560 
for an award year shall be equal to the amount 
that bears the same proportion to the amount 
made available under subparagraph (A) for 
such award year as the total amount of the 
graduate student need at the participating in-
stitution for the preceding award year bears to 
the total amount of graduate student need at 
all participating institutions for the preceding 
award year. 
‘‘(2) NO FUNDS TO NON-PARTICIPATING INSTI-
TUTIONS.—The Secretary shall not make funds 
available under this subsection to any eligible insti-
tution that is not a participating institution. 
‘‘(3) REQUIRED MINIMUM AMOUNT.—In no case 
shall the sum of a participating institution’s alloca-
tion of loan authority computed under paragraph 
(1)(B) be less than the average of the institution’s 
total principal amount of loans made under this part 
for each of the academic years 2012–2013 through 
2016–2017. 
‘‘(4) ADDITIONAL ADJUSTMENTS.—If the Sec-
retary determines that the sum of a participating in-
stitution’s allocation of loan authority under para-
graph (1)(B) is below the minimum amount required 
under paragraph (3), the Secretary shall— 
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‘‘(A) for each participating institution for 
which the minimum amount under paragraph 
(3) is not satisfied, increase the amount of such 
sum to the amount of the required minimum 
under such paragraph; and 
‘‘(B) ratably reduce the amount of the sum 
of such loan authority of all participating insti-
tutions not described in subparagraph (A). 
‘‘(5) ESTIMATING THE YEAR PRECEDING THE 
FIRST
YEAR
OF
ALLOCATIONS.—For award year 
2021–2022, in calculating an institution’s under-
graduate student need under paragraph (1)(C) and 
an institution’s graduate student need under para-
graph (1)(D), the Secretary may estimate the data 
with respect to the preceding award year required to 
make such calculations. 
‘‘(c) DEFINITIONS.—In this section: 
‘‘(1) ANNUAL
LOAN
AUTHORITY.—The term 
‘annual loan authority’ means the total original prin-
cipal amount of loans that may be allocated and 
made available for an award year to make Federal 
Direct Perkins Loans under section 455A. 
‘‘(2) AVERAGE
COST
OF
ATTENDANCE.—The 
term ‘average cost of attendance’ has the meaning 
given the term in section 4202(e)(5)(B). 
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562 
‘‘(3) GRADUATE
STUDENT
NEED.—The term 
‘graduate student need’ means, with respect to a 
graduate student for an award year, the lesser of the 
following: 
‘‘(A) The amount equal to (except the 
amount computed by this subparagraph shall 
not be less than zero)— 
‘‘(i) the average cost of attendance for 
the preceding award year, minus 
‘‘(ii) such graduate student’s expected 
family contribution (computed in accord-
ance with part F of this title) for the pre-
ceding award year. 
‘‘(B) The total annual loan limit for a 
Federal Direct Unsubsidized Stafford Loan. 
‘‘(4) UNDERGRADUATE STUDENT NEED.—The 
term ‘undergraduate student need’ means, with re-
spect to an undergraduate student for an award 
year, the lesser of the following: 
‘‘(A) The total of the amount equal to (ex-
cept the amount computed by this clause shall 
not be less than zero)— 
‘‘(i) the average cost of attendance for 
the award year, minus 
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‘‘(ii) such undergraduate student’s ex-
pected family contribution (computed in 
accordance with part F of this title) for 
the preceding award year. 
‘‘(B) The total loan annual limit for a 
Federal Direct Unsubsidized Stafford Loan and 
a Federal Direct Loan. 
‘‘(5) ELIGIBLE INSTITUTION.—The term ‘eligi-
ble institution’ means an institution of higher edu-
cation that participates in the Federal Direct Staf-
ford Loan Program. 
‘‘(6) PARTICIPATING INSTITUTION.—The term 
‘participating institution’ means an institution of 
higher education that has an agreement under sec-
tion 463(f).’’. 
SEC. 4404. AGREEMENTS WITH INSTITUTIONS OF HIGHER 
EDUCATION FOR PURPOSES OF THE PERKINS 
LOAN PROGRAM. 
(a) AMENDMENTS.—Section 463 of the Higher Edu-
cation Act (20 U.S.C. 1087cc) is amended— 
(1) in subsection (a)— 
(A) in the heading, by inserting ‘‘FOR 
LOANS MADE BEFORE JULY 1, 2021’’ after 
‘‘AGREEMENTS’’; 
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(B) in paragraph (3)(A), by inserting ‘‘be-
fore July 1, 2021’’ after ‘‘students’’; 
(C) in paragraph (4), by striking ‘‘there-
on—’’ and all that follows and inserting ‘‘there-
on, if the institution has failed to maintain an 
acceptable collection record with respect to such 
loan, as determined by the Secretary in accord-
ance with criteria established by regulation, the 
Secretary may require the institution to assign 
such note or agreement to the Secretary, with-
out recompense;’’; and 
(D) in paragraph (5), by striking ‘‘and the 
Secretary shall apportion’’ and all that follows 
through ‘‘in accordance with section 462’’ and 
inserting ‘‘and the Secretary shall return a por-
tion of funds from loan repayments to the insti-
tution as specified in section 466(b)’’; 
(2) by amending subsection (b) to read as fol-
lows: 
‘‘(b) ADMINISTRATIVE EXPENSES.—An institution 
that has entered into an agreement under subsection (a) 
shall be entitled, for each fiscal year during which it serv-
ices student loans from a student loan fund established 
under such agreement, to a payment in lieu of reimburse-
ment for its expenses in servicing student loans made be-
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fore July 1, 2021. Such payment shall be equal to 0.50 
percent of the outstanding principal and interest balance 
of such loans being serviced by the institution as of Sep-
tember 30 of each fiscal year.’’; and 
(3) by adding at the end the following: 
‘‘(f) CONTENTS OF AGREEMENTS FOR LOANS MADE 
ON OR AFTER JULY 1, 2021.—An agreement with any 
institution of higher education that elects to participate 
in the Federal Direct Perkins Loan program under section 
455A shall provide— 
‘‘(1) for the establishment and maintenance of 
a Direct Perkins Loan program at the institution 
under which the institution shall use loan authority 
allocated under section 462A to make loans to eligi-
ble students attending the institution; 
‘‘(2) that the institution, unless otherwise speci-
fied in this subsection, shall operate the program 
consistent with the requirements of agreements es-
tablished under section 454; and 
‘‘(3) that if the institution ceases to be eligible 
to receive Federal loans under this title based on 
loss of eligibility under section 435(a), as amended, 
due to a high adjusted cohort default rate, the Sec-
retary shall suspend or terminate the institution’s 
eligibility to make Federal Direct Perkins Loans 
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