Sec. 4. Risk-sharing payments for Federal Direct Loans
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Section 454 of the Higher Education Act of 1965 ( 20 U.S.C. 1087d(a) ) is amended— in subsection (a)— in paragraph (5), by striking and after the semicolon; by redesignating paragraph
(6)as paragraph (8); and by inserting after paragraph
(5)the following: provide that the institution accepts the institutional risk-sharing requirements under subsection (d); ; and by adding at the end the following: Beginning with the first fiscal year that begins after the date of enactment of the COLLEGE Act , and each succeeding fiscal year, each institution of higher education participating in the direct student loan program under this part shall remit to the Secretary, at such times as the Secretary may specify, an institutional risk-sharing payment, as determined under paragraph (2). The cohort loan balance of an institution for a fiscal year equals the total principal amount of all loans made under this part to attend such institution for the cohort of borrowers who entered repayment, deferment, or forbearance on such loans in the third preceding fiscal year for which the determination is made. The cohort nonrepayment loan balance of an institution for a fiscal year equals, from the total amount of the loans described in subparagraph (A), the total loan balance of those borrowers who have gone into default in the 3 consecutive fiscal years since their loans entered repayment, deferment, or forbearance. The risk-sharing payment of an institution for a fiscal year shall equal, for the first fiscal year after the date of enactment of the COLLEGE Act through the twenty-fifth fiscal year after such date, an amount equal to 1 percent of the cohort nonrepayment loan balance determined under subparagraph
(B)through 25 percent of that balance, respectively, for each year. .
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Sec. 4
Risk-sharing payments for Federal Direct Loans
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