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20 U.S.C. § 1077a — Applicable interest rates
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**(a) Rates to be consistent for borrower’s entire debt** With respect to any loan to cover the cost of instruction for any period of instruction beginning on or after January 1, 1981, the rate of interest applicable to any borrower shall—
(1) not exceed 7 percent per year on the unpaid principal balance of the loan in the case of any borrower who, on the date of entering into the note or other written evidence of that loan, has an outstanding balance of principal or interest on any loan made, insured, or guaranteed under this part, for which the interest rate does not exceed 7 percent;
(2) except as provided in paragraph (3), be 9 percent per year on the unpaid principal balance of the loan in the case of any borrower who, on the date of entering into the note or other written evidence of that loan, has no outstanding balance of principal or interest on any loan described in paragraph (1) or any loan for which the interest rate is determined under paragraph (1); or
(3) be 8 percent per year on the unpaid principal balance of the loan for a loan to cover the cost of education for any period of enrollment beginning on or after a date which is 3 months after a determination made under subsection (b) in the case of any borrower who, on the date of entering into the note or other written evidence of the loan, has no outstanding balance of principal or interest on any loan for which the interest rate is determined under paragraph (1) or (2) of this subsection.
**(b) Reduction for new borrowers after decline in Treasury bill rates** If for any 12-month period beginning on or after January 1, 1981, the Secretary, after consultation with the Secretary of the Treasury, determines that the average of the bond equivalent rates of 91-day Treasury bills auctioned for such 12-mon
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Source location: Title 20, Chapter 28, § 1077a; chapter-028-higher-education-resources-and-student-assistance.md
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**(a) Rates to be consistent for borrower’s entire debt** With respect to any loan to cover the cost of instruction for any period of instruction beginning on or after January 1, 1981, the rate of interest applicable to any borrower shall—
(1) not exceed 7 percent per year on the unpaid principal balance of the loan in the case of any borrower who, on the date of entering into the note or other written evidence of that loan, has an outstanding balance of principal or interest on any loan made, insured, or guaranteed under this part, for which the interest rate does not exceed 7 percent;
(2) except as provided in paragraph (3), be 9 percent per year on the unpaid principal balance of the loan in the case of any borrower who, on the date of entering into the note or other written evidence of that loan, has no outstanding balance of principal or interest on any loan described in paragraph (1) or any loan for which the interest rate is determined under paragraph (1); or
(3) be 8 percent per year on the unpaid principal balance of the loan for a loan to cover the cost of education for any period of enrollment beginning on or after a date which is 3 months after a determination made under subsection (b) in the case of any borrower who, on the date of entering into the note or other written evidence of the loan, has no outstanding balance of principal or interest on any loan for which the interest rate is determined under paragraph (1) or (2) of this subsection.
**(b) Reduction for new borrowers after decline in Treasury bill rates** If for any 12-month period beginning on or after January 1, 1981, the Secretary, after consultation with the Secretary of the Treasury, determines that the average of the bond equivalent rates of 91-day Treasury bills auctioned for such 12-month period is equal to or less than 9 percent, the interest rate for loans under this part shall be the rate prescribed in subsection (a)(3) for borrowers described in such subsection.
**(c) Rates for supplemental loans for students and loans for parents**
(1) **In general** — Except as otherwise provided in this subsection, the applicable rate of interest on loans made pursuant to section 1078–1 11 See References in Text note below. or 1078–2 of this title on or after October 1, 1981, shall be 14 percent per year on the unpaid principal balance of the loan.
(2) **Reduction of rate after decline in Treasury bill rates** — If for any 12-month period beginning on or after October 1, 1981, the Secretary, after consultation with the Secretary of the Treasury, determines that the average of the bond equivalent rates of 91-day Treasury bills auctioned for such 12-month period is equal to or less than 14 percent, the applicable rate of interest for loans made pursuant to section 1078–1 1 or 1078–2 of this title on and after the first day of the first month beginning after the date of publication of such determination shall be 12 percent per year on the unpaid principal balance of the loan.
(3) **Increase of rate after increase in Treasury bill rates** — If for any 12-month period beginning on or after the date of publication of a determination under paragraph (2), the Secretary, after consultation with the Secretary of the Treasury, determines that the average of the bond equivalent rates of 91-day Treasury bills auctioned for such 12-month period exceeds 14 percent, the applicable rate of interest for loans made pursuant to section 1078–1 1 or 1078–2 of this title on and after the first day of the first month beginning after the date of publication of that determination under this paragraph shall be 14 percent per year on the unpaid principal balance of the loan.
(4) **Availability of variable rates**
(A) For any loan made pursuant to section 1078–1 1 or 1078–2 of this title and disbursed on or after July 1, 1987, or any loan made pursuant to such section prior to such date that is refinanced pursuant to section 1078–1(d) 1 or 1078–2(d) of this title, the applicable rate of interest during any 12-month period beginning on July 1 and ending on June 30 shall be determined under subparagraph (B), except that such rate shall not exceed 12 percent.
(B)
(i) For any 12-month period beginning on July 1 and ending on or before June 30, 2001, the rate determined under this subparagraph is determined on the preceding June 1 and is equal to—
(I) the bond equivalent rate of 52-week Treasury bills auctioned at the final auction held prior to such June 1; plus
(II) 3.25 percent.
(ii) For any 12-month period beginning on July 1 of 2001 or any succeeding year, the rate determined under this subparagraph is determined on the preceding June 26 and is equal to—
(I) the weekly average 1-year constant maturity Treasury yield, as published by the Board of Governors of the Federal Reserve System, for the last calendar week ending on or before such June 26; plus
(II) 3.25 percent.
(C) The Secretary shall determine the applicable rate of interest under subparagraph (B) after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of determination.
(D) Notwithstanding subparagraph (A)—
(i) for any loan made pursuant to section 1078–1 1 of this title for which the first disbursement is made on or after October 1, 1992—
(I) subparagraph (B) shall be applied by substituting “3.1” for “3.25”; and
(II) the interest rate shall not exceed 11 percent; and
(ii) for any loan made pursuant to [section 1078–2 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1078-2&num=0&edition=prelim) for which the first disbursement is made on or after October 1, 1992—
(I) subparagraph (B) shall be applied by substituting “3.1” for “3.25”; and
(II) the interest rate shall not exceed 10 percent.
(E) Notwithstanding subparagraphs (A) and (D) for any loan made pursuant to [section 1078–2 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1078-2&num=0&edition=prelim) for which the first disbursement is made on or after July 1, 1994—
(i) subparagraph (B) shall be applied by substituting “3.1” for “3.25”; and
(ii) the interest rate shall not exceed 9 percent.
**(d) Interest rates for new borrowers after July 1, 1988** Notwithstanding subsections (a) and (b) of this section, with respect to any loan (other than a loan made pursuant to sections 1078–1,1 1078–2, and 1078–3 of this title) to cover the cost of instruction for any period of enrollment beginning on or after July 1, 1988, to any borrower who, on the date of entering into the note or other written evidence of the loan, has no outstanding balance of principal or interest on any loan made, insured, or guaranteed under this part, the applicable rate of interest shall be—
(1) 8 percent per year on the unpaid principal balance of the loan during the period beginning on the date of the disbursement of the loan and ending 4 years after the commencement of repayment; and
(2) 10 percent per year on the unpaid principal balance of the loan during the remainder of the repayment period.
**(e) Interest rates for new borrowers after October 1, 1992**
(1) **In general** — Notwithstanding subsections (a), (b), and (d) of this section, with respect to any loan (other than a loan made pursuant to sections 1078–1,1 1078–2 and 1078–3 of this title) for which the first disbursement is made on or after October 1, 1992, to any borrower who, on the date of entering into the note or other written evidence of the loan, has no outstanding balance of principal or interest on any loan made, insured, or guaranteed under section 1077, 1078, or 1078–8 of this title, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to—
(A) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to such June 1; plus
(B) 3.10 percent,
except that such rate shall not exceed 9 percent.
(2) **Consultation** — The Secretary shall determine the applicable rate of interest under paragraph (1) after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of determination.
**(f) Interest rates for new loans after July 1, 1994**
(1) **In general** — Notwithstanding subsections (a), (b), (d), and (e) of this section, with respect to any loan made, insured, or guaranteed under this part (other than a loan made pursuant to section 1078–2 or 1078–3 of this title) for which the first disbursement is made on or after July 1, 1994, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to—
(A) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to such June 1; plus
(B) 3.10 percent,
(2) **Consultation** — The Secretary shall determine the applicable rate of interest under paragraph (1) after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of determination.
**(g) In school and grace period rules**
(1) **General rule** — Notwithstanding the provisions of subsection (f), but subject to subsection (h), with respect to any loan under section 1078 or 1078–8 of this title for which the first disbursement is made on or after July 1, 1995, the applicable rate of interest for interest which accrues—
(A) prior to the beginning of the repayment period of the loan; or
(B) during the period in which principal need not be paid (whether or not such principal is in fact paid) by reason of a provision described in section 1078(b)(1)(M) or 1077(a)(2)(C) of this title,
shall not exceed the rate determined under paragraph (2).
(2) **Rate determination** — For purposes of paragraph (1), the rate determined under this paragraph shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to—
(A) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction prior to such June 1; plus
(B) 2.5 percent,
(3) **Consultation** — The Secretary shall determine the applicable rate of interest under this subsection after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of determination.
**(h) Interest rates for new loans after July 1, 1998**
(1) **In general** — Notwithstanding subsections (a), (b), (d), (e), (f), and (g) of this section, with respect to any loan made, insured, or guaranteed under this part (other than a loan made pursuant to sections 1078–2 and 1078–3 of this title) for which the first disbursement is made on or after July 1, 1998, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to—
(A) the bond equivalent rate of the securities with a comparable maturity as established by the Secretary; plus
(B) 1.0 percent,
(2) **Interest rates for new PLUS loans after July 1, 1998** — Notwithstanding subsections (a), (b), (d), (e), (f), and (g), with respect to any loan made under [section 1078–2 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1078-2&num=0&edition=prelim) for which the first disbursement is made on or after July 1, 1998, paragraph (1) shall be applied—
(A) by substituting “2.1 percent” for “1.0 percent” in subparagraph (B); and
(B) by substituting “9.0 percent” for “8.25 percent” in the matter following such subparagraph.
(3) **Consultation** — The Secretary shall determine the applicable rate of interest under this subsection after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of determination.
**(i) Treatment of excess interest payments on new borrower accounts resulting from decline in Treasury bill rates**
(1) **Excess interest on 10 percent loans** — If, with respect to a loan for which the applicable interest rate is 10 percent under subsection (d) of this section at the close of any calendar quarter, the sum of the average of the bond equivalent rates of 91-day Treasury bills auctioned for that quarter and 3.25 percent is less than 10 percent, then an adjustment shall be made to a borrower’s account—
(A) by calculating excess interest in the amount computed under paragraph (2) of this subsection; and
(B)
(i) during any period in which a student is eligible to have interest payments paid on his or her behalf by the Government pursuant to [section 1078(a) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1078/a&num=0&edition=prelim), by crediting the excess interest to the Government; or
(ii) during any other period, by crediting such excess interest to the reduction of principal to the extent provided in paragraph (5) of this subsection.
(2) **Amount of adjustment for 10 percent loans** — The amount of any adjustment of interest on a loan to be made under this subsection for any quarter shall be equal to—
(A) 10 percent minus the sum of (i) the average of the bond equivalent rates of 91-day Treasury bills auctioned for such calendar quarter, and (ii) 3.25 percent; multiplied by
(B) the average daily principal balance of the loan (not including unearned interest added to principal) during such calendar quarter; divided by
(C) four.
(3) **Excess interest on loans after 1992 amendments, to borrowers with outstanding balances** — If, with respect to a loan made on or after July 23, 1992, to a borrower, who on the date of entering into the note or other written evidence of the loan, has an outstanding balance of principal or interest on any other loan made, insured, or guaranteed under this part, the sum of the average of the bond equivalent rates of 91-day Treasury bills auctioned for that quarter and 3.1 percent is less than the applicable interest rate, then an adjustment shall be made—
(A) by calculating excess interest in the amount computed under paragraph (4) of this subsection; and
(B)
(i) during any period in which a student is eligible to have interest payments paid on his or her behalf by the Government pursuant to [section 1078(a) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1078/a&num=0&edition=prelim), by crediting the excess interest to the Government; or
(ii) during any other period, by crediting such excess interest to the reduction of principal to the extent provided in paragraph (5) of this subsection.
(4) **Amount of adjustment** — The amount of any adjustment of interest on a loan to be made under this subsection for any quarter shall be equal to—
(A) the applicable interest rate minus the sum of (i) the average of the bond equivalent rates of 91-day Treasury bills auctioned for such calendar quarter, and (ii) 3.1 percent; multiplied by
(B) the average daily principal balance of the loan (not including unearned interest added to principal) during such calendar quarter; divided by
(C) four.
(5) **Annual adjustment of interest and borrower eligibility for credit** — Any adjustment amount computed pursuant to paragraphs (2) and (4) of this subsection for any quarter shall be credited, by the holder of the loan on the last day of the calendar year in which such quarter falls, to the loan account of the borrower so as to reduce the principal balance of such account. No such credit shall be made to the loan account of a borrower who on the last day of the calendar year is delinquent for more than 30 days in making a required payment on the loan, but the excess interest shall be calculated and credited to the Secretary. Any credit which is to be made to a borrower’s account pursuant to this subsection shall be made effective commencing no later than 30 days following the last day of the calendar year in which the quarter falls for which the credit is being made. Nothing in this subsection shall be construed to require refunding any repayment of a loan. At the option of the lender, the amount of such adjustment may be distributed to the borrower either by reduction in the amount of the periodic payment on loan, by reducing the number of payments that shall be made with respect to the loan, or by reducing the amount of the final payment of the loan. Nothing in this paragraph shall be construed to require the lender to make additional disclosures pursuant to [section 1083(b) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1083/b&num=0&edition=prelim).
(6) **Publication of Treasury bill rate** — For the purpose of enabling holders of loans to make the determinations and adjustments provided for in this subsection, the Secretary shall for each calendar quarter commencing with the quarter beginning on July 1, 1987, publish a notice of the average of the bond equivalent rates of 91-day Treasury bills auctioned for such quarter. Such notice shall be published not later than 7 days after the end of the quarter to which the notice relates.
(7) **Conversion to variable rate**
(A) Subject to subparagraphs (C) and (D), a lender or holder shall convert the interest rate on a loan that is made pursuant to this part and is subject to the provisions of this subsection to a variable rate. Such conversion shall occur not later than January 1, 1995, and, commencing on the date of conversion, the applicable interest rate for each 12-month period beginning on July 1 and ending on June 30 shall be determined by the Secretary on the June 1 preceding each such 12-month period and be equal to the sum of (i) the bond equivalent rate of the 91-day Treasury bills auctioned at the final auction prior to such June 1; and (ii) 3.25 percent in the case of loans described in paragraph (1), or 3.10 percent in the case of loans described in paragraph (3).
(B) In connection with the conversion specified in subparagraph (A) for any period prior to such conversion, and subject to paragraphs (C) and (D), a lender or holder shall convert the interest rate to a variable rate on a loan that is made pursuant to this part and is subject to the provisions of this subsection to a variable rate. The interest rates for such period shall be reset on a quarterly basis and the applicable interest rate for any quarter or portion thereof shall equal the sum of (i) the average of the bond equivalent rates of 91-Treasury bills auctioned for the preceding 3-month period, and (ii) 3.25 percent in the case of loans described in paragraph (1) or 3.10 percent in the case of loans described in paragraph (3). The rebate of excess interest derived through this conversion shall be provided to the borrower as specified in paragraph (5) for loans described in paragraph (1) or to the Government and borrower as specified in paragraph (3).
(C) A lender or holder of a loan being converted pursuant to this paragraph shall complete such conversion on or before January 1, 1995. The lender or holder shall notify the borrower that the loan shall be converted to a variable interest rate and provide a description of the rate to the borrower not later than 30 days prior to the conversion. The notice shall advise the borrower that such rate shall be calculated in accordance with the procedures set forth in this paragraph and shall provide the borrower with a substantially equivalent benefit as the adjustment otherwise provided for under this subsection. Such notice may be incorporated into the disclosure required under [section 1083(b) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1083/b&num=0&edition=prelim) if such disclosure has not been previously made.
(D) The interest rate on a loan converted to a variable rate pursuant to this paragraph shall not exceed the maximum interest rate applicable to the loan prior to such conversion.
(E) Loans on which the interest rate is converted in accordance with subparagraph (A) or (B) shall not be subject to any other provisions of this subsection.
**(j) Interest rates for new loans between July 1, 1998, and October 1, 1998**
(1) **In general** — Notwithstanding subsection (h), but subject to paragraph (2), with respect to any loan made, insured, or guaranteed under this part (other than a loan made pursuant to section 1078–2 or 1078–3 of this title) for which the first disbursement is made on or after July 1, 1998, and before October 1, 1998, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to—
(A) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to such June 1; plus
(B) 2.3 percent,
(2) **In school and grace period rules** — Notwithstanding subsection (h), with respect to any loan under this part (other than a loan made pursuant to section 1078–2 or 1078–3 of this title) for which the first disbursement is made on or after July 1, 1998, and before October 1, 1998, the applicable rate of interest for interest which accrues—
(A) prior to the beginning of the repayment period of the loan; or
(B) during the period in which principal need not be paid (whether or not such principal is in fact paid) by reason of a provision described in section 1078(b)(1)(M) or 1077(a)(2)(C) of this title,
(3) **PLUS loans** — Notwithstanding subsection (h), with respect to any loan under [section 1078–2 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1078-2&num=0&edition=prelim) for which the first disbursement is made on or after July 1, 1998, and before October 1, 1998, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to the lesser of—
(A)
(i) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to such June 1; plus
(ii) 3.1 percent; or
(B) 9.0 percent.
(4) **Consultation** — The Secretary shall determine the applicable rate of interest under this subsection after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of determination.
**(k) Interest rates for new loans on or after October 1, 1998, and before July 1, 2006**
(1) **In general** — Notwithstanding subsection (h) and subject to paragraph (2) of this subsection, with respect to any loan made, insured, or guaranteed under this part (other than a loan made pursuant to section 1078–2 or 1078–3 of this title) for which the first disbursement is made on or after October 1, 1998, and before July 1, 2006, the applicable rate of interest shall, during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to—
(A) the bond equivalent rate of 91-day Treasury bills auctioned at the final auction held prior to such June 1; plus
(B) 2.3 percent,
except that such rate shall not exceed 8.25 percent.
(2) **In school and grace period rules** — Notwithstanding subsection (h), with respect to any loan under this part (other than a loan made pursuant to section 1078–2 or 1078–3 of this title) for which the first disbursement is made on or after October 1, 1998, and before July 1, 2006, the applicable rate of interest for interest which accrues—
(A) prior to the beginning of the repayment period of the loan; or
(B) during the period in which principal need not be paid (whether or not such principal is in fact paid) by reason of a provision described in section 1077(a)(2)(C) or 1078(b)(1)(M) of this title,
shall be determined under paragraph (1) by substituting “1.7 percent” for “2.3 percent”.
(3) **PLUS loans** — Notwithstanding subsection (h), with respect to any loan under [section 1078–2 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1078-2&num=0&edition=prelim) for which the first disbursement is made on or after October 1, 1998, and before July 1, 2006, the applicable rate of interest shall be determined under paragraph (1)—
(A) by substituting “3.1 percent” for “2.3 percent”; and
(B) by substituting “9.0 percent” for “8.25 percent”.
(4) **Consolidation loans** — With respect to any consolidation loan under [section 1078–3 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1078-3&num=0&edition=prelim) for which the application is received by an eligible lender on or after October 1, 1998, and before July 1, 2006, the applicable rate of interest shall be at an annual rate on the unpaid principal balance of the loan that is equal to the lesser of—
(A) the weighted average of the interest rates on the loans consolidated, rounded to the nearest higher one-eighth of 1 percent; or
(B) 8.25 percent.
(5) **Consultation** — The Secretary shall determine the applicable rate of interest under this subsection after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of determination.
**(l) Interest rates for new loans on or after July 1, 2006, and before July 1, 2010**
(1) **In general** — Notwithstanding subsection (h), with respect to any loan made, insured, or guaranteed under this part (other than a loan made pursuant to section 1078–2 or 1078–3 of this title) for which the first disbursement is made on or after July 1, 2006, and before July 1, 2010, the applicable rate of interest shall be 6.8 percent on the unpaid principal balance of the loan.
(2) **PLUS loans** — Notwithstanding subsection (h), with respect to any loan under [section 1078–2 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1078-2&num=0&edition=prelim) for which the first disbursement is made on or after July 1, 2006, and before July 1, 2010, the applicable rate of interest shall be 8.5 percent on the unpaid principal balance of the loan.
(3) **Consolidation loans** — With respect to any consolidation loan under [section 1078–3 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1078-3&num=0&edition=prelim) for which the application is received by an eligible lender on or after July 1, 2006, and that was disbursed before July 1, 2010, the applicable rate of interest shall be at an annual rate on the unpaid principal balance of the loan that is equal to the lesser of—
(A) the weighted average of the interest rates on the loans consolidated, rounded to the nearest higher one-eighth of 1 percent; or
(B) 8.25 percent.
(4) **Reduced rates for undergraduate subsidized loans** — Notwithstanding subsection (h) and paragraph (1) of this subsection, with respect to any loan to an undergraduate student made, insured, or guaranteed under this part (other than a loan made pursuant to section 1078–2, 1078–3, or 1078–8 of this title) for which the first disbursement is made on or after July 1, 2006, and before July 1, 2010, the applicable rate of interest shall be as follows:
(A) For a loan for which the first disbursement is made on or after July 1, 2006, and before July 1, 2008, 6.8 percent on the unpaid principal balance of the loan.
(B) For a loan for which the first disbursement is made on or after July 1, 2008, and before July 1, 2009, 6.0 percent on the unpaid principal balance of the loan.
(C) For a loan for which the first disbursement is made on or after July 1, 2009, and before July 1, 2010, 5.6 percent on the unpaid principal balance of the loan.
**(m) Lesser rates permitted** Nothing in this section or [section 1078–3 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1078-3&num=0&edition=prelim) shall be construed to prohibit a lender from charging a borrower interest at a rate less than the rate which is applicable under this part.
**(n) Definitions** For the purpose of subsections (a) and (d) of this section—
(1) the term “period of instruction” shall, at the discretion of the lender, be any academic year, semester, trimester, quarter, or other academic period; or shall be the period for which the loan is made as determined by the institution of higher education; and
(2) the term “period of enrollment” shall be the period for which the loan is made as determined by the institution of higher education and shall coincide with academic terms such as academic year, semester, trimester, quarter, or other academic period as defined by such institution.
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Purpose** It is the purpose of this part, to assist in making available the benefits of postsecondary education to eligible students (defined in accordance with [section 1091 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1091&num=0&edition=prelim)) in institutions of higher education by—
(1) providing Federal Pell Grants to all eligible students;
(2) providing supplemental educational opportunity grants to those students who demonstrate financial need;
(3) providing for payments to the States to assist them in making financial aid available to such students;
(4) providing for special programs and projects designed (A) to identify and encourage qualified youths with financial or cultural need with a potential for postsecondary education, (B) to prepare students from low-income families for postsecondary education, and (C) to provide remedial (including remedial language study) and other services to students; and
(5) providing assistance to institutions of higher education.
**(b) Secretary required to carry out purposes** The Secretary shall, in accordance with subparts 1 through 9 of this part, carry out programs to achieve the purposes of this part.
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Purpose; discrimination prohibited**
(1) **Purpose** — The purpose of this part is to enable the Secretary—
(A) to encourage States and nonprofit private institutions and organizations to establish adequate loan insurance programs for students in eligible institutions (as defined in [section 1085 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1085&num=0&edition=prelim)),
(B) to provide a Federal program of student loan insurance for students or lenders who do not have reasonable access to a State or private nonprofit program of student loan insurance covered by an agreement under [section 1078(b) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1078/b&num=0&edition=prelim),
(C) to pay a portion of the interest on loans to qualified students which are insured under this part, and
(D) to guarantee a portion of each loan insured under a program of a State or of a nonprofit private institution or organization which meets the requirements of [section 1078(a)(1)(B) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1078/a/1/B&num=0&edition=prelim).
(2) **Discrimination by creditors prohibited** — No agency, organization, institution, bank, credit union, corporation, or other lender who regularly extends, renews, or continues credit or provides insurance under this part shall exclude from receipt or deny the benefits of, or discriminate against any borrower or applicant in obtaining, such credit or insurance on the basis of race, national origin, religion, sex, marital status, age, or handicapped status.
**(b) Authorization of appropriations** For the purpose of carrying out this part—
(1) there are authorized to be appropriated to
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Institution of higher education** For purposes of this chapter, other than subchapter IV, the term “institution of higher education” means an educational institution in any State that—
(1) admits as regular students only persons having a certificate of graduation from a school providing secondary education, or the recognized equivalent of such a certificate, or persons who meet the requirements of [section 1091(d) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1091/d&num=0&edition=prelim);
(2) is legally authorized within such State to provide a program of education beyond secondary education;
(3) provides an educational program for which the institution awards a bachelor’s degree or provides not less than a 2-year program that is acceptable for full credit toward such a degree, or awards a degree that is acceptable for admission to a graduate or professional degree program, subject to review and approval by the Secretary;
(4) is a public or other nonprofit institution; and
(5) is accredited by a nationally recognized accrediting agency or association, or if not so accredited, is an institution that has been granted preaccreditation status by such an agency or association that has been recognized by the Secretary for the granting of preaccreditation status, and the Secretary has determined that there is satisfactory assurance that the institution will meet the accreditation standards of such an agency or association within a reasonable time.
**(b) Additional institutions included** For purposes of this chapter, other than subchapter IV, the term “institution of higher education” also includes—
(1) any school that provides not less than a 1-year program of training to prepare students for gainful employment in a re
Source: Supplied U.S. Code snapshot — release unconfirmed · 20 U.S.C. § 1001
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Definition of institution of higher education for purposes of student assistance programs**
(1) **Inclusion of additional institutions** — Subject to paragraphs (2) through (4) of this subsection, the term “institution of higher education” for purposes of subchapter IV includes, in addition to the institutions covered by the definition in [section 1001 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1001&num=0&edition=prelim)—
(A) a proprietary institution of higher education (as defined in subsection (b) of this section);
(B) a postsecondary vocational institution (as defined in subsection (c) of this section); and
(C) only for the purposes of part D of subchapter IV, an institution outside the United States that is comparable to an institution of higher education as defined in [section 1001 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1001&num=0&edition=prelim) and that has been approved by the Secretary for the purpose of part D of subchapter IV, consistent with the requirements of [section 1087b(d) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1087b/d&num=0&edition=prelim).
(2) **Institutions outside the United States**
(A) *In general* — For the purpose of qualifying as an institution under paragraph (1)(C), the Secretary shall establish criteria by regulation for the approval of institutions outside the United States and for the determination that such institutions are comparable to an institution of higher education as defined in [section 1001 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1001&num=0&edition=prelim) (except that a graduate medical school, nursing schoo
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Authorizations**
(1) **Part A**
(A) There are authorized to be appropriated to carry out part A (other than sections 1059c through 1059g of this title), $135,000,000 for fiscal year 2009, and such sums as may be necessary for each of the five succeeding fiscal years.
(B) There are authorized to be appropriated to carry out [section 1059c of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1059c&num=0&edition=prelim), $30,000,000 for fiscal year 2009, and such sums as may be necessary for each of the five succeeding fiscal years.
(C) There are authorized to be appropriated to carry out [section 1059d of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1059d&num=0&edition=prelim), $15,000,000 for fiscal year 2009, and such sums as may be necessary for each of the five succeeding fiscal years.
(D) There are authorized to be appropriated to carry out [section 1059e of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1059e&num=0&edition=prelim), $75,000,000 for fiscal year 2009 and each of the five succeeding fiscal years.
(E) There are authorized to be appropriated to carry out [section 1059f of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1059f&num=0&edition=prelim), $25,000,000 for fiscal year 2009, and such sums as may be necessary for each of the five succeeding fiscal years.
(F) There are authorized to be appropriated to carry out [section 1059g of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1059g&num=0&edition=prelim), $30,000,000 for fiscal year 2009, and such sums as may be necessary for each of the five succeeding fiscal years.
(2) **Part
Source: Supplied U.S. Code snapshot — release unconfirmed · 20 U.S.C. § 1051
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Federal law — U.S. Code and appendices · legal_authorities
**(a) List of requirements** Except as provided in [section 1078–3 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1078-3&num=0&edition=prelim), a loan by an eligible lender shall be insurable by the Secretary under the provisions of this part only if—
(1) made to a student who (A) is an eligible student under [section 1091 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1091&num=0&edition=prelim), (B) has agreed to notify promptly the holder of the loan concerning any change of address, and (C) is carrying at least one-half the normal full-time academic workload for the course of study the student is pursuing (as determined by the institution); and
(2) evidenced by a note or other written agreement which—
(A) is made without security and without endorsement;
(B) provides for repayment (except as provided in subsection (c)) of the principal amount of the loan in installments over a period of not less than 5 years (unless sooner repaid or unless the student, during the 6 months preceding the start of the repayment period, specifically requests that repayment be made over a shorter period) nor more than 10 years beginning 6 months after the month in which the student ceases to carry at an eligible institution at least one-half the normal full-time academic workload as determined by the institution, except—
(i) as provided in subparagraph (C);
(ii) that the note or other written instrument may contain such reasonable provisions relating to repayment in the event of default in the payment of interest or in the payment of the cost of insurance premiums, or other default by the borrower, as may be authorized by regulations of the Secretary in effect at the time the loan is
Source: Supplied U.S. Code snapshot — release unconfirmed · 20 U.S.C. § 1077
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Federal interest subsidies**
(1) **Types of loans that qualify** — Each student who has received a loan for study at an eligible institution for which the first disbursement is made before July 1, 2010, and—
(A) which is insured by the Secretary under this part; or
(B) which is insured under a program of a State or of a nonprofit private institution or organization which was contracted for, and paid to the student, within the period specified in paragraph (5), and which—
(i) in the case of a loan insured prior to July 1, 1967, was made by an eligible lender and is insured under a program which meets the requirements of subparagraph (E) of subsection (b)(1) and provides that repayment of such loan shall be in installments beginning not earlier than 60 days after the student ceases to pursue a course of study (as described in subparagraph (D) of subsection (b)(1)) at an eligible institution, or
(ii) in the case of a loan insured after June 30, 1967, was made by an eligible lender and is insured under a program covered by an agreement made pursuant to subsection (b),
shall be entitled to have paid on his or her behalf and for his or her account to the holder of the loan a portion of the interest on such loan under circumstances described in paragraph (2).
(2) **Additional requirements to receive subsidy**
(A) Each student qualifying for a portion of an interest payment under paragraph (1) shall—
(i) have provided to the lender a statement from the eligible institution, at which the student has been accepted for enrollment, or at which the student is in attendance, which—
(I) sets forth the loan amount for which the student shows financial need; and
(II) sets forth a schedule for disbursement of the proceeds of the loan in ins
Source: Supplied U.S. Code snapshot — release unconfirmed · 20 U.S.C. § 1078
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Authority to borrow**
(1) **Authority and eligibility** — Prior to July 1, 2010, a graduate or professional student or the parents of a dependent student shall be eligible to borrow funds under this section in amounts specified in subsection (b), if—
(A) the graduate or professional student or the parents do not have an adverse credit history as determined pursuant to regulations promulgated by the Secretary;
(B) in the case of a graduate or professional student or parent who has been convicted of, or has pled nolo contendere or guilty to, a crime involving fraud in obtaining funds under this subchapter, such graduate or professional student or parent has completed the repayment of such funds to the Secretary, or to the holder in the case of a loan under this subchapter obtained by fraud; and
(C) the graduate or professional student or the parents meet such other eligibility criteria as the Secretary may establish by regulation, after consultation with guaranty agencies, eligible lenders, and other organizations involved in student financial assistance.
(2) **Terms, conditions, and benefits** — Except as provided in subsections (c), (d), and (e), loans made under this section shall have the same terms, conditions, and benefits as all other loans made under this part.
(3) **Special rules**
(A) *Parent borrowers* — Whenever necessary to carry out the provisions of this section, the terms “student” and “borrower” as used in this part shall include a parent borrower under this section.
(B)
(i) *Extenuating circumstances* — An eligible lender may determine that extenuating circumstances exist under the regulations promulgated pursuant to paragraph (1)(A) if, during the period beginning January 1, 2007, and ending December 31, 2009, an applicant f
Source: Supplied U.S. Code snapshot — release unconfirmed · 20 U.S.C. § 1078–2
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Agreements with eligible lenders**
(1) **Agreement required for insurance coverage** — For the purpose of providing loans to eligible borrowers for consolidation of their obligations with respect to eligible student loans, the Secretary or a guaranty agency shall enter into agreements in accordance with subsection (b) with the following eligible lenders:
(A) the Student Loan Marketing Association or the Holding Company of the Student Loan Marketing Association, including any subsidiary of the Holding Company, created pursuant to [section 1087–3 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1087-3&num=0&edition=prelim);
(B) State agencies described in subparagraphs (D) and (F) of [section 1085(d)(1) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1085/d/1&num=0&edition=prelim); and
(C) other eligible lenders described in subparagraphs (A), (B), (C), (E), and (J) of such section.
(2) **Insurance coverage of consolidation loans** — Except as provided in [section 1079(e) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1079/e&num=0&edition=prelim), no contract of insurance under this part shall apply to a consolidation loan unless such loan is made under an agreement pursuant to this section and is covered by a certificate issued in accordance with subsection (b)(2). Loans covered by such a certificate that is issued by a guaranty agency shall be considered to be insured loans for the purposes of reimbursements under [section 1078(c) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1078/c&num=0&edition=prelim), but no payment shall be made with respect to such loans under [section 1078(f)
Source: Supplied U.S. Code snapshot — release unconfirmed · 20 U.S.C. § 1078–3
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Federal law — U.S. Code and appendices · legal_authorities
**(a) In general** It is the purpose of this section to authorize insured loans under this part that are first disbursed before July 1, 2010, for borrowers who do not qualify for Federal interest subsidy payments under [section 1078 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1078&num=0&edition=prelim). Except as provided in this section, all terms and conditions for Federal Stafford loans established under [section 1078 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1078&num=0&edition=prelim) shall apply to loans made pursuant to this section.
**(b) Eligible borrowers** Prior to July 1, 2010, any student meeting the requirements for student eligibility under [section 1091 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1091&num=0&edition=prelim) (including graduate and professional students as defined in regulations promulgated by the Secretary) shall be entitled to borrow an unsubsidized Federal Stafford Loan for which the first disbursement is made before such date if the eligible institution at which the student has been accepted for enrollment, or at which the student is in attendance, has—
(1) determined and documented the student’s need for the loan based on the student’s estimated cost of attendance (as determined under section 1087ll of this title) and the student’s estimated financial assistance, including a loan which qualifies for interest subsidy payments under [section 1078 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title20-section1078&num=0&edition=prelim); and
(2) provided the lender a statement—
(A) certifying the eligibility of the student to receive a loan under this section and th
Source: Supplied U.S. Code snapshot — release unconfirmed · 20 U.S.C. § 1078–8
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