paragraph (D) that is approved by the Sec-
retary, the Secretary shall reduce the total an-
nual amount of risk-sharing payments as fol-
lows: 
‘‘(i) With respect to an institution 
with a cohort default rate described in 
paragraph (2)(A), the risk-sharing pay-
ment shall be in an amount that is equal 
to 15 percent of the total amount (includ-
ing interest and collection fees) of loans 
made under this part to students who are 
in default. 
‘‘(ii) With respect to an institution 
with a cohort default rate described in 
paragraph (2)(B), the risk-sharing pay-
ment shall be in an amount that is equal 
to 10 percent of the total amount (includ-
ing interest and collection fees) of loans 
made under this part to students who are 
in default. 
‘‘(iii) With respect to an institution 
with a cohort default rate described in 
paragraph (2)(C), the risk-sharing pay-
ment shall be in an amount that is equal 
to 5 percent of the total amount (including 
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interest and collection fees) of loans made 
under this part to students who are in de-
fault. 
‘‘(C) CONTINUATION OF WAIVER OR RE-
DUCED
PAYMENTS.—An institution that re-
ceives a waiver under subparagraph (A) or a re-
duced risk-sharing payment under subpara-
graph (B) may receive a waiver or reduced pay-
ment for a subsequent fiscal year only if the 
Secretary determines that the institution is 
making satisfactory progress in carrying out the 
student loan management plan described in 
subparagraph (D), including evidence of the ef-
fectiveness of the individualized financial aid 
counseling for students. 
‘‘(D) 
STUDENT
LOAN
MANAGEMENT 
PLAN.—An institution that seeks a waiver or 
reduction of its risk-sharing payment, shall de-
velop and carry out a student loan management 
plan that shall include an analysis of the risk 
factors correlated with higher student loan de-
faults that are present at the institution and 
actions that the institution will take to address 
such factors. Such plan shall include individual-
ized financial aid counseling for students and 
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strategies to minimize student loan default and 
delinquency. 
‘‘(E) WAIVER
OR
REDUCTION
FOR
CER-
TAIN INSTITUTIONS.—In addition to the other 
risk-sharing payment waivers and reductions 
described in this paragraph, the Secretary may 
waive or reduce risk-sharing payments if— 
‘‘(i) an institution is eligible under— 
‘‘(I) part A or part B of title III; 
or 
‘‘(II) title V; and 
‘‘(ii) the Secretary determines that— 
‘‘(I) the institution is making 
satisfactory progress in carrying out 
the institution’s student loan manage-
ment plan described under subpara-
graph (D); and 
‘‘(II) granting a waiver or reduc-
tion of risk-sharing payments would 
be in the best interest of students at 
the institution. 
‘‘(4) PROHIBITION.—An institution of higher 
education shall not deny admission or financial aid 
to a student based on a perception that such student 
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may be at risk for defaulting on a loan made under 
this part. 
‘‘(5) FUND FOR THE DEPOSIT OF RISK-SHAR-
ING PAYMENTS.— 
‘‘(A) IN GENERAL.—There is established in 
the Treasury of the United States a separate 
account for the deposit of risk-sharing pay-
ments collected under this subsection. The Sec-
retary shall deposit any payments collected pur-
suant to this subsection into such fund. 
‘‘(B) USE OF FUNDS.—Of the amounts in 
the fund described in subparagraph (A), for 
each fiscal year— 
‘‘(i) not more than 50 percent of such 
amounts shall be made available to the 
Secretary to enter into contracts or cooper-
ative agreements for delinquency and de-
fault prevention or rehabilitation under 
section 456(c); and 
‘‘(ii) the Secretary shall reserve the 
remainder of such amounts for a Federal 
Pell Grant fund that shall be used to offset 
any future shortfalls in funding under the 
Federal Pell Grant program. 
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‘‘(6) 
APPLICABILITY.—The 
Secretary 
shall 
carry out this subsection beginning with the cohort 
default rate for the 2014 cohort. The 2014 cohort 
shall include current and former students who enter 
repayment in fiscal year 2014. 
‘‘(7) REPORT
TO
CONGRESS.—The Secretary 
shall report on an annual basis to the Committee on 
Health, Education, Labor, and Pensions of the Sen-
ate and the Committee on Education and the Work-
force of the House of Representatives the following 
information: 
‘‘(A) A list of institutions that have been 
subject to risk-sharing payments in the previous 
year. 
‘‘(B) The required risk-sharing payment 
from such institutions. 
‘‘(C) The amount of risk-sharing payments 
collected from such institutions. 
‘‘(D) A list of the institutions that have re-
ceived waivers from the risk-sharing payment 
and the reason for such waiver. 
‘‘(E) A list of the institutions that have re-
ceived reductions in the required risk-sharing 
payment. 
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