Tap any paragraph to write a margin note. Your notes collect in the Desk below the text and file under cases with @. The side-by-side margin rail opens on a larger screen.

§
Marginalia
Code · STATUTE-COMPILATIONS · Higher Education Act of 1965 · Sec. 428G

Sec. 428G. REQUIREMENTS FOR DISBURSEMENT OF STUDENT LOANS

1,088 words·~5 min read·/statute-compilations/comps-765/sec-428g

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

## SEC. 428G REQUIREMENTS FOR DISBURSEMENT OF STUDENT LOANS **[**[20 U.S.C. 1078–7](/us/usc/t20/s1078–7)**]** ###
(a)Multiple Disbursement Required ####
(1)Two disbursements required The proceeds of any loan made, insured, or guaranteed under this part that is made for any period of enrollment shall be disbursed in 2 or more installments, none of which exceeds one-half of the loan. ####
(2)Minimum interval required The interval between the first and second such installments shall be not less than one-half of such period of enrollment, except as necessary to permit the second installment to be disbursed at the beginning of the second semester, quarter, or similar division of such period of enrollment. #### (3)29 Special rule An institution whose cohort default rate (as determined under section 435(m)) for each of the 3 most recent fiscal years for which data are available is less than 10 percent may disburse any loan made, insured, or guaranteed under this part in a single installment for any period of enrollment that is not more than 1 semester, 1 trimester, 1 quarter, or 4 months. Notwithstanding section 422(d) of the Higher Education Amendments of 1998, this paragraph shall be effective beginning on the date of enactment of the Higher Education Reconciliation Act of 2005. 29Section 422(a) of Public Law 105–244 added paragraph (3). Section 422(d) of such Act states the amendments made by subsections
(a)and
(b)of section 422 shall be effective during the period beginning on October 1, 1998, and ending on September 30, 2002. ####
(4)Amendment to special rule Beginning on October 1, 2011, the special rule under paragraph
(3)shall be applied by substituting “15 percent” for “10 percent”. ###
(b)Disbursement and Endorsement Requirements ####
(1)First year students The first installment of the proceeds of any loan made, insured, or guaranteed under this part that is made to a student borrower who is entering the first year of a program of undergraduate education, and who has not previously obtained a loan under this part, shall not (regardless of the amount of such loan or the duration of the period of enrollment) be presented by the institution to the student for endorsement until 30 days after the borrower begins a course of study, but may be delivered to the eligible institution prior to the end of that 30-day period. An institution whose cohort default rate (as determined under section 435(m)) for each of the three most recent fiscal years for which data are available is less than 10 percent shall be exempt from the requirements of this paragraph.30 Notwithstanding section 422(d) of the Higher Education Amendments of 1998, the second sentence of this paragraph shall be effective beginning on the date of enactment of the Higher Education Reconciliation Act of 2005. 30Section 422(b) of Public Law 105–244 added a new sentence at the end. Section 422(d) of such Act states the amendments made by subsections
(a)and
(b)shall be effective during the period beginning on October 1, 1998, and ending on September 30, 2002. ####
(2)Other students The proceeds of any loan made, insured, or guaranteed under this part that is made to any student other than a student described in paragraph
(1)shall not be disbursed more than 30 days prior to the beginning of the period of enrollment for which the loan is made. ####
(3)Amendment to cohort default rate exemption Beginning on October 1, 2011, the exemption to the requirements of paragraph
(1)in the second sentence of such paragraph shall be applied by substituting “15 percent” for “10 percent”. ###
(c)Method of Multiple Disbursement Disbursements under subsection (a)— ####
(1)shall be made in accordance with a schedule provided by the institution (under section 428(a)(2)(A)(i)(II)) that complies with the requirements of this section; ####
(2)may be made directly by the lender or, in the case of a loan under sections 428 and 428A, may be disbursed pursuant to the escrow provisions of section 428(i); and ####
(3)notwithstanding subsection (a)(2), may, with the permission of the borrower, be disbursed by the lender on a weekly or monthly basis, provided that the proceeds of the loan are disbursed by the lender in substantially equal weekly or monthly installments, as the case may be, over the period of enrollment for which the loan is made. ###
(d)Withholding of Second Disbursement ####
(1)Withdrawing students A lender or escrow agent that is informed by the borrower or the institution that the borrower has ceased to be enrolled before the disbursement of the second or any succeeding installment shall withhold such disbursement. Any disbursement which is so withheld shall be credited to the borrower's loan and treated as a prepayment thereon. ####
(2)Students receiving over-awards If the sum of a disbursement for any student and the other financial aid obtained by such student exceeds the amount of assistance for which the student is eligible under this title, the institution such student is attending shall withhold and return to the lender or escrow agent the portion (or all) of such installment that exceeds such eligible amount, except that overawards permitted pursuant to section 443(b)(4) of the Act shall not be construed to be overawards for purposes of this paragraph. Any portion (or all) of a disbursement installment which is so returned shall be credited to the borrower's loan and treated as a prepayment thereon. ###
(e)Exclusion of Consolidation and Foreign Study Loans The provisions of this section shall not apply in the case of a loan made under section 428C, or made to a student to cover the cost of attendance in a program of study abroad approved by the home eligible institution if the home eligible institution has a cohort default rate (as calculated under section 435(m)) of less than 5 percent. ###
(f)Beginning of Period of Enrollment For purposes of this section, a period of enrollment begins on the first day that classes begin for the applicable period of enrollment. ###
(g)Sales Prior to Disbursement Prohibited An eligible lender shall not sell or transfer a promissory note for any loan made, insured, or guaranteed under this part until the final disbursement of such loan has been made, except that the prohibition of this subsection shall not apply if— ####
(1)the sale of the loan does not result in a change in the identity of the party to whom payments will be made for the loan; and ####
(2)the first disbursement of such loan has been made.
Connections2 off-index
2 references not yet in our index
  • 20 USC 1078–7
  • Pub. L. 105-244
Citation graph
cites case law
Sec. 428G
REQUIREMENTS FOR DISBURSEMENT OF STUDENT LOANS
Cite20 USC 1078–7
Pub. L.Pub. L. 105-244
Cites 2Cited by 0 across 0 sources
★   the supreme law of the land   ★
Don't Tread on Me
E Pluribus Unum — out of many, one

"If you don't know your rights, you don't have any."

Marginalia · a citizen's law index
A research desk, not legal advice. Always read the cited source before relying on a summary.
Questions or an issue? support@self-law.org
disclaimerMarginalia is a research index, not a law firm. Nothing on this site is legal, tax, or financial advice and no attorney–client relationship is formed by using it. Statutes, regulations, and case law change; summaries, search results, AI output, and member posts may be incomplete, out of date, or wrong. Any interpretation drawn from material on this site should be validated by a licensed attorney in your jurisdiction before you act on it.