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(B) in clause (ii), by striking ‘‘$65,500’’ 
and inserting ‘‘$73,000’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall be effective July 1, 2008. 
SEC. 113. REDUCTION OF LENDER SPECIAL ALLOWANCE 
PAYMENTS. 
Section 438(b)(2)(I) (20 U.S.C. 1087–1(b)(2)(I)) is 
amended— 
(1) in clause (i), by striking ‘‘clauses (ii), (iii), 
and (iv)’’ and inserting ‘‘the following clauses’’; 
(2) in clause (v)(III), by striking ‘‘clauses (ii), 
(iii), and (iv)’’ and inserting ‘‘clauses (ii), (iii), (iv), 
and (vi)’’; and 
(3) by adding at the end the following new 
clause: 
‘‘(vi) REDUCTION FOR LOANS ON OR 
AFTER OCTOBER 1, 2007.—With respect to 
a loan on which the applicable interest rate 
is determined under section 427A(l), the 
percentage to be added under clause 
(i)(III) in computing the special allowance 
payment pursuant to this subparagraph 
shall be the following: 
‘‘(I) IN
GENERAL
AND
PLUS 
LOANS.—1.79 percent in the case of a 
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loan described in clause (i) or (iii) for 
which the first disbursement of prin-
cipal is made on or after October 1, 
2007. 
‘‘(II) IN SCHOOL AND GRACE PE-
RIOD.—1.19 percent in the case of a 
loan described in clause (ii)(II) for 
which the first disbursement of prin-
cipal is made on or after October 1, 
2007. 
‘‘(III) CONSOLIDATION LOANS.— 
2.09 percent in the case of a loan de-
scribed in clause (iv) made on or after 
October 1, 2007.’’. 
SEC. 114. ELIMINATION OF EXCEPTIONAL PERFORMER 
STATUS FOR LENDERS. 
(a) ELIMINATION OF STATUS.—Part B of title IV (20 
U.S.C. 1071 et seq.) is amended by striking section 428I 
(20 U.S.C. 1078–9). 
(b) CONFORMING AMENDMENTS.—Part B of title IV 
is further amended— 
(1) 
in 
section 
428(c)(1) 
(20 
U.S.C. 
1078(c)(1))— 
(A) by striking subparagraph (D); and 
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(B) by redesignating subparagraphs (E) 
through (H) as subparagraphs (D) through 
(G), respectively; and 
(2) in section 438(b)(5) (20 U.S.C. 1087– 
1(b)(5)), by striking the matter following subpara-
graph (B). 
SEC. 115. REDUCTION OF LENDER INSURANCE PERCENT-
AGE. 
(a) AMENDMENT.—Subparagraph (G) of section 
428(b)(1) (20 U.S.C. 1078(b)(1)(G)) is amended to read 
as follows: 
‘‘(G) insures 95 percent of the unpaid 
principal of loans insured under the program, 
except that— 
‘‘(i) such program shall insure 100 
percent of the unpaid principal of loans 
made with funds advanced pursuant to sec-
tion 428(j) or 439(q); and 
‘‘(ii) notwithstanding the preceding 
provisions of this subparagraph, such pro-
gram shall insure 100 percent of the un-
paid principal amount of exempt claims as 
defined in subsection (c)(1)(G);’’. 
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(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall take effect with respect to loans made 
on or after October 1, 2007. 
SEC. 116. GUARANTY AGENCY COLLECTION RETENTION. 
Clause (ii) of section 428(c)(6)(A) (20 U.S.C. 
1078(c)(6)(A)(ii)) is amended to read as follows: 
‘‘(ii) an amount equal to 23 percent of 
such payments for use in accordance with 
section 422B, except that beginning Octo-
ber 1, 2007, this subparagraph shall be ap-
plied by substituting ‘16 percent’ for ‘23 
percent’.’’. 
SEC. 117. ACCOUNT MAINTENANCE FEES. 
Section 458(b) (20 U.S.C. 1087h(b)) is amended by 
striking ‘‘0.10 percent’’ and inserting ‘‘0.06 percent’’. 
SEC. 118. INCREASED LOAN FEES FROM LENDERS. 
Paragraph (2) of section 438(d) (20 U.S.C. 1087– 
1(d)(2)) is amended to read as follows: 
‘‘(2) AMOUNT OF LOAN FEES.— 
‘‘(A) AMOUNT.—The amount of the loan 
fee which shall be deducted under paragraph 
(1), but which may not be collected from the 
borrower, shall be equal to— 
‘‘(i) except as provided in clauses (ii) 
and (iii), 0.50 percent of the principal 
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amount of the loan with respect to any 
loan under this part for which the first dis-
bursement was made on or after October 
1, 1993; 
‘‘(ii) 1.0 percent of the principal 
amount of the loan with respect to any 
loan under this part for which the first dis-
bursement was made on or after October 
1, 2007, that is held by any holder other 
than a holder described in subclause (I) or 
(II) of clause (iii); and 
‘‘(iii) 0.0 percent of the principal 
amount of the loan with respect to any 
loan under this part for which the first dis-
bursement was made on or after October 
1, 2007, that is held by— 
‘‘(I) any holder that, together 
with its affiliated holders, is des-
ignated by the Secretary annually as a 
small lender under subparagraph (B); 
or 
‘‘(II) any holder that— 
‘‘(aa) is a unit of a State or 
local government or a nonprofit 
private entity; and 
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