132 
‘‘(B) 
the 
speech-language 
pathologist 
meets or exceeds the qualifications described in 
section 1861(ll)(3) of the Social Security Act 
(42 U.S.C. 1395x(3)). 
‘‘(i) AUTHORIZATION OF APPROPRIATIONS.—There 
are authorized to be appropriated to carry out this section 
such sums as may be necessary for fiscal year 2006 and 
such sums as may be necessary for each of the 5 suc-
ceeding fiscal years.’’. 
SEC. 2120. UNSUBSIDIZED STAFFORD LOANS. 
(a) 
AMENDMENT.—Section 
428H(d)(2)(C) 
(20 
U.S.C. 
1078–8(d)(2)(C)) 
is 
amended 
by 
striking 
‘‘$10,000’’ and inserting ‘‘$12,000’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to loans for which the first dis-
bursement of principal is made on or after July 1, 2007. 
SEC. 2121. ELIMINATION OF TERMINATION DATES FROM 
TAXPAYER-TEACHER PROTECTION ACT OF 
2004. 
(a) EXTENSION OF LIMITATIONS ON SPECIAL AL-
LOWANCE FOR LOANS FROM THE PROCEEDS OF TAX EX-
EMPT ISSUES.—Section 438(b)(2)(B) (20 U.S.C. 1087– 
1(b)(2)(B)) is amended— 
(1) in clause (iv), by striking ‘‘and before Janu-
ary 1, 2006,’’; and
133 
(2) in clause (v)(II)— 
(A) by striking ‘‘and before January 1, 
2006,’’ each place it appears in divisions (aa) 
and (bb); and 
(B) by striking ‘‘, and before January 1, 
2006’’ in division (cc). 
(b) ADDITIONAL LIMITATION ON SPECIAL ALLOW-
ANCE FOR LOANS FROM THE PROCEEDS OF TAX EXEMPT 
ISSUES.—Section 
438(b)(2)(B) 
(20 
U.S.C 
1087– 
1(b)(2)(B)) is further amended by adding at the end 
thereof the following new clause: 
‘‘(vi) Notwithstanding clauses (i), (ii), and (v), 
the quarterly rate of the special allowance shall be 
the rate determined under subparagraph (A), (E), 
(F), (G), (H), or (I) of this paragraph, as the case 
may be, for a holder of loans— 
‘‘(I) that were made or purchased on or 
after October 1, 2005; or 
‘‘(II) that were not earning a quarterly 
rate of special allowance determined under 
clauses (i) or (ii) of subparagraph (B) of this 
paragraph (20 U.S.C. 1087–1(b)(2)(b)) as of 
October 1, 2005.’’. 
(c) ELIMINATION OF EFFECTIVE DATE LIMITATION 
ON HIGHER TEACHER LOAN FORGIVENESS BENEFITS.—
134 
Paragraph (3) of section 3(b) of the Taxpayer-Teacher 
Protection Act of 2004 (20 U.S.C. 1078–10 note) is 
amended by striking ‘‘, and before October 1, 2005’’. 
(d) ADDITIONAL CHANGES TO TEACHER LOAN FOR-
GIVENESS PROVISIONS.— 
(1) FFEL PROVISIONS.—Section 428J (20 
U.S.C. 1078–10) is amended— 
(A) in subsection (b)(1)(B), by inserting 
after ‘‘1965’’ the following: ‘‘, or meets the re-
quirements of subsection (g)(3)’’; 
(B) in subsection (c)(3)— 
(i) by striking ‘‘and’’ at the end of 
subparagraph (A); 
(ii) by striking the period at the end 
of subparagraph (B) and inserting ‘‘; 
and’’; and 
(iii) by inserting after subparagraph 
(B) the following new subparagraph: 
‘‘(C) an elementary or secondary school 
teacher who primarily teaches reading— 
‘‘(i) who meets the requirements of 
subsection (b); 
‘‘(ii) who has obtained a separate 
reading instruction credential from the
135 
State in which the teacher is employed; 
and 
‘‘(iii) who is certified by the chief ad-
ministrative officer of the public or non-
profit private elementary or secondary 
school in which the borrower is employed 
to teach reading— 
‘‘(I) as being proficient in teach-
ing the essential components of read-
ing instruction as defined in section 
1208 of the Elementary and Sec-
ondary Education Act of 1965; and 
‘‘(II) as having such credential.’’; 
and 
(C) in subsection (g), by adding at the end 
the following new paragraph: 
‘‘(3) PRIVATE
SCHOOL
TEACHERS.—An indi-
vidual who is employed as a teacher in a private 
school and is exempt from State certification re-
quirements (unless otherwise applicable under State 
law), may, in lieu of the requirement of subsection 
(a)(1)(B), have such employment treated as quali-
fying employment under this section if such indi-
vidual is permitted to and does satisfy rigorous sub-
ject knowledge and skills tests by taking competency
136 
tests in the applicable grade levels and subject areas. 
For such purposes, the competency tests taken by 
such a private school teacher must be recognized by 
5 or more States for the purpose of fulfilling the 
highly qualified teacher requirements under section 
9101 of the Elementary and Secondary Education 
Act of 1965, and the score achieved by such teacher 
on each test must equal or exceed the average pass-
ing score of those 5 States.’’. 
(2) DIRECT
LOAN
PROVISIONS.—Section 460 
(20 U.S.C. 1087j) is amended— 
(A) in subsection (b)(1)(A)(ii), by inserting 
after ‘‘1965’’ the following: ‘‘, or meets the re-
quirements of subsection (g)(3)’’; 
(B) in subsection (c)(3)— 
(i) by striking ‘‘and’’ at the end of 
subparagraph (A); 
(ii) by striking the period at the end 
of subparagraph (B) and inserting ‘‘; 
and’’; and 
(iii) by inserting after subparagraph 
(B) the following new subparagraph: 
‘‘(C) an elementary or secondary school 
teacher who primarily teaches reading—
137 
‘‘(i) who meets the requirements of 
subsection (b); 
‘‘(ii) who has obtained a separate 
reading instruction credential from the 
State in which the teacher is employed; 
and 
‘‘(iii) who is certified by the chief ad-
ministrative officer of the public or non-
profit private elementary or secondary 
school in which the borrower is employed 
to teach reading— 
‘‘(I) as being proficient in teach-
ing the essential components of read-
ing instruction as defined in section 
1208 of the Elementary and Sec-
ondary Education Act of 1965; and 
‘‘(II) as having such credential.’’; 
and 
(C) in subsection (g), by adding at the end 
the following new paragraph: 
‘‘(3) PRIVATE
SCHOOL
TEACHERS.—An indi-
vidual who is employed as a teacher in a private 
school and is exempt from State certification re-
quirements (unless otherwise applicable under State 
law), may, in lieu of the requirement of subsection
138 
(a)(1)(A)(ii), have such employment treated as 
qualifying employment under this section if such in-
dividual is permitted to and does satisfy rigorous 
subject knowledge and skills tests by taking com-
petency tests in the applicable grade levels and sub-
ject areas. For such purposes, the competency tests 
taken by such a private school teacher must be rec-
ognized by 5 or more States for the purpose of ful-
filling the highly qualified teacher requirements 
under section 9101 of the Elementary and Sec-
ondary Education Act of 1965, and the score 
achieved by such teacher on each test must equal or 
exceed the average passing score of those 5 States.’’. 
SEC. 2122. LOAN FEES FROM LENDERS. 
Section 438(d)(2) (20 U.S.C. 1087–1(d)(2)) is 
amended to read as follows: 
‘‘(2) AMOUNT OF LOAN FEES.—The amount of 
the loan fee which shall be deducted under para-
graph (1) shall be equal to— 
‘‘(A) 0.50 percent of the principal amount 
of the loan with respect to any loan under this 
part for which the first disbursement was made 
on or after October 1, 1993, and before July 1, 
2006; and
139 
‘‘(B) 1.0 percent of the principal amount 
of the loan with respect to any loan under this 
part for which the first disbursement was made 
on or after July 1, 2006.’’. 
SEC. 2123. ADDITIONAL ADMINISTRATIVE PROVISIONS. 
(a) TREATMENT OF EXEMPT CLAIMS.— 
(1) 
INSURANCE
COVERAGE.—Section 
428(b)(1)(G) (20 U.S.C. 1078(b)(1)(G)) is amended 
by inserting before the semicolon at the end the fol-
lowing: ‘‘and 100 percent of the unpaid principal 
amount of exempt claims as defined in subsection 
(c)(1)(G)’’. 
(2) 
TREATMENT.—Section 
428(c)(1) 
(20 
U.S.C. 1078(c)(1)) is amended— 
(A) by redesignating subparagraph (G) as 
subparagraph (H), and moving such subpara-
graph 2 em spaces to the left; and 
(B) by inserting after subparagraph (F) 
the following new subparagraph: 
‘‘(G)(i) Notwithstanding any other provisions of 
this section, in the case of exempt claims, the Sec-
retary shall apply the provisions of— 
‘‘(I) the fourth sentence of subparagraph 
(A) by substituting ‘100 percent’ for ‘95 per-
cent’;
140 
‘‘(II) subparagraph (B)(i) by substituting 
‘100 percent’ for ‘85 percent’; and 
‘‘(III) subparagraph (B)(ii) by substituting 
‘100 percent’ for ‘75 percent’. 
‘‘(ii) For purposes of clause (i) of this subpara-
graph, the term ‘exempt claims’ means claims with 
respect to loans for which it is determined that the 
borrower (or the student on whose behalf a parent 
has borrowed), without the lender’s or the institu-
tion’s knowledge at the time the loan was made, pro-
vided false or erroneous information or took actions 
that caused the borrower or the student to be ineli-
gible for all or a portion of the loan or for interest 
benefits thereon.’’. 
(b) REDUCTION OF INSURANCE PERCENTAGE.— 
(1) INSURANCE
PERCENTAGE
REDUCTION.— 
Section 428(b)(1)(G) as amended by subsection 
(a)(1) is further amended by inserting after the mat-
ter inserted by such subsection the following: ‘‘, ex-
cept, for any loan for which the first disbursement 
of principal is made on or after July 1, 2006, the 
preceding provisions of this subparagraph shall be 
applied by substituting ‘96 percent’ for ‘98 per-
cent’ ’’.
141 
(2) INCREASE
INSURANCE
FOR
EXCEPTIONAL 
PERFORMANCE.—Section 428I (20 U.S.C. 1078–9) 
is amended to read as follows: 
‘‘SEC. 428I. SPECIAL INSURANCE AND REINSURANCE RULES 
FOR EXCEPTIONAL PERFORMANCE. 
‘‘(a) DESIGNATION OF LENDERS AND SERVICERS.— 
‘‘(1) IN GENERAL.—Whenever the Secretary de-
termines that an eligible lender or servicer meets the 
performance measures required by paragraph (2), 
the Secretary shall designate that eligible lender or 
servicer, as the case may be, for exceptional per-
formance. The Secretary shall notify each appro-
priate guaranty agency of the eligible lenders and 
servicers designated under this section. 
‘‘(2) PERFORMANCE MEASURES.— 
‘‘(A) In determining whether to award a 
lender or servicer the exceptional performance 
designation, the Secretary shall require that the 
lender or servicer be performing at or above the 
95 percentile of the industry, and demonstrate 
improved performance against the lender’s or 
servicer’s average of the last 3 years on the fac-
tors described in subparagraph (B). 
‘‘(B) The factors on which the Secretary 
shall require improvement shall include—
142 
‘‘(i) delinquency rates; 
‘‘(ii) the rate at which delinquent ac-
counts are restored to good standing; 
‘‘(iii) default rates; 
‘‘(iv) the rate of rejected claims; and 
‘‘(v) any other such measures as de-
termined by the Secretary. 
‘‘(C) In addition, the Secretary shall not 
make any award of such a designation unless 
the consequence of the designation is cost-neu-
tral to the Federal Government. 
‘‘(3) ADDITIONAL INFORMATION ON LENDERS 
AND SERVICERS.—Each appropriate guaranty agen-
cy shall provide the Secretary with such other infor-
mation in its possession regarding an eligible lender 
or servicer desiring designation as may relate to the 
Secretary’s determination under paragraph (1), in-
cluding but not limited to any information sug-
gesting that the application of a lender or servicer 
for designation should not be approved. 
‘‘(4) DETERMINATIONS BY THE SECRETARY.— 
‘‘(A) The Secretary shall designate an eli-
gible lender or servicer for exceptional perform-
ance if the eligible lender or servicer meets the
143 
performance measures required by paragraph 
(2). 
‘‘(B) The Secretary shall make the deter-
mination under paragraph (1) based upon the 
documentation submitted by the eligible lender 
or servicer as specified in regulation, such other 
information as provided by any guaranty agen-
cy under paragraph (3), and any information in 
the possession of the Secretary or submitted by 
any other agency or office of the Federal Gov-
ernment. 
‘‘(C) The Secretary shall inform the eligi-
ble lender or servicer and the appropriate guar-
anty agency that its application for designation 
as an exceptional performance lender or servicer 
has been approved or disapproved. 
‘‘(5) TRANSITION.— 
‘‘(A) Any eligible lender or servicer des-
ignated for exceptional performance as of the 
day before the date of enactment of the Higher 
Education Budget Reconciliation Act of 2005 
shall continue to be so designated, and subject 
to the requirements of this section as in effect 
on that day (including revocation), until the
144 
performance standards described in paragraph 
(2) are established. 
‘‘(B) The Secretary shall not designate any 
additional eligible lenders or servicers for excep-
tional performance until those performance 
standards are established. 
‘‘(b) PAYMENT TO LENDERS AND SERVICERS.—A 
guaranty agency shall pay, to each eligible lender or 
servicer (as agent for an eligible lender) designated under 
subsection (a), 98 percent of the unpaid principal and in-
terest of all loans for which claims are submitted for pay-
ment by that eligible lender or servicer for the one-year 
period following the receipt by the guaranty agency of the 
notification of designation under this section, or until the 
guaranty agency receives notice from the Secretary that 
the designation of the lender or servicer under subsection 
(a)(2) has been revoked. 
‘‘(c) REVOCATION AUTHORITY.— 
‘‘(1) The Secretary shall revoke the designation 
of a lender or a servicer under subsection (a) if the 
Secretary determines that the lender or servicer has 
failed to meet the performance standards required 
by subsection (a)(2). 
‘‘(2) Notwithstanding any other provision of 
this section, a designation under subsection (a) may
145 
be revoked at any time by the Secretary, in the Sec-
retary’s discretion, if the Secretary determines that 
the eligible lender or servicer has failed to meet the 
criteria and performance standards established by 
the Secretary in regulation, or if the Secretary be-
lieves the lender or servicer may have engaged in 
fraud in securing designation under subsection (a), 
or is failing to service loans in accordance with pro-
gram regulations. 
‘‘(d) DOCUMENTATION.—Nothing in this section 
shall restrict or limit the authority of guaranty agencies 
to require the submission of claims documentation evi-
dencing servicing performed on loans, except that the 
guaranty agency may not require greater documentation 
than that required for lenders and servicers not designated 
under subsection (a). 
‘‘(e) SPECIAL RULE.—Reimbursements made by the 
Secretary on loans submitted for claim by an eligible lend-
er or loan servicer designated for exceptional performance 
under this section shall not be subject to additional review 
by the Secretary or repurchase by the guaranty agency 
for any reason other than a determination by the Sec-
retary that the eligible lender or loan servicer engaged in 
fraud or other purposeful misconduct in obtaining des-
ignation for exceptional performance.
146 
‘‘(f) LIMITATION.—Nothing in this section shall be 
construed to affect the processing of claims on student 
loans of eligible lenders not subject to this section. 
‘‘(g) CLAIMS.—A lender or servicer designated under 
subsection (a) failing to service loans or otherwise comply 
with applicable program regulations shall be considered in 
violation of section 3729 of title 31, United States Code. 
‘‘(h) TERMINATION.—The Secretary may terminate 
the designation of lenders and servicers under this section 
if he determines that termination would be in the fiscal 
interest of the United States. 
‘‘(i) DEFINITIONS.—As used in this section— 
‘‘(1) the term ‘eligible loan’ means a loan made, 
insured, or guaranteed under this part; and 
‘‘(2) the term ‘servicer’ means an entity serv-
icing and collecting student loans that— 
‘‘(A) has substantial experience in serv-
icing and collecting consumer loans or student 
loans; 
‘‘(B) has an independent financial audit 
annually which is furnished to the Secretary 
and any other parties designated by the Sec-
retary; 
‘‘(C) has business systems which are capa-
ble of meeting the requirements of this part;
147 
‘‘(D) has adequate personnel who are 
knowledgeable about the student loan programs 
authorized by this part; and 
‘‘(E) does not have any owner, majority 
shareholder, director, or officer of the entity 
who has been convicted of a felony.’’. 
(3) EFFECTIVE DATE OF AMENDMENTS.—The 
amendments made by this subsection shall apply 
with respect to loans for which the first disburse-
ment of principal is made on or after July 1, 2006. 
(c) DOCUMENTATION
OF FORBEARANCE AGREE-
MENTS.—Section 428(c) (20 U.S.C. 1078(c)) is further 
amended— 
(1) in paragraph (3)(A)(i)— 
(A) by striking ‘‘in writing’’; and 
(B) by inserting ‘‘and documented in ac-
cordance with paragraph (10)’’ after ‘‘approval 
of the insurer’’; and 
(2) by adding at the end the following new 
paragraph: 
‘‘(10) 
DOCUMENTATION
OF
FORBEARANCE 
AGREEMENTS.—For the purposes of paragraph (3), 
the terms of forbearance agreed to by the parties 
shall be documented by confirming the agreement of 
the borrower by notice to the borrower from the
148 
lender, and by recording the terms in the borrower’s 
file.’’. 
(d) CONSOLIDATION OF DEFAULTED LOANS.—Sec-
tion 428(c) (20 U.S.C. 1078(c)) is further amended— 
(1) in paragraph (2)(A)— 
(A) by inserting ‘‘(i)’’ after ‘‘including’’; 
and 
(B) by inserting before the semicolon at 
the end the following: ‘‘and (ii) requirements es-
tablishing procedures to preclude consolidation 
lending from being an excessive proportion of 
guaranty agency recoveries on defaulted loans 
under this part’’; 
(2) in paragraph (2)(D), by striking ‘‘para-
graph (6)’’ and inserting ‘‘paragraph (6)(A)’’; and 
(3) in paragraph (6)— 
(A) by inserting ‘‘(A)’’ before ‘‘For the 
purpose of paragraph (2)(D),’’; 
(B) by redesignating subparagraphs (A) 
and (B) as clauses (i) and (ii), respectively; and 
(C) by adding at the end the following new 
subparagraphs: 
‘‘(B) A guaranty agency shall— 
‘‘(i) on or after October 1, 2006—
149 
‘‘(I) not charge the borrower collec-
tion costs in an amount in excess of 18.5 
percent of the outstanding principal and 
interest of a defaulted loan that is paid off 
through consolidation by the borrower 
under this title; and 
‘‘(II) remit to the Secretary a portion 
of the collection charge under subclause (I) 
equal to 8.5 percent of the outstanding 
principal and interest of such defaulted 
loan; and 
‘‘(ii) on and after October 1, 2009, remit 
to the Secretary the entire amount charged 
under clause (i)(I) with respect to each de-
faulted loan that is paid off with excess consoli-
dation proceeds. 
‘‘(C) For purposes of subparagraph (B), the 
term ‘excess consolidation proceeds’ means, with re-
spect to any guaranty agency for any Federal fiscal 
year beginning on or after October 1, 2009, the pro-
ceeds of consolidation of defaulted loans under this 
title that exceed 45 percent of the agency’s total col-
lections on defaulted loans in such Federal fiscal 
year.’’.