Sec. 501. DEFAULT REDUCTION PROGRAM
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## SEC. 501 DEFAULT REDUCTION PROGRAM **[**[20 U.S.C. 1078-6 note](/us/usc/t20/s1078-6)**]** Effective July 1, 2014, section 428F(a)(1) of the Higher Education Act of 1965 (20 U.S.C. 1078-6(a)(1)) is amended— ####
(1)in subparagraph (A), by striking clause
(ii)and inserting the following: > > ###### “(ii) > > beginning July 1, 2014, assign the loan to the Secretary if the guaranty agency has been unable to sell the loan under clause (i).” > ; and ####
(2)in subparagraph (D), by striking clause
(i)and inserting the following: > > ###### “(i) > > the guaranty agency— > > > ###### “(I) > > shall, in the case of a sale made on or after July 1, 2014, repay the Secretary 100 percent of the amount of the principal balance outstanding at the time of such sale, multiplied by the reinsurance percentage in effect when payment under the guaranty agreement was made with respect to the loan; and > > > ###### “(II) > > may, in the case of a sale made on or after July 1, 2014, in order to defray collection costs— > > > ###### “(aa) > > charge to the borrower an amount not to exceed 16 percent of the outstanding principal and interest at the time of the loan sale; and > > > ###### “(bb) > > retain such amount from the proceeds of the loan sale; and” > .
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Sec. 501
DEFAULT REDUCTION PROGRAM
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