Sec. 7. Maximizing effective use and recoupment of Federal student loans by closing the forbearance loophole and amending default rates
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Section 435(a)(7)(A) of the Higher Education Act of 1965 ( 20 U.S.C. 1085(a)(7)(A) ) is amended— by redesignating clause
(ii)as clause (iii); and by inserting after clause
(i)the following: The plan required under clause
(i)may not include placing students in forbearance as a means of reducing the cohort default rate of the institution. . Section 435(m)(1) of the Higher Education Act of 1965 ( 20 U.S.C. 1085(m)(1) ) is amended by adding at the end the following: With respect to a cohort default rate calculated for an institution under this paragraph for fiscal year 2018 and for each succeeding fiscal year, the cohort default rate shall be calculated such that in determining the number of current and former students at an institution who enter repayment for such fiscal year— any student who is in nonmandatory forbearance for such fiscal year for a period of greater than 18 months but less than 36 months shall not be counted as entering repayment for that fiscal year; any student described in clause
(i)shall be counted as entering repayment for the first fiscal year for which the student ceases to be in a period of forbearance and otherwise meets the requirements for being in repayment; and any student who is in a period of nonmandatory forbearance for 3 or more years shall be counted as in default and included in the institution’s total number of students in default. .
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Sec. 7
Maximizing effective use and recoupment of Federal student loans by closing the forbearance loophole and amending default rates
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