86 STAT. 261 79 Stat. 1237; 82 Stat. 1020. 20 USC 1074. 79 Stat. 1247. 20 USC 1085. 20 USC 1078. 82 Stat. 1024. 20 USC 1083. Effective date. 79 Stat. 1238. 20 USC 1075. 82 Stat. 1027. 79 Stat. 1241. 20 USC 1078. 82 Stat. 1027. Effective date. INSURED STUDENT LOANS-EXTENSION OF PROGRAM SEC. 132. (a) (1) The first sentence of section 424 (a) of the Higher Education Act of 1965 is amended to read as follows: "The total principal amount of new loans made and installments paid pursuant to lines of credit (as defined in section 435) to students covered by Federal loan insurance under this part shall not exceed $1,400,000,000 for the fiscal year ending June 30, 1972, $1,600,000,000 for the fiscal year ending June 30, 1973, $1,800,000,000 for the fiscal year ending June 30, 1974, and $2,000,000,000 for the fiscal year ending June 30, 1975." (2) Such section 424 (a) is further amended by striking out "June 30, 1975" and inserting in lieu thereof "June 30, 1979". (b) Paragraph (4) of section 428 (a) of such Act is amended (1) by striking out "June 30, 1971" and inserting in lieu thereof "June 30, 1975" and (2) by striking out "shall end at the close of June 30, 1975" and inserting in lieu thereof "shall end at the close of June 30, 1979". (c) Section 433 (c) of such Act is amended by striking out "two succeeding fiscal years" and inserting in lieu thereof "succeeding fiscal years ending prior to July 1, 1975”. (d) The amendments made by this section shall be effective after June 30, 1971. INCREASE IN LOAN LIMITATION IN EXCEPTIONAL CASES SEC. 132A. (a) (1) Section 425 (a) of the Higher Education Act of 1965 is amended by striking out "$1,500" and inserting in lieu thereof the following: "$2,500, except in cases where the Commissioner determines, pursuant to regulations prescribed by him, that a higher amount is warranted in order to carry out the purposes of this part with respect to students engaged in specialized training requiring exceptionally high costs of education". (2) The second sentence of section 425 (a) of such Act is amended by inserting before the period a comma and the following: "in the case of any student who has not successfully completed a program of undergraduate education, and $10,000 in the case of any graduate or professional student (as defined by regulations of the Commissioner and including any loans which are insured by the Commissioner under this part or by a State or nonprofit institution or organization with which the Commissioner has an agreement under section 428 (b) made to such person before he became a graduate or professional student)". (b) (1) Section 428 (b) (1) (A) of such Act is amended (1) by striking out "$1,500" and inserting in lieu thereof the following: "$2,500, except in those cases where the Commissioner determines, pursuant to regulations prescribed by him, that a higher amount is warranted in order to carry out the purposes of this part with respect to students engaged in specialized training requiring exceptionally high costs of education)". (2) Section 428 (b) (1) (a) of such Act is further amended by inserting before the semicolon the following: "in the case of any student who has successfully completed a program of undergraduate education, and $10,000 in the case of any graduate or professional student (as defined by regulations of the Commissioner and including any loans which are insured by the Commissioner under this part or by a State or nonprofit institution or organization with which the Commissioner has an agreement under this part made to such person before he became a graduate or professional student).". (c) The amendments made by subsections (a) and (b) shall be effective with respect to loans made after the enactment of this Act, and insured by the Commissioner under part B of title IV of the Higher Education Act of 1965, or by a State or nonprofit private institution or organization with which the Commissioner has an agreement under section 428 (b) of such part. INSURANCE LIABILITY 86 STAT. 262 79 Stat. 1236. 20 USC 1071. Ante, p. 261. SEC. 132B. (a) Section 425 (b) of the Higher Education Act of 1965 79 Stat. 1238. is amended to read as follows: "(b) The insurance liability on any loan insured by the Commissioner under this part shall be 100 per centum of the unpaid balance of the principal amount of the loan plus interest. The full faith and credit of the United States is pledged to the payment of all amounts which may be required to be paid under the provisions of section 430 or 437 of this part.". (b) Section 427 (a) (2) (D) of such Act is amended by striking out the following: "(but without thereby increasing the insurance liability under this part)". (c) The last sentence of section 430 (a) of such Act is amended by striking out "of the loan (other than interest added to principal)" and inserting in lieu thereof the following: "and interest". AMENDMENTS TO INTEREST SUBSIDY PROVISIONS 20 USC 1075. 82 Stat. 1020. 20 USC 1087. 20 USC 1077. 20 USC 1080. SEC. 132C. (a) Section 428 (a) (1) of the Higher Education Act of 20 USC 1078. 1965 is amended to read as follows: "(1) Each student who has received a loan for study at an eligible institution "(A) which is insured by the Commissioner under this part; "(B) which was made under a State student loan program (meeting criteria prescribed by the Commissioner), and which was contracted for, and paid to the student, within the period specified by paragraph (4); or "(C) which is insured under a program of a State or of a nonprofit private institution or organization which was contracted for, and paid to the student, within the period specified in paragraph (4), and which (i) in the case of a loan insured prior to July 1, 1967, was made by an eligible lender and is insured under a program which meets the requirements of subparagraph (E) of subsection (b) (1) and provides that repayment of such loan shall be in installments beginning not earlier than sixty days after the student ceases to pursue a course of study (as described in subparagraph (D) of subsection (b) (1)) at an eligible institution, or "(ii) in the case of a loan insured after June 30, 1967, is insured under a program covered by an agreement made pursuant to subsection (b), shall be entitled to have paid on his behalf and for his account to the holder of the loan a portion of the interest on such loan (in accordance with paragraph (2) of this subsection) only if at the time of execution of the note or written agreement evidencing such loan his adjusted family income is "(I) less than $15,000 and the eligible institution at which he has been accepted for enrollment or, in the case of a student who is attending such an institution, at which he is in good standing (as determined by such institution) "(a) has determined the amount of need for such loan by subtracting from the estimated cost of his attendance at such Ante, p. 261. 86 STAT. 263 cost allowance payment. institution (which, for purposes of this paragraph, means the cost, for the period for which the loan is sought, of tuition, fees, room and board, and reasonable commuting costs) the expected family contribution with respect to such student plus any other resources or student aid reasonably available to such student, and "(B) has provided the lender with a statement evidencing the determination made under clause (I) (a) of this paragraph and recommending a loan in the amount of such need; or "(II) equal to or more than $15,000 and the eligible institution at which he has been accepted for enrollment or, in the case of a student who is attending such an institution, at which he is in good standing (as determined by such institution) "(a) has determined that he is in need of a loan to attend such institution, "(B) has determined the amount of such need by subtracting from the estimated cost of attendance at such institution the expected family contribution with respect to such student plus any other resources or student aid reasonably available to such student, and "(y) has provided the lender with a statement evidencing the determination made under clause (II) (B) of this paragraph and recommending a loan in the amount of such need. Administration In addition, the Commissioner shall pay an administrative cost allowance in the amount established by paragraph (2) (B) of this subsection with respect to loans to any student without regard to the borrower's need. For the purposes of this paragraph, the adjusted family income of a student shall be determined pursuant to regulations of the Commissioner in effect at the time of the execution of the note or written agreement evidencing the loan. Such regulations shall provide for taking into account such factors, including family size, as the Commissioner deems appropriate. In the absence of fraud by the lender, such determination of the need of a student under this paragraph shall be final insofar as it concerns the obligation of the Commissioner to pay the holder of a loan a portion of the interest on the loan.". (b) Section 428(b)(1) (H) of such Act is amended to read as follows: 79 Stat. 1242. 20 USC 1078. 20 USC 1077. 82 Stat. 1020. 20 USC 1087. Ante, p. 262. "(H) provides that the benefits of the loan insurance program will not be denied any student who has been determined (pursuant to section 428 (a) (1)) to be in need of a loan except in the case of loans made by an instrumentality of a State or eligible institution;". (c) Section 427 (a) (1) of such Act is amended by striking out", and (C) has provided the lender with a statement of the institution which sets forth a schedule of the tuition and fees applicable to that student and its estimate of the cost of board and room for such a student". TECHNICAL AMENDMENTS SEC. 132D. Section 437 of such Act is amended to read as follows: "REPAYMENT BY THE COMMISSIONER OF LOANS OF DECEASED OR DISABLED BORROWERS "SEC. 437. If a student borrower who has received a loan described in clause (A), (B), or (C) of section 428 (a) (1) dies or becomes permanently and totally disabled (as determined in accordance with regulations of the Commissioner), then the Commissioner shall discharge the borrower's liability on the loan by repaying the amount owed on the loan.". (b) Paragraph (1) of section 428 (b) is amended (1) by striking out "and" at the end of clause (J) thereof, (2) by striking out the period at the end of clause (K) and inserting"; and" in lieu thereof, and (3) by adding at the end of such paragraph the following new clause: "(L) provides that periodic installments of principal need not be paid, but interest shall accrue and be paid during any period (i) during which the borrower is pursuing a full-time course of study at an eligible institution, (ii) not in excess of three years during which the borrower is a member of the Armed Forces of the United States, (iii) not in excess of three years during which the borrower is in service as a volunteer under the Peace Corps Act, or (iv) not in excess of three years during which the borrower is in service as a full-time volunteer under title VIII of the Economic Opportunity Act of 1964." (c) Section 428 (e) of such Act is repealed. (d) Paragraph (1) of subsection (c) of such section 428 is amended by striking out "adjusted family income of the borrower" and inserting in lieu thereof "the borrower's lack of need". (e) Section 434 of such Act is amended by striking out "up to 15 per centum of their assets,". ELIGIBILITY OF INSTITUTIONS SEC. 132E. (a) Part B of title IV of the Higher Education Act of 1965 is amended by adding at the end thereof the following new section: "ELIGIBILITY OF INSTITUTIONS 86 STAT. 264 79 Stat. 1242; 82 Stat. 1027. 81 Stat. 722. Repeal. 82 Stat. 636. 79 Stat. 1236; 82 Stat. 1020. 20 USC 1071. "SEC. 438. (a) Notwithstanding any other provision of this part, the Regulations. Commissioner is authorized to prescribe such regulations as may be necessary to provide for "(1) a fiscal audit of an eligible institution with regard to any Audit. funds obtained from a student who has received a loan insured under this part, or insured by a State or nonprofit private institution or organization with which the Commissioner has an agreement under section 428 (b); 79 Stat. 1241. "(2) the establishment of reasonable standards of financial 20 USC 1078. responsibility and appropriate institutional capability for the administration by an eligible institution of a program of student financial aid with respect to funds obtained from a student who has received a loan insured under this part, or insured by a State or nonprofit private institution or organization with which the Commissioner has an agreement under section 428 (b); "(3) the limitation, suspension, or termination of the eligibility under this part of any otherwise eligible institution, whenever the Commissioner has determined, after notice and affording an opportunity for hearing, that such institution has violated or failed to carry out any regulation prescribed under this part. "(b) The Commissioner shall publish a list of State agencies which he determines to be reliable authority as to the quality of public postsecondary vocational education in their respective States for the purpose of determining eligibility for all Federal student assistance programs.". List of State agencies, publication. (b) The amendment made by subsection (a) shall be effective on Effective date. and after the sixtieth day following the enactment of this Act. 86 STAT. 265 Ante, p. 264. 79 Stat. 1241. 20 USC 1078. Establishment. Tax exemption. Appropriation. Advances, interest. Board of SAVINGS PROVISION SEC. 132F. The amendments made by sections 132, 132A, 132B, 132C, and 132D, shall not be effective with respect to any loan made after the date of enactment of this Act, in whole or in part, to consolidate or convert a loan made or contracted for prior to its effective date. STUDENT LOAN MARKETING ASSOCIATION SEC. 133. (a) Part B of title IV of the Higher Education Act of 1965 is further amended by adding at the end thereof the following new section: "STUDENT LOAN MARKETING ASSOCIATION "SEC. 439. (a) The Congress hereby declares that it is the purpose of this section to establish a Government-sponsored private corporation which will be financed by private capital and which will serve as a secondary market and warehousing facility for insured student loans, insured by the Commissioner under this part or by a State or nonprofit private institution or organization with which the Commissioner has an agreement under section 428 (b), and which will provide liquidity for student loan investments. "(b) (1) There is hereby created a body corporate to be known as the Student Loan Marketing Association (hereinafter referred to as the 'Association). The Association shall have succession until dissolved. It shall maintain its principal office in the District of Columbia and shall be deemed, for purposes of venue in civil actions, to be a resident thereof. Offices may be established by the Association in such other place or places as it may deem necessary or appropriate for the conduct of its business. "(2) The Association, including its franchise, capital, reserves, surplus, mortgages, or other security holdings, and income shall be exempt from all taxation now or hereafter imposed by any State, territory, possession, Commonwealth, or dependency of the United States, or by the District of Columbia, or by any county, municipality, or local taxing authority, except that any real property of the Association shall be subject to State, territorial, county, municipal, or local taxation to the same extent according to its value as other real property is taxed. "(3) There is hereby authorized to be appropriated to the Secretary of Health, Education, and Welfare $5,000,000 for making advances for the purpose of helping to establish the Association. Such advances shall be repaid within such period as the Secretary may deem to be appropriate in light of the maturity and solvency of the Association. Such advances shall bear interest at a rate not less than (A) a rate determined by the Secretary of the Treasury taking into consideration the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the maturity of such advances, adjusted to the nearest one-eighth of 1 per centum, plus (B) an allowance adequate in the judgment of the Secretary to cover administrative costs and probable losses. Repayments of such advances shall be deposited into miscellaneous receipts of the Treasury. "(c) (1) The Association shall have a Board of Directors which shall consist of twenty-one persons, one of whom shall be designated Chairman by the President. "(2) An interim Board of Directors shall be appointed by the President, one of whom he shall designate as interim Chairman. The interim Board shall consist of twenty-one members, seven of whom shall be representative of banks or other financial institutions which are insured |