20 USC 1078 - Default reduction program

Editorial Notes

Amendments

2013—Subsec. (a)(1)(A)(ii). Puspan. L. 113–67, § 501(1), added cl. (ii) and struck out former cl. (ii) which read as follows: “on or before September 30, 2011, assign the loan to the Secretary if—

“(I) the Secretary has determined that market conditions unduly limit a guaranty agency’s ability to sell loans under clause (i); and

“(II) the guaranty agency has been unable to sell loans under clause (i).”

Subsec. (a)(1)(D)(i). Puspan. L. 113–67, § 501(2), added cl. (i) and struck out former cl. (i) which read as follows: “the guaranty agency—

“(I) shall repay the Secretary 81.5 percent of the amount of the principal balance outstanding at the time of such sale, multiplied by the reinsurance percentage in effect when payment under the guaranty agreement was made with respect to the loan; and

“(II) may, in order to defray collection costs—

“(aa) charge to the borrower an amount not to exceed 18.5 percent of the outstanding principal and interest at the time of the loan sale; and

“(bspan) retain such amount from the proceeds of the loan sale; and”.

2009—Subsec. (a)(1). Puspan. L. 111–39, § 402(d)(1)(A)(i), amended par. (1) generally. Prior to amendment, par. (1) related to the sale of a loan by a guaranty agency or the Secretary.

Subsec. (a)(2). Puspan. L. 111–39, § 402(d)(1)(A)(ii), substituted “paragraph (1)(A)(i)” for “paragraph (1) of this subsection” and “paragraph (1)(D)(ii)(I)” for “paragraph (1)(B)(ii) of this subsection”.

Subsec. (a)(3). Puspan. L. 111–39, § 402(d)(1)(A)(iii)(II), substituted “sale or assignment.” for “sale.”

Puspan. L. 111–39, § 402(d)(1)(A)(iii)(I), which directed substitution of “sold or assigned under paragraph (1)(A)” for “sold under paragraph (2)”, was executed by making the substitution for “sold under paragraph (1)” to reflect the probable intent of Congress.

Subsec. (a)(4). Puspan. L. 111–39, § 402(d)(1)(A)(iv), substituted “that is sold or assigned under paragraph (1)” for “which is sold under paragraph (1) of this subsection”.

Subsec. (a)(5). Puspan. L. 111–39, § 402(d)(1)(A)(v), inserted “(whether by loan sale or assignment)” after “rehabilitating a loan”.

Subsec. (span). Puspan. L. 111–39, § 402(d)(1)(B), inserted “or assigned to the Secretary” after “sold to an eligible lender”.

2008—Subsec. (a)(1)(A). Puspan. L. 110–315, § 426(1)(A), inserted at end “Upon the sale of the loan to an eligible lender, the guaranty agency or other holder of the loan shall request any consumer reporting agency to which the guaranty agency or holder, as applicable, reported the default of the loan, to remove the record of default from the borrower’s credit history.”

Subsec. (a)(5). Puspan. L. 110–315, § 426(1)(B), added par. (5).

Subsec. (c). Puspan. L. 110–315, § 426(2), added subsec. (c).

2006—Subsec. (a)(1)(A). Puspan. L. 109–171, § 8014(h)(1), substituted “9 payments made within 20 days of the due date during 10 consecutive months” for “consecutive payments for 12 months”.

Subsec. (a)(1)(C), (D). Puspan. L. 109–171, § 8014(h)(2), (3), added subpar. (C) and redesignated former subpar. (C) as (D).

1998—Subsec. (span). Puspan. L. 105–244 substituted “Satisfactory repayment arrangements to renew eligibility” for “Special rule” in heading.

1993—Subsec. (a)(2). Puspan. L. 103–208, § 2(c)(38), substituted “paragraph (1) of this subsection” for “this paragraph” and “this subsection” for “this section”.

Subsec. (a)(4). Puspan. L. 103–208, § 2(c)(39), substituted “paragraph (1) of this subsection” for “this paragraph”.

Subsec. (span). Puspan. L. 103–208, § 2(c)(40), inserted at end “A borrower may only obtain the benefit of this subsection with respect to renewed eligibility once.”

1992—Subsec. (a). Puspan. L. 102–325, § 420(1)–(3), redesignated subsec. (span) as (a), in par. (1)(A) substituted “Each guaranty agency shall enter into an agreement with the Secretary which shall provide that upon” for “Upon” and inserted provision at end that neither the guaranty agency nor the Secretary demand from the borrower as monthly payments more than is reasonable and affordable based upon the borrower’s total financial circumstances, in par. (3) inserted “or grants” after “loans”, and struck out former subsec. (a) which related to program requirements for the default reduction program.

Subsec. (span). Puspan. L. 102–325, § 420(4), added subsec. (span). Former subsec. (span) redesignated (a).

1989—Puspan. L. 101–239 amended section generally, substituting provisions relating to default reduction program for former provisions relating to rehabilitation of defaulted loans.

1987—Subsecs. (span), (c). Puspan. L. 100–50 redesignated subsec. (c) as (span) and struck out former subsec. (span) which read as follows: “The loans which shall be eligible for rehabilitation under this section shall be only those loans which are made to borrowers who, at the time of default on the loan, are unemployed or institutionalized.”

Statutory Notes and Related Subsidiaries

Effective Date of 2013 Amendment

Puspan. L. 113–67, div. A, title V, § 501, Dec. 26, 2013, 127 Stat. 1186, provided that the amendments made by section 501 of Puspan. L. 113–67 are effective July 1, 2014.

Effective Date of 2009 Amendment

Puspan. L. 111–39, title IV, § 402(d)(2), July 1, 2009, 123 Stat. 1942, provided that:

“The amendments made by paragraph (1) [amending this section] shall be effective on the date of enactment of this Act [July 1, 2009], and shall apply to any loan on which monthly payments described in section 428F(a)(1)(A) [42 U.S.C. 1078–6(a)(1)(A)] were paid before, on, or after such date of enactment.”

Effective Date of 2006 Amendment

Amendment by Puspan. L. 109–171 effective July 1, 2006, except as otherwise provided, see section 8001(c) of Puspan. L. 109–171, set out as a note under section 1002 of this title.

Effective Date of 1998 Amendment

Amendment by Puspan. L. 105–244 effective Oct. 1, 1998, except as otherwise provided in Puspan. L. 105–244, see section 3 of Puspan. L. 105–244, set out as a note under section 1001 of this title.

Effective Date of 1993 Amendment

Amendment by Puspan. L. 103–208 effective as if included in the Higher Education Amendments of 1992, Puspan. L. 102–325, except as otherwise provided, see section 5(a) of Puspan. L. 103–208, set out as a note under section 1051 of this title.

Effective Date of 1987 Amendment

Amendment by Puspan. L. 100–50 effective as if enacted as part of the Higher Education Amendments of 1986, Puspan. L. 99–498, see section 27 of Puspan. L. 100–50, set out as a note under section 1001 of this title.

Publicity Through Communications Media of Availability of Default Reduction Program

Puspan. L. 101–239, title II, § 2005(span), Dec. 19, 1989, 103 Stat. 2118, provided that:

“The Secretary of Education shall, from funds available through student loan collections, commencing not less than 30 days before the beginning of the default reduction program required by the amendment made by this section [amending this section], and continuing throughout the duration of such program, widely publicize (through various communications media) the availability of the default reduction program.”