20 U.S.C. § 1087dd — Terms of loans

Page 591 TITLE 20—EDUCATION § 1087dd EFFECTIVE DATE OF 1996 AMENDMENT Amendment by Pub. L. 104–106 effective as if included in the Reserve Officer Personnel Management Act, title XVI of Pub. L. 103–337, as enacted on Oct. 5, 1994, see section 1501(f)(3) of Pub. L. 104–106, set out as a note under section 113 of Title 10, Armed Forces. EFFECTIVE DATE OF 1993 AMENDMENT Amendment by Pub. L. 103–208 effective as if included in the Higher Education Amendments of 1992, Pub. L. 102–325, except as otherwise provided, see section 5(a) of Pub. L. 103–208, set out as a note under section 1051 of this title. EFFECTIVE DATE OF 1987 AMENDMENT Amendment by Pub. L. 100–50 effective as if enacted as part of the Higher Education Amendments of 1986, Pub. L. 99–498, see section 27 of Pub. L. 100–50, set out as a note under section 1001 of this title. EFFECTIVE DATE Section applicable only to loans made for periods of enrollment beginning on or after July 1, 1987, see sec- tion 405(b) of Pub. L. 99–498, as amended, set out as a note under section 1087dd of this title. § 1087dd. Terms of loans (a) Terms and conditions (1) Loans from any student loan fund estab- lished pursuant to an agreement under section 1087cc of this title to any student by any institu- tion shall, subject to such conditions, limita- tions, and requirements as the Secretary shall prescribe by regulation, be made on such terms and conditions as the institution may deter- mine. (2)(A) Except as provided in paragraph (4), the total of loans made to a student in any aca- demic year or its equivalent by an institution of higher education from a loan fund established pursuant to an agreement under this part shall not exceed— (i) $5,500, in the case of a student who has not successfully completed a program of un- dergraduate education; or (ii) $8,000, in the case of a graduate or profes- sional student (as defined in regulations issued by the Secretary). (B) Except as provided in paragraph (4), the aggregate unpaid principal amount for all loans made to a student by institutions of higher edu- cation from loan funds established pursuant to agreements under this part may not exceed— (i) $60,000, in the case of any graduate or pro- fessional student (as defined by regulations issued by the Secretary, and including any loans from such funds made to such person be- fore such person became a graduate or profes- sional student); (ii) $27,500, in the case of a student who has successfully completed 2 years of a program of education leading to a bachelor’s degree but who has not completed the work necessary for such a degree (determined under regulations issued by the Secretary), and including any loans from such funds made to such person be- fore such person became such a student; and (iii) $11,000, in the case of any other student. (3) Regulations of the Secretary under para- graph (1) shall be designed to prevent the im- pairment of the capital student loan funds to the maximum extent practicable and with a view toward the objective of enabling the stu- dent to complete his course of study. (4) In the case of a program of study abroad that is approved for credit by the home institu- tion at which a student is enrolled and that has reasonable costs in excess of the home institu- tion’s budget, the annual and aggregate loan limits for the student may exceed the amounts described in paragraphs (2)(A) and (2)(B) by 20 percent. (b) Demonstration of need and eligibility re- quired (1) A loan from a student loan fund assisted under this part may be made only to a student who demonstrates financial need in accordance with part F of this subchapter, who meets the requirements of section 1091 of this title, and who provides the institution with the student’s drivers license number, if any, at the time of ap- plication for the loan. A student who is in de- fault on a loan under this part shall not be eligi- ble for an additional loan under this part unless such loan meets one of the conditions for exclu- sion under section 1087bb(g)(1)(E) of this title. (2) If the institution’s capital contribution under section 1087bb of this title is directly or indirectly based in part on the financial need demonstrated by students who are (A) attending the institution less than full time, or (B) inde- pendent students, then a reasonable portion of the loans made from the institution’s student loan fund containing the contribution shall be made available to such students. (c) Contents of loan agreement (1) Any agreement between an institution and a student for a loan from a student loan fund as- sisted under this part— (A) shall be evidenced by note or other writ- ten instrument which, except as provided in paragraph (2), provides for repayment of the principal amount of the loan, together with interest thereon, in equal installments (or, if the borrower so requests, in graduated peri- odic installments determined in accordance with such schedules as may be approved by the Secretary) payable quarterly, bimonthly, or monthly, at the option of the institution, over a period beginning nine months after the date on which the student ceases to carry, at an in- stitution of higher education or a comparable institution outside the United States approved for this purpose by the Secretary, at least one- half the normal full-time academic workload, and ending 10 years and 9 months after such date except that such period may begin earlier than 9 months after such date upon the re- quest of the borrower; (B) shall include provision for acceleration of repayment of the whole, or any part, of such loan, at the option of the borrower; (C)(i) may provide, at the option of the insti- tution, in accordance with regulations of the Secretary, that during the repayment period of the loan, payments of principal and interest by the borrower with respect to all out- standing loans made to the student from a stu- dent loan fund assisted under this part shall be at a rate equal to not less than $40 per month, except that the institution may, subject to Page 592 TITLE 20—EDUCATION § 1087dd 1 See References in Text note below. such regulations, permit a borrower to pay less than $40 per month for a period of not more than one year where necessary to avoid hardship to the borrower, but without extend- ing the 10-year maximum repayment period provided for in subparagraph (A) of this para- graph; and (ii) may provide that the total payments by a borrower for a monthly or similar payment period with respect to the aggregate of all loans held by the institution may, when the amount of a monthly or other similar pay- ment is not a multiple of $5, be rounded to the next highest whole dollar amount that is a multiple of $5; (D) shall provide that the loan shall bear in- terest, on the unpaid balance of the loan, at the rate of 5 percent per year in the case of any loan made on or after October 1, 1981, ex- cept that no interest shall accrue (i) prior to the beginning date of repayment determined under paragraph (2)(A)(i), or (ii) during any pe- riod in which repayment is suspended by rea- son of paragraph (2); (E) shall provide that the loan shall be made without security and without endorsement; (F) shall provide that the liability to repay the loan shall be cancelled— (i) upon the death of the borrower; (ii) if the borrower becomes permanently and totally disabled as determined in ac- cordance with regulations of the Secretary; (iii) if the borrower is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death, has lasted for a continuous period of not less than 60 months, or can be expected to last for a continuous period of not less than 60 months; or (iv) if the borrower is determined by the Secretary of Veterans Affairs to be unem- ployable due to a service-connected dis- ability; (G) shall provide that no note or evidence of obligation may be assigned by the lender, ex- cept upon the transfer of the borrower to an- other institution participating under this part (or, if not so participating, is eligible to do so and is approved by the Secretary for such pur- pose), to such institution, and except as nec- essary to carry out section 1087cc(a)(6) 1 of this title; (H) pursuant to regulations of the Secretary, shall provide for an assessment of a charge with respect to the loan for failure of the bor- rower to pay all or part of an installment when due, which shall include the expenses reasonably incurred in attempting collection of the loan, to the extent permitted by the Secretary, except that no charge imposed under this subparagraph shall exceed 20 per- cent of the amount of the monthly payment of the borrower; and (I) shall contain a notice of the system of disclosure of information concerning default on such loan to consumer reporting agencies under section 1087cc(c) of this title. (2)(A) No repayment of principal of, or interest on, any loan from a student loan fund assisted under this part shall be required during any pe- riod— (i) during which the borrower— (I) is pursuing at least a half-time course of study as determined by an eligible insti- tution; or (II) is pursuing a course of study pursuant to a graduate fellowship program approved by the Secretary, or pursuant to a rehabili- tation training program for disabled individ- uals approved by the Secretary, except that no borrower shall be eligible for a deferment under this clause, or loan made under this part while serving in a medical in- ternship or residency program; (ii) not in excess of 3 years during which the borrower is seeking and unable to find full- time employment; (iii) during which the borrower— (I) is serving on active duty during a war or other military operation or national emergency; or (II) is performing qualifying National Guard duty during a war or other military operation or national emergency, and for the 180-day period following the demo- bilization date for the service described in sub- clause (I) or (II); (iv) not in excess of 3 years for any reason which the lender determines, in accordance with regulations prescribed by the Secretary under section 1085(o) of this title, has caused or will cause the borrower to have an eco- nomic hardship; (v) during which the borrower is engaged in service described in section 1087ee(a)(2) of this title; or (vi) during which the borrower is receiving treatment for cancer and the 6 months after such period; and provides that any such period shall not be included in determining the 10-year period de- scribed in subparagraph (A) of paragraph (1). (B) No repayment of principal of, or interest on, any loan for any period described in subpara- graph (A) shall begin until 6 months after the completion of such period. (C) An individual with an outstanding loan balance who meets the eligibility criteria for a deferment described in subparagraph (A) as in effect on October 7, 1998, shall be eligible for deferment under this paragraph notwithstanding any contrary provision of the promissory note under which the loan or loans were made, and notwithstanding any amendment (or effective date provision relating to any amendment) to this section made prior to the date of such deferment. (3)(A) The Secretary is authorized, when good cause is shown, to extend, in accordance with regulations, the 10-year maximum repayment period provided for in subparagraph (A) of para- graph (1) with respect to individual loans. (B) Pursuant to uniform criteria established by the Secretary, the repayment period for any student borrower who during the repayment pe- riod is a low-income individual may be extended for a period not to exceed 10 years and the re- Page 593 TITLE 20—EDUCATION § 1087dd payment schedule may be adjusted to reflect the income of that individual. (4) The repayment period for a loan made under this part shall begin on the day imme- diately following the expiration of the period, specified in paragraph (1)(A), after the student ceases to carry the required academic workload, unless the borrower requests and is granted a re- payment schedule that provides for repayment to commence at an earlier point in time, and shall exclude any period of authorized deferment, forbearance, or cancellation. (5) The institution may elect— (A) to add the amount of any charge imposed under paragraph (1)(H) to the principal amount of the loan as of the first day after the day on which the installment was due and to notify the borrower of the assessment of the charge; or (B) to make the amount of the charge pay- able to the institution not later than the due date of the next installment. (6) Requests for deferment of repayment of loans under this part by students engaged in graduate or post-graduate fellowship-supported study (such as pursuant to a Fulbright grant) outside the United States shall be approved until completion of the period of the fellowship. (7) There shall be excluded from the 9-month period that begins on the date on which a stu- dent ceases to carry at least one-half the normal full-time academic workload (as described in paragraph (1)(A)) any period not to exceed 3 years during which a borrower who is a member of a reserve component of the Armed Forces named in section 10101 of title 10 is called or or- dered to active duty for a period of more than 30 days (as defined in section 101(d)(2) of such title). Such period of exclusion shall include the period necessary to resume enrollment at the borrower’s next available regular enrollment pe- riod. (d) Availability of loan fund to all eligible stu- dents An agreement under this part for payment of Federal capital contributions shall include pro- visions designed to make loans from the student loan fund established pursuant to such agree- ment reasonably available (to the extent of the available funds in such fund) to all eligible stu- dents in such institutions in need thereof. (e) Forbearance (1) The Secretary shall ensure that, as docu- mented in accordance with paragraph (2), an in- stitution of higher education shall grant a bor- rower forbearance of principal and interest or principal only, renewable at 12-month intervals for a period not to exceed 3 years, on such terms as are otherwise consistent with the regulations issued by the Secretary and agreed upon in writ- ing by the parties to the loan, if— (A) the borrower’s debt burden equals or ex- ceeds 20 percent of such borrower’s gross in- come; (B) the institution determines that the bor- rower should qualify for forbearance for other reasons; or (C) the borrower is eligible for interest pay- ments to be made on such loan for service in the Armed Forces under section 2174 of title 10 and, pursuant to that eligibility, the interest on such loan is being paid under subsection (j), except that the form of a forbearance under this paragraph shall be a temporary cessation of all payments on the loan other than pay- ments of interest on the loan that are made under subsection (j). (2) For the purpose of paragraph (1), the terms of forbearance agreed to by the parties shall be documented by— (A) confirming the agreement of the bor- rower by notice to the borrower from the in- stitution of higher education; and (B) recording the terms in the borrower’s file. (f) Special repayment rule authority (1) Subject to such restrictions as the Sec- retary may prescribe to protect the interest of the United States, in order to encourage repay- ment of loans made under this part which are in default, the Secretary may, in the agreement entered into under this part, authorize an insti- tution of higher education to compromise on the repayment of such defaulted loans in accordance with paragraph (2). The Federal share of the compromise repayment shall bear the same rela- tion to the institution’s share of such com- promise repayment as the Federal capital con- tribution to the institution’s loan fund under this part bears to the institution’s capital con- tribution to such fund. (2) No compromise repayment of a defaulted loan as authorized by paragraph (1) may be made unless the student borrower pays— (A) 90 percent of the loan under this part; (B) the interest due on such loan; and (C) any collection fees due on such loan; in a lump sum payment. (g) Discharge (1) In general If a student borrower who received a loan made under this part on or after January 1, 1986, is unable to complete the program in which such student is enrolled due to the clo- sure of the institution, then the Secretary shall discharge the borrower’s liability on the loan (including the interest and collection fees) and shall subsequently pursue any claim available to such borrower against the institu- tion and the institution’s affiliates and prin- cipals, or settle the loan obligation pursuant to the financial responsibility standards de- scribed in section 1099c(c) of this title. (2) Assignment A borrower whose loan has been discharged pursuant to this subsection shall be deemed to have assigned to the United States the right to a loan refund in an amount that does not exceed the amount discharged against the in- stitution and the institution’s affiliates and principals. (3) Eligibility for additional assistance The period during which a student was un- able to complete a course of study due to the closing of the institution shall not be consid- ered for purposes of calculating the student’s Page 594 TITLE 20—EDUCATION § 1087dd period of eligibility for additional assistance under this subchapter. (4) Special rule A borrower whose loan has been discharged pursuant to this subsection shall not be pre- cluded, because of that discharge, from receiv- ing additional grant, loan, or work assistance under this subchapter for which the borrower would be otherwise eligible (but for the default on the discharged loan). The amount dis- charged under this subsection shall be treated as an amount canceled under section 1087ee(a) of this title. (5) Reporting The Secretary or institution, as the case may be, shall report to consumer reporting agencies with respect to loans that have been discharged pursuant to this subsection. (h) Rehabilitation of loans (1) Rehabilitation (A) In general If the borrower of a loan made under this part who has defaulted on the loan makes 9 on-time, consecutive, monthly payments of amounts owed on the loan, as determined by the institution, or by the Secretary in the case of a loan held by the Secretary, the loan shall be considered rehabilitated, and the institution that made that loan (or the Secretary, in the case of a loan held by the Secretary) shall request that any consumer reporting agency to which the default was reported remove the default from the bor- rower’s credit history. (B) Comparable conditions As long as the borrower continues to make scheduled repayments on a loan rehabili- tated under this paragraph, the rehabilitated loan shall be subject to the same terms and conditions, and qualify for the same benefits and privileges, as other loans made under this part. (C) Additional assistance The borrower of a rehabilitated loan shall not be precluded by section 1091 of this title from receiving additional grant, loan, or work assistance under this subchapter (for which the borrower is otherwise eligible) on the basis of defaulting on the loan prior to such rehabilitation. (D) Limitations A borrower only once may obtain the ben- efit of this paragraph with respect to reha- bilitating a loan under this part. (2) Restoration of eligibility If the borrower of a loan made under this part who has defaulted on that loan makes 6 ontime, consecutive, monthly payments of amounts owed on such loan, the borrower’s eli- gibility for grant, loan, or work assistance under this subchapter shall be restored to the extent that the borrower is otherwise eligible. A borrower only once may obtain the benefit of this paragraph with respect to restored eli- gibility. (i) Incentive repayment program (1) In general Each institution of higher education may es- tablish, with the approval of the Secretary, an incentive repayment program designed to re- duce default and to replenish student loan funds established under this part. Each such incentive repayment program may— (A) offer a reduction of the interest rate on a loan on which the borrower has made 48 consecutive, monthly repayments, but in no event may the rate be reduced by more than 1 percent; (B) provide for a discount on the balance owed on a loan on which the borrower pays the principal and interest in full prior to the end of the applicable repayment period, but in no event may the discount exceed 5 per- cent of the unpaid principal balance due on the loan at the time the early repayment is made; and (C) include such other incentive repay- ment options as the institution determines will carry out the objectives of this sub- section. (2) Limitation No incentive repayment option under an in- centive repayment program authorized by this subsection may be paid for with Federal funds, including any Federal funds from the student loan fund, or with institutional funds from the student loan fund. (j) Armed Forces and NOAA Commissioned Offi- cer Corps student loan interest payment pro- grams (1) Authority Using funds received by transfer to the Sec- retary under section 2174 of title 10 or section 3078 of title 33 for the payment of interest on a loan made under this part to a member of the Armed Forces or an officer in the commis- sioned officer corps of the National Oceanic and Atmospheric Administration, respec- tively, the Secretary shall pay the interest on the loan as due for a period not in excess of 36 consecutive months. The Secretary may not pay interest on such a loan out of any funds other than funds that have been so trans- ferred. (2) Forbearance During the period in which the Secretary is making payments on a loan under paragraph (1), the institution of higher education shall grant the borrower forbearance in accordance with subsection (e)(1)(C). (k) Additional safeguards The Secretary may develop such additional safeguards as the Secretary determines nec- essary to prevent fraud and abuse in the can- cellation of liability under subsection (c)(1)(F). Notwithstanding subsection (c)(1)(F), the Sec- retary may promulgate regulations to resume collection on loans cancelled under subsection (c)(1)(F) in any case in which— (1) a borrower received a cancellation of li- ability under subsection (c)(1)(F) and after the cancellation the borrower— Page 595 TITLE 20—EDUCATION § 1087dd (A) receives a loan made, insured, or guar- anteed under this subchapter; or (B) has earned income in excess of the pov- erty line; or (2) the Secretary determines necessary. (Pub. L. 89–329, title IV, § 464, as added Pub. L. 99–498, title IV, § 405(a), Oct. 17, 1986, 100 Stat. 1448; amended Pub. L. 100–50, § 13(i), June 3, 1987, 101 Stat. 349; Pub. L. 100–369, § 7(c), July 18, 1988, 102 Stat. 837; Pub. L. 101–239, title II, § 2002(a)(3), Dec. 19, 1989, 103 Stat. 2111; Pub. L. 102–325, title IV, § 464, July 23, 1992, 106 Stat. 580; Pub. L. 103–208, § 2(f)(9)–(11), Dec. 20, 1993, 107 Stat. 2471; Pub. L. 105–244, title IV, § 464, Oct. 7, 1998, 112 Stat. 1725; Pub. L. 107–314, div. A, title VI, § 651(d), Dec. 2, 2002, 116 Stat. 2580; Pub. L. 109–171, title VIII, § 8007(c), Feb. 8, 2006, 120 Stat. 160; Pub. L. 110–84, title II, § 202(c), Sept. 27, 2007, 121 Stat. 792; Pub. L. 110–315, title IV, §§ 432(b)(7), 464(a), (b)(1), (c), Aug. 14, 2008, 122 Stat. 3246, 3266, 3267; Pub. L. 111–39, title IV, § 405(4), July 1, 2009, 123 Stat. 1947; Pub. L. 115–245, div. B, title III, § 309(d), Sept. 28, 2018, 132 Stat. 3106; Pub. L. 116–259, title II, § 202(b)(2), Dec. 23, 2020, 134 Stat. 1163.) Editorial Notes REFERENCES IN TEXT Section 1087cc(a) of this title, referred to in subsec. (c)(1)(G), was amended by Pub. L. 105–244, title IV, § 463(a)(3), Oct. 7, 1998, 112 Stat. 1724, which redesignated pars. (6) and (7) as (5) and (6), respectively. PRIOR PROVISIONS A prior section 1087dd, Pub. L. 89–329, title IV, § 464, as added Pub. L. 92–318, title I, § 137(b), June 23, 1972, 86 Stat. 275; amended Pub. L. 94–482, title I, § 130(d)–(g)(1), Oct. 12, 1976, 90 Stat. 2147; Pub. L. 95–43, § 1(a)(39), June 15, 1977, 91 Stat. 217; Pub. L. 96–374, title IV, §§ 442(b)(5), 443, 444, 445(b)(2), 446, 448(c), title XIII, § 1391(a)(1), Oct. 3, 1980, 94 Stat. 1440–1443, 1503; Pub. L. 97–35, title V, § 539, Aug. 13, 1981, 95 Stat. 458; Pub. L. 99–272, title XVI, § 16028, Apr. 7, 1986, 100 Stat. 353, related to terms and conditions of loans, prior to the general revision of this part by Pub. L. 99–498. AMENDMENTS 2020—Subsec. (j). Pub. L. 116–259, § 202(b)(2)(A), sub- stituted ‘‘Armed Forces and NOAA Commissioned Offi- cer Corps student loan interest payment programs’’ for ‘‘Armed Forces student loan interest payment pro- gram’’ in heading. Subsec. (j)(1). Pub. L. 116–259, § 202(b)(2)(B), inserted ‘‘or section 3078 of title 33’’ after ‘‘section 2174 of title 10’’ and ‘‘or an officer in the commissioned officer corps of the National Oceanic and Atmospheric Administra- tion, respectively’’ after ‘‘Armed Forces’’. 2018—Subsec. (c)(2)(A)(vi). Pub. L. 115–245 added cl. (vi). 2009—Subsec. (c). Pub. L. 111–39, § 405(4)(A), sub- stituted ‘‘(i)’’ for ‘‘(I)’’ and ‘‘(ii)’’ for ‘‘(II)’’ in par. (1)(D) and realigned margins in par. (2)(A)(iii). Subsec. (g)(5). Pub. L. 111–39, § 405(4)(B), substituted ‘‘consumer reporting agencies’’ for ‘‘credit bureaus’’. 2008—Subsec. (a)(2)(A). Pub. L. 110–315, § 464(a)(1), sub- stituted ‘‘$5,500’’ for ‘‘$4,000’’ in cl. (i) and ‘‘$8,000’’ for ‘‘$6,000’’ in cl. (ii). Subsec. (a)(2)(B). Pub. L. 110–315, § 464(a)(2), sub- stituted ‘‘$60,000’’ for ‘‘$40,000’’ in cl. (i), ‘‘$27,500’’ for ‘‘$20,000’’ in cl. (ii), and ‘‘$11,000’’ for ‘‘$8,000’’ in cl. (iii). Subsec. (c)(1)(F). Pub. L. 110–315, § 464(b)(1)(A), sub- stituted ‘‘cancelled—’’ and cls. (i) to (iv) for ‘‘canceled upon the death of the borrower, or if he becomes per- manently and totally disabled as determined in accord- ance with regulations of the Secretary;’’. Subsec. (c)(1)(I). Pub. L. 110–315, § 432(b)(7)(A), sub- stituted ‘‘consumer reporting agencies’’ for ‘‘credit bu- reau organizations’’. Subsec. (e). Pub. L. 110–315, § 464(c)(1), substituted ‘‘, as documented in accordance with paragraph (2),’’ for ‘‘, upon written request,’’ in introductory provi- sions, designated existing text as par. (1), redesignated former pars. (1) to (3) as subpars. (A) to (C), respec- tively, and added par. (2). Subsec. (h)(1)(A). Pub. L. 110–315, §§ 432(b)(7)(B), 464(c)(2), substituted ‘‘9 on-time’’ for ‘‘12 ontime’’ and ‘‘consumer’’ for ‘‘credit bureau organization or credit’’. Subsec. (j)(2). Pub. L. 110–315, § 464(c)(3), substituted ‘‘subsection (e)(1)(C)’’ for ‘‘subsection (e)(3)’’. Subsec. (k). Pub. L. 110–315, § 464(b)(1)(B), added sub- sec. (k). 2007—Subsec. (c)(2)(A)(iii). Pub. L. 110–84 struck out ‘‘not in excess of 3 years’’ before ‘‘during’’ in introduc- tory provisions, substituted comma for semicolon at end of subcl. (II), and inserted concluding provisions. 2006—Subsec. (c)(2)(A)(iii) to (v). Pub. L. 109–171 added cl. (iii) and redesignated former cls. (iii) and (iv) as (iv) and (v), respectively. 2002—Subsec. (e)(3). Pub. L. 107–314, § 651(d)(1), added par. (3). Subsec. (j). Pub. L. 107–314, § 651(d)(2), added subsec. (j). 1998—Subsec. (a)(2). Pub. L. 105–244, § 464(a), amended par. (2) generally. Prior to amendment, par. (2) related to limitations on the total of loans that could be made to a student by an institution of higher education from a loan fund established pursuant to an agreement under this part. Subsec. (b)(1). Pub. L. 105–244, § 464(b)(1), inserted at end ‘‘A student who is in default on a loan under this part shall not be eligible for an additional loan under this part unless such loan meets one of the conditions for exclusion under section 1087bb(g)(1)(E) of this title.’’ Subsec. (b)(2). Pub. L. 105–244, § 464(b)(2), amended par. (2) generally. Prior to amendment, par. (2) read as fol- lows: ‘‘If the institution’s capital contribution under section 1087bb of this title is directly or indirectly based in part on the financial need demonstrated by students who are (A) attending the institution less than full time, or (B) independent students, and if the total financial need of all such less than full-time and independent students at the institution exceeds 5 per- cent of the total financial need of all students at such institution, then at least 5 percent of such loans shall be made available to such less than full-time and inde- pendent students.’’ Subsec. (c)(1)(D). Pub. L. 105–244, § 464(c)(1), struck out ‘‘(i) 3 percent per year, (ii) 4 percent per year in the case of any loan made on or after July 1, 1981, or (iii)’’ after ‘‘at the rate of’’ and substituted ‘‘paragraph (2)(A)(i)’’ for ‘‘subparagraph (A)(i)’’. Subsec. (c)(2)(A). Pub. L. 105–244, § 464(c)(2), sub- stituted ‘‘subparagraph (A) of paragraph (1)’’ for ‘‘sub- paragraph (B)’’ in concluding provisions. Subsec. (c)(2)(C). Pub. L. 105–244, § 464(c)(3), added sub- par. (C). Subsec. (c)(7). Pub. L. 105–244, § 464(c)(4), added par. (7). Subsecs. (g) to (i). Pub. L. 105–244, § 464(d), added sub- secs. (g) to (i). 1993—Subsec. (c)(2)(B). Pub. L. 103–208, § 2(f)(9), sub- stituted ‘‘repayment of’’ for ‘‘repayment or’’. Subsec. (c)(6). Pub. L. 103–208, § 2(f)(10), substituted ‘‘Fulbright’’ for ‘‘Fullbright’’. Subsec. (e). Pub. L. 103–208, § 2(f)(11), substituted ‘‘principal’’ for ‘‘principle’’ before ‘‘only’’. 1992—Subsec. (a)(2). Pub. L. 102–325, § 464(a), amended par. (2) generally. Prior to amendment, par. (2) read as follows: ‘‘The aggregate of the loans for all years made by institutions of higher education from loan funds es- tablished pursuant to agreements under this part may not exceed— ‘‘(A) $18,000 in the case of any graduate or profes- sional student (as defined by regulations of the Sec- retary, and including any loans from such funds made Page 596 TITLE 20—EDUCATION § 1087dd to such person before he became a graduate or profes- sional student); ‘‘(B) $9,000 in the case of a student who has success- fully completed 2 years of a program of education leading to a bachelor’s degree, but who has not com- pleted the work necessary for such a degree (deter- mined under regulations of the Secretary, and includ- ing any loans from such funds made to such person before he became such a student); and ‘‘(C) $4,500 in the case of any other student.’’ Subsec. (a)(4). Pub. L. 102–325, § 464(b), added par. (4). Subsec. (b)(1). Pub. L. 102–325, § 464(c)(1), substituted ‘‘this subchapter, who meets the requirements of sec- tion 1091 of this title, and who provides the institution with the student’s drivers license number, if any, at the time of application for the loan’’ for ‘‘this subchapter and who meets the requirements of section 1091 of this title’’. Subsec. (b)(2). Pub. L. 102–325, § 464(c)(2), amended par. (2) generally. Prior to amendment, par. (2) read as fol- lows: ‘‘If the institution’s Federal capital contribution under section 1087bb of this title is directly or indi- rectly based in part on the financial need demonstrated by students attending the institution less than full time, a reasonable proportion of the loans under this part shall be made available to such students.’’ Subsec. (c)(1)(C)(i). Pub. L. 102–325, § 464(d), sub- stituted ‘‘$40’’ for ‘‘$30’’ in two places. Subsec. (c)(1)(E). Pub. L. 102–325, § 464(e), struck out ‘‘unless the borrower is a minor and the note or other evidence of obligation executed by him would not, under applicable law, create a binding obligation,’’ be- fore ‘‘shall provide’’. Subsec. (c)(2)(A). Pub. L. 102–325, § 464(f), amended subpar. (A) generally, revising and restating as cls. (i) to (iv) provisions formerly contained in cls. (i) to (ix). Subsec. (c)(2)(B), (C). Pub. L. 102–325, § 464(g)(1), added subpar. (B) and struck out former subpars. (B) and (C) which read as follows: ‘‘(B) Any period during which repayment is deferred under subparagraph (A) shall not be included in com- puting the 10-year maximum period provided for in sub- paragraph (A) of paragraph (1). ‘‘(C) No repayment of principal of, or interest on, any loan for any period of study, service, or disability de- scribed in subparagraph (A) or any combination thereof shall begin until 6 months after the completion of such period of study, service, disability, or combination thereof.’’ Subsec. (c)(4) to (6). Pub. L. 102–325, § 464(g)(2)–(4), added par. (4), redesignated former par. (4) as (5), and added par. (6). Subsecs. (e), (f). Pub. L. 102–325, § 464(h), added sub- secs. (e) and (f). 1989—Subsec. (c)(2)(A)(i). Pub. L. 101–239 inserted be- fore semicolon at end ‘‘, except that no borrower shall be eligible for a deferment under this clause, or a loan made under this part (other than a loan made under section 1078–2 or 1078–3 of this title), while serving in a medical internship or residency program’’. 1988—Subsec. (c)(2)(A)(v). Pub. L. 100–369 substituted ‘‘Internal Revenue Code of 1986’’ for ‘‘Internal Revenue Code of 1954’’, which for purposes of codification was translated as ‘‘title 26’’ thus requiring no change in text. 1987—Subsec. (c)(2)(A)(vi). Pub. L. 100–50 inserted ‘‘or serving in an internship or residency program leading to a degree or certificate awarded by an institution of higher education, a hospital, or a health care facility that offers postgraduate training’’ before semicolon at end. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2018 AMENDMENT Amendment by Pub. L. 115–245 applicable with re- spect to loans made on or after Sept. 28, 2018, or in re- payment on Sept. 28, 2018, see section 309(f) of Pub. L. 115–245, set out as a note under section 1077 of this title. EFFECTIVE DATE OF 2009 AMENDMENT Amendment by Pub. L. 111–39 effective as if enacted on the date of enactment of Pub. L. 110–315 (Aug. 14, 2008), see section 3 of Pub. L. 111–39, set out as a note under section 1001 of this title. EFFECTIVE DATE OF 2008 AMENDMENT Pub. L. 110–315, title IV, § 464(b)(2), Aug. 14, 2008, 122 Stat. 3267, provided that: ‘‘The amendments made by paragraph (1) [amending this section] shall take effect on July 1, 2008.’’ EFFECTIVE DATE OF 2007 AMENDMENT Amendment by Pub. L. 110–84 effective Oct. 1, 2007, see section 1(c) of Pub. L. 110–84, set out as a note under section 1070a of this title. EFFECTIVE DATE OF 2006 AMENDMENT Amendment by Pub. L. 109–171 effective July 1, 2006, except as otherwise provided, see section 8001(c) of Pub. L. 109–171, set out as a note under section 1002 of this title. Amendment by Pub. L. 109–171 applicable with re- spect to all loans under title IV of the Higher Edu- cation Act of 1965 (20 U.S.C. 1070 et seq.), see section 8007(f) of Pub. L. 109–171, set out as a note under section 1078 of this title. EFFECTIVE DATE OF 2002 AMENDMENT Amendment by Pub. L. 107–314 applicable with re- spect to interest, and any special allowance under sec- tion 1087–1 of this title, that accrue for months begin- ning on or after Oct. 1, 2003, on student loans described in section 2174(c) of Title 10, Armed Forces, that were made before, on, or after such date to members of the Armed Forces who are on active duty (as defined in sec- tion 101(d) of Title 10) on or after that date, see section 651(e) of Pub. L. 107–314, set out as an Effective Date note under section 2174 of Title 10. EFFECTIVE DATE OF 1998 AMENDMENT Amendment by Pub. L. 105–244 effective Oct. 1, 1998, except as otherwise provided in Pub. L. 105–244, see sec- tion 3 of Pub. L. 105–244, set out as a note under section 1001 of this title. EFFECTIVE DATE OF 1993 AMENDMENT Amendment by Pub. L. 103–208 effective as if included in the Higher Education Amendments of 1992, Pub. L. 102–325, except as otherwise provided, see section 5(a) of Pub. L. 103–208, set out as a note under section 1051 of this title. EFFECTIVE DATE OF 1992 AMENDMENT Pub. L. 102–325, title IV, § 468, July 23, 1992, 106 Stat. 585, as amended by Pub. L. 102–394, title III, § 307(a), Oct. 6, 1992, 106 Stat. 1820, provided that: ‘‘The changes made in part E of title IV of the Act [20 U.S.C. 1087aa et seq.] by the amendments made by this part [part E (§§ 461–468) of title IV of Pub. L. 102–325, enacting sec- tion 1087ii of this title and amending sections 1087aa to 1087gg of this title] shall take effect on the date of en- actment of this Act [July 23, 1992], except that— ‘‘(1) the changes in section 463(a)(2)(B) [20 U.S.C. 1087cc(a)(2)(B)], relating to the matching of Federal capital contributions, shall apply to funds provided for such program for the award years beginning on or after July 1, 1993; ‘‘(2) the changes made in section 464(c)(1)(C) [20 U.S.C. 1087dd(c)(1)(C)], relating to minimum monthly payments shall apply with respect to loans for which the first disbursement is made on or after October 1, 1992, to an individual who, on the date the loan is made, has no outstanding balance of principal or in- terest owing on any loan made under part E of title IV of the Act; ‘‘(3) the changes made in section 464(c)(2)(A), relat- ing to deferments, shall apply with respect to loans Page 597 TITLE 20—EDUCATION § 1087ee for which the first disbursement is made on or after July 1, 1993; ‘‘(4) the changes made in section 467 [20 U.S.C. 1087gg], relating to the creation of a Perkins Loan Revolving Fund, shall take effect on September 15, 1997; and ‘‘(5) the changes in section 464(a)(2)(A), (B) and (C) shall not apply to any loan made for the award year beginning July 1, 1992 provided that the loan does not result in a violation of section 464(a)(2)(A), (B) and (C) as in effect prior to such date of enactment.’’ [Pub. L. 102–394, title III, § 307(b), Oct. 6, 1992, 106 Stat. 1820, provided that: ‘‘The amendments made by sub- section (a) [amending section 468 of Pub. L. 102–325, set out above] shall take effect as if enacted on July 23, 1992.’’] EFFECTIVE DATE OF 1989 AMENDMENT Amendment by Pub. L. 101–239 applicable to any loan made, insured, or guaranteed under this part or part B of this subchapter, including a loan made before Dec. 19, 1989, and amendment effective Jan. 1, 1990, but inap- plicable with respect to any portion of a period of deferment granted to a borrower under section 1077(a)(2)(C)(i), 1078(b)(1)(M)(i), or 1087dd(c)(2)(A)(i) of this title for service in a medical internship or resi- dency program completed prior to Dec. 19, 1989, see sec- tion 2002(a)(4) of Pub. L. 101–239, set out as a note under section 1077 of this title. EFFECTIVE DATE OF 1987 AMENDMENT Amendment by Pub. L. 100–50 effective as if enacted as part of the Higher Education Amendments of 1986, Pub. L. 99–498, see section 27 of Pub. L. 100–50, set out as a note under section 1001 of this title. EFFECTIVE DATE Section effective Oct. 17, 1986, except as otherwise provided, see section 2 of Pub. L. 99–498, set out as a note under section 1001 of this title. Pub. L. 99–498, title IV, § 405(b), Oct. 17, 1986, 100 Stat. 1454, as amended by Pub. L. 100–50, § 22(d), June 3, 1987, 101 Stat. 361, provided that: ‘‘(1) Section 462 of the Act [20 U.S.C. 1087bb] shall apply with respect to academic year 1988-1989 and suc- ceeding academic years. ‘‘(2) The changes made in sections 464(c)(1)(A), 464(c)(2), and 465(a)(2)(E) of the Act [20 U.S.C. 1087dd(c)(1)(A), (2), 1087ee(a)(2)(E)] shall apply only to loans made to cover the costs of instruction for periods of enrollment beginning on or after July 1, 1987, to indi- viduals who are new borrowers on that date. ‘‘(3) Section 463(a)(9) and section 463A of the Act [20 U.S.C. 1087cc(a)(9), 1087cc–1] as amended by this section shall apply only to loans made for periods of enroll- ment beginning on or after July 1, 1987. ‘‘(4) For the purpose of this subsection, the term ‘new borrower’ means, with respect to any date, an indi- vidual who on that date has no outstanding balance of principal or interest owing on any loan made under part E of title IV of the Act [this part].’’ CONSTRUCTION OF 2006 AMENDMENT Nothing in amendment by Pub. L. 109–171 to be con- strued to authorize any refunding of any repayment of a loan, see section 8007(e) of Pub. L. 109–171, set out as a note under section 1078 of this title. § 1087ee. Cancellation of loans for certain public service (a) Cancellation of percentage of debt based on years of qualifying service (1) The percent specified in paragraph (3) of this subsection of the total amount of any loan made after June 30, 1972, from a student loan fund assisted under this part shall be canceled for each complete year of service after such date by the borrower under circumstances described in paragraph (2). (2) Loans shall be canceled under paragraph (1) for service— (A) as a full-time teacher for service in an academic year (including such a teacher em- ployed by an educational service agency)— (i) in a public or other nonprofit private el- ementary school or secondary school, which, for the purpose of this paragraph and for that year— (I) has been determined by the Secretary (pursuant to regulations of the Secretary and after consultation with the State edu- cational agency of the State in which the school is located) to be a school in which the number of children meeting a measure of poverty under section 1113(a)(5) of the Elementary and Secondary Education Act of 1965 [20 U.S.C. 6313(a)(5)], exceeds 30 per- cent of the total number of children en- rolled in such school; and (II) is in the school district of a local educational agency which is eligible in such year for assistance pursuant to part A of title I of the Elementary and Sec- ondary Education Act of 1965 [20 U.S.C. 6311 et seq.]; or (ii) in one or more public, or nonprofit pri- vate, elementary schools or secondary schools or locations operated by an edu- cational service agency that have been de- termined by the Secretary (pursuant to reg- ulations of the Secretary and after consulta- tion with the State educational agency of the State in which the educational service agency operates) to be a school or location at which the number of children taught who meet a measure of poverty under section 1113(a)(5) of the Elementary and Secondary Education Act of 1965 [20 U.S.C. 6313(a)(5)], exceeds 30 percent of the total number of children taught at such school or location; (B) as a full-time staff member in a pre- school program carried on under the Head Start Act [42 U.S.C. 9831 et seq.], or in a pre- kindergarten or child care program that is li- censed or regulated by the State, that is oper- ated for a period which is comparable to a full school year in the locality if the salary of such staff member is not more than the salary of a comparable employee of the local educational agency; (C) as a full-time special education teacher, including teachers of infants, toddlers, chil- dren, or youth with disabilities in a public or other nonprofit elementary or secondary school system, including a system adminis- tered by an educational service agency, or as a full-time qualified professional provider of early intervention services in a public or other nonprofit program under public supervision by the lead agency as authorized in section 1435(a)(10) of this title; (D) as a member of the Armed Forces of the United States, for service that qualifies for special pay under section 310, or paragraph (1) or (3) of section 351(a), of title 37 as an area of hostilities; (E) as a volunteer under the Peace Corps Act [22 U.S.C. 2501 et seq.] or a volunteer under the