ginning on October 1, 2009, and each 
subsequent calendar quarter, in com-
puting the special allowance paid pur-
suant to this subsection with respect to 
loans described in subclause (II), 
clause (i)(I) of this subparagraph shall 
be applied by substituting ‘of the 1- 
month London Inter Bank Offered 
Rate (LIBOR) for United States dol-
lars in effect for each of the days in 
such quarter as compiled and released 
by the British Bankers Association’ for 
‘of the quotes of the 3-month commer-
cial paper (financial) rates in effect for 
each of the days in such quarter as re-
ported by the Federal Reserve in Publi-
cation H–15 (or its successor) for such 
3-month period’. 
‘‘(II) 
LOANS
ELIGIBLE
FOR 
LIBOR-BASED CALCULATION.—The spe-
cial allowance paid pursuant to this 
subsection shall be calculated as de-
scribed in subclause (I) with respect to 
special allowance payments for the 3- 
month period ending December 31, 
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2009, and each succeeding 3-month pe-
riod, on loans for which the first dis-
bursement is made— 
‘‘(aa) on or after the date of 
enactment of the Student Aid and 
Fiscal Responsibility Act of 2009, 
and before July 1, 2010; and 
‘‘(bb) on or after January 1, 
2000, and before the date of enact-
ment of the Student Aid and Fis-
cal Responsibility Act of 2009, if, 
not later than the last day of the 
second full fiscal quarter after the 
date of enactment of such Act, the 
holder of the loan affirmatively 
and permanently waives all con-
tractual, statutory or other legal 
rights to a special allowance paid 
pursuant to this subsection that is 
calculated using the formula in ef-
fect at the time the loans were 
first disbursed. 
‘‘(III) TERMS
OF
WAIVER.—A 
waiver pursuant to subclause (II)(bb) 
shall— 
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‘‘(aa) be applicable to all 
loans described in such subclause 
that are held under any lender 
identification number associated 
with the holder (pursuant to sec-
tion 487B); and 
‘‘(bb) apply with respect to 
all future calculations of the spe-
cial allowance on loans described 
in such subclause that are held on 
the date of such waiver or that are 
acquired by the holder after such 
date. 
‘‘(IV) PARTICIPANT’S YIELD.—For 
the calendar quarter beginning on Oc-
tober 1, 2009, and each subsequent cal-
endar quarter, the Secretary’s partici-
pant yield in any loan for which the 
first disbursement is made on or after 
January 1, 2000, and before October 1, 
2009, and that is held by a lender that 
has sold any participation interest in 
such loan to the Secretary shall be de-
termined by using the LIBOR-based 
rate described in subclause (I) as the 
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substitute rate (for the commercial 
paper rate) referred to in the partici-
pation agreement between the Sec-
retary and such lender.’’; 
(b) CONFORMING AMENDMENT.—Section 438(b)(2)(I) 
(20 U.S.C. 1087–1(b)(2)(I)) is further amended— 
(1) in clause (i)(II), by striking ‘‘such average 
bond equivalent rate’’ and inserting ‘‘the rate deter-
mined under subclause (I)’’; and 
(2) in clause (v)(III) by striking ‘‘(iv), and (vi)’’ 
and inserting ‘‘(iv), (vi), and (vii)’’. 
SEC. 211. ORIGINATION OF DIRECT LOANS AT INSTITU-
TIONS 
LOCATED 
OUTSIDE 
THE 
UNITED 
STATES. 
(a) LOANS FOR STUDENTS ATTENDING INSTITUTIONS 
LOCATED OUTSIDE THE UNITED STATES.—Section 452 (20 
U.S.C. 1087b) is amended by adding at the end the fol-
lowing: 
‘‘(d) INSTITUTIONS LOCATED OUTSIDE THE UNITED 
STATES.—Loan funds for students (and parents of stu-
dents) attending institutions located outside the United 
States shall be disbursed through a financial institution lo-
cated in the United States and designated by the Secretary 
to serve as the agent of such institutions with respect to 
the receipt of the disbursements of such loan funds and the 
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transfer of such funds to such institutions. To be eligible 
to receive funds under this part, an otherwise eligible insti-
tution located outside the United States shall make arrange-
ments, subject to regulations by the Secretary, with the 
agent designated by the Secretary under this subsection to 
receive funds under this part.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) AMENDMENTS.—Section 102 (20 U.S.C. 
1002), as amended by section 102 of the Higher Edu-
cation Opportunity Act (Public Law 110–315) and 
section 101 of Public Law 111–39, is amended— 
(A) by striking ‘‘part B’’ each place it ap-
pears and inserting ‘‘part D’’; 
(B) in subsection (a)(1)(C), by inserting ‘‘, 
consistent with the requirements of section 
452(d)’’ before the period at the end; and 
(C) in subsection (a)(2)(A)— 
(i) in the matter preceding clause (i), 
by striking ‘‘made, insured, or guaranteed’’ 
and inserting ‘‘made’’; and 
(ii) in clause (iii)— 
(I) in subclause (III), by striking 
‘‘only Federal Stafford’’ and all that 
follows through ‘‘section 428B’’ and in-
serting ‘‘only Federal Direct Stafford 
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Loans under section 455(a)(2)(A), Fed-
eral 
Direct 
Unsubsidized 
Stafford 
Loans under section 455(a)(2)(D), or 
Federal Direct PLUS Loans under sec-
tion 455(a)(2)(B)’’; and 
(II) in subclause (V), by striking 
‘‘a Federal Stafford’’ and all that fol-
lows through ‘‘section 428B’’ and in-
serting ‘‘a Federal Direct Stafford 
Loan under section 455(a)(2)(A), a 
Federal Direct Unsubsidized Stafford 
Loan under section 455(a)(2)(D), or a 
Federal Direct PLUS Loan under sec-
tion 455(a)(2)(B)’’. 
(2) EFFECTIVE DATE.—The amendments made 
by subparagraph (C) of paragraph (1) shall be effec-
tive on July 1, 2010, as if enacted as part of section 
102(a)(1) of the Higher Education Opportunity Act 
(Public Law 110–315). 
SEC. 212. AGREEMENTS WITH INSTITUTIONS. 
Section 454 (20 U.S.C. 1087d) is amended— 
(1) in subsection (a), by striking paragraph (4) 
and redesignating the succeeding paragraphs accord-
ingly; and 
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