Sec. 109. AMENDMENT TO THE HIGHER EDUCATION ACT OF 1965
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## SEC. 109 AMENDMENT TO THE HIGHER EDUCATION ACT OF 1965 Section 438(b)(2)(I) of the Higher Education Act of 1965 (20 U.S.C. 1087-1(b)(2)(I)) is amended by adding at the end the following: > > ###### “(viii) Revised calculation rule to address instances where 1-month usd libor ceases or is non-representative > > > ###### “(I) Substitute reference index > > The provisions of this clause apply to loans for which the special allowance payment would otherwise be calculated pursuant to clause (vii). > > > ###### “(II) Calculation based on sofr > > For loans described in subclause
(III)or (IV), the special allowance payment described in this subclause shall be substituted for the payment provided under clause (vii). For each calendar quarter, the formula for computing the special allowance that would otherwise apply under clause
(vii)shall be revised by substituting ‘of the quotes of the 30-day Average Secured Overnight Financing Rate
(SOFR)in effect for each of the days in such quarter as published by the Federal Reserve Bank of New York (or a successor administrator), adjusted daily by adding the tenor spread adjustment, as that term is defined in the Adjustable Interest Rate (LIBOR) Act, for 1-month LIBOR contracts of 0.11448 percent’ for ‘of the 1-month London Inter Bank Offered Rate (LIBOR) for United States dollars in effect for each of the days in such quarter as compiled and released by the British Bankers Association’. The special allowance calculation for loans subject to clause
(vii)shall otherwise remain in effect. > > > ###### “(III) Loans eligible for sofr-based calculation > > Except as provided in subclause (IV), the special allowance payment calculated under subclause
(II)shall apply to all loans for which the holder (or, if the holder acts as an eligible lender trustee for the beneficial owner of the loan, the beneficial owner of the loan) at any time after the effective date of this clause notifies the Secretary that the holder or beneficial owner affirmatively and permanently elects to waive all contractual, statutory, or other legal rights to a special allowance paid under clause
(vii)or to the special allowance paid pursuant to any other formula that was previously in effect with respect to such loan, and accepts the rate described in subclause (II). Any such waiver shall apply to all loans then held, or to be held from time to time, by such holder or beneficial owner; provided that, due to the need to obtain the approval of, demonstrated to the satisfaction of the Secretary— > > > ###### “(aa) > > one or more third parties with a legal or beneficial interest in loans eligible for the SOFR-based calculation; or > > > ###### “(bb) > > a nationally recognized rating organization assigning a rating to a financing secured by loans otherwise eligible for the SOFR-based calculation, > > the holder of the loan (or, if the holder acts as an eligible lender trustee for the beneficial owner of the loan, the beneficial owner of the loan) may elect to apply the rate described in subclause
(II)to specified loan portfolios established for financing purposes by separate notices with different effective dates. The special allowance rate based on SOFR shall be effective with respect to a portfolio as of the first day of the calendar quarter following the applicable effective date of the waiver received by the Secretary from the holder or beneficial owner and shall permanently and irrevocably continue for all subsequent quarters. > > > ###### “(IV) Fallback provisions > > > ###### “(aa) > > In the event that a holder or beneficial owner has not elected to waive its rights to a special allowance payment under clause
(vii)with respect to a portfolio with an effective date of the waiver prior to the first of— > > > ###### “(AA) > > the date on which the ICE Benchmark Administration (‘IBA’) has permanently or indefinitely stopped providing the 1-month United States Dollar LIBOR (‘1-month USD LIBOR’) to the general public; > > > ###### “(BB) > > the effective date of an official public statement by the IBA or its regulator that the 1-month USD LIBOR is no longer reliable or no longer representative; or > > > ###### “(CC) > > the LIBOR replacement date, as defined in section 103 of the Adjustable Interest Rate (LIBOR) Act, > > the special allowance rate calculation as described in subclause
(II)shall, by operation of law, apply to all loans in such portfolio. > > > ###### “(bb) > > In such event— > > > ###### “(AA) > > the last determined rate of special allowance based on 1-month USD LIBOR will continue to apply until the end of the then current calendar quarter; and > > > ###### “(BB) > > the special allowance rate calculation as described in subclause
(II)shall become effective as of the first day of the following calendar quarter and remain in effect for all subsequent calendar quarters.” > .
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Sec. 109
AMENDMENT TO THE HIGHER EDUCATION ACT OF 1965
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