Part A—Student Loans
subpart i—insured health education assistance loans to graduate students
§292. Statement of purpose
The purpose of this subpart is to enable the Secretary to provide a Federal program of student loan insurance for students in (and certain former students of) eligible institutions (as defined in
(July 1, 1944, ch. 373, title VII, §701, as added
Editorial Notes
Prior Provisions
A prior section 292, act July 1, 1944, ch. 373, title VII, §700, as added Oct. 12, 1976,
Another prior section 292, act July 1, 1944, ch. 373, title VII, §701, as added July 30, 1956, ch. 779, §2,
A prior section 701 of act July 1, 1944, was classified to
Statutory Notes and Related Subsidiaries
Effective Date
Transfer of Health Education Assistance Loan Program
"(a)
"(b)
"(c)
"(d)
"(e)
Study on Effectiveness of Health Professions Programs
§292a. Scope and duration of loan insurance program
(a) In general
The total principal amount of new loans made and installments paid pursuant to lines of credit (as defined in
(b) Certain limitations and priorities
(1) Limitations regarding lenders, States, or areas
The Secretary may, if necessary to assure an equitable distribution of the benefits of this subpart, assign, within the maximum amounts specified in subsection (a), Federal loan insurance quotas applicable to eligible lenders, or to States or areas, and may from time to time reassign unused portions of these quotas.
(2) Priority for certain lenders
In providing certificates of insurance under
(A) to make loans to students at interest rates below the rates prevailing, during the period involved, for loans covered by Federal loan insurance pursuant to this subpart; or
(B) to make such loans under terms that are otherwise favorable to the student relative to the terms under which eligible lenders are generally making such loans during such period.
(c) Authority of Student Loan Marketing Association
(1) In general
Subject to paragraph (2), the Student Loan Marketing Association, established under part B of title IV of the Higher Education Act of 1965 [
(2) Applicability of certain Federal regulations
With respect to Federal regulations for lenders, this subpart may not be construed to preclude the applicability of such regulations to the Student Loan Marketing Association or to any other entity in the business of purchasing student loans, including such regulations with respect to applications, contracts, and due diligence.
(July 1, 1944, ch. 373, title VII, §702, as added
Editorial Notes
References in Text
The Higher Education Act of 1965, referred to in subsec. (c)(1), is
Prior Provisions
A prior section 292a, act July 1, 1944, ch. 373, title VII, §701, formerly §724, as added Sept. 24, 1963,
Another prior section 292a, act July 1, 1944, ch. 373, title VII, §702, as added July 30, 1956, ch. 779, §2,
A prior section 702 of act July 1, 1944, was classified to
§292b. Limitations on individual insured loans and on loan insurance
(a) In general
The total of the loans made to a student in any academic year or its equivalent (as determined by the Secretary) which may be covered by Federal loan insurance under this subpart may not exceed $20,000 in the case of a student enrolled in a school of medicine, osteopathic medicine, dentistry, veterinary medicine, optometry, or podiatric medicine, and $12,500 in the case of a student enrolled in a school of pharmacy, public health, allied health, or chiropractic, or a graduate program in health administration or behavioral and mental health practice, including clinical psychology. The aggregate insured unpaid principal amount for all such insured loans made to any borrower shall not at any time exceed $80,000 in the case of a borrower who is or was a student enrolled in a school of medicine, osteopathic medicine, dentistry, veterinary medicine, optometry, or podiatric medicine, and $50,000 in the case of a borrower who is or was a student enrolled in a school of pharmacy, public health, allied health, or chiropractic, or a graduate program in health administration or clinical psychology. The annual insurable limit per student shall not be exceeded by a line of credit under which actual payments by the lender to the borrower will not be made in any year in excess of the annual limit.
(b) Extent of insurance liability
The insurance liability on any loan insured by the Secretary under this subpart shall be 100 percent of the unpaid balance of the principal amount of the loan plus interest. The full faith and credit of the United States is pledged to the payment of all amounts which may be required to be paid under the provisions of
(July 1, 1944, ch. 373, title VII, §703, as added
Editorial Notes
Prior Provisions
A prior section 292b, act July 1, 1944, ch. 373, title VII, §702, formerly §725, as added Sept. 24, 1963,
Another prior section 292b, act July 1, 1944, ch. 373, title VII, §703, as added July 30, 1956, ch. 779, §2,
A prior section 703 of act July 1, 1994, was classified to
Amendments
1998—Subsec. (a).
§292c. Sources of funds
Loans made by eligible lenders in accordance with this subpart shall be insurable by the Secretary whether made from funds fully owned by the lender or from funds held by the lender in a trust or similar capacity and available for such loans.
(July 1, 1944, ch. 373, title VII, §704, as added
Editorial Notes
Prior Provisions
A prior section 292c, act July 1, 1944, ch. 373, title VII, §703, formerly §799, as added Nov. 2, 1970,
Another prior section 292c, act July 1, 1944, ch. 373, title VII, §704, as added July 30, 1956, 779, §2,
A prior section 704 of act July 1, 1944, was classified to
§292d. Eligibility of borrowers and terms of insured loans
(a) In general
A loan by an eligible lender shall be insurable by the Secretary under the provisions of this subpart only if—
(1) made to—
(A) a student who—
(i)(I) has been accepted for enrollment at an eligible institution, or (II) in the case of a student attending an eligible institution, is in good standing at that institution, as determined by the institution;
(ii) is or will be a full-time student at the eligible institution;
(iii) has agreed that all funds received under such loan shall be used solely for tuition, other reasonable educational expenses, including fees, books, and laboratory expenses, and reasonable living expenses, incurred by such students; and
(iv) in the case of a pharmacy student, has satisfactorily completed three years of training; or
(B) an individual who—
(i) has previously had a loan insured under this subpart when the individual was a full-time student at an eligible institution;
(ii) is in a period during which, pursuant to paragraph (2), the principal amount of such previous loan need not be paid; and
(iii) has agreed that all funds received under the proposed loan shall be used solely for repayment of interest due on previous loans made under this subpart;
(2) evidenced by a note or other written agreement which—
(A) is made without security and without endorsement, except that if the borrower is a minor and such note or other written agreement executed by him would not, under the applicable law, create a binding obligation, an endorsement may be required;
(B) provides for repayment of the principal amount of the loan in installments over a period of not less than 10 years (unless sooner repaid) nor more than 25 years beginning not earlier than 9 months nor later than 12 months after the date of—
(i) the date on which—
(I) the borrower ceases to be a participant in an accredited internship or residency program of not more than four years in duration;
(II) the borrower completes the fourth year of an accredited internship or residency program of more than four years in duration; or
(III) the borrower, if not a participant in a program described in subclause (I) or (II), ceases to carry, at an eligible institution, the normal full-time academic workload as determined by the institution; or
(ii) the date on which a borrower who is a graduate of an eligible institution ceases to be a participant in a fellowship training program not in excess of two years or a participant in a full-time educational activity not in excess of two years, which—
(I) is directly related to the health profession for which the borrower prepared at an eligible institution, as determined by the Secretary; and
(II) may be engaged in by the borrower during such a two-year period which begins within twelve months after the completion of the borrower's participation in a program described in subclause (I) or (II) of clause (i) or prior to the completion of the borrower's participation in such program,
except as provided in subparagraph (C), except that the period of the loan may not exceed 33 years from the date of execution of the note or written agreement evidencing it, and except that the note or other written instrument may contain such provisions relating to repayment in the event of default in the payment of interest or in the payment of the costs of insurance premiums, or other default by the borrower, as may be authorized by regulations of the Secretary in effect at the time the loan is made;
(C) provides that periodic installments of principal and interest need not be paid, but interest shall accrue, during any period (i) during which the borrower is pursuing a full-time course of study at an eligible institution (or at an institution defined by
(D) provides for interest on the unpaid principal balance of the loan at a yearly rate, not exceeding the applicable maximum rate prescribed and defined by the Secretary (within the limits set forth in subsection (b)) on a national, regional, or other appropriate basis, which interest shall be compounded not more frequently than annually and payable in installments over the period of the loan except as provided in subparagraph (C), except that the note or other written agreement may provide that payment of any interest may be deferred until not later than the date upon which repayment of the first installment of principal falls due or the date repayment of principal is required to resume (whichever is applicable) and may further provide that, on such date, the amount of the interest which has so accrued may be added to the principal for the purposes of calculating a repayment schedule;
(E) offers, in accordance with criteria prescribed by regulation by the Secretary, a schedule for repayment of principal and interest under which payment of a portion of the principal and interest otherwise payable at the beginning of the repayment period (as defined in such regulations) is deferred until a later time in the period;
(F) entitles the borrower to accelerate without penalty repayment of the whole or any part of the loan;
(G) provides that the check for the proceeds of the loan shall be made payable jointly to the borrower and the eligible institution in which the borrower is enrolled; and
(H) contains such other terms and conditions consistent with the provisions of this subpart and with the regulations issued by the Secretary pursuant to this subpart, as may be agreed upon by the parties to such loan, including, if agreed upon, a provision requiring the borrower to pay to the lender, in addition to principal and interest, amounts equal to the insurance premiums payable by the lender to the Secretary with respect to such loan; and
(3) subject to the consent of the student and subject to applicable law, the eligible lender has obtained from the student appropriate demographic information regarding the student, including racial or ethnic background.
(b) Limitation on rate of interest
The rate of interest prescribed and defined by the Secretary for the purpose of subsection (a)(2)(D) may not exceed the average of the bond equivalent rates of the 91-day Treasury bills auctioned for the previous quarter plus 3 percentage points, rounded to the next higher one-eighth of 1 percent.
(c) Minimum annual payment by borrower
The total of the payments by a borrower during any year or any repayment period with respect to the aggregate amount of all loans to that borrower which are insured under this subpart shall not be less than the annual interest on the outstanding principal, except as provided in subsection (a)(2)(C), unless the borrower, in the written agreement described in subsection (a)(2), agrees to make payments during any year or any repayment period in a lesser amount.
(d) Applicability of certain laws on rate or amount of interest
No provision of any law of the United States (other than subsections (a)(2)(D) and (b)) or of any State that limits the rate or amount of interest payable on loans shall apply to a loan insured under this subpart.
(e) Determination regarding forbearance
Any period of time granted to a borrower under this subpart in the form of forbearance on the loan shall not be included in the 25-year total loan repayment period under subsection (a)(2)(C).
(f) Loan repayment schedule
Lenders and holders under this subpart shall offer borrowers graduated loan repayment schedules that, during the first 5 years of loan repayment, are based on the borrower's debt-to-income ratio.
(g) Rule of construction regarding determination of need of students
With respect to any determination of the financial need of a student for a loan covered by Federal loan insurance under this subpart, this subpart may not be construed to limit the authority of any school to make such allowances for students with special circumstances as the school determines appropriate.
(h) Definitions
For purposes of this section:
(1) The term "active duty" has the meaning given such term in
(2) The term "Persian Gulf conflict" means the period beginning on August 2, 1990, and ending on the date thereafter prescribed by Presidential proclamation or by law.
(July 1, 1944, ch. 373, title VII, §705, as added
Editorial Notes
References in Text
The Peace Corps Act, referred to in subsec. (a)(2)(C), is
The Domestic Volunteer Service Act of 1973, referred to in subsec. (a)(2)(C), is
Prior Provisions
A prior section 292d, act July 1, 1944, ch. 373, title VII, §704, formerly §799A, as added Nov. 2, 1970,
Another prior section 292d, act July 1, 1944, ch. 373, title VII, §705, as added July 30, 1956, ch. 779, §2,
A prior section 705 of act July 1, 1944, was classified to
Amendments
2022—Subsec. (a)(1)(A)(iv), (v).
Subsec. (a)(1)(B)(iv).
1998—Subsec. (a)(2)(C).
1993—Subsec. (a)(2)(H), (I).
Statutory Notes and Related Subsidiaries
Effective Date of 1998 Amendments
Amendment by
1 So in original. Probably should be preceded by a closing parenthesis.
§292e. Certificate of loan insurance; effective date of insurance
(a) In general
(1) Authority for issuance of certificate
If, upon application by an eligible lender, made upon such form, containing such information, and supported by such evidence as the Secretary may require, and otherwise in conformity with this section, the Secretary finds that the applicant has made a loan to an eligible borrower which is insurable under the provisions of this subpart, he may issue to the applicant a certificate of insurance covering the loan and setting forth the amount and terms of the insurance.
(2) Effective date of insurance
Insurance evidenced by a certificate of insurance pursuant to subsection (a)(1) shall become effective upon the date of issuance of the certificate, except that the Secretary is authorized, in accordance with regulations, to issue commitments with respect to proposed loans, or with respect to lines (or proposed lines) of credit, submitted by eligible lenders, and in that event, upon compliance with subsection (a)(1) by the lender, the certificate of insurance may be issued effective as of the date when any loan, or any payment by the lender pursuant to a line of credit, to be covered by such insurance is made to a student described in
(3) Certain agreements for lenders
An application submitted pursuant to subsection (a)(1) shall contain—
(A) an agreement by the applicant to pay, in accordance with regulations, the premiums fixed by the Secretary pursuant to
(B) an agreement by the applicant that if the loan is covered by insurance the applicant will submit such supplementary reports and statements during the effective period of the loan agreement, upon such forms, at such times, and containing such information as the Secretary may prescribe by or pursuant to regulation.
(b) Authority regarding comprehensive insurance coverage
(1) In general
In lieu of requiring a separate insurance application and issuing a separate certificate of insurance for each loan made by an eligible lender as provided in subsection (a), the Secretary may, in accordance with regulations consistent with
(2) Lines of credit beyond cutoff date
If the holder of a certificate of comprehensive insurance coverage issued under this subsection grants to a borrower a line of credit extending beyond the cutoff date specified in that certificate, loans or payments thereon made by the holder after that date pursuant to the line of credit shall not be deemed to be included in the coverage of that certificate except as may be specifically provided therein; but, subject to the limitations of
(c) Assignment of insurance rights
The rights of an eligible lender arising under insurance evidenced by a certificate of insurance issued to it under this section may be assigned by such lender, subject to regulation by the Secretary, only to—
(1) another eligible lender (including a public entity in the business of purchasing student loans); or
(2) the Student Loan Marketing Association.
(d) Effect of refinancing or consolidation of obligations
The consolidation of the obligations of two or more federally insured loans obtained by a borrower in any fiscal year into a single obligation evidenced by a single instrument of indebtedness or the refinancing of a single loan shall not affect the insurance by the United States. If the loans thus consolidated are covered by separate certificates of insurance issued under subsection (a), the Secretary may upon surrender of the original certificates issue a new certificate of insurance in accordance with that subsection upon the consolidated obligation. If the loans thus consolidated are covered by a single comprehensive certificate issued under subsection (b), the Secretary may amend that certificate accordingly.
(e) Rule of construction regarding consolidation of debts and refinancing
Nothing in this section shall be construed to preclude the lender and the borrower, by mutual agreement, from consolidating all of the borrower's loans insured under this subpart into a single instrument (or, if the borrower obtained only 1 loan insured under this subpart, refinancing the loan 1 time) under the terms applicable to an insured loan made at the same time as the consolidation. The lender or loan holder should provide full information to the borrower concerning the advantages and disadvantages of loan consolidation or refinancing. Nothing in this section shall be construed to preclude the consolidation of the borrower's loans insured under this subpart under
(July 1, 1944, ch. 373, title VII, §706, as added
Editorial Notes
Prior Provisions
A prior section 292e, act July 1, 1944, ch. 373, title VII, §705, as added Oct. 12, 1976,
Another prior section 292e, act July 1, 1944, ch. 373, title VII, §706, as added July 30, 1956, 779, §2,
A prior section 706 of act July 1, 1944, was classified to
Another prior section 706 of act July 1, 1944, was classified to
Amendments
1998—Subsec. (d).
Subsec. (e).
§292f. Default of borrower
(a) Conditions for payment to beneficiary
(1) In general
Upon default by the borrower on any loan covered by Federal loan insurance pursuant to this subpart, and after a substantial collection effort (including, subject to subsection (h), commencement and prosecution of an action) as determined under regulations of the Secretary, the insurance beneficiary shall promptly notify the Secretary and the Secretary shall, if requested (at that time or after further collection efforts) by the beneficiary, or may on his own motion, if the insurance is still in effect, pay to the beneficiary the amount of the loss sustained by the insured upon that loan as soon as that amount has been determined, except that, if the insurance beneficiary including any servicer of the loan is not designated for "exceptional performance", as set forth in paragraph (2), the Secretary shall pay to the beneficiary a sum equal to 98 percent of the amount of the loss sustained by the insured upon that loan.
(2) Exceptional performance
(A) Authority
Where the Secretary determines that an eligible lender, holder, or servicer has a compliance performance rating that equals or exceeds 97 percent, the Secretary shall designate that eligible lender, holder, or servicer, as the case may be, for exceptional performance.
(B) Compliance performance rating
For purposes of subparagraph (A), a compliance performance rating is determined with respect to compliance with due diligence in the disbursement, servicing, and collection of loans under this subpart for each year for which the determination is made. Such rating shall be equal to the percentage of all due diligence requirements applicable to each loan, on average, as established by the Secretary, with respect to loans serviced during the period by the eligible lender, holder, or servicer.
(C) Annual audits for lenders, holders, and servicers
Each eligible lender, holder, or servicer desiring a designation under subparagraph (A) shall have an annual financial and compliance audit conducted with respect to the loan portfolio of such eligible lender, holder, or servicer, by a qualified independent organization from a list of qualified organizations identified by the Secretary and in accordance with standards established by the Secretary. The standards shall measure the lender's, holder's, or servicer's compliance with due diligence standards and shall include a defined statistical sampling technique designed to measure the performance rating of the eligible lender, holder, or servicer for the purpose of this section. Each eligible lender, holder, or servicer shall submit the audit required by this section to the Secretary.
(D) Secretary's determinations
The Secretary shall make the determination under subparagraph (A) based upon the audits submitted under this paragraph and any information in the possession of the Secretary or submitted by any other agency or office of the Federal Government.
(E) Quarterly compliance audit
To maintain its status as an exceptional performer, the lender, holder, or servicer shall undergo a quarterly compliance audit at the end of each quarter (other than the quarter in which status as an exceptional performer is established through a financial and compliance audit, as described in subparagraph (C)), and submit the results of such audit to the Secretary. The compliance audit shall review compliance with due diligence requirements for the period beginning on the day after the ending date of the previous audit, in accordance with standards determined by the Secretary.
(F) Revocation authority
The Secretary shall revoke the designation of a lender, holder, or servicer under subparagraph (A) if any quarterly audit required under subparagraph (E) is not received by the Secretary by the date established by the Secretary or if the audit indicates the lender, holder, or servicer has failed to meet the standards for designation as an exceptional performer under subparagraph (A). A lender, holder, or servicer receiving a compliance audit not meeting the standard for designation as an exceptional performer may reapply for designation under subparagraph (A) at any time.
(G) Documentation
Nothing in this section shall restrict or limit the authority of the Secretary to require the submission of claims documentation evidencing servicing performed on loans, except that the Secretary may not require exceptional performers to submit greater documentation than that required for lenders, holders, and servicers not designated under subparagraph (A).
(H) Cost of audits
Each eligible lender, holder, or servicer shall pay for all the costs associated with the audits required under this section.
(I) Additional revocation authority
Notwithstanding any other provision of this section, a designation under subparagraph (A) may be revoked at any time by the Secretary if the Secretary determines that the eligible lender, holder, or servicer has failed to maintain an overall level of compliance consistent with the audit submitted by the eligible lender, holder, or servicer under this paragraph or if the Secretary asserts that the lender, holder, or servicer may have engaged in fraud in securing designation under subparagraph (A) or is failing to service loans in accordance with program requirements.
(J) Noncompliance
A lender, holder, or servicer designated under subparagraph (A) that fails to service loans or otherwise comply with applicable program regulations shall be considered in violation of the Federal False Claims Act.
(b) Subrogation
Upon payment by the Secretary of the amount of the loss pursuant to subsection (a), the United States shall be subrogated for all of the rights of the holder of the obligation upon the insured loan and shall be entitled to an assignment of the note or other evidence of the insured loan by the insurance beneficiary. If the net recovery made by the Secretary on a loan after deduction of the cost of that recovery (including reasonable administrative costs) exceeds the amount of the loss, the excess shall be paid over to the insured. The Secretary may sell without recourse to eligible lenders (or other entities that the Secretary determines are capable of dealing in such loans) notes or other evidence of loans received through assignment under the first sentence.
(c) Forbearance
Nothing in this section or in this subpart shall be construed to preclude any forbearance for the benefit of the borrower which may be agreed upon by the parties to the insured loan and approved by the Secretary or to preclude forbearance by the Secretary in the enforcement of the insured obligation after payment on that insurance.
(d) Reasonable care and diligence regarding loans
Nothing in this section or in this subpart shall be construed to excuse the eligible lender or holder of a federally insured loan from exercising reasonable care and diligence in the making of loans under the provisions of this subpart and from exercising a substantial effort in the collection of loans under the provisions of this subpart. If the Secretary, after reasonable notice and opportunity for hearing to an eligible lender, finds that the lender has failed to exercise such care and diligence, to exercise such substantial efforts, to make the reports and statements required under
(e) Definitions
For purposes of this section:
(1) The term "insurance beneficiary" means the insured or its authorized assignee in accordance with
(2) The term "amount of the loss" means, with respect to a loan, unpaid balance of the principal amount and interest on such loan, less the amount of any judgment collected pursuant to default proceedings commenced by the eligible lender or holder involved.
(3) The term "default" includes only such defaults as have existed for 120 days.
(4) The term "servicer" means any agency acting on behalf of the insurance beneficiary.
(f) Reductions in Federal reimbursements or payments for defaulting borrowers
The Secretary shall, after notice and opportunity for a hearing, cause to be reduced Federal reimbursements or payments for health services under any Federal law to borrowers who are practicing their professions and have defaulted on their loans insured under this subpart in amounts up to the remaining balance of such loans. Procedures for reduction of payments under the medicare program are provided under
(g) Conditions for discharge of debt in bankruptcy
Notwithstanding any other provision of Federal or State law, a debt that is a loan insured under the authority of this subpart may be released by a discharge in bankruptcy under any chapter of title 11, only if such discharge is granted—
(1) after the expiration of the seven-year period beginning on the first date when repayment of such loan is required, exclusive of any period after such date in which the obligation to pay installments on the loan is suspended;
(2) upon a finding by the Bankruptcy Court that the nondischarge of such debt would be unconscionable; and
(3) upon the condition that the Secretary shall not have waived the Secretary's rights to apply subsection (f) to the borrower and the discharged debt.
(h) Requirement regarding actions for default
(1) In general
With respect to the default by a borrower on any loan covered by Federal loan insurance under this subpart, the Secretary shall, under subsection (a), require an eligible lender or holder to commence and prosecute an action for such default unless—
(A) in the determination of the Secretary—
(i) the eligible lender or holder has made reasonable efforts to serve process on the borrower involved and has been unsuccessful with respect to such efforts, or
(ii) prosecution of such an action would be fruitless because of the financial or other circumstances of the borrower;
(B) for such loans made before November 4, 1988, the loan involved was made in an amount of less than $5,000; or
(C) for such loans made after November 4, 1988, the loan involved was made in an amount of less than $2,500.
(2) Relationship to claim for payment
With respect to an eligible lender or holder that has commenced an action pursuant to subsection (a), the Secretary shall make the payment required in such subsection, or deny the claim for such payment, not later than 60 days after the date on which the Secretary determines that the lender or holder has made reasonable efforts to secure a judgment and collect on the judgment entered into pursuant to this subsection.
(3) State court judgments
With respect to any State court judgment that is obtained by a lender or holder against a borrower for default on a loan insured under this subpart and that is subrogated to the United States under subsection (b), any United States attorney may register such judgment with the Federal courts for enforcement.
(i) Inapplicability of Federal and State statute of limitations on actions for loan collection
Notwithstanding any other provision of Federal or State law, there shall be no limitation on the period within which suit may be filed, a judgment may be enforced, or an offset, garnishment, or other action may be initiated or taken by the Secretary, the Attorney General, or other administrative head of another Federal agency, as the case may be, for the repayment of the amount due from a borrower on a loan made under this subpart that has been assigned to the Secretary under subsection (b).
(j) School collection assistance
An institution or postgraduate training program attended by a borrower may assist in the collection of any loan of that borrower made under this subpart which becomes delinquent, including providing information concerning the borrower to the Secretary and to past and present lenders and holders of the borrower's loans, contacting the borrower in order to encourage repayment, and withholding services in accordance with regulations issued by the Secretary under
(July 1, 1944, ch. 373, title VII, §707, as added
Editorial Notes
References in Text
The Federal False Claims Act, referred to in subsec. (a)(2)(J), probably means the False Claims Act which was the popular name for sections 231, 232, 233, and 235 of former Title 31, Money and Finance. Sections 231, 232, 233, and 235 were repealed by
Prior Provisions
A prior section 292f, act July 1, 1944, ch. 373, title VII, §706, as added Oct. 12, 1976,
Another prior section 292f, act July 1, 1944, ch. 373, title VII, §707, as added July 30, 1956, ch. 779, §2,
A prior section 707 of act July 1, 1944, was classified to
Amendments
1998—Subsec. (a).
Subsec. (e)(4).
Subsec. (g).
1993—Subsec. (g)(1).
Subsec. (j).
Statutory Notes and Related Subsidiaries
Effective Date of 1998 Amendment
"(1) on or after the date of enactment of this Act [Nov. 13, 1998]; or
"(2) prior to such date of enactment in which a discharge has not been granted."
§292g. Risk-based premiums
(a) Authority
With respect to a loan made under this subpart on or after January 1, 1993, the Secretary, in accordance with subsection (b), shall assess a risk-based premium on an eligible borrower and, if required under this section, an eligible institution that is based on the default rate of the eligible institution involved (as defined in
(b) Assessment of premium
Except as provided in subsection (d)(2), the risk-based premium to be assessed under subsection (a) shall be as follows:
(1) Low-risk rate
With respect to an eligible borrower seeking to obtain a loan for attendance at an eligible institution that has a default rate of not to exceed five percent, such borrower shall be assessed a risk-based premium in an amount equal to 6 percent of the principal amount of the loan.
(2) Medium-risk rate
(A) In general
With respect to an eligible borrower seeking to obtain a loan for attendance at an eligible institution that has a default rate of in excess of five percent but not to exceed 10 percent—
(i) such borrower shall be assessed a risk-based premium in an amount equal to 8 percent of the principal amount of the loan; and
(ii) such institution shall be assessed a risk-based premium in an amount equal to 5 percent of the principal amount of the loan.
(B) Default management plan
An institution of the type described in subparagraph (A) shall prepare and submit to the Secretary for approval, an annual default management plan, that shall specify the detailed short-term and long-term procedures that such institution will have in place to minimize defaults on loans to borrowers under this subpart. Under such plan the institution shall, among other measures, provide an exit interview to all borrowers that includes information concerning repayment schedules, loan deferments, forbearance, and the consequences of default.
(3) High-risk rate
(A) In general
With respect to an eligible borrower seeking to obtain a loan for attendance at an eligible institution that has a default rate of in excess of 10 percent but not to exceed 20 percent—
(i) such borrower shall be assessed a risk-based premium in an amount equal to 8 percent of the principal amount of the loan; and
(ii) such institution shall be assessed a risk-based premium in an amount equal to 10 percent of the principal amount of the loan.
(B) Default management plan
An institution of the type described in subparagraph (A) shall prepare and submit to the Secretary for approval a plan that meets the requirements of paragraph (2)(B).
(4) Ineligibility
An individual shall not be eligible to obtain a loan under this subpart for attendance at an institution that has a default rate in excess of 20 percent.
(c) Reduction of risk-based premium
Lenders shall reduce by 50 percent the risk-based premium to eligible borrowers if a credit worthy parent or other responsible party co-signs the loan note.
(d) Administrative waivers
(1) Hearing
The Secretary shall afford an institution not less than one hearing, and may consider mitigating circumstances, prior to making such institution ineligible for participation in the program under this subpart.
(2) Exceptions
In carrying out this section with respect to an institution, the Secretary may grant an institution a waiver of requirements of paragraphs (2) through (4) of subsection (b) if the Secretary determines that the default rate for such institution is not an accurate indicator because the volume of the loans under this subpart made by such institution has been insufficient.
(3) Transition for certain institutions
During the 3-year period beginning on October 13, 1992—
(A) subsection (b)(4) shall not apply with respect to any eligible institution that is a Historically Black College or University; and
(B) any such institution that has a default rate in excess of 20 percent, and any eligible borrower seeking a loan for attendance at the institution, shall be subject to subsection (b)(3) to the same extent and in the same manner as eligible institutions and borrowers described in such subsection.
(e) Payoff to reduce risk category
An institution may pay off the outstanding principal and interest owed by the borrowers of such institution who have defaulted on loans made under this subpart in order to reduce the risk category of the institution.
(July 1, 1944, ch. 373, title VII, §708, as added
Editorial Notes
Prior Provisions
A prior section 292g, act July 1, 1944, ch. 373, title VII, §707, as added Oct. 12, 1976,
Another prior section 292g, act July 1, 1944, ch. 373, title VII, §708, as added July 30, 1956, ch. 779, §2,
A prior section 708 of act July 1, 1944, was classified to
Statutory Notes and Related Subsidiaries
Effective Date
Section effective Jan. 1, 1993, and until such date, former
§292h. Office for Health Education Assistance Loan Default Reduction
(a) Establishment
The Secretary shall establish, within the Division of Student Assistance of the Bureau of Health Professions, an office to be known as the Office for Health Education Assistance Loan Default Reduction (in this section referred to as the "Office").
(b) Purpose and functions
It shall be the purpose of the Office to achieve a reduction in the number and amounts of defaults on loans guaranteed under this subpart. In carrying out such purpose the Office shall—
(1) conduct analytical and evaluative studies concerning loans and loan defaults;
(2) carry out activities designed to reduce loan defaults;
(3) respond to special circumstances that may exist in the financial lending environment that may lead to loan defaults;
(4) coordinate with other Federal entities that are involved with student loan programs, including—
(A) with respect to the Department of Education, in the development of a single student loan application form, a single student loan deferment form, a single disability form, and a central student loan database; and
(B) with respect to the Department of Justice, in the recovery of payments from health professionals who have defaulted on loans guaranteed under this subpart; and
(5) provide technical assistance to borrowers, lenders, holders, and institutions concerning deferments and collection activities.
(c) Additional duties
In conjunction with the report submitted under subsection (b), the Office shall—
(1) compile, and publish in the Federal Register, a list of the borrowers who are in default under this subpart; and
(2) send the report and notices of default with respect to these borrowers to relevant Federal agencies and to schools, school associations, professional and specialty associations, State licensing boards, hospitals with which such borrowers may be associated, and any other relevant organizations.
(d) Allocation of funds for Office
In the case of amounts reserved under
(July 1, 1944, ch. 373, title VII, §709, as added
Editorial Notes
Prior Provisions
A prior section 292h, act July 1, 1944, ch. 373, title VII, §708, as added Oct. 12, 1976,
Another prior section 292h, act July 1, 1944, ch. 373, title VII, §709, as added July 30, 1956, ch. 779, §2,
A prior section 709 of act July 1, 1944, was classified to
Amendments
1998—Subsec. (b).
"(A) the default rates for each—
"(i) institution described in
"(ii) lender participating in the loan program under this subpart; and
"(iii) loan holder under this subpart;
"(B) the total amounts recovered pursuant to
"(C) a plan for improving the extent of such recoveries during the current fiscal year."
§292i. Insurance account
(a) In general
(1) Establishment
There is hereby established a student loan insurance account (in this section referred to as the "Account") which shall be available without fiscal year limitation to the Secretary for making payments in connection with the collection and default of loans insured under this subpart by the Secretary.
(2) Funding
(A) Except as provided in subparagraph (B), all amounts received by the Secretary as premium charges for insurance and as receipts, earnings, or proceeds derived from any claim or other assets acquired by the Secretary in connection with his operations under this subpart, and any other moneys, property, or assets derived by the Secretary from the operations of the Secretary in connection with this section, shall be deposited in the Account.
(B) With respect to amounts described in subparagraph (A) that are received by the Secretary for fiscal year 1993 and subsequent fiscal years, the Secretary may, before depositing such amounts in the Account, reserve from the amounts each such fiscal year not more than $1,000,000 for obligation under
(3) Expenditures
All payments in connection with the default of loans insured by the Secretary under this subpart shall be paid from the Account.
(b) Contingent authority for issuance of notes or other obligations
If at any time the moneys in the Account are insufficient to make payments in connection with the collection or default of any loan insured by the Secretary under this subpart, the Secretary of the Treasury may lend the Account such amounts as may be necessary to make the payments involved, subject to the Federal Credit Reform Act of 1990 [
(July 1, 1944, ch. 373, title VII, §710, as added
Editorial Notes
References in Text
The Federal Credit Reform Act of 1990, referred to in subsec. (b), is title V of
Prior Provisions
A prior section 292i, act July 1, 1944, ch. 373, title VII, §709, as added Oct. 12, 1976,
Another prior section 292i, act July 1, 1944, ch. 373, title VII, §710, as added July 30, 1956, ch. 779, §2,
A prior section 710 of act July 1, 1944, was classified to
Another prior section 710 of act July 1, 1944, was renumbered section 709 by
Amendments
1998—Subsec. (a)(2)(B).
§292j. Powers and responsibilities of Secretary
(a) In general
In the performance of, and with respect to, the functions, powers, and duties vested in the Secretary by this subpart, the Secretary is authorized as follows:
(1) To prescribe such regulations as may be necessary to carry out the purposes of this subpart.
(2) To sue and be sued in any district court of the United States. Such district courts shall have jurisdiction of civil actions arising under this subpart without regard to the amount in controversy, and any action instituted under this subsection by or against the Secretary shall survive notwithstanding any change in the person occupying the office of Secretary or any vacancy in that office. No attachment, injunction, garnishment, or other similar process, mesne or final, shall be issued against the Secretary or property under the control of the Secretary. Nothing herein shall be constructed to except litigation arising out of activities under this subpart from the application of
(3) To include in any contract for Federal loan insurance such terms, conditions, and covenants relating to repayment of principal and payments of interest, relating to his obligations and rights and to those of eligible lenders, and borrowers in case of default, and relating to such other matters as the Secretary determines to be necessary to assure that the purposes of this subpart will be achieved. Any term, condition, and covenant made pursuant to this paragraph or any other provisions of this subpart may be modified by the Secretary if the Secretary determines that modification is necessary to protect the financial interest of the United States.
(4) Subject to the specific limitations in the subpart, to consent to the modification of any note or other instrument evidencing a loan which has been insured by him under this subpart (including modifications with respect to the rate of interest, time of payment of any installment of principal and interest or any portion thereof, or any other provision).
(5) To enforce, pay, compromise, waive, or release any right, title, claim, lien, or demand, however acquired, including any equity or any right or 1 redemption.
(b) Annual budget; accounts
The Secretary shall, with respect to the financial operations arising by reason of this subpart—
(1) prepare annually and submit a budget program as provided for wholly owned Government corporations by
(2) maintain with respect to insurance under this subpart an integral set of accounts.
(July 1, 1944, ch. 373, title VII, §711, as added
Editorial Notes
Codification
In subsec. (b)(1), "
Prior Provisions
A prior section 292j, act July 1, 1944, ch. 373, title VII, §709, formerly §710, as added Oct. 12, 1976,
Another prior section 292j, act July 1, 1944, ch. 373, title VII, §711, as added Sept. 24, 1963,
1 So in original. Probably should be "of".
§292k. Participation by Federal credit unions in Federal, State, and private student loan insurance programs
Notwithstanding any other provision of law, Federal credit unions shall, pursuant to regulations of the Administrator of the National Credit Union Administration, have power to make insured loans to eligible students in accordance with the provisions of this subpart relating to Federal insured loans.
(July 1, 1944, ch. 373, title VII, §712, as added
Editorial Notes
Prior Provisions
A prior section 292k, act July 1, 1944, ch. 373, title VII, §710, formerly §711, as added Oct. 12, 1976,
Statutory Notes and Related Subsidiaries
Transfer of Functions
Functions vested in Administrator of National Credit Union Administration transferred and vested in National Credit Union Administration Board pursuant to
§292l. Determination of eligible students
For purposes of determining eligible students under this part, in the case of a public school in a State that offers an accelerated, integrated program of study combining undergraduate premedical education and medical education leading to advanced entry, by contractual agreement, into an accredited four-year school of medicine which provides the remaining training leading to a degree of doctor of medicine, whenever in this part a provision refers to a student at a school of medicine, such reference shall include only a student enrolled in any of the last four years of such accelerated, integrated program of study.
(July 1, 1944, ch. 373, title VII, §713, as added
§292m. Repayment by Secretary of loans of deceased or disabled borrowers
If a borrower who has received a loan dies or becomes permanently and totally disabled (as determined in accordance with regulations of the Secretary), the Secretary shall discharge the borrower's liability on the loan by repaying the amount owed on the loan from the account established under
(July 1, 1944, ch. 373, title VII, §714, as added
§292n. Additional requirements for institutions and lenders
(a) In general
Notwithstanding any other provision of this subpart, the Secretary is authorized to prescribe such regulations as may be necessary to provide for—
(1) a fiscal audit of an eligible institution with regard to any funds obtained from a borrower who has received a loan insured under this subpart;
(2) the establishment of reasonable standards of financial responsibility and appropriate institutional capability for the administration by an eligible institution of a program of student financial aid with respect to funds obtained from a student who has received a loan insured under this subpart;
(3) the limitation, suspension, or termination of the eligibility under this subpart of any otherwise eligible institution, whenever the Secretary has determined, after notice and affording an opportunity for hearing, that such institution has violated or failed to carry out any regulation prescribed under this subpart;
(4) the collection of information from the borrower, lender, or eligible institution to assure compliance with the provisions of
(5) the assessing of tuition or fees to borrowers in amounts that are the same or less than the amount of tuition and fees assessed to nonborrowers;
(6) the submission, by the institution or the lender to the Office of Health Education Assistance Loan Default Reduction, of information concerning each loan made under this subpart, including the date when each such loan was originated, the date when each such loan is sold, the identity of the loan holder and information concerning a change in the borrower's status;
(7) the withholding of services, including academic transcripts, financial aid transcripts, and alumni services, by an institution from a borrower upon the default of such borrower of a loan under this subpart, except in case of a borrower who has filed for bankruptcy; and
(8) the offering, by the lender to the borrower, of a variety of repayment options, including fixed-rate, graduated repayment with negative amortization permitted, and income dependent payments for a limited period followed by level monthly payments.
(b) Recording by institution of information on students
The Secretary shall require an eligible institution to record, and make available to the lender and to the Secretary upon request, the name, address, postgraduate destination, and other reasonable identifying information for each student of such institution who has a loan insured under this subpart.
(c) Workshop for student borrowers
Each participating eligible institution must have, at the beginning of each academic year, a workshop concerning the provisions of this subpart that all student borrowers shall be required to attend.
(July 1, 1944, ch. 373, title VII, §715, as added
§292o. Definitions
For purposes of this subpart:
(1) The term "eligible institution" means, with respect to a fiscal year, a school of medicine, osteopathic medicine, dentistry, veterinary medicine, optometry, podiatric medicine, pharmacy, public health, allied health, or chiropractic, or a graduate program in health administration or behavioral and mental health practice, including clinical psychology.
(2) The term "eligible lender" means an eligible institution that became a lender under this subpart prior to September 15, 1992, an agency or instrumentality of a State, a financial or credit institution (including an insurance company) which is subject to examination and supervision by an agency of the United States or of any State, a pension fund approved by the Secretary for this purpose, or a nonprofit private entity designated by the State, regulated by the State, and approved by the Secretary.
(3) The term "line of credit" means an arrangement or agreement between the lender and the borrower whereby a loan is paid out by the lender to the borrower in annual installments, or whereby the lender agrees to make, in addition to the initial loan, additional loans in subsequent years.
(4) The term "school of allied health" means a program in a school of allied health (as defined in
(5)(A) The term "default rate", in the case of an eligible entity, means the percentage constituted by the ratio of—
(i) the principal amount of loans insured under this subpart—
(I) that are made with respect to the entity and that enter repayment status after April 7, 1987; and
(II) for which amounts have been paid under
(ii) the total principal amount of loans insured under this subpart that are made with respect to the entity and that enter repayment status after April 7, 1987.
(B) For purposes of subparagraph (A), a loan insured under this subpart shall be considered to have entered repayment status if the applicable period described in subparagraph (B) of
(C) For purposes of subparagraph (A), the term "eligible entity" means an eligible institution, an eligible lender, or a holder, as the case may be.
(D) For purposes of subparagraph (A), a loan is made with respect to an eligible entity if—
(i) in the case of an eligible institution, the loan was made to students of the institution;
(ii) in the case of an eligible lender, the loan was made by the lender; and
(iii) in the case of a holder, the loan was purchased by the holder.
(6) The term "Secretary" means the Secretary of Education.
(July 1, 1944, ch. 373, title VII, §719, as added
Editorial Notes
Amendments
2014—Par. (6).
1998—Par. (1).
Statutory Notes and Related Subsidiaries
Effective Date of 2014 Amendment
§292p. Authorization of appropriations
(a) In general
For fiscal year 1993 and subsequent fiscal years, there are authorized to be appropriated such sums as may be necessary for the adequacy of the student loan insurance account under this subpart and for the purpose of administering this subpart.
(b) Availability of sums
Sums appropriated under subsection (a) shall remain available until expended.
(July 1, 1944, ch. 373, title VII, §720, as added
Editorial Notes
Prior Provisions
A prior section 720 of act July 1, 1944, was classified to
subpart ii—federally-supported student loan funds
§292q. Agreements for operation of school loan funds
(a) Fund agreements
The Secretary is authorized to enter into an agreement for the establishment and operation of a student loan fund in accordance with this subpart with any public or other nonprofit school of medicine, osteopathic medicine, dentistry, pharmacy, podiatric medicine, optometry, or veterinary medicine.
(b) Requirements
Each agreement entered into under this section shall—
(1) provide for establishment of a student loan fund by the school;
(2) provide for deposit in the fund of—
(A) the Federal capital contributions to the fund;
(B) an amount equal to not less than one-ninth of such Federal capital contributions, contributed by such institution;
(C) collections of principal and interest on loans made from the fund;
(D) collections pursuant to
(E) any other earnings of the fund;
(3) provide that the fund shall be used only for loans to students of the school in accordance with the agreement and for costs of collection of such loans and interest thereon;
(4) provide that loans may be made from such funds only to students pursuing a full-time course of study at the school leading to a degree of doctor of medicine, doctor of dentistry or an equivalent degree, doctor of osteopathy, bachelor of science in pharmacy or an equivalent degree, doctor of pharmacy or an equivalent degree, doctor of podiatric medicine or an equivalent degree, doctor of optometry or an equivalent degree, or doctor of veterinary medicine or an equivalent degree;
(5) provide that the school shall advise, in writing, each applicant for a loan from the student loan fund of the provisions of
(6) contain such other provisions as are necessary to protect the financial interests of the United States.
(c) Failure of school to collect loans
(1) In general
Any standard established by the Secretary by regulation for the collection by schools of medicine, osteopathic medicine, dentistry, pharmacy, podiatric medicine, optometry, or veterinary medicine of loans made pursuant to loan agreements under this subpart shall provide that the failure of any such school to collect such loans shall be measured in accordance with this subsection. This subsection may not be construed to require such schools to reimburse the student loan fund under this subpart for loans that became uncollectible prior to August 1985 or to penalize such schools with respect to such loans.
(2) Extent of failure
The measurement of a school's failure to collect loans made under this subpart shall be the ratio (stated as a percentage) that the defaulted principal amount outstanding of such school bears to the matured loans of such school.
(3) Definitions
For purposes of this subsection:
(A) The term "default" means the failure of a borrower of a loan made under this subpart to—
(i) make an installment payment when due; or
(ii) comply with any other term of the promissory note for such loan,
except that a loan made under this subpart shall not be considered to be in default if the loan is discharged in bankruptcy or if the school reasonably concludes from written contracts with the borrower that the borrower intends to repay the loan.
(B) The term "defaulted principal amount outstanding" means the total amount borrowed from the loan fund of a school that has reached the repayment stage (minus any principal amount repaid or canceled) on loans—
(i) repayable monthly and in default for at least 120 days; and
(ii) repayable less frequently than monthly and in default for at least 180 days;
(C) The term "grace period" means the period of one year beginning on the date on which the borrower ceases to pursue a full-time course of study at a school of medicine, osteopathic medicine, dentistry, pharmacy, podiatric medicine, optometry, or veterinary medicine; and
(D) The term "matured loans" means the total principal amount of all loans made by a school under this subpart minus the total principal amount of loans made by such school to students who are—
(i) enrolled in a full-time course of study at such school; or
(ii) in their grace period.
(July 1, 1944, ch. 373, title VII, §721, as added
Editorial Notes
Prior Provisions
A prior section 721 of act July 1, 1944, was classified to
§292r. Loan provisions
(a) Amount of loan
(1) In general
Loans from a student loan fund (established under an agreement with a school under
(2) Third and fourth years of medical school
For purposes of paragraph (1), the amount of the loan may, in the case of the third or fourth year of a student at a school of medicine or osteopathic medicine, be increased to the extent necessary to pay the balances of loans that, from sources other than the student loan fund under
(b) Terms and conditions
Subject to
(c) Repayment; exclusions from repayment period
Such loans shall be repayable in equal or graduated periodic installments (with the right of the borrower to accelerate repayment) over the period of not less than 10 years nor more than 25 years, at the discretion of the institution, which begins one year after the student ceases to pursue a full-time course of study at a school of medicine, osteopathic medicine, dentistry, pharmacy, podiatry, optometry, or veterinary medicine, excluding from such period—
(1) all periods—
(A) not in excess of three years of active duty performed by the borrower as a member of a uniformed service;
(B) not in excess of three years during which the borrower serves as a volunteer under the Peace Corps Act [
(C) during which the borrower participates in advanced professional training, including internships and residencies; and
(D) during which the borrower is pursuing a full-time course of study at such a school; and
(2) a period—
(A) not in excess of two years during which a borrower who is a full-time student in such a school leaves the school, with the intent to return to such school as a full-time student, in order to engage in a full-time educational activity which is directly related to the health profession for which the borrower is preparing, as determined by the Secretary; or
(B) not in excess of two years during which a borrower who is a graduate of such a school is a participant in a fellowship training program or a full-time educational activity which—
(i) is directly related to the health profession for which such borrower prepared at such school, as determined by the Secretary; and
(ii) may be engaged in by the borrower during such a two-year period which begins within twelve months after the completion of the borrower's participation in advanced professional training described in paragraph (1)(C) or prior to the completion of such borrower's participation in such training.
(d) Cancellation of liability
The liability to repay the unpaid balance of such a loan and accrued interest thereon shall be canceled upon the death of the borrower, or if the Secretary determines that he has become permanently, and totally disabled.
(e) Rate of interest
Such loans shall bear interest, on the unpaid balance of the loan, computed only for periods for which the loan is repayable, at the rate of 5 percent per year.
(f) Security or endorsement
Loans shall be made under this subpart without security or endorsement, except that if the borrower is a minor and the note or other evidence of obligation executed by him would not, under the applicable law, create a binding obligation, either security or endorsement may be required.
(g) Transferring and assigning loans
No note or other evidence of a loan made under this subpart may be transferred or assigned by the school making the loan except that, if the borrowers transfer to another school participating in the program under this subpart, such note or other evidence of a loan may be transferred to such other school.
(h) Charge with respect to insurance for certain cancellations
Subject to regulations of the Secretary, a school may assess a charge with respect to loans made this subpart 1 to cover the costs of insuring against cancellation of liability under subsection (d).
(i) Charge with respect to late payments
Subject to regulations of the Secretary, and in accordance with this section, a school shall assess a charge with respect to a loan made under this subpart for failure of the borrower to pay all or any part of an installment when it is due and, in the case of a borrower who is entitled to deferment of the loan under subsection (c), for any failure to file timely and satisfactory evidence of such entitlement. No such charge may be made if the payment of such installment or the filing of such evidence is made within 60 days after the date on which such installment or filing is due. The amount of any such charge may not exceed an amount equal to 6 percent of the amount of such installment. The school may elect to add the amount of any such charge to the principal amount of the loan as of the first day after the day on which such installment or evidence was due, or to make the amount of the charge payable to the school not later than the due date of the next installment after receipt by the borrower of notice of the assessment of the charge.
(j) Authority of schools regarding rate of payment
A school may provide, in accordance with regulations of the Secretary, that during the repayment period of a loan from a loan fund established pursuant to an agreement under this subpart payments of principal and interest by the borrower with respect to all the outstanding loans made to him from loan funds so established shall be at a rate equal to not less than $40 per month.
(k) Authority regarding repayments by Secretary
Upon application by a person who received, and is under an obligation to repay, any loan made to such person as a health professions student to enable him to study medicine, osteopathy, dentistry, veterinary medicine, optometry, pharmacy, or podiatry, the Secretary may undertake to repay (without liability to the applicant) all or any part of such loan, and any interest or portion thereof outstanding thereon, upon his determination, pursuant to regulations establishing criteria therefor, that the applicant—
(1) failed to complete such studies leading to his first professional degree;
(2) is in exceptionally needy circumstances;
(3) is from a low-income or disadvantaged family as those terms may be defined by such regulations; and
(4) has not resumed, or cannot reasonably be expected to resume, the study of medicine, osteopathy, dentistry, veterinary medicine, optometry, pharmacy, or podiatric medicine, within two years following the date upon which he terminated such studies.
(l) Collection efforts by Secretary
The Secretary is authorized to attempt to collect any loan which was made under this subpart, which is in default, and which was referred to the Secretary by a school with which the Secretary has an agreement under this subpart, on behalf of that school under such terms and conditions as the Secretary may prescribe (including reimbursement from the school's student loan fund for expenses the Secretary may reasonably incur in attempting collection), but only if the school has complied with such requirements as the Secretary may specify by regulation with respect to the collection of loans under this subpart. A loan so referred shall be treated as a debt subject to
(m) Elimination of statute of limitation for loan collections
(1) Purpose
It is the purpose of this subsection to ensure that obligations to repay loans under this section are enforced without regard to any Federal or State statutory, regulatory, or administrative limitation on the period within which debts may be enforced.
(2) Prohibition
Notwithstanding any other provision of Federal or State law, no limitation shall terminate the period within which suit may be filed, a judgment may be enforced, or an offset, garnishment, or other action may be initiated or taken by a school that has an agreement with the Secretary pursuant to
(July 1, 1944, ch. 373, title VII, §722, as added
Editorial Notes
References in Text
The Peace Corps Act, referred to in subsec. (c)(1)(B), is
Prior Provisions
A prior section 722 of act July 1, 1944, was classified to
Amendments
2022—Subsec. (b).
"(1) who is in need"
and struck out par. (2) which read as follows: "who, if required under
1998—Subsec. (a)(1).
"(A) the cost of tuition for such year at such school, and
"(B) $2,500."
Subsec. (a)(2).
Subsec. (c).
Subsec. (j).
Subsec. (m).
1993—Subsec. (a).
"(1) the cost of tuition for such year at such school, and
"(2) $2,500."
Subsec. (b)(2), (3).
Statutory Notes and Related Subsidiaries
Effective Date of 1998 Amendment
1 So in original. Probably should be "under this subpart".
§292s. Medical schools and primary health care
(a) Requirements for students
(1) In general
Subject to the provisions of this subsection, in the case of student loan funds established under
(A) to enter and complete a residency training program in primary health care not later than 4 years after the date on which the student graduates from such school; and
(B) to practice in such care for 10 years (including residency training in primary health care) or through the date on which the loan is repaid in full, whichever occurs first.
(2) Inapplicability to certain students
(A) The requirement established in paragraph (1) regarding the student loan fund of a school does not apply to a student if—
(i) the first loan to the student from such fund is made before July 1, 1993; or
(ii) the loan is made from—
(I) a Federal capital contribution under
(II) a school contribution made under
(B) A Federal capital contribution under
(3) Noncompliance by student
Each agreement entered into with a student pursuant to paragraph (1) shall provide that, if the student fails to comply with such agreement, the loan involved will begin to accrue interest at a rate of 2 percent per year greater than the rate at which the student would pay if compliant in such year.
(4) Waivers
(A) With respect to the obligation of an individual under an agreement made under paragraph (1) as a student, the Secretary shall provide for the partial or total waiver or suspension of the obligation whenever compliance by the individual is impossible, or would involve extreme hardship to the individual, and if enforcement of the obligation with respect to the individual would be unconscionable.
(B) For purposes of subparagraph (A), the obligation of an individual shall be waived if—
(i) the status of the individual as a student of the school involved is terminated before graduation from the school, whether voluntarily or involuntarily; and
(ii) the individual does not, after such termination, resume attendance at the school or begin attendance at any other school of medicine or osteopathic medicine.
(C) If an individual resumes or begins attendance for purposes of subparagraph (B), the obligation of the individual under the agreement under paragraph (1) shall be considered to have been suspended for the period in which the individual was not in attendance.
(D) This paragraph may not be construed as authorizing the waiver or suspension of the obligation of a student to repay, in accordance with
(b) Requirements for schools
(1) In general
Subject to the provisions of this subsection, in the case of student loan funds established under
(2) Description of conditions
With respect to graduates described in paragraph (1) (in this paragraph referred to as "designated graduates"), the conditions referred to in such paragraph for a school for a 1-year period are as follows:
(A) Not less than 50 percent of designated graduates of the school meet the criterion of either being in a residency training program in primary health care, or being engaged in a practice in such care (having completed such a program).
(B) Not less than 25 percent of the designated graduates of the school meet such criterion, and such percentage is not less than 5 percentage points above the percentage of such graduates meeting such criterion for the preceding 1-year period.
(C) In the case of schools of medicine or osteopathic medicine with student loans funds under
(3) Determinations by Secretary
Not later than 90 days after the close of each 1-year period described in paragraph (1), the Secretary shall make a determination of whether the school involved has for such period complied with such paragraph and shall in writing inform the school of the determination. Such determination shall be made only after consideration of the report submitted to the Secretary by the school under paragraph (6).
(4) Noncompliance by school
(A)(i) Subject to subparagraph (C), each agreement under
(I) will pay to the Secretary the amount applicable under subparagraph (B) for the period; and
(II) will pay such amount not later than 90 days after the school is informed under paragraph (3) of the determination of the Secretary regarding such period.
(ii) Any amount that a school is required to pay under clause (i) may be paid from the student loan fund of the school under
(B) For purposes of subparagraph (A), the amount applicable for a school, subject to subparagraph (C), is—
(i) for the 1-year period ending June 30, 1997, an amount equal to 10 percent of the income received during such period by the student loan fund of the school under
(ii) for the 1-year period ending June 30, 1998, an amount equal to 20 percent of the income received during such period by the student loan fund; and
(iii) for any subsequent 1-year period under paragraph (1), an amount equal to 30 percent of the income received during such period by the student loan fund.
(C) In determining the amount of income that a student loan fund has received for purposes of subparagraph (B), the Secretary shall exclude any income derived from exempt contributions. Payments made to the Secretary under subparagraph (A) may not be made with such contributions or with income derived from such contributions.
(5) Expenditure of payments
(A) Amounts paid to the Secretary under paragraph (4) shall be expended to make Federal capital contributions to student loan funds under
(B) A Federal capital contribution under
(6) Reports by schools
Each agreement under
(c) Definitions
For purposes of this section:
(1) The term "exempt contributions" means exempt Federal capital contributions and exempt school contributions.
(2) The term "exempt Federal capital contribution" means a Federal capital contribution described in subclause (I) of subsection (a)(2)(A)(ii).
(3) The term "exempt school contribution" means a school contribution described in subclause (II) of subsection (a)(2)(A)(ii).
(4) The term "income", with respect to a student fund under
(5) The term "primary health care" means family medicine, general internal medicine, general pediatrics, preventive medicine, or osteopathic general practice.
(d) Sense of Congress
It is the sense of Congress that funds repaid under the loan program under this section should not be transferred to the Treasury of the United States or otherwise used for any other purpose other than to carry out this section.
(July 1, 1944, ch. 373, title VII, §723, as added
Editorial Notes
References in Text
Prior Provisions
A prior section 723 of act July 1, 1944, was classified to
Amendments
2010—Subsec. (a)(1)(B).
Subsec. (a)(3).
Subsec. (d).
1998—Subsec. (a)(3).
"(A) the balance due on the loan involved will be immediately recomputed from the date of issuance at an interest rate of 12 percent per year, compounded annually; and
"(B) the recomputed balance will be paid not later than the expiration of the 3-year period beginning on the date on which the student fails to comply with the agreement."
Subsec. (b)(1).
Subsecs. (c), (d).
1993—Subsec. (a)(4).
Subsec. (b)(1).
Subsec. (b)(2)(B).
Subsec. (b)(4)(B).
Statutory Notes and Related Subsidiaries
Student Loan Guidelines
1 See References in Text note below.
2 So in original. The semicolon probably should be a comma.
§292t. Individuals from disadvantaged backgrounds
(a) Fund agreements regarding certain amounts
With respect to amounts appropriated under subsection (f), each agreement entered into under
(1) any Federal capital contribution made to the student loan fund of the school from such amounts, together with the school contribution appropriate under subsection (b)(2)(B) of such section to the amount of the Federal capital contribution, will be utilized only for the purpose of—
(A) making loans to individuals from disadvantaged backgrounds; and
(B) the costs of the collection of the loans and interest on the loans; and
(2) collections of principal and interest on loans made pursuant to paragraph (1), and any other earnings of the student loan fund attributable to amounts that are in the fund pursuant to such paragraph, will be utilized only for the purpose described in such paragraph.
(b) Minimum qualifications for schools
The Secretary may not make a Federal capital contribution for purposes of subsection (a) for a fiscal year unless the health professions school involved—
(1) is carrying out a program for recruiting and retaining students from disadvantaged backgrounds, including racial and ethnic minorities; and
(2) is carrying out a program for recruiting and retaining minority faculty.
(c) Certain agreements regarding education of students; date certain for compliance
The Secretary may not make a Federal capital contribution for purposes of subsection (a) for a fiscal year unless the health professions school involved agrees—
(1) to ensure that adequate instruction regarding minority health issues is provided for in the curricula of the school;
(2) with respect to health clinics providing services to a significant number of individuals who are from disadvantaged backgrounds, including members of minority groups, to enter into arrangements with 1 or more such clinics for the purpose of providing students of the school with experience in providing clinical services to such individuals;
(3) with respect to public or nonprofit private secondary educational institutions and undergraduate institutions of higher education, to enter into arrangements with 1 or more such institutions for the purpose of carrying out programs regarding the educational preparation of disadvantaged students, including minority students, to enter the health professions and regarding the recruitment of such individuals into the health professions;
(4) to establish a mentor program for assisting disadvantaged students, including minority students, regarding the completion of the educational requirements for degrees from the school;
(5) to be carrying out each of the activities specified in any of paragraphs (1) through (4) by not later than 1 year after the date on which the first Federal capital contribution is made to the school for purposes of subsection (a); and
(6) to continue carrying out such activities, and the activities specified in paragraphs (1) and (2) of subsection (b), throughout the period during which the student loan fund established pursuant to
(d) Availability of other amounts
With respect to Federal capital contributions to student loan funds under agreements under
(e) "Disadvantaged" defined
For purposes of this section, the term "disadvantaged", with respect to an individual, shall be defined by the Secretary.
(f) Authorization of appropriations
(1) Repealed. Pub. L. 105–392, title I, §132(b), Nov. 13, 1998, 112 Stat. 3575
(2) Special consideration for certain schools
In making Federal capital contributions to student loan funds for purposes of subsection (a), the Secretary shall give special consideration to health professions schools that have enrollments of underrepresented minorities above the national average for health professions schools.
(July 1, 1944, ch. 373, title VII, §724, as added
Editorial Notes
Prior Provisions
A prior section 724 of act July 1, 1944, was classified to
Amendments
1998—Subsec. (f)(1).
Statutory Notes and Related Subsidiaries
Effective Date of 1998 Amendment
§292u. Administrative provisions
The Secretary may agree to modifications of agreements or loans made under this subpart, and may compromise, waive, or release any right, title, claim, or demand of the United States arising or acquired under this subpart.
(July 1, 1944, ch. 373, title VII, §725, as added
Editorial Notes
Prior Provisions
A prior section 725 of act July 1, 1944, was classified to
Statutory Notes and Related Subsidiaries
Health Professions Education Fund; Availability of Fund; Deposit in Fund of: Interest Payments or Repayments of Principal on Loans; Transfer of Excess Moneys to General Fund of the Treasury; Authorization of Appropriations for Payments Under Agreements
"(b) The health professions education fund created within the Treasury by section 744(d)(1) of the Public Health Service Act (as in effect before the date of enactment of this Act) [former
"(c) There are authorized to be appropriated without fiscal year limitation such sums as may be necessary to enable the Secretary to make payments under agreements entered into under section 744(b) [former
§292v. Provision by schools of information to students
(a) In general
With respect to loans made by a school under this subpart after June 30, 1986, each school, in order to carry out the provisions of
(1) the yearly and cumulative maximum amounts that may be borrowed by the student;
(2) the terms under which repayment of the loan will begin;
(3) the maximum number of years in which the loan must be repaid;
(4) the interest rate that will be paid by the borrower and the minimum amount of the required monthly payment;
(5) the amount of any other fees charged to the borrower by the lender;
(6) any options the borrower may have for deferral, cancellation, prepayment, consolidation, or other refinancing of the loan;
(7) a definition of default on the loan and a specification of the consequences which will result to the borrower if the borrower defaults, including a description of any arrangements which may be made with credit bureau organizations;
(8) to the extent practicable, the effect of accepting the loan on the eligibility of the borrower for other forms of student assistance; and
(9) a description of the actions that may be taken by the Federal Government to collect the loan, including a description of the type of information concerning the borrower that the Federal Government may disclose to (A) officers, employees, or agents of the Department of Health and Human Services, (B) officers, employees, or agents of schools with which the Secretary has an agreement under this subpart, or (C) any other person involved in the collection of a loan under this subpart.
(b) Statement regarding loan
Each school shall, immediately prior to the graduation from such school of a student who receives a loan under this subpart after June 30, 1986, provide such student with a statement specifying—
(1) each amount borrowed by the student under this subpart;
(2) the total amount borrowed by the student under this subpart; and
(3) a schedule for the repayment of the amounts borrowed under this subpart, including the number, amount, and frequency of payments to be made.
(July 1, 1944, ch. 373, title VII, §726, as added
Editorial Notes
Prior Provisions
A prior section 726 of act July 1, 1944, was classified to
Another prior section 726 of act July 1, 1944, was classified to
§292w. Procedures for appeal of termination of agreements
In any case in which the Secretary intends to terminate an agreement with a school under this subpart, the Secretary shall provide the school with a written notice specifying such intention and stating that the school may request a formal hearing with respect to such termination. If the school requests such a hearing within 30 days after the receipt of such notice, the Secretary shall provide such school with a hearing conducted by an administrative law judge.
(July 1, 1944, ch. 373, title VII, §727, as added
Editorial Notes
Prior Provisions
A prior section 727 of act July 1, 1944, was classified to
Another prior section 727 of act July 1, 1944, was classified to
§292x. Distribution of assets from loan funds
(a) Distribution after termination of fund
If a school terminates a loan fund established under an agreement pursuant to
(1) The Secretary shall first be paid an amount which bears the same ratio to such balance in such fund on the date of termination of the fund as the total amount of the Federal capital contributions to such fund by the Secretary pursuant to
(2) The remainder of such balance shall be paid to the school.
(b) Payment of proportionate share to Secretary
If a capital distribution is made under subsection (a), the school involved shall, after the capital distribution, pay to the Secretary, not less often than quarterly, the same proportionate share of amounts received by the school in payment of principal or interest on loans made from the loan fund established pursuant to
(July 1, 1944, ch. 373, title VII, §728, as added
Editorial Notes
Prior Provisions
A prior section 728 of act July 1, 1944, was classified to
Another prior section 728 of act July 1, 1944, was classified to
§292y. General provisions
(a) Date certain for applications
The Secretary shall from time to time set dates by which schools must file applications for Federal capital contributions.
(b) Contingent reduction in allotments
If the total of the amounts requested for any fiscal year in such applications exceeds the amounts appropriated under this section for that fiscal year, the allotment to the loan fund of each such school shall be reduced to whichever of the following is the smaller: (A) the amount requested in its application; or (B) an amount which bears the same ratio to the amounts appropriated as the number of students estimated by the Secretary to be enrolled in such school during such fiscal year bears to the estimated total number of students in all such schools during such year. Amounts remaining after allotment under the preceding sentence shall be reallotted in accordance with clause (B) of such sentence among schools whose applications requested more than the amounts so allotted to their loan funds, but with such adjustments as may be necessary to prevent the total allotted to any such school's loan fund from exceeding the total so requested by it.
(c) Allotment of excess funds
Funds available in any fiscal year for payment to schools under this subpart which are in excess of the amount appropriated pursuant to this section for that year shall be allotted among schools in such manner as the Secretary determines will best carry out the purposes of this subpart.
(d) Payment of installments to schools
Allotments to a loan fund of a school shall be paid to it from time to time in such installments as the Secretary determines will not result in unnecessary accumulations in the loan fund at such school.
(e) Disposition of funds returned to Secretary
(1) Expenditure for Federal capital contributions
Subject to
(2) Date certain for contributions
Amounts described in paragraph (1) that are returned to the Secretary shall be obligated before the end of the succeeding fiscal year.
(3) Preference in making contributions
In making Federal capital contributions to student loans funds under
(f) Funding for certain medical schools
(1) Authorization of appropriations
For the purpose of making Federal capital contributions to student loan funds established under
(2) Minimum requirements
(A) Subject to subparagraph (B), the Secretary may make a Federal capital contribution pursuant to paragraph (1) only if the school of medicine or osteopathic medicine involved meets the conditions described in subparagraph (A) of
(B) For purposes of subparagraph (A), the conditions referred to in such subparagraph shall be applied with respect to graduates of the school involved whose date of graduation occurred approximately 3 years before June 30 of the fiscal year preceding the fiscal year for which the Federal capital contribution involved is made.
(July 1, 1944, ch. 373, title VII, §735, as added
Editorial Notes
Prior Provisions
A prior section 735 of act July 1, 1944, was classified to
Amendments
1998—Subsec. (e)(2).
1993—Subsec. (f).
1992—Subsec. (b).