20 U.S.C. § 1085 — Definitions for student loan insurance

Page 495 TITLE 20—EDUCATION § 1085 tions of higher education served by such guar- anty agency, shall develop and make available high-quality educational programs and mate- rials to provide training for students and fami- lies in budgeting and financial management, in- cluding debt management and other aspects of financial literacy, such as the cost of using high interest loans to pay for postsecondary edu- cation, particularly as budgeting and financial management relates to student loan programs authorized by this subchapter. Such programs and materials shall be in formats that are sim- ple and understandable to students and families, and shall be provided before, during, and after the students’ enrollment in an institution of higher education. The activities described in this section shall be considered default reduc- tion activities for the purposes of section 1072 of this title. (b) Rule of construction Nothing in this section shall be construed to prohibit— (1) a guaranty agency from using existing activities, programs, and materials in meeting the requirements of this section; (2) a guaranty agency from providing pro- grams or materials similar to the programs or materials described in subsection (a) to an in- stitution of higher education that provides loans exclusively through part D; or (3) a lender or loan servicer from providing outreach or financial aid literacy information in accordance with subsection (a). (Pub. L. 89–329, title IV, § 433A, as added Pub. L. 110–315, title IV, § 435, Aug. 14, 2008, 122 Stat. 3252.) Editorial Notes PRIOR PROVISIONS A prior section 1083a, Pub. L. 89–329, title IV, § 433A, as added Pub. L. 96–374, title IV, § 418, Oct. 3, 1980, 94 Stat. 1423; amended Pub. L. 97–301, § 13(a), Oct. 13, 1982, 96 Stat. 1404; Pub. L. 98–79, § 3(a), Aug. 15, 1983, 97 Stat. 476; Pub. L. 99–272, title XVI, § 16012(c), Apr. 7, 1986, 100 Stat. 340, related to student loan information to be pro- vided by eligible lenders, prior to the general revision of this part by Pub. L. 99–498. See section 1083 of this title. § 1084. Participation by Federal credit unions in Federal, State, and private student loan in- surance programs Notwithstanding any other provision of law, Federal credit unions shall, pursuant to regula- tions of the National Credit Union Administra- tion, have power to make insured loans to stu- dent members in accordance with the provisions of this part relating to federally insured loans, or in accordance with the provisions of any State or nonprofit private student loan insur- ance program which meets the requirements of section 1078(a)(1)(B) of this title. (Pub. L. 89–329, title IV, § 434, as added Pub. L. 99–498, title IV, § 402(a), Oct. 17, 1986, 100 Stat. 1408.) Editorial Notes PRIOR PROVISIONS A prior section 1084, Pub. L. 89–329, title IV, § 434, Nov. 8, 1965, 79 Stat. 1247; Pub. L. 90–575, title I, § 116(b)(4), Oct. 16, 1968, 82 Stat. 1024; Pub. L. 91–206, § 6, Mar. 10, 1970, 84 Stat. 51; Pub. L. 92–318, title I, § 132D(e), June 23, 1972, 86 Stat. 264; Pub. L. 94–482, title I, § 127(a), Oct. 12, 1976, 90 Stat. 2129; Pub. L. 95–630, title V, § 502(a), Nov. 10, 1978, 92 Stat. 3681, related to participation by Fed- eral credit unions in Federal, State, and private stu- dent loan insurance programs, prior to the general revi- sion of this part by Pub. L. 99–498. § 1085. Definitions for student loan insurance program As used in this part: (a) Eligible institution (1) In general Except as provided in paragraph (2), the term ‘‘eligible institution’’ means an institu- tion of higher education, as defined in section 1002 of this title, except that, for the purposes of sections 1077(a)(2)(C)(i) and 1078(b)(1)(M)(i) of this title, an eligible institution includes any institution that is within this definition without regard to whether such institution is participating in any program under this sub- chapter and includes any institution ineligible for participation in any program under this part pursuant to paragraph (2) of this sub- section. (2) Ineligibility based on high default rates (A) An institution whose cohort default rate is equal to or greater than the threshold per- centage specified in subparagraph (B) for each of the three most recent fiscal years for which data are available shall not be eligible to par- ticipate in a program under this part for the fiscal year for which the determination is made and for the two succeeding fiscal years, unless, within 30 days of receiving notification from the Secretary of the loss of eligibility under this paragraph, the institution appeals the loss of its eligibility to the Secretary. The Secretary shall issue a decision on any such appeal within 45 days after its submission. Such decision may permit the institution to continue to participate in a program under this part if— (i) the institution demonstrates to the sat- isfaction of the Secretary that the Sec- retary’s calculation of its cohort default rate is not accurate, and that recalculation would reduce its cohort default rate for any of the three fiscal years below the threshold percentage specified in subparagraph (B); (ii) there are exceptional mitigating cir- cumstances within the meaning of para- graph (5); or (iii) there are, in the judgment of the Sec- retary, other exceptional mitigating cir- cumstances that would make the application of this paragraph inequitable. During such appeal, the Secretary may permit the institution to continue to participate in a program under this part. If an institution con- tinues to participate in a program under this part, and the institution’s appeal of the loss of eligibility is unsuccessful, the institution shall be required to pay to the Secretary an amount equal to the amount of interest, spe- cial allowance, reinsurance, and any related payments made by the Secretary (or which the Page 496 TITLE 20—EDUCATION § 1085 1 See References in Text note below. Secretary is obligated to make) with respect to loans made under this part to students at- tending, or planning to attend, that institu- tion during the pendency of such appeal. (B) For purposes of determinations under subparagraph (A), the threshold percentage is— (i) 35 percent for fiscal year 1991 and 1992; (ii) 30 percent for fiscal year 1993; (iii) 25 percent for fiscal year 1994 through fiscal year 2011; and (iv) 30 percent for fiscal year 2012 and any succeeding fiscal year. (C) Until July 1, 1999, this paragraph shall not apply to any institution that is— (i) a part B institution within the meaning of section 1061(2) of this title; (ii) a tribally controlled college or univer- sity, as defined in section 1801(a)(4) of title 25; or (iii) a Navajo Community College under the Navajo Community College Act. (D) Notwithstanding the first sentence of subparagraph (A), the Secretary shall restore the eligibility to participate in a program under subpart 1 of part A, part B, or part E of an institution that did not appeal its loss of eligibility within 30 days of receiving notifica- tion if the Secretary determines, on a case-by- case basis, that the institution’s failure to ap- peal was substantially justified under the cir- cumstances, and that— (i) the institution made a timely request that the appropriate guaranty agency cor- rect errors in the draft data used to cal- culate the institution’s cohort default rate; (ii) the guaranty agency did not correct the erroneous data in a timely fashion; and (iii) the institution would have been eligi- ble if the erroneous data had been corrected by the guaranty agency. (3) Appeals for regulatory relief An institution whose cohort default rate, calculated in accordance with subsection (m), is equal to or greater than the threshold per- centage specified in paragraph (2)(B)(iv) for any two consecutive fiscal years may, not later than 30 days after the date the institu- tion receives notification from the Secretary, file an appeal demonstrating exceptional miti- gating circumstances, as defined in paragraph (5). The Secretary shall issue a decision on any such appeal not later than 45 days after the date of submission of the appeal. If the Sec- retary determines that the institution dem- onstrates exceptional mitigating cir- cumstances, the Secretary may not subject the institution to provisional certification based solely on the institution’s cohort de- fault rate. (4) Appeals based upon allegations of improper loan servicing An institution that— (A) is subject to loss of eligibility for the Federal Family Education Loan Program pursuant to paragraph (2)(A) of this sub- section; (B) is subject to loss of eligibility for the Federal Supplemental Loans for Students pursuant to section 1078–1(a)(2) 1 of this title; or (C) is an institution whose cohort default rate equals or exceeds 20 percent for the most recent year for which data are avail- able; may include in its appeal of such loss or rate a defense based on improper loan servicing (in addition to other defenses). In any such ap- peal, the Secretary shall take whatever steps are necessary to ensure that such institution has access for a reasonable period of time, not to exceed 30 days, to a representative sample (as determined by the Secretary) of the rel- evant loan servicing and collection records used by a guaranty agency in determining whether to pay a claim on a defaulted loan or by the Department in determining an institu- tion’s default rate in the loan program under part D of this subchapter. The Secretary shall reduce the institution’s cohort default rate to reflect the percentage of defaulted loans in the representative sample that are required to be excluded pursuant to subsection (m)(1)(B). (5) Definition of mitigating circumstances (A) For purposes of this subsection, an insti- tution of higher education shall be treated as having exceptional mitigating circumstances that make application of paragraph (2) inequi- table, and that provide for regulatory relief under paragraph (3), if such institution, in the opinion of an independent auditor, meets the following criteria: (i) For a 12-month period that ended dur- ing the 6 months immediately preceding the fiscal year for which the cohort of borrowers used to calculate the institution’s cohort de- fault rate is determined, at least two-thirds of the students enrolled on at least a half- time basis at the institution— (I) are eligible to receive a Federal Pell Grant award that is at least equal to one- half the Federal Pell Grant amount, deter- mined under section 1070a(b)(2)(A) of this title, for which a student would be eligible based on the student’s enrollment status; or (II) have an adjusted gross income that when added with the adjusted gross income of the student’s parents (unless the stu- dent is an independent student), of less than the poverty level, as determined by the Department of Health and Human Services. (ii) In the case of an institution of higher education that offers an associate, bacca- laureate, graduate or professional degree, 70 percent or more of the institution’s regular students who were initially enrolled on a full-time basis and were scheduled to com- plete their programs during the same 12- month period described in clause (i)— (I) completed the educational programs in which the students were enrolled; (II) transferred from the institution to a higher level educational program; (III) at the end of the 12-month period, remained enrolled and making satisfactory Page 497 TITLE 20—EDUCATION § 1085 progress toward completion of the stu- dent’s educational programs; or (IV) entered active duty in the Armed Forces of the United States. (iii)(I) In the case of an institution of high- er education that does not award a degree described in clause (ii), had a placement rate of 44 percent or more with respect to the in- stitution’s former regular students who— (aa) remained in the program beyond the point the students would have received a 100 percent tuition refund from the institu- tion; (bb) were initially enrolled on at least a half-time basis; and (cc) were originally scheduled, at the time of enrollment, to complete their edu- cational programs during the same 12- month period described in clause (i). (II) The placement rate shall not include students who are still enrolled and making satisfactory progress in the educational pro- grams in which the students were originally enrolled on the date following 12 months after the date of the student’s last date of attendance at the institution. (III) The placement rate is calculated by determining the percentage of all those former regular students who— (aa) are employed, in an occupation for which the institution provided training, on the date following 12 months after the date of their last day of attendance at the insti- tution; (bb) were employed, in an occupation for which the institution provided training, for at least 13 weeks before the date fol- lowing 12 months after the date of their last day of attendance at the institution; or (cc) entered active duty in the Armed Forces of the United States. (IV) The placement rate shall not include as placements a student or former student for whom the institution is the employer. (B) For purposes of determining a rate of completion and a placement rate under this paragraph, a student is originally scheduled, at the time of enrollment, to complete the educational program on the date when the stu- dent will have been enrolled in the program for the amount of time normally required to complete the program. The amount of time normally required to complete the program for a student who is initially enrolled full- time is the period of time specified in the in- stitution’s enrollment contract, catalog, or other materials, for completion of the pro- gram by a full-time student. For a student who is initially enrolled less than full-time, the period is the amount of time it would take the student to complete the program if the student remained enrolled at that level of en- rollment throughout the program. (6) Reduction of default rates at certain minor- ity institutions (A) Beneficiaries of exception required to es- tablish management plan After July 1, 1999, any institution that has a cohort default rate that equals or exceeds 25 percent for each of the three most recent fiscal years for which data are available and that relies on the exception in subparagraph (B) to continue to be an eligible institution shall— (i) submit to the Secretary a default management plan which the Secretary, in the Secretary’s discretion, after consider- ation of the institution’s history, re- sources, dollars in default, and targets for default reduction, determines is acceptable and provides reasonable assurance that the institution will, by July 1, 2004, have a co- hort default rate that is less than 25 per- cent; (ii) engage an independent third party (which may be paid with funds received under section 1059d of this title or part B of subchapter III) to provide technical as- sistance in implementing such default management plan; and (iii) provide to the Secretary, on an an- nual basis or at such other intervals as the Secretary may require, evidence of cohort default rate improvement and successful implementation of such default manage- ment plan. (B) Discretionary eligibility conditioned on improvement Notwithstanding the expiration of the ex- ception in paragraph (2)(C), the Secretary may, in the Secretary’s discretion, continue to treat an institution described in subpara- graph (A) of this paragraph as an eligible in- stitution for each of the 1-year periods be- ginning on July 1 of 1999 through 2003, only if the institution submits by the beginning of such period evidence satisfactory to the Secretary that— (i) such institution has complied and is continuing to comply with the require- ments of subparagraph (A); and (ii) such institution has made substan- tial improvement, during each of the pre- ceding 1-year periods, in the institution’s cohort default rate. (7) Default prevention and assessment of eligi- bility based on high default rates (A) First year (i) In general An institution whose cohort default rate is equal to or greater than the threshold percentage specified in paragraph (2)(B)(iv) in any fiscal year shall establish a default prevention task force to prepare a plan to— (I) identify the factors causing the in- stitution’s cohort default rate to exceed such threshold; (II) establish measurable objectives and the steps to be taken to improve the institution’s cohort default rate; and (III) specify actions that the institu- tion can take to improve student loan repayment, including appropriate coun- seling regarding loan repayment options. (ii) Technical assistance Each institution subject to this subpara- graph shall submit the plan under clause Page 498 TITLE 20—EDUCATION § 1085 (i) to the Secretary, who shall review the plan and offer technical assistance to the institution to promote improved student loan repayment. (B) Second consecutive year (i) In general An institution whose cohort default rate is equal to or greater than the threshold percentage specified in paragraph (2)(B)(iv) for two consecutive fiscal years, shall re- quire the institution’s default prevention task force established under subparagraph (A) to review and revise the plan required under such subparagraph, and shall submit such revised plan to the Secretary. (ii) Review by the Secretary The Secretary shall review each revised plan submitted in accordance with this subparagraph, and may direct that such plan be amended to include actions, with measurable objectives, that the Secretary determines, based on available data and analyses of student loan defaults, will pro- mote student loan repayment. (8) Participation rate index (A) In general An institution that demonstrates to the Secretary that the institution’s participa- tion rate index is equal to or less than 0.0625 for any of the 3 most recent fiscal years for which data is available shall not be subject to paragraph (2). The participation rate index shall be determined by multiplying the institution’s cohort default rate for loans under this part or part D, or weighted average cohort default rate for loans under this part and part D, by the percentage of the institution’s regular students, enrolled on at least a half-time basis, who received a loan made under this part or part D for a 12- month period ending during the 6 months immediately preceding the fiscal year for which the cohort of borrowers used to cal- culate the institution’s cohort default rate is determined. (B) Data An institution shall provide the Secretary with sufficient data to determine the insti- tution’s participation rate index within 30 days after receiving an initial notification of the institution’s draft cohort default rate. (C) Notification Prior to publication of a final cohort de- fault rate for an institution that provides the data described in subparagraph (B), the Secretary shall notify the institution of the institution’s compliance or noncompliance with subparagraph (A). (b), (c) Repealed. Pub. L. 102–325, title IV, § 427(b)(1), (c), July 23, 1992, 106 Stat. 549 (d) Eligible lender (1) In general Except as provided in paragraphs (2) through (6), the term ‘‘eligible lender’’ means— (A) a National or State chartered bank, a mutual savings bank, a savings and loan as- sociation, a stock savings bank, or a credit union which— (i) is subject to examination and super- vision by an agency of the United States or of the State in which its principal place of operation is established, and (ii) does not have as its primary con- sumer credit function the making or hold- ing of loans made to students under this part unless (I) it is a bank which is wholly owned by a State, or a bank which is sub- ject to examination and supervision by an agency of the United States, makes stu- dent loans as a trustee pursuant to an ex- press trust, operated as a lender under this part prior to January 1, 1975, and which meets the requirements of this provision prior to July 23, 1992, (II) it is a single wholly owned subsidiary of a bank holding company which does not have as its pri- mary consumer credit function the mak- ing or holding of loans made to students under this part, (III) it is a bank (as de- fined in section 1813(a)(1) of title 12) that is a wholly owned subsidiary of a nonprofit foundation, the foundation is described in section 501(c)(3) of title 26 and exempt from taxation under section 501(a) of such title, and the bank makes loans under this part only to undergraduate students who are age 22 or younger and has a portfolio of such loans that is not more than $5,000,000, or (IV) it is a National or State chartered bank, or a credit union, with assets of less than $1,000,000,000; (B) a pension fund as defined in the Em- ployee Retirement Income Security Act [29 U.S.C. 1001 et seq.]; (C) an insurance company which is subject to examination and supervision by an agen- cy of the United States or a State; (D) in any State, a single agency of the State or a single nonprofit private agency designated by the State; (E) an eligible institution which meets the requirements of paragraphs (2) through (5) of this subsection; (F) for purposes only of purchasing and holding loans made by other lenders under this part, the Student Loan Marketing Asso- ciation or the Holding Company of the Stu- dent Loan Marketing Association, including any subsidiary of the Holding Company, cre- ated pursuant to section 1087–3 of this title, or an agency of any State functioning as a secondary market; (G) for purposes of making loans under sections 1078–2(d) and 1078–3 of this title, the Student Loan Marketing Association or the Holding Company of the Student Loan Mar- keting Association, including any subsidiary of the Holding Company, created pursuant to section 1087–3 of this title; (H) for purposes of making loans under sections 1078(h) 1 and 1078(j) of this title, a guaranty agency; (I) a Rural Rehabilitation Corporation, or its successor agency, which has received Federal funds under Public Law 499, Eighty- first Congress (64 Stat. 98 (1950)); (J) for purpose of making loans under sec- tion 1078–3 of this title, any nonprofit pri- Page 499 TITLE 20—EDUCATION § 1085 vate agency functioning in any State as a secondary market; and (K) a consumer finance company sub- sidiary of a national bank which, as of Octo- ber 7, 1998, through one or more subsidiaries: (i) acts as a small business lending company, as determined under regulations of the Small Business Administration under sec- tion 120.470 of title 13, Code of Federal Regu- lations (as such section is in effect on Octo- ber 7, 1998); and (ii) participates in the pro- gram authorized by this part pursuant to subparagraph (C), provided the national bank and all of the bank’s direct and indi- rect subsidiaries taken together as a whole, do not have, as their primary consumer cred- it function, the making or holding of loans made to students under this part. (2) Requirements for eligible institutions (A) In general To be an eligible lender under this part, an eligible institution— (i) shall employ at least one person whose full-time responsibilities are lim- ited to the administration of programs of financial aid for students attending such institution; (ii) shall not be a home study school; (iii) shall not— (I) make a loan to any undergraduate student; (II) make a loan other than a loan under section 1078 or 1078–8 of this title to a graduate or professional student; or (III) make a loan to a borrower who is not enrolled at that institution; (iv) shall award any contract for financ- ing, servicing, or administration of loans under this subchapter on a competitive basis; (v) shall offer loans that carry an origi- nation fee or an interest rate, or both, that are less than such fee or rate authorized under the provisions of this subchapter; (vi) shall not have a cohort default rate (as defined in subsection (m)) greater than 10 percent; (vii) shall, for any year for which the in- stitution engages in activities as an eligi- ble lender, provide for a compliance audit conducted in accordance with section 1078(b)(1)(U)(iii)(I) of this title, and the regulations thereunder, and submit the re- sults of such audit to the Secretary; (viii) shall use any proceeds from special allowance payments and interest pay- ments from borrowers, interest subsidies received from the Department of Edu- cation, and any proceeds from the sale or other disposition of loans, for need-based grant programs; and (ix) shall have met the requirements of subparagraphs (A) through (F) of this para- graph as in effect on the day before Feb- ruary 8, 2006, and made loans under this part, on or before April 1, 2006. (B) Administrative expenses An eligible lender under subparagraph (A) shall be permitted to use a portion of the proceeds described in subparagraph (A)(viii) for reasonable and direct administrative ex- penses. (C) Supplement, not supplant An eligible lender under subparagraph (A) shall ensure that the proceeds described in subparagraph (A)(viii) are used to supple- ment, and not to supplant, non-Federal funds that would otherwise be used for need- based grant programs. (3) Disqualification for high default rates The term ‘‘eligible lender’’ does not include any eligible institution in any fiscal year im- mediately after the fiscal year in which the Secretary determines, after notice and oppor- tunity for a hearing, that for each of 2 con- secutive years, 15 percent or more of the total amount of such loans as are described in sec- tion 1078(a)(1) of this title made by the institu- tion with respect to students at that institu- tion and repayable in each such year, are in default, as defined in subsection (m). (4) Waiver of disqualification Whenever the Secretary determines that— (A) there is reasonable possibility that an eligible institution may, within 1 year after a determination is made under paragraph (3), improve the collection of loans described in section 1078(a)(1) of this title, so that the application of paragraph (3) would be a hard- ship to that institution, or (B) the termination of the lender’s status under paragraph (3) would be a hardship to the present or for prospective students of the eligible institution, after considering the management of that institution, the ability of that institution to improve the collection of loans, the opportunities that institution offers to economically disadvantaged stu- dents, and other related factors, the Secretary shall waive the provisions of paragraph (3) with respect to that institution. Any determination required under this para- graph shall be made by the Secretary prior to the termination of an eligible institution as a lender under the exception of paragraph (3). Whenever the Secretary grants a waiver pur- suant to this paragraph, the Secretary shall provide technical assistance to the institution concerned in order to improve the collection rate of such loans. (5) Disqualification for use of certain incen- tives The term ‘‘eligible lender’’ does not include any lender that the Secretary determines, after notice and opportunity for a hearing, has— (A) offered, directly or indirectly, points, premiums, payments (including payments for referrals and for processing or finder fees), prizes, stock or other securities, trav- el, entertainment expenses, tuition payment or reimbursement, the provision of informa- tion technology equipment at below-market value, additional financial aid funds, or other inducements, to any institution of higher education, any employee of an insti- tution of higher education, or any individual Page 500 TITLE 20—EDUCATION § 1085 or entity in order to secure applicants for loans under this part; (B) conducted unsolicited mailings, by postal or electronic means, of student loan application forms to students enrolled in secondary schools or postsecondary institu- tions, or to family members of such stu- dents, except that applications may be mailed, by postal or electronic means, to students or borrowers who have previously received loans under this part from such lender; (C) entered into any type of consulting ar- rangement, or other contract to provide services to a lender, with an employee who is employed in the financial aid office of an institution of higher education, or who oth- erwise has responsibilities with respect to student loans or other financial aid of the institution; (D) compensated an employee who is em- ployed in the financial aid office of an insti- tution of higher education, or who otherwise has responsibilities with respect to student loans or other financial aid of the institu- tion, and who is serving on an advisory board, commission, or group established by a lender or group of lenders for providing such service, except that the eligible lender may reimburse such employee for reasonable ex- penses incurred in providing such service; (E) performed for an institution of higher education any function that such institution of higher education is required to perform under this title, except that a lender shall be permitted to perform functions on behalf of such institution in accordance with section 1092(b) or 1092(l) of this title; (F) paid, on behalf of an institution of higher education, another person to perform any function that such institution of higher education is required to perform under this subchapter, except that a lender shall be permitted to perform functions on behalf of such institution in accordance with section 1092(b) or 1092(l) of this title; (G) provided payments or other benefits to a student at an institution of higher edu- cation to act as the lender’s representative to secure applications under this subchapter from individual prospective borrowers, un- less such student— (i) is also employed by the lender for other purposes; and (ii) made all appropriate disclosures re- garding such employment; (H) offered, directly or indirectly, loans under this part as an inducement to a pro- spective borrower to purchase a policy of in- surance or other product; or (I) engaged in fraudulent or misleading ad- vertising. It shall not be a violation of this paragraph for a lender to provide technical assistance to in- stitutions of higher education comparable to the kinds of technical assistance provided to institutions of higher education by the De- partment. (6) Rebate fee requirement To be an eligible lender under this part, an eligible lender shall pay rebate fees in accord- ance with section 1078–3(f) of this title. (7) Eligible lender trustees Notwithstanding any other provision of this subsection, an eligible lender may not make or hold a loan under this part as trustee for an institution of higher education, or for an orga- nization affiliated with an institution of high- er education, unless— (A) the eligible lender is serving as trustee for that institution or organization as of September 30, 2006, under a contract that was originally entered into before Sep- tember 30, 2006, and that continues in effect or is renewed after September 30, 2006; and (B) the institution or organization, and the eligible lender, with respect to its duties as trustee, each comply on and after January 1, 2007, with the requirements of paragraph (2), except that— (i) the requirements of clauses (i), (ii), (vi), and (viii) of paragraph (2)(A) shall, subject to clause (ii) of this subparagraph, only apply to the institution (including both an institution for which the lender serves as trustee and an institution affili- ated with an organization for which the lender serves as trustee); (ii) in the case of an organization affili- ated with an institution— (I) the requirements of clauses (iii) and (v) of paragraph (2)(A) shall apply to the organization; and (II) the requirements of clause (viii) of paragraph (2)(A) shall apply to the insti- tution or the organization (or both), if the institution or organization receives (directly or indirectly) the proceeds de- scribed in such clause; (iii) the requirements of clauses (iv) and (ix) of paragraph (2)(A) shall not apply to the eligible lender, institution, or organi- zation; and (iv) the eligible lender, institution, and organization shall ensure that the loans made or held by the eligible lender as trustee for the institution or organization, as the case may be, are included in a com- pliance audit in accordance with clause (vii) of paragraph (2)(A). (8) School as lender program audit Each institution serving as an eligible lend- er under paragraph (1)(E), and each eligible lender serving as a trustee for an institution of higher education or an organization affili- ated with an institution of higher education, shall annually complete and submit to the Secretary a compliance audit to determine whether— (A) the institution or lender is using all proceeds from special allowance payments and interest payments from borrowers, in- terest subsidies received from the Depart- ment, and any proceeds from the sale or other disposition of loans, for need-based grant programs, in accordance with para- graph (2)(A)(viii); Page 501 TITLE 20—EDUCATION § 1085 (B) the institution or lender is using not more than a reasonable portion of the pro- ceeds described in paragraph (2)(A)(viii) for direct administrative expenses; and (C) the institution or lender is ensuring that the proceeds described in paragraph (2)(A)(viii) are being used to supplement, and not to supplant, Federal and non-Federal funds that would otherwise be used for need- based grant programs. (e) Line of credit The term ‘‘line of credit’’ means an arrange- ment or agreement between the lender and the borrower whereby a loan is paid out by the lend- er to the borrower in annual installments, or whereby the lender agrees to make, in addition to the initial loan, additional loans in subse- quent years. (f) Due diligence The term ‘‘due diligence’’ requires the utiliza- tion by a lender, in the servicing and collection of loans insured under this part, of servicing and collection practices at least as extensive and forceful as those generally practiced by finan- cial institutions for the collection of consumer loans. (g), (h) Repealed. Pub. L. 102–325, title IV, § 427(f), July 23, 1992, 106 Stat. 550 (i) Holder The term ‘‘holder’’ means an eligible lender who owns a loan. (j) Guaranty agency The term ‘‘guaranty agency’’ means any State or nonprofit private institution or organization with which the Secretary has an agreement under section 1078(b) of this title. (k) Insurance beneficiary The term ‘‘insurance beneficiary’’ means the insured or its authorized representative assigned in accordance with section 1079(d) of this title. (l) Default Except as provided in subsection (m), the term ‘‘default’’ includes only such defaults as have existed for (1) 270 days in the case of a loan which is repayable in monthly installments, or (2) 330 days in the case of a loan which is repay- able in less frequent installments. (m) Cohort default rate (1) In general (A) Except as provided in paragraph (2), the term ‘‘cohort default rate’’ means, for any fis- cal year in which 30 or more current and former students at the institution enter repay- ment on loans under section 1078, 1078–1,1 or 1078–8 of this title received for attendance at the institution, the percentage of those cur- rent and former students who enter repayment on such loans (or on the portion of a loan made under section 1078–3 of this title that is used to repay any such loans) received for at- tendance at that institution in that fiscal year who default before the end of the second fiscal year following the fiscal year in which the stu- dents entered repayment. The Secretary shall require that each guaranty agency that has in- sured loans for current or former students of the institution afford such institution a rea- sonable opportunity (as specified by the Sec- retary) to review and correct errors in the in- formation required to be provided to the Sec- retary by the guaranty agency for the pur- poses of calculating a cohort default rate for such institution, prior to the calculation of such rate. (B) In determining the number of students who default before the end of such second fis- cal year, the Secretary shall include only loans for which the Secretary or a guaranty agency has paid claims for insurance. In con- sidering appeals with respect to cohort default rates pursuant to subsection (a)(3), the Sec- retary shall exclude, from the calculation of the number of students who entered repay- ment and from the calculation of the number of students who default, any loans which, due to improper servicing or collection, would, as demonstrated by the evidence submitted in support of the institution’s timely appeal to the Secretary, result in an inaccurate or in- complete calculation of such cohort default rate. (C) For any fiscal year in which fewer than 30 of the institution’s current and former stu- dents enter repayment, the term ‘‘cohort de- fault rate’’ means the percentage of such cur- rent and former students who entered repay- ment on such loans (or on the portion of a loan made under section 1078–3 of this title that is used to repay any such loans) in any of the three most recent fiscal years, who default be- fore the end of the second fiscal year following the year in which they entered repayment. (2) Special rules (A) In the case of a student who has attended and borrowed at more than one school, the student (and such student’s subsequent repay- ment or default) is attributed to each school for attendance at which the student received a loan that entered repayment in the fiscal year. (B) A loan on which a payment is made by the school, such school’s owner, agent, con- tractor, employee, or any other entity or indi- vidual affiliated with such school, in order to avoid default by the borrower, is considered as in default for purposes of this subsection. (C) Any loan which has been rehabilitated before the end of the second fiscal year fol- lowing the year in which the loan entered re- payment is not considered as in default for purposes of this subsection. The Secretary may require guaranty agencies to collect data with respect to defaulted loans in a manner that will permit the identification of any de- faulted loan for which (i) the borrower is cur- rently making payments and has made not less than 6 consecutive on-time payments by the end of such second fiscal year, and (ii) a guaranty agency has renewed the borrower’s subchapter IV eligibility as provided in sec- tion 1078–6(b) of this title. (D) For the purposes of this subsection, a loan made in accordance with section 1078–1 1 of this title (or the portion of a loan made under section 1078–3 of this title that is used to Page 502 TITLE 20—EDUCATION § 1085 repay a loan made under section 1078–1 1 of this title) shall not be considered to enter repay- ment until after the borrower has ceased to be enrolled in a course of study leading to a de- gree or certificate at an eligible institution on at least a half-time basis (as determined by the institution) and ceased to be in a period of forbearance based on such enrollment. Each eligible lender of a loan made under section 1078–1 1 of this title (or a loan made under sec- tion 1078–3 of this title a portion of which is used to repay a loan made under section 1078–1 1 of this title) shall provide the guaranty agency with the information necessary to de- termine when the loan entered repayment for purposes of this subsection, and the guaranty agency shall provide such information to the Secretary. (3) Regulations to prevent evasions The Secretary shall prescribe regulations de- signed to prevent an institution from evading the application to that institution of a default rate determination under this subsection through the use of such measures as branch- ing, consolidation, change of ownership or control, or any similar device. (4) Collection and reporting of cohort default rates and life of cohort default rates (A) The Secretary shall publish not less often than once every fiscal year a report showing cohort default data and life of cohort default rates for each category of institution, including: (i) four-year public institutions; (ii) four-year private nonprofit institutions; (iii) two-year public institutions; (iv) two-year pri- vate nonprofit institutions; (v) four-year pro- prietary institutions; (vi) two-year propri- etary institutions; and (vii) less than two-year proprietary institutions. For purposes of this subparagraph, for any fiscal year in which one or more current and former students at an in- stitution enter repayment on loans under sec- tion 1078, 1078–2, or 1078–8 of this title, received for attendance at the institution, the Sec- retary shall publish the percentage of those current and former students who enter repay- ment on such loans (or on the portion of a loan made under section 1078–3 of this title that is used to repay any such loans) received for at- tendance at the institution in that fiscal year who default before the end of each succeeding fiscal year. (B) The Secretary may designate such addi- tional subcategories within the categories specified in subparagraph (A) as the Secretary deems appropriate. (C) The Secretary shall publish not less often than once every fiscal year a report showing default data for each institution for which a cohort default rate is calculated under this subsection. (D) The Secretary shall publish the report described in subparagraph (C) by September 30 of each year. (n) Repealed. Pub. L. 102–325, title IV, § 427(f), July 23, 1992, 106 Stat. 550 (o) Economic hardship (1) In general For purposes of this part and part E, a bor- rower shall be considered to have an economic hardship if— (A) such borrower is working full-time and is earning an amount which does not exceed the greater of— (i) the minimum wage rate described in section 206 of title 29; or (ii) an amount equal to 150 percent of the poverty line applicable to the borrower’s family size as determined in accordance with section 9902(2) of title 42; or (B) such borrower meets such other cri- teria as are established by the Secretary by regulation in accordance with paragraph (2). (2) Considerations In establishing criteria for purposes of para- graph (1)(B), the Secretary shall consider the borrower’s income and debt-to-income ratio as primary factors. (p) Eligible not-for-profit holder (1) Definition Subject to the limitations in paragraph (2) and the prohibition in paragraph (3), the term ‘‘eligible not-for-profit holder’’ means an eligi- ble lender under subsection (d) (except for an eligible lender described in subsection (d)(1)(E)) that requests a special allowance payment under section 1087–1(b)(2)(I)(vi)(II) of this title or a payment under section 1141 of this title and that is— (A) a State, or a political subdivision, au- thority, agency, or other instrumentality thereof, including such entities that are eli- gible to issue bonds described in section 1.103–1 of title 26, Code of Federal Regula- tions, or section 144(b) of title 26; (B) an entity described in section 150(d)(2) of such title that has not made the election described in section 150(d)(3) of such title; (C) an entity described in section 501(c)(3) of such title; or (D) acting as a trustee on behalf of a State, political subdivision, authority, agency, in- strumentality, or other entity described in subparagraph (A), (B), or (C), regardless of whether such State, political subdivision, authority, agency, instrumentality, or other entity is an eligible lender under subsection (d). (2) Limitations (A) Existing on September 27, 2007 (i) In general An eligible lender shall not be an eligible not-for-profit holder under this chapter unless such lender— (I) was a State, political subdivision, authority, agency, instrumentality, or other entity described in paragraph (1)(A), (B), or (C) that was, on September 27, 2007, acting as an eligible lender under subsection (d) (other than an eligi- Page 503 TITLE 20—EDUCATION § 1085 2 So in original. Probably should be ‘‘with respect to the’’. ble lender described in subsection (d)(1)(E)); or (II) is acting as a trustee on behalf of a State, political subdivision, authority, agency, instrumentality, or other entity described in subparagraph (A), (B), or (C) of paragraph (1), regardless of whether such State, political subdivision, author- ity, agency, instrumentality, or other entity is an eligible lender under sub- section (d), and such State, political sub- division, authority, agency, instrumen- tality, or other entity, on September 27, 2007, was the sole beneficial owner of a loan eligible for any special allowance payment under section 1087–1 of this title. (ii) Exception Notwithstanding clause (i), a State may elect, in accordance with regulations of the Secretary, to waive the requirements of this subparagraph for a new not-for- profit holder determined by the State to be necessary to carry out a public purpose of such State, except that a State may not make such election with respect the 2 re- quirements of clause (i)(II). (B) No for-profit ownership or control (i) In general No State, political subdivision, author- ity, agency, instrumentality, or other en- tity described in paragraph (1)(A), (B), or (C) shall be an eligible not-for-profit hold- er under this chapter if such State, polit- ical subdivision, authority, agency, instru- mentality, or other entity is owned or con- trolled, in whole or in part, by a for-profit entity. (ii) Trustees A trustee described in paragraph (1)(D) shall not be an eligible not-for-profit hold- er under this chapter with respect to a State, political subdivision, authority, agency, instrumentality, or other entity described in subparagraph (A), (B), or (C) of paragraph (1), regardless of whether such State, political subdivision, author- ity, agency, instrumentality, or other en- tity is an eligible lender under subsection (d), if such State, political subdivision, au- thority, agency, instrumentality, or other entity is owned or controlled, in whole or in part, by a for-profit entity. (C) Sole ownership of loans and income No State, political subdivision, authority, agency, instrumentality, trustee, or other entity described in paragraph (1)(A), (B), (C), or (D) shall be an eligible not-for-profit hold- er under this chapter with respect to any loan, or income from any loan, unless— (i) such State, political subdivision, au- thority, agency, instrumentality, or other entity is the sole beneficial owner of such loan and the income from such loan; or (ii) such trustee holds the loan on behalf of a State, political subdivision, authority, agency, instrumentality, or other entity described in subparagraph (A), (B), or (C) of paragraph (1), regardless of whether such State, political subdivision, author- ity, agency, instrumentality, or other en- tity is an eligible lender under subsection (d), and such State, political subdivision, authority, agency, instrumentality, or other entity is the sole beneficial owner of such loan and the income from such loan. (D) Trustee compensation limitations A trustee described in paragraph (1)(D) shall not receive compensation as consider- ation for acting as an eligible lender on be- half of a State, political subdivision, author- ity, agency, instrumentality, or other entity described in subparagraph (A), (B), or (C) of paragraph (1), regardless of whether such State, political subdivision, authority, agen- cy, instrumentality, or other entity is an el- igible lender under subsection (d), in excess of reasonable and customary fees. (E) Rule of construction For purposes of subparagraphs (A), (B), (C), and (D) of this paragraph, a State, political subdivision, authority, agency, instrumen- tality, or other entity described in subpara- graph (A), (B), or (C) of paragraph (1), re- gardless of whether such State, political subdivision, authority, agency, instrumen- tality, or other entity is an eligible lender under subsection (d), shall not— (i) be deemed to be owned or controlled, in whole or in part, by a for-profit entity; or (ii) lose its status as the sole owner of a beneficial interest in a loan and the in- come from a loan, by such State, political subdivision, author- ity, agency, instrumentality, or other enti- ty, or by the trustee described in paragraph (1)(D), granting a security interest in, or otherwise pledging as collateral, such loan, or the income from such loan, to secure a debt obligation for which such State, polit- ical subdivision, authority, agency, instru- mentality, or other entity is the issuer of the debt obligation. (3) Prohibition In the case of a loan for which the special al- lowance payment is calculated under section 1087–1(b)(2)(I)(vi)(II) of this title and that is sold by the eligible not-for-profit holder hold- ing the loan to an entity that is not an eligible not-for-profit holder under this chapter, the special allowance payment for such loan shall, beginning on the date of the sale, no longer be calculated under section 1087–1(b)(2)(I)(vi)(II) of this title and shall be calculated under sec- tion 1087–1(b)(2)(I)(vi)(I) of this title instead. (4) Regulations Not later than 1 year after September 27, 2007, the Secretary shall promulgate regula- tions in accordance with the provisions of this subsection. (Pub. L. 89–329, title IV, § 435, as added Pub. L. 99–498, title IV, § 402(a), Oct. 17, 1986, 100 Stat. Page 504 TITLE 20—EDUCATION § 1085 1408; amended Pub. L. 100–50, § 10(aa), June 3, 1987, 101 Stat. 347; Pub. L. 101–239, title II, §§ 2003(a)(2), 2007(a), Dec. 19, 1989, 103 Stat. 2113, 2120; Pub. L. 101–508, title III, § 3004(a), Nov. 5, 1990, 104 Stat. 1388–26; Pub. L. 101–542, title III, § 301, Nov. 8, 1990, 104 Stat. 2387; Pub. L. 102–26, § 2(a)(1), Apr. 9, 1991, 105 Stat. 123; Pub. L. 102–325, title IV, §§ 416(e)(2), 427(a), (b)(1), (c)–(g), July 23, 1992, 106 Stat. 519, 549, 550; Pub. L. 103–66, title IV, §§ 4046(b)(1), 4106(b), Aug. 10, 1993, 107 Stat. 362, 368; Pub. L. 103–208, § 2(c)(55)–(62), Dec. 20, 1993, 107 Stat. 2468, 2469; Pub. L. 103–235, § 1, Apr. 28, 1994, 108 Stat. 381; Pub. L. 103–382, title III, § 357, Oct. 20, 1994, 108 Stat. 3967; Pub. L. 104–208, div. A, title I, § 101(e) [title VI, § 602(b)(1)(A)], Sept. 30, 1996, 110 Stat. 3009–233, 3009–283; Pub. L. 105–244, title I, § 102(b)(2), title IV, § 429(a)–(c)(1), (d), title IX, § 901(d), Oct. 7, 1998, 112 Stat. 1622, 1704–1709, 1828; Pub. L. 106–554, § 1(a)(1) [title III, §§ 308(a), 312], Dec. 21, 2000, 114 Stat. 2763, 2763A–45, 2763A–46; Pub. L. 109–171, title VIII, § 8011, Feb. 8, 2006, 120 Stat. 165; Pub. L. 109–292, § 3(a), Sept. 30, 2006, 120 Stat. 1340; Pub. L. 110–84, title III, § 304, Sept. 27, 2007, 121 Stat. 797; Pub. L. 110–109, § 4, Oct. 31, 2007, 121 Stat. 1028; Pub. L. 110–315, title IV, §§ 436(a)(1), (b)–(e)(1), 438(a)(3), Aug. 14, 2008, 122 Stat. 3253–3256, 3258; Pub. L. 111–39, title IV, § 402(b)(2), (f)(10), July 1, 2009, 123 Stat. 1940, 1944; Pub. L. 111–152, title II, § 2101(b)(3), Mar. 30, 2010, 124 Stat. 1073.) Editorial Notes REFERENCES IN TEXT The Navajo Community College Act, referred to in subsec. (a)(2)(C)(iii), is Pub. L. 92–189, Dec. 15, 1971, 85 Stat. 646, which was classified to section 640a et seq. of Title 25, Indians, and was omitted from the Code as being of special and not general application. The Employee Retirement Income Security Act, re- ferred to in subsec. (d)(1)(B), probably means the Em- ployee Retirement Income Security Act of 1974, Pub. L. 93–406, Sept. 2, 1974, 88 Stat. 829, which is classified prin- cipally to chapter 18 (§ 1001 et seq.) of Title 29, Labor. For complete classification of this Act to the Code, see Short Title note set out under section 1001 of Title 29 and Tables. Section 1078–1 of this title, referred to in subsecs. (a)(4)(B) and (m)(1)(A), (2)(D), was repealed by Pub. L. 103–66, title IV, § 4047(b)–(d), Aug. 10, 1993, 107 Stat. 364, eff. July 1, 1994, except with respect to loans provided under that section as it existed prior to Aug. 10, 1993. Subsequently, a new section 1078–1, relating to vol- untary flexible agreements with guaranty agencies, was enacted by Pub. L. 105–244, title IV, § 418, Oct. 7, 1998, 112 Stat. 1691. Section 1078(h) of this title, referred to in subsec. (d)(1)(H), was repealed by Pub. L. 110–315, title IV, § 438(a)(2)(B), Aug. 14, 2008, 122 Stat. 3258. Public Law 499, Eighty-first Congress (64 Stat. 98 (1950)), referred to in subsec. (d)(1)(I), is act May 3, 1950, ch. 152, 64 Stat. 98, known as the Rural Rehabilitation Corporation Trust Liquidation Act, which was classi- fied to sections 440 to 444 of former Title 40, Public Buildings, Property, and Works, and as notes set out under section 1001 of Title 7, Agriculture, and section 440 of former Title 40, and was omitted from the Code. PRIOR PROVISIONS A prior section 1085, Pub. L. 89–329, title IV, § 435, Nov. 8, 1965, 79 Stat. 1247; Pub. L. 89–698, title II, § 204, Oct. 29, 1966, 80 Stat. 1072; Pub. L. 90–575, title I, §§ 116(a), 118(a), Oct. 16, 1968, 82 Stat. 1023, 1026; Pub. L. 94–482, title I, § 127(a), Oct. 12, 1976, 90 Stat. 2130; Pub. L. 95–43, § 1(a)(35), (36), June 15, 1977, 91 Stat. 216; Pub. L. 96–374, title IV, §§ 413(e), 421(e)(2), title XIII, § 1391(a)(1), Oct. 3, 1980, 94 Stat. 1418, 1432, 1503; Pub. L. 99–272, title XVI, §§ 16017(b)(2), 16020, Apr. 7, 1986, 100 Stat. 347, 349, defined terms used in this part, prior to the general revision of this part by Pub. L. 99–498. AMENDMENTS 2010—Subsec. (a)(5)(A)(i)(I). Pub. L. 111–152 sub- stituted ‘‘one-half the Federal Pell Grant amount, de- termined under section 1070a(b)(2)(A) of this title, for which a student would be eligible’’ for ‘‘one-half the maximum Federal Pell Grant award for which a stu- dent would be eligible’’. 2009—Subsec. (a)(2)(C)(ii). Pub. L. 111–39, § 402(f)(10)(A), substituted ‘‘a tribally controlled college or university, as defined in section 1801(a)(4) of title 25’’ for ‘‘a tribally controlled community college within the meaning of section 1801(a)(4) of title 25’’. Subsec. (d)(1). Pub. L. 111–39, § 402(f)(10)(B)(i), sub- stituted ‘‘section 501(a) of such title’’ for ‘‘section 501(1) of such title’’ in subpar. (A)(ii)(III) and ‘‘sections 1078–2(d) and 1078–3 of this title,’’ for ‘‘sections 1078–1(d), 1078–2(d), and 1078–3 of this title,’’ in subpar (G). Subsec. (d)(2)(A)(vi), (3). Pub. L. 111–39, § 402(f)(10)(B)(ii), (iii), made technical amendment to reference in original act which appears in text as ref- erence to subsec. (m). Subsec. (d)(5)(A). Pub. L. 111–39, § 402(f)(10)(B)(iv), sub- stituted ‘‘to any institution of higher education, any employee of an institution of higher education, or any individual or entity in order to secure applicants for loans under this part’’ for ‘‘to any institution of higher education or any employee of an institution of higher education in order to secure applicants for loans under this part’’. Subsec. (d)(5)(E), (F). Pub. L. 111–39, § 402(b)(2), in- serted ‘‘or 1092(l)’’ after ‘‘section 1092(b)’’. Subsec. (o)(1)(A)(ii). Pub. L. 111–39, § 402(f)(10)(C), made technical amendment to reference in original act which appears in text as reference to section 9902(2) of title 42. Subsec. (p)(1). Pub. L. 111–39, § 402(f)(10)(D), made technical amendment to reference in original act which appears in text as reference to section 1141 of this title. 2008—Subsec. (a)(2)(A)(ii). Pub. L. 110–315, § 436(a)(1)(A)(i), substituted ‘‘paragraph (5)’’ for ‘‘para- graph (4)’’. Subsec. (a)(2)(B)(iii), (iv). Pub. L. 110–315, § 436(a)(1)(A)(ii), added cls. (iii) and (iv) and struck out former cl. (iii) which read as follows: ‘‘25 percent for any succeeding fiscal year.’’ Subsec. (a)(3) to (8). Pub. L. 110–315, § 436(a)(1)(B)–(E), added pars. (3) and (7), redesignated former pars. (3), (4), (5), and (6), as (4), (5), (6), and (8), respectively, and, in introductory provisions of par. (5)(A), substituted ‘‘For purposes of this subsection, an institution of higher education shall be treated as having exceptional miti- gating circumstances that make application of para- graph (2) inequitable, and that provide for regulatory relief under paragraph (3), if such institution, in the opinion of an independent auditor, meets the following criteria:’’ for ‘‘For purposes of paragraph (2)(A)(ii), an institution of higher education shall be treated as hav- ing exceptional mitigating circumstances that make application of that paragraph inequitable if such insti- tution, in the opinion of an independent auditor, meets the following criteria:’’. Subsec. (a)(8)(A). Pub. L. 110–315, § 436(a)(1)(F), sub- stituted ‘‘0.0625’’ for ‘‘0.0375’’. Subsec. (d)(1)(A)(ii). Pub. L. 110–315, § 436(b), sub- stituted ‘‘part, (III)’’ for ‘‘part, or (III)’’ and inserted ‘‘, or (IV) it is a National or State chartered bank, or a credit union, with assets of less than $1,000,000,000’’ before semicolon at end. Subsec. (d)(1)(G). Pub. L. 110–315, § 438(a)(3), sub- stituted ‘‘and 1078–3’’ for ‘‘1078–3, and 1087–2(q)’’. Subsec. (d)(5). Pub. L. 110–315, § 436(c), amended par. (5) generally. Prior to amendment, par. (5) related to disqualification for use of certain incentives. Page 505 TITLE 20—EDUCATION § 1085 Subsec. (d)(8). Pub. L. 110–315, § 436(d), added par. (8). Subsec. (m)(1)(A). Pub. L. 110–315, § 436(e)(1)(A)(i), sub- stituted ‘‘end of the second fiscal year following the fis- cal year in which the students entered repayment’’ for ‘‘end of the following fiscal year’’ in first sentence. Subsec. (m)(1)(B). Pub. L. 110–315, § 436(e)(1)(A)(ii), substituted ‘‘such second fiscal year’’ for ‘‘such fiscal year’’. Subsec. (m)(1)(C). Pub. L. 110–315, § 436(e)(1)(A)(iii), substituted ‘‘end of the second fiscal year following the year in which they entered repayment’’ for ‘‘end of the fiscal year immediately following the year in which they entered repayment’’. Subsec. (m)(2)(C). Pub. L. 110–315, § 436(e)(1)(B), sub- stituted ‘‘end of the second fiscal year following the year in which the loan entered repayment is not con- sidered as in default for purposes of this subsection’’ for ‘‘end of such following fiscal year is not considered as in default for the purposes of this subsection’’ and ‘‘such second fiscal year’’ for ‘‘such following fiscal year’’. Subsec. (m)(4). Pub. L. 110–315, § 436(e)(1)(C)(i), sub- stituted ‘‘Collection and reporting of cohort default rates and life of cohort default rates’’ for ‘‘Collection and reporting of cohort default rates’’ in heading. Subsec. (m)(4)(A). Pub. L. 110–315, § 436(e)(1)(C)(ii), amended subpar. (A) generally. Prior to amendment, text read as follows: ‘‘The Secretary shall collect data from all insurers under this part and shall publish not less often than once every fiscal year a report showing default data for each category of institution, including (i) 4-year public institutions, (ii) 4-year private institu- tions, (iii) 2-year public institutions, (iv) 2-year private institutions, (v) 4-year proprietary institutions, (vi) 2- year proprietary institutions, and (vii) less than 2-year proprietary institutions.’’ 2007—Subsec. (o)(1)(A)(ii). Pub. L. 110–84, § 304(1)(A), substituted ‘‘150 percent of the poverty line applicable to the borrower’s family size’’ for ‘‘100 percent of the poverty line for a family of 2’’ and inserted ‘‘or’’ after semicolon at end. Subsec. (o)(1)(B), (C). Pub. L. 110–84, § 304(1)(B), (C), re- designated subpar. (C) as (B) and struck out former sub- par. (B) which read as follows: ‘‘such borrower is work- ing full-time and has a Federal educational debt burden that equals or exceeds 20 percent of such borrower’s ad- justed gross income, and the difference between such borrower’s adjusted gross income minus such burden is less than 220 percent of the greater of— ‘‘(i) the annual earnings of an individual earning the minimum wage under section 206 of title 29; or ‘‘(ii) the income official poverty line (as defined by the Office of Management and Budget, and revised an- nually in accordance with section 9902(2) of title 42) applicable to a family of two; or’’. Subsec. (o)(2). Pub. L. 110–84, § 304(2), substituted ‘‘(1)(B)’’ for ‘‘(1)(C)’’. Subsec. (p). Pub. L. 110–84, § 304(3), added subsec. (p). Subsec. (p)(1)(D). Pub. L. 110–109, § 4(1), added subpar. (D) and struck out former subpar. (D) which read as fol- lows: ‘‘a trustee acting as an eligible lender on behalf of a State, political subdivision, authority, agency, in- strumentality, or other entity described in subpara- graph (A), (B), or (C).’’ Subsec. (p)(2)(A)(i)(II). Pub. L. 110–109, § 4(2)(A), added subcl. (II) and struck out former subcl. (II) which read as follows: ‘‘is a trustee acting as an eligible lender under this chapter on behalf of such a State, political subdivision, authority, agency, instrumentality, or other entity described in subclause (I) of this clause.’’ Subsec. (p)(2)(A)(ii). Pub. L. 110–109, § 4(2)(B), inserted ‘‘of’’ after ‘‘waive the requirements’’. Subsec. (p)(2)(B). Pub. L. 110–109, § 4(2)(C), reenacted heading without change and amended text of subpar. (B) generally. Prior to amendment, text read as fol- lows: ‘‘No political subdivision, authority, agency, in- strumentality, or other entity described in paragraph (1)(A), (B), or (C) shall be an eligible not-for-profit hold- er under this chapter if such entity is owned or con- trolled, in whole or in part, by a for-profit entity.’’ Subsec. (p)(2)(C). Pub. L. 110–109, § 4(2)(D), reenacted heading without change and amended text of subpar. (C) generally. Prior to amendment, text read as fol- lows: ‘‘No State, political subdivision, authority, agen- cy, instrumentality, or other entity described in para- graph (1)(A), (B), or (C) shall be an eligible not-for-prof- it holder under this chapter with respect to any loan, or income from any loan, unless the State, political subdivision, authority, agency, instrumentality, or other entity described in paragraph (1)(A), (B), or (C) is the sole owner of the beneficial interest in such loan and the income from such loan.’’ Subsec. (p)(2)(D). Pub. L. 110–109, § 4(2)(E), substituted ‘‘a State, political subdivision, authority, agency, in- strumentality, or other entity described in subpara- graph (A), (B), or (C) of paragraph (1), regardless of whether such State, political subdivision, authority, agency, instrumentality, or other entity is an eligible lender under subsection (d),’’ for ‘‘an entity described in described in paragraph (1)(A), (B), or (C)’’. Subsec. (p)(2)(E). Pub. L. 110–109, § 4(2)(F), reenacted heading without change and amended text of subpar. (E) generally. Prior to amendment, text read as fol- lows: ‘‘For purposes of subparagraphs (B), (C), and (D) of this paragraph, a State, political subdivision, au- thority, agency, instrumentality, or other entity de- scribed in paragraph (1)(A), (B), or (C) shall not— ‘‘(i) be deemed to be owned or controlled, in whole or in part, by a for-profit entity, or ‘‘(ii) lose its status as the sole owner of a beneficial interest in a loan and the income from a loan by that political subdivision, authority, agency, instrumen- tality, or other entity, by granting a security interest in, or otherwise pledg- ing as collateral, such loan, or the income from such loan, to secure a debt obligation in the operation of an arrangement described in paragraph (1)(D).’’ 2006—Subsec. (d)(2). Pub. L. 109–171 amended heading and text of par. (2) generally. Prior to amendment, text read as follows: ‘‘To be an eligible lender under this part, an eligible institution— ‘‘(A) shall employ at least one person whose full- time responsibilities are limited to the administra- tion of programs of financial aid for students attend- ing such institution; ‘‘(B) shall not be a home study school; ‘‘(C) shall make loans to not more than 50 percent of the undergraduate students at the institution; ‘‘(D) shall not make a loan, other than a loan to a graduate or professional student, unless the borrower has previously received a loan from the school or has been denied a loan by an eligible lender; ‘‘(E) shall not have a cohort default rate (as defined in subsection (m) of this section) greater than 15 per- cent; and ‘‘(F) shall use the proceeds from special allowance payments and interest payments from borrowers for need-based grant programs, except for reasonable re- imbursement for direct administrative expenses; except that the requirements of subparagraphs (C) and (D) shall not apply with respect to loans made, and loan commitments made, after October 17, 1986, and prior to July 1, 1987.’’ Subsec. (d)(7). Pub. L. 109–292 added par. (7). 2000—Subsec. (a)(2)(D). Pub. L. 106–554, § 1(a)(1) [title III, § 308(a)], added subpar. (D). Subsec. (a)(5)(A)(i). Pub. L. 106–554, § 1(a)(1) [title III, § 312(1)], substituted ‘‘July 1, 2004,’’ for ‘‘July 1, 2002,’’. Subsec. (a)(5)(B). Pub. L. 106–554, § 1(a)(1) [title III, § 312(2)], substituted ‘‘1999 through 2003’’ for ‘‘1999, 2000, and 2001’’ in introductory provisions. 1998—Subsec. (a)(1). Pub. L. 105–244, § 102(b)(2), sub- stituted ‘‘section 1002’’ for ‘‘section 1088’’. Subsec. (a)(2)(A). Pub. L. 105–244, § 429(a)(1)(A)(i), (ii), struck out ‘‘or’’ at end of cl. (i), added cls. (ii) and (iii), and struck out former cl. (ii) which read as follows: ‘‘there are, in the judgment of the Secretary, excep- tional mitigating circumstances that would make the application of this paragraph inequitable.’’ Pub. L. 105–244, § 429(a)(1)(A)(iii), inserted at end of concluding provisions ‘‘If an institution continues to Page 506 TITLE 20—EDUCATION § 1085 participate in a program under this part, and the insti- tution’s appeal of the loss of eligibility is unsuccessful, the institution shall be required to pay to the Sec- retary an amount equal to the amount of interest, spe- cial allowance, reinsurance, and any related payments made by the Secretary (or which the Secretary is obli- gated to make) with respect to loans made under this part to students attending, or planning to attend, that institution during the pendency of such appeal.’’ Subsec. (a)(2)(C). Pub. L. 105–244, § 429(a)(1)(B), sub- stituted ‘‘July 1, 1999,’’ for ‘‘July 1, 1998,’’ in introduc- tory provisions. Subsec. (a)(2)(C)(ii). Pub. L. 105–244, § 901(d), made technical amendment to reference in original act which appears in text as reference to section 1801(a)(4) of title 25. Subsec. (a)(3). Pub. L. 105–244, § 429(a)(2), in con- cluding provisions, inserted ‘‘for a reasonable period of time, not to exceed 30 days,’’ after ‘‘access’’ and sub- stituted ‘‘used by a guaranty agency in determining whether to pay a claim on a defaulted loan or by the Department in determining an institution’s default rate in the loan program under part C of this sub- chapter’’ for ‘‘of the affected guaranty agencies and loan servicers for a reasonable period of time, not to exceed 30 days’’. Subsec. (a)(4) to (6). Pub. L. 105–244, § 429(a)(3), added pars. (4) to (6). Subsec. (d)(1)(A)(ii)(III). Pub. L. 105–244, § 429(b)(1)(A), added subcl. (III). Subsec. (d)(1)(K). Pub. L. 105–244, § 429(b)(1)(B)–(D), added subpar. (K). Subsec. (d)(5). Pub. L. 105–244, § 429(b)(2), inserted con- cluding provisions. Subsec. (l). Pub. L. 105–244, § 429(c)(1), substituted ‘‘270 days’’ for ‘‘180 days’’ and ‘‘330 days’’ for ‘‘240 days’’. Subsec. (m)(1)(B). Pub. L. 105–244, § 429(d)(1), sub- stituted ‘‘insurance. In considering appeals with re- spect to cohort default rates pursuant to subsection (a)(3), the Secretary shall exclude, from the calculation of the number of students who entered repayment and from the calculation of the number of students who de- fault,’’ for ‘‘insurance, and, in considering appeals with respect to cohort default rates pursuant to subsection (a)(3) of this section, exclude’’. Subsec. (m)(2)(C). Pub. L. 105–244, § 429(d)(2), inserted at end ‘‘The Secretary may require guaranty agencies to collect data with respect to defaulted loans in a manner that will permit the identification of any de- faulted loan for which (i) the borrower is currently making payments and has made not less than 6 con- secutive on-time payments by the end of such following fiscal year, and (ii) a guaranty agency has renewed the borrower’s title IV eligibility as provided in section 1078–6(b) of this title.’’ Subsec. (m)(4)(D). Pub. L. 105–244, § 429(d)(3), added subpar. (D). 1996—Subsec. (d)(1)(F). Pub. L. 104–208, § 101(e) [title VI, § 602(b)(1)(A)(i)], inserted ‘‘or the Holding Company of the Student Loan Marketing Association, including any subsidiary of the Holding Company, created pursu- ant to section 1087–3 of this title,’’ after ‘‘Student Loan Marketing Association’’. Subsec. (d)(1)(G). Pub. L. 104–208, § 101(e) [title VI, § 602(b)(1)(A)(ii)], inserted ‘‘or the Holding Company of the Student Loan Marketing Association, including any subsidiary of the Holding Company, created pursu- ant to section 1087–3 of this title’’ after ‘‘Student Loan Marketing Association’’. 1994—Subsec. (a)(2)(C). Pub. L. 103–235 substituted ‘‘July 1, 1998’’ for ‘‘July 1, 1994’’. Subsec. (o)(1). Pub. L. 103–382, § 357(1)–(3), struck out ‘‘or’’ at end of subpar. (A), added subpar. (B), and redes- ignated former subpar. (B) as (C). Subsec. (o)(2). Pub. L. 103–382, § 357(4), substituted ‘‘(1)(C)’’ for ‘‘(1)(B)’’. 1993—Subsec. (a)(3). Pub. L. 103–208, § 2(c)(55), added par. (3). Subsec. (d)(1). Pub. L. 103–66, § 4106(b)(1), in par. (1) substituted ‘‘through (6)’’ for ‘‘through (5)’’ in introduc- tory provisions. Subsec. (d)(2). Pub. L. 103–208, § 2(c)(57), realigned margins of closing provisions. Subsec. (d)(2)(D). Pub. L. 103–208, § 2(c)(56), substituted ‘‘lender;’’ for ‘‘lender; and’’. Subsec. (d)(3). Pub. L. 103–208, § 2(c)(58), substituted ‘‘subsection (m)’’ for ‘‘subsection (o)’’. Subsec. (d)(6). Pub. L. 103–66, § 4106(b)(2), added par. (6). Subsec. (m)(1). Pub. L. 103–66, § 4046(b)(1)(C), which di- rected the insertion in par. (1)(D) of ‘‘(or the portion of a loan made under section 1078–3 of this title that is used to repay a loan made under such section)’’ after ‘‘section 1078–1 of this title’’ the first place it appears, and ‘‘(or a loan made under section 1078–3 of this title a portion of which is used to repay a loan made under such section)’’ after ‘‘section 1078–1 of this title’’ the second place it appears, could not be executed because subsec. (m)(1) does not contain a subpar. (D). Subsec. (m)(1)(A). Pub. L. 103–208, § 2(c)(60)(A), in- serted at end ‘‘The Secretary shall require that each guaranty agency that has insured loans for current or former students of the institution afford such institu- tion a reasonable opportunity (as specified by the Sec- retary) to review and correct errors in the information required to be provided to the Secretary by the guar- anty agency for the purposes of calculating a cohort de- fault rate for such institution, prior to the calculation of such rate.’’ Pub. L. 103–208, § 2(c)(59), substituted ‘‘section 1078, 1078–1, or 1078–8’’ for ‘‘section 1078 or 1078–1’’. Pub. L. 103–66, § 4046(b)(1)(A), inserted ‘‘(or on the por- tion of a loan made under section 1078–3 of this title that is used to repay any such loans)’’ after ‘‘on such loans’’. Subsec. (m)(1)(B). Pub. L. 103–208, § 2(c)(60)(B), sub- stituted ‘‘and, in considering appeals with respect to cohort default rates pursuant to subsection (a)(3) of this section, exclude any loans which, due to improper servicing or collection, would, as demonstrated by the evidence submitted in support of the institution’s time- ly appeal to the Secretary, result in an inaccurate or incomplete calculation of such cohort default rate.’’ for ‘‘and, in calculating the cohort default rate, exclude any loans which, due to improper servicing or collec- tion, would result in an inaccurate or incomplete cal- culation of the cohort default rate.’’ Subsec. (m)(1)(C). Pub. L. 103–66, § 4046(b)(1)(B), in- serted ‘‘(or on the portion of a loan made under section 1078–3 of this title that is used to repay any such loans)’’ after ‘‘on such loans’’. Subsec. (m)(2)(D). Pub. L. 103–208, § 2(c)(61), inserted ‘‘(or the portion of a loan made under section 1078–3 of this title that is used to repay a loan made under sec- tion 1078–1 of this title)’’ after ‘‘in accordance with sec- tion 1078–1 of this title’’, and ‘‘(or a loan made under section 1078–3 of this title a portion of which is used to repay a loan made under section 1078–1 of this title)’’ after ‘‘a loan made under section 1078–1 of this title’’. Subsec. (m)(4). Pub. L. 103–208, § 2(c)(62), added par. (4). 1992—Subsec. (a)(1). Pub. L. 102–325, § 427(a)(1), added par. (1) and struck out former par. (1) which read as fol- lows: ‘‘Subject to subsection (n) of this section, the term ‘eligible institution’ means— ‘‘(A) an institution of higher education; ‘‘(B) a vocational school; or ‘‘(C) with respect to students who are nationals of the United States, an institution outside the United States which is comparable to an institution of high- er education or to a vocational school and which has been approved by the Secretary for the purpose of this part, except that such term does not include any such insti- tution or school which employs or uses commissioned salesmen to promote the availability of any loan pro- gram described in section 1078(a)(1), 1078–1, or 1078–2 of this title at that institution or school.’’ Subsec. (a)(2). Pub. L. 102–325, § 427(a)(3), struck out ‘‘and’’ at end of subpar. (B)(i), substituted ‘‘fiscal year 1993; and’’ for ‘‘any succeeding fiscal year.’’ in subpar. (B)(ii), and added subpar. (B)(iii). Page 507 TITLE 20—EDUCATION § 1085 Pub. L. 102–325, § 427(a)(1), (2), redesignated par. (3) as (2) and struck out former par. (2) which required Sec- retary to establish criteria for qualifying foreign med- ical schools as ‘‘eligible institutions’’. Subsec. (a)(3). Pub. L. 102–325, § 427(a)(2), redesignated par. (3) as (2). Subsec. (b). Pub. L. 102–325, § 427(b)(1), struck out sub- sec. (b) which defined ‘‘institution of higher edu- cation’’. Subsec. (c). Pub. L. 102–325, § 427(c), struck out subsec. (c) which defined ‘‘vocational school’’. Subsec. (d)(1)(A). Pub. L. 102–325, § 427(d)(1), in intro- ductory provisions, struck out ‘‘a trust company,’’ after ‘‘stock savings bank,’’ and in cl. (ii), inserted at end of subcl. (I) ‘‘or a bank which is subject to exam- ination and supervision by an agency of the United States, makes student loans as a trustee pursuant to an express trust, operated as a lender under this part prior to January 1, 1975, and which meets the requirements of this provision prior to July 23, 1992, or’’ and substituted a semicolon for ‘‘or (III) it is a trust company which makes student loans as a trustee pursuant to an ex- press trust and which operated as a lender under this part prior to January 1, 1981;’’. Subsec. (d)(2)(E), (F). Pub. L. 102–325, § 427(d)(2), added subpars. (E) and (F). Subsec. (f). Pub. L. 102–325, § 427(e), inserted ‘‘serv- icing and’’ before ‘‘collection practices’’. Subsecs. (g), (h). Pub. L. 102–325, § 427(f), struck out subsec. (g) which defined ‘‘temporarily totally dis- abled’’ and subsec. (h) which defined ‘‘parental leave’’. Subsec. (m). Pub. L. 102–325, § 427(g), amended subsec. (m) generally, revising and restating as pars. (1) to (3) provisions formerly contained in a single paragraph. Subsec. (n). Pub. L. 102–325, § 427(f), struck out subsec. (n) which related to impact of loss of accreditation on certification or recertification as an eligible institu- tion. Subsec. (o). Pub. L. 102–325, § 416(e)(2), added subsec. (o). 1991—Subsec. (c)(1). Pub. L. 102–26 substituted ‘‘or who are beyond the age of compulsory school attend- ance in the State in which the institution is located’’ for ‘‘and who have the ability to benefit (as determined by the institution under section 1088(d) of this title) from the training offered by such institution;’’. 1990—Subsec. (a)(3). Pub. L. 101–508 added par. (3). Subsec. (l). Pub. L. 101–542, § 301(1), substituted ‘‘Ex- cept as provided in subsection (m), the term’’ for ‘‘The term’’. Subsec. (m). Pub. L. 101–542, § 301(2), inserted after first sentence ‘‘In determining the number of students who default before the end of such fiscal year, the Sec- retary shall include only loans for which the Secretary or a guaranty agency has paid claims for insurance, and, in calculating the cohort default rate, exclude any loans which, due to improper servicing or collection, would result in an inaccurate or incomplete calculation of the cohort default rate.’’ 1989—Subsec. (a)(1). Pub. L. 101–239, § 2007(a)(1), sub- stituted ‘‘Subject to subsection (n) of this section, the term’’ for ‘‘The term’’. Subsec. (m). Pub. L. 101–239, § 2003(a)(2), added subsec. (m). Subsec. (n). Pub. L. 101–239, § 2007(a)(2), added subsec. (n). 1987—Subsec. (b)(3). Pub. L. 100–50, § 10(aa)(1), inserted ‘‘, or in the case of a hospital or health care facility, which provides training of not less than one year for graduates of accredited health professions programs, leading to a degree or certificate upon completion of such training’’ before semicolon at end. Subsec. (d)(1)(J). Pub. L. 100–50, § 10(aa)(2), added sub- par. (J). Subsec. (d)(2). Pub. L. 100–50, § 10(aa)(3), added sub- pars. (C) and (D) and inserted concluding provision that the requirements of subpars. (C) and (D) not apply with respect to loans made, and loan commitments made, after Oct. 17, 1986, and prior to July 1, 1987. Subsec. (g)(2). Pub. L. 100–50, § 10(aa)(4), added par. (2) and struck out former par. (2) which read as follows: ‘‘Such term when used with respect to the disabled de- pendent of a single parent borrower means a dependent who, by reason of injury or illness, cannot be expected to be able to attend school or to be gainfully employed during a period of injury or illness of not less than 3 months and who during such period requires contin- uous nursing or similar services.’’ Subsec. (h). Pub. L. 100–50, § 10(aa)(5), struck out ‘‘Definition of’’ before ‘‘Parental’’ in heading. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2010 AMENDMENT Amendment by Pub. L. 111–152 effective July 1, 2010, see section 2101(c) of Pub. L. 111–152, set out as a note under section 1070a 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, § 436(a)(2), Aug. 14, 2008, 122 Stat. 3254, provided that: ‘‘The amendment made by paragraph (1)(F) [amending this section] shall take ef- fect for fiscal years beginning on or after October 1, 2011.’’ Pub. L. 110–315, title IV, § 436(e)(2), Aug. 14, 2008, 122 Stat. 3257, provided that: ‘‘(A) EFFECTIVE DATE.—The amendments made by paragraph (1) [amending this section] shall take effect for purposes of calculating cohort default rates for fis- cal year 2009 and succeeding fiscal years. ‘‘(B) TRANSITION.—Notwithstanding subparagraph (A), the method of calculating cohort default rates under section 435(m) of the Higher Education Act of 1965 [20 U.S.C. 1085(m)] as in effect on the day before the date of enactment of this Act [Aug. 14, 2008] shall continue in effect, and the rates so calculated shall be the basis for any sanctions imposed on institutions of higher education because of their cohort default rates, until three consecutive years of cohort default rates cal- culated in accordance with the amendments made by paragraph (1) are available.’’ 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 Pub. L. 109–292, § 3(b), Sept. 30, 2006, 120 Stat. 1341, pro- vided that: ‘‘The amendment made by subsection (a) [amending this section] shall not apply with respect to any loan under part B of title IV of the Higher Edu- cation Act of 1965 (20 U.S.C. 1071 et seq.) disbursed be- fore January 1, 2007.’’ Amendment by Pub. L. 109–171 effective July 1, 2006, except as otherwise provided, see section 8001(c) of Pub. L. 109–171, set out as a note under section 1002 of this title. EFFECTIVE DATE OF 2000 AMENDMENT Pub. L. 106–554, § 1(a)(1) [title III, § 308(b)], Dec. 21, 2000, 114 Stat. 2763, 2763A–45, provided that: ‘‘The amendment made by subsection (a) of this section [amending this section] shall be effective for cohort de- fault rate calculations for fiscal years 1997 and 1998.’’ EFFECTIVE DATE OF 1998 AMENDMENT Amendment by sections 102(b)(2) and 429(a), (b), (d) of Pub. L. 105–244 effective Oct. 1, 1998, except as otherwise provided in Pub. L. 105–244, see section 3 of Pub. L. 105–244, set out as a note under section 1001 of this title. Pub. L. 105–244, title IV, § 429(c)(2), Oct. 7, 1998, 112 Stat. 1708, provided that: ‘‘The amendment made by Page 508 TITLE 20—EDUCATION § 1086 paragraph (1) [amending this section] shall apply with respect to loans for which the first day of delinquency occurs on or after the date of enactment of this Act [Oct. 7, 1998].’’ EFFECTIVE DATE OF 1996 AMENDMENT Amendment by Pub. L. 104–208 effective on reorga- nization effective date as defined in section 1087–3(h) of this title, see section 101(e) [title VI, § 602(b)(1)(B)] of Pub. L. 104–208, set out as a note under section 1078–3 of this title. EFFECTIVE DATE OF 1993 AMENDMENTS Amendments by section 2(c)(55), (60)(B) of Pub. L. 103–208 applicable with respect to determination (and appeals from determinations) of cohort default rates for fiscal year 1989 and any succeeding fiscal year, amendments by section 2(c)(56)–(58), (61) of Pub. L. 103–208 effective, except as otherwise provided, as if in- cluded in the Higher Education Amendments of 1992, Pub. L. 102–325, amendment by section 2(c)(59) of Pub. L. 103–208 effective on and after 30 days after Dec. 20, 1993, amendment by section 2(c)(60)(A) of Pub. L. 103–208 effective on and after Oct. 1, 1994, and amendment by section 2(c)(62) effective on and after Dec. 20, 1993, see section 5(a), (b)(2), (3), (7), (8) of Pub. L. 103–208, set out as a note under section 1051 of this title. Amendment by section 4046(b)(1) of Pub. L. 103–66 ef- fective July 1, 1994, see section 4046(c) of Pub. L. 103–66, set out as a note under section 1078–3 of this title. EFFECTIVE DATE OF 1991 AMENDMENT Pub. L. 102–26, § 2(d)(1), Apr. 9, 1991, 105 Stat. 124, pro- vided that: ‘‘The amendments made by this section [amending this section and sections 1078–1, 1088, 1091, 1094, and 1141 of this title] shall apply to any grant, loan, or work assistance to cover the cost of instruc- tion for periods of enrollment beginning on or after July 1, 1991.’’ EFFECTIVE DATE OF 1990 AMENDMENT Pub. L. 101–508, title III, § 3004(d), Nov. 5, 1990, 104 Stat. 1388–27, provided that: ‘‘The amendments made by this section [amending this section, section 1078 of this title, and provisions set out as a note under section 1078–1 of this title] shall be effective July 1, 1991, except that the amendment made by subsection (b) [amending section 1078 of this title] shall be effective upon enact- ment.’’ 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, with subsec. (d)(5) of this section effective 30 days after Oct. 17, 1986, see sec- tion 402(b) of Pub. L. 99–498, set out as a note under sec- tion 1071 of this title. WAIVER OF MITIGATING CIRCUMSTANCES REQUIREMENT FOR STUDENT LOAN INSURANCE PROGRAM ELIGIBILITY Pub. L. 115–141, div. H, title III, § 314, Mar. 23, 2018, 132 Stat. 752, provided that: ‘‘(a) IN GENERAL.—For the purpose of carrying out section 435(a)(2) of the Higher Education Act of 1965 (20 U.S.C. 1085(a)(2)), the Secretary of Education may waive the requirements under sections 435(a)(5)(A)(i) and 435(a)(5)(A)(ii) of such Act (20 U.S.C. 1085(a)(5)(A)(i) and 20 U.S.C. 1085(a)(5)(A)(ii))— ‘‘(1) for an institution of higher education that of- fers an associate degree, is a public institution, and is located in an economically distressed county, de- fined as a county that ranks in the lowest 5 percent of all counties in the United States based on a na- tional index of county economic status; and ‘‘(2) for an institution— ‘‘(A) that is a public institution of higher edu- cation or a Tribal College or University (as defined in section 316(b) of such Act (20 U.S.C. 1059c[(b)])); and ‘‘(B) whose fall enrollment for the most recently completed academic year was comprised of a major- ity of students who are Indian (as defined in such section) or Alaska Natives (as defined in section 317(b) of such Act (20 U.S.C. 1059d(b))[)]. ‘‘(b) APPLICABILITY.—Subsection (a) shall apply to an institution of higher education that otherwise would be ineligible to participate in a program under part A of title IV of the Higher Education Act of 1965 [20 U.S.C. 1070 et seq.] on or after the date of enactment of this Act [Mar. 23, 2018] due to the application of section 435(a)(2) of the Higher Education Act of 1965 (20 U.S.C. 1085(a)(2)). ‘‘(c) COVERAGE.—This section shall be in effect for the period covered by this Act [div. H of Pub. L. 115–141, 132 Stat. 696] and for the succeeding fiscal year.’’ DEFINITION OF INSTITUTION OF HIGHER EDUCATION Pub. L. 102–325, title IV, § 427(b)(2), July 23, 1992, 106 Stat. 549, provided that: ‘‘With respect to reference in any other provision of law to the definition of institu- tion of higher education contained in section 435(b) of the Act [former 20 U.S.C. 1085(b)], such provision shall be deemed to refer to section 481(a) of the Act [former 20 U.S.C. 1088(a)].’’ § 1086. Delegation of functions (a) In general An eligible lender or guaranty agency that contracts with another entity to perform any of the lender’s or agency’s functions under this subchapter, or otherwise delegates the perform- ance of such functions to such other entity— (1) shall not be relieved of the lender’s or agency’s duty to comply with the require- ments of this subchapter; and (2) shall monitor the activities of such other entity for compliance with such requirements. (b) Special rule A lender that holds a loan made under this part in the lender’s capacity as a trustee is re- sponsible for complying with all statutory and regulatory requirements imposed on any other holder of a loan made under this part. (Pub. L. 89–329, title IV, § 436, as added Pub. L. 99–498, title IV, § 402(a), Oct. 17, 1986, 100 Stat. 1413; amended Pub. L. 105–244, title IV, § 430, Oct. 7, 1998, 112 Stat. 1709.) Editorial Notes PRIOR PROVISIONS A prior section 1086, Pub. L. 89–329, title IV, § 436, as added Pub. L. 89–752, § 12, Nov. 3, 1966, 80 Stat. 1244; amended Pub. L. 90–575, title I, § 116(b)(5), Oct. 16, 1968, 82 Stat. 1024; Pub. L. 94–482, title I, § 127(a), Oct. 12, 1976, 90 Stat. 2132; Pub. L. 96–374, title XIII, § 1391(a)(1), Oct. 3, 1980, 94 Stat. 1503, related to a District of Columbia student loan insurance program, prior to the general revision of this part by Pub. L. 99–498. AMENDMENTS 1998—Pub. L. 105–244 amended section catchline and text generally. Prior to amendment, section authorized establishment of a District of Columbia student loan insurance program. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1998 AMENDMENT Amendment by Pub. L. 105–244 effective Oct. 1, 1998, except as otherwise provided in Pub. L. 105–244, see sec-