II

105TH CONGRESS

2D SESSION S. 2123

To amend the Higher Education Act of 1965 to improve accountability

and reform certain programs.

IN THE SENATE OF THE UNITED STATES

MAY 22, 1998

Mr. SANTORUM introduced the following bill; which was read twice and

referred to the Committee on Labor and Human Resources

A BILL

To amend the Higher Education Act of 1965 to improve

accountability and reform certain programs.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; REFERENCE.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Federal Accountability and Institutional Reform in Edu6 cation Act of 1998’’.

7 (b) REFERENCES.—Except as otherwise expressly

8 provided, whenever in this Act an amendment or repeal

9 is expressed in terms of an amendment to, or repeal of,

10 a section or other provision, the reference shall be consid-
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1 ered to be made to a section or other provision of the

2 Higher Education Act of 1965 (20 U.S.C. 1001 et seq.).

3 SEC. 2. FINDINGS.

4 The Congress finds that—

5 (1) the Federal Government is reducing spend6 ing in all areas, including postsecondary education;

7 (2) reductions in postsecondary education

8 spending fall on students, institutions, State loan

9 guaranty agencies and lenders;

10 (3) the administration of postsecondary edu11 cation is the responsibility of the Department of

12 Education; and

13 (4) reforms should be made to postsecondary

14 education programs—

15 (A) to provide greater accountability from

16 the Department, educational institutions, lend17 ers, guaranty agencies, servicers, and secondary

18 markets; and

19 (B) to enhance institutional compliance

20 with Department policies.

21 SEC. 3. STUDENT LOAN COHORT DEFAULT MANAGEMENT

22 REFORMS.

23 (a) ADMINISTRATIVE AND FISCAL PROCEDURES.—

24 Section 428(c)(2)(A) (20 U.S.C. 1078(c)(2)(A)) is amend25 ed by striking ‘‘proof that reasonable attempts were
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1 made’’ and inserting ‘‘proof that the institution was con2 tacted and other reasonable attempts were made’’.

3 (b) REIMBURSEMENT.—Section 428(c)(2)(G) (20

4 U.S.C. 1078(c)(2)(G)) is amended by striking ‘‘certifies

5 to the Secretary that diligent attempts have been made’’

6 and inserting ‘‘demonstrates to the Secretary that diligent

7 attempts, including contact with the institution, have been

8 made’’.

9 (c) LIMITATION.—Section 428 (20 U.S.C. 1078) is

10 amended by adding at the end the following:

11 ‘‘(o) LIMITATION.—Notwithstanding any other provi12 sion of this section, the Secretary shall not reimburse or

13 permit any eligible lender, servicer, or guaranty agency (or

14 its affiliates) who previously filed a claim for reimburse15 ment on a loan to retain any proceeds from subsequent

16 collection of a defaulted loan to the extent that such funds,

17 when added to the amount of prior reimbursement under

18 this section, exceed 100 percent of the original principal

19 of the loan.’’.

20 (d) NOTICE TO SECRETARY AND PAYMENT OF

21 LOSS.—The third sentence of section 430(a) (20 U.S.C.

22 1080(a)) is amended—

23 (1) by inserting ‘‘all’’ after ‘‘required to meet’’;

24 and
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1 (2) by inserting ‘‘the institution was contacted

2 and other’’ after ‘‘submit proof that’’.

3 (e) ANNUAL REPORT.—Section 430 (20 U.S.C.

4 1080) is amended by adding at the end the following:

5 ‘‘(f) ANNUAL REPORT.—The Secretary shall report

6 annually to Congress that lenders, servicers and guaranty

7 agencies have demonstrated their compliance with servic8 ing and due diligence requirements, under both statute

9 and regulation. The Secretary also shall provide informa10 tion on the successful practices of low-default lenders,

11 servicers and guaranty agencies to other financial, servic12 ing and guaranty institutions participating in this title to

13 encourage duplication of successful servicing and collec14 tion programs.’’.

15 (f) NOTICE TO INSTITUTIONS OF CREDIT BUREAU

16 INFORMATION.—Section 430A(e) (20 U.S.C. 1080a(e)) is

17 amended by striking ‘‘are authorized to’’ and inserting

18 ‘‘shall’’.

19 (g) CIRCUMSTANCES.—Section 435(a)(2) (20 U.S.C.

20 1085(a)(2)) is amended by adding at the end the follow21 ing:

22 ‘‘(D) The circumstances referred to in subpara23 graph (A)(ii) shall be uniformly applied to all eligible

24 institutions and shall require that such an institu25 tion meet the following criteria:
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1 ‘‘(i) Not less than 50 percent of the stu2 dents enrolled in eligible programs qualify for

3 an award under subpart 1 of part A of title IV.

4 ‘‘(ii) The institution’s student completion

5 rate is 60 percent or greater.

6 ‘‘(iii) The initial job placement rate of pro7 gram graduates is 60 percent or greater.’’.

8 (h) CONTINUED PARTICIPATION.—Section 435(a)(2)

9 (20 U.S.C. 1085(a)(2)) (as amended by subsection (g))

10 is further amended—

11 (1) in subparagraph (A)—

12 (A) in the first sentence of the matter pre13 ceding clause (i), by striking ‘‘for the fiscal year

14 for which the determination is made and for the

15 two succeeding fiscal years’’ and inserting ‘‘dur16 ing the period determined under subparagraph

17 (E)’’;

18 (B) in clause (i), by striking ‘‘or’’ after the

19 semicolon;

20 (C) in clause (ii), by striking the period

21 and inserting ‘‘; or’’; and

22 (D) by inserting before the matter follow23 ing clause (ii) the following:
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1 ‘‘(iii) the institution has less than 100

2 borrowers in any of the 3 cohorts on which

3 the cohort default rates are based.’’; and

4 (2) by adding at the end the following:

5 ‘‘(E) An institution that is ineligible to

6 participate pursuant to a determination under

7 subparagraph (A) shall be ineligible for a period

8 beginning with the fiscal year for which the de9 termination is made and ending on the earlier

10 of—

11 ‘‘(i) the expiration of the 2 succeeding

12 fiscal years; or

13 ‘‘(ii) the date on which the cohort de14 fault rates published with respect to such

15 institution are less than the threshold per16 centage specified in subparagraph (B) for

17 any 2 of the 3 most recent fiscal years for

18 which data are available.

19 ‘‘(F) The Secretary shall perform a pro20 gram review pursuant to section 489A with re21 spect to an institution described in subpara22 graph (A)(iii) within a reasonable timeframe to

23 ensure the administrative capability and finan24 cial responsibility of the institution.’’.
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1 (i) COHORT DEFAULT RATE.—Section 435(m) (20

2 U.S.C. 1085(m)) is amended—

3 (1) in paragraph (1)—

4 (A) in subparagraph (A), by striking ‘‘30

5 or more current’’ and inserting ‘‘100 or more

6 current’’;

7 (B) in subparagraph (B)—

8 (i) by inserting ‘‘properly’’ before

9 ‘‘paid claims’’; and

10 (ii) by striking ‘‘due to improper’’ and

11 all that follows through the period and in12 serting ‘‘as demonstrated by the evidence

13 submitted in support of the institution’s

14 timely appeal to the Secretary, did not

15 meet the standards of due diligence in the

16 collection of the loan, including attempts to

17 locate the borrower (when the location is

18 unknown) and contact with the borrower

19 (when the location is known), as required

20 under section 430.’’; and

21 (C) in subparagraph (C), by striking

22 ‘‘fewer than 30’’ and inserting ‘‘fewer than

23 100’’; and

24 (2) in paragraph (2)—
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1 (A) by redesignating subparagraph (D) as

2 subparagraph (E); and

3 (B) by inserting after subparagraph (C)

4 the following new subparagraph:

5 ‘‘(D) Any loan for which the Secretary has

6 reimbursed the guaranty agency for claims on

7 the insurance on a defaulted loan, and the

8 agency has subsequently brought the loan into

9 current repayment under section 428(c)(6),

10 shall be removed from an institution’s default

11 rate and the institution’s rate shall be recal12 culated to reflect an accurate percentage of the

13 borrowers in default for the three most recent

14 cohorts used to determine institutional eligi15 bility under this subsection.’’.

16 (j) INACCURACIES AND EXCEPTIONS.—Section

17 435(m)(1) (20 U.S.C. 1085(m)(1)) is amended by adding

18 at the end the following:

19 ‘‘(D) The Secretary, after consultation

20 with the institution for which the cohort default

21 rate is calculated, shall correct any inaccuracies

22 in the data generated by the Department. The

23 Secretary shall confirm with the institution the

24 last date of attendance for all students, and ac25 cept and apply the institution’s determination
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1 as to the correct last date of attendance prior

2 to the calculation of the cohort default rate. No

3 cohort default rate shall be published until the

4 Secretary assures the accuracy of the cohort de5 fault rates. The institution for which the cohort

6 default rate is calculated shall have an oppor7 tunity to appeal the cohort default rate based

8 on inaccuracies, inadequate loan servicing, miti9 gating circumstances, and exceptions.

10 ‘‘(E) No cohort default rate shall be cal11 culated for any institution that meets any 1 of

12 the following criteria:

13 ‘‘(i) Three or fewer loans entered into

14 default during the repayment period cov15 ered by the cohort default rate.

16 ‘‘(ii) The institution no longer partici17 pates in the loan program under this part

18 or part D.’’.

19 (k) PUBLICATION DATE.—Section 435(m)(4) (20

20 U.S.C. 1085(m)(4)) is amended by adding at the end the

21 following:

22 ‘‘(D) The Secretary shall publish the report de23 scribed in subparagraph (C) by September 30 of

24 each year.’’.
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1 SEC. 4. LIMITED INJUNCTIVE RELIEF.

2 Section 432(a)(2) (20 U.S.C. 1082(a)(2)) is amended

3 by striking ‘‘Secretary’s control and’’ and inserting ‘‘Sec4 retary’s control, except that, notwithstanding the provi5 sions of this paragraph, any district court of the United

6 States, in reviewing any final determination of the Sec7 retary concerning eligibility for, or the terms of participa8 tion in, any loan or grant program under this title, may

9 enter any order that would be appropriate under sections

10 705 and 706 of title 5, United States Code, and’’.

11 SEC. 5. EXPANDED REVIEW OF LOAN SERVICING AND COL12 LECTION RECORDS.

13 The matter following subparagraph (C) of section

14 435(a)(3) (20 U.S.C. 1085(a)(3)) is amended by inserting

15 after ‘‘loan servicers’’ the following ‘‘, or at the request

16 of the institution, a complete copy of the records,’’.

17 SEC. 6. REPAYMENT TERMS.

18 (a) INSURED LOANS.—Section 427 (20 U.S.C. 1077)

19 is amended—

20 (1) in subsection (a)(2)—

21 (A) in subparagraph (B), in the matter

22 preceding clause (i), by striking ‘‘over a period’’

23 through ‘‘nor more than 10 years’’ and insert24 ing ‘‘in accordance with the repayment plan se25 lected under subsection (d),’’;
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1 (B) in the matter following clause (iii) of

2 subparagraph (C), by striking ‘‘the 10-year pe3 riod described in subparagraph (B);’’ and in4 serting ‘‘the length of the repayment period

5 under a repayment plan described in subsection

6 (d);’’;

7 (C) by striking subparagraph (F);

8 (D) by redesignating subparagraphs (G),

9 (H), and (I) as subparagraphs (F), (G), and

10 (H), respectively; and

11 (E) in subparagraph (G) (as redesignated

12 by subparagraph (D)), by striking ‘‘the option’’

13 through the end of the subparagraph and in14 serting ‘‘the repayment options described in

15 subsection (d); and’’;

16 (2) in subsection (c), by striking ‘‘in subsection

17 (a)(2)(H),’’ and inserting the following: ‘‘by a repay18 ment plan selected by the borrower under subpara19 graph (C) or (D) of subsection (d)(1),’’; and

20 (3) by adding after subsection (c) the following

21 new subsection:

22 ‘‘(d) REPAYMENT PLANS.—

23 ‘‘(1) DESIGN AND SELECTION.—In accordance

24 with regulations of the Secretary, the lender shall

25 offer a borrower of a loan made under this part the
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1 plans described in this subsection for repayment of

2 such loan, including principal and interest thereon.

3 No plan may require a borrower to repay a loan in

4 less than 5 years. The borrower may choose from—

5 ‘‘(A) a standard repayment plan, with a

6 fixed annual repayment amount paid over a

7 fixed period of time, not to exceed 10 years;

8 ‘‘(B) an extended repayment plan, with a

9 fixed annual repayment amount paid over an

10 extended period of time, not to exceed 30 years,

11 except that the borrower shall repay annually a

12 minimum amount determined in accordance

13 with subsection (c);

14 ‘‘(C) a graduated repayment plan, with an15 nual repayment amounts established at 2 or

16 more graduated levels and paid over an ex17 tended period of time, not to exceed 30 years,

18 except that the borrower’s scheduled payments

19 shall not be less than 50 percent, nor more

20 than 150 percent, of what the amortized pay21 ment on the amount owed would be if the loan

22 were repaid under the standard repayment

23 plan; and

24 ‘‘(D) an income-sensitive repayment plan,

25 with income-sensitive repayment amounts paid
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1 over a fixed period of time prescribed by the

2 Secretary, not to exceed 25 years, at the end of

3 which any remaining obligation of the borrower

4 shall be discharged under section 437(e).

5 ‘‘(2) LENDER SELECTION OF OPTION IF BOR6 ROWER DOES NOT SELECT.—If a borrower of a loan

7 made under this part does not select a repayment

8 plan described in paragraph (1), the lender shall

9 provide the borrower with a repayment plan de10 scribed in paragraph (1)(A).

11 ‘‘(3) CHANGES IN SELECTIONS.—The borrower

12 of a loan made under this part may change the bor13 rower’s selection of a repayment plan under para14 graph (1), or the lender’s selection of a plan for the

15 borrower under paragraph (2), as the case may be,

16 under such conditions as may be prescribed by the

17 Secretary in regulation.

18 ‘‘(4) ACCELERATION PERMITTED.—Under any

19 of the plans described in this subsection, the bor20 rower shall be entitled to accelerate, without penalty,

21 repayment on the borrower’s loans under this part.’’.

22 (b) GUARANTEED LOANS.—Section 428(b) (20

23 U.S.C. 1078) is amended—

24 (1) in paragraph (1)—
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1 (A) in subparagraph (D), by striking

2 clauses (i) and (ii) and the clause designation

3 ‘‘(iii)’’;

4 (B) in subparagraph (E)—

5 (i) in clause (i)—

6 (I) by striking ‘‘or section

7 428A,’’ and inserting ‘‘or section

8 428H,’’; and

9 (II) by striking ‘‘the option’’

10 through the end of the clause and in11 serting ‘‘the repayment options de12 scribed in paragraph (9); and’’; and

13 (ii) in clause (ii)—

14 (I) by striking ‘‘over a period’’

15 through ‘‘nor more than 10 years’’

16 and inserting ‘‘in accordance with the

17 repayment plan selected under para18 graph (9), and’’; and

19 (II) by striking ‘‘of this sub20 section’’; and

21 (C) in subparagraph (L)(i), by inserting

22 after the clause designation the following: ‘‘ex23 cept as otherwise provided by a repayment plan

24 selected by the borrower under clause (iii) or

25 (iv) of paragraph (9)(A),’’; and
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1 (2) by adding after paragraph (8) the following

2 new paragraph:

3 ‘‘(9) REPAYMENT PLANS.—

4 ‘‘(A) DESIGN AND SELECTION.—In accord5 ance with regulations of the Secretary, the lend6 er shall offer a borrower of a loan made under

7 this part the plans described in this subpara8 graph for repayment of such loan, including

9 principal and interest thereon. No plan may re10 quire a borrower to repay a loan in less than

11 5 years. The borrower may choose from—

12 ‘‘(i) a standard repayment plan, with

13 a fixed annual repayment amount paid

14 over a fixed period of time, not to exceed

15 10 years;

16 ‘‘(ii) an extended repayment plan,

17 with a fixed annual repayment amount

18 paid over an extended period of time, not

19 to exceed 30 years, except that the bor20 rower shall repay annually a minimum

21 amount determined in accordance with

22 paragraph (2)(L);

23 ‘‘(iii) a graduated repayment plan,

24 with annual repayment amounts estab25 lished at 2 or more graduated levels and
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1 paid over an extended period of time, not

2 to exceed 30 years, except that the borrow3 er’s scheduled payments shall not be less

4 than 50 percent, nor more than 150 per5 cent, of what the amortized payment on

6 the amount owed would be if the loan were

7 repaid under the standard repayment plan;

8 and

9 ‘‘(iv) an income-sensitive repayment

10 plan, with income-sensitive repayment

11 amounts paid over a fixed period of time

12 prescribed by the Secretary, not to exceed

13 25 years, at the end of which any remain14 ing obligation of the borrower shall be dis15 charged under section 437(e).

16 ‘‘(B) LENDER SELECTION OF OPTION IF

17 BORROWER DOES NOT SELECT.—If a borrower

18 of a loan made under this part does not select

19 a repayment plan described in subparagraph

20 (A), the lender shall provide the borrower with

21 a repayment plan described in subparagraph

22 (A)(i).

23 ‘‘(C) CHANGES IN SELECTIONS.—The bor24 rower of a loan made under this part may

25 change the borrower’s selection of a repayment
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1 plan under subparagraph (A), or the lender’s

2 selection of a plan for the borrower under sub3 paragraph (B), as the case may be, under such

4 conditions as may be prescribed by the Sec5 retary in regulation.

6 ‘‘(D) ACCELERATION PERMITTED.—Under

7 any of the plans described in this paragraph,

8 the borrower shall be entitled to accelerate,

9 without penalty, repayment on the borrower’s

10 loans under this part.

11 ‘‘(E) COMPARABLE FFEL AND DIRECT

12 LOAN REPAYMENT PLANS.—The Secretary shall

13 ensure that the repayment plans offered to bor14 rowers under this part are comparable, to the

15 extent practicable and not otherwise provided in

16 statute, to the repayment plans offered under

17 part D.’’.

18 (c) CONSOLIDATION LOANS.—Section 428C (20

19 U.S.C. 1078–3) is amended—

20 (1) in subsection (b)(3)(F), by striking ‘‘alter21 native’’; and

22 (2) in subsection (c), by amending paragraph

23 (2) to read as follows:

24 ‘‘(2) REPAYMENT PLANS.—
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1 ‘‘(A) DESIGN AND SELECTION.—In accord2 ance with regulations of the Secretary, the lend3 er shall offer a borrower of a loan made under

4 this section the plans described in this para5 graph for repayment of such loan, including

6 principal and interest thereon. No plan may re7 quire a borrower to repay a loan in less than

8 5 years. The borrower may choose from—

9 ‘‘(i) a standard repayment plan, with

10 a fixed annual repayment amount paid

11 over a fixed period of time, not to exceed

12 10 years;

13 ‘‘(ii) an extended repayment plan,

14 with a fixed annual repayment amount

15 paid over an extended period of time, not

16 to exceed 30 years, except that the bor17 rower shall repay annually a minimum

18 amount determined in accordance with

19 paragraph (3);

20 ‘‘(iii) a graduated repayment plan,

21 with annual repayment amounts estab22 lished at 2 or more graduated levels and

23 paid over an extended period of time, not

24 to exceed 30 years, except that the borrow25 er’s scheduled payments shall not be less
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1 than 50 percent, nor more than 150 per2 cent, of what the amortized payment on

3 the amount owed would be if the loan were

4 repaid under the standard repayment plan;

5 and

6 ‘‘(iv) an income-sensitive repayment

7 plan, with income-sensitive repayment

8 amounts paid over a fixed period of time

9 prescribed by the Secretary, not to exceed

10 25 years, at the end of which any remain11 ing obligation of the borrower shall be dis12 charged under section 437(e).

13 ‘‘(B) LENDER SELECTION OF OPTION IF

14 BORROWER DOES NOT SELECT.—If a borrower

15 of a loan made under this section does not se16 lect a repayment plan described in subpara17 graph (A), the lender shall provide the borrower

18 with a repayment plan described in subpara19 graph (A)(i).

20 ‘‘(C) CHANGES IN SELECTIONS.—The bor21 rower of a loan made under this section may

22 change the borrower’s selection of a repayment

23 plan under subparagraph (A), or the lender’s

24 selection of a plan for the borrower under sub25 paragraph (B), as the case may be, under such
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1 conditions as may be prescribed by the Sec2 retary in regulation.’’.

3 (d) DIRECT LOANS.—Section 455(d) (20 U.S.C.

4 1087e) is amended—

5 (1) in paragraph (1)—

6 (A) in subparagraph (B), by inserting after

7 ‘‘an extended period of time,’’ the following:

8 ‘‘not to exceed 30 years,’’;

9 (B) in subparagraph (C), by striking ‘‘a

10 fixed or extended period of time,’’ and inserting

11 the following: ‘‘an extended period of time, not

12 to exceed 30 years,’’; and

13 (C) in subparagraph (D), by inserting ‘‘at

14 the end of which any remaining obligation of

15 the borrower shall be discharged,’’ after ‘‘25

16 years,’’; and

17 (2) in paragraph (2), by striking ‘‘subpara18 graph (A), (B), or (C) of paragraph (1).’’ and in19 serting ‘‘paragraph (1)(A).’’.

20 (e) DISCHARGE OF INCOME-SENSITIVE BORROWER

21 OBLIGATIONS.—Section 437 (20 U.S.C. 1087) is amended

22 by adding at the end the following new subsection:

23 ‘‘(e) PAYMENT AFTER 25 YEARS ON INCOME-SEN24 SITIVE LOANS.—The Secretary shall discharge a borrow25 er’s liability by repaying to the holder of a loan that is
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1 subject to an income-sensitive repayment plan the amount

2 of the principal and interest that remains unpaid after the

3 borrower has completed 25 years of payment in accord4 ance with the plan.’’.

5 SEC. 7. NEGATIVE AMORTIZATION WAIVER.

6 Section 437A(b) (20 U.S.C. 1087–0(b)) is amended

7 by adding at the end the following new paragraph:

8 ‘‘(3) NEGATIVE AMORTIZATION WAIVER.—No

9 loan shall be considered in default for any purpose

10 under this paragraph if the borrower is making reg11 ularly scheduled payments towards the repayment of

12 the borrower’s loan obligation in the amount re13 quired by the borrower’s repayment plan, even if

14 those payments are not sufficient to pay the interest

15 accruing on a monthly or quarterly basis.’’.

16 SEC. 8. EQUITY IN LOAN CONSOLIDATION.

17 Section 428C (20 U.S.C. 1078–3) is amended—

18 (1) in subsection (a)(3)—

19 (A) in subparagraph (A), by inserting ‘‘in

20 an in-school period,’’ after ‘‘for a consolidation

21 loan is’’; and

22 (B) in subparagraph (B), by amending

23 clause (i) to read as follows: ‘‘(i) Eligible stu24 dent loans received by the eligible borrower may

25 be added to a consolidation loan during the
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1 180-day period following the making of such

2 consolidation loan.’’;

3 (2) in subsection (b)(4)(C), by amending clause

4 (ii) to read as follows:

5 ‘‘(ii) provides that interest shall accrue and

6 be paid—

7 ‘‘(I) by the Secretary, in the case of

8 a consolidation loan made before October

9 1, 1998, that consolidated only Federal

10 Stafford Loans for which the student bor11 rower received an interest subsidy under

12 section 428;

13 ‘‘(II) by the Secretary, in the case of

14 a consolidation loan made on or after Oc15 tober 1, 1998, except that the Secretary

16 shall pay such interest only on that portion

17 of the loan that repays Federal Stafford

18 Loans for which the student borrower re19 ceived an interest subsidy under section

20 428; and

21 ‘‘(III) by the borrower, or capitalized,

22 in the case of a consolidation loan, or por23 tion thereof, other than one described in

24 subclause (I) or (II);’’; and

25 (3) in subsection (c)—
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1 (A) in paragraph (1)—

2 (i) in subparagraph (A), by striking

3 ‘‘subparagraph (B), (C), or (D).’’ and in4 serting ‘‘subparagraph (B), (C), (D), (E),

5 or (F), and subject to subparagraph (G).’’;

6 and

7 (ii) by adding after subparagraph (D)

8 the following new subparagraphs:

9 ‘‘(E) A consolidation loan made on or after Oc10 tober 1, 1998, that repays loans made under section

11 428 or 428H, or a combination thereof, shall bear

12 interest at an annual rate on the unpaid principal

13 balance of the loan that is equal to—

14 ‘‘(i) the rate specified in section 427A(g),

15 in the case of a borrower in an in-school or

16 grace period; or

17 ‘‘(ii) the rate specified in section

18 427A(h)(1) in all other cases.

19 ‘‘(F) A consolidation loan made on or after Oc20 tober 1, 1998, that repays loans made under section

21 428B shall bear interest at an annual rate on the

22 unpaid principal balance of the loan that is equal to

23 the rate specified in section 427A(h)(2).

24 ‘‘(G) Notwithstanding any other provision of

25 this section, the Secretary may prescribe in regula-
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1 tion such procedures as may be necessary to ensure

2 that—

3 ‘‘(i) a borrower of a consolidation loan that

4 repays a combination of loans eligible to be con5 solidated under this section, shall continue to

6 receive, after consolidation, any interest subsidy

7 benefits associated with a loan, without extend8 ing such benefits to any other loans consoli9 dated that do not have interest subsidy benefits;

10 ‘‘(ii) in the case of a consolidation loan

11 that repays a combination of loans described in

12 subparagraphs (E) and (F), the interest rate on

13 such consolidation loan shall be calculated in a

14 manner that reflects the interest rate applicable

15 to loans made under each such subparagraph;

16 and

17 ‘‘(iii) in the case of a consolidation loan

18 that repays a loan eligible to be consolidated

19 under this section other than those described in

20 subparagraphs (E) and (F), the interest rate

21 applicable to such other loan shall be the inter22 est rate described in subparagraph (E) if such

23 other loan is considered by the Secretary to be

24 subsidized, and the interest rate described in
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1 subparagraph (F) if such other loan is consid2 ered by the Secretary to be unsubsidized.’’; and

3 (B) in paragraph (4)—

4 (i) by striking ‘‘Repayment of’’ and

5 inserting ‘‘(A) Except as provided in sub6 paragraph (B), repayment of’’; and

7 (ii) by adding after subparagraph (A)

8 (as redesignated by clause (i)) the follow9 ing new subparagraph:

10 ‘‘(B) In the case of a consolidation loan that re11 pays a loan made under this part for which the bor12 rower is in an in-school period at the time the con13 solidation application is received, the repayment pe14 riod for such consolidation loan shall commence

15 after the completion of a grace period, as described

16 in section 428(b)(7)(A)(i).’’.

17 SEC. 9. LIAISON FOR PROPRIETARY INSTITUTIONS OF

18 HIGHER EDUCATION.

19 Title II of the Department of Education Organization

20 Act (20 U.S.C. 3411 et seq.) is amended by adding at

21 the end the following:

22 ‘‘SEC. 219. LIAISON FOR PROPRIETARY INSTITUTIONS OF

23 HIGHER EDUCATION.

24 ‘‘(a) ESTABLISHMENT.—There shall be in the De25 partment a Liaison for Proprietary Institutions of Higher
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1 Education, who shall be an officer of the Department ap2 pointed by the Secretary.

3 ‘‘(b) APPOINTMENT.—The Secretary shall appoint,

4 not later than 6 months after the date of enactment of

5 the Federal Accountability and Institutional Reform in

6 Education Act of 1998 a Liaison for Proprietary Institu7 tions of Higher Education who shall be a person who—

8 ‘‘(1) has attained a certificate or degree from a

9 proprietary institution of higher education; or

10 ‘‘(2) has been employed in a proprietary institu11 tion setting for not less than 5 years.

12 ‘‘(c) DUTIES.—The Liaison for Proprietary Institu13 tions of Higher Education shall—

14 ‘‘(1) serve as the principal advisor to the Sec15 retary on matters affecting proprietary institutions

16 of higher education;

17 ‘‘(2) provide guidance to programs within the

18 Department that involve functions affecting propri19 etary institutions of higher education; and

20 ‘‘(3) work with the Federal Interagency Com21 mittee on Education to improve the coordination

22 of—

23 ‘‘(A) the outreach programs in the numer24 ous Federal departments and agencies that ad25 minister education and job training programs;
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•S 2123 IS

1 ‘‘(B) collaborative business and education

2 partnerships; and

3 ‘‘(C) education programs located in, and

4 involving, rural areas.’’.

Æ