event may the rate be reduced by more than 1 percent;
(B) provide for a discount on the balance owed on a loan on which the borrower pays the principal and interest in full prior to the end of the applicable repayment period, but in no event may the discount exceed 5 percent of the unpaid principal balance due on the loan at the time the early repayment is made; and
(C) include such other incentive repayment options as the institution determines will carry out the objectives of this subsection.
(2) Limitation
No incentive repayment option under an incentive repayment program authorized by this subsection may be paid for with Federal funds, including any Federal funds from the student loan fund, or with institutional funds from the student loan fund.
(j) Armed Forces and NOAA Commissioned Officer Corps student loan interest payment programs
(1) Authority
Using funds received by transfer to the Secretary under
(2) Forbearance
During the period in which the Secretary is making payments on a loan under paragraph (1), the institution of higher education shall grant the borrower forbearance in accordance with subsection (e)(1)(C).
(k) Additional safeguards
The Secretary may develop such additional safeguards as the Secretary determines necessary to prevent fraud and abuse in the cancellation of liability under subsection (c)(1)(F). Notwithstanding subsection (c)(1)(F), the Secretary may promulgate regulations to resume collection on loans cancelled under subsection (c)(1)(F) in any case in which—
(1) a borrower received a cancellation of liability under subsection (c)(1)(F) and after the cancellation the borrower—
(A) receives a loan made, insured, or guaranteed under this subchapter; or
(B) has earned income in excess of the poverty line; or
(2) the Secretary determines necessary.
(
Editorial Notes
References in Text
Prior Provisions
A prior section 1087dd,
Amendments
2020—Subsec. (j).
Subsec. (j)(1).
2018—Subsec. (c)(2)(A)(vi).
2009—Subsec. (c).
Subsec. (g)(5).
2008—Subsec. (a)(2)(A).
Subsec. (a)(2)(B).
Subsec. (c)(1)(F).
Subsec. (c)(1)(I).
Subsec. (e).
Subsec. (h)(1)(A).
Subsec. (j)(2).
Subsec. (k).
2007—Subsec. (c)(2)(A)(iii).
2006—Subsec. (c)(2)(A)(iii) to (v).
2002—Subsec. (e)(3).
Subsec. (j).
1998—Subsec. (a)(2).
Subsec. (b)(1).
Subsec. (b)(2).
Subsec. (c)(1)(D).
Subsec. (c)(2)(A).
Subsec. (c)(2)(C).
Subsec. (c)(7).
Subsecs. (g) to (i).
1993—Subsec. (c)(2)(B).
Subsec. (c)(6).
Subsec. (e).
1992—Subsec. (a)(2).
"(A) $18,000 in the case of any graduate or professional student (as defined by regulations of the Secretary, and including any loans from such funds made to such person before he became a graduate or professional student);
"(B) $9,000 in the case of a student who has successfully completed 2 years of a program of education leading to a bachelor's degree, but who has not completed the work necessary for such a degree (determined under regulations of the Secretary, and including any loans from such funds made to such person before he became such a student); and
"(C) $4,500 in the case of any other student."
Subsec. (a)(4).
Subsec. (b)(1).
Subsec. (b)(2).
Subsec. (c)(1)(C)(i).
Subsec. (c)(1)(E).
Subsec. (c)(2)(A).
Subsec. (c)(2)(B), (C).
"(B) Any period during which repayment is deferred under subparagraph (A) shall not be included in computing the 10-year maximum period provided for in subparagraph (A) of paragraph (1).
"(C) No repayment of principal of, or interest on, any loan for any period of study, service, or disability described in subparagraph (A) or any combination thereof shall begin until 6 months after the completion of such period of study, service, disability, or combination thereof."
Subsec. (c)(4) to (6).
Subsecs. (e), (f).
1989—Subsec. (c)(2)(A)(i).
1988—Subsec. (c)(2)(A)(v).
1987—Subsec. (c)(2)(A)(vi).
Statutory Notes and Related Subsidiaries
Effective Date of 2018 Amendment
Amendment by
Effective Date of 2009 Amendment
Amendment by
Effective Date of 2008 Amendment
Effective Date of 2007 Amendment
Amendment by
Effective Date of 2006 Amendment
Amendment by
Amendment by
Effective Date of 2002 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
Effective Date of 1992 Amendment
"(1) the changes in section 463(a)(2)(B) [
"(2) the changes made in section 464(c)(1)(C) [
"(3) the changes made in section 464(c)(2)(A), relating to deferments, shall apply with respect to loans for which the first disbursement is made on or after July 1, 1993;
"(4) the changes made in section 467 [
"(5) the changes in section 464(a)(2)(A), (B) and (C) shall not apply to any loan made for the award year beginning July 1, 1992 provided that the loan does not result in a violation of section 464(a)(2)(A), (B) and (C) as in effect prior to such date of enactment."
[
Effective Date of 1989 Amendment
Amendment by
Effective Date of 1987 Amendment
Amendment by
Effective Date
Section effective Oct. 17, 1986, except as otherwise provided, see section 2 of
"(1) Section 462 of the Act [
"(2) The changes made in sections 464(c)(1)(A), 464(c)(2), and 465(a)(2)(E) of the Act [
"(3) Section 463(a)(9) and section 463A of the Act [
"(4) For the purpose of this subsection, the term 'new borrower' means, with respect to any date, an individual who on that date has no outstanding balance of principal or interest owing on any loan made under part E of title IV of the Act [this part]."
Construction of 2006 Amendment
Nothing in amendment by
1 See References in Text note below.
§1087ee. Cancellation of loans for certain public service
(a) Cancellation of percentage of debt based on years of qualifying service
(1) The percent specified in paragraph (3) of this subsection of the total amount of any loan made after June 30, 1972, from a student loan fund assisted under this part shall be canceled for each complete year of service after such date by the borrower under circumstances described in paragraph (2).
(2) Loans shall be canceled under paragraph (1) for service—
(A) as a full-time teacher for service in an academic year (including such a teacher employed by an educational service agency)—
(i) in a public or other nonprofit private elementary school or secondary school, which, for the purpose of this paragraph and for that year—
(I) has been determined by the Secretary (pursuant to regulations of the Secretary and after consultation with the State educational agency of the State in which the school is located) to be a school in which the number of children meeting a measure of poverty under section 1113(a)(5) of the Elementary and Secondary Education Act of 1965 [
(II) is in the school district of a local educational agency which is eligible in such year for assistance pursuant to part A of title I of the Elementary and Secondary Education Act of 1965 [
(ii) in one or more public, or nonprofit private, elementary schools or secondary schools or locations operated by an educational service agency that have been determined by the Secretary (pursuant to regulations of the Secretary and after consultation with the State educational agency of the State in which the educational service agency operates) to be a school or location at which the number of children taught who meet a measure of poverty under section 1113(a)(5) of the Elementary and Secondary Education Act of 1965 [
(B) as a full-time staff member in a preschool program carried on under the Head Start Act [
(C) as a full-time special education teacher, including teachers of infants, toddlers, children, or youth with disabilities in a public or other nonprofit elementary or secondary school system, including a system administered by an educational service agency, or as a full-time qualified professional provider of early intervention services in a public or other nonprofit program under public supervision by the lead agency as authorized in
(D) as a member of the Armed Forces of the United States, for service that qualifies for special pay under section 310, or paragraph (1) or (3) of
(E) as a volunteer under the Peace Corps Act [
(F) as a full-time law enforcement officer or corrections officer for service to local, State, or Federal law enforcement or corrections agencies, or as a full-time attorney employed in a defender organization established in accordance with
(G) as a full-time teacher of mathematics, science, foreign languages, bilingual education, or any other field of expertise where the State educational agency determines there is a shortage of qualified teachers;
(H) as a full-time nurse or medical technician providing health care services;
(I) as a full-time employee of a public or private nonprofit child or family service agency who is providing, or supervising the provision of, services to high-risk children who are from low-income communities and the families of such children;
(J) as a full-time fire fighter for service to a local, State, or Federal fire department or fire district;
(K) as a full-time faculty member at a Tribal College or University, as that term is defined in
(L) as a librarian, if the librarian has a master's degree in library science and is employed in—
(i) an elementary school or secondary school that is eligible for assistance under part A of title I of the Elementary and Secondary Education Act of 1965 [
(ii) a public library that serves a geographic area that contains one or more schools eligible for assistance under part A of title I of the Elementary and Secondary Education Act of 1965; or
(M) as a full-time speech language pathologist, if the pathologist has a masters degree and is working exclusively with schools that are eligible for assistance under title I of the Elementary and Secondary Education Act of 1965 [
For the purpose of this paragraph, the term "children with disabilities" has the meaning set forth in
(3)(A) The percent of a loan which shall be canceled under paragraph (1) of this subsection is—
(i) in the case of service described in subparagraph (A), (C), (D), (F), (G), (H), (I), (J), (K), (L), or (M) of paragraph (2), at the rate of 15 percent for the first or second year of such service, 20 percent for the third or fourth year of such service, and 30 percent for the fifth year of such service;
(ii) in the case of service described in subparagraph (B) of paragraph (2), at the rate of 15 percent for each year of such service; or
(iii) in the case of service described in subparagraph (E) of paragraph (2) at the rate of 15 percent for the first or second year of such service and 20 percent for the third or fourth year of such service.
(B) If a portion of a loan is canceled under this subsection for any year, the entire amount of interest on such loan which accrues for such year shall be canceled.
(C) Nothing in this subsection shall be construed to authorize refunding of any repayment of a loan.
(4) For the purpose of this subsection, the term "year" where applied to service as a teacher means academic year as defined by the Secretary.
(5) The amount of a loan, and interest on a loan, which is canceled under this section shall not be considered income for purposes of title 26.
(6) No borrower may, for the same volunteer service, receive a benefit under both this section and subtitle D of title I of the National and Community Service Act of 1990 (
(7) An individual with an outstanding loan obligation under this part who performs service of any type that is described in paragraph (2) as in effect on October 7, 1998, shall be eligible for cancellation under this section for such service notwithstanding any contrary provision of the promissory note under which the loan or loans were made, and notwithstanding any amendment (or effective date provision relating to any amendment) to this section made prior to the date of such service.
(b) Reimbursement for cancellation
The Secretary shall pay to each institution for each fiscal year an amount equal to the aggregate of the amounts of loans from its student loan fund which are canceled pursuant to this section for such year, minus an amount equal to the aggregate of the amounts of any such loans so canceled which were made from Federal capital contributions to its student loan fund provided by the Secretary under
(c) Special rules
(1) List
If the list of schools in which a teacher may perform service pursuant to subsection (a)(2)(A) is not available before May 1 of any year, the Secretary may use the list for the year preceding the year for which the determination is made to make such service determination.
(2) Continuing eligibility
Any teacher who performs service in a school which—
(A) meets the requirements of subsection (a)(2)(A) in any year; and
(B) in a subsequent year fails to meet the requirements of such subsection,
may continue to teach in such school and shall be eligible for loan cancellation pursuant to subsection (a)(1) such 2 subsequent years.
(
Editorial Notes
References in Text
The Elementary and Secondary Education Act of 1965, referred to in subsec. (a)(2)(A)(i), (L), (M), is
The Head Start Act, referred to in subsec. (a)(2)(B), is subchapter B (§§635 to 657) of
The Peace Corps Act, referred to in subsec. (a)(2)(E), is
The Domestic Volunteer Service Act of 1973, referred to in subsec. (a)(2)(E), is
The National and Community Service Act of 1990, referred to in subsec. (a)(6), is
Codification
Amendment by section 2(f)(14) of
Prior Provisions
A prior section 1087ee,
Amendments
2016—Subsec. (a)(2)(D).
2009—Subsec. (a)(6).
2008—Subsec. (a)(2)(A).
Subsec. (a)(2)(B).
Subsec. (a)(2)(C).
Subsec. (a)(2)(F).
Subsec. (a)(2)(J) to (M).
Subsec. (a)(3)(A)(i).
Subsec. (a)(3)(A)(iii), (iv).
2004—Subsec. (a)(2)(C).
1998—Subsec. (a)(2).
Subsec. (a)(2)(C).
Subsec. (a)(7).
Subsec. (b).
1994—Subsec. (a)(2)(A).
1993—Subsec. (a)(2)(A).
Subsec. (a)(2)(D).
Subsec. (a)(2)(F).
Subsec. (a)(6).
1992—Subsec. (a)(2)(A).
Subsec. (a)(2)(C).
Subsec. (a)(2)(G) to (I).
Subsec. (a)(3)(A)(i).
Subsec. (c).
1991—Subsec. (a)(2).
1990—Subsec. (a)(2).
Subsec. (a)(2)(F).
Subsec. (a)(3)(A)(i).
1988—Subsec. (a)(5).
1987—Subsec. (a)(2)(A).
Subsec. (a)(2)(B).
Statutory Notes and Related Subsidiaries
Effective Date of 2009 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendments
Amendment by
Amendment by
Effective Date of 1990 Amendments
Effective Date of 1987 Amendment
Amendment by
Effective Date
Section effective Oct. 17, 1986, except as otherwise provided, see section 2 of
Subsection (a)(2)(E) of this section applicable only to loans made to cover the costs of instruction for periods of enrollment beginning on or after July 1, 1987, to individuals who are new borrowers on that date, see section 405(b) of
1 See References in Text note below.
2 So in original. Probably should be "in such".
§1087ff. Distribution of assets from student loan funds
(a) In general
Beginning October 1, 2017, there shall be a capital distribution of the balance of the student loan fund established under this part by each institution of higher education as follows:
(1) The Secretary shall first be paid an amount which bears the same ratio to the balance in such fund at the close of September 30, 2017, as the total amount of the Federal capital contributions to such fund by the Secretary under this part bears to the sum of such Federal contributions and the institution's capital contributions to such fund.
(2) The remainder of such balance shall be paid to the institution.
(b) Distribution of late collections
Beginning October 1, 2017, each institution with which the Secretary has made an agreement under this part, shall pay to the Secretary the same proportionate share of amounts received by this institution after September 30, 2017, in payment of principal and interest on student loans made from the student loan fund established pursuant to such agreement (which amount shall be determined after deduction of any costs of litigation incurred in collection of the principal or interest on loans from the fund and not already reimbursed from the fund or from such payments of principal or interest), as was determined for the Secretary under subsection (a).
(c) Distribution of excess capital
(1) Upon a finding by the institution or the Secretary prior to October 1, 2017, that the liquid assets of a student loan fund established pursuant to an agreement under this part exceed the amount required for loans or otherwise in the foreseeable future, and upon notice to such institution or to the Secretary, as the case may be, there shall be, subject to such limitations as may be included in regulations of the Secretary or in such agreement, a capital distribution from such fund. Such capital distribution shall be made as follows:
(A) The Secretary shall first be paid an amount which bears the same ratio to the total to be distributed as the Federal capital contributions by the Secretary to the student loan fund prior to such distribution bear to the sum of such Federal capital contributions and the capital contributions to the fund made by the institution.
(B) The remainder of the capital distribution shall be paid to the institution.
(2) No finding that the liquid assets of a student loan fund established under this part exceed the amount required under paragraph (1) may be made prior to a date which is 2 years after the date on which the institution of higher education received the funds from such institution's allocation under
(
Editorial Notes
Prior Provisions
A prior section 1087ff,
Amendments
2015—Subsec. (a).
Subsec. (a)(1).
Subsec. (b).
Subsec. (c)(1).
2007—Subsec. (b).
1998—Subsec. (a).
Subsec. (a)(1).
Subsec. (b).
Subsec. (c)(1).
1993—Subsec. (c)(2).
1992—Subsec. (b).
Subsec. (c).
Statutory Notes and Related Subsidiaries
Effective Date of 2007 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1993 Amendment
Amendment by
§1087gg. Collection of defaulted loans: Perkins Loan Revolving Fund
(a) Authority of Secretary to collect referred, transferred, or assigned loans
With respect to any loan—
(1) which was made under this part, and
(2) which is referred, transferred, or assigned to the Secretary by an institution with an agreement under
the Secretary is authorized to attempt to collect such loan by any means authorized by law for collecting claims of the United States (including referral to the Attorney General for litigation) and under such terms and conditions as the Secretary may prescribe, including reimbursement for expenses reasonably incurred in attempting such collection.
(b) Collection of referred, transferred, or assigned loans
The Secretary shall continue to attempt to collect any loan referred, transferred, or assigned under paragraph (4) or (5) of
(
Editorial Notes
Prior Provisions
A prior section 1087gg,
Amendments
2009—Subsec. (b).
1998—Subsec. (c).
1992—
Statutory Notes and Related Subsidiaries
Effective Date of 2009 Amendment
Amendment by
Effective Date of 1998 Amendment
Amendment by
Effective Date of 1992 Amendment
Amendment by
Transfer of Balance
§1087hh. General authority of Secretary
In carrying out the provisions of this part, the Secretary is authorized—
(1) to consent to modification, with respect to rate of interest, time of payment of any installment of principal and interest or any portion thereof, or any other provision of any note evidencing a loan which has been made under this part;
(2) to enforce, pay, compromise, waive, or release any right, title, claim, lien, or demand, however acquired, including any equity or any right of redemption;
(3) to conduct litigation in accordance with the provisions of
(4) to enter into a contract or other arrangement with State or nonprofit agencies and, on a competitive basis, with collection agencies for servicing and collection of loans under this part.
(
Editorial Notes
Prior Provisions
A prior section 1087hh,
A prior section 1087ii,
§1087ii. Definitions
(a) Low-income communities
For the purpose of this part, the term "low-income communities" means communities in which there is a high concentration of children eligible to be counted under
(b) High-risk children
For the purposes of this part, the term "high-risk children" means individuals under the age of 21 who are low-income or at risk of abuse or neglect, have been abused or neglected, have serious emotional, mental, or behavioral disturbances, reside in placements outside their homes, or are involved in the juvenile justice system.
(c) Infants, toddlers, children, and youth with disabilities
For purposes of this part, the term "infants, toddlers, children, and youth with disabilities" means children with disabilities and infants and toddlers with disabilities as defined in
(
Editorial Notes
Amendments
2015—Subsec. (a).
2009—Subsec. (c).
2004—Subsec. (c).
1994—Subsec. (a).
Statutory Notes and Related Subsidiaries
Effective Date of 2015 Amendment
Amendment by
Effective Date of 2009 Amendment
Amendment by