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approved by the State board administering a supplementary State plan approved under section 105.
(3) The term "area vocational education program" means a program consisting of one or more courses, conducted under public supervision and control, which is designed to fit for useful work individuals who have completed junior or senior high school, or who are sixteen years of age or older and have dropped out of school before completion of high school and are enrolled for study in preparation for entering the labor market or for improving their occupational competencies, and who are residents of the State or an area thereof, including two or more high school districts, designated and approved by the State board.
(4) The term "school facilities" means classrooms and related facilities (including initial equipment) and interests in land (including site, grading, and improvement) on which such facilities are constructed or which are used for demonstration or laboratory practice. Such term shall not include any facility intended primarily for events for which admission is to be charged to the general public.
(5) The term "Commissioner" means the Commissioner of Education.
(6) The term "State" includes, in addition to the several States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, and American Samoa.
(7) The term "State board" means the State board designated or created pursuant to section 5 of the Smith-Hughes Act (that is, the Act approved February 23, 1917 (39 Stat. 929)).
(8) The term "supplementary State plan" means such supplement to the State plan required by section 8 of the Smith-Hughes Act as may be required by the Commissioner under the provisions of this title.
(9) The term "local educational agency" means a board of education or other legally constituted local school authority having administrative control and direction of the public vocational education programs in a city, county, township, school district, or political subdivision in a State. This does not exclude State operated educational institutions or programs.
(10) The term "high school" does not include any grade beyond grade 12. (11) The term "Vocational Education Act of 1946" means the Vocational Education Act of 1946, as amended (20 U.S.C. 15i-15m, 150-15q, 15aa-15jj, 15aaa-15ggg).
(12) The term "supplementary vocational education Acts" means section 1 of the Act of March 3, 1931 (20 U.S.C. 30) (relating to vocational education in Puerto Rico), the Act of March 18, 1950 (20 U.S.C. 31-33) (relating to vocational education in the Virgin Islands), and section 9 of the Act of August 1, 1956 (20 U.S.C. 34) (relating to vocational education in Guam).
FEDERAL CONTROL OF EDUCATION PROHIBITED
SEC. 110. Nothing contained in this title shall be construed to authorize any department, agency, officer, or employee of the United States to exercise any direction, supervision, or control over the curriculum, program of instruction, administration, or personnel of any educational institution or school system. TITLE II-WORK ASSISTANCE FOR STUDENTS ENROLLED IN AREA VOCATIONAL EDUCATIONAL PROGRAM
DECLARATION OF PURPOSE
SEC. 201. It is the purpose of this title to authorize Federal grants to States to assist in providing part-time employment for students enrolled in area vocational education programs, who are in need of earnings from such employment in order to pursue vocational courses to fit them for useful work.
AUTHORIZATION OF APPROPRIATIONS
SEC. 202. There are hereby authorized to be appropriated for the fiscal year ending June 30, 1964, $1,000,000, and for each fiscal year thereafter such sums as may be necessary for the purpose of making allotments to States and payments as provided in this title.
ALLOTMENTS TO STATES
SEC. 203. (a) The sums appropriated pursuant to section 202 shall be allotted to the States which enter into an agreement as provided in section 204 on the basis of the number of persons enrolled in area vocational education programs. The Commissioner shall allot to each such State for each fiscal year an amount which bears the same ratio to the sums appropriated under section 202 for such year as the number of persons enrolled in such programs in the State in the preceding fiscal year bears to the total number enrolled in all such States in such preceding year.
(b) The amount of any State's allotment under subsection (a) for any fiscal year which the Commissioner determines will not be required for such fiscal year for carrying out the State's program for such assistance shall be available for reallotment from time to time, on such dates during such year as the Commissioner may fix, to other States in proportion to the original allotments to such States under such subsection for such year, but with such proportionate amount for any of such other States being reduced to the extent it exceeds the sum the Commissioner estimates such State needs and will be able to use for such year and the total of such reductions shall be similarly reallotted among the States not suffering such a reduction. Any amount reallotted to a State under this subsection during such year shall be deemed part of its allotment for such year.
AGREEMENTS WITH STATES
SEC. 204. An agreement by the Commissioner with any State under this title shall
(1) provide for the operation by a school of a work program for the parttime employment of its students enrolled in the area vocational education program;
(2) provide that employment under such work program shall be furnished only to a student who (A) is in need of the earnings from employment to pursue a course of study at such school, (B) is capable, in the opinion of the school authorities, of maintaining good standing in such course of study while employed under the program covered by the agreement, and (C) has been accepted for enrollment as a full-time student at the school, or in the case of a student already enrolled in and attending the school, is in good standing and in full-time attendance there as a vocational student;
(3) provide that no student shall be employed under such work program for more than fifteen hours in any week in which classes in which he is enrolled are in session;
(4) provide that, in each fiscal year during which the agreement remains in effect, the institution shall expend (from sources other than payments from Federal funds under this title) for the employment of its students (whether or not in employment eligible for assistance under this title) an amount that is not less than its average annual expenditure for such work program during the three fiscal years preceding the fiscal year in which the agreement is entered into;
(5) provide for payment by the Commissioner, within the limits of the applicable State allocation, of one-half (hereafter in this title referred to as the Federal share) of the compensation of each student employed in the work program in accordance with the agreement, but not to exceed $350 as the Federal share in the case of any vocational student in any academic year or its equivalent, nor more than $700 as the total Federal share in the case of all payments to any student under this title;
(6) provide for the making of such reports, in such form and containing such information, as the Commissioner may reasonably require to carry out his functions under this title, and for the keeping of such records and for affording such access thereto as the Commissioner may find necessary to assure the correctness and verification of such reports;
(7) provide such other provisions as the Commissioner may find necessary to carry out the purposes of this title; and
(8) provide that such work program will be reasonably available (to the extent of available funds) to all eligible students.
PAYMENTS TO STUDENTS
SEC. 205. (a) A student's compensation for work, covered by an agreement under this title, shall be paid through the employing school pursuant to regulations of the State board and in accordance with the agreement entered into by the State board with the Commissioner.
(b) Students employed in a work program covered by an agreement under this title shall not by reason of such employment be deemed employees of the United States, or their service Federal service, for any purpose.
(c) The non-Federal funds required for purposes of section 204 shall not include funds from Federal sources or from the student assisted nor from his immediate family.
(d) Financial transactions of the Commissioner pursuant to this title, and vouchers approved by him in connection with such financial transaction, shall be final and conclusive upon all officers of the Government; except that all such transactions shall be subject to audit by the General Accounting Office at such times and in such manner as the Comptroller General may by regulation prescribe.
SEC. 206. For the purpose of this title the terms "Commissioner", "State", "State board", and "area vocational education program" have the meanings provided in section 108 of title I.
VOCATIONAL EDUCATION PROGRAMS
SCOPE AND DURATION OF LOAN INSURANCE PROGRAM
SEC. 301. (a) For the purpose of facilitating loans to students enrolled in area Vocational education programs, eligible lenders may be insured by the Commissioner, on behalf of the United States, against losses on loans made by them to such students, on or after July 1, 1963, if made upon the conditions and within the limits specified in this title. The total principal amount of new loans to students covered by insurance under this title shall not exceed $5,000,000 in the fiscal year ending June 30, 1964, and $10,000,000 in any fiscal year thereafter.
(b) The Commissioner may, if he finds it necessary to do so in order to assure an equitable distribution of the benefits of this title, assign, within the maximum amounts specified in subsection (a), insurance quotas applicable to eligible lenders, or to States or areas, and may from time to time reassign unused portions of such quotas. For purposes of this title, the term "eligible lender" means a financial or credit institution (including an insurance company) which is subject to examination and supervision by an agency of the United States or of any State.
LIMITATIONS ON INDIVIDUAL LOANS AND ON INSURANCE
SEC. 302. (a) No loan or loans by one or more eligible lenders in excess of $500 in the aggregate to any student in any academic year or its equivalent shall be covered by insurance under this title, and the aggregate insured unpaid principal amount of all loans made to any student shall not exceed $1,000 at any time. 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 such annual limit. As used in this section and hereinafter in this title, the term "line of credit" means an arrangemeent or agreement between the lender and the borrower whereby a loan is paid out by the lender to the borrower in annual installments, or whereby the lender agrees to make, in addition to the initial loan, additional loans in subsequent years.
(b) The insurance liability on any loan insured under this title shall be limited to 90 per centum of the unpaid balance of such loan, including 90 per centum of the interest accrued and unpaid.
SOURCES OF FUNDS
SEC. 303. Loans made by eligible lenders in accordance with this title shall be insurable 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.
ELIGIBILITY OF STUDENT BORROWERS AND TERMS OF STUDENT LOANS
SEC. 304. A loan by an eligible lender shall be insurable under the provisions of this title only if—
(a) made to a student who has been accepted for enrollment as a fulltime student in an area vocational education program or, in the case of a student already attending an institution in such a program, is in good standing and in full-time attendance at such institution, as determined by such institution, and
(b) evidenced by a note or other written agreement which (1) 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, (2) provides for repayment of the principal amount of such loan in installments over a ten-year period (or such other period os may be authorized by regulation of the Commissioner) beginning (except in the event of default in the payment of interest or in payment of the cost of insurance premiums, or other default by the borrower) not earlier than one year following the date on which the student ceases to devote essentially full time to educational work in attendance in an area vocational education program, (3) provides for interest on the unpaid balance of such loan at a yearly rate, not exceeding the applicable maximum rate as prescribed and defined by the Commissioner by or pursuant to regulation, which shall be payable in installments over the period of the loan except that, if provided in the note or other written agreement, payment of interest 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 accrued during such period may be added on that date to the principal, (4) entitles the student borrower to accelerate repayment of the whole or any part of such loan, and (5) contains such other terms and conditions, consistent with the provisions of his title and with the regulations issued by the Commissioner pursuant to this title, as may be agreed upon by the parties to such loan, including, if agreed upon, a provision requiring the borrower to pay the lender, in addition to principal and interest, amounts equal to the insurance premiums payable by the lender to the Commissioner with respect to such loan.
CERTIFICATES OF INSURANCE-EFFECTIVE DATE OF INSURANCE-PREMIUMS
SEC. 305. (a) If, upon application by an eligible lender, made upon such form, containing such information, and supported by such evidence as the Commissioner may require, and otherwise in conformity with this section, the Commissioner finds that the applicant has made a loan to an eligible student which is insurable under the provisions of this title, he may, upon tender by the applicant of the first year's insurance premium payable pursuant to subsection (d), issue to such applicant a certificate of insurance covering such loan and setting forth the amount and terms of such insurance.
(b) Insurance evidenced by a certificate of insurance pursuant to subsection (a) shall become effective upon the date of issuance of such certificate, except that the Commissioner, is authorized, in accordance with regulations, to issue commitments with respect to proposed loans, or with respect to lines (or proposed lines) of credit (as defined in section 302), submitted by eligible lenders, and in that event, upon compliance with subsection (a) by the lender, the certificate of insurance may be issued effective as of the date when any loan, or any payment by the lender pursuant to a line of credit, to be covered by such insurance was made. Such insurance shall cease to be effective upon thirty days' default by the lender in the payment of any installment of the premiums payable pursuant to subsection (d).
(c) An application submitted pursuant to subsection (a) shall contain (1) an agreement by the applicant to pay, in accordance with regulations, the premiums fixed by the Commissioner pursuant to subsection (d), and (2) an agreement by the applicant that if the loan is covered by insurance the ap plicant will submit such supplementary reports and statements during the effective period of the loan agreement, upon such forms, at such times, and containing such information as the Commissioner may prescribe by or pursuant to regulation.
(d) The Commissioner shall, pursuant to regulations, charge for insurance on each loan under this title a premium in an amount not to exceed one-fourth of 1 per centum per year of the unpaid balance of principal and accrued interest of such loan, payable in advance, at such time and in such manner as may be prescribed by the Commissioner. Such regulations may provide that such premium shall not be payable, or if paid shall be refundable, with respect to any period after default in the payment of principal or interest, or after the borrower has died or becomes totally and permanently disabled, if (1) notice of such default or other event has been duly given, and (2) request for payment of the loss insured against has been made or the Commissioner has made such payment on his own motion pursuant to section 306 (a).
(e) The rights of an eligible lender arising under insurance evidenced by a certificate of insurance issued to it under this section may be assigned as security by such lender only to another eligible lender, and subject to regulation by the Commissioner.
(f) The consolidation of the obligations of two or more insured loans obtained by a student borrower in any fiscal year into a single obligation evidenced by a single instrument of indebtedness shall not affect the insurance of the United States. Upon surrender of the original certificates of insurance in such cases, the Commissioner may issue a new certificate of insurance in accordance with this section upon such consolidated obligation.
RROCEDURE ON DEFAULT, DEATH, OR DISABILITY OF STUDENT
SEC. 306. (a) Upon default by the student borrower on any loan covered by insurance pursuant to this title, or upon the death of the student borrower or a finding by the insurance beneficiary that the borrower has become totally and permanently disabled (as determined in accordance with regulations established by the Commissioner) before the loan has been repaid in full, and prior to the commencement of suit or other enforcement proceeding upon any security for such loan, the insurance beneficiary shall promptly notify the Commissioner, and the Commissioner shall, if requested (at that time or after collection efforts) by such beneficiary, or may on his own motion, if the insurance is still in effect, pay to the beneficiary, within the limits of the liability specified in section 302(b), the amount of the loss sustained by the insured upon such loan as soon as such amount has been determined. The "amount of the loss" on any loan shall, for the purposes of this subsection, be deemed to be an amount equal to the unpaid balance of the loan, including interest accrued and unpaid on the date of payment by the United States on its insurance obligation, except that where the Commissioner has decided to make payment on his own motion the amount of loss as so determined shall be deemed tentative and shall be increased by the excess, if any, over such tentative amount of any net recovery made by the Commissioner on such loan after deduction of the cost of such recovery (including reasonable administrative cost).
(b) Upon payment by the Commissioner of the insured portion of the loss, or tentative amount of loss, pursuant to subsection (a), the United States shall be subrogated to the rights of the holder of the obligation upon the insured loan and be entitled to an assignment of the note or other evidence of the insured loan by the insurance beneficiary.
(c) Nothing in this section or in this title shall be construed to preclude any forbearance for the benefit of the student borrower which may be agreed upon by the parties to the insured loan and approved by the Commissioner, or to preclude forbearance by the Commissioner in the enforcement of the insured obligation after payment on such insurance, or to require collection of the amount of any loan by the insurance beneficiary or by the Commissioner from the estate of a deceased borrower or from a borrower found by the insurance beneficiary to have become permanently and totally disabled.
(d) Nothing in this section or in this title shall be construed to excuse the holder of a loan from exercising, in the making and collection of loans under the provisions of this title, the same care and diligence which would reasonably be used in making and collecting loans not insured. If the Commissioner, after reasonable notice and opportunity for hearing to an eligible lender, finds that it has substantially failed to exercise such care and diligence, or to make the