Sec. 301. Elimination of interest capitalization
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Section 428B(d)(2) of the Higher Education Act of 1965 ( 20 U.S.C. 1078–2(d)(2) ) is amended to read as follows: Interest on loans made under this section for which payments of principal are deferred pursuant to paragraph
(1)shall be paid by the borrower and shall not be capitalized. . Section 428C(b)(4)(C)(ii)(III) of the Higher Education Act of 1965 ( 20 U.S.C. 1078–3(b)(4)(C)(III) ) is amended by striking or capitalized, . Section 428F(a)(1)(E) of such Act of 1965 ( 20 U.S.C. 1078–6(a)(1)(E) ) is amended to read as follows: With respect to a loan assigned under subparagraph (A)(ii)— the guaranty agency shall add to the principal and interest outstanding at the time of the assignment of such loan an amount equal to the amount described in subparagraph (D)(i)(II)(aa); the Secretary shall pay the guaranty agency, for deposit in the agency’s Operating Fund established pursuant to section 422B, an amount equal to the amount added to the principal and interest outstanding at the time of the assignment in accordance with clause
(i); for a loan assigned on or after the date of enactment of the LOAN Act, the interest outstanding at the time of the assignment of such loan, and any interest accruing after such time, shall not be capitalized; and beginning on the date of enactment of LOAN Act, interest shall only accrue on the percentage of such a loan that is equal to— the amount of the outstanding principal on the original loan on the date it was assigned; divided by the total amount of such assigned loan, including interest outstanding at the time of the assignment of such loan and the amount added by the guaranty agency in accordance with clause
(i), on the date such loan was assigned. . Section 428H(d)(5) of the Higher Education Act of 1965 ( 20 U.S.C. 1078–8(d)(5) ) is amended by inserting before the date of enactment of the LOAN Act after Interest capitalized . Section 428H(e)(2) of the Higher Education Act of 1965 ( 20 U.S.C. 1078–8(e)(2) ) is amended— in the header, by striking and inserting Capitalization ; No capitalization in subparagraph (A), in the matter before clause (i), by striking , if agreed upon by the borrower and the lender and all that follows through clause (ii)(IV) and inserting be paid by the borrower and shall not be capitalized. ; by striking subparagraph (B); and by redesignating subparagraph
(C)as subparagraph (B). Section 455(e)(5) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(e)(5) ) is amended by striking the last sentence and inserting No interest may be capitalized on such loan on or after the date of the enactment of the LOAN Act, and the Secretary shall promulgate regulations with respect to the treatment of accrued interest that is not capitalized . Section 455(f) of the Higher Education Act of 1965 ( 20 U.S.C. 1087e(f) ) is amended— in the subsection heading, by inserting at the end the following: ; and forbearance in subparagraph (B), by striking capitalized or ; and by adding at the end the following: At the expiration of a period of forbearance, interest shall not be capitalized on any loans made under this part. . The amendments made by paragraph
(1)shall apply to any deferment or forbearance period in effect on the date of enactment of this Act, or any deferment or forbearance period beginning on or after such date of enactment. Section 493C(b)(3) of the Higher Education Act of 1965 ( 20 U.S.C. 1098e(b)(3) ) is amended to read as follows: on subsidized loans, any interest due and not paid under paragraph
(2)shall be paid by the Secretary for a period of not more than 3 years after the date of the borrower’s election under paragraph (1), except that such period shall not include any period during which the borrower is in deferment due to an economic hardship described in section 435(o); . Section 485A(f) of the Higher Education Act of 1965 ( 20 U.S.C. 1092a(f) ) is amended by adding at the end the following new paragraph: Not withstanding paragraphs
(1)and (2), beginning on the date of enactment of the LOAN Act, interest on a loan reissued under subsection
(e)shall not be capitalized, and interest shall only accrue on the percentage of such reissued loan that is equal to— the amount of the outstanding principal on the original loan on the date it was reissued; divided by the total amount of such reissued loan on the date such loan was reissued. .
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- 20 USC 1078–2(d)(2)
- 20 USC 1078–3(b)(4)(C)(III)
- 20 USC 1078–6(a)(1)(E)
- 20 USC 1078–8(d)(5)
- 20 USC 1078–8(e)(2)
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Sec. 301
Elimination of interest capitalization
Cite20 USC 1078–2(d)(2)
Cite20 USC 1078–3(b)(4)(C)(III)
Cite20 USC 1078–6(a)(1)(E)
Cite20 USC 1078–8(d)(5)
Cite20 USC 1078–8(e)(2)
Cites 8Cited by 0 across 0 sources