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Code · BILL · 115th Congress · H.R. 4508 (Reported in House) — To support students in completing an affordable postsecondary education that will prepare them to enter the workforce... · Sec. 462

Sec. 462. Federal ONE Loan program

13,822 words·~63 min read·/bill/115/hr/4508/rh/section-462

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

Part E of title IV ( 20 U.S.C. 1087aa et seq.) is amended to read as follows: There are hereby made available, in accordance with the provisions of this part, such sums as may be necessary to make loans to all eligible students (and the eligible parents of such students) in attendance at participating institutions of higher education selected by the Secretary to enable such students to pursue their courses of study at such institutions during the period beginning July 1, 2019.
Loans made under this part shall be made by participating institutions that have agreements with the Secretary to originate loans. The program established under this part shall be referred to as the Federal ONE Loan Program . Except as otherwise specified in this part, loans made to borrowers under this part shall be known as Federal ONE Loans . The Secretary shall provide, on the basis of 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 section 464(a) to participate in the Federal ONE Loan Program under this part and that also has an agreement with the Secretary under section 464(b) to originate loans under this part.
Subsections (b), (c), and
(d)of section 452 shall apply to the loan program under this part in the same manner that such subsections apply to the loan program under part D. The Secretary shall enter into agreements pursuant to section 464(a) with institutions of higher education to participate in the Federal ONE Loan Program under this part, and agreements pursuant to section 464(b) with institutions of higher education, to originate loans in such program, for academic years beginning on or after July 1, 2019. Such agreements for the academic year 2019–2020 shall, to the extent feasible, be entered into not later than January 1, 2019. The application and selection procedure for an institution of higher education desiring to participate in the loan program under this part shall be the application and selection procedure described in section 453(b) for an institution of higher education desiring to participate in the loan program under part D. The Secretary may not select an institution of higher education for participation under this part unless such institution is an eligible institution under section 487(a). An agreement with any institution of higher education for participation in the Federal ONE Loan Program under this part shall— provide for the establishment and maintenance of a direct 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 section 484; 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 pursuant to section 454(a)(1)(C), refuse to certify a statement that permits a student to receive a loan under this part, if the reason for such action is documented and provided in written form to such student; set forth a schedule for disbursement of the proceeds of the loan in installments, consistent with the requirements of section 465(a); 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; and 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. An agreement with any institution of higher education for the origination of loans under this part shall— supplement the agreement entered into in accordance with subsection (a); include provisions established by the Secretary that are similar to the participation agreement provisions described in paragraphs (2), (3), (4), and
(5)of subsection (a), as modified to relate to the origination of loans by the institution; provide that the institution 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. An institution of higher education participating in the Federal ONE Loan Program under this part may withdraw from the program by providing written notice to the Secretary of the intent to withdraw not less than 60 days before the intended date of withdrawal. Except in cases in which the Secretary and an institution of higher education agree to an earlier date, the date of withdrawal from the Federal ONE Loan Program under this part of an institution of higher education shall be the later of— 60 days after the institution submits the notice required under paragraph (1); or a date designated by the institution. The proceeds of any loan made under this part that is made for any period of enrollment shall be disbursed as follows: The disbursement of the first installment of proceeds shall, with respect to any student other than a student described in subparagraph (B)(i), be made not more than 30 days prior to the beginning of the period of enrollment, and not later than 30 days after the beginning of such period of enrollment. The disbursement of an installment of proceeds shall be made in substantially equal monthly or weekly installments over the period of enrollment for which the loan was made, except that installments may be unequal as necessary to permit the institution to adjust for unequal costs (which may include upfront costs such as tuition and fees) incurred or estimated financial assistance received by the student, or based on the academic progress of the student. The credit balances of any loan made under this part that is made for any period of enrollment shall be disbursed by— an electronic transfer of funds to the borrower’s financial account; a check for the amount payable to, and requiring the endorsement of, the borrower; an access device in accordance with clause (ii); or a cash payment for which the institution obtains a receipt signed by the borrower. An institution may enter into an agreement with a third-party servicer for the delivery of funds awarded under this part in which the third-party servicer provides the borrower with an unvalidated access device for accessing credit balances of any loan if— the agreement provides that the access device must bear a prominent disclosure informing the borrower that the borrower is not required to use such access device and open such an account in order to access the student’s funds under this part; the agreement provides that the consent of the borrower is obtained before the access device is validated to enable the student to access the account; the agreement provides for the protection of the borrower against fraud; and the institution documents that it has conducted a reasonable due diligence review before entering into the agreement, and will conduct such a review at least every two years to ensure that— the fees applicable to such account are, considered as a whole, below prevailing market rates; and the terms and conditions of such account are otherwise consistent with prevailing market terms and conditions. The first installment of the proceeds of any loan made under this part that is made to a student borrower who is entering the first year of a program of undergraduate education, and who has not previously obtained a loan under this part, shall not (regardless of the amount of such loan or the duration of the period of enrollment) be presented by the institution of higher education to the student for endorsement until 30 days after the borrower begins a course of study, but may be delivered to the eligible institution prior to the end of that 30-day period. An institution of higher education in which each educational program has a loan repayment rate (as determined under section 481B(c)) for the most recent fiscal year for which data are available that is greater than 60 percent shall be exempt from the requirements of clause (i). In the case in which the Secretary is informed by the borrower or the institution that the borrower has ceased to be enrolled before the disbursement of the second or any succeeding installment, the Secretary shall withhold such disbursement. Any disbursement which is so withheld shall be credited to the borrower’s loan and treated as a prepayment on the principal of the loan. If the sum of a disbursement for any borrower and the other financial aid obtained by borrower exceeds the amount of assistance for which the borrower is eligible under this title, the institution the borrower, or dependent student, in the case of a parent borrower, is attending shall withhold and return to the Secretary the portion (or all) of such installment that exceeds such eligible amount, except that overawards permitted pursuant to section 443(b)(4) shall not be construed to be overawards for purposes of this subparagraph. Any portion (or all) of a disbursement installment which is so returned shall be credited to the borrower’s loan and treated as a prepayment on the principal of the loan. The provisions of this subsection shall not apply in the case of a Federal ONE Consolidation Loan, or a loan made to a student to cover the cost of attendance in a program of study abroad approved by the home eligible institution if each of the educational programs of such home eligible institution has a loan repayment rate (as calculated under section 481B(c)) for the most recent fiscal year for which data are available of greater than 70 percent. For purposes of this subsection, a period of enrollment begins on the first day that classes begin for the applicable period of enrollment. The determination of the amount of a loan disbursed by an eligible 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 institution; minus any estimated financial assistance reasonably available to such student, including 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 borrower is eligible in accordance with paragraph (2). Except as provided under subparagraph (B), (C), or (D), the amount of loans made under this part that an eligible student or parent borrower may borrow for an academic year shall be as follows: With respect to enrollment in a program of undergraduate education at an eligible institution— in the case of a dependent student— who has not successfully completed the first year of a program of undergraduate education, $7,500; who has successfully completed such first year but has not successfully completed the remainder of a program of undergraduate education, $8,500; and who has successfully completed the first and second years of a program of undergraduate education but has not successfully completed the remainder of such program, $9,500; in the case of an independent student, or a dependent student whose parents are unable to borrow a loan under this part on behalf of such student— who has not successfully completed the first year of a program of undergraduate education, $11,500; who has successfully completed such first year but has not successfully completed the remainder of a program of undergraduate education, $12,500; and who has successfully completed the first and second years of a program of undergraduate education but has not successfully completed the remainder of such program, $14,500; and in the case of a student who is enrolled in a program of undergraduate education that is less than one academic year, the maximum annual loan amount that such student may receive may not exceed the amount that bears the same ratio to the amount specified in subclause
(I)or (II), as applicable, as the length of such program measured in semester, trimester, quarter, or clock hours bears to one academic year. In the case of a graduate or professional student for enrollment in a program of graduate or professional education at an eligible institution, $28,500. In the case of a parent borrowing a loan under this part on behalf of a dependent student for the student’s enrollment in a program of undergraduate education at an eligible institution, $12,500 per each such student. With respect to enrollment in coursework specified in section 484(b)(3)(B) necessary for enrollment in an undergraduate degree or certificate program— in the case of a dependent student, $2,625; in the case of a parent borrowing a loan under this part on behalf of a dependent student for the student’s enrollment in such coursework, $6,000; and in the case an independent student, or a dependent student whose parents are unable to borrow a loan under this part on behalf of such student, $8,625. With respect to the enrollment of a student who has obtained a baccalaureate degree in coursework specified in section 484(b)(3)(B) necessary for enrollment in a graduate or professional degree or certificate program, or coursework specified in section 484(b)(4)(B) necessary for a professional credential or certification from a State required for employment as a teacher in an elementary or secondary school, in the case of a student (without regard to whether the student is a dependent student or dependent student), $12,500. Except as provided under subparagraph (C), (D), or (E), the maximum aggregate amount of loans under this part and parts B and D that an eligible student or parent borrower may borrow shall be— for enrollment in a program of undergraduate education at an eligible institution, including for enrollment in coursework described in clause
(iv)or
(v)of subparagraph (A)— in the case of a dependent student, $39,000; in the case of an independent student, or an dependent student whose parents are unable to receive a loan under this part on behalf of such student, $60,250; and in the case of a parent borrowing a loan under this part on behalf of a dependent student for the student’s enrollment in such a program, $56,250 per each such student. in the case of a graduate or professional student for enrollment in a program of graduate or professional education at an eligible institution, $150,000. In the case of a graduate or professional student who is not described in subparagraph
(E)and who has received loans made under part B or D for enrollment in a graduate or professional program at an eligible institution, the total amount of which equal or exceed $28,500 as of the time of disbursement, the student may continue to borrow the amount of loans under this part necessary to complete such program without regard to the aggregate limit under subparagraph (B)(ii), except that the— amount of such loans shall not exceed the annual limits under subparagraph (A)(ii) for any academic year beginning after June 30, 2019; and authority to borrow loans in accordance with this subclause shall terminate at the end of the academic year ending before September 30, 2024. In the case of a parent borrower who has received loans made under part B or D on behalf of a dependent student for the student’s enrollment in a program of undergraduate education at an eligible institution, the total amount of which equal or exceed $12,500 for such student as of the time of disbursement, the parent borrower may continue to borrow the amount of loans under this part necessary for such student to complete such program without regard to the aggregate limit under subparagraph (B)(i)(III), except that the— amount of such loans shall not exceed the annual limits under subparagraph (A)(iii) for any academic year beginning after June 30, 2019; and the authority to borrow loans in accordance with this subclause shall terminate at the end of the academic year ending before September 30, 2024. Notwithstanding any other provision of this subsection, an eligible institution (at the discretion of a financial aid administrator at the institution) may prorate or limit the amount of a loan any student enrolled in a program of study at that institution may borrow under this part for an academic year— if the institution, using the most recently available data from the Bureau of Labor Statistics for the average starting salary in the region in which the institution is located for typical occupations pursued by graduates of such program, can reasonably demonstrate that student debt levels are or would be excessive for such program; in a case in which the student is enrolled on a less than full-time basis or the student is enrolled for less than the period of enrollment to which the annual loan limit applies under this subsection, based on the student’s enrollment status; based on the credential level (such as a degree, certificate, or other recognized educational credential) that the student would attain upon completion of such program; or based on the year of the program for which the student is seeking such loan. Any proration or limiting of loan amounts under clause
(i)shall be applied in the same manner to all students enrolled in the institution or program of study. Upon the request of a student whose loan amount for an academic year has been prorated or limited under clause (i), an eligible institution (at the discretion of the financial aid administrator at the institution) may increase such loan amount to an amount not exceeding the annual loan amount applicable to such student under this subparagraph for such academic year if such student demonstrates special circumstances or exceptional need. Subject to clause
(iii)of this subparagraph, in addition to the loan amount for an academic year described in subparagraph (A)(ii)— a graduate or professional student who is enrolled in a program of study to become a doctor of allopathic medicine, doctor of osteopathic medicine, doctor of dentistry, doctor of veterinary medicine, doctor of optometry, doctor of podiatric medicine, doctor of naturopathic medicine, or doctor of naturopathy may borrow an additional— in the case of a program with a 9-month academic year, $20,000 for an academic year; or in the case of a program with a 12-month academic year, $26,667 for an academic year; and a graduate or professional student who is enrolled in a program of study to become a doctor of pharmacy, doctor of chiropractic medicine, or a physician’s assistant, or receive a graduate degree in public health, doctoral degree in clinical psychology, or a masters or doctoral degree in health administration may borrow an additional— in the case of a program with a 9-month academic year, $12,500 for an academic year; or in the case of a program with a 12-month academic year, $16,667 for an academic year. Subject to clause
(iii)of this subparagraph, the maximum aggregate amount of loans under this part and parts B and D that a student described in clause
(i)may borrow shall be $235,500. In the case of a graduate or professional student described in clause
(i)of this subparagraph who has received loans made under part B or D for enrollment in a graduate or professional program at an eligible institution, the total amount of which equal or exceed $28,500 as of the time of disbursement, the student may continue to borrow the amount of loans under this part necessary to complete such program without regard to the aggregate limit under clause
(ii)of this subparagraph, except that the— amount of such loans shall not exceed the annual limits under clause
(i)of this subparagraph for any academic year beginning after June 30, 2019; and authority to borrow loans in accordance with this subclause shall terminate at the end of the academic year ending before September 30, 2024. For Federal ONE Loans issued to undergraduate students, the applicable rate of interest shall, for loans disbursed during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to the lesser of— a rate equal to the high yield of the 10-year Treasury note auctioned at the final auction held prior to such June 1 plus 2.05 percent; or 8.25 percent. For Federal ONE Loans issued to graduate or professional students, the applicable rate of interest shall, for loans disbursed during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to the lesser of— a rate equal to the high yield of the 10-year Treasury note auctioned at the final auction held prior to such June 1 plus 3.6 percent; or 9.5 percent. For Federal ONE Parent Loans, the applicable rate of interest shall, for loans disbursed during any 12-month period beginning on July 1 and ending on June 30, be determined on the preceding June 1 and be equal to the lesser of— a rate equal to the high yield of the 10-year Treasury note auctioned at the final auction held prior to such June 1 plus 4.6 percent; or 10.5 percent. Any Federal ONE Consolidation Loan for which the application is received on or after July 1, 2019, shall bear interest at an annual rate on the unpaid principal balance of the loan that is equal to the weighted average of the interest rates on the loans consolidated, rounded to the nearest higher one-eighth of one percent. The Secretary shall determine the applicable rates of interest under this subsection after consultation with the Secretary of the Treasury and shall publish such rate in the Federal Register as soon as practicable after the date of determination. The applicable rate of interest determined under this subsection for a loan under this part shall be fixed for the period of the loan. Notwithstanding any other provision of this part, the Secretary is prohibited from authorizing or providing any repayment incentive or subsidy not otherwise authorized under this part to encourage on-time repayment of a loan under this part, including any reduction in the interest paid by a borrower of such a loan, except that the Secretary may provide for an interest rate reduction of not more than 0.25 percentage points for a borrower who agrees to have payments on such a loan automatically debited from a bank account. The Secretary shall not charge the borrower of a loan made under this part an origination fee. Using funds received by transfer to the Secretary under section 2174 of title 10, United States Code, for the payment of interest on a loan made under this part to a member of the Armed Forces, the Secretary shall pay the interest on the loan as due for a period not in excess of 36 consecutive months. The Secretary may not pay interest on such a loan out of any funds other than funds that have been so transferred. During the period in which the Secretary is making payments on a loan under paragraph (1), the Secretary shall grant the borrower administrative deferment, in the form of a temporary cessation of all payments on the loan other than the payments of interest on the loan that are made under that paragraph. Notwithstanding any other provision of this part and in accordance with paragraphs
(2)and (4), interest shall not accrue for an eligible military borrower on a loan made under this part. In the case of any consolidation loan made under this part, interest shall not accrue pursuant to this subsection only on such portion of such loan as was used to repay a loan made under this part or a loan made under part D for which the first disbursement was made on or after October 1, 2008, and before July 1, 2019. In this subsection, the term eligible military borrower means an individual who— is serving on active duty during a war or other military operation or national emergency; or is performing qualifying National Guard duty during a war or other military operation or national emergency; and is serving in an area of hostilities in which service qualifies for special pay under section 310 of title 37, United States Code. An individual who qualifies as an eligible military borrower under this subsection may receive the benefit of this subsection for not more than 60 months. In the case of a Federal ONE Loan (other than a Federal ONE Consolidation Loan or a Federal ONE Parent Loan)— subject to clause (ii), the repayment period shall— exclude any period of authorized deferment under section 469A; and begin the day after 6 months after the date the student ceases to carry at least one-half the normal full-time academic workload (as determined by the institution); and interest shall begin to accrue or be paid by the borrower on the day the loan is disbursed. In the case of a Federal ONE Consolidation Loan or a Federal ONE Parent Loan, the repayment period shall— exclude any period of authorized deferment; and begin— on the day the loan is disbursed; or if the loan is disbursed in multiple installments, on the day of the last such disbursement. There shall be excluded from the 6-month period that begins on the date on which a student ceases to carry at least one-half the normal full-time academic workload as described in subparagraph
(A)any period not to exceed 3 years during which a borrower who is a member of a reserve component of the Armed Forces named in section 10101 of title 10, United States Code, is called or ordered to active duty for a period of more than 30 days (as defined in section 101(d)(2) of such title). Such period of exclusion shall include the period necessary to resume enrollment at the borrower’s next available regular enrollment period. Repayment of principal on loans made under this part shall begin at the beginning of the repayment period described in paragraph (1). Interest on loans made under this part for which payments of principal are not required during the 6-month period described in paragraph (1)(A)(i)(II) or for which payments are deferred under section 469A shall— be paid monthly or quarterly; or be added to the principal amount of the loan only— when the loan enters repayment; at the expiration of a the 6-month period described in paragraph (1)(A)(i)(II); at the expiration of a period of deferment, unless otherwise exempted; or when the borrower defaults. Interest capitalized shall not be deemed to exceed the amount equal to the maximum aggregate limit of the loan under section 465(b). Not less than 60 days, and again not less than 30 days, prior to the anticipated commencement of the repayment period for a Federal ONE Loan, the Secretary shall provide notice to the borrower— that interest will accrue before repayment begins; that interest will be added to the principal amount of the loan in the cases described in subparagraph (B)(i)(II); and of the borrower’s option to begin loan repayment prior to such repayment period. The total of the payments by a borrower, except as otherwise provided by an income-based repayment plan under subsection (d), during any year of any repayment period with respect to the aggregate amount of all loans made under this part to the borrower shall not (unless the borrower and the Secretary otherwise agree), be less than $600 or the balance of all such loans (together with interest thereon), whichever amount is less (but in no instance less than the amount of interest due and payable, notwithstanding any repayment plan described in subsection (c)). The amount of the periodic payment and the repayment schedule for a loan made under this part shall be established by assuming an interest rate equal to the applicable rate of interest at the time of the first disbursement of the loan. The note or other written evidence of a loan under this part shall require that the amount of the periodic payment will be adjusted annually in order to reflect adjustments in— interest rates occurring as a consequence of variable rate loans under parts B or D paid in conjunction with Federal ONE Loans under subsection (d)(1)(B)(i); or principal occurring as a consequence of interest capitalization under subsection (a)(2)(B). Not more than 6 months prior to the date on which a borrower’s first payment on a loan made under this part is due, the Secretary shall offer the borrower two plans for repayment of such loan, including principal and interest on the loan. The borrower shall be entitled to accelerate, without penalty, repayment on the borrower’s loans under this part. The borrower may choose— a standard 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 subsection (d). If a borrower of a loan made under this part does not select a repayment plan described in paragraph (1), the Secretary shall provide the borrower with the repayment plan described in paragraph (1)(A). Subject to subparagraph (B), the borrower of a loan made under this part may change the borrower’s selection of a repayment plan under paragraph (1), or the Secretary’s selection of a plan for the borrower under paragraph (2), as the case may be, under such terms and conditions as may be established by the Secretary, except that the Secretary may not establish any terms or conditions with respect to whether a borrower may change the borrower’s repayment plan. Nothing in this subsection shall prohibit the Secretary from encouraging struggling borrowers from enrolling in the income-driven repayment plan described in section 466(d). All loans made under this part to a borrower shall be repaid under the same repayment plan under paragraph (1), except that the borrower may repay a Federal ONE Parent Loan or an Excepted Federal ONE Consolidation Loan (as defined in subsection (d)(5)) separately from other loans made under this part to the borrower. The Secretary may require any borrower who has defaulted on a loan made under this part to— pay all reasonable collection costs associated with such loan; and repay the loan pursuant to the income-based repayment plan under subsection (d). For purposes of calculating the repayment period under this subsection, such period shall commence at the time the first payment of principal is due from the borrower. Repayment of loans under this part shall be in installments in accordance with the repayment plan selected under paragraph
(1)and commencing at the beginning of the repayment period determined under paragraph (5). Notwithstanding any other provision of this Act, the Secretary shall carry out a program under which— a borrower of any loan made under this part (other than a Federal ONE Parent Loan or an Excepted Federal ONE Consolidation Loan) may elect to have the borrower’s aggregate monthly payment for all such loans— not to exceed the result obtained by dividing by 12, 15 percent of the result obtained by calculating, on at least an annual basis, the amount by which— the adjusted gross income of the borrower or, if the borrower is married and files a Federal income tax return jointly with or separately from the borrower’s spouse, the adjusted gross income of the borrower and the borrower's spouse; exceeds 150 percent of the poverty line applicable to the borrower’s family size as determined under section 673(2) of the Community Services Block Grant Act ( 42 U.S.C. 9902(2) ); and not to be less than $25; the Secretary adjusts the calculated monthly payment under subparagraph (A), if— in addition to the loans described in subparagraph (A), the borrower has an outstanding loan made under part B or D (other than an excepted parent loan or an excepted consolidation loan, as such terms are defined in section 493C(a)), by determining the borrower’s adjusted monthly payment by multiplying— the calculated monthly payment, by the percentage of the total outstanding principal amount of the borrower’s loans described in the matter preceding subclause (I), which are described in subparagraph (A); the borrower and borrower’s spouse have loans described in subparagraph
(A)and outstanding loans under part B or D (other than an excepted parent loan or an excepted consolidation loan, as such terms are defined in section 493C(a)) and have filed a joint or separate Federal income tax return, in which case the Secretary determines— each borrower’s percentage of the couple’s total outstanding amount of principal on such loans; the adjusted monthly payment for each borrower by multiplying the borrower’s calculated monthly payment by the percentage determined under subclause
(I)applicable to the borrower; and if the borrower’s loans are held by multiple holders, the borrower’s adjusted monthly payment for loans described in subparagraph
(A)by multiplying the adjusted monthly payment determined under subclause
(II)by the percentage of the total outstanding principal amount of the borrower’s loans described in the matter preceding subclause (I), which are described in subparagraph (A); the holder of such a loan shall apply the borrower’s monthly payment under this subsection first toward interest due on the loan, next toward any fees due on the loan, and then toward the principal of the loan; any principal due and not paid under subparagraph
(C)shall be deferred; any interest due and not paid under subparagraph
(C)shall be capitalized, at the time the borrower— ends the election to make income-based repayment under this subsection; or begins making payments of not less than the amount specified in subparagraph (G)(i); the amount of time the borrower makes monthly payments under subparagraph
(A)may exceed 10 years; if the borrower no longer wishes to continue the election under this subsection, then— the maximum monthly payment required to be paid for all loans made to the borrower under this part (other than a Federal ONE Parent Loan or an Excepted Federal ONE Consolidation Loan) shall not exceed the monthly amount calculated under subsection (c)(1)(A), based on a 10-year repayment period, when the borrower first made the election described in this subsection; and the amount of time the borrower is permitted to repay such loans may exceed 10 years; the Secretary shall cancel any outstanding balance (other than an amount equal to the interest accrued during any period of in-school deferment under subparagraph (A), (B), or
(F)of section 469A(b)(1)) due on all loans made under this part (other than a Federal ONE Parent Loan or an Excepted Federal ONE Consolidation Loan) to a borrower— who, at any time, elected to participate in income-based repayment under subparagraph (A); whose final monthly payment for such loans prior to the loan cancellation under this subparagraph was made under such income-based repayment; and who has repaid, pursuant to income-based repayment under subparagraph (A), a standard repayment plan under subsection (c)(1)(A), or a combination— an amount on such loans that is equal to the total amount of principal and interest that the borrower would have repaid under a standard repayment plan under subsection (c)(1)(A), based on a 10-year repayment period, when the borrower entered repayment on such loans; and the amount of interest that accrues during a period of deferment described in section 469A prior to the completion of the repayment period described in subclause
(I)on the portion of such loans remaining to be repaid in accordance with such subclause; and a borrower who is repaying a loan made under this part pursuant to income-based repayment under subparagraph
(A)may elect, at any time during the 10-year period beginning on the date the borrower entered repayment on the loan, to terminate repayment pursuant to such income-based repayment and repay such loan under the standard repayment plan. The Secretary shall establish procedures for annual verification of a borrower’s annual income and the annual amount due on the total amount of loans made under this part (other than a Federal ONE Parent Loan or an Excepted Federal ONE Consolidation Loan), and such other procedures as are necessary to implement effectively income-based repayment under this subsection, including the procedures established with respect to section 493C. The Secretary may obtain such information as is reasonably necessary regarding the income of a borrower (and the borrower's spouse, if applicable) of a loan made under this part that is, or may be, repaid pursuant to income-based repayment under this subsection, for the purpose of determining the annual repayment obligation of the borrower. The Secretary shall establish procedures for determining the borrower’s repayment obligation on that loan for such year, and such other procedures as are necessary to implement effectively the income-based repayment under this subsection. A borrower who chooses to repay a loan made under this part pursuant to income-based repayment under this subsection, and— for whom adjusted gross income is available and reasonably reflects the borrower's current income, shall, to the maximum extent practicable, provide to the Secretary the Federal tax information of the borrower; and for whom adjusted gross income is unavailable or does not reasonably reflect the borrower's current income, shall provide to the Secretary other documentation of income satisfactory to the Secretary, which documentation the Secretary may use to determine an appropriate repayment schedule. The Secretary shall establish procedures under which a borrower of a loan made under this part who chooses to repay such loan pursuant to income-based repayment under this subsection is notified of the terms and conditions of such plan, including notification that if a borrower considers that special circumstances, such as a loss of employment by the borrower or the borrower's spouse, warrant an adjustment in the borrower's loan repayment as determined using the borrower’s Federal tax return information, or the alternative documentation described in paragraph (2)(C), the borrower may contact the Secretary, who shall determine whether such adjustment is appropriate, in accordance with criteria established by the Secretary. The Secretary shall authorize borrowers meeting the criteria under subparagraph
(B)to make monthly payments of $5 for a period not in excess of 3 years, except that— for purposes of subparagraph (B)(i), the Secretary may authorize reduced payments in 6-month increments, beginning on the date the borrower provides to the Secretary the evidence described in subclause
(I)or
(II)of subparagraph (B)(i); and for purposes of subparagraph (B)(ii), the Secretary may authorize reduced payments in 3-month increments, beginning on the date the borrower provides to the Secretary the evidence described in subparagraph (B)(ii)(I). The Secretary shall authorize borrowers to make reduced payments under this paragraph in the following circumstances: In a case of borrower who is seeking and unable to find full-time employment, as demonstrated by providing to the Secretary— evidence of the borrower’s eligibility for unemployment benefits to the Secretary; or a written certification or an equivalent that— the borrower has registered with a public or private employment agency that is available to the borrower within a 50-mile radius of the borrower’s home address; and in the case of a borrower that has been granted a request under this subparagraph, the borrower has made at least six diligent attempts during the preceding six-month period to secure full-time employment. The Secretary determines that, due to high medical expenses, the $25 monthly payment the borrower would otherwise make would be an extreme economic hardship to the borrower, if— the borrower documents the reason why the $25 minimum payment is an extreme economic hardship; and the borrower recertifies the reason for the $5 minimum payment on a three-month basis. For purpose of this section, the term full-time employment means employment that will provide not less than 30 hours of work a week and is expected to continue for a period of not less than 3 months. In this subsection: The term adjusted gross income has the meaning given the term in section 62 of the Internal Revenue Code of 1986. The term Excepted Federal ONE Consolidation Loan means a Federal ONE Consolidation Loan if the proceeds of such loan were used to discharge the liability on— a Federal ONE Parent Loan; a Federal Direct PLUS Loan, or a loan under section 428B, that is made, insured, or guaranteed on behalf of a dependent student; an excepted consolidation loan (defined in section 493C); or a Federal ONE Consolidation loan that was used to discharge the liability on a loan described in clause (i), (ii), or (iii). Nothing in this section shall be construed to authorize, with respect to loans made under this part— eligibility for a repayment plan that is not described in subsection (c)(1) or section 468(c); or the Secretary to— carry out a repayment plan, which is not described in subsection (c)(1) or section 468(c); or modify a repayment plan that is described in subsection (c)(1) or section 468(c). The parent of a dependent student shall be eligible to borrow funds under this section in amounts specified in subsection (b), if— the parent is borrowing to pay for the educational costs of a dependent student who meets the requirements for an eligible student under section 484(a); the parent meets the applicable requirements concerning defaults and overpayments that apply to a student borrower; the parent complies with the requirements for submission of a statement of educational purpose that apply to a student borrower under section 484(a)(4)(A) (other than the completion of a statement of selective service registration status); the parent meets the requirements that apply to a student under section 437(a); the parent— does not have an adverse credit history; or has an adverse credit history, but has— obtained an endorser who does not have an adverse credit history or documented to the satisfaction of the Secretary that extenuating circumstances exist in accordance with paragraph (4)(D); and completed Federal ONE Parent Loan counseling offered by the Secretary; and in the case of a parent who has been convicted of, or has pled nolo contendere or guilty to, a crime involving fraud in obtaining funds under this title, such parent has completed the repayment of such funds to the Secretary, or to the holder in the case of a loan under this title obtained by fraud. Except as provided in subsections (c), (d), and (e), loans made under this section shall have the same terms, conditions, and benefits as all other loans made under this part. For purposes of this section, the term parent includes a student’s biological or adoptive mother or father or the student’s stepparent, if the biological parent or adoptive mother or father has remarried at the time of filing the common financial reporting form under section 483(a), and that spouse’s income and assets would have been taken into account when calculating the student's expected family contribution. Whenever necessary to carry out the provisions of this section, the terms student and borrower as used in this part shall include a parent borrower under this section. For purposes of this section: The term adverse credit history , when used with respect to a borrower, means that the borrower— has one or more debts with a total combined outstanding balance equal to or greater than $2,085, as may be adjusted by the Secretary in accordance with subparagraph (B), that— are 90 or more days delinquent as of the date of the credit report; or have been placed in collection or charged off during the two years preceding the date of the credit report; or has been the subject of a default determination, bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or write-off of a debt under this title during the 5 years preceding the date of the credit report. The term charged off means a debt that a creditor has written off as a loss, but that is still subject to collection action. The term in collection means a debt that has been placed with a collection agency by a creditor or that is subject to more intensive efforts by a creditor to recover amounts owed from a borrower who has not responded satisfactorily to the demands routinely made as part of the creditor’s billing procedures. In a case of a borrower with a debt amount described in subparagraph (A)(i), the Secretary shall increase such debt amount, or its inflation-adjusted equivalent, if the Secretary determines that an inflation adjustment to such debt amount would result in an increase of $100 or more to such debt amount. In making the inflation adjustment under clause (i), the Secretary shall— use the annual average percent change of the All Items Consumer Price Index for All Urban Consumers, before seasonal adjustment, as the measurement of inflation; and if the adjustment calculated under subclause
(I)is equal to or greater than $100— add the adjustment to the debt amount, or its inflation-adjusted equivalent; and round up to the nearest $5. The Secretary shall publish a notice in the Federal Register announcing any increase to the threshold amount specified in subparagraph (A)(i)(I). For purposes of this section, the Secretary shall not consider the absence of a credit history as an adverse credit history and shall not deny a Federal ONE Parent loan on that basis. For purposes of this section, the Secretary may determine that extenuating circumstances exist based on documentation that may include— an updated credit report for the parent; or a statement from the creditor that the parent has repaid or made satisfactory arrangements to repay a debt that was considered in determining that the parent has an adverse credit history Any loan under this section may be counted as part of the expected family contribution in the determination of need under this title, but no loan may be made to any parent under this section for any academic year in excess of the lesser of— the student’s estimated cost of attendance minus the student’s estimated financial assistance (as calculated under section 465(b)(1)(A)); or the established annual loan limits for such loan under section 465(b). All loans made under this section shall be disbursed in accordance with the requirements of section 465(a) and shall be disbursed by— an electronic transfer of funds from the lender to the eligible institution; or a check copayable to the eligible institution and the parent borrower. Repayment of principal on loans made under this section shall commence not later than 60 days after the date such loan is disbursed by the Secretary, subject to deferral— during any period during which the parent borrower meets the conditions required for a deferral under section 469A; and upon the request of the parent borrower, during the 6-month period beginning, if the parent borrower is also a student, the day after the date such parent borrower ceases to carry at least one-half such a workload. The maximum repayment period for a loan made under this section shall be a 10-year period beginning on the commencement of such period described in paragraph (1). Interest on loans made under this section for which payments of principal are deferred pursuant to paragraph
(1)shall, if agreed upon by the borrower and the Secretary— be paid monthly or quarterly; or be added to the principal amount of the loan not more frequently than quarterly by the Secretary. Interest on loans made pursuant to this section shall be at the applicable rate of interest provided in section 465(c)(3) for loans made under this section. Section 466(b)(2) shall apply to each loan made under this section. A parent who wishes to borrow funds under this section shall be subject to verification of the parent's— immigration status in the same manner as immigration status is verified for students under section 484(g); and social security number in the same manner as social security numbers are verified for students under section 484(p). For purposes of this Act, the Federal ONE Loans described in this section shall be known as Federal ONE Parent Loans . In making consolidation loans under this section, the Secretary shall— not make such a loan to an eligible borrower, unless the Secretary has determined, in accordance with reasonable and prudent business practices, for each loan being consolidated, that the loan— is a legal, valid, and binding obligation of the borrower; and was made and serviced in compliance with applicable laws and regulations; ensure that each consolidation loan made under this section will bear interest, and be subject to repayment, in accordance with subsection (c), except as otherwise provided under subsections
(f)and
(g)of section 465; ensure that each consolidation loan will be made, notwithstanding any other provision of this part limiting the annual or aggregate principal amount for all loans made to a borrower, in an amount which is equal to the sum of the unpaid principal and accrued unpaid interest and late charges of all eligible student loans received by the eligible borrower which are selected by the borrower for consolidation; ensure that the proceeds of each consolidation loan will be paid by the Secretary to the holder or holders of the loans so selected to discharge the liability on such loans; disclose to a prospective borrower, in simple and understandable terms, at the time the Secretary provides an application for a consolidation loan— with respect to a loan made, insured, or guaranteed under this part, part B, or part D, that if a borrower includes such a loan in the consolidation loan— that the consolidation would result in a loss of loan benefits; and which specific loan benefits the borrower would lose, including the loss of eligibility for loan forgiveness (including loss of eligibility for interest rate forgiveness), cancellation, deferment, forbearance, interest-free periods, or loan repayment programs that would have been available for such a loan; and with respect to Federal Perkins Loans under this part (as this part was in effect on the day before the date of enactment of the PROSPER Act )— that if a borrower includes such a Federal Perkins Loan in the consolidation loan, the borrower will lose all interest-free periods that would have been available for the Federal Perkins Loan, such as— the periods during which no interest accrues on such loan while the borrower is enrolled in an institution of higher education at least half-time; the grace period under section 464(c)(1)(A) (as such section was in effect on the day before the date of enactment of the PROSPER Act ); and the periods during which the borrower's student loan repayments are deferred under section 464(c)(2) (as such section was in effect on the day before the date of enactment of the PROSPER Act ); and that if a borrower includes such a Federal Perkins Loan in the consolidation loan, the borrower will no longer be eligible for cancellation of part or all of the Federal Perkins Loan under section 465(a) (as such section was in effect on the day before the date of enactment of the PROSPER Act); and the occupations listed in section 465 that qualify for Federal Perkins Loan cancellation under section 465(a) (as such section was in effect on the day before the date of enactment of the PROSPER Act); the repayment plans that are available to the borrower under section (c); the options of the borrower to prepay the consolidation loan, to pay such loan on a shorter schedule, and to change repayment plans; the consequences of default on the consolidation loan; and that by applying for a consolidation loan, the borrower is not obligated to agree to take the consolidation loan; and not make such a loan to an eligible borrower, unless— the borrower has agreed to notify the Secretary promptly concerning any change of address; and the loan is evidenced by a note or other written agreement which— is made without security and without endorsement, except that if— the borrower is a minor and such note or other written agreement executed by him or her would not, under applicable law, create a binding obligation, endorsement may be required; or the borrower desires to include in the consolidation loan, a Federal ONE Parent Loan, or a loan under section 428B, or a Federal Direct PLUS loan, made on behalf of a dependent student, endorsement shall be required; provides for the payment of interest and the repayment of principal as described in paragraph (2); provides that during any period for which the borrower would be eligible for a deferral under section 469A, which period shall not be included in determining the repayment schedule pursuant to subsection (c)— periodic installments of principal need not be paid, but interest shall accrue and be paid by the borrower or be capitalized; and except as otherwise provided under subsections
(f)and
(g)of section 465, the Secretary shall not pay interest on any portion of the consolidation loan, without regard to whether the portion repays Federal Stafford Loans for which the student borrower received an interest subsidy under section 428 or Federal Direct Stafford Loans for which the borrower received an interest subsidy under section 455; entitles the borrower to accelerate without penalty repayment of the whole or any part of the loan; and contains a notice of the system of disclosure concerning such loan to consumer reporting agencies under section 430A, and provides that the Secretary on request of the borrower will provide information on the repayment status of the note to such consumer reporting agencies. The Secretary shall not discriminate against any borrower seeking a loan under this section— based on the number or type of eligible student loans the borrower seeks to consolidate; based on the type or category of institution of higher education that the borrower attended; based on the interest rate to be charged to the borrower with respect to the consolidation loan; or with respect to the types of repayment schedules offered to such borrower. Notwithstanding any other provision of this part, the Secretary shall— establish repayment terms as will promote the objectives of this section; and provide a borrower with the option of the standard-repayment plan or income-based repayment plan under section 466(d) in lieu of such repayment terms. The repayment terms established under clause (i)(I) shall require that if the sum of the consolidation loan and the amount outstanding on other eligible student loans to the individual— is less than $7,500, then such consolidation loan shall be repaid in not more than 10 years; is equal to or greater than $7,500 but less than $10,000, then such consolidation loan shall be repaid in not more than 12 years; is equal to or greater than $10,000 but less than $20,000, then such consolidation loan shall be repaid in not more than 15 years; is equal to or greater than $20,000 but less than $40,000, then such consolidation loan shall be repaid in not more than 20 years; is equal to or greater than $40,000 but less than $60,000, then such consolidation loan shall be repaid in not more than 25 years; or is equal to or greater than $60,000, then such consolidation loan shall be repaid in not more than 30 years. The amount outstanding on other eligible student loans which may be counted for the purpose of subparagraph
(A)may not exceed the amount of the consolidation loan. Notwithstanding paragraph (1)— except in the case of an income-based repayment schedule under section 466(d), a repayment schedule established with respect to a consolidation loan shall require that the minimum installment payment be an amount equal to not less than the accrued unpaid interest; and an income-based repayment schedule under section 466(d) shall not be available to a consolidation loan borrower who— used the proceeds of a Federal ONE Consolidation loan to discharge the liability— on a loan under section 428B made on behalf of a dependent student; a Federal Direct PLUS loan made on behalf of a dependent student; a Federal ONE Parent loan; or an excepted consolidation loan (defined in section 493C); or used the proceeds of a subsequent Federal ONE Consolidation loan to discharge the liability on a Federal ONE Consolidation loan described in clause (i). Repayment of a consolidation loan shall commence within 60 days after all holders have, pursuant to subsection (a)(4), discharged the liability of the borrower on the loans selected for consolidation. A consolidation loan made under this section shall bear interest at an annual rate described in section 465(c)(4). Any insurance premium paid by the borrower under subpart I of part A of title VII of the Public Health Service Act with respect to a loan made under that subpart and consolidated under this section shall be retained by the student loan insurance account established under section 710 of the Public Health Service Act. For the purpose of this section: The term eligible borrower means a borrower who— is not subject to a judgment secured through litigation with respect to a loan under this title or to an order for wage garnishment under section 488A; and at the time of application for a consolidation loan— is in repayment status as determined under section 466(a)(1); is in a grace period preceding repayment; or is a defaulted borrower who has made arrangements to repay the obligation on the defaulted loans satisfactory to the holders of the defaulted loans. An individual's status as an eligible borrower under this section terminates upon receipt of a consolidation loan under this section, except that— an individual who receives eligible student loans after the date of receipt of the consolidation loan may receive a subsequent consolidation loan; loans received prior to the date of the consolidation loan may be added during the 180-day period following the making of the consolidation loan; loans received following the making of the consolidation loan may be added during the 180-day period following the making of the consolidation loan; loans received prior to the date of the first consolidation loan may be added to a subsequent consolidation loan; and an individual may obtain a subsequent consolidation loan for the purpose— of income-based repayment under section 466(d) only if the loan has been submitted for default aversion or if the loan is already in default; of using the no accrual of interest for active duty service members benefit offered under section 465(g); of of submitting an application under section 469B(d) for a borrower defense to repayment of a loan made, insured, or guaranteed under this title. For the purpose of paragraph (1), the term eligible student loans means loans— made, insured, or guaranteed under part B, and first disbursed before July 1, 2010, including loans on which the borrower has defaulted (but has made arrangements to repay the obligation on the defaulted loans satisfactory to the Secretary or guaranty agency, whichever insured the loans); made under part D of this title, and first disbursed before July 1, 2019; made under this part before September 30, 2017; made under this part on or after the date of enactment of the PROSPER Act; made under subpart II of part A of title VII of the Public Health Service Act; or made under part E of title VIII of the Public Health Service Act. For purposes of this Act, the Federal ONE Loans described in this section shall be known as Federal ONE Consolidation Loans . A borrower who has 1 or more loans in 2 or more of the categories described in subsection (b), and who has not yet entered repayment on 1 or more of those loans in any of the categories, may consolidate all of the loans of the borrower that are described in subsection
(b)into a Federal ONE Consolidation Loan during the period described in subsection (c). The categories of loans that may be consolidated under this section are— loans made under this part before October 1, 2017 and on or after July 1, 2019; loans purchased by the Secretary pursuant to section 459A; loans made under part B that are held by an eligible lender, as such term is defined in section 435(d); and loans made under part D. The Secretary may make a Federal ONE Consolidation Loan under this section to a borrower whose application for such Federal ONE Consolidation Loan is received on or after July 1, 2019, and before July 1, 2024. A Federal ONE Consolidation Loan made under this subsection shall have the same terms and conditions as a Federal ONE Consolidation Loan made under section 468, except that in determining the applicable rate of interest on the Federal ONE Consolidation Loan made under this section, section 465(c)(4) shall be applied without rounding the weighted average of the interest rate on the loans consolidated to the nearest higher one-eighth of one percent as in such section. A borrower of a loan made under this part who meets the requirements described in subsection
(b)shall be eligible for a deferment during which installments of principal need not be paid and, unless otherwise provided in this subsection, interest shall accrue and be capitalized or paid by the borrower. A borrower of a loan made under this part shall be eligible for a deferment— during any period during which the borrower— is carrying at least one-half the normal full-time work load for the course of study that the borrower is pursuing, as determined by the eligible institution the borrower is attending; is pursuing a course of study pursuant to— an eligible graduate fellowship program in accordance with subsection (g); or an eligible rehabilitation training program for individuals with disabilities in accordance with subsection (i); is serving on active duty during a war or other military operation or national emergency, and for the 180-day period following the demobilization date for such service; is performing qualifying National Guard duty during a war or other military operation or national emergency, and for the 180-day period following the demobilization date for such service; is a member of the National Guard who is not eligible for a post-active duty deferment under section 493D and is engaged in active State duty for a period of more than 30 consecutive days beginning— the day after 6 months after the date the student ceases to carry at least one-half the normal full-time academic workload (as determined by the institution); or the day after the borrower ceases enrollment on at least a half-time basis, for a loan in repayment; is serving in a medical or dental internship or residency program, the successful completion of which is required to begin professional practice or service, or is serving in a medical or dental internship or residency program leading to a degree or certificate awarded by an institution of higher education, a hospital, or a health care facility that offers postgraduate training; or is eligible for interest payments to be made on a loan made under this part for service in the Armed Forces under section 2174 of title 10, United States Code, and pursuant to that eligibility, the interest is being paid on such loan under section 465(f); during a period sufficient to enable the borrower to resume honoring the agreement to repay the outstanding balance of principal and interest on the loan after default, if— the borrower signs a new agreement to repay such outstanding balance; the deferment period is limited to 120 days; and such deferment is not granted for consecutive periods; during a period of administrative deferment described in subsection (j); or in the case of a borrower of a Federal ONE Parent Loan or an Excepted Federal ONE Consolidation Loan, during a period described in subsection (k). A deferment granted by the Secretary— under subparagraph
(F)or
(G)of subsection (b)(1) shall be renewable at 12 month intervals; under subparagraph
(F)of subsection (b)(1) shall equal the length of time remaining in the borrower’s medical or dental internship or residency program; and under subparagraph
(G)of subsection (b)(1) shall not exceed 3 years. The Secretary shall determine the eligibility of a borrower for a deferment under paragraphs (1), (2), or
(4)of subsection (b), or in the case of a loan for which an endorser is required, an endorser’s eligibility for a deferment under paragraph
(2)or
(4)or eligibility to request a deferment under paragraph (1), based on— the receipt of a request for a deferment from the borrower or the endorser, and documentation of the borrower’s or endorser’s eligibility for the deferment or eligibility to request the deferment; receipt of a completed loan application that documents the borrower’s eligibility for a deferment; receipt of a student status information documenting that the borrower is enrolled on at least a half-time basis; or the Secretary’s confirmation of the borrower’s half-time enrollment status, if the confirmation is requested by the institution of higher education. The Secretary shall— notify a borrower of a loan made under this part— the granting of a deferment under this subsection on such loan; and the option of the borrower to continue making payments on the outstanding balance of principal and interest on such loan in accordance with subsection (f); at the time the Secretary grants a deferment to a borrower of a loan made under this part, and not less frequently than once every 180 days during the period of such deferment, provide information to the borrower to assist the borrower in understanding— the effect of granting a deferment on the total amount to be paid under the income-based repayment plan under 466(d); the fact that interest will accrue on the loan for the period of deferment, other than for a deferment granted under subsection (b)(1)(G); the amount of unpaid principal and the amount of interest that has accrued since the last statement of such amounts provided to the borrower; the amount of interest that will be capitalized, and the date on which capitalization will occur; the effect of the capitalization of interest on the borrower’s loan principal and on the total amount of interest to be paid on the loan; the option of the borrower to pay the interest that has accrued before the interest is capitalized; and the borrower’s option to discontinue the deferment at any time. The form of a deferment granted under this subsection on a loan made under this part shall be temporary cessation of all payments on such loan, except that— in the case of a deferment granted under subsection (b)(1)(G), payments of interest on the loan will be made by the Secretary under section 465(f) during such period of deferment; and a borrower may make payments on the outstanding balance of principal and interest on such loan during any period of deferment granted under this subsection. A borrower of a loan under this part is eligible for a deferment under subsection (b)(1)(B)(i) during any period for which an authorized official of the borrower’s graduate fellowship program certifies that the borrower meets the requirements of paragraph
(2)and is pursuing a course of study pursuant to an eligible graduate fellowship program. A borrower meets the requirements of this subparagraph if the borrower— holds at least a baccalaureate degree conferred by an institution of higher education; has been accepted or recommended by an institution of higher education for acceptance on a full-time basis into an eligible graduate fellowship program; and is not serving in a medical internship or residency program, except for a residency program in dentistry. The Secretary shall treat, in the same manner as required under section 428(b)(4), any course of study at a foreign university that is accepted for the completion of a recognized international fellowship program by the administrator of such a program as an eligible graduate fellowship program. Requests for deferment of repayment of loans under this subsection by students engaged in graduate or postgraduate fellowship-supported study (such as pursuant to a Fulbright grant) outside the United States shall be approved until completion of the period of the fellowship, in the same manner as required under section 428(b)(4). A borrower of a loan under this part is eligible for a deferment under subsection (b)(1)(B)(ii) during any period for which an authorized official of the borrower’s rehabilitation training program certifies that the borrower is pursuing an eligible rehabilitation training program for individuals with disabilities. The Secretary may grant a deferment to a borrower or, in the case of a loan for which an endorser is required, an endorser, without requiring a request and documentation from the borrower or the endorser under subsection
(d)for— a period during which the borrower was delinquent at the time a deferment is granted, including a period for which scheduled payments of principal and interest were overdue at the time such deferment is granted; a period during which the borrower or the endorser was granted a deferment under this subsection but for which the Secretary determines the borrower or the endorser should not have qualified; a period necessary for the Secretary to determine the borrower’s eligibility for the cancellation of the obligation of the borrower to repay the loan under section 437; a period during which the Secretary has authorized deferment due to a national military mobilization or other local or national emergency; or a period not to exceed 60 days, during which interest shall accrue but not be capitalized, if the Secretary reasonably determines that a suspension of collection activity is warranted to enable the Secretary to process supporting documentation relating to a borrower’s request— for a deferment under this subsection; for a change in repayment plan under section 466(c); or to consolidate loans under section 468. A qualified borrower shall be eligible for deferments under paragraphs
(3)through (5). In this subsection, the term qualified borrower means— a borrower of a Federal ONE Parent Loan or an Excepted Federal ONE Consolidation Loan; or in the case of such a loan for which an endorser is required, the endorser of such loan. A qualified borrower shall be eligible for a deferment during periods, not to exceed 3 years in total, during which the qualified borrower experiences an economic hardship described in subparagraph (B). An economic hardship described in this clause is a period during which the qualified borrower— is receiving payment under a means-tested benefit program; is employed full-time and the monthly gross income of the qualified borrower does not exceed the greater of— the minimum wage rate described in section 6 of the Fair Labor Standards Act of 1938 ( 29 U.S.C. 206 ); or an amount equal to 150 percent of the poverty line; or demonstrates that the sum of the qualified borrower’s monthly payments on the qualified borrower’s Federal ONE Parent Loan or Excepted Federal ONE Consolidation Loan is not less than 20 percent of the qualified borrower’s monthly gross income. To be eligible to receive a deferment under this subparagraph, a qualified borrower shall submit to the Secretary— for the first period of deferment under this subparagraph, evidence showing the monthly gross income of the qualified borrower; and for a subsequent period of deferment that begins less than one year after the end of a period of deferment granted under this subparagraph— evidence showing the monthly gross income of the qualified borrower; or the qualified borrower’s most recently filed Federal income tax return, if such a return was filed in either of the two tax years preceding the year in which the qualified borrower requests the subsequent period of deferment. A qualified borrower shall be eligible for a deferment for periods during which the qualified borrower is seeking, and is unable to find, full-time employment. To be eligible to receive an deferment under this subparagraph, a qualified borrower shall submit to the Secretary— evidence of the qualified borrower’s eligibility for unemployment benefits; or written confirmation, or an equivalent as approved by the Secretary, that— the qualified borrower has registered with a public or private employment agency, if one is available to the borrower within 50 miles of the qualified borrower’s address; and for requests submitted after the initial request, the qualified borrower has made at least six diligent attempts during the preceding six-month period to secure full-time employment. A qualified borrower shall not be eligible for a deferment under this subparagraph if the qualified borrower refuses to seek or accept employment in types of positions or at salary levels or responsibility levels for which the qualified borrower feels overqualified based on the qualified borrower’s education or previous experience. The following terms shall apply to a deferment under this subparagraph: The first deferment granted to a qualified borrower under this subparagraph may be for a period of unemployment beginning not more than 6 months before the date on which the Secretary receives the qualified borrower’s request for deferment and may be granted for a period of up to 6 months after that date. Deferments under this subparagraph shall be renewable at 6-month intervals beginning after the expiration of the first period of deferment under clause (i). To be eligible to renew a deferment under this subparagraph, a qualified borrower shall submit to the Secretary the information described in subparagraph (B)(i). The period of all deferments granted to a borrower under this subparagraph may not exceed 3 years in aggregate. A qualified borrower shall be eligible for a deferment during periods in which the qualified borrower is unable to make scheduled loan payments due to high medical expenses, as determined by the Secretary. To be eligible to receive a deferment under this subparagraph, a qualified borrower shall— submit to the Secretary documentation demonstrating that making scheduled loan payments would be an extreme economic hardship to the borrower due to high medical expenses, as determined by the Secretary; and resubmit such documentation to the Secretary not less frequently than once every 3 months. No administrative fee or other fee may be charged to the borrower in connection with the granting of a deferment under this subsection. No adverse information relating to a borrower may be reported to a consumer reporting agency solely because of the granting of a deferment under this subsection. The Secretary shall not, through regulation or otherwise, authorize additional deferment options or periods of deferment other than the deferment options and periods of deferment authorized under this subsection. With respect to any Federal ONE Parent Loan or Federal ONE Consolidation Loan for which an endorser is required— paragraphs
(2)through
(4)of subsection
(b)shall be applied— by substituting An endorser for A borrower ; by substituting the endorser for the borrower ; and by substituting an endorser for a borrower ; and in the case in which the borrower of such a loan is eligible for a deferment described in subparagraph (C), (D), (E), (F), or
(G)of subsection (b)(1), but is not making payments on the loan, the endorser of the loan may request a deferment under such subparagraph for the loan. In this section: The term eligible graduate fellowship program , when used with respect to a course of study pursued by the borrower of a loan under this part, means a fellowship program that— provides sufficient financial support to graduate fellows to allow for full-time study for at least six months; requires a written statement from each applicant explaining the applicant’s objectives before the award of that financial support; requires a graduate fellow to submit periodic reports, projects, or evidence of the fellow’s progress; and in the case of a course of study at an institution of higher education outside the United States described in section 102, accepts the course of study for completion of the fellowship program. The term eligible rehabilitation training program for individuals with disabilities , when used with respect a course of study pursued by the borrower of a loan under this part, means a program that— is necessary to assist an individual with a disability in preparing for, securing, retaining, or regaining employment; is licensed, approved, certified, or otherwise recognized as providing rehabilitation training to disabled individuals by— a State agency with responsibility for vocational rehabilitation programs, drug abuse treatment programs, mental health services programs, or alcohol abuse treatment programs; or the Secretary of the Department of Veterans Affairs; and provides or will provide the borrower with rehabilitation services under a written plan that— is individualized to meet the borrower’s needs; specifies the date on which the services to the borrower are expected to end; and requires a commitment of time and effort from the borrower that prevents the borrower from being employed at least 30 hours per week, either because of the number of hours that must be devoted to rehabilitation or because of the nature of the rehabilitation. The Excepted Federal ONE Consolidation Loan have the meaning given the term in section 466(d)(5). The term family size means the number that is determined by counting— the borrower; the borrower’s spouse; the borrower’s children, including unborn children who are expected to be born during the period covered by the deferment, if the children receive more than half their support from the borrower; and another individual if, at the time the borrower requests a deferment under this section, the individual— lives with the borrower; receives more than half of the individual’s support (which may include money, gifts, loans, housing, food, clothes, car, medical and dental care, and payment of college costs) from the borrower; and is expected to receive such support from the borrower during the relevant period of deferment. The term full-time , when used with respect to employment, means employment for not less than 30 hours per week that is expected to continue for not less than three months. The term means-tested benefit program means— a State public assistance program under which eligibility for the program's benefits, or the amount of such benefits, are determined on the basis of income or resources of the individual or family seeking the benefit; or a mandatory spending program of the Federal Government, other than a program under this title, under which eligibility for the program's benefits, or the amount of such benefits, are determined on the basis of income or resources of the individual or family seeking the benefit, and may include such programs as the supplemental security income program under title XVI of the Social Security Act ( 42 U.S.C. 1381 et seq.); the supplemental nutrition assistance program under the Food and Nutrition Act of 2008 ( 7 U.S.C. 2011 et seq.); the free and reduced price school lunch program established under the Richard B. Russell National School Lunch Act ( 42 U.S.C. 1751 et seq.); the program of block grants for States for temporary assistance for needy families established under part A of title IV of the Social Security Act ( 42 U.S.C. 601 et seq.); the special supplemental nutrition program for women, infants, and children established by section 17 of the Child Nutrition Act of 1966 ( 42 U.S.C. 1786 ); and other programs identified by the Secretary. The term monthly gross income , when used with respect to a borrower, means— the gross amount of income received by the borrower from employment and other sources for the most recent month; or one-twelfth of the borrower’s adjusted gross income, as recorded on the borrower’s most recently filed Federal income tax return. Except as otherwise provided in this part, section 455(p) shall apply with respect to loans under this part in the same manner that such section applies with respect to loans under part D. Except as otherwise provided in this part, the following provisions shall apply with respect to loans made under this part in the same manner that such provisions apply with respect to loans made under part D: Section 427(a)(2). Section 428(d). Section 428F Section 430A. Paragraphs (1), (2), (4), and
(6)of section 432(a). Section 432(i). Section 432(l). Section 432(m), except that an institution of higher education shall have a separate master promissory note under paragraph (1)(D) of such section for loans made under this part. Subsections (a), (c), and
(d)of section 437. Any provision listed under paragraph
(1)or
(2)that applies to— Federal Direct PLUS Loans made on behalf of dependent students shall apply to Federal ONE Parent Loans; Federal Direct PLUS Loans made to students shall apply to Federal ONE Loans for graduate or professional students; Federal Direct Unsubsidized Stafford loans shall apply to Federal ONE Loans (other than Federal ONE Consolidation Loans) for any student borrower; Federal Direct Consolidation Loans shall apply to Federal ONE Consolidation Loans; and forbearance shall apply to deferment under section 469A. A loan under this part may only be made to a student who— is an eligible student under section 484; has agreed to notify promptly the Secretary and the applicable contractors with which the Secretary has a contract under section 493E concerning— any change of permanent address, telephone number, or email address; when the student ceases to be enrolled on at least a half-time basis; and any other change in status, when such change in status affects the student's eligibility for the loan; and is carrying at least one-half the normal full-time academic workload for the course of study the student is pursuing (as determined by the institution). The common financial reporting form required in section 483(a)(1) shall constitute the application for loans made under this part. The Secretary shall develop, print, and distribute to participating institutions a standard promissory note and loan disclosure form. A borrower of a loan under this part may assert a defense to repayment to such loan under the provisions of section 455(h) that apply to a borrower of a loan made under part D asserting, on or after the date of enactment of the PROSPER Act, a defense to repayment to such loan made under part D. The Secretary shall ensure that monthly Federal ONE Loan statements and other publications of the Department do not contain more than four digits of the Social Security number of any individual. The Secretary, in consultation with the Secretary of the Treasury, is authorized to sell loans made under this part on such terms determined to be in the best interest of the United States, except that any such sale shall not result in any cost to the Federal Government. .
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Citation graph
cites case law
Sec. 462
Federal ONE Loan program
U.S.C.§ 1087aa
U.S.C.§ 9902
U.S.C.§ 206
U.S.C.§ 1381
U.S.C.§ 2011
U.S.C.§ 1751
U.S.C.§ 601
U.S.C.§ 1786
Cites 8Cited by 0 across 0 sources
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