of the Peace Corps service, the three years is not included in determining the prescribed repayment period for the loan. Any State or any nonprofit private institution may enter into an agreement with the Commissioner of Education for the purpose of entitling eligible students to have made on their behalf payments authorized to reduce student interest costs. Financing Advances for Reserve Funds of State and Nonprofit Private Programs Advances for reserve funds: When an agreement exists, a State may request the Office of Education to make advances to help establish or strengthen the reserve fund of the student loan insurance program covered by the agreement. If, for any fiscal year, a State does not have a program covered by an agreement and the Commissioner of Education determines by consultation with the chief executive officer of the State that there is no reasonable likelihood that the State will have such a program for the year, the Commissioner may make such advances for the year to one or more nonprofit private institutions or organizations with which he enters into an agreement. Federal Student Loan Insurance Program: Funds are to be expended to meet claims submitted by eligible lenders for defaulted loans under this program. Interest payments on student loans: Interest payments are made to eligible lending agencies on the basis of reports they submit to the Commissioner of Education. They are to be paid on a staggered quarterly basis. The Federal Government pays the interest cost up to 6 percent of the unpaid balance on behalf of students from families in which the adjusted annual income is less than $15,000 while the student is in school and half of the interest costs up to 3 percent on the unpaid balance after the student begins repayment on completion or termination of his studies. Source of Data: Regulations on the program: 31 F.R. 6109, April 21, 1966--45 C.F.R. 177, and related regulations pertinent to organization and operation of Federal Credit Unions: 31 F.R. 4801, March 22, 1966--45 C.F.R. 301. Matching Requirements None. Who May Receive Federal Aid State and private nonprofit institutions and organizations which have entered into an agreement with the Commissioner of Education. An "eligible institution" is a public or other nonprofit educational institution in any State which (a) admits as regular students only persons having a certificate of graduation from secondary school or the equivalent, (b) is legally authorized in the State to provide a program of education beyond secondary education, (c) provides an educational program for which it awards a bachelor's degree or provides not less than a 2-year program acceptable for full credit toward such a degree, and (d) is accredited to a nationally recognized accrediting agency or association approved by the U.S. Commissioner of Education for this purpose or meets one of the alternate provisions specified in the Act. Application Procedure After a State or private nonprofit institution or organization has entered into an agreement with the Commissioner of Education, it applies for advances for reserve funds in keeping with instructions supplied by the Office of Education. Students provide lending institutions with statements signifying their eligibility for Federal payments to reduce interest costs of their loans. After the determination is made that borrowers are eligible for interest benefits, the lender submits a report to the Commissioner of Education as a basis for periodic Federal payments on behalf of borrowers owing the interest. Developments During the Past Year Enabling legislation and initial appropriations are developments in fiscal year 1966. Legal Basis Public Law 89-329 (Higher Education Act of 1965), November 8, 1965, title IV, part B (79 Stat. 1236)--20 U.S.c. 1071. Additional information may be obtained from: Division of Student Financial Aid, Bureau of Higher Education, Office of Education, U.S. Department of Health, Education, and Welfare, Washington, D. C. 20202. Purpose INSURED LOANS AND INTEREST BENEFITS FOR VOCATIONAL STUDENTS 1. To encourage States and nonprofit private institutions and organizations to establish adequate loan insurance programs for students desiring vocational training in business, trade, technical, and other vocational schools. 2. To provide a Federal program of student loan insurance for eligible vocational students who do not have reasonable access to a State or private ronprofit program of student loan insurance. 3. To pay a portion of the interest on eligible insured loans for qualified vocational students. 4. To provide for direct loans to vocational students eligible for insured loans but unable to get them at appropriate interest rates or residing where such loans are not otherwise available. The National Vocational Student Loan Insurance Act of 1965 authorizes the program. Under this law, the term "State" means any of the 50 States of the Union, the District of Columbia, Puerto Rico, American Samoa, Guam, or the Virgin Islands. The initial appropriation was made on May 13, 1966. Financing Advances for Reserve Funds of State and Nonprofit Private Programs 1/ Funds for advances remain available until June 30, 1968, while those for The Federal Fund and for interest payments remain available until expended. Method of Distribution Reserve fund advances: When agreements have been entered into with the U.S. Commissioner of Education, these funds are to be distributed among States on the basis of their respective populations aged 18-22 years. In the absence of State programs meeting statutory standards, such advances may be made to nonprofit private loan insurance programs provided an agreement is approved by the U.S. Commissioner of Education. Federal Student Loan Insurance Program: Payments in connection with the default of loans insured under the law are to be paid from this fund. Moneys not needed for current operations may be invested in bonds or other obligations guaranteed as to principal and interest by the United States. Interest payments: These payments will be made on behalf of eligible students and to eligible lending agencies on the basis of reports they submit to the Commissioner of Education. Portion of interest to be paid will vary according to (1) whether family income of the borrower was less than $15,000 at the time of execution of the note or written agreement evidencing the loan, and (2) whether or not the repayment period has started. Direct loans: When funds are available, procedures will be developed for loans the Commissioner of Education is authorized to make to those eligible students who do not have other access to an insured loan program or who are unable to obtain such a loan at appropriate interest rates. Source of Data: Regulations related to organization and operation of Federal Credit Unions affecting insured loans to student members in eligible Vocational (or Higher Education) Institutions: 31 F.R. 4801, March 22, 1966--45 C.F.R. 301. Matching Requirements None. Who May Receive Federal Aid State and private nonprofit institutions and organizations which have entered into an agreement with the Commissioner of Education. (When funds are available, vocational students will be eligible for loans under certain conditions. Application Procedure State or private nonprofit agencies submit proposed agreements to the Commissioner of Education for approval and request him to provide advances to strengthen or establish reserve funds. After determination that borrowers are eligible to have interest payments made on their behalf, lending agencies submit reports to the Commissioner. Developments During the Past Year The enabling legislation and the initial appropriation action are developments in fiscal year 1966. Legal Basis Public Law 89-287 (National Vocational Student Loan Insurance Act of 1965), October 22, 1965 (79 Stat. 1037)--20 U.S.C. 981. Additional information may be obtained from: Division of Student Financial Aid, Bureau of Higher Education, Office of Education, U.S. Department of Health, Education, and Welfare, Washington, D. C. 20202. |