United States Code

GUARANTEED STUDENT LOAN PROGRAM; SUSPENSION PERIOD (AUGUST 19, 1972 TO MARCH 1, 1973) FOR EFFECTIVENESS OF CERTAIN AMENDMENTS BY EDUCATION AMENDMents of June 23, 1972

Amendment of section by section 132D of Pub. L. 92-318 suspended for period beginning Aug. 19, 1972, and ending Mar. 1, 1973, the provisions as in effect prior to June 23, 1972, as effective during the suspension period, and any action taken or obligation undertaken under amended provisions prior to Aug. 19, 1972, as unaffected, see Pub. L. 92-391, Aug. 19, 1972, 86 Stat. 563, set out as a note under section 1074 of this title.

§ 1085. Definitions for student loan insurance program

As used in this part:

(a) The term "eligible institution" means (1) an institution of higher education, (2) a vocational school, or (3) with respect to students who are nationals of the United States, an institution outside the United States which is comparable to an institution of higher education or to a vocational school and which has been approved by the Secretary for purposes of this part, except that such term does not include any such institution or school which employs or uses commissioned salesmen to promote the availability of any loan program described in section 1078(a)(1) of this title at that institution or school.

(b) The term "institution of higher education" means an educational institution in any State which (1) admits as regular students only persons having a certificate of graduation from a school providing secondary education, or the recognized equivalent of such certificate, or who are beyond the age of compulsory school attendance, (2) is legally authorized within such State to provide a program of education beyond secondary education, (3) provides an educational program for which it awards a bachelor's degree or provides not less than a two-year program which is acceptable for full credit toward such a degree, (4) is a public or other nonprofit institution, and (5) is accredited by a nationally recognized accrediting agency or association approved by the Secretary for this purpose or, if not so accredited, (A) is an institution with respect to which the Secretary has determined that there is satisfactory assurance, considering the resources available to the institution, the period of time, if any, during which it has operated, the effort it is making to meet accreditation standards, and the purpose for which this determination is being made, that the institution will meet the accreditation standards of such an agency or association within a reasonable time or, (B) is an institution whose credits are accepted on transfer by not less than three institutions which are so accredited, for credit on the same basis as if transferred from an institution so accredited. Such term includes any public or other nonprofit collegiate or associate degree school of nursing and any school which provides not less than a one-year program of training to prepare students for gainful employment in a recognized occupation and which meets the provisions of clauses (1), (2), (4), and (5). If the Secretary determines that a particular category of such schools does not meet the requirements of

clause (5) because there is no nationally recognized accrediting agency or association qualified to accredit schools in such category, he shall, pending the establishment of such an accrediting agency or association, appoint an advisory committee, composed of persons specially qualified to evaluate training provided by schools in such category, which shall (i) prescribe the standards of content, scope, and quality which must be met in order to qualify schools in such category to participate in the program pursuant to this part, and (ii) determine whether particular schools not meeting the requirements of clause (5) meet those standards. For purposes of this subsection the Secretary shall publish a list of nationally recognized accrediting agencies or associations which he determines to be reliable authority as to the quality of training offered.

(c) The term "vocational school" means a business or trade school, or technical institution or other technical or vocational school, in any State, which (1) admits as regular students only persons who have completed or left elementary or secondary school and who have the ability to benefit from the training offered by such institution; (2) is legally authorized to provide, and provides within that State, a program of postsecondary vocational or technical education designated to fit individuals for useful employment in recognized occupations; (3) has been in existence for two years or has been specially accredited by the Secretary as an institution meeting the other requirements of this subsection; and (4) is accredited (A) by a nationally recognized accrediting agency or association listed by the Secretary pursuant to this clause, (B) if the Secretary determines that there is no nationally recognized accrediting agency or association qualified to accredit schools of a particular category, by a State agency listed by the Secretary pursuant to this clause, and (C) if the Secretary determines there is no nationally recognized or State agency or association qualified to accredit schools of a particular category, by an advisory committee appointed by him and composed of persons specially qualified to evaluate training provided by schools of that category, which committee shall prescribe the standards of content, scope, and quality which must be met by those schools in order for loans to students attending them to be insurable under this part and shall also determine whether particular schools meet those standards. For the purpose of this subsection, the Secretary shall publish a list of nationally recognized accrediting agencies or associations and State agencies which he determines to be reliable authority as to the quality of education or training afforded.

(d) The term "collegiate school of nursing" means a department, division, or other administrative unit in a college or university which provides primarily or exclusively an accredited program of education in professional nursing and allied subjects leading to the degree of bachelor of arts, bachelor of science, bachelor of nursing, or to an equivalent degree, or to a graduate degree in nursing.

(e) The term "associate degree school of nursing" means a department, division, or other administrative unit in a junior college, community college, college, or university which provides primarily or exclusively an accredited two-year program of education in professional nursing and allied subjects leading to an associate degree in nursing or to an equivalent degree.

(f) The term "accredited" when applied to any program of nurse education means a program accredited by a recognized body or bodies approved for such purpose by the Secretary.

(g)(1) Except as provided in paragraphs (2), (3), and (4), the term "eligible lender” means—

(A) a National or State chartered bank, a mutual savings bank, a savings and loan association, or a credit union which

(i) is subject to examination and supervision by an agency of the United States or of the State in which its principal place of operation is established, and

(ii) does not have as its primary consumer credit function the making or holding of loans made to students under this part unless it is a bank which is wholly owned by a State;

(B) a pension fund as defined in the Employee Retirement Income Security Act [29 U.S.C. 1001 et seq.];

(D) in any State, a single agency of the State or a single nonprofit private agency designated by the State;

(E) an eligible institution which meets the requirements of paragraphs (2), (3), and (4) of this subsection and which has signed an agreement pursuant to section 1083 of this title;

(F) for purposes only of purchasing and holding loans made by other lenders under this part, the Student Loan Marketing Association or an agency of any State functioning as a secondary market '

(G) for purposes of making loans under section 1087-2(o) and (q) of this title, the Student Loan Marketing Association; and

(H) for purposes of making loans under section 1078(j) of this title, a State agency or a nonprofit private institution or organization having an agreement under section 1078(b) of this title.

(2) To be an eligible lender under this part, an eligible institution

(A) shall employ at least one person whose full-time responsibilities are limited to the administration of programs of financial aid for students attending such institution; and

(B) shall not be a home study school. (3) The term eligible lender does not include any eligible institution in any fiscal year immediately after the fiscal year in which the Secretary determines, after notice and opportunity for a hearing, that for each of two consecutive years 15 per centum or more of the total amount of such loans as are described in section 1078(a)(1) of this title made by the institu

'So in original. Probably should be followed by a semicolon.

tion with respect to students at that institution and repayable in each such year is in default, as defined in section 1080(e)(2) of this title.

(4) Whenever the Secretary determines that

(A) there is reasonable possibility that an eligible institution may, within one year after a determination is made under paragraph (3), improve the collection of loans described in section 1078(a)(1) of this title, so that the application of paragraph (3) would be a hardship to that institution, or

(B) the termination of the lender's status under paragraph (3) would be a hardship to the present or for prospective students of the eligible institution, after considering the management of that institution, the ability of that institution to improve the collection of loans, the opportunities that institution offers to economically disadvantaged students, and other related factors,

the Secretary shall waive the provisions of paragraph (3) with respect to that institution. Any determination required under this paragraph shall be made by the Secretary prior to the termination of an eligible institution as a lender under the exception of paragraph (3). Whenever the Secretary grants a waiver pursuant to this paragraph he shall provide technical assistance to the institution concerned in order to improve the collection rate of such loans.

(h) The term "line of credit" means an arrangement or agreement between the lender and the borrower whereby a loan is paid out by the lender to the borrower in annual installments, or whereby the lender agrees to make, in addition to the initial loan, additional loans in subsequent years.

(i) The term "due diligence" requires the utilization by a lender, in the servicing and collection of loans insured under this part, of collection practices at least as extensive and forceful as those generally practiced by financial institutions for the collection of consumer loans.

(j) The term "temporarily totally disabled" when used with respect to a borrower means a borrower who, by reason of injury or illness, cannot be expected to be able to attend an eligible institution or to be gainfully employed during a reasonable period of recovery from such injury or illness not to exceed three years. Such term when used with respect to the spouse of a borrower means a spouse who, by reason of injury or illness, cannot be expected to be gainfully employed during a reasonable period of recovery from such injury or illness not to exceed three years and who during such period required continuous nursing or other similar services.

(Pub. L. 89-329, title IV, § 435, Nov. 8, 1965, 79 Stat. 1247; Pub. L. 89-698, title II, § 204, Oct. 29, 1966, 80 Stat. 1072; Pub. L. 90-575, title I, §§ 116(a), 118(a), Oct. 16, 1968, 82 Stat. 1023, 1026; Pub. L. 94-482, title I, § 127(a), Oct. 12, 1976, 90 Stat. 2130; Pub. L. 95-43, § 1(a)(35), (36), June 15, 1977, 91 Stat. 216; Pub. L. 96-374, title IV, §§ 413(e), 421(e)(2), title XIII, § 1391(a)(1), Oct. 3, 1980, 94 Stat. 1418, 1432, 1503.)

REFERENCES IN TEXT

The Employee Retirement Income Security Act, referred to in subsec. (g)(1)(B), probably means the Employee Retirement Income Security Act of 1974, Pub. L. 93-406, Sept. 2, 1974, 88 Stat. 832, as amended, which is classified principally to chapter 18 (§ 1001 et seq.) of Title 29, Labor. For complete classification of this Act to the Code, see Short Title note set out under section 1001 of Title 29 and Tables.

AMENDMENTS

1980-Subsecs. (a) to (c), (f). Pub. L. 96-374, § 1391(a)(1), substituted "Secretary" for "Commissioner" wherever appearing.

Subsec. (g)(1)(G), (H). Pub. L. 96-374, § 421(e)(2), added subpars. (G) and (H).

Subsec. (g)(3), (4). Pub. L. 96-374, § 1391(a)(1), substituted "Secretary" for "Commissioner" wherever appearing.

Subsec. (j). Pub. L. 96-374, § 413(e), added subsec. (j). 1977-Subsec. (g). Pub. L. 95-43, § 1(a) (35), (36), substituted in par. (1)(B) "Employee" for "Employees" and in par. (3) "the total amount of such loans as are described in section 1078(a)(1) of this title made by the institution" for "the amount of the loan described in section 1078(a)(1) of this title made".

1976-Subsec. (a). Pub. L. 94-482 added provision excepting any institution or school which employs or uses commissioned salesmen.

Subsec. (b)(1). Pub. L. 94-482 added reference to admission of students beyond the age of compulsory school attendance.

Subsecs. (c) to (f). Pub. L. 94-482 reenacted provisions without change.

Subsec. (g). Pub. L. 94-482 designated existing provisions as subsec. (g)(1) and, as so designated, added introductory excepting clause, and substituted provisions enumerating the particular types of banks, etc., subject to coverage, for provisions setting forth coverage of an eligible institution, agency or instrumentality of a State, a financial or credit institution (including an insurance company), or a pension fund approved by the Commissioner, and added subsec. (g)(2) to (4).

Subsec. (h). Pub. L. 94-482 reenacted provisions without change.

Subsec. (1). Pub. L. 94-482 added subsec. (i). 1968-Subsec. (a). Pub. L. 90-575, § 116(a)(1), (2), added subsec. (a). Former subsec. (a) was redesignated as (b).

Subsec. (b). Pub. L. 90-575, § 116(a)(1), (3), redesignated former subsec. (a) as (b), and, as so redesignated, substituted as the term being defined “institution of higher education" for "eligible institution", and struck out "any institution outside the States which is comparable to an institution described in the preceding sentence and which has been approved by the Commissioner for the purposes of this subchapter, and also includes" following "Such term includes". Former subsec. (b) was redesignated as (d).

Subsec. (c). Pub. L. 90-575, § 116(a)(1), (4), redesignated former subsec. (a) of section 996 of this title as (c), and as so redesignated, substituted as the term being defined "vocational school" for "eligible institution", and substituted "part" for "chapter". Former subsec. (c) was redesignated as (e).

Subsec. (d). Pub. L. 90-575, § 116(a)(1), redesignated former subsec. (b) as (d). Former subsec. (d) was redesignated as (f).

Subsec. (e). Pub. L. 90-575, § 116(a)(1), redesignated former subsec. (c) as (e). Former subsec. (e) was redesignated as (g).

Subsec. (f). Pub. L. 90-575, § 116(a)(1), redesignated former subsec. (d) as (f). Former subsec. (f) was redesignated as (h).

Subsec. (g). Pub. L. 90-575, §§ 116(a)(1), 118(a), redesignated former subsec. (e) as (g), and, as so redesignated, added reference to a pension fund approved by the Commissioner.

Subsec. (h). Pub. L. 90-575, § 116(a)(1), redesignated former subsec. (f) as (h).

1966-Subsec. (a). Pub. L. 89-698 expanded the definition of "eligible institution" to include comparable out-of-state institutions that have been approved by the Commissioner.

EFFECTIVE DATE OF 1980 AMENDMENT

Amendment by sections 413(e) and 421(e)(2) of Pub. L. 96-374 effective Jan. 1, 1981, see section 1393(b)(4) of Pub. L. 96-374, set out as an Effective Date of 1980 Amendment note under section 1001 of this title. Amendment by section 1391(a)(1) of Pub. L. 96-374 effective Oct. 1, 1980, see section 1393(a) of Pub. L. 96-374.

EFFECTIVE Date of 1977 AMENDMENT

Amendment by section 1(a) of Pub. L. 95-43 deemed an amendment by section 127(a) of Pub. L. 94-482, effective Oct. 1, 1976, as provided by section 127(b) of Pub. L. 94-482, as amended by section 1(b)(4) of Pub. L. 95-43, described in Effective Date of 1976 Amendment note below and set out as an Effective Date of 1976 Amendment note under section 1071 of this title, see section 2 of Pub. L. 95-43, set out as an Effective Date of 1977 Amendment note under section 1071 of this title.

EFFECTIVE DATE OF 1976 AMENDMENT

Amendment by Pub. L. 94-482 effective Oct. 1, 1976, and to the extent amendment makes changes in this part B which affect student loans, such changes to apply to outstanding loans as well as to loans made after the amendment becomes effective, see section 127(b) of Pub. L. 94-482, set out as an Effective Date of 1976 Amendment note under section 1071 of this title.

EFFECTIVE DATE of 1968 AMENDMENT

Amendment by Pub. L. 90-575 applicable on or after the 60th day after Oct. 16, 1968, see section 116(e) of Pub. L. 90-575, set out as an Effective Date of 1968 Amendment note under section 1083 of this title. AUTHORITY FOR LIMITATION, SUSPENSION, OR TERMINATION OF ELIGIBILITY OF INSTITUTION OF HIGHER EDUCATION

Amendment of subsec. (b)(1) by Pub. L. 94-482 was not to be construed to authorize terminating the eligibility of an institution deemed to be an institution of higher education for purposes of this section on Oct. 12, 1976, but the authority of the Commissioner to limit, suspend, or terminate eligibility was also not to be construed as impaired, see section 181(b) of Pub. L. 94-482, set out as a note under section 1141 of this title.

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1071, 1074, 1075, 1078, 1087-2, 1087dd, 1094 of this title; title 42 section 294d.

§ 1086. District of Columbia student loan insurance program

(a) Powers of government of District of Columbia

The government of the District of Columbia is authorized (1) to establish a student loan insurance program which meets the requirements of this part for a State loan insurance program in order to enter into agreements with the Secretary for the purposes of this subchapter and part C of subchapter I of chapter 34 of title 42, (2) to enter into such agreements with the Secretary, (3) to use amounts appropriated for the purposes of this section to establish a fund for

such purposes and for expenses in connection therewith, and (4) to accept and use donations for the purposes of this section.

(b) Defense of minority removed

Notwithstanding the provisions of any applicable law, if the borrower, on any loan insured under the program established pursuant to this section, is a minor, any otherwise valid note or other written agreement executed by him for the purposes of such loan shall create a binding obligation.

There are authorized to be appropriated such amounts as may be necessary for the purposes of this section.

(Pub. L. 89-329, title IV, § 436, as added Pub. L. 89-752, § 12, Nov. 3, 1966, 80 Stat. 1244, and amended Pub. L. 90-575, title I, § 116(b)(5), Oct. 16, 1968, 82 Stat. 1024; Pub. L. 94-482, title I, § 127(a), Oct. 12, 1976, 90 Stat. 2132; Pub. L. 96-374, title XIII, § 1391(a)(1), Oct. 3, 1980, 94 Stat. 1503.)

CODIFICATION

Section is also set out in D.C. Code, § 1-358.

AMENDMENTS

1980-Subsec. (a). Pub. L. 96-374 substituted "Secretary" for "Commissioner" wherever appearing.

1976-Subsec. (a). Pub. L. 94-482 in cl. (1) substituted "government" for "Mayor", and in cl. (3) struck out reference to Mayor of the District of Columbia.

Subsec. (b). Pub. L. 94-482 reenacted provisions without change.

Subsec. (c). Pub. L. 94-482 struck out reference to Mayor of the District of Columbia.

1968-Subsec. (a). Pub. L. 90-575 substituted "this part" for "this title and the National Vocational Student Loan Insurance Act of 1965".

EFFECTIVE DATE OF 1980 AMENDMENT

Amendment by Pub. L. 96-374 effective Oct. 1, 1980, see section 1393(a) of Pub. L. 96-374, set out as an Effective Date of 1980 Amendment note under section 1001 of this title.

EFFECTIVE DATE OF 1976 AMENDMENT Amendment by Pub. L. 94-482 effective Oct. 1, 1976, and to the extent amendment makes changes in this part B which affect student loans, such changes to apply to outstanding loans as well as to loans made after the amendment becomes effective, see section 127(b) of Pub. L. 94-482, set out as an Effective Date of 1976 Amendment note under section 1071 of this title.

EFFECTIVE DATE OF 1968 AMENDMENT

§ 1087. Repayment of loans by Secretary
(a) Loans of deceased or disabled borrowers

If a student borrower who has received a loan described in clause (A), (B), or (C) of section 1078(a)(1) of this title dies or becomes permanently and totally disabled (as determined in accordance with regulations of the Secretary), then the Secretary shall discharge the borrower's liability on the loan by repaying the amount owed on the loan.

(b) Loans of bankrupt borrowers

If a student borrower who has received a loan described in clause (A), (B), or (C) of section 1078(a)(1) of this title is relieved of his obligation to repay such loan, in whole or in part, through a discharge in bankruptcy, the Secretary shall repay the amount of the loan so discharged.

(Pub. L. 89-329, title IV, § 437, as added Pub. L. 90-575, title I, § 113(a), Oct. 16, 1968, 82 Stat. 1020, and amended Pub. L. 92-318, title I, § 132D(a), June 23, 1972, 86 Stat. 263; Pub. L. 94-482, title I, § 127(a), Oct. 12, 1976, 90 Stat. 2133; Pub. L. 96-374, title XIII, § 1391(a)(1), Oct. 3, 1980, 94 Stat. 1503.)

AMENDMENTS

1980-Pub. L. 96-374 substituted "Secretary" for "Commissioner" wherever appearing.

1976-Pub. L. 94-482 designated existing provisions as subsec. (a) and added subsec. (b).

1972-Pub. L. 92-318 substituted "loans described in clause (A), (B), or (C) of section 1078(a)(1) of this title" for "loan with respect to which a portion of the interest (1) is payable by the Commissioner under section 1078(a) of this title, or (2) would be payable but for the adjusted family income of the borrower,".

EFFECTIVE DATE OF 1980 AMENDMENT

Amendment by Pub. L. 96-374 effective Oct. 1, 1980, see section 1393(a) of Pub. L. 96-374, set out as an Effective Date of 1980 Amendment note under section 1001 of this title.

EFFECTIVE DATE of 1976 AMENDMENT

EFFECTIVE DATE

Section to apply only with respect to loans made on or after the 60th day following Oct. 16, 1968, see section 113(c) of Pub. L. 90-575, set out as an Effective Date of 1968 Amendment note under section 1071 of this title.

SAVINGS PROVISION

Amendment by Pub. L. 92-318 not effective with respect to any loan made after June 23, 1972, in whole or in part, to consolidate or convert a loan made or constructed for prior to its effective date, see section 132F of Pub. L. 92-318, set out as a Savings Provision note under section 1074 of this title.

GUARANTEED STUDENT LOAN PROGRAM; SUSPENSION PERIOD (AUGUST 19, 1972 TO MARCH 1, 1973) FOR EFFECTIVENESS OF CERTAIN AMENDMENTS BY EDUCATION AMENDMments of June 23, 1972

Amendment by section 132D of Pub. L. 92-318 suspended for period beginning Aug. 19, 1972, and ending Mar. 1, 1973, the provisions as in effect prior to June 23, 1972, as effective during the suspension period, and any action taken or obligation undertaken under amended provisions prior to Aug. 19, 1972, as unaffected, see Pub. L. 92-391, Aug. 19, 1972, 86 Stat. 563, set out as a note under section 1074 of this title.

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1071, 1075, 1077, 1078, 1080 of this title.

§ 1087-1. Special allowances

(a) Congressional findings and declaration of purpose In order to assure (1) that the limitation on interest payments or other conditions (or both) on loans made or insured under this part, do not impede or threaten to impede the carrying out of the purposes of this part or do not cause the return to holders of loans to be less than equitable, (2) that incentive payments on such loans are paid promptly to eligible lenders, and (3) that appropriate consideration of relative administrative costs and money market conditions is made in setting the quarterly rate of such payments, the Congress finds it necessary to establish an improved method for the determination of the quarterly rate of the special allowances on such loans, and to provide for a thorough, expeditious and objective examination of alternative methods for the determination of the quarterly rate of such allowances. (b) Payment authority; percentage calculation formula

(1) A special allowance shall be paid for each of the three-month periods ending March 31, June 30, September 30, and December 31 of every year and the amount of such allowance paid to any holder with respect to any threemonth period shall be a percentage of the average unpaid balance of principal (not including unearned interest added to principal) of all eligible loans held by such holder during such period.

(2)(A) Subject to subparagraph (B) and paragraph (4), the special allowance paid pursuant to this subsection on loans shall be computed (i) by determining the average of the bond equivalent rates of ninety-one-day Treasury bills auctioned for such three month period, (ii) by subtracting the applicable interest rate on such loans from such average, (iii) by adding 3.5 per centum to the resultant per centum, and (iv) by dividing the resultant per centum by four.

(B)(i) The quarterly rate of the special allowance for holders of loans which were made or purchased with funds obtained by the holder from the issuance of obligations, the income from which is exempt from taxation under title 26 shall be one-half the quarterly rate of the special allowance established under subparagraph (A). Such rate shall also apply to holders of loans which were made or purchased with funds obtained by the holder from collections or default reimbursements on, or interests or other income pertaining to, eligible loans made or purchased with funds described in the preceding sentence of this subparagraph or from income on the investment of such funds. This subparagraph shall not apply to loans which were made or insured prior to October 1, 1980.

(ii) The rate set under division (i) shall not be less than (I) 2.5 per centum per annum in the case of loans for which the applicable interest rate is 7 per centum per annum, (II) 1.5 per centum per annum in the case of loans for which the applicable interest rate is 8 per

centum per annum, or (III) 0.5 per centum in the case of loans for which the applicable rate is 9 per centum per annum.

(iii) No special allowance may be paid under this subparagraph unless the issuer of such obligations complies with section 1087-1a of this title.

(3) The holder of an eligible loan shall be deemed to have a contractual right against the United States, during the life of such loan, to receive the special allowance according to the provisions of this section. Subject to paragraph (4) the special allowance determined for any such three-month period shall be payable at such time, after the close of such period, as may be specified by or pursuant to regulations promulgated under this section.

(4)(A) If payments of the special allowances payable under this section or of interest payments under section 1078(a) of this title with respect to a loan have not been made within thirty days after the Secretary has received an accurate, timely, and complete request for payment thereof, the special allowance payable to such holder shall be increased by an amount equal to the daily interest accruing on the special allowance and interest benefits payments due the holder.

(B) Such daily interest shall be computed at the daily equivalent rate of the sum of the special allowance rate computed pursuant to paragraph (2) and the interest rate applicable to the loan and shall be paid for the later of (i) the thirty-first day after the receipt of such request for payment from the holder, or (ii) the thirtyfirst day after the final day of the period or periods covered by such request, and shall be paid for each succeeding day until, and including, the date on which the Secretary authorizes payment.

(C) For purposes of reporting to the Congress the amounts of special allowances paid under this section, amounts of special allowances paid pursuant to this paragraph shall be segregated and reported separately.

(5) As used in this section, the term "eligible loan" means a loan

(A)(i) on which a portion of the interest is paid on behalf of the student and for his account to the holder of the loan under section 1078(a) of this title;

(ii) which is made under section 1078-2 or 1087-2(o) of this title; or

(iii) which was made prior to October 1, 1981; and

(B) which is insured under this part, or made under a program covered by an agreement under section 1078(b) of this title.

(6) The Secretary shall pay the holder of an eligible loan, at such time or times as are specified in regulations, a special allowance prescribed pursuant to this subsection subject to the condition that such holder shall submit to the Secretary, at such time or times and in such a manner as he may deem proper, such information as may be required by regulation for the purpose of enabling the Secretary to carry out his functions under this section and to carry out the purposes of this section.

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United States Code, Volume 8