Sec. 6. One loan program
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Title IV of the Act ( 20 U.S.C. 1070 et seq. ) is further amended— in section 451(a), by inserting , and ending on the June 30 following the date of enactment of the after Financial Aid Simplification and Transparency Act of 2015 during the period beginning July 1, 1994 ; and by striking part F and inserting the following: There are hereby made available, in accordance with the provisions of this part, such sums as may be necessary to make loans (including consolidation loans, as described in subsection (f)) to all eligible students (and the eligible parents of such students) in attendance at participating institutions of higher education, to enable such students to pursue their programs of study at such institutions during the period beginning on the July 1 after the date of enactment of the Financial Aid Simplification and Transparency Act of 2015 .
Loans made under this part shall be made by participating institutions, or consortia thereof, that have agreements with the Secretary to originate loans, or by alternative originators designated by the Secretary to make loans for students in attendance at participating institutions. The Secretary shall provide, on the basis of the estimated loan amount determined under subsection (e)(4) and the eligibility of students at each participating institution, and parents of such students, for such loans, funds for student and parent loans under this part directly to an institution of higher education that has an agreement with the Secretary under subsection (d)(1) to participate in the student loan programs under this part and that also has an agreement with the Secretary under subsection (d)(2) to originate loans under this part.
No institution of higher education shall have a right to participate in the program authorized by this part, to originate loans, or to perform any program function under this part. Nothing in this paragraph shall be construed so as to limit the entitlement of an eligible student attending a participating institution (or the eligible parent of such student) to borrow under this part. Loan funds shall be paid and delivered to an institution by the Secretary prior to the beginning of the payment period established by the Secretary in a manner that is consistent with payment and delivery of Federal Pell Grants under subpart 1 of part A of this title.
Loan funds for students (and parents of students) attending institutions outside the United States shall be disbursed through a financial institution located or operating in the United States and designated by the Secretary to serve as the agent of such institutions with respect to the receipt of the disbursements of such loan funds and the transfer of such funds to such institutions. To be eligible to receive funds under this part, an institution outside the United States shall make arrangements with the agent designated by the Secretary under this paragraph to receive funds under this part.
The Secretary shall enter into agreements pursuant to subsection (d)(1) with institutions of higher education to participate in the student loan program under this part, and agreements pursuant to subsection (d)(2) with institutions of higher education, or consortia thereof, to originate loans in such program, for academic years beginning on or after the July 1 after the date of enactment of the Financial Aid Simplification and Transparency Act of 2015 . Such agreements for the academic year 2015–2016 shall, to the extent feasible, be entered into not later than January 1, 2015.
Each institution of higher education desiring to participate in the student loan program under this part shall submit an application satisfactory to the Secretary containing such information and assurances as the Secretary may require. The Secretary shall select institutions for participation in the student loan program under this part, and shall enter into agreements with such institutions under subsection (d)(1), from among those institutions that submit the applications described in subparagraph (A), and meet such other eligibility requirements as the Secretary shall prescribe.
The Secretary may enter into a supplemental agreement with an institution (or a consortium of such institutions) that— has an agreement under subsection (d)(1); desires to originate loans under this part; and meets the criteria described in subparagraph (B). The Secretary may approve an institution to originate loans only if such institution— is not on the reimbursement system of payment for any of the programs under subpart 1 of part A or part C of this title; is not overdue on program or financial reports or audits required under this title; is not subject to an emergency action, or a limitation, suspension, or termination under section 428(b)(1)(T), 432(h), or 487(c); in the opinion of the Secretary, has not had severe performance deficiencies for any of the programs under this title, including such deficiencies demonstrated by audits or program reviews submitted or conducted during the 5 calendar years immediately preceding the date of application; provides an assurance that such institution has no delinquent outstanding debts to the Federal Government, unless such debts are being repaid under or in accordance with a repayment arrangement satisfactory to the Federal Government, or the Secretary in the Secretary's discretion determines that the existence or amount of such debts has not been finally determined by the cognizant Federal agency; and meets such other criteria as the Secretary may establish to protect the financial interest of the United States and to promote the purposes of this part.
The Secretary may not select an institution of higher education for participation under this section unless such institution is an eligible institution under section 435(a). Subject to such requirements as the Secretary may prescribe, eligible institutions of higher education (as determined under paragraph (4)) with agreements under subsection (d)(1) may apply to the Secretary as consortia to originate loans under this part for students in attendance at such institutions. Each such institution shall be required to meet the requirements of paragraph
(3)with respect to loan origination. An agreement with any institution of higher education for participation in the student loan program under this part shall— provide for the establishment and maintenance of a student loan program at the institution under which the institution will— identify eligible students who seek student financial assistance at such institution in accordance with subsection (e)(2); estimate the loan amount of each such student in accordance with subsection (e)(4)(A)(i); provide a statement that certifies the eligibility of any student to receive a loan under this part that is not in excess of the annual or aggregate limit applicable to such loan, except that the institution may, in exceptional circumstances identified by the Secretary, refuse to certify a statement that permits a student to receive a loan under this part, or certify a loan amount that is less than the amount the student may otherwise be eligible to receive, as described in clauses
(iii)and
(iv)of subsection (e)(4)(B); set forth a schedule for disbursement of the proceeds of the loan in installments, consistent with the requirements of section 428G; and provide timely and accurate information concerning the status of student borrowers (and students on whose behalf parents borrow under this part) while such students are in attendance at the institution and concerning any new information of which the institution becomes aware for such students (or their parents) after such borrowers leave the institution, to the Secretary for the servicing and collecting of loans made under this part; provide assurances that the institution will comply with requirements established by the Secretary relating to student loan information with respect to loans made under this part; provide that the institution accepts responsibility and financial liability stemming from its failure to perform its functions pursuant to the agreement; provide for the implementation of a quality assurance system, as established by the Secretary and developed in consultation with institutions of higher education, to ensure that the institution is complying with program requirements and meeting program objectives; provide that the institution will not charge any fees of any kind, however described, to student or parent borrowers for origination activities or the provision of any information necessary for a student or parent to receive a loan under this part, or any benefits associated with such loan; and include such other provisions as the Secretary reasonably determines are necessary to protect the interests of the United States and to promote the purposes of this part. An agreement with any institution of higher education, or consortia thereof, for the origination of loans under this part shall— supplement the agreement entered into in accordance with paragraph (1); include provisions established by the Secretary that are similar to the participation agreement provisions described in subparagraphs (A)(v), (B), (C), (D), (E), and
(F)of paragraph (1), as modified to relate to the origination of loans by the institution or consortium; provide that the institution or consortium will originate loans to eligible students and parents in accordance with this part; and provide that the note or evidence of obligation on the loan shall be the property of the Secretary. The Secretary shall establish procedures by which institutions or consortia may withdraw or be terminated from the program under this part. Unless otherwise specified in this part, loans made to borrowers under this part shall have the same terms, conditions, and benefits as Federal Direct Unsubsidized Stafford Loans under part D made to borrowers and first disbursed on July 1, 1994. In order to be eligible for a loan under this section, an individual must be— an eligible student, as defined in section 400(a), who is an undergraduate; an eligible graduate or professional student as defined in section 400(a); or a parent or legal guardian of an eligible student who is an undergraduate, as defined in section 400(a). Each eligible student (or the parent of such student) desiring to obtain a Federal loan under this part for any year shall file an application with the Secretary to determine eligibility for a loan as described in section 400A. The amount of a loan disbursed by a participating institution under this section shall be the lesser of— an amount that is equal to the estimated loan amount, as determined by the institution by calculating— the estimated cost of attendance at the eligible institution; minus any estimated financial assistance that the student will receive from a Federal grant, including a Federal Pell Grant, a State grant, an institutional grant, or a scholarship or grant from another source, that is known to the institution at the time the student's determination of need is made; and in the case of a loan to a parent, the amount of a loan awarded under this part to the parent's child; or the maximum Federal loan amount for which such student is eligible in accordance with subparagraph (B). Except as provided under clause (iv), the annual amount of loans under this section that an eligible student may borrow shall be— $8,000, in the case of a student who is an undergraduate student attending a participating institution; and $30,000, in the case of a graduate or professional student attending a participating institution. Except as provided under clause (iv), the maximum aggregate amount of loans under this section that an eligible student may borrow shall be— $37,500 in the case of a student who is an undergraduate student attending an eligible institution; and $150,000 in the case of a student who is a graduate or professional student attending an eligible institution, except that such aggregate limit shall not include any debt that the student incurred as an undergraduate. Any eligible student receiving loans under this section that is enrolled in a program of study on less than a full-time basis shall have their loans prorated based on actual enrollment status. Notwithstanding any other provision of this paragraph, a participating institution may limit the annual amount that students enrolled in an identified program of study at that institution may borrow under this section, if— the institution can reasonably demonstrate, based on previous student income following such program, that student debt levels are excessive; and subject to item (bb), any proration or limiting of loan amounts are applied in the same manner to all students enrolled in the institution or program of study. Notwithstanding item (aa)(BB), upon the request of an individual student, an institution (at the discretion of a financial aid administrator) may increase the annual amount limit established under this subclause for an individual student if that student demonstrates special circumstances. Notwithstanding the annual loan limits described in clause
(i)and subject to subclause (III), a participating institution may increase the annual amount that graduate and professional students enrolled in an identified program of study at that institution may borrow under this section and allow the annual amount to exceed such limit, if— the institution can reasonably demonstrate that students enrolled in a program of study have an increased need and should not be subject to the loan limitations described in clauses
(i)and (iii); and any increase of loan amounts are applied in the same manner to all students enrolled in the institution or program of study. An increase in the annual loan amount under subclause
(II)shall not be for an amount that results in more than a 50 percent increase to the aggregate loan limit amount established under clause (ii)(II). Repayment of principal and interest accrued on loans made under this part shall commence not later than the day after 6 months after the date the student, or the student on whose behalf the loan was made— ceases to carry at least one-half of the normal full-time academic workload, as determined by the institution; or successfully completes the program of study in which the student is enrolled, as determined by the institution. Not later than 2 months after a student enters the status described under clause
(i)or
(ii)of subparagraph (A), the Secretary shall inform a borrower of a loan made under this part of the borrower's repayment options, by providing— the monthly payment amount that the borrower will owe based on the total amount of the borrower's Federal loan under this section if such loan is paid under a 10-year repayment plan; and estimates of the monthly payment amounts that the borrower may owe under the income-based repayment plan, based on the total amount of the borrower's Federal loan under this section and a schedule of different income levels. A borrower of a loan made under this part may choose from— a repayment plan with a fixed monthly repayment amount paid over a fixed period of time, not to exceed 10 years; or an income-based repayment plan under section 493C. A borrower of a loan made under this part may consolidate such loan with— another loan made under this part; a loan described in section 428C(a)(4) that was first disbursed before July 1, 2010; or a loan made under section 455 that was first disbursed before the July 1 prior to the date of enactment of this Act. To be eligible for a consolidation loan under this part, a borrower shall meet the eligibility criteria set forth in section 428C(a)(3). A consolidation loan under this subsection shall have the same terms and conditions as a consolidation loan made under section 455(g). .
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