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.

TRANSFER OF ASSETS AND LIABILITIES OF THE
VOCATIONAL STUDENT LOAN INSURANCE FUND

All assets and liabilities of the vocational student loan insurance fund transferred to the student loan insurance fund, see section 116(c)(2) of Pub. L. 90-575, set out as a note under former section 981 et seq. of this title.

SECTION REFERRED TO IN OTHER SECTIONS

This section is referred to in sections 1071, 1078, 1078-1 of this title.

§ 1082. Functions, powers, and duties of Commission

er

(a) Power to prescribe regulations; to sue and be sued; to enter into contracts; to pay and compromise claims; to waive rights

In the performance of, and with respect to, the functions, powers, and duties vested in him by this part, the Commissioner may

(1) prescribe such regulations as may be necessary to carry out the purposes of this part;

(2) sue and be sued in any court of record of a State having general jurisdiction or in any district court of the United States, and such district courts shall have jurisdiction of civil actions arising under this part without regard to the amount in controversy, and action instituted under this subsection by or against the Commissioner shall survive notwithstanding any change in the person occupying the office of Commissioner or any vacancy in that office; but no attachment, injunction, garnishment, or other similar process, mesne or final, shall be issued against the Commissioner or property under his control, and nothing herein shall be construed to except litigation arising out of activities under this part from the application of sections 509, 517, 547, and 2679 of title 28;

(3) include in any contract for Federal loan insurance such terms, conditions, and covenants relating to repayment of principal and payment of interest, relating to his obligations and rights and to those of eligible lenders, and borrowers in case of default, and relating to such other matters as the Commissioner determines to be necessary to assure that the purposes of this part will be achieved; and any term, condition, and covenant made pursuant to this clause or any other provisions of this part may be modified by the Commissioner if he determines that modification is necessary to protect the financial interest of the United States;

(4) subject to the specific limitations in this part, consent to the modification, with respect to rate of interest, time of payment of any installment of principal and interest or any portion thereof, or any other provision of any note or other instrument evidencing a

loan which has been insured by him under this part;

(5) enforce, pay, or compromise, any claim on, or arising because of, any such insurance or any guarantee agreement under section 1078(c) of this title; and

(6) enforce, pay, compromise, waive, or release any right, title, claim, lien, or demand, however acquired, including any equity or any right of redemption.

(b) Preparation and submission of budget program; maintenance of accounts; audit of accounts The Commissioner shall, with respect to the financial operations arising by reason of this part

(1) prepare annually and submit a budget program as provided for wholly owned Government corporations by the Government Corporation Control Act [31 U.S.C. 841 et seq.]; and

(2) maintain with respect to insurance under this part an integral set of accounts, which shall be audited annually by the General Accounting Office in accordance with principles and procedures applicable to commercial corporate transactions, as provided by section 105 of the Government Corporation Control Act [31 U.S.C. 850], except that the transactions of the Commissioner, including the settlement of insurance claims and of claims for payments pursuant to section 1078 of this title, and transactions related thereto and vouchers approved by the Commissioner in connection with such transactions, shall be final and conclusive upon all accounting and other officers of the Government.

(c) Collection and accumulation of data; publication of report of data

(1)(A) For loans insured after December 31, 1976, or in the case of each insurer after such earlier date where the data required by this subsection are available, the Commissioner and all other insurers under this part shall collect and accumulate all data relating to (i) loan volume insured and (ii) defaults reimbursed or default rates according to the categories of loans listed in subparagraph (B) of this paragraph.

(B) The data indicated in subparagraph (A) of this paragraph shall be accumulated according to the category of lender making the loan and shall be accumulated separately for lenders who are (i) eligible institutions, (ii) State or pri vate, nonprofit direct lenders, (iii) commercial financial institutions who are banks, savings and loan associations, or credit unions, and (iv) all other types of institutions or agencies.

(C) The Commissioner may designate such additional subcategories within the categories specified in subparagraph (B) as he deems appropriate.

(D) The category or designation of a loan shall not be changed for any reason, including its purchase or acquisition by a lender of another category.

(2)(A) The Commissioner shall collect data under this subsection from all insurers under this part and shall publish not less often than once every fiscal year a report showing loan volume guaranteed and default data for each category specified in subparagraph (B) of para

graph (1) of this subsection and for the total of all lenders.

(B) The reports specified in subparagraph (A) of this paragraph shall include a separate report for each insurer under this part including the Commissioner, and where an insurer insures loans for lenders in more than one State, such insurer's report shall list all data separately for each State.

(3) For purposes of clarity in communications, the Commissioner shall separately identify loans made by the lenders referred to in clause (i) and loans made by the lenders referred to in clause (ii) of paragraph (1)(B) of this subsection.

(d) Delegation of powers and functions

(1) The functions of the Commissioner under this part listed in paragraph (2) of this subsection may be delegated to employees in the regional offices of the Office of Education established pursuant to section 1221c(c)(2) of this title.

(2) The functions which may be delegated pursuant to this subsection are

(A) reviewing applications for loan insurance under section 1079 of this title and issuing contracts for Federal loan insurance, certificates of insurance, and certificates of comprehensive insurance coverage to eligible lenders which are financial or credit institutions subject to examination and supervision by an agency of the United States or of any State;

(B) receiving claims for payments under section 1080(a) of this title, examining those claims, and pursuant to regulations of the Commissioner, approving claims for payment, or requiring lenders to take additional collection action as a condition for payment of claims; and

(C) certifying to the central office when collection of defaulted loans has been completed, compromising or agreeing to the modification of any Federal claim against a borrower (pursuant to regulations of the Commissioner issued under subsection (a) of this section), and recommending litigation with respect to any such claim.

(Pub. L. 89-329, title IV, § 432, Nov. 8, 1965, 79 Stat. 1246; Pub. L. 90-460, § 3(d), Aug. 3, 1968, 82 Stat. 638; Pub. L. 93-604, title VII, § 705(a), Jan. 2, 1975, 88 Stat. 1964; Pub. L. 94-482, title I, § 127(a), Oct. 12, 1976, 90 Stat. 2127.)

REFERENCES IN TEXT

The Government Corporation Control Act, referred to in subsec. (b)(1), is act Dec. 6, 1945, ch. 557, 59 Stat. 597, which is classified generally to chapter 14 (§ 841 et seq.) of Title 31, Money and Finance. For complete classification of this Act to the Code, see Short Title note set out under section 841 of Title 31 and Tables volume.

AMENDMENTS

1976-Subsec. (a)(2). Pub. L. 94-482 added references to sections 509, 517, and 547 of title 28 and struck out references to section 316 of title 5 and section 507(b) of title 28.

Subsec. (b)(2). Pub. L. 94-482 substituted provisions requiring an annual audit of the integral set of accounts by the General Accounting Office in accordance with the principles and procedures of section 850 of title 31, for provisions requiring an audit of the

set of accounts by the Comptroller General in accordance with the provisions of the Accounting and Auditing Act of 1950.

Subsecs. (c), (d). Pub. L. 94-482 added subsecs. (c) and (d).

1975-Subsec. (b)(2). Pub. L. 93-604 substituted "a set of accounts, which shall be audited by the Comptroller General in accordance with the provisions of the Accounting and Auditing Act of 1950" for "an integral set of accounts, which shall be audited annually by the General Accounting Office in accordance with principles and procedures applicable to commercial corporate transactions, as provided by section 850 of title 31".

1968-Subsec. (a)(5). Pub. L. 90-460 authorized the Commissioner to enforce, pay, or compromise, any claim on, or arising because of any guaranty agreement under section 1078(c) 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.

§ 1083. Institutional lenders

(a)(1) An eligible institution may not act as an eligible lender or originate loans under this part unless it has in effect an agreement with the Commissioner under which it agrees (A) to make such loans to no more than 50 per centum of the students in attendance at the institution who are not graduate or professional students (as defined in regulations of the Commissioner), and (B) that it will not make such a loan under this part to a student, other than a graduate or professional student (as defined in regulations of the Commissioner), who has not previously received a loan from such institution until such student has provided the institution with either (i) a statement from an eligible lender (other than an eligible institution or a State or an agency of a State or a private nonprofit agency designated by a State) that the borrower sought a loan from it and was denied such loan, or (ii) a sworn statement by the borrower that the lender from which he sought such a loan declined to provide the statement described in clause (i).

(2) Whenever the Commissioner determines that the termination of the eligible institution's status as a lender under paragraph (1) would be a hardship to the present or prospective students of the eligible institution after considering the management of that institution, the opportunities that institution provides to economically disadvantaged students, and related factors, the Commissioner shall waive the provisions of such paragraph with respect to that institution.

(b)(1) An eligible institution shall be deemed to have originated a loan for purposes of this section if it has had delegated to it by an eligible lender a substantial portion of the functions and responsibilities normally performed by a lender prior to the making of a loan, such as interviewing the applicant for the loan, explaining the applicant's responsibilities under the loan, obtaining completion of necessary forms, obtaining necessary documentation, or verifying that the student is eligible for the loan.

(2) For purposes of this section, a loan is made or originated on the date of the first disbursement of any proceeds of the loan.

(Pub. L. 89-329, title IV, § 433, Nov. 8, 1965, 79 Stat. 1247; Pub. L. 90-575, title I, § 116(d), Oct. 16, 1968, 82 Stat. 1024; Pub. L. 92-318, title I, § 132(c), June 23, 1972, 86 Stat. 261; Pub. L. 94482, title I, § 127(a), Oct. 12, 1976, 90 Stat. 2129.)

AMENDMENTS

1976-Subsec. (a). Pub. L. 94-482 substituted provisions setting forth prerequisites for an eligible institution to act as an eligible lender or originate loans under this part, for provisions authorizing the Commissioner to make direct loans to students where there is an unavailability of other insurable loans.

Subsec. (b). Pub. L. 94-482 substituted provisions setting forth criteria for construing an eligible institution as originating a loan for purposes of this section, for provisions setting forth the interest rate and terms and conditions of loans to students.

Subsec. (c). Pub. L. 94-482 struck out subsec. (c) which authorized appropriations of $1,000,000 for the fiscal years ending June 30, 1969, and succeeding fiscal years ending prior to July 1, 1975, to carry out this section.

1972-Subsec. (c). Pub. L. 92-318 substituted "succeeding fiscal years ending prior to July 1, 1975" for "two succeeding fiscal years".

1968-Subsec. (a). Pub. L. 90-575 substituted provisions authorizing the Commissioner to make a direct loan to any student residing in an area where loans insurable under this chapter are unavailable or the rate of interest for any loans available exceeds the rate prescribed by the Secretary for provisions establishing an Advisory Council on Insured Loans to Students in the Office of Education.

Subsec. (b). Pub. L. 90-575 substituted provisions requiring that loans made under this section bear interest at the rate specified by the Secretary, and be made on such terms and conditions as prescribed by the Commissioner, for provisions setting forth the functions of the Advisory Council on Insured Loans to Students.

Subsec. (c). Pub. L. 90-575 substituted provisions authorizing appropriations to carry out the purposes of this section for provisions setting forth the compensation for members of the Advisory Council on Insured Loans to Students.

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 new provisions of this section shall become effective with respect to loans made to cover the costs of education for periods of enrollment 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 Amendment by Pub. L. 92-318 effective after June 30, 1971, see section 132(d) of Pub. L. 92-318, set out as an Effective Date of 1972 Amendment note under section 1074 of this title.

EFFECTIVE DATE OF 1968 AMENDMENT Pub. L. 90-575, § 116(e), provided that: "(1) Except as provided in paragraphs (2), (3), and (4):

"(A) This section (and any amendment or repeal made thereby) [amending this section and sections 1075(a), 1077(a)(2)(C), 1078(a)(6), 1084, 1085, and 1086(a) of this title, repealing sections 981 to 996 of this title and enacting material set out as a note under 981 of this title] shall apply to loans made on

or after the sixtieth day after the date of enactment of this Act [Oct. 16, 1968]; and the terminal date applicable under the first sentence of section 5(a), under section 9(a)(2)(B), and under section 9(a)(4) of the National Vocational Student Loan Insurance Act [section 984(a), 988(a)(2)(B), and 988(a)(4) of this title] shall, instead of October 31, 1968, be deemed to be (i) the day immediately preceding such sixtieth day, or (ii) with respect to any particular lender or State or nonprofit private agency to which paragraph (3) relates, the last day of the period required for modification or termination of, or refusal to extend, the Commissioner's agreements with such agency.

"(B) In computing the maximum amounts which may be borrowed by a student who obtains an insured loan on or after such sixtieth day, and the minimum amounts of repayment allowable with respect to sums borrowed by such a student, there shall be included all loans, whenever made, (i) insured by the Commissioner, or a State, institution, or organization with which the Commissioner has an agreement under section 428(b) of part B of title IV of the Higher Education Act of 1965 [section 1078(b) of this title] or section 9(b) of the National Vocational Student Loan Insurance Act of 1965 [section 988(b) of this title], or (ii) made by a State under section 428(a)(2)(B) of such part [section 1078(a)(2)(B) of this title] or section 9(a)(2)(B) of such Act [section 988(a)(2)(B) of this title], or by the Commissioner under section 433 of such part [this section].

"(2) Clause (i) (attendance at eligible institution) and clause (iv) (VISTA service) of section 427(a)(2)(C) of the Higher Education Act of 1965 [section 1077(a)(2)(C) of this title], shall apply to loans made by the Commissioner and, with the consent of the lender, loans insured by the Commissioner, to students for study at vocational schools, which are outstanding on the sixtieth day after the enactment of this Act, but only with respect to periods of service or attendance occurring on or after such sixtieth day.

"(3) This section (and any amendment or repeal made thereby) shall not apply so as to require violation of any commitment for insurance made to an eligible lender, or of any line of credit granted to a student, prior to the sixtieth day after enactment of this Act, under the Higher Education Act of 1965 [see Short Title note set out under section 1001 of this title] or the National Vocational Student Loan Insurance Act of 1965, [sections 981 to 996 of this title], or, except with the consent of the State or nonprofit private agency concerned, impair the obligations of any agreement made pursuant to section 428(b) of the Higher Education Act of 1965 [section 1078(b) of this title] or section 9(b) of the National Vocational Stu dent Loan Insurance Act of 1965 [section 988(b) of this title]. The Commissioner of Education shall undertake to obtain necessary modifications of agree. ments entered into by him pursuant to section 428(b) of the Higher Education Act of 1965 or section 9(b) of the National Vocational Student Loan Insurance Act of 1965 and in force upon the date of enactment of this Act so as to conform the provisions of such agreements to the requirements of such section 428(b). If, however, such modifications cannot be obtained be cause a party to such an agreement is subject to a stat ute of a State that prevents such party from comply. ing with the terms of such modification, the Commissioner shall not, before 120 days after the adjourn ment of such State's first regular legislative session which adjourns after January 1, 1969, exercise his authority to terminate, or to refuse to extend, such agreement.

"(4) A certificate of insurance or of comprehensive insurance coverage pursuant to section 11 of the National Vocational Student Loan Insurance Act of 1965 [section 990 of this title] may be issued or made effective on or after the sixtieth day after the date of enactment of this Act with respect to loans made prior

fied 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 Commissioner 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 Commissioner 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 Commissioner pursuant to this clause, (B) if the Commissioner 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 Commissioner pursuant to this clause, and (C) if the Commissioner 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 Commissioner 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 Commissioner of Education.

(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's Retirement Income Security Act;

(C) an insurance company which is subject to examination and supervision by an agency of the United States or a State;

(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; and

(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.

(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 Commissioner determines, after notice and opportu nity for a hearing, that for each of two consecutive years 15 per centum or more of the amount of the loan described in section 1078(a)(1) of this title made 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 Commissioner 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 man