amendments [June 23, 1972], shall be effective during such period, except that (1) nothing in this joint resolution shall be deemed to affect the validity of any action taken or obligation undertaken under such part prior to the enactment of this joint resolution [Aug. 19, 1972], and (2) section 438(b) of the Higher Education Act of 1965 [section 1087-1(b) of this title] shall continue to be in effect during such period. Section 431(b) of the General Education Provisions Act [section 1232(b) of this title] and section 495 of the Higher Education Act of 1965 [section 1088d of this title] shall not be applicable in the case of administrative action taken to effectuate this joint resolution."

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in section 1079 of this title.

§ 1075. Federal loan insurance limitations

(a) Maximum annual insurable loan; maximum aggregate insured unpaid principal amount

(1) The total of loans made to a student in any academic year or its equivalent (as determined by the Commissioner) which may be covered by Federal loan insurance under this part may not exceed $2,500 in the case of a student who has not successfully completed a program of undergraduate education, or $5,000 in the case of a graduate or professional student (as defined in regulations of the Commissioner), except

(A) that in the case of a loan to a student who is or will be in his first year of a program of undergraduate education, and who has not previously enrolled in such a program which is made by an eligible lender as described in section 1085(g)(1)(D) of this title or which is made or originated (as defined in section 1083(b) of this title) by an eligible institution, the loan may not exceed the lesser of $2,500 or 50 per centum of the estimated cost of attendance (calculated in accordance with the provisions of section 1078(a)(2)(C)(i) of this title),

(B) that in the case of a loan made or originated (as defined in section 1083(b) of this title) by an eligible institution which is made to a student for his first academic year of postsecondary education, the loan may exceed $1,500 only if it is to be disbursed in two or more installments none of which exceeds one-half of the loan, with the interval between the first and second of such installments being not less than one-third of the period of enrollment for which the student received the loan, and

(C) 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 cost of education.

The annual insurable limit per student shall not be deemed to be exceeded by a line of credit under which actual payments by the lender to the borrower will not be made in any year in excess of the annual limit.

(2) The aggregate insured unpaid principal amount for all such insured loans made to any student shall not at any time exceed $7,500, in the case of any student who has not successfully completed a program of undergraduate edu

cation, and $15,000 in the case of any graduate or professional student (as defined by regula tions 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 1078(b) of this title, made to such person before he became a graduate or professional student). (b) Insurance liability limitations

(1)(A) Except as provided in subparagraph (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, except that

(i) if, for any fiscal year, the total amount of payments under section 1080 of this title by the Commissioner to any eligible lender as described in section 1085(g)(1)(D) of this title exceeds 5 per centum of the sum of the loans made by such lender which are insured by the Commissioner and which were in repayment at the end of the preceding fiscal year, the insurance liability under this subsection for that portion of such excess which represents loans insured after the applicable date with respect to such loans, as determined under subparagraph (C), shall be equal to 90 per centum of the amount of such portion;

(ii) if, for any fiscal year, the total amount of such payments to such a lender exceeds 9 per centum of such sum, the insurance liability under this subsection for that portion of such excess which represents loans insured after the applicable date with respect to such loans, as determined under subparagraph (C), shall be equal to 80 per centum of the amount of such portion.

(B) Notwithstanding subparagraph (A), the provisions of clauses (i) and (ii) shall not apply to an eligible lender as described in section 1085(g)(1)(D) of this title for the fiscal year in which such lender begins to carry on a loan program insured by the Commissioner, or for any of the four succeeding fiscal years.

(C) The applicable date with respect to a loan made by an eligible lender as described in section 1085(g)(1)(D) of this title shall be

(i) the 90th day after the adjournment of the next regular session of the appropriate State legislature which convenes after October 12, 1976, or

(ii) if the primary source of lending capital for such lender is derived from the sale of bonds, and the constitution of the appropriate State prohibits a pledge of such State's credit as security against such bonds, the day which is one year after such 90th day.

(2) For the purposes of this subsection, the sum of the loans made by a lender which are insured by the Commissioner and which are in repayment shall be the original principal amount of loans made by such lender which are insured by the Commissioner reduced by (A) the amount the Commissioner has been required to pay to discharge his insurance obligations under this part, (B) the original principal amount of loans insured by the Commissioner which have been fully repaid, (C) the original principal amount insured on those loans for

which payment of first installment of principal has not become due pursuant to section 1077(a)(2)(B) of this title or such first installment need not be paid pursuant to section 1077(a)(2)(C), and (D) of this title the original principal amount of loans repaid by the Commissioner under section 1087 of this title.

(3) For the purposes of this subsection, payments by the Commissioner under section 1080 of this title to an assignee of the lender with respect to a loan shall be deemed payments made to such lender.

(4) 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 1080 or 1087 of this title. (Pub. L. 89-329, title IV, § 425, Nov. 8, 1965, 79 Stat. 1238; Pub. L. 90-575, title I, §§ 116(b)(1), 120(a)(2), Oct. 16, 1968, 82 Stat. 1023, 1027; Pub. L. 92-318, title I, §§ 132A(a), 132B(a), June 23, 1972, 86 Stat. 261, 262; Pub. L. 94-482, title I, § 127(a), Oct. 12, 1976, 90 Stat. 2104.)

AMENDMENTS

1976-Subsec. (a). Pub. L. 94-482 restructured existing provisions into pars. (1) and (2), with provisions relating to maximum annual insurable loans, as amended to expand excepted conditions and adding applicability to graduate or professional students, constituting par. (1), and with provisions relating to maximum aggregate insured unpaid principal amount, as amended to increase the amount from $10,000 to $15,000, constituting par. (2).

Subsec. (b). Pub. L. 94-482 restructured existing provisions into pars. (1) and (4), with provisions relating to insurance liability limitations, as amended to add excepted conditions of subpar. (A) and subpars. (B) and (C), constituting par. (1), and provisions relating to full faith and credit constituting par. (4), and added pars. (2) and (3).

1972-Subsec. (a). Pub. L. 92-318, § 132A(a), increased limitation on insurable loan from $1,500 to $2,500, except where a higher amount is warranted for students engaged in specialized training requiring exceptionally high costs of education and made the $7,500 limitation applicable where student has not successfully completed a program of undergraduate education, and $10,000 where graduate or professional student and including insured loans made before person became a graduate or professional student, respectively.

Subsec. (b). Pub. L. 92-318, § 132B(a), included liability for interest and the pledging of Federal credit.

1968-Subsec. (a). Pub. L. 90-575 redesignated subsec. (a)(1) as (a), and, as so redesignated, provided that the maximum annual insurable loan amount available be the same for graduate and professional students as for other students, and that the aggregate insured unpaid principal amount loaned be the same for graduate and professional students as for other students, and struck out subsec. (a)(2), which prohibited concurrent loans or loan insurance under both this part and the National Vocational Student Loan Insurance Act of 1965.

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, except that the changes made in subsec. (a) shall become applicable to loans to cover the costs of education for periods of enrollments beginning on or after Oct. 1, 1976, 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 1972 AMENDMENT

§ 1076

Pub. L. 92-318, § 132A(c), provided that: "The amendments made by subsections (a) and (b) [to subsec. (a) of this section and section 1078(b)(1)(A) of this title] shall be effective with respect to loans made after the enactment of this Act [June 23, 1972], and insured by the Commissioner under part B of title IV of the Higher Education Act of 1965 [section 1071 et seq. of this title], or by a State or nonprofit private institution or organization with which the Commissioner has an agreement under section 428(b) of such part [section 1078(b) of this title]."

EFFECTIVE DATE OF 1968 AMENDMENT

Amendment of subsec. (a) by Pub. L. 90-575 applicable on or after the 60th day after Oct. 16, 1968, see sections 116(e) and 120(d) of Pub. L. 90-575, set out as Effective Date of 1968 Amendment notes under sections 1078 and 1083 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 contracted for prior to its effective date, see section 132F of Pub. L. 92-318, set out as 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 AMENDMENTS OF JUNE 23, 1972

Amendment of subsecs. (a) and (b) of this section by sections 132A and 132B of Pub. L. 92-318 suspended for period beginning Aug. 19, 1972, and ending Mar. 1, 1973, such subsecs. (a) and (b) 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 section 1080 of this title.

§ 1076. Insurability of loans made from funds owned by lender or held by lender in trust

Loans made by eligible lenders in accordance with this part shall be insurable by the Commissioner whether made from funds fully owned by the lender or from funds held by the lender in a trust or similar capacity and available for such loans.

(Pub. L. 89-329, title IV, § 426, Nov. 8, 1965, 79 Stat. 1238; Pub. L. 94-482, title I, § 127(a), Oct. 12, 1976, 90 Stat. 2106.)

AMENDMENTS

1976-Pub. L. 94-482 reenacted provisions without change.

§ 1077. Conditions for Federal loan insurance

(a) Student eligibility; terms of loans

A loan by an eligible lender shall be insurable by the Commissioner under the provisions of this part only if—

(1) made to a student who (A) has been accepted for enrollment at an eligible institution or, in the case of a student already attending such institution, is in good standing there as determined by the institution, (B) is carrying at least one-half of the normal fulltime workload as determined by the institution, and (C) has agreed to notify promptly the holder of the loan concerning any change of address; and

(2) evidenced by a note or other written agreement which

(A) is made without security and without endorsement, except that if the borrower is a minor and such note or other written agreement executed by him would not, under the applicable law, create a binding obligation, endorsement may be required,

(B) provides for repayment (except as provided in subsection (c) of this section) of the principal amount of the loan in installments over a period of not less than five years (unless sooner repaid or unless the student, during the nine- to twelve-month period preceding the start of the repayment period, specifically requests that repayment be made over a shorter period) nor more than ten years beginning not earlier than nine months nor later than one year after the date on which the student ceases to carry at an eligible institution at least onehalf the normal full-time academic workload as determined by the institution, except

(i) as provided in clause (C) below,

(ii) that the period of the loan may not exceed fifteen years from the execution of the note or written agreement evidencing it,

(iii) that the note or other written instrument may contain such provisions relating to repayment in the event of default in the payment of interest or in the payment of the cost of insurance premiums, or other default by the borrower, as may be authorized by regulations of the Commissioner in effect at the time the loan is made, and

(iv) that the lender and the student, after the student ceases to carry at an eligible institution at least one-half the normal full-time academic workload as determined by the institution, may agree to a repayment schedule which begins earlier, or is of shorter duration, than required by this subparagraph, except that in the event a student has requested and obtained a repayment period of less than five years, he may at any time prior to the total repayment of the loan, have the repayment period extended so that the total repayment period is not less than five years,

(C) 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", or is pursuing a course of study pursuant to a graduate fellowship program approved by the Commissioner, (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, [22 U.S.C. 2501 et seq.], (iv) not in excess of three years during which the borrower is in service as a full-time volunteer under the Domestic Volunteer Service Act of 1973 [42 U.S.C. 4951 et seq.), or (v) during a single period, not in excess of twelve months, at the request of the borrower, during which the borrower is seeking and unable to find full-time employment, and any such period shall not be included in determining the ten-year period or the fifteen-year period provided in clause (B) above,

(D) provides for interest on the unpaid principal balance of the loan at a yearly rate, not exceeding the applicable maximum rate prescribed and defined by the Secretary (within the limits set forth in subsection (b) of this section) on a national, regional, or other appropriate basis, which interest shall be payable in installments over the period of the loan except that, if provided in the note or other written agreement, any interest payable by the student may be deferred until not later than the date upon which repayment of the first installment of principal falls due, in which case interest that has so accrued during that period may be added on that date to the principal,

(E) provides that the lender will not collect or attempt to collect from the borrower any portion of the interest on the note which is payable by the Commissioner under this part, and that the lender will enter into such agreements with the Commissioner as may be necessary for the purposes of section 1087 of this title.

(F) entitles the student borrower to accelerate without penalty repayment of the whole or any part of the loan,

(G) provides that, in the case of each loan insured by the program, the eligible institution attended by the borrower at the time of the loan will be notified of such insurance and the name of the lender making the loan, and such notification will be made either by (i) the prompt transmittal of such information to the institution by the insurer or the lender, or (ii) a requirement of the insurer, as a condition of its insurance, that the lender shall transmit any checks for the proceeds of such loan directly to the eligible institution for delivery to the borrower;

(H) the funds borrowed by a student are disbursed by check payable to the order and requiring the endorsement of such student, and

(I) contains such other terms and conditions, consistent with the provisions of this part and with the regulations issued by the Commissioner pursuant to this part, as may