*(2) is capable, in the opinion of the institution, of maintaining good standing in such course of study;

"(3) has been accepted for enrollment as an undergraduate, graduate, or professional student in such institution, or, in the case of a student already in attendance at such institution, is in good standing; and

"(4) is carrying at least one-half the normal academic workload, as determined by the institution.

In any case in which a student has been determined to be eligible for a Joan under the preceding sentence, and such student thereafter fails to maintain good standing, the eligibility of such student shall, upon notice to the Commissioner, be suspended, and further payments to, or on behalf of, such student shall not be made until such student regains good standing.

(c) (1) Any agreement between an institution and a student for a loan from a student loan fund assisted under this part

"(A) shall be evidenced by note or other written instrument which, except as provided in paragraph (2), provides for repayment of the principal amount of the loan, together with interest thereon, in equal installments (or, if the borrower so requests, in graduated periodic installments determined in accordance with such schedules as may be approved by the Commissioner) payable quarterly, bimonthly, or monthly, at the option of the institution, over a period beginning nine months after the date on which the student ceases to carry, at an institution of higher education or a comparable institution outside the United States approved for this purpose by the Commissioner, at least one-half the normal fulltime academic workload, and ending ten years and nine months after such date;

"(B) shall include provision for acceleration of repayment of the whole, or any part, of such loan, at the option of the borrower: "(C) may provide, at the option of the institution in accordance with regulations of the Commissioner, that during the repayment period of the loan, payments of principal and interest by the borrower with respect to all outstanding loans made to him from student loan funds assisted under this part shall be at a rate equal to not less than $30 per month;

"(D) shall provide that the loan shall bear interest, on the unpaid balance of the loan, at the rate of 3 per centum per annum, except that no interest shall accrue (i) prior to the beginning date of repayment determined under clause (A) (i) or (ii) during any period in which repayment is suspended by reason of paragraph (2);

"(E) unless the borrower is a minor and the note or other evidence of obligation executed by him would not, under applicable law, create a binding obligation, shall provide that the loan shall be made without security and without endorsement;

"(F) shall provide that no note or evidence of obligation may be assigned by the lender, except upon the transfer of the borrower to another institution participating under this part (or, if not so participating, is eligible to do so and is approved by the Commissioner for such purpose), to such institution; and

"(G) may, pursuant to regulations of the Commissioner, provide for an assessment of a charge with respect to the loan for failure of the borrower (i) to pay all or part of an installment when it is due or (ii) to file timely and satisfactory evidence of an entitlement of the borrower to a deferment of repayment benefit or a cancellation benefit provided under this part.

86 Stat. 276

86 Stat. 277

Repayment, deferral.

75 Stat. 612. 22 USC 2501 note.

81 Stat. 722. 42 USC 2991.

"(2) (A) No repayment of principal of, or interest on, any loan from a student loan fund assisted under this part shall be required during any period in which the borrower

"(i) is carrying at least one-half the normal full-time academic workload at an institution of higher education or at a comparable institution outside the United States which is approved for this purpose by the Commissioner;

"(ii) is a member of the Armed Forces of the United States;

(iii) is in service as a volunteer under the Peace Corps Act; or (iv) is in service as a volunteer under title VIII of the Economic Opportunity Act of 1964.

The period during which repayment may be deferred by reason of clause (ii), (iii), or (iv) shall not exceed three years.

"(B) Any period during which repayment is deferred under subparagraph (A) shall not be included in computing the ten-year maximum period provided for in clause (A) of paragraph (1).

"(3) The Commissioner is authorized, when good cause is shown, to extend, in accordance with regulations, the ten-year maximum repayment period provided for in clause (A) of paragraph (1) with respect. to individual loans.

"(4) The amount of any charge under clause (G) of paragraph (1) shall not exceed—

"(A) in the case of a loan which is repayable in monthly installments, $1 for the first month or part of a month by which such installment or evidence is late and $2 for each such month or part of a month thereafter; and

"(B) in the case of a loan which has a bimonthly or quarterly repayment interval, $3 and $6, respectively, for each such interval or part thereof by which such installment or evidence is late. The institution may elect to add the amount of any such charge to the principal amount of the loan as of the first day after the day on which such installment or evidence was due, or to make the amount of the charge payable to the institution not later than the due date of the next installment after receipt by the borrower of notice of the assessment of the charge.

"(d) An agreement under this part for payment of Federal capital contributions shall include provisions designed to make loans from the student loan fund established pursuant to such agreement reasonably available (to the extent of the available funds in such fund) to all eligible students in such institutions in need thereof.

(e) In determining, for purposes of clause (1) of subsection (b) of this section, whether a student who is a veteran (as that term is 72 Stat. 1106. defined in section 101(2) of title 38, United States Code) is in need. an institution shall not take into account the income and assets of his parents.

79 Stat. 27; 80 Stat. 1198.

20 USC 241a note.

"CANCELLATION OF LOANS FOR CERTAIN PUBLIC SERVICE

"SEC. 465. (a) (1) The per centum specified in paragraph (3) of this subsection of the total amount of any loan made after June 30, 1972. from a student loan fund assisted under this part shall be canceled for each complete year of service after such date by the borrower under circumstances described in paragraph (2).

"(2) Loans shall be canceled under paragraph (1) for service

"(A) as a full-time teacher for service in an academic year in a public or other nonprofit private elementary or secondary school which is in the school district of a local educational agency which is eligible in such year for assistance pursuant to title I of the Elementary and Secondary Education Act of 1965, and which for the

purposes of this paragraph and for that year has been determined by the Commissioner (pursuant to regulations and after consultation with the State educational agency of the State in which the school is located) to be a school in which the enrollment of children described in clause (A), (B), or (C) of section 103 (a) (2) of title I of the Elementary and Secondary Education Act of 1965 (using a low-income factor of $3,000) exceeds 30 per centum of the total enrollment of that school and such determination shall not be made with respect to more than 50 per centum of the total number of schools in the State receiving assistance under such title I;

86 Stat. 278

80 Stat. 1193; 81 Stat. 783, 787.

20 USC 241c.

"(B) as a full-time staff member in a preschool program carried on under section 222 (a)(1) of the Economic Opportunity Act of 1964 which is operated for a period which is comparable 81 Stat. 698; to a full school year in the locality: Provided, That the salary of 83 Stat. 828. such staff member is not more than the salary of a comparable 42 USC 2809. employee of the local educational agency, or

(C) as a full-time teacher of handicapped children in a public

or other nonprofit elementary or secondary school system; or

"(D) as a member of the Armed Forces of the United States.

for service that qualifies for special pay under section 310 of title 37, United States Code, as an area of hostilities.

72 Stat. 1119.

For the purposes of this paragraph, the term 'handicapped children "Handicapped means children who are mentally retarded, hard of hearing, deaf, children." speech-impaired, visually handicapped, seriously emotionally disturbed, or other health-impaired children who by reason thereof

require special education.

(3) (A) The per centum of a loan which shall be canceled under Loan per paragraph (1) of this subsection is

"(i) in the case of service described in clause (A), or (C), of paragraph (2), at the rate of 15 per centum for the first or second year of such service, 20 per centum for the third or fourth year of such service, and 30 per centum for the fifth year of such service: "(ii) in the case of service described in clause (B) of paragraph (2) at the rate of 15 per centum for each year of such service;

"(iii) in the case of service described in clause (D) of paragraph (2), not to exceed a total of 50 per centum of such loan at the rate of 1212 per centum for each year of qualifying service. (B) If a portion of a loan is canceled under this subsection for any year, the entire amount of interest on such loan which accrues for such year shall be canceled.

(C) Nothing in this subsection shall be construed to authorize refunding any repayment of a loan.

centum.

"(4) For the purposes of this subsection, the term 'year where "Year." applied to service as a teacher means academic year as defined by the Commissioner.

"(b) The Commissioner shall pay to each institution for each fiscal year an amount equal to the aggregate of the amounts of loans from its student loan fund which are canceled pursuant to this section for

such year. None of the funds appropriated pursuant to section 461 (b) Ante, p. 273. shall be available for payments pursuant to this subsection.

"DISTRIBUTION OF ASSETS FROM STUDENT LOAN FUNDS

"SEC. 466. (a) After June 30, 1980, and not later than December 31, Capital dis1980, there shall be a capital distribution of the balance of the student tribution. loan fund established under this part by each institution of higher education as follows:

"(1) The Commissioner shall first be paid an amount which bears the same ratio to the balance in such fund at the close of

36-930 - 79-5

86 Stat. 279

72 Stat. 1583; 83 Stat. 143. 20 USC 421.

79 Stat. 27;

80 Stat. 1198. 20 USC 24la

note.

80 Stat. 1193; 81 Stat. 783, 787.

20 USC 241c.

June 30, 1980, as the total amount of the Federal capital contributions to such fund by the Commissioner under this part bears to the sum of such Federal contributions and the institution's capital contributions to such fund.

"(2) The remainder of such balance shall be paid to the institution.

(b) After December 31, 1980, each institution with which the Commissioner has made an agreement under this part, shall pay to the Commissioner the same proportionate share of amounts received by the institution after June 30, 1974, in payment of principal and interest on student loans made from the student loan fund established pursuant to such agreement (which amount shall be determined after deduction of any costs of litigation incurred in collection of the principal or interest on loans from the fund and not already reimbursed from the fund or from such payments of principal or interest), as was determined for the Commissioner under subsection (a).

(c) Upon a finding by the institution or the Commissioner prior to July 1, 1980, that the liquid assets of a student loar. fund established pursuant to an agreement under this part exceed the amount required for loans or otherwise in the foreseeable future, and upon notice to such institution or to the Commissioner, as the case may be, there shall be, subject to such limitations as may be included in regulations of the Commissioner or in such agreement, a capital distribution from such fund. Such capital distribution shall be made as follows:

"(1) The Commissioner shall first be paid an amount which bears the same ratio to the total to be distributed as the Federal capital contributions by the Commissioner to the student loan fund prior to such distribution bear to the sum of such Federal capital contributions and the capital contributions to the fund made by the institution.

"(2) The remainder of the capital distribution shall be paid to the institution.".

(c) In the case of a loan made before July 1, 1972, under title II of the National Defense Education Act of 1958 not to exceed 50 per centum of such loan (1) shall be canceled for service by the borrower as a full-time teacher in a public or other nonprofit elementary or secondary school in a State, in an institution of higher education, or in an elementary or secondary school overseas of the Armed Forces of the United States at the rate of 10 per centum of the total amount of such loan for each complete academic year of such service, except that (A) such rate shall be 15 per centum for each complete academic year of service as a full-time teacher in a public or other nonprofit elementary or secondary school which is in the school district of a local educational agency which is eligible in such year for assistance pursuant to title I of the Elementary and Secondary Education Act of 1965, as amended, and which for purposes of this paragraph and for that year has been determined by the Commissioner (pursuant to regulations and after consultation with the State educational agency of the State in which the school is located) to be a school in which there is a high concentration of students from low-income families, except that (unless all of the schools so determined are schools in which the enrollment of children described in clause (A), (B), or (C) of section 103(a) (2) of such title (using a low-income factor of $3,000) exceeds 50 per centum of the total enrollment of the school) the Commissioner shall not make such determination with respect to more than 25 per centum of the total of the public and other nonprofit elementary and secondary schools in any one State for any one year. (B) such rate

86 Stat. 280

shall be 15 per centum for each complete academic year of service as a full-time teacher of handicapped children (including mentally retarded, hard of hearing, deaf, speech impaired, visually handicapped, seriously emotionally disturbed, or other health impaired children who by reason thereof require special education) in a public or other nonprofit elementary or secondary school system, and (C) for the purposes of any cancellation pursuant to clause (A) or (B), an additional 50 per centum of any such loan may be canceled, and (2) shall be canceled for service by the borrower after June 30, 1970, as a member of the Armed Forces of the United States at the rate of 121/2 per centum of the total amount of such loan for each year of consecutive service, but only if such loan was made after April 13, 1970. (d) (1) Upon enactment of this Act, the program authorized by part E of title IV of the Higher Education Act of 1965 as added by subsection (b) is, and shall be deemed to be, a continuation of the program authorized by title II of the National Defense Education Act of 1958. In accordance with regulations of the Commissioner, except as provided in subsection (c), all rights, privileges, duties, 20 USC 421. functions, and obligations under such title II prior to the enactment of this Act shall be deemed to be vested, as the Commissioner determines to be appropriate, under such part E. Any student loan fund established under an agreement under such title II shall, in accordance with regulations, be deemed to have been established under such part E; and any assets of such student loan fund of any institution shall be deemed to be the assets of a student loan fund established under an agreement of that institution with the Commissioner under such part E.

Ante, p. 272.

72 Stat. 1583.

(2) Upon enactment of this Act, title II of the National Defense Effective date. Education Act of 1958 is amended by striking out section 206.

WAIVER OF MAINTENANCE OF EFFORT REQUIREMENTS IN CERTAIN CASES

20 USC 426.

SEC. 138. (a) Section 494 (a) of the Higher Education Act of 1965 Ante, p. 272. is amended by inserting before the period at the end thereof a comma and the following: "except that under special and unusual circumstances, pursuant to regulations, the Commissioner is authorized to waive the application of any provision of such an agreement which is required by this section."

(b) The amendment made by subsection (a) shall be deemed to be Effective date. effective from the date of enactment of the Higher Education Act of 1965.

FURNISHING GUIDELINES

79 Stat. 1219. 20 USC 1001

note.

SEC. 139. Part F of title IV of the Higher Education Act of 1965 is amended by adding after section 494, as added by this Act, the Ante, p. 272. following new section:

"FURNISHING GUIDELINES

"SEC. 495. Copies of all rules, regulations, guidelines, instructions, and application forms published or promulgated pursuant to this title shall be provided to the Committee on Labor and Public Welfare of the Senate and the Committee on Education and Labor of the House of Representatives at least thirty days prior to their effective date.".

TRANSFER OF FUNDS BETWEEN PROGRAMS

SEC. 139A. (a) Part F of title IV of the Higher Education Act of 1965 is further amended by adding after section 495, as added by this Supra. Act, the following new section: