189 
‘‘(C) RENEWAL OF WAIVER.—A Partner-
ship applicant that receives a tentative approval 
of a waiver under subparagraph (A)(ii)(II) of 
paragraph (2) for more than two years under 
this paragraph must submit to the Secretary 
every two years by such time as the Secretary 
may direct documentation that demonstrates 
that— 
‘‘(i) the significant economic hardship 
upon which the waiver was granted still ex-
ists; and 
‘‘(ii) the grantee tried diligently, but 
unsuccessfully, to obtain contributions 
needed to meet the matching requirement. 
‘‘(D) MULTIPLE WAIVERS.—If a grantee 
has received one or more waivers under para-
graph (2), the grantee may request an addi-
tional waiver of the matching requirement 
under this subsection not earlier than 60 days 
before the expiration of the grantee’s existing 
waiver.’’. 
(c) ACTIVITIES.—Section 404D (20 U.S.C. 1070a– 
24) is amended— 
(1) in subsection (a)— 
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190 
(A) in paragraph (1), by striking ‘‘finan-
cial aid for’’ and inserting ‘‘financial aid, in-
cluding loans, grants, scholarships, and institu-
tional aid for’’; 
(B) in paragraph (2) by striking ‘‘rigorous 
and challenging curricula and coursework, in 
order 
to’’ 
and 
inserting 
‘‘curricula 
and 
coursework designed to’’; 
(C) by redesignating paragraphs (3) and 
(4) as paragraphs (5) and (6), respectively; 
(D) by inserting after paragraph (2) the 
following: 
‘‘(3) Providing information to students and 
families about the advantages of obtaining a postsec-
ondary education. 
‘‘(4) Providing tutors and mentors, who may in-
clude adults or former participants of a program 
under this chapter, for use by eligible students in 
need.’’; and 
(E) in paragraph (5), as so redesignated, 
by striking ‘‘Improving’’ and inserting ‘‘Pro-
viding supportive services to improve’’; and 
(2) in subsection (b)— 
(A) by striking paragraph (1); 
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191 
(B) 
by 
redesignating 
paragraphs 
(2) 
through (15) as paragraphs (1) through (14), 
respectively; 
(C) in paragraph (3), as so redesignated, 
by striking ‘‘rigorous’’ each place it appears; 
and 
(D) in paragraph (9), as so redesignated— 
(i) by redesignating subparagraphs 
(E) through (K) as subparagraphs (F) 
through (L), respectively; and 
(ii) by inserting after subparagraph 
(D) the following: 
‘‘(E) providing counseling or referral serv-
ices to address the behavioral, social-emotional, 
and mental health needs of at-risk students;’’; 
(iii) in subparagraph (I), as so redes-
ignated, by striking ‘‘skills assessments’’ 
and inserting ‘‘skills, cognitive, non-cog-
nitive, and credit-by-examination assess-
ments’’; 
(iv) in subparagraph (K), as so redes-
ignated, by striking ‘‘and’’ at the end; 
(v) in subparagraph (L), as so redes-
ignated, by striking the period at the end 
and inserting ‘‘; and’’; and 
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192 
(vi) by adding at the end the fol-
lowing: 
‘‘(M) capacity building activities that cre-
ate college-going cultures in participating 
schools and local education agencies.’’; 
(E) by adding at the end the following: 
‘‘(15) Creating or expanding drop-out recovery 
programs that allow individuals who drop out of 
school to complete a regular secondary school di-
ploma and begin college-level work.’’; and 
(F) in subsection (c)— 
(i) in paragraph (3), by inserting 
‘‘and technical assistance’’ after ‘‘adminis-
trative support’’; and 
(ii) by striking paragraph (9); and 
(3) in subsection (e), by striking ‘‘institutions 
and agencies sponsoring programs authorized under 
subpart 4,’’. 
(d) SCHOLARSHIP REQUIREMENTS.—Section 404E 
(20 U.S.C. 1070a–25) is amended— 
(1) in subsection (a)(1), by inserting ‘‘described 
in section 404C(a)(2)(B)(i)’’ after ‘‘financial assist-
ance program’’; and 
(2) in subsection (e)(1), by striking ‘‘an 
amount’’ and all that follows through the period at 
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193 
the end and inserting the following: ‘‘an estimated 
amount that is based on the requirements of the fi-
nancial assistance program of the eligible entity de-
scribed in section 404C(a)(2)(B)(i).’’ 
(e) EVALUATION
AND REPORT.—Section 404G(b) 
(20 U.S.C. 1070a–27(b)) is amended— 
(1) in paragraph (1), by striking ‘‘and’’ at the 
end; 
(2) in paragraph (2), by striking the period at 
the end and inserting ‘‘; and’’ 
(3) by adding after paragraph (2) the following: 
‘‘(3) include the following metrics: 
‘‘(A) the number of students completing 
the Free Application for Federal Student Aid; 
‘‘(B) the enrollment of participating stu-
dents in curricula and coursework designed to 
reduce the need for remedial coursework at the 
postsecondary level; 
‘‘(C) if applicable, the number of students 
receiving a scholarship; 
‘‘(D) the graduation rate of participating 
students from high school; 
‘‘(E) the enrollment of participating stu-
dents into postsecondary education; and 
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194 
‘‘(F) such other information as the Sec-
retary may require.’’. 
(f) AUTHORIZATION OF APPROPRIATIONS.—Section 
404H (20 U.S.C. 1070a–28) is amended by striking 
‘‘$400,000,000 for fiscal year 2009 and such sums as may 
be necessary for each of the five succeeding fiscal years’’ 
and inserting ‘‘$339,754,000 for fiscal year 2019 and 
each of the five succeeding fiscal years’’. 
SEC. 404. SPECIAL PROGRAMS FOR STUDENTS WHOSE FAM-
ILIES ARE ENGAGED IN MIGRANT AND SEA-
SONAL FARMWORK. 
Section 418A(i) (20 U.S.C. 1070d—2(i)) is amended 
by striking ‘‘$75,000,000’’ and all that follows through 
the period at the end and inserting ‘‘$44,623,000 for each 
of fiscal years 2019 through 2024.’’. 
SEC. 405. CHILD CARE ACCESS MEANS PARENTS IN 
SCHOOL. 
Section 419N (20 U.S.C. 1070e) is amended— 
(1) in the heading of paragraph (6) of sub-
section (b), by striking ‘‘CONSTRUCTION’’ and in-
serting ‘‘RULE OF CONSTRUCTION’’; 
(2) in subsection (c)— 
(A) in paragraph (4), by striking ‘‘as-
sisted’’ and inserting ‘‘funded’’; 
(B) in paragraph (5)— 
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195 
(i) by striking ‘‘resources, including 
technical expertise’’ and inserting ‘‘re-
sources, including non-Federal resources, 
technical expertise,’’; and 
(ii) by striking ‘‘the use of the’’ and 
inserting ‘‘these’’; and 
(C) in paragraph (9)— 
(i) by inserting ‘‘provisional status,’’ 
after ‘‘approval,’’; and 
(ii) by striking ‘‘; and’’ and inserting 
‘‘prior to serving children and families; 
and’’; 
(3) in subsection (d)— 
(A) in paragraph (1)— 
(i) by striking ‘‘local’’ and inserting 
‘‘non-Federal, local,’’; and 
(ii) by striking ‘‘and’’ at the end; 
(B) in paragraph (2), by striking the pe-
riod at the end and inserting ‘‘; and’’; and 
(C) by adding at the end the following: 
‘‘(3) coordinate with other community programs 
where appropriate to improve the quality and limit 
cost of the campus-based program.’’; 
(4) by amending subsection (e) to read as fol-
lows: 
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196 
‘‘(e) REPORTING REQUIREMENTS; CONTINUING ELI-
GIBILITY.— 
‘‘(1) REPORTING REQUIREMENTS.— 
‘‘(A) REPORTS.—Each institution of high-
er education receiving a grant under this sec-
tion shall report to the Secretary annually. The 
Secretary shall annually publish such reports on 
a publicly accessible website of the Department 
of Education. 
‘‘(B) CONTENTS.—Each report shall in-
clude— 
‘‘(i) data on the population served 
under this section, including the total num-
ber of children and families served; 
‘‘(ii) information on sources of cam-
pus and community resources and the 
amount of non-Federal funding used to 
help low-income students access child care 
services on campus; 
‘‘(iii) documentation that the program 
meets applicable licensing, certification, ap-
proval, or registration requirements; and 
‘‘(iv) a description of how funding was 
used to pursue the goals of this section de-
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197 
termined by the institution under sub-
section (c). 
‘‘(2) CONTINUING ELIGIBILITY.—The Secretary 
shall make continuation awards under this section to 
an institution of higher education only if the Sec-
retary determines, on the basis of the reports sub-
mitted under paragraph (1) and the application 
from the institution, that the institution is— 
‘‘(A) using funds only for authorized pur-
poses; 
‘‘(B) providing low-income students at the 
institution with priority access to affordable, 
quality child care services as provided under 
this section; and 
‘‘(C) documenting a continued need for 
Federal funding under this section, while dem-
onstrating how non-Federal sources will be le-
veraged to support a continuation award.’’; and 
(5) in subsection (g), by striking ‘‘such sums as 
may be necessary for fiscal year 2009 and each of 
the five succeeding fiscal years’’ and inserting 
‘‘$15,134,000 for each of fiscal years 2019 through 
2024’’. 
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SEC. 406. REPEALS. 
(a) ACADEMIC COMPETITIVENESS GRANTS.—Section 
401A (20 U.S.C. 1070a–1) is repealed. 
(b) FEDERAL SUPPLEMENTAL EDUCATIONAL OP-
PORTUNITY GRANTS.— 
(1) REPEAL.—Subpart 3 of part A of title IV 
(20 U.S.C. 1070b et seq.) is repealed. 
(2) EFFECTIVE
DATE.—The repeal made by 
paragraph (1) shall take effect on June 30, 2018. 
(c) LEVERAGING EDUCATIONAL ASSISTANCE PART-
NERSHIP PROGRAM.—Subpart 4 of part A of title IV (20 
U.S.C. 1070c et seq.) is repealed. 
(d) ROBERT C. BYRD HONORS SCHOLARSHIP PRO-
GRAM.—Subpart 6 of part A of title IV (20 U.S.C. 1070d– 
31 et seq.) is repealed. 
SEC. 407. SUNSET OF TEACH GRANTS. 
Subpart 9 of part A of title IV (20 U.S.C. 1070g) 
is amended— 
(1) in section 420L(1) (20 U.S.C. 1070g(1), by 
striking ‘‘section 102’’ and inserting ‘‘section 102 
(as in effect on the day before the date of enactment 
of the PROSPER Act)’’; 
(2) in section 420N (20 U.S.C. 1070g–2)— 
(A) by amending subparagraph (B) of sub-
section (b)(1) to read as follows: 
‘‘(B) teach— 
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‘‘(i) in a public or other nonprofit pri-
vate elementary school or secondary school, 
which, for the purpose of this paragraph 
and for that year— 
‘‘(I) has been determined by the 
Secretary (pursuant to regulations of 
the Secretary and after consultation 
with the State educational agency of 
the State in which the school is lo-
cated) to be a school in which the 
number of children meeting a measure 
of poverty under section 1113(a)(5) of 
the Elementary and Secondary Edu-
cation Act of 1965 (20 U.S.C. 
6313(a)(5)), exceeds 30 percent of the 
total number of children enrolled in 
such school; and 
‘‘(II) is in the school district of a 
local educational agency which is eligi-
ble in such year for assistance pursu-
ant to part A of title I of the Elemen-
tary and Secondary Education Act of 
1965 (20 U.S.C. 6311 et seq.); or 
‘‘(ii) in one or more public, or non-
profit private, elementary schools or sec-
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200 
ondary schools or locations operated by an 
educational service agency that have been 
determined by the Secretary (pursuant to 
regulations of the Secretary and after con-
sultation with the State educational agency 
of the State in which the educational serv-
ice agency operates) to be a school or loca-
tion at which the number of children 
taught who meet a measure of poverty 
under section 1113(a)(5) of the Elemen-
tary and Secondary Education Act of 1965 
(20 U.S.C. 6313(a)(5)), exceeds 30 per-
cent of the total number of children taught 
at such school or location;’’; and 
(B) in subsection (c), by inserting ‘‘(as in 
effect on the day before the date of the enact-
ment of the PROSPER Act)’’ after ‘‘part D of 
title IV’’; 
(3) in section 420M(a) (20 U.S.C. 1070g–1), 
by adding at the end the following: 
‘‘(3) TERMINATION.— 
‘‘(A) TERMINATION OF PROGRAM AUTHOR-
ITY.—No new grants may be made under this 
subpart after June 30, 2018. 
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‘‘(B) LIMITATION ON FUNDS.—No funds 
are authorized to be appropriated, and no funds 
may be obligated or expended under this Act or 
any other Act, to make a grant under this sub-
part for which the first disbursement would be 
made after June 30, 2018.’’; and 
(4) in section 420O (20 U.S.C. 1070g–3)— 
(A) by striking ‘‘2008’’ and inserting 
‘‘2008, and ending on June 30, 2018’’; and 
(B) by adding at the end the following: 
‘‘No funds shall be available to the Secretary to 
carry out this subpart after June 30, 2018.’’. 
PART B—FEDERAL FAMILY EDUCATION LOAN 
PROGRAM 
SEC. 421. FEDERAL DIRECT CONSOLIDATION LOANS. 
Section 428C (20 U.S.C. 1078–3) is amended— 
(1) in subsection (a)(4)(B), by inserting before 
the semicolon at the end ‘‘, as in effect on the day 
before the date of enactment of the PROSPER Act 
and pursuant to section 461(a) of such Act’’; and 
(2) in subsection (b)(1)(F)(ii)— 
(A) in the matter preceding subclause (I), 
by inserting ‘‘, as in effect on the day before 
the date of enactment of the PROSPER Act 
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203 
SEC. 424. LOAN FORGIVENESS FOR SERVICE IN AREAS OF 
NATIONAL NEED. 
Section 428K (20 U.S.C. 1078–11) is amended— 
(1) in subsection (b)— 
(A) in paragraph (4)(B), by striking ‘‘that 
qualifies under section 465(a)(2)(A) for loan 
cancellation for Perkins loan recipients who 
teach in such a school’’ and inserting ‘‘de-
scribed in section 420N(b)(1)(B)’’; 
(B) in paragraph (5)(B)(ii), by striking 
‘‘that qualifies under section 465(a)(2)(A) for 
loan cancellation for Perkins loan recipients 
who teach in such a school’’ and inserting ‘‘de-
scribed in section 420N(b)(1)(B)’’; 
(C) in paragraph (7)(A), by striking ‘‘that 
qualifies under section 465(a)(2)(A) for loan 
cancellation for Perkins loan recipients who 
teach in such a school’’ and inserting ‘‘de-
scribed in section 420N(b)(1)(B)’’; 
(D) in paragraph (8), by striking ‘‘that 
qualifies under section 465(a)(2)(A) for loan 
cancellation for Perkins loan recipients who 
teach in such a school’’ and inserting ‘‘de-
scribed in section 420N(b)(1)(B)’’; and 
(E) in paragraph (16), by striking ‘‘that 
qualify under section 465(a)(2)(A) for loan can-
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204 
cellation for Perkins loan recipients who teach 
in such a school’’ and inserting ‘‘described in 
section 420N(b)(1)(B)’’; and 
(2) in subsection (g)(6)(B), by striking ‘‘that 
qualifies under section 465(a)(2)(A) for loan can-
cellation for Perkins loan recipients who teach in 
such a school’’ and inserting ‘‘described in section 
420N(b)(1)(B)’’. 
SEC. 425. LOAN REPAYMENT FOR CIVIL LEGAL ASSISTANCE 
ATTORNEYS. 
Section 
428L(b)(2)(A) 
(20 
U.S.C. 
1087– 
12(b)(2)(A)) is amended— 
(1) in clause (i), by inserting before the semi-
colon at the end ‘‘, as in effect on the day before the 
date of enactment of the PROSPER Act and pursu-
ant to section 461(a) of such Act’’; and 
(2) in clause (ii)(III), by inserting ‘‘, as in ef-
fect on the day before the date of enactment of the 
PROSPER Act and pursuant to section 461(a) of 
such Act’’ after ‘‘part E’’; 
SEC. 426. SUNSET OF COHORT DEFAULT RATE AND OTHER 
CONFORMING CHANGES. 
(a) REQUIREMENTS FOR THE SECRETARY.—Section 
430(e) (20 U.S.C. 1080(e)) is amended by adding at the 
end the following: 
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205 
‘‘(4) SUNSET.—The Secretary shall not be sub-
ject to the requirements of this subsection after the 
transition period described in section 481B(e)(3).’’. 
(b) ELIGIBLE INSTITUTION DEFINED.—Section 435 
(20 U.S.C. 1085) is amended— 
(1) in subsection (a)— 
(A) in paragraph (1), by striking ‘‘section 
102’’ and inserting ‘‘section 101 and 102’’; and 
(B) by adding at the end the following: 
‘‘(9) SUNSET.—No institution shall be subject 
to paragraph (2) after the transition period de-
scribed in section 481B(e)(3).’’; 
(2) in subsection (m), by adding at the end the 
following: 
‘‘(5) TRANSITION PERIOD; SUNSET.— 
‘‘(A) TRANSITION
PERIOD.—During the 
transition period, the cohort default rate for an 
institution shall be calculated in the manner de-
scribed in section 481B(e)(1). 
‘‘(B) SUNSET.—The Secretary shall not be 
subject, and no institution shall be subject, to 
the requirements of this subsection after the 
transition period. 
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‘‘(C) DEFINITION.—In this paragraph, the 
term ‘transition period’ has the meaning given 
the term in section 481B(e)(3).’’; and 
(3) in subsection (o)(1), by inserting ‘‘, as in ef-
fect on the day before the date of enactment of the 
PROSPER Act and pursuant to section 461(a) of 
such Act’’ after ‘‘part E’’. 
SEC. 427. CLOSED SCHOOL AND OTHER DISCHARGES. 
Section 437(c) (20 U.S.C. 1087) is amended— 
(1) in paragraph (1), by inserting ‘‘and the bor-
rower meets the applicable requirements of para-
graphs (6) through (8),’’ after ‘‘such student’s lend-
er,’’; 
(2) in paragraph (4), by inserting before the pe-
riod at the end ‘‘, as in effect on the day before the 
date of enactment of the PROSPER Act and pursu-
ant to section 461(a) of such Act’’; and 
(3) by adding at the end the following: 
‘‘(6) 
BORROWER
QUALIFICATIONS
FOR
A 
CLOSED SCHOOL DISCHARGE.— 
‘‘(A) IN GENERAL.—In order to qualify for 
the discharge of a loan under this subsection 
due to the closure of the institution in which 
the borrower was enrolled, a borrower shall sub-
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207 
mit to the Secretary a written request and 
sworn statement— 
‘‘(i) that contains true factual asser-
tions; 
‘‘(ii) that is made by the borrower 
under penalty of perjury, and that may or 
may not be notarized; 
‘‘(iii) under which the borrower (or 
the student on whose behalf a parent bor-
rowed) states— 
‘‘(I) that the borrower or the stu-
dent— 
‘‘(aa) received, on or after 
January 1, 1986, the proceeds of 
a loan made, insured, or guaran-
teed under this title to attend a 
program of study at an institu-
tion of higher education; 
‘‘(bb)(AA) did not complete 
the program of study because the 
institution closed while the stu-
dent was enrolled; or 
‘‘(BB) the student withdrew 
from the institution not more 
than 120 days before the institu-
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208 
tion closed, or in the case of ex-
ceptional circumstances described 
in subparagraph (B), not more 
than the period by which such 
120-day period is extended under 
such subparagraph; and 
‘‘(cc) attempted but was un-
able to complete the program of 
study through a teach-out at an-
other institution or by transfer-
ring academic credits or hours 
earned at the closed institution to 
another institution; 
‘‘(II) whether the borrower (or 
the student) has made a claim with 
respect to the institutions’s closing 
with any third party, such as the 
holder of a performance bond or a tui-
tion recovery program, and, if so, the 
amount of any payment received by 
the borrower (or the student) or cred-
ited to the borrower’s loan obligation; 
and 
‘‘(III) that the borrower (or the 
student)— 
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209 
‘‘(aa) agrees to provide to 
the Secretary or the holder of the 
loan upon request other docu-
mentation reasonably available to 
the borrower that demonstrates 
that the borrower meets the 
qualifications for discharge under 
this subsection; and 
‘‘(bb) agrees to cooperate 
with the Secretary in enforce-
ment actions in accordance with 
subparagraph (C) and to transfer 
any right to recovery against a 
third party to the Secretary in 
accordance with subparagraph 
(D). 
‘‘(B) EXCEPTIONAL CIRCUMSTANCES.— 
‘‘(i) IN
GENERAL.—The Secretary 
may extend the 120-day period described 
in subparagraph (A)(iii)(I)(bb)(BB) if the 
Secretary determines that exceptional cir-
cumstances related to an institution’s clos-
ing justify an extension. 
‘‘(ii) DEFINITION.—For purposes of 
this subsection, the term ‘exceptional cir-
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cumstances’, when used with respect to an 
institution that closed, includes the loss of 
accreditation of institution, the institu-
tions’ discontinuation of the majority of its 
academic programs, action by the State to 
revoke the institution’s license to operate 
or award academic credentials in the State, 
or a finding by a State or Federal Govern-
ment agency that the institution violated 
State or Federal law. 
‘‘(C) COOPERATION BY BORROWER IN EN-
FORCEMENT ACTIONS.— 
‘‘(i) IN GENERAL.—In order to obtain 
a discharge described in subparagraph (A), 
a borrower shall cooperate with the Sec-
retary in any judicial or administrative 
proceeding brought by the Secretary to re-
cover amounts discharged or to take other 
enforcement action with respect to the con-
duct on which the discharge was based. At 
the request of the Secretary and upon the 
Secretary’s tendering to the borrower the 
fees and costs that are customarily pro-
vided in litigation to reimburse witnesses, 
the borrower shall— 
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211 
‘‘(I) provide testimony regarding 
any representation made by the bor-
rower to support a request for dis-
charge; 
‘‘(II) produce any documents rea-
sonably available to the borrower with 
respect to those representations; and 
‘‘(III) if required by the Sec-
retary, provide a sworn statement re-
garding those documents and rep-
resentations. 
‘‘(ii) DENIAL OF REQUEST FOR DIS-
CHARGE.—The Secretary shall deny the re-
quest for such a discharge or revoke the 
discharge of a borrower who— 
‘‘(I) fails to provide the testi-
mony, documents, or a sworn state-
ment required under clause (i); or 
‘‘(II) provides testimony, docu-
ments, or a sworn statement that does 
not support the material representa-
tions made by the borrower to obtain 
the discharge. 
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‘‘(D) TRANSFER TO THE SECRETARY OF 
BORROWER’S
RIGHT
OF
RECOVERY
AGAINST 
THIRD PARTIES.— 
‘‘(i) IN GENERAL.—Upon receiving a 
discharge described in subparagraph (A) of 
a loan, the borrower shall be deemed to 
have assigned to and relinquished in favor 
of the Secretary any right to a loan refund 
for such loan (up to the amount dis-
charged) that the borrower (or student) 
may have by contract or applicable law 
with respect to the loan or the enrollment 
agreement for the program for which the 
loan was received, against the institution, 
its principals, its affiliates and their suc-
cessors, its sureties, and any private fund, 
including the portion of a public fund that 
represents funds received from a private 
party. 
‘‘(ii) APPLICATION.—The provisions 
of this subsection apply notwithstanding 
any provision of State law that would oth-
erwise restrict transfer of such rights by 
the borrower (or student), limit, or prevent 
a transferee from exercising such rights, or 
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establish procedures or a scheme of dis-
tribution that would prejudice the Sec-
retary’s ability to recover on such rights. 
‘‘(iii) RULE
OF
CONSTRUCTION.— 
Nothing in this subsection shall limit or 
foreclose the borrower’s (or student’s) 
right to pursue legal and equitable relief 
regarding disputes arising from matters 
unrelated to the discharged loan. 
‘‘(E) DISCHARGE PROCEDURES.— 
‘‘(i) IN GENERAL.—After confirming 
the date of an institution’s closure, the 
Secretary shall identify any borrower (or 
student on whose behalf a parent bor-
rowed) who appears to have been enrolled 
at the institution on the closure date of the 
institution or to have withdrawn not more 
than 120 days prior to the closure date (or 
in the case of exceptional circumstances 
described in subparagraph (B), not more 
than the period by which such 120-day pe-
riod is extended under such subparagraph. 
In the case of a loan made, insured, or 
guaranteed under this part, a guaranty 
agency shall notify the Secretary imme-
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214 
diately whenever it becomes aware of reli-
able information indicating an institution 
may have closed. 
‘‘(ii) BORROWER ADDRESS.— 
‘‘(I) KNOWN.—If the borrower’s 
current address is known, the Sec-
retary shall mail the borrower a dis-
charge application and an explanation 
of the qualifications and procedures 
for obtaining a discharge. The Sec-
retary or the guaranty agency shall 
promptly suspend any efforts to col-
lect from the borrower on any affected 
loan. The Secretary may continue to 
receive borrower payments of the loan 
for which the discharge application 
has been filed. 
‘‘(II) UNKNOWN.—If the bor-
rower’s current address is unknown, 
the Secretary shall attempt to locate 
the borrower and determine the bor-
rower’s potential eligibility for a dis-
charge described in subparagraph (A) 
by consulting with representatives of 
the closed institution, the institution’s 
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215 
licensing agency, the institution’s ac-
crediting agency, and other appro-
priate parties. If the Secretary learns 
the new address of a borrower, the 
Secretary shall mail to the borrower a 
discharge application and explanation, 
and shall suspend collection on the 
loan, as described in subclause (I). 
‘‘(iii) SWORN STATEMENT.—If a bor-
rower fails to submit the written request 
and sworn statement described subpara-
graph (A) not later than 60 days after 
date on which the Secretary mails the dis-
charge application under clause (ii), the 
Secretary— 
‘‘(I) shall resume collection on 
the loan and grant forbearance of 
principal and interest for the period in 
which collection activity was sus-
pended; and 
‘‘(II) may capitalize any interest 
accrued and not paid during such pe-
riod. 
‘‘(iv) NOTIFICATION.— 
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‘‘(I) QUALIFICATIONS
MET.—If 
the Secretary determines that a bor-
rower who requests a discharge de-
scribed in subparagraph (A) meets the 
qualifications for such a discharge, 
the Secretary shall— 
‘‘(aa) notify the borrower in 
writing of that determination; 
and 
‘‘(bb) not regard a borrower 
who has defaulted on a loan that 
has been so discharged as in de-
fault on the loan after such dis-
charge, and such a borrower shall 
be eligible to receive assistance 
under this title. 
‘‘(II) 
QUALIFICATIONS
NOT 
MET.—If the Secretary determines 
that a borrower who requests a dis-
charge described in subparagraph (A) 
does not meet the qualifications for 
such a discharge, the Secretary or 
guaranty agency shall resume collec-
tion on the loan and notify the bor-
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rower in writing of that determination 
and the reasons for the determination. 
‘‘(7) BORROWER QUALIFICATIONS FOR A FALSE 
CERTIFICATION DISCHARGE.— 
‘‘(A) APPLICATION.— 
‘‘(i) IN GENERAL.—In order to qualify 
for false certification discharge under this 
subsection, the borrower shall submit to 
the Secretary, on a form approved by the 
Secretary, an application for discharge 
that— 
‘‘(I) does not need not be nota-
rized, but shall be made by the bor-
rower under penalty of perjury; and 
‘‘(II) demonstrates to the satis-
faction of the Secretary that the re-
quirements 
in 
subparagraphs 
(B) 
through (G) have been met. 
‘‘(ii) NOTIFICATION.—If the Secretary 
determines the application does not meet 
the requirements of clause (i), the Sec-
retary shall notify the applicant and ex-
plain why the application does not meet 
the requirements. 
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‘‘(B) HIGH SCHOOL DIPLOMA OR EQUIVA-
LENT.—In the case of a borrower requesting a 
false certification discharge based on not having 
had a high school diploma and not having met 
the alternative to graduation from high school 
eligibility requirements under section 484(d) 
applicable at the time the loan was originated, 
and the institution or a third party to which the 
institution referred the borrower falsified the 
student’s high school diploma, the borrower 
shall state in the application that the borrower 
(or the student on whose behalf a parent bor-
rowed)— 
‘‘(i) reported not having a valid high 
school diploma or its equivalent at the time 
the loan was certified; and 
‘‘(ii) did not satisfy the alternative to 
graduation from high school statutory or 
regulatory eligibility requirements identi-
fied on the application form and applicable 
at the time the institution certified the 
loan. 
‘‘(C) DISQUALIFYING CONDITION.—In the 
case of a borrower requesting a false certifi-
cation discharge based on a condition that 
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219 
would disqualify the borrower from employment 
in the occupation that the program for which 
the borrower received the loan was intended, 
the borrower shall state in the application that 
the borrower (or student on whose behalf the 
parent borrowed) did not meet State require-
ments for employment (in the student’s State of 
residence) in the occupation that the program 
for which the borrower received the loan was in-
tended because of a physical or mental condi-
tion, age, criminal record, or other reason ac-
cepted by the Secretary. 
‘‘(D) UNAUTHORIZED LOAN.—In the case 
of a borrower requesting a discharge under this 
subsection because the institution signed the 
borrower’s name on the loan application or 
promissory note without the borrower’s author-
ization, the borrower shall— 
‘‘(i) state that the borrower did not 
sign the document in question or authorize 
the institution to do so; and 
‘‘(ii) provide 5 different specimens of 
the borrower’s signature, two of which 
must be within one year before or after the 
date of the contested signature. 
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220 
‘‘(E) UNAUTHORIZED
PAYMENT.—In the 
case of a borrower requesting a false certifi-
cation discharge because the institution, with-
out the borrower’s authorization, endorsed the 
borrower’s loan check or signed the borrower’s 
authorization for electronic funds transfer, the 
borrower shall— 
‘‘(i) state that the borrower did not 
endorse the loan check or sign the author-
ization for electronic funds transfer or au-
thorize the institution to do so; 
‘‘(ii) provide 5 different specimens of 
the borrower’s signature, two of which 
must be within one year before or after the 
date of the contested signature; and 
‘‘(iii) state that the proceeds of the 
contested disbursement were not delivered 
to the borrower or applied to charges owed 
by the borrower to the institution. 
‘‘(F) IDENTITY THEFT.— 
‘‘(i) IN GENERAL.—In the case of an 
individual whose eligibility to borrow was 
falsely certified because the individual was 
a victim of the crime of identity theft and 
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221 
is requesting a discharge, the individual 
shall— 
‘‘(I) certify that the individual 
did not sign the promissory note, or 
that any other means of identification 
used to obtain the loan was used with-
out the authorization of the individual 
claiming relief; 
‘‘(II) certify that the individual 
did not receive or benefit from the 
proceeds of the loan with knowledge 
that the loan had been made without 
the authorization of the individual; 
‘‘(III) provide a copy of a local, 
State, or Federal court verdict or 
judgment that conclusively determines 
that the individual who is named as 
the borrower of the loan was the vic-
tim of a crime of identity theft; and 
‘‘(IV) if the judicial determina-
tion of the crime does not expressly 
state that the loan was obtained as a 
result of the crime of identity theft, 
provide— 
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222 
‘‘(aa) authentic specimens of 
the signature of the individual, as 
described 
in 
subparagraph 
(D)(ii), or of other means of 
identification of the individual, as 
applicable, corresponding to the 
means of identification falsely 
used to obtain the loan; and 
‘‘(bb) statement of facts 
that demonstrate, to the satisfac-
tion of the Secretary, that eligi-
bility for the loan in question was 
falsely certified as a result of the 
crime of identity theft committed 
against that individual. 
‘‘(ii) DEFINITIONS.—For purposes of 
this subparagraph: 
‘‘(I) 
IDENTITY
THEFT.—The 
term ‘identity theft’ means the unau-
thorized use of the identifying infor-
mation of another individual that is 
punishable 
under 
section 
1028, 
1028A, 1029, or 1030 of title 18, 
United States Code, or substantially 
comparable State or local law. 
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223 
‘‘(II) 
IDENTIFYING
INFORMA-
TION.—The term ‘identifying informa-
tion’ includes— 
‘‘(aa) name, Social Security 
number, date of birth, official 
State or government issued driv-
er’s license or identification num-
ber, alien registration number, 
government 
passport 
number, 
and employer or taxpayer identi-
fication number; 
‘‘(bb) unique biometric data, 
such as fingerprints, voiceprint, 
retina or iris image, or unique 
physical representation; 
‘‘(cc) unique electronic iden-
tification number, address, or 
routing code; or 
‘‘(dd) 
telecommunication 
identifying information or access 
device (as defined in 18 U.S.C. 
1029(e)) borrower qualifications 
for a false certification discharge 
‘‘(G) CLAIM TO THIRD PARTY.—The bor-
rower shall state whether the borrower has 
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224 
made a claim with respect to the institutions’s 
false certification or unauthorized payment with 
any third party, such as the holder of a per-
formance bond or a tuition recovery program, 
and, if so, the amount of any payment received 
by the borrower or credited to the borrower’s 
loan obligation. 
‘‘(H) 
COOPERATION
WITH
THE
SEC-
RETARY.—The borrower shall state that the 
borrower— 
‘‘(i) agrees to provide to the Secretary 
upon request other documentation reason-
ably available to the borrower that dem-
onstrates that the borrower meets the 
qualifications for discharge under this sub-
section; and 
‘‘(ii) agrees to cooperate with the Sec-
retary in enforcement actions and to trans-
fer any right to recovery against a third 
party to the Secretary. 
‘‘(8) BORROWER QUALIFICATIONS FOR AN UN-
PAID REFUND DISCHARGE.—To receive an unpaid 
refund discharge of a portion of a loan under this 
subsection, a borrower shall submit to the holder or 
guaranty agency a written application— 
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225 
‘‘(A) that requests the information re-
quired to calculate the amount of the discharge; 
‘‘(B) that the borrower signs for the pur-
pose of swearing to the accuracy of the infor-
mation; 
‘‘(C) that is made by the borrower under 
penalty of perjury, and that may or may not be 
notarized; and 
‘‘(D) under which the borrower states— 
‘‘(i) that the borrower— 
‘‘(I) received, on or after January 
1, 1986, the proceeds of a loan, in 
whole or in part, made, insured, or 
guaranteed under this title to attend 
an institution of higher education; 
‘‘(II) did not attend, withdrew, or 
was terminated from the institution 
within a timeframe that entitled the 
borrower to a refund; and 
‘‘(III) did not receive the benefit 
of a refund to which the borrower was 
entitled either from the institution or 
from a third party, such as the holder 
of a performance bond or a tuition re-
covery program; 
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226 
‘‘(ii) whether the borrower has any 
other application for discharge pending for 
this loan; and 
‘‘(iii) that the borrower— 
‘‘(I) agrees to provide to the Sec-
retary upon request other documenta-
tion reasonably available to the bor-
rower that demonstrates that the bor-
rower meets the qualifications for dis-
charge under this subsection; and 
‘‘(II) agrees to cooperate with the 
Secretary in enforcement actions and 
to transfer any right to recovery 
against a third party to the Sec-
retary.’’. 
PART C—FEDERAL WORK-STUDY PROGRAMS 
SEC. 441. PURPOSE; AUTHORIZATION OF APPROPRIATIONS. 
Section 441 (20 U.S.C. 1087–51) is amended— 
(1) in subsection (a)— 
(A) by striking ‘‘part-time’’ and inserting 
‘‘paid’’; 
(B) by striking ‘‘, graduate, or profes-
sional’’; and 
(C) by striking ‘‘community service’’ and 
inserting ‘‘work-based learning’’; 
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227 
(2) in subsection (b), by striking ‘‘part, such 
sums as may be necessary for fiscal year 2009 and 
each of the five succeeding fiscal years.’’ and insert-
ing ‘‘part, $1,722,858,000 for fiscal year 2019 and 
each of the 5 succeeding fiscal years.’’; and 
(3) by amending subsection (c) to read as fol-
lows: 
‘‘(c) WORK-BASED LEARNING.—For purposes of this 
part, the term ‘work-based learning’ means paid inter-
actions with industry or community professionals in real 
workplace settings that foster in-depth, first-hand engage-
ment with the tasks required of a given career field, that 
are aligned to a student’s field of study.’’. 
SEC. 442. ALLOCATION FORMULA. 
Section 442 (20 U.S.C. 1087–52) is amended to read 
as follows: 
‘‘SEC. 442. ALLOCATION OF FUNDS. 
‘‘(a) RESERVATIONS.— 
‘‘(1) RESERVATION
FOR
IMPROVED
INSTITU-
TIONS.— 
‘‘(A) AMOUNT OF RESERVATION FOR IM-
PROVED INSTITUTIONS.—For a fiscal year in 
which the amount appropriated under section 
441(b) exceeds $700,000,000, the Secretary 
shall— 
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‘‘(i) reserve the lesser of— 
‘‘(I) an amount equal to 20 per-
cent of the amount by which the 
amount appropriated under section 
441(b) exceeds $700,000,000; or 
‘‘(II) $150,000,000; and 
‘‘(ii) allocate the amount reserved 
under clause (i) to each improved institu-
tion in an amount— 
‘‘(I) that bears the same propor-
tion to the amount reserved under 
clause (i) as the total amount of all 
Federal Pell Grant funds awarded at 
the improved institution for the sec-
ond preceding fiscal year bears to the 
total amount of Federal Pell Grant 
funds awarded at improved institu-
tions participating under this part for 
the second preceding fiscal year; and 
‘‘(II) is not— 
‘‘(aa) less than $10,000; or 
‘‘(bb) 
greater 
than 
$1,500,000. 
‘‘(B) 
IMPROVED
INSTITUTION
DE-
SCRIBED.—For purposes of this paragraph, an 
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229 
improved institution is an institution that, on 
the date the Secretary makes an allocation 
under subparagraph (A)(ii) is, with respect to— 
‘‘(i) the completion rate or graduation 
rate of Federal Pell Grant recipients at the 
institution, in the top 10 percent of— 
‘‘(I) if the institution is an insti-
tution described in any of clauses (iv) 
through (ix) of section 132(d)(1)(B), 
all 
such 
institutions 
participating 
under this part for the preceding fis-
cal year; or 
‘‘(II) if the institution is an insti-
tution described in any of clauses (i) 
through (iii) of section 132(d)(1)(B), 
all 
such 
institutions 
participating 
under this part for the preceding fis-
cal year; or 
‘‘(ii) the improvement of the comple-
tion rate or graduation rate between the 
preceding fiscal year and such date, in the 
top 10 percent of the institutions described 
in clause (i). 
‘‘(C) COMPLETION RATE OR GRADUATION 
RATE.—For purposes of determining the com-
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230 
pletion rate or graduation rate under this sec-
tion, a Federal Pell Grant recipient shall be 
counted as a completor or graduate if, within 
the normal time for completion of or graduation 
from the program, the student has completed or 
graduated from the program, or enrolled in any 
program of an institution participating in any 
program under this title for which the prior 
program provides substantial preparation. 
‘‘(D) 
REALLOCATION
OF
RETURNED 
AMOUNT.—If an institution returns to the Sec-
retary any portion of the sums allocated to such 
institution under this paragraph for any fiscal 
year, the Secretary shall reallot such excess to 
improved institutions on the same basis as 
under subparagraph (A)(ii)(I). 
‘‘(2) RESERVATION
FOR
WORK
COLLEGES.— 
From the amounts appropriated under section 
441(b), the Secretary shall reserve to carry out sec-
tion 448 such amounts as may be necessary for fis-
cal year 2019 and each of the 5 succeeding fiscal 
years. 
‘‘(b) ALLOCATION FORMULA
FOR FISCAL YEARS 
2019 THROUGH 2023.— 
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231 
‘‘(1) IN GENERAL.—From the amount appro-
priated under section 441(b) for a fiscal year and re-
maining after the Secretary reserves funds under 
subsection (a), the Secretary shall allocate to each 
institution— 
‘‘(A) for fiscal year 2019, an amount equal 
to the greater of— 
‘‘(i) 90 percent of the amount the in-
stitution received under this subsection 
and subsection (a) for fiscal year 2018, as 
such subsections were in effect with re-
spect to such fiscal year (in this subpara-
graph referred to as the ‘2018 amount for 
the institution’); or 
‘‘(ii) the fair share amount for the in-
stitution determined under subsection (d); 
‘‘(B) for fiscal year 2020, an amount equal 
to the greater of— 
‘‘(i) 80 percent of the 2018 amount 
for the institution; or 
‘‘(ii) the fair share amount for the in-
stitution determined under subsection (d); 
‘‘(C) for fiscal year 2021, an amount equal 
to the greater of— 
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232 
‘‘(i) 60 percent of the 2018 amount 
for the institution; or 
‘‘(ii) the fair share amount for the in-
stitution determined under subsection (d); 
‘‘(D) for fiscal year 2022, an amount equal 
to the greater of— 
‘‘(i) 40 percent of the 2018 amount 
for the institution; or 
‘‘(ii) the fair share amount for the in-
stitution determined under subsection (d); 
and 
‘‘(E) for fiscal year 2023, an amount equal 
to the greater of— 
‘‘(i) 20 percent of the 2018 amount 
for the institution; or 
‘‘(ii) the fair share amount for the in-
stitution determined under subsection (d). 
‘‘(2) RATABLE REDUCTION.— 
‘‘(A) IN GENERAL.—If the amount appro-
priated under section 441(b) for a fiscal year 
and remaining after the Secretary reserves 
funds under subsection (a) is less than the 
amount required to be allocated to the institu-
tions under this subsection, then the amount of 
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233 
the allocation to each institution shall be rat-
ably reduced. 
‘‘(B) ADDITIONAL
APPROPRIATIONS.—If 
the amounts allocated to each institution are 
ratably reduced under subparagraph (A) for a 
fiscal year and additional amounts are appro-
priated for such fiscal year, the amount allo-
cated to each institution from the additional 
amounts shall be increased on the same basis as 
the amounts under subparagraph (A) were re-
duced (until each institution receives the 
amount required to be allocated under this sub-
section). 
‘‘(c) ALLOCATION FORMULA FOR FISCAL YEAR 2024 
AND
EACH
SUCCEEDING
FISCAL
YEAR.—From the 
amount appropriated under section 441(b) for fiscal year 
2024 and each succeeding fiscal year and remaining after 
the Secretary reserves funds under subsection (a), the Sec-
retary shall allocate to each institution the fair share 
amount for the institution determined under subsection 
(d). 
‘‘(d) DETERMINATION OF FAIR SHARE AMOUNT.— 
‘‘(1) IN GENERAL.—The fair share amount for 
an institution for a fiscal year shall be equal to the 
sum of the following: 
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‘‘(A) An amount equal to 50 percent of the 
amount that bears the same proportion to the 
available appropriated amount for such fiscal 
year as the total amount of Federal Pell Grant 
funds disbursed at the institution for the pre-
ceding fiscal year bears to the total amount of 
Federal Pell Grant funds awarded at all institu-
tions participating under this part for the pre-
ceding fiscal year. 
‘‘(B) An amount equal to 50 percent of the 
amount that bears the same proportion to the 
available appropriated amount for such fiscal 
year as the total amount of the undergraduate 
student need at the institution for the preceding 
fiscal year bears to the total amount of under-
graduate student need at all institutions partici-
pating under this part for the preceding fiscal 
year. 
‘‘(2) DEFINITIONS.—In this subsection: 
‘‘(A) 
AVAILABLE
APPROPRIATED 
AMOUNT.—The term ‘available appropriated 
amount’ means— 
‘‘(i) the amount appropriated under 
section 441(b) for a fiscal year, minus 
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‘‘(ii) the amounts reserved under sub-
section (a) for such fiscal year. 
‘‘(B) AVERAGE COST OF ATTENDANCE.— 
The term ‘average cost of attendance’ means, 
with respect to an institution, the average of 
the attendance costs for a fiscal year for stu-
dents which shall include— 
‘‘(i) tuition and fees, computed on the 
basis of information reported by the insti-
tution to the Secretary, which shall in-
clude— 
‘‘(I) total revenue received by the 
institution from undergraduate tuition 
and fees for the second year preceding 
the year for which it is applying for 
an allocation; and 
‘‘(II) the institution’s enrollment 
for such second preceding year; 
‘‘(ii) standard living expenses equal to 
150 percent of the difference between the 
income protection allowance for a family of 
five with one in college and the income 
protection allowance for a family of six 
with one in college for a single independent 
student; and 
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‘‘(iii) books and supplies, in an 
amount not exceeding $800. 
‘‘(C) UNDERGRADUATE STUDENT NEED.— 
The term ‘undergraduate student need’ means, 
with respect to an undergraduate student for a 
fiscal year, the lesser of the following: 
‘‘(i) The total of the amount equal to 
(except the amount computed by this 
clause shall not be less than zero)— 
‘‘(I) the average cost of attend-
ance for the fiscal year, minus 
‘‘(II) the total amount of each 
such 
undergraduate 
student’s 
ex-
pected family contribution (computed 
in accordance with part F of this 
title) for the preceding fiscal year. 
‘‘(ii) $12,500. 
‘‘(e) RETURN OF SURPLUS ALLOCATED FUNDS.— 
‘‘(1) AMOUNT RETURNED.—If an institution re-
turns more than 10 percent of its allocation under 
subsection (d), the institution’s allocation for the 
next fiscal year shall be reduced by the amount re-
turned. 
‘‘(2) WAIVER.—The Secretary may waive this 
paragraph for a specific institution if the Secretary 
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finds that enforcing this paragraph would be con-
trary to the interest of the program. 
‘‘(f) FILING DEADLINES.—The Secretary shall, from 
time to time, set dates before which institutions must file 
applications for allocations under this part.’’. 
SEC. 443. GRANTS FOR FEDERAL WORK-STUDY PROGRAMS. 
Section 443 (20 U.S.C. 1087–53) is amended— 
(1) in subsection (b)— 
(A) in paragraph (1), in the matter pre-
ceding subparagraph (A), by striking ‘‘part- 
time’’; 
(B) in paragraph (2), by striking ‘‘except 
that—’’ and all that follows through ‘‘an insti-
tution may use a portion’’ and inserting ‘‘except 
that an institution may use a portion’’; 
(C) in paragraph (3), by inserting ‘‘under-
graduate’’ after ‘‘only’’; 
(D) in paragraph (4), by striking ‘‘300’’ 
and inserting ‘‘500’’; 
(E) in paragraph (5)— 
(i) by striking ‘‘shall not exceed 75 
percent’’ and inserting ‘‘shall not exceed 
75 percent in the first year after the date 
of the enactment of PROSPER Act, 65 
percent in the first succeeding fiscal year, 
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(H) in paragraph (11), by striking the pe-
riod at the end and inserting a semicolon; and 
(I) by adding at the end the following: 
‘‘(12) provide assurances that the institution 
will collect data from students and employers such 
that the employment made available from funds 
under this part will, to the maximum extent prac-
ticable, complement and reinforce the educational 
goals or career goals of each student receiving as-
sistance under this part; and 
‘‘(13) provide assurances that if the institution 
receives funds under section 442(a)(1)(A), such in-
stitution shall— 
‘‘(A) use such funds to compensate stu-
dents participating in the work-study program; 
and 
‘‘(B) prioritize the awarding of such funds 
to students— 
‘‘(i) 
who 
demonstrate 
exceptional 
need; or 
‘‘(ii) who are employed in work-based 
learning opportunities through the work- 
study program.’’; 
(2) in subsection (c)— 
(A) in paragraph (1)— 
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(i) by striking ‘‘program of part-time 
employment’’ and inserting the following: 
‘‘program— 
‘‘(A) of employment’’; and 
(ii) by inserting ‘‘or’’ after ‘‘sub-
section (b)(3);’’; and 
(iii) by adding at the end the fol-
lowing: 
‘‘(B) of full-time employment of its cooper-
ative education students in work for a private 
for-profit organization under an arrangement 
between the institution and such organization 
that complies with the requirements of subpara-
graphs (A) through (D) of subsection (b)(1) of 
this section and subsection (b)(4) of this sec-
tion;’’; 
(B) by striking paragraph (2); 
(C) in paragraph (4), by inserting ‘‘and 
complement and reinforce the educational goals 
or career goals of each student receiving assist-
ance under this part’’ after ‘‘relevant’’; and 
(D) by redesignating paragraphs (3), (4), 
and (5) as paragraphs (2), (3), and (4), respec-
tively; and 
(3) in subsection (d)— 
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(A) in paragraph (1)— 
(i) by striking ‘‘In any academic year 
to which subsection (b)(2)(A) applies, an 
institution shall ensure that’’ and inserting 
‘‘An institution may use the’’; and 
(ii) by striking ‘‘are used’’; and 
(B) in paragraph (3), by striking ‘‘may ex-
ceed 75 percent’’ and inserting ‘‘shall not ex-
ceed 50 percent’’. 
SEC. 444. FLEXIBLE USE OF FUNDS. 
Section 445(a) (20 U.S.C. 1087–55(a)) is amended— 
(1) in paragraph (2), by striking ‘‘in the same 
State’’ and inserting ‘‘described under section 
442(a)(1)(B)’’; and 
(2) by adding at the end the following new 
paragraph: 
‘‘(3) In addition to the carry-over sums authorized 
under paragraph (1) of this section, an institution may 
permit a student who completed the previous award period 
to continue to earn unearned portions of the student’s 
work-study award from that previous year if— 
‘‘(A) any reduction in the student’s need upon 
which the award was based is accounted for in the 
remaining portion; and 
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‘‘(B) the student is currently employed in a 
work-based learning position.’’. 
SEC. 445. JOB LOCATION AND DEVELOPMENT PROGRAMS. 
Section 446 (20 U.S.C. 1087–56) is amended— 
(1) in subsection (a)— 
(A) in paragraph (1)— 
(i) 
by 
striking 
‘‘10 
percent 
or 
$75,000’’ and inserting ‘‘20 percent or 
$150,000’’; and 
(ii) by striking ‘‘, including commu-
nity service jobs,’’; and 
(B) in paragraph (2), by striking ‘‘voca-
tional’’ and inserting ‘‘career’’; and 
(2) in subsection (b)— 
(A) by striking paragraph (2); 
(B) 
by 
redesignating 
paragraphs 
(3) 
through (6) as paragraphs (4) through (7), re-
spectively; and 
(C) by inserting before paragraph (4) the 
following: 
‘‘(2) provide satisfactory assurance that the in-
stitution will prioritize placing students with the low-
est expected family contribution and Federal work- 
study recipients in jobs located and developed under 
this section; 
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‘‘(3) provide a satisfactory assurance that the 
institution will locate and develop work-based learn-
ing opportunities through the job location develop-
ment programs;’’; and 
(D) in paragraph (7), by striking the pe-
riod and inserting ‘‘, including— 
‘‘(A) the number of students employed in 
work-based learning opportunities through such 
program; 
‘‘(B) 
the 
number 
of 
students 
dem-
onstrating exceptional need and employed in a 
work-study program through such program; and 
‘‘(C) 
the 
number 
of 
students 
dem-
onstrating exceptional need and employed in 
work-based learning opportunities through such 
program.’’. 
SEC. 446. COMMUNITY SERVICE. 
Section 447 (20 U.S.C. 1087–57) is repealed. 
SEC. 447. WORK COLLEGES. 
Section 448 (20 U.S.C. 1087–58) is amended— 
(1) in subsection (b)— 
(A) in paragraph (1)— 
(i) by striking ‘‘and part E’’; and 
(ii) by striking ‘‘appropriated’’ and in-
serting ‘‘allocated’’; 
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(B) in paragraph (2), by striking ‘‘appro-
priated pursuant to’’ and inserting ‘‘allocated 
under’’; 
(2) in subsection (c), by striking ‘‘authorized 
by’’ and inserting ‘‘allocated under’’; 
(3) in subsection (e)(1)— 
(A) in subparagraph (C), by striking ‘‘; 
and’’ and inserting a semicolon; and 
(B) by adding at the end the following: 
‘‘(E) has administered Federal work-study 
for at least 2 years; and’’; and 
(4) by amending subsection (f) to read as fol-
lows: 
‘‘(f) ALLOCATION OF RESERVED FUNDS.— 
‘‘(1) IN GENERAL.—Subject to paragraph (2), 
from the amount reserved under section 442(a)(2) 
for a fiscal year to carry out this section, the Sec-
retary shall allocate to each work college that sub-
mits an application under subsection (c) an amount 
equal to the amount that bears the same proportion 
to the amount appropriated for such fiscal year as 
the number of students eligible for employment 
under a work-study program under this part who 
are enrolled at the work college bears to the total 
number of students eligible for employment under a 
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work-study program under this part who are en-
rolled at all work colleges. 
‘‘(2) REALLOTMENT OF UNMATCHED FUNDS.— 
If a work college is unable to match funds received 
under paragraph (1) in accordance with subsection 
(d), any unmatched funds shall be returned to the 
Secretary and the Secretary shall reallot such funds 
on the same basis as funds are allocated under para-
graph (1).’’. 
PART D—FEDERAL DIRECT STUDENT LOAN 
PROGRAM 
SEC. 451. TERMINATION OF FEDERAL DIRECT LOAN PRO-
GRAM UNDER PART D AND OTHER CON-
FORMING AMENDMENTS. 
(a) APPROPRIATIONS.—Section 451 (20 U.S.C. 
1087a) is amended— 
(1) in subsection (a), by adding at the end the 
following: ‘‘No sums may be expended after Sep-
tember 30, 2024, with respect to loans under this 
part for which the first disbursement is after such 
date.’’; and 
(2) by adding at the end, the following: 
‘‘(c) TERMINATION OF AUTHORITY TO MAKE NEW 
LOANS.—Notwithstanding subsection (a) or any other 
provision of law— 
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‘‘(1) no new loans may be made under this part 
after September 30, 2024; and 
‘‘(2) no funds are authorized to be appro-
priated, or may be expended, under this Act, or any 
other Act to make loans under this part for which 
the first disbursement is after September 30, 2024, 
except as expressly authorized by an Act of Congress en-
acted after the date of enactment of the PROSPER Act. 
‘‘(d) STUDENT
ELIGIBILITY
BEGINNING
WITH 
AWARD YEAR 2019.— 
‘‘(1) NEW BORROWERS.—No loan may be made 
under this part to a new borrower for which the first 
disbursement is after June 30, 2019. 
‘‘(2) BORROWERS
WITH
OUTSTANDING
BAL-
ANCES.—Subject to paragraph (3), with respect to a 
borrower who, as of July 1, 2019, has an out-
standing balance of principal or interest owing on a 
loan made under this part, such borrower may— 
‘‘(A) in the case of such a loan made to 
the borrower for enrollment in a program of un-
dergraduate education, borrow loans made 
under this part for any program of under-
graduate education through the close of Sep-
tember 30, 2024; 
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‘‘(B) in the case of such a loan made to 
the borrower for enrollment in a program of 
graduate or professional education, borrow 
loans made under this part for any program of 
graduate or professional education through the 
close of September 30, 2024; and 
‘‘(C) in the case of such a loan made to 
the borrower on behalf of a dependent student 
for the student’s enrollment in a program of 
undergraduate education, borrow loans made 
under this part on behalf of such student 
through the close of September 30, 2024. 
‘‘(3) LOSS
OF
ELIGIBILITY.—A borrower de-
scribed in paragraph (2) who borrows a loan made 
under part E for which the first disbursement is 
made on or after July 1, 2019, shall lose the bor-
rower’s eligibility to borrow loans made under this 
part in accordance with paragraph (2).’’. 
(b) PERKINS LOAN CONFORMING AMENDMENT.— 
Section 453(c)(2)(A) (20 U.S.C. 1087c(c)(2)(A)) is 
amended by inserting ‘‘, as in effect on the day before 
the date of enactment of the PROSPER Act and pursuant 
to subsection 461(a),’’ after ‘‘part E’’. 
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248 
(c) APPLICABLE
INTEREST
RATES
AND
OTHER 
TERMS
AND
CONDITIONS.—Section 455 (20 U.S.C. 
1087e) is amended— 
(1) in subsection (a)— 
(A) in paragraph (1), by inserting ‘‘, and 
first disbursed before October 1, 2024,’’ after 
‘‘under this part’’; and 
(B) in paragraph (2), by inserting ‘‘, and 
first disbursed before October 1, 2024,’’ after 
‘‘under this part’’; 
(2) in subsection (b)(8)— 
(A) in the section heading, by inserting 
‘‘AND BEFORE OCTOBER 1, 2024’’ after ‘‘2013’’; 
(B) in subparagraph (A), by inserting 
‘‘and before October 1, 2024,’’ after ‘‘July 1, 
2013,’’; 
(C) in subparagraph (B), by inserting 
‘‘and before October 1, 2024,’’ after ‘‘July 1, 
2013,’’; 
(D) in subparagraph (C), by inserting 
‘‘and before October 1, 2024,’’ after ‘‘July 1, 
2013,’’; and 
(E) in subparagraph (D), by inserting 
‘‘and before October 1, 2024,’’ after ‘‘July 1, 
2013,’’; 
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249 
(3) in subsection (c)(2)(E), by inserting ‘‘, and 
before October 1, 2024’’ after ‘‘July 1, 2010’’; 
(4) in subsection (e)(7), in the matter preceding 
subparagraph (A), by inserting ‘‘, as in effect on the 
day before the date of enactment of the PROSPER 
Act and pursuant to subsection 461(a)’’ after ‘‘part 
E’’; 
(5) in subsection (g)— 
(A) by inserting ‘‘, and first disbursed be-
fore October 1, 2024,’’ after ‘‘under this part’’; 
and 
(B) by adding at the end the following: 
‘‘The authority to make consolidation loans 
under this subsection expires at the close of 
September 30, 2024. No loan may be made 
under this subsection for which the disburse-
ment is on or after October 1, 2024.’’; and 
(6) in subsection (o)— 
(A) in paragraph (1), by inserting ‘‘, and 
before October 1, 2024,’’ after ‘‘October 1, 
2008’’; and 
(B) in paragraph (2)— 
(i) by inserting ‘‘and before October 
1, 2024,’’ after ‘‘October 1, 2008,’’; and 
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(ii) by inserting ‘‘, and before October 
1, 2024’’ after ‘‘October 1, 2008’’. 
SEC. 452. BORROWER DEFENSES. 
Section 455(h) (20 U.S.C. 1087e(h)) is amended to 
read as follows: 
‘‘(h) BORROWER DEFENSES.— 
‘‘(1) IN GENERAL.—In any proceeding to collect 
on a loan made under this part to a borrower, the 
Secretary shall abide by the following: 
‘‘(A) In no event may the borrower recover 
any amount previously collected or be freed of 
amounts owed to the Secretary without submit-
ting an individually-filed application for ap-
proval. 
‘‘(B) In no event may the borrower recover 
amounts previously collected by the Secretary, 
in any action arising from or relating to a loan 
made under this part, in an amount in excess 
of the amount that has been paid by the bor-
rower on such loan. 
‘‘(C) In no event may the borrower recover 
amounts previously collected by the Secretary 
later than 3 years after the misconduct or 
breach of contract on behalf of the institution 
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251 
takes place that gives rise to the borrower to 
assert a defense to repayment of the loan. 
‘‘(D) In no event may anyone other than 
an administrative law judge or its equivalent 
preside over hearings of any kind related to ap-
plications submitted under this subsection. 
‘‘(E) In no event may the Secretary ap-
prove or disapprove the borrower’s application 
under this subsection without allowing for the 
equal consideration of evidence and arguments 
presented by a representative on behalf of the 
student or students and a representative on be-
half of the institution, if either such party 
makes a request. 
‘‘(F) In no event may the Secretary with-
hold from an institution any materials, facts, or 
evidence used when processing an application 
submitted by the borrower. 
‘‘(G) In no event may the borrower of a 
loan made, insured or guaranteed under this 
title (other than a loan made under this part or 
a Federal ONE Loan) submit an application 
under this subsection without consolidating the 
loans of the borrower into a Federal ONE Con-
solidation Loan. 
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‘‘(2) 
BORROWER
APPLICATION
REQUIRE-
MENTS.— 
‘‘(A) IN
GENERAL.—An application sub-
mitted by a borrower under this subsection to 
the Secretary shall— 
‘‘(i) certify the borrower’s receipt of 
loan proceeds, in whole or in part, to at-
tend the named institution of higher edu-
cation; 
‘‘(ii) provide evidence described in 
subparagraph (B) that supports a bor-
rower defense to repayment of the loan; 
and 
‘‘(iii) indicate whether the borrower 
has made a claim with respect to the infor-
mation underlying the borrower defense 
with any third party and, if so, the amount 
of any payment received by the borrower 
or credited to the borrower’s loan obliga-
tion. 
‘‘(B) EVIDENCE.—The borrower has a bor-
rower defense if— 
‘‘(i) the borrower, whether as an indi-
vidual or as a member of a class, or a gov-
ernmental agency, has obtained against the 
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253 
institution of higher education a non-
default, 
favorable 
contested 
judgment 
based on State or Federal law in a court 
or administrative tribunal of competent ju-
risdiction; 
‘‘(ii) the institution of higher edu-
cation for which the borrower received the 
loan made under this part failed to per-
form its obligations under the terms of a 
contract with the student; or 
‘‘(iii) the institution of higher edu-
cation described in clause (ii) or any of its 
representatives engaged directly in mar-
keting, recruitment or admissions activi-
ties, or any other institution of higher edu-
cation, organization, or person with whom 
such institution has an agreement to pro-
vide educational programs, or to provide 
marketing, advertising, recruiting, or ad-
missions services, made a substantial mis-
representation within the meaning of sec-
tion 487(c)(3)(B)(i)(II) that the borrower 
reasonably relied on when the borrower de-
cided to attend, or to continue attending, 
such institution. 
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254 
‘‘(3) SECRETARIAL
NOTIFICATION
REQUIRE-
MENTS.— 
‘‘(A) RECEIPT
OF
APPLICATION.—Upon 
receipt of a borrower’s application, the Sec-
retary— 
‘‘(i) if the borrower is not in default 
on the loan for which a borrower defense 
has been asserted, shall grant a forbear-
ance and notify the borrower of the option 
to decline the forbearance and to continue 
making payments on the loan; 
‘‘(ii) if the borrower is in default on 
the loan for which a borrower defense has 
been asserted— 
‘‘(I) shall suspend collection ac-
tivity on the loan until the Secretary 
issues a decision on the borrower’s 
claim; 
‘‘(II) shall notify the borrower of 
the suspension of collection activity 
and explain that collection activity will 
resume if the Secretary determines 
that the borrower does not qualify for 
a full discharge; and 
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255 
‘‘(III) shall notify the borrower 
of the option to continue making pay-
ments under a rehabilitation agree-
ment or other repayment agreement 
on the defaulted loan; and 
‘‘(iii) shall to the extent possible, no-
tify the institutions against which the ap-
plication is filed, which notification shall 
include— 
‘‘(I) the reasons that the applica-
tion has been filed; and 
‘‘(II) the amount of relief re-
quested. 
‘‘(B) APPROVED APPLICATION.—If a bor-
rower’s application is approved in full or in 
part, the Secretary shall— 
‘‘(i) notify the borrower and the insti-
tution in writing of that determination and 
of the relief provided; and 
‘‘(ii) inform the institution of the op-
portunity to request a one-time reconsider-
ation of the claim in the application if new 
evidence that was not previously provided 
can be identified. 
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‘‘(C) APPLICATION NOT APPROVED.—If a 
borrower’s application is not approved in full or 
in part, the Secretary— 
‘‘(i) shall notify the borrower and the 
institution of the reasons for the denial, 
the evidence that was relied upon, any por-
tion of the loan that is due and payable to 
the Secretary, whether the Secretary will 
reimburse any amounts previously col-
lected, and inform the borrower that the 
loan will return to its status prior to the 
borrower’s submission of the application; 
and 
‘‘(ii) shall inform the borrower of the 
opportunity to request a one-time reconsid-
eration of the claim in the application if 
new evidence that was not previously pro-
vided can be identified. 
‘‘(D) CONSOLIDATION.—During a pro-
ceeding for an individual borrower, the Sec-
retary may consolidate individually-filed appli-
cations that have common facts and claims and 
resolve the borrowers’ borrower defense claims 
for faster processing. 
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‘‘(E) NEW EVIDENCE DEFINED.—For pur-
poses of this paragraph, the term ‘new evidence’ 
means relevant evidence that the borrower or 
the institution did not previously provide and 
that was not identified in the final decision as 
evidence that was relied upon for the final deci-
sion. If accepted for reconsideration by the Sec-
retary, the Secretary shall follow the procedure 
under this paragraph. 
‘‘(4) CALCULATION OF RELIEF.—The Secretary 
shall determine the appropriate method for calcu-
lating the amount of relief to be awarded to a bor-
rower as a result of a proceeding described in this 
subsection based on the materials, facts, and evi-
dence presented during the proceeding. 
‘‘(5) FURTHER
RELIEF.—The Secretary may 
afford the borrower such further relief as the Sec-
retary determines is appropriate under the cir-
cumstances, but which shall not exceed the fol-
lowing: 
‘‘(A) 
Reimbursing 
the 
borrower 
for 
amounts paid toward the loan voluntarily or 
through enforced collection. 
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258 
‘‘(B) Restoring eligibility for assistance 
under this title after determining that the bor-
rower is not in default on the loan. 
‘‘(C) Updating reports to consumer report-
ing agencies to which the Secretary previously 
made adverse credit reports with regard to a 
loan made under this part. 
‘‘(6) RECOVERY.— 
‘‘(A) IN
GENERAL.—The Secretary may 
initiate an appropriate proceeding to require the 
institution of higher education whose act or 
omission resulted in the borrower’s successful 
defense against repayment of a loan made 
under this part to pay to the Secretary the 
amount of the loan to which the defense applies 
not later than 3 years from the end of the last 
award year in which the student attended the 
institution. 
‘‘(B) NOTICE.—The Secretary may initiate 
a proceeding to collect at any time if the insti-
tution received notice of the claim before the 
end of the later of the periods described in sub-
paragraph (A). For purposes of this subpara-
graph, notice includes receipt of— 
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259 
‘‘(i) actual notice from the borrower, 
from a representative of the borrower, or 
from the Department; 
‘‘(ii) a class action complaint assert-
ing relief for a class that may include the 
borrower; or 
‘‘(iii) written notice, including a civil 
investigative demand or other written de-
mand for information, from a Federal or 
State agency that has power to initiate an 
investigation into conduct of the institution 
of higher education relating to specific pro-
grams, periods, or practices that may have 
affected the borrower.’’. 
SEC. 453. ADMINISTRATIVE EXPENSES. 
Section 458(a) (20 U.S.C. 1087h)— 
(1) in paragraph (3)— 
(A) by striking ‘‘2007’’ each place it ap-
pears and inserting ‘‘2019’’; 
(B) by striking ‘‘2014’’ each place it ap-
pears and inserting ‘‘2024’’; and 
(C) by striking ‘‘part and part B, including 
the costs of the direct student loan programs 
under this part’’ and inserting ‘‘title’’; 
(2) in paragraph (6)— 
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(A) in subparagraph (B), by striking 
‘‘2010’’ and inserting ‘‘2019’’; and 
(B) in subparagraph (C), by striking 
‘‘training’’ and inserting ‘‘education’’; 
(3) by striking paragraph (7); and 
(4) by redesignating paragraph (8) as para-
graph (7). 
SEC. 454. LOAN CANCELLATION FOR TEACHERS. 
Section 460(b)(1)(A) (20 U.S.C. 1087j(b)(1)(A)) is 
amended by striking ‘‘that qualifies under section 
465(a)(2)(A) for loan cancellation for Perkins loan recipi-
ents who teach in such schools or locations’’ and inserting 
‘‘described in section 420N(b)(1)(B)’’. 
PART E—FEDERAL ONE LOANS 
SEC. 461. WIND-DOWN OF FEDERAL PERKINS LOAN PRO-
GRAM. 
(a) IN GENERAL.—Except as otherwise provided in 
this section and notwithstanding section 462, the provi-
sions of part E of title IV of the Higher Education Act 
of 1965 (20 U.S.C. 1087aa et seq.), as in effect on the 
day before the date of enactment of this Act, are deemed 
to be incorporated in this subsection as though set forth 
fully in this subsection, and shall have the same force and 
effect as on such day. 
(b) CLOSE-OUT AUDITS.— 
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(1) IN GENERAL.—In the case of an institution 
of higher education that desires to have a final audit 
of its participation under the program under part E 
of title IV of the Higher Education Act of 1965 (20 
U.S.C. 1087aa et seq.), as in effect pursuant to sub-
section (a), at the same time as its annual financial 
and compliance audit under section 487(c) of such 
Act (20 U.S.C. 1094(c)), such institution shall sub-
mit to the Secretary a request, in writing, for such 
an arrangement not later than 60 days after the in-
stitution terminates its participation under such pro-
gram. 
(2) TERMINATION
OF
PARTICIPATION.—For 
purposes of this subsection, an institution shall be 
considered to have terminated its participation under 
the program described in paragraph (1), if the insti-
tution— 
(A)(i) has made a determination not to 
service and collect student loans made available 
from funds under part E of title IV of the 
Higher Education Act of 1965 (20 U.S.C. 
1087aa et seq.), as in effect pursuant to sub-
section (a); or 
(ii) has completed the servicing and collec-
tion of such student loans; and 
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(B) has completed the asset distribution 
required under section 466(b) of the Higher 
Education Act of 1965 (20 U.S.C. 1087ff(b)), 
as in effect pursuant to subsection (a). 
(c) COLLECTION OF INTEREST ON CERTAIN STU-
DENT LOANS.—In the case of an institution of higher edu-
cation that, on or after October 1, 2006, loaned an 
amount to its student loan fund established under part 
E of title IV of the Higher Education Act of 1965 (20 
U.S.C. 1087aa et seq.), as in effect pursuant to subsection 
(a), for the purpose of making student loans from such 
fund, and that, before the date of enactment of this Act, 
has repaid to itself the amount loaned to such student loan 
fund, the institution shall collect any interest earned on 
such student loans. 
(d) ASSIGNMENT OF LOANS TO SECRETARY.—Not-
withstanding the requirements of section 463(a)(5) of the 
Higher Education Act of 1965 (20 U.S.C. 1087cc(a)(5)), 
as in effect pursuant to subsection (a), if an institution 
of higher education determines not to service and collect 
student loans made available from funds under part E of 
such Act (20 U.S.C. 1087aa et seq.), as so in effect— 
(1) the institution shall assign, during the re-
payment period, any notes or evidence of obligations 
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263 
of student loans made from such funds to the Sec-
retary; and 
(2) the Secretary shall deposit any sums col-
lected on such notes or obligations (less an amount 
not to exceed 30 percent of any such sums collected 
to cover that Secretary’s collection costs) into the 
Treasury of the United States. 
(e) CLOSED SCHOOL DISCHARGE.—The amendments 
made by section 427 to section 437(c) of the Higher Edu-
cation Act of 1965 (20 U.S.C. 1087), relating to closed 
school discharge, shall apply with respect to any loans dis-
charged on or after the date of enactment of this Act 
under section 464(g) of such Act (20 U.S.C. 10877dd(g)), 
as in effect pursuant to subsection (a)). 
SEC. 462. FEDERAL ONE LOAN PROGRAM. 
Part E of title IV (20 U.S.C. 1087aa et seq.) is 
amended to read as follows: 
‘‘SEC. 461. PROGRAM AUTHORITY. 
‘‘(a) IN GENERAL.—There are hereby made available, 
in accordance with the provisions of this part, such sums 
as may be necessary to make loans to all eligible students 
(and the eligible parents of such students) in attendance 
at participating institutions of higher education selected 
by the Secretary to enable such students to pursue their 
courses of study at such institutions during the period be-
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ginning July 1, 2019. Loans made under this part shall 
be made by participating institutions that have agree-
ments with the Secretary to originate loans. 
‘‘(b) DESIGNATION.—The program established under 
this part shall be referred to as the ‘Federal ONE Loan 
Program’. 
‘‘(c) ONE LOANS.—Except as otherwise specified in 
this part, loans made to borrowers under this part shall 
be known as ‘Federal ONE Loans’. 
‘‘SEC. 462. FUNDS FOR THE ORIGINATION OF ONE LOANS. 
‘‘(a) IN GENERAL.—The Secretary shall provide, on 
the basis of eligibility of students at each participating in-
stitution, and parents of such students, for such loans, 
funds for student and Parent Loans under this part di-
rectly to an institution of higher education that has an 
agreement with the Secretary under section 464(a) to par-
ticipate in the Federal ONE Loan Program under this 
part and that also has an agreement with the Secretary 
under section 464(b) to originate loans under this part. 
‘‘(b) PARALLEL TERMS.—Subsections (b), (c), and 
(d) of section 452 shall apply to the loan program under 
this part in the same manner that such subsections apply 
to the loan program under part D. 
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265 
‘‘SEC. 463. SELECTION OF INSTITUTIONS FOR PARTICIPA-
TION AND ORIGINATION. 
‘‘(a) GENERAL AUTHORITY.—The Secretary shall 
enter into agreements pursuant to section 464(a) with in-
stitutions of higher education to participate in the Federal 
ONE Loan Program under this part, and agreements pur-
suant to section 464(b) with institutions of higher edu-
cation, to originate loans in such program, for academic 
years beginning on or after July 1, 2019. Such agreements 
for the academic year 2019–2020 shall, to the extent fea-
sible, be entered into not later than January 1, 2019. 
‘‘(b) SELECTION CRITERIA AND PROCEDURE.—The 
application and selection procedure for an institution of 
higher education desiring to participate in the loan pro-
gram under this part shall be the application and selection 
procedure described in section 453(b) for an institution 
of higher education desiring to participate in the loan pro-
gram under part D. 
‘‘(c) ELIGIBLE INSTITUTIONS.—The Secretary may 
not select an institution of higher education for participa-
tion under this part unless such institution is an eligible 
institution under section 487(a). 
‘‘SEC. 464. AGREEMENTS WITH INSTITUTIONS. 
‘‘(a) PARTICIPATION AGREEMENTS.—An agreement 
with any institution of higher education for participation 
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in the Federal ONE Loan Program under this part 
shall— 
‘‘(1) provide for the establishment and mainte-
nance of a direct student loan program at the insti-
tution under which the institution will— 
‘‘(A) identify eligible students who seek 
student financial assistance at such institution 
in accordance with section 484; 
‘‘(B) provide a statement that certifies the 
eligibility of any student to receive a loan under 
this part that is not in excess of the annual or 
aggregate limit applicable to such loan, except 
that the institution may, in exceptional cir-
cumstances identified by the Secretary pursuant 
to section 454(a)(1)(C), refuse to certify a 
statement that permits a student to receive a 
loan under this part, if the reason for such ac-
tion is documented and provided in written 
form to such student; 
‘‘(C) set forth a schedule for disbursement 
of the proceeds of the loan in installments, con-
sistent with the requirements of section 465(a); 
and 
‘‘(D) provide timely and accurate informa-
tion, concerning the status of student borrowers 
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(and students on whose behalf parents borrow 
under this part) while such students are in at-
tendance at the institution and concerning any 
new information of which the institution be-
comes aware for such students (or their par-
ents) after such borrowers leave the institution, 
to the Secretary for the servicing and collecting 
of loans made under this part; 
‘‘(2) provide assurances that the institution will 
comply with requirements established by the Sec-
retary relating to student loan information with re-
spect to loans made under this part; 
‘‘(3) provide that the institution accepts respon-
sibility and financial liability stemming from its fail-
ure to perform its functions pursuant to the agree-
ment; 
‘‘(4) provide for the implementation of a quality 
assurance system, as established by the Secretary 
and developed in consultation with institutions of 
higher education, to ensure that the institution is 
complying with program requirements and meeting 
program objectives; and 
‘‘(5) provide that the institution will not charge 
any fees of any kind, however described, to student 
or parent borrowers for origination activities or the 
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provision of any information necessary for a student 
or parent to receive a loan under this part, or any 
benefits associated with such loan. 
‘‘(b) ORIGINATION.—An agreement with any institu-
tion of higher education for the origination of loans under 
this part shall— 
‘‘(1) supplement the agreement entered into in 
accordance with subsection (a); 
‘‘(2) include provisions established by the Sec-
retary that are similar to the participation agree-
ment provisions described in paragraphs (2), (3), 
(4), and (5) of subsection (a), as modified to relate 
to the origination of loans by the institution; 
‘‘(3) provide that the institution will originate 
loans to eligible students and parents in accordance 
with this part; and 
‘‘(4) provide that the note or evidence of obliga-
tion on the loan shall be the property of the Sec-
retary. 
‘‘(c) WITHDRAWAL PROCEDURES.— 
‘‘(1) IN
GENERAL.—An institution of higher 
education participating in the Federal ONE Loan 
Program under this part may withdraw from the 
program by providing written notice to the Secretary 
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of the intent to withdraw not less than 60 days be-
fore the intended date of withdrawal. 
‘‘(2) DATE OF WITHDRAWAL.—Except in cases 
in which the Secretary and an institution of higher 
education agree to an earlier date, the date of with-
drawal from the Federal ONE Loan Program under 
this part of an institution of higher education shall 
be the later of— 
‘‘(A) 60 days after the institution submits 
the notice required under paragraph (1); or 
‘‘(B) a date designated by the institution. 
‘‘SEC. 465. DISBURSEMENT OF STUDENT LOANS, LOAN LIM-
ITS, INTEREST RATES, AND LOAN FEES. 
‘‘(a) REQUIREMENTS FOR DISBURSEMENT OF STU-
DENT LOANS.— 
‘‘(1) MULTIPLE DISBURSEMENT REQUIRED.— 
‘‘(A) REQUIRED
DISBURSEMENTS.—The 
proceeds of any loan made under this part that 
is made for any period of enrollment shall be 
disbursed as follows: 
‘‘(i) The disbursement of the first in-
stallment of proceeds shall, with respect to 
any student other than a student described 
in subparagraph (B)(i), be made not more 
than 30 days prior to the beginning of the 
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period of enrollment, and not later than 30 
days after the beginning of such period of 
enrollment. 
‘‘(ii) The disbursement of an install-
ment of proceeds shall be made in substan-
tially equal monthly or weekly installments 
over the period of enrollment for which the 
loan was made, except that installments 
may be unequal as necessary to permit the 
institution to adjust for unequal costs 
(which may include upfront costs such as 
tuition and fees) incurred or estimated fi-
nancial assistance received by the student. 
‘‘(B) FIRST-YEAR STUDENTS.— 
‘‘(i) IN GENERAL.—The first install-
ment of the proceeds of any loan made 
under this part that is made to a student 
borrower who is entering the first year of 
a program of undergraduate education, 
and who has not previously obtained a loan 
under this part, shall not (regardless of the 
amount of such loan or the duration of the 
period of enrollment) be presented by the 
institution of higher education to the stu-
dent for endorsement until 30 days after 
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271 
the borrower begins a course of study, but 
may be delivered to the eligible institution 
prior to the end of that 30-day period. 
‘‘(ii) EXEMPTION.—An institution of 
higher education in which each educational 
program has a loan repayment rate (as de-
termined under section 481B(c)) for the 
most recent fiscal year for which data are 
available that is greater than 60 percent 
shall be exempt from the requirements of 
clause (i). 
‘‘(2) WITHDRAWING
OF
SUCCEEDING
DIS-
BURSEMENTS.— 
‘‘(A) WITHDRAWING
STUDENTS.—In the 
case in which the Secretary is informed by the 
borrower or the institution that the borrower 
has ceased to be enrolled before the disburse-
ment of the second or any succeeding install-
ment, the Secretary shall withhold such dis-
bursement. Any disbursement which is so with-
held shall be credited to the borrower’s loan and 
treated as a prepayment on the principal of the 
loan. 
‘‘(B) 
STUDENTS
RECEIVING
OVER- 
AWARDS.—If the sum of a disbursement for any 
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272 
borrower and the other financial aid obtained 
by borrower exceeds the amount of assistance 
for which the borrower is eligible under this 
title, the institution the borrower, or dependent 
student, in the case of a parent borrower, is at-
tending shall withhold and return to the Sec-
retary the portion (or all) of such installment 
that exceeds such eligible amount, except that 
overawards permitted pursuant to section 
443(b)(4) shall not be construed to be over-
awards for purposes of this subparagraph. Any 
portion (or all) of a disbursement installment 
which is so returned shall be credited to the 
borrower’s loan and treated as a prepayment on 
the principal of the loan. 
‘‘(3) EXCLUSION OF CONSOLIDATION AND FOR-
EIGN STUDY LOANS.—The provisions of this sub-
section shall not apply in the case of a Federal ONE 
Consolidation Loan, or a loan made to a student to 
cover the cost of attendance in a program of study 
abroad approved by the home eligible institution if 
each of the educational programs of such home eligi-
ble institution has a loan repayment rate (as cal-
culated under section 481B(c)) for the most recent 
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273 
fiscal year for which data are available of greater 
than 70 percent. 
‘‘(4) BEGINNING
OF
PERIOD
OF
ENROLL-
MENT.—For purposes of this subsection, a period of 
enrollment begins on the first day that classes begin 
for the applicable period of enrollment. 
‘‘(b) AMOUNT OF LOAN.— 
‘‘(1) IN GENERAL.—The determination of the 
amount of a loan disbursed by an eligible institution 
under this section shall be the lesser of— 
‘‘(A) an amount that is equal to the esti-
mated loan amount, as determined by the insti-
tution by calculating— 
‘‘(i) the estimated cost of attendance 
at the institution, minus 
‘‘(ii)(I) any estimated financial assist-
ance reasonably available to such student, 
including assistance that the student will 
receive from a Federal grant, including a 
Federal Pell Grant, a State grant, an insti-
tutional grant, or a scholarship or grant 
from another source, that is known to the 
institution at the time the student’s deter-
mination of need is made; and 
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‘‘(II) in the case of a loan to a 
parent, the amount of a loan awarded 
under this part to the parent’s child; 
or 
‘‘(B) the maximum Federal loan amount 
for which such borrower is eligible in accord-
ance with paragraph (2). 
‘‘(2) LOAN LIMITS.— 
‘‘(A) ANNUAL LIMITS.—Except as provided 
under subparagraph (B), (C), or (D), the 
amount of loans made under this part that an 
eligible student or parent borrower may borrow 
for an academic year shall be as follows: 
‘‘(i) UNDERGRADUATE
STUDENTS.— 
With respect to enrollment in a program of 
undergraduate education at an eligible in-
stitution— 
‘‘(I) in the case of a dependent 
student— 
‘‘(aa) who has not success-
fully completed the first year of a 
program of undergraduate edu-
cation, $7,500; 
‘‘(bb) who has successfully 
completed such first year but has 
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not successfully completed the re-
mainder of a program of under-
graduate education, $8,500; and 
‘‘(cc) who has successfully 
completed the first and second 
years of a program of under-
graduate education but has not 
successfully completed the re-
mainder 
of 
such 
program, 
$9,500; 
‘‘(II) in the case of an inde-
pendent student, or a dependent stu-
dent whose parents are unable to bor-
row a loan under this part on behalf 
of such student— 
‘‘(aa) who has not success-
fully completed the first year of a 
program of undergraduate edu-
cation, $11,500; 
‘‘(bb) who has successfully 
completed such first year but has 
not successfully completed the re-
mainder of a program of under-
graduate education, $12,500; and 
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276 
‘‘(cc) who has successfully 
completed the first and second 
years of a program of under-
graduate education but has not 
successfully completed the re-
mainder 
of 
such 
program, 
$14,500; and 
‘‘(III) in the case of a student 
who is enrolled in a program of un-
dergraduate education that is less 
than one academic year, the maximum 
annual loan amount that such student 
may receive may not exceed the 
amount that bears the same ratio to 
the amount specified in subclause (I) 
or (II), as applicable, as the length of 
such program measured in semester, 
trimester, quarter, or clock hours 
bears to one academic year. 
‘‘(ii) GRADUATE
OR
PROFESSIONAL 
STUDENTS.—In the case of a graduate or 
professional student for enrollment in a 
program of graduate or professional edu-
cation at an eligible institution, $28,500. 
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‘‘(iii) PARENT
BORROWERS.—In the 
case of a parent borrowing a loan under 
this part on behalf of a dependent student 
for the student’s enrollment in a program 
of undergraduate education at an eligible 
institution, $12,500 per each such student. 
‘‘(iv) 
COURSEWORK
FOR
UNDER-
GRADUATE
ENROLLMENT.—With respect 
to enrollment in coursework specified in 
section 484(b)(3)(B) necessary for enroll-
ment in an undergraduate degree or cer-
tificate program— 
‘‘(I) in the case of a dependent 
student, $2,625; 
‘‘(II) in the case of a parent bor-
rowing a loan under this part on be-
half of a dependent student for the 
student’s 
enrollment 
in 
such 
coursework, $6,000; and 
‘‘(III) in the case an independent 
student, or a dependent student whose 
parents are unable to borrow a loan 
under this part on behalf of such stu-
dent, $8,625. 
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278 
‘‘(v) COURSEWORK FOR GRADUATE OR 
PROFESSIONAL ENROLLMENT OR TEACHER 
EMPLOYMENT.—With respect to the enroll-
ment of a student who has obtained a bac-
calaureate degree in coursework specified 
in section 484(b)(3)(B) necessary for en-
rollment in a graduate or professional de-
gree or certificate program, or coursework 
specified in section 484(b)(4)(B) necessary 
for a professional credential or certification 
from a State required for employment as a 
teacher in an elementary or secondary 
school, in the case of a student (without 
regard to whether the student is a depend-
ent 
student 
or 
dependent 
student), 
$12,500. 
‘‘(B) AGGREGATE LIMITS.—Except as pro-
vided under subparagraph (C), (D), or (E), the 
maximum aggregate amount of loans under this 
part and parts B and D that an eligible student 
or parent borrower may borrow shall be— 
‘‘(i) for enrollment in a program of 
undergraduate education at an eligible in-
stitution, including for enrollment in 
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279 
coursework described in clause (iv) or (v) 
of subparagraph (A)— 
‘‘(I) in the case of a dependent 
student, $39,000; 
‘‘(II) in the case of an inde-
pendent student, or an dependent stu-
dent whose parents are unable to re-
ceive a loan under this part on behalf 
of such student, $60,250; and 
‘‘(III) in the case of a parent 
borrowing a loan under this part on 
behalf of a dependent student for the 
student’s enrollment in such a pro-
gram, $56,250 per each such student.; 
and 
‘‘(ii) in the case of a graduate or pro-
fessional student for enrollment in a pro-
gram of graduate or professional education 
at an eligible institution, $150,000. 
‘‘(C) APPLICATION
OF
LIMITS
TO
BOR-
ROWERS WITH PART B OR D LOANS.— 
‘‘(i) GRADUATE
OR
PROFESSIONAL 
STUDENTS.—In the case of a graduate or 
professional student who is not described 
in subparagraph (E) and who has received 
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280 
loans made under part B or D for enroll-
ment in a graduate or professional pro-
gram at an eligible institution, the total 
amount of which equal or exceed $28,500 
as of the time of disbursement, the student 
may continue to borrow the amount of 
loans under this part necessary to complete 
such program without regard to the aggre-
gate limit under subparagraph (B)(ii), ex-
cept that the— 
‘‘(I) amount of such loans shall 
not exceed the annual limits under 
subparagraph (A)(ii) for any academic 
year beginning after June 30, 2019; 
and 
‘‘(II) authority to borrow loans in 
accordance with this subclause shall 
terminate at the end of the academic 
year ending before September 30, 
2024. 
‘‘(ii) PARENT
BORROWERS.—In the 
case of a parent borrower who has received 
loans made under part B or D on behalf 
of a dependent student for the student’s 
enrollment in a program of undergraduate 
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281 
education at an eligible institution, the 
total amount of which equal or exceed 
$12,500 for such student as of the time of 
disbursement, the parent borrower may 
continue to borrow the amount of loans 
under this part necessary for such student 
to complete such program without regard 
to the aggregate limit under subparagraph 
(B)(i)(III), except that the— 
‘‘(I) amount of such loans shall 
not exceed the annual limits under 
subparagraph (A)(iii) for any aca-
demic year beginning after June 30, 
2019; and 
‘‘(II) the authority to borrow 
loans in accordance with this sub-
clause shall terminate at the end of 
the academic year ending before Sep-
tember 30, 2024. 
‘‘(D) INSTITUTIONAL
DETERMINED
LIM-
ITS.— 
‘‘(i) IN
GENERAL.—Notwithstanding 
any other provision of this subsection, an 
eligible institution (at the discretion of a 
financial aid administrator at the institu-
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282 
tion) may prorate or limit the amount of 
a loan any student enrolled in a program 
of study at that institution may borrow 
under this part for an academic year— 
‘‘(I) if the institution, using the 
most recently available data from the 
Bureau of Labor Statistics for the av-
erage starting salary in the region in 
which the institution is located for 
typical occupations pursued by grad-
uates of such program, can reasonably 
demonstrate that student debt levels 
are or would be excessive for such 
program; 
‘‘(II) in a case in which the stu-
dent is enrolled on a less than full- 
time basis or the student is enrolled 
for less than the period of enrollment 
to which the annual loan limit applies 
under this subsection, based on the 
student’s enrollment status; 
‘‘(III) based on the credential 
level (such as a degree, certificate, or 
other recognized educational creden-
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283 
tial) that the student would attain 
upon completion of such program; or 
‘‘(IV) based on the year of the 
program for which the student is 
seeking such loan. 
‘‘(ii) APPLICATION
TO
ALL
STU-
DENTS.—Any proration or limiting of loan 
amounts under clause (i) shall be applied 
in the same manner to all students en-
rolled in the institution or program of 
study. 
‘‘(iii) INCREASES
FOR
INDIVIDUAL 
STUDENTS.—Upon the request of a stu-
dent whose loan amount for an academic 
year has been prorated or limited under 
clause (i), an eligible institution (at the 
discretion of the financial aid adminis-
trator at the institution) may increase such 
loan amount to an amount not exceeding 
the annual loan amount applicable to such 
student under this subparagraph for such 
academic year if such student dem-
onstrates special circumstances or excep-
tional need. 
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284 
‘‘(E) INCREASES FOR CERTAIN GRADUATE 
OR PROFESSIONAL STUDENTS.— 
‘‘(i) 
ADDITIONAL
ANNUAL 
AMOUNTS.—Subject to clause (iii) of this 
subparagraph, in addition to the loan 
amount for an academic year described in 
subparagraph (A)(ii)— 
‘‘(I) a graduate or professional 
student who is enrolled in a program 
of study to become a doctor of 
allopathic medicine, doctor of osteo-
pathic medicine, doctor of dentistry, 
doctor of veterinary medicine, doctor 
of optometry, doctor of podiatric med-
icine, doctor of naturopathic medicine, 
or doctor of naturopathy may borrow 
an additional— 
‘‘(aa) in the case of a pro-
gram with a 9-month academic 
year, $20,000 for an academic 
year; or 
‘‘(bb) in the case of a pro-
gram with a 12-month academic 
year, $26,667 for an academic 
year; and 
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285 
‘‘(II) a graduate or professional 
student who is enrolled in a program 
of study to become a doctor of phar-
macy, doctor of chiropractic medicine, 
or a physician’s assistant, or receive a 
graduate degree in public health, doc-
toral degree in clinical psychology, or 
a masters or doctoral degree in health 
administration may borrow an addi-
tional— 
‘‘(aa) in the case of a pro-
gram with a 9-month academic 
year, $12,500 for an academic 
year; or 
‘‘(bb) in the case of a pro-
gram with a 12-month academic 
year, $16,667 for an academic 
year. 
‘‘(ii) AGGREGATE LIMIT.—Subject to 
clause (iii) of this subparagraph, the max-
imum aggregate amount of loans under 
this part and parts B and D that a stu-
dent described in clause (i) may borrow 
shall be $235,500. 
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286 
‘‘(iii) LIMITATION.—In the case of a 
graduate or professional student described 
in clause (i) of this subparagraph who has 
received loans made under part B or D for 
enrollment in a graduate or professional 
program at an eligible institution, the total 
amount of which equal or exceed $34,000 
as of the time of disbursement, the student 
may continue to borrow the amount of 
loans under this part necessary to complete 
such program without regard to the aggre-
gate limit under clause (ii) of this subpara-
graph, except that the— 
‘‘(I) amount of such loans shall 
not exceed the annual limits under 
clause (i) of this subparagraph for 
any academic year beginning after 
June 30, 2019; and 
‘‘(II) authority to borrow loans in 
accordance with this subclause shall 
terminate at the end of the academic 
year ending before September 30, 
2024. 
‘‘(c) INTEREST RATE PROVISIONS
FOR FEDERAL 
ONE LOANS.— 
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287 
‘‘(1) UNDERGRADUATE ONE LOANS.—For Fed-
eral ONE Loans issued to undergraduate students, 
the applicable rate of interest shall, for loans dis-
bursed during any 12-month period beginning on 
July 1 and ending on June 30, be determined on the 
preceding June 1 and be equal to the lesser of— 
‘‘(A) a rate equal to the high yield of the 
10-year Treasury note auctioned at the final 
auction held prior to such June 1 plus 2.05 per-
cent; or 
‘‘(B) 8.25 percent. 
‘‘(2) GRADUATE
AND
PROFESSIONAL
ONE 
LOANS.—For Federal ONE Loans issued to grad-
uate or professional students, the applicable rate of 
interest shall, for loans disbursed during any 12- 
month period beginning on July 1 and ending on 
June 30, be determined on the preceding June 1 
and be equal to the lesser of— 
‘‘(A) a rate equal to the high yield of the 
10-year Treasury note auctioned at the final 
auction held prior to such June 1 plus 3.6 per-
cent; or 
‘‘(B) 9.5 percent. 
‘‘(3) PARENT ONE LOANS.—For Federal ONE 
Parent Loans, the applicable rate of interest shall, 
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288 
for loans disbursed during any 12-month period be-
ginning on July 1 and ending on June 30, be deter-
mined on the preceding June 1 and be equal to the 
lesser of— 
‘‘(A) a rate equal to the high yield of the 
10-year Treasury note auctioned at the final 
auction held prior to such June 1 plus 4.6 per-
cent; or 
‘‘(B) 10.5 percent. 
‘‘(4) CONSOLIDATION
LOANS.—Any Federal 
ONE Consolidation Loan for which the application 
is received on or after July 1, 2019, shall bear inter-
est at an annual rate on the unpaid principal bal-
ance of the loan that is equal to the weighted aver-
age of the interest rates on the loans consolidated, 
rounded to the nearest higher one-eighth of one per-
cent. 
‘‘(5) PUBLICATION.—The Secretary shall deter-
mine the applicable rates of interest under this sub-
section after consultation with the Secretary of the 
Treasury and shall publish such rate in the Federal 
Register as soon as practicable after the date of de-
termination. 
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289 
‘‘(6) RATE.—The applicable rate of interest de-
termined under this subsection for a loan under this 
part shall be fixed for the period of the loan. 
‘‘(d) PROHIBITION ON CERTAIN REPAYMENT INCEN-
TIVES.—Notwithstanding any other provision of this part, 
the Secretary is prohibited from authorizing or providing 
any repayment incentive or subsidy not otherwise author-
ized under this part to encourage on-time repayment of 
a loan under this part, including any reduction in the in-
terest paid by a borrower of such a loan, except that the 
Secretary may provide for an interest rate reduction of 
not more than 0.25 percentage points for a borrower who 
agrees to have payments on such a loan automatically deb-
ited from a bank account. 
‘‘(e) LOAN FEE.—The Secretary shall not charge the 
borrower of a loan made under this part an origination 
fee. 
‘‘(f) ARMED FORCES STUDENT LOAN INTEREST 
PAYMENT PROGRAM.— 
‘‘(1) AUTHORITY.—Using funds received by 
transfer to the Secretary under section 2174 of title 
10, United States Code, for the payment of interest 
on a loan made under this part to a member of the 
Armed Forces, the Secretary shall pay the interest 
on the loan as due for a period not in excess of 36 
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290 
consecutive months. The Secretary may not pay in-
terest on such a loan out of any funds other than 
funds that have been so transferred. 
‘‘(2) DEFERMENT.—During the period in which 
the Secretary is making payments on a loan under 
paragraph (1), the Secretary shall grant the bor-
rower administrative deferment, in the form of a 
temporary cessation of all payments on the loan 
other than the payments of interest on the loan that 
are made under that paragraph. 
‘‘(g) NO ACCRUAL OF INTEREST FOR ACTIVE DUTY 
SERVICE MEMBERS.— 
‘‘(1) IN GENERAL .—Notwithstanding any other 
provision of this part and in accordance with para-
graphs (2) and (4), interest shall not accrue for an 
eligible military borrower on a loan made under this 
part. 
‘‘(2) CONSOLIDATION LOANS.—In the case of 
any consolidation loan made under this part, interest 
shall not accrue pursuant to this subsection only on 
such portion of such loan as was used to repay a 
loan made under this part or a loan made under 
part D for which the first disbursement was made 
on or after October 1, 2008, and before July 1, 
2019. 
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291 
‘‘(3) ELIGIBLE MILITARY BORROWER.—In this 
subsection, the term ‘eligible military borrower’ 
means an individual who— 
‘‘(A)(i) is serving on active duty during a 
war or other military operation or national 
emergency; or 
‘‘(ii) is performing qualifying National 
Guard duty during a war or other military op-
eration or national emergency; and 
‘‘(B) is serving in an area of hostilities in 
which service qualifies for special pay under 
section 310 of title 37, United States Code. 
‘‘(4) LIMITATION.—An individual who qualifies 
as an eligible military borrower under this sub-
section may receive the benefit of this subsection for 
not more than 60 months. 
‘‘SEC. 466. REPAYMENT. 
‘‘(a) REPAYMENT PERIOD; COMMENCEMENT OF RE-
PAYMENT.— 
‘‘(1) REPAYMENT PERIOD.— 
‘‘(A) IN GENERAL.—In the case of a Fed-
eral ONE Loan— 
‘‘(i) subject to clause (ii), the repay-
ment period shall— 
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‘‘(I) exclude any period of au-
thorized 
deferment 
under 
section 
469A; and 
‘‘(II) begin the day after 6 
months after the date the student 
ceases to carry at least one-half the 
normal full-time academic workload 
(as determined by the institution); 
and 
‘‘(ii) interest shall begin to accrue or 
be paid by the borrower on the day the 
loan is disbursed. 
‘‘(B) 
CONSOLIDATION
AND
PARENT 
LOANS.—In the case of a Federal ONE Consoli-
dation Loan or a Federal ONE Parent Loan, 
the repayment period shall— 
‘‘(i) exclude any period of authorized 
deferment; and 
‘‘(ii) begin— 
‘‘(I) on the day the loan is dis-
bursed; or 
‘‘(II) if the loan is disbursed in 
multiple installments, on the day of 
the last such disbursement. 
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293 
‘‘(C) ACTIVE
DUTY
EXCLUSION.—There 
shall be excluded from the 6-month period that 
begins on the date on which a student ceases to 
carry at least one-half the normal full-time aca-
demic workload as described in subparagraph 
(A) any period not to exceed 3 years during 
which a borrower who is a member of a reserve 
component of the Armed Forces named in sec-
tion 10101 of title 10, United States Code, is 
called or ordered to active duty for a period of 
more than 30 days (as defined in section 
101(d)(2) of such title). Such period of exclu-
sion shall include the period necessary to re-
sume enrollment at the borrower’s next avail-
able regular enrollment period. 
‘‘(2) PAYMENT OF PRINCIPAL AND INTEREST.— 
‘‘(A) COMMENCEMENT OF REPAYMENT.— 
Repayment of principal on loans made under 
this part shall begin at the beginning of the re-
payment period described in paragraph (1). 
‘‘(B) CAPITALIZATION OF INTEREST.— 
‘‘(i) IN GENERAL.—Interest on loans 
made under this part for which payments 
of principal are not required during the 6- 
month period described in paragraph 
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294 
(1)(A)(i)(II) or for which payments are de-
ferred under section 469A shall— 
‘‘(I) be paid monthly or quar-
terly; or 
‘‘(II) be added to the principal 
amount of the loan only— 
‘‘(aa) when the loan enters 
repayment; 
‘‘(bb) at the expiration of a 
the 6-month period described in 
paragraph (1)(A)(i)(II); 
‘‘(cc) at the expiration of a 
period of deferment, unless other-
wise exempted; or 
‘‘(dd) when the borrower de-
faults. 
‘‘(ii) MAXIMUM AGGREGATE LIMIT.— 
Interest capitalized shall not be deemed to 
exceed the amount equal to the maximum 
aggregate limit of the loan under section 
465(b). 
‘‘(C) NOTICE.—Not less than 60 days, and 
again not less than 30 days, prior to the antici-
pated commencement of the repayment period 
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295 
for a Federal ONE Loan, the Secretary shall 
provide notice to the borrower— 
‘‘(i) that interest will accrue before re-
payment begins; 
‘‘(ii) that interest will be added to the 
principal amount of the loan in the cases 
described in subparagraph (B)(i)(II); and 
‘‘(iii) of the borrower’s option to begin 
loan repayment prior to such repayment 
period. 
‘‘(b) REPAYMENT AMOUNT.— 
‘‘(1) IN GENERAL.—The total of the payments 
by a borrower, except as otherwise provided by an 
income-based repayment plan under subsection (d), 
during any year of any repayment period with re-
spect to the aggregate amount of all loans made 
under this part to the borrower shall not (unless the 
borrower and the Secretary otherwise agree), be less 
than $600 or the balance of all such loans (together 
with interest thereon), whichever amount is less (but 
in no instance less than the amount of interest due 
and payable, notwithstanding any repayment plan 
described in subsection (c)). 
‘‘(2) AMORTIZATION.— 
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296 
‘‘(A) INTEREST RATE.—The amount of the 
periodic payment and the repayment schedule 
for a loan made under this part shall be estab-
lished by assuming an interest rate equal to the 
applicable rate of interest at the time of the 
first disbursement of the loan. 
‘‘(B) 
ADJUSTMENT
TO
REPAYMENT 
AMOUNT.—The note or other written evidence 
of a loan under this part shall require that the 
amount of the periodic payment will be adjusted 
annually in order to reflect adjustments in— 
‘‘(i) interest rates occurring as a con-
sequence of variable rate loans under parts 
B or D paid in conjunction with Federal 
ONE Loans under subsection (d)(1)(B)(i); 
or 
‘‘(ii) principal occurring as a con-
sequence of interest capitalization under 
subsection (a)(2)(B). 
‘‘(c) REPAYMENT PLANS.— 
‘‘(1) DESIGN AND SELECTION.—Not more than 
6 months prior to the date on which a borrower’s 
first payment on a loan made under this part is due, 
the Secretary shall offer the borrower two plans for 
repayment of such loan, including principal and in-
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297 
terest on the loan. The borrower shall be entitled to 
accelerate, without penalty, repayment on the bor-
rower’s loans under this part. The borrower may 
choose— 
‘‘(A) a standard repayment plan with a 
fixed monthly repayment amount paid over a 
fixed period of time, not to exceed 10 years; or 
‘‘(B) an income-based repayment plan 
under subsection (d). 
‘‘(2) SELECTION
BY
SECRETARY.—If a bor-
rower of a loan made under this part does not select 
a repayment plan described in paragraph (1), the 
Secretary shall provide the borrower with the repay-
ment plan described in paragraph (1)(A). 
‘‘(3) CHANGES IN SELECTIONS.— 
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the borrower of a loan made under 
this part may change the borrower’s selection of 
a repayment plan under paragraph (1), or the 
Secretary’s selection of a plan for the borrower 
under paragraph (2), as the case may be, under 
such terms and conditions as may be estab-
lished by the Secretary, except that the Sec-
retary may not establish any terms or condi-
tions with respect to whether a borrower may 
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298 
change the borrower’s repayment plan. Nothing 
in this subsection shall prohibit the Secretary 
from encouraging struggling borrowers from en-
rolling in the income-driven repayment plan de-
scribed in section 466(d). 
‘‘(B) 
SAME
REPAYMENT
PLAN
RE-
QUIRED.—All loans made under this part to a 
borrower shall be repaid under the same repay-
ment plan under paragraph (1), except that the 
borrower may repay a Federal ONE Parent 
Loan or an Excepted Federal ONE Consolida-
tion Loan (as defined in subsection (d)(5)) sep-
arately from other loans made under this part 
to the borrower. 
‘‘(4) REPAYMENT AFTER DEFAULT.—The Sec-
retary may require any borrower who has defaulted 
on a loan made under this part to— 
‘‘(A) pay all reasonable collection costs as-
sociated with such loan; and 
‘‘(B) repay the loan pursuant to the in-
come-based repayment plan under subsection 
(d). 
‘‘(5) REPAYMENT
PERIOD.—For purposes of 
calculating the repayment period under this sub-
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299 
section, such period shall commence at the time the 
first payment of principal is due from the borrower. 
‘‘(6) INSTALLMENTS.—Repayment of loans 
under this part shall be in installments in accord-
ance with the repayment plan selected under para-
graph (1) and commencing at the beginning of the 
repayment period determined under paragraph (5). 
‘‘(d) INCOME-BASED REPAYMENT PROGRAM.— 
‘‘(1) IN GENERAL.—Notwithstanding any other 
provision of this Act, the Secretary shall carry out 
a program under which— 
‘‘(A) a borrower of any loan made under 
this part (other than a Federal ONE Parent 
Loan or an Excepted Federal ONE Consolida-
tion Loan) may elect to have the borrower’s ag-
gregate monthly payment for all such loans— 
‘‘(i) not to exceed the result obtained 
by dividing by 12, 15 percent of the result 
obtained by calculating, on at least an an-
nual basis, the amount by which— 
‘‘(I) the adjusted gross income of 
the borrower or, if the borrower is 
married and files a Federal income 
tax return jointly with or separately 
from the borrower’s spouse, the ad-
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justed gross income of the borrower 
and the borrower’s spouse, exceeds 
‘‘(II) 150 percent of the poverty 
line applicable to the borrower’s fam-
ily size as determined under section 
673(2) of the Community Services 
Block Grant Act (42 U.S.C. 9902(2)); 
and 
‘‘(ii) not to be less than $25; 
‘‘(B) the Secretary adjusts the calculated 
monthly payment under subparagraph (A), if— 
‘‘(i) in addition to the loans described 
in subparagraph (A), the borrower has an 
outstanding loan made under part B or D 
(other than an excepted parent loan or an 
excepted consolidation loan, as such terms 
are defined in section 493C(a)), by deter-
mining the borrower’s adjusted monthly 
payment by multiplying— 
‘‘(I) the calculated monthly pay-
ment, by 
‘‘(II) the percentage of the total 
outstanding principal amount of the 
borrower’s loans described in the mat-
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ter preceding subclause (I), which are 
described in subparagraph (A); 
‘‘(ii) the borrower and borrower’s 
spouse have loans described in subpara-
graph (A) and outstanding loans under 
part B or D (other than an excepted par-
ent loan or an excepted consolidation loan, 
as such terms are defined in section 
493C(a)) and have filed a joint or separate 
Federal income tax return, in which case 
the Secretary determines— 
‘‘(I) each borrower’s percentage 
of the couple’s total outstanding 
amount of principal on such loans; 
‘‘(II) the adjusted monthly pay-
ment for each borrower by multiplying 
the borrower’s calculated monthly 
payment by the percentage deter-
mined under subclause (I) applicable 
to the borrower; and 
‘‘(III) if the borrower’s loans are 
held by multiple holders, the bor-
rower’s adjusted monthly payment for 
loans described in subparagraph (A) 
by multiplying the adjusted monthly 
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payment determined under subclause 
(II) by the percentage of the total 
outstanding principal amount of the 
borrower’s loans described in the mat-
ter preceding subclause (I), which are 
described in subparagraph (A); 
‘‘(C) the holder of such a loan shall apply 
the borrower’s monthly payment under this sub-
section first toward interest due on the loan, 
next toward any fees due on the loan, and then 
toward the principal of the loan; 
‘‘(D) any principal due and not paid under 
subparagraph (C) shall be deferred; 
‘‘(E) any interest due and not paid under 
subparagraph (C) shall be capitalized, at the 
time the borrower— 
‘‘(i) ends the election to make income- 
based repayment under this subsection; or 
‘‘(ii) begins making payments of not 
less than the amount specified in subpara-
graph (G)(i); 
‘‘(F) the amount of time the borrower 
makes monthly payments under subparagraph 
(A) may exceed 10 years; 
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‘‘(G) if the borrower no longer wishes to 
continue the election under this subsection, 
then— 
‘‘(i) the maximum monthly payment 
required to be paid for all loans made to 
the borrower under this part (other than a 
Federal ONE Parent Loan or an Excepted 
Federal ONE Consolidation Loan) shall 
not exceed the monthly amount calculated 
under subsection (c)(1)(A), based on a 10- 
year repayment period, when the borrower 
first made the election described in this 
subsection; and 
‘‘(ii) the amount of time the borrower 
is permitted to repay such loans may ex-
ceed 10 years; 
‘‘(H) the Secretary shall cancel any out-
standing balance (other than an amount equal 
to the interest accrued during any period of in- 
school deferment under subparagraph (A), (B), 
or (F) of section 469A(b)(1)) due on all loans 
made under this part (other than a Federal 
ONE Parent Loan or an Excepted Federal 
ONE Consolidation Loan) to a borrower— 
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‘‘(i) who, at any time, elected to par-
ticipate in income-based repayment under 
subparagraph (A); 
‘‘(ii) whose final monthly payment for 
such loans prior to the loan cancellation 
under this subparagraph was made under 
such income-based repayment; and 
‘‘(iii) who has repaid, pursuant to in-
come-based repayment under subparagraph 
(A), a standard repayment plan under sub-
section (c)(1)(A), or a combination— 
‘‘(I) an amount of principal and 
interest on such loans that is equal to 
the total amount of principal and in-
terest that the borrower would have 
repaid under a standard repayment 
plan under subsection (c)(1)(A), based 
on a 10-year repayment period, when 
the borrower entered repayment on 
such loans; and 
‘‘(II) the amount of interest that 
accrues during a period of deferment 
described in section 469A prior to the 
completion of the repayment period 
described in subclause (I) on the por-
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305 
tion of such loans remaining to be re-
paid in accordance with such sub-
clause; and 
‘‘(I) a borrower who is repaying a loan 
made under this part pursuant to income-based 
repayment under subparagraph (A) may elect, 
at any time during the 10-year period beginning 
on the date the borrower entered repayment on 
the loan, to terminate repayment pursuant to 
such income-based repayment and repay such 
loan under the standard repayment plan. 
‘‘(2) ELIGIBILITY DETERMINATIONS.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
establish procedures for annual verification of a 
borrower’s annual income and the annual 
amount due on the total amount of loans made 
under this part (other than a Federal ONE 
Parent Loan or an Excepted Federal ONE 
Consolidation Loan), and such other procedures 
as are necessary to implement effectively in-
come-based repayment under this subsection, 
including the procedures established with re-
spect to section 493C. 
‘‘(B) INCOME
INFORMATION.—The Sec-
retary may obtain such information as is rea-
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306 
sonably necessary regarding the income of a 
borrower (and the borrower’s spouse, if applica-
ble) of a loan made under this part that is, or 
may be, repaid pursuant to income-based repay-
ment under this subsection, for the purpose of 
determining the annual repayment obligation of 
the borrower. The Secretary shall establish pro-
cedures for determining the borrower’s repay-
ment obligation on that loan for such year, and 
such other procedures as are necessary to im-
plement effectively the income-based repayment 
under this subsection. 
‘‘(C) BORROWER REQUIREMENTS.—A bor-
rower who chooses to repay a loan made under 
this part pursuant to income-based repayment 
under this subsection, and— 
‘‘(i) for whom adjusted gross income 
is available and reasonably reflects the bor-
rower’s current income, shall, to the max-
imum extent practicable, provide to the 
Secretary the Federal tax information of 
the borrower; and 
‘‘(ii) for whom adjusted gross income 
is unavailable or does not reasonably re-
flect the borrower’s current income, shall 
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provide to the Secretary other documenta-
tion of income satisfactory to the Sec-
retary, which documentation the Secretary 
may use to determine an appropriate re-
payment schedule. 
‘‘(3) NOTIFICATION TO BORROWERS.—The Sec-
retary shall establish procedures under which a bor-
rower of a loan made under this part who chooses 
to repay such loan pursuant to income-based repay-
ment under this subsection is notified of the terms 
and conditions of such plan, including notification 
that if a borrower considers that special cir-
cumstances, such as a loss of employment by the 
borrower or the borrower’s spouse, warrant an ad-
justment in the borrower’s loan repayment as deter-
mined using the borrower’s Federal tax return infor-
mation, or the alternative documentation described 
in paragraph (2)(C), the borrower may contact the 
Secretary, who shall determine whether such adjust-
ment is appropriate, in accordance with criteria es-
tablished by the Secretary. 
‘‘(4) REDUCED PAYMENT PERIODS.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
authorize borrowers meeting the criteria under 
subparagraph (B) to make monthly payments 
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of $5 for a period not in excess of 3 years, ex-
cept that— 
‘‘(i) for purposes of subparagraph 
(B)(i), the Secretary may authorize re-
duced payments in 6-month increments, 
beginning on the date the borrower pro-
vides to the Secretary the evidence de-
scribed in subclause (I) or (II) of subpara-
graph (B)(i); and 
‘‘(ii) for purposes of subparagraph 
(B)(ii), the Secretary may authorize re-
duced payments in 3-month increments, 
beginning on the date the borrower pro-
vides to the Secretary the evidence de-
scribed in subparagraph (B)(ii)(I). 
‘‘(B) ELIGIBILITY DETERMINATIONS.—The 
Secretary shall authorize borrowers to make re-
duced payments under this paragraph in the 
following circumstances: 
‘‘(i) In a case of borrower who is seek-
ing and unable to find full-time employ-
ment, as demonstrated by providing to the 
Secretary— 
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309 
‘‘(I) evidence of the borrower’s 
eligibility for unemployment benefits 
to the Secretary; or 
‘‘(II) a written certification or an 
equivalent that— 
‘‘(aa) the borrower has reg-
istered with a public or private 
employment agency that is avail-
able to the borrower within a 50- 
mile radius of the borrower’s 
home address; and 
‘‘(bb) in the case of a bor-
rower that has been granted a re-
quest under this subparagraph, 
the borrower has made at least 
six diligent attempts during the 
preceding six-month period to se-
cure full-time employment. 
‘‘(ii) The Secretary determines that, 
due to high medical expenses, the $25 
monthly payment the borrower would oth-
erwise make would be an extreme economic 
hardship to the borrower, if— 
‘‘(I) the borrower documents the 
reason why the $25 minimum pay-
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310 
ment is an extreme economic hard-
ship; and 
‘‘(II) the borrower recertifies the 
reason for the $5 minimum payment 
on a three-month basis. 
‘‘(C) DEFINITION.—For purpose of this 
section, the term ‘full-time employment’ means 
employment that will provide not less than 30 
hours of work a week and is expected to con-
tinue for a period of not less than 3 months. 
‘‘(5) DEFINITIONS.—In this subsection: 
‘‘(A) ADJUSTED
GROSS
INCOME.—The 
term ‘adjusted gross income’ has the meaning 
given the term in section 62 of the Internal 
Revenue Code of 1986. 
‘‘(B) EXCEPTED FEDERAL ONE CONSOLI-
DATION
LOAN.—The term ‘Excepted Federal 
ONE Consolidation Loan’ means a Federal 
ONE Consolidation Loan if the proceeds of 
such loan were used to discharge the liability 
on— 
‘‘(i) a Federal ONE Parent Loan; 
‘‘(ii) a Federal Direct PLUS Loan, or 
a loan under section 428B, that is made, 
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311 
insured, or guaranteed on behalf of a de-
pendent student; 
‘‘(iii) an excepted consolidation loan 
(defined in section 493C); or 
‘‘(iv) a Federal ONE Consolidation 
loan that was used to discharge the liabil-
ity on a loan described in clause (i), (ii), 
or (iii). 
‘‘(e) RULES OF CONSTRUCTION.—Nothing in this 
section shall be construed to authorize, with respect to 
loans made under this part— 
‘‘(1) eligibility for a repayment plan that is not 
described in subsection (c)(1) or section 468(c); or 
‘‘(2) the Secretary to— 
‘‘(A) carry out a repayment plan, which is 
not described in subsection (c)(1) or section 
468(c); or 
‘‘(B) modify a repayment plan that is de-
scribed in subsection (c)(1) or section 468(c) in 
a manner that results in any net cost to the 
Federal Government, as determined jointly by 
the Secretary, the Secretary of the Treasury, 
and the Director of the Office of Management 
and Budget. 
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312 
‘‘SEC. 467. FEDERAL ONE PARENT LOANS. 
‘‘(a) AUTHORITY TO BORROW.— 
‘‘(1) AUTHORITY AND ELIGIBILITY.—The par-
ent of a dependent student shall be eligible to bor-
row funds under this section in amounts specified in 
subsection (b), if— 
‘‘(A) the parent is borrowing to pay for the 
educational costs of a dependent student who 
meets the requirements for an eligible student 
under section 484(a); 
‘‘(B) the parent meets the applicable re-
quirements concerning defaults and overpay-
ments that apply to a student borrower; 
‘‘(C) the parent complies with the require-
ments for submission of a statement of edu-
cational purpose that apply to a student bor-
rower under section 484(a)(4)(A) (other than 
the completion of a statement of selective serv-
ice registration status); 
‘‘(D) the parent meets the requirements 
that apply to a student under section 437(a); 
‘‘(E) the parent— 
‘‘(i) does not have an adverse credit 
history; or 
‘‘(ii) has an adverse credit history, but 
has— 
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‘‘(I) obtained an endorser who 
does not have an adverse credit his-
tory or documented to the satisfaction 
of the Secretary that extenuating cir-
cumstances exist in accordance with 
paragraph (4)(D); and 
‘‘(II) completed Federal ONE 
Parent Loan counseling offered by the 
Secretary; and 
‘‘(F) in the case of a parent who has been 
convicted of, or has pled nolo contendere or 
guilty to, a crime involving fraud in obtaining 
funds under this title, such parent has com-
pleted the repayment of such funds to the Sec-
retary, or to the holder in the case of a loan 
under this title obtained by fraud. 
‘‘(2) TERMS, CONDITIONS, AND
BENEFITS.— 
Except as provided in subsections (c), (d), and (e), 
loans made under this section shall have the same 
terms, conditions, and benefits as all other loans 
made under this part. 
‘‘(3) PARENT BORROWERS.— 
‘‘(A) DEFINITION.—For purposes of this 
section, the term ‘parent’ includes a student’s 
biological or adoptive mother or father or the 
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314 
student’s stepparent, if the biological parent or 
adoptive mother or father has remarried at the 
time of filing the common financial reporting 
form under section 483(a), and that spouse’s 
income and assets would have been taken into 
account when calculating the student’s expected 
family contribution. 
‘‘(B) 
CLARIFICATION.—Whenever 
nec-
essary to carry out the provisions of this sec-
tion, the terms ‘student’ and ‘borrower’ as used 
in this part shall include a parent borrower 
under this section. 
‘‘(4) ADVERSE CREDIT HISTORY DEFINITIONS 
AND ADJUSTMENTS.— 
‘‘(A) DEFINITIONS.—For purposes of this 
section: 
‘‘(i) IN GENERAL.—The term ‘adverse 
credit history’, when used with respect to 
a borrower, means that the borrower— 
‘‘(I) has one or more debts with 
a total combined outstanding balance 
equal to or greater than $2,085, as 
may be adjusted by the Secretary in 
accordance with subparagraph (B), 
that— 
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‘‘(aa) are 90 or more days 
delinquent as of the date of the 
credit report; or 
‘‘(bb) have been placed in 
collection or charged off during 
the two years preceding the date 
of the credit report; or 
‘‘(II) has been the subject of a 
default determination, bankruptcy dis-
charge, foreclosure, repossession, tax 
lien, wage garnishment, or write-off of 
a debt under this title during the 5 
years preceding the date of the credit 
report. 
‘‘(ii) 
CHARGED
OFF.—The 
term 
‘charged off’ means a debt that a creditor 
has written off as a loss, but that is still 
subject to collection action. 
‘‘(iii) IN COLLECTION.—The term ‘in 
collection’ means a debt that has been 
placed with a collection agency by a cred-
itor or that is subject to more intensive ef-
forts by a creditor to recover amounts 
owed from a borrower who has not re-
sponded satisfactorily to the demands rou-
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316 
tinely made as part of the creditor’s billing 
procedures. 
‘‘(B) ADJUSTMENTS.— 
‘‘(i) IN GENERAL.—In a case of a bor-
rower with a debt amount described in 
subparagraph (A)(i), the Secretary shall 
increase such debt amount, or its inflation- 
adjusted equivalent, if the Secretary deter-
mines that an inflation adjustment to such 
debt amount would result in an increase of 
$100 or more to such debt amount. 
‘‘(ii) INFLATION
ADJUSTMENT.—In 
making the inflation adjustment under 
clause (i), the Secretary shall— 
‘‘(I) use the annual average per-
cent change of the All Items Con-
sumer Price Index for All Urban Con-
sumers, before seasonal adjustment, 
as the measurement of inflation; and 
‘‘(II) if the adjustment calculated 
under subclause (I) is equal to or 
greater than $100— 
‘‘(aa) add the adjustment to 
the debt amount, or its inflation- 
adjusted equivalent; and 
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317 
‘‘(bb) round up to the near-
est $5. 
‘‘(iii) PUBLICATION.—The Secretary 
shall publish a notice in the Federal Reg-
ister announcing any increase to the 
threshold amount specified in subpara-
graph (A)(i)(I). 
‘‘(C) TREATMENT OF ABSENCE OF CREDIT 
HISTORY.—For purposes of this section, the 
Secretary shall not consider the absence of a 
credit history as an adverse credit history and 
shall not deny a Federal ONE Parent loan on 
that basis. 
‘‘(D) EXTENUATING
CIRCUMSTANCES.— 
For purposes of this section, the Secretary may 
determine that extenuating circumstances exist 
based on documentation that may include— 
‘‘(i) an updated credit report for the 
parent; or 
‘‘(ii) a statement from the creditor 
that the parent has repaid or made satis-
factory arrangements to repay a debt that 
was considered in determining that the 
parent has an adverse credit history 
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318 
‘‘(b) LIMITATION BASED ON NEED.—Any loan under 
this section may be counted as part of the expected family 
contribution in the determination of need under this title, 
but no loan may be made to any parent under this section 
for any academic year in excess of the lesser of— 
‘‘(1) the student’s estimated cost of attendance 
minus the student’s estimated financial assistance 
(as calculated under section 465(b)(1)(A)); or 
‘‘(2) the established annual loan limits for such 
loan under section 465(b). 
‘‘(c) PARENT
LOAN
DISBURSEMENT.—All loans 
made under this section shall be disbursed in accordance 
with the requirements of section 465(a) and shall be dis-
bursed by— 
‘‘(1) an electronic transfer of funds from the 
lender to the eligible institution; or 
‘‘(2) a check copayable to the eligible institution 
and the parent borrower. 
‘‘(d) PAYMENT OF PRINCIPAL AND INTEREST.— 
‘‘(1) COMMENCEMENT
OF
REPAYMENT.—Re-
payment of principal on loans made under this sec-
tion shall commence not later than 60 days after the 
date such loan is disbursed by the Secretary, subject 
to deferral— 
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319 
‘‘(A) during any period during which the 
parent borrower meets the conditions required 
for a deferral under section 469A; and 
‘‘(B) upon the request of the parent bor-
rower, during the 6-month period beginning, if 
the parent borrower is also a student, the day 
after the date such parent borrower ceases to 
carry at least one-half such a workload. 
‘‘(2) MAXIMUM
REPAYMENT
PERIOD.—The 
maximum repayment period for a loan made under 
this section shall be a 10-year period beginning on 
the commencement of such period described in para-
graph (1). 
‘‘(3) CAPITALIZATION OF INTEREST.—Interest 
on loans made under this section for which pay-
ments of principal are deferred pursuant to para-
graph (1) shall, if agreed upon by the borrower and 
the Secretary— 
‘‘(A) be paid monthly or quarterly; or 
‘‘(B) be added to the principal amount of 
the loan not more frequently than quarterly by 
the Secretary. 
‘‘(4) APPLICABLE RATES OF INTEREST.—Inter-
est on loans made pursuant to this section shall be 
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320 
at the applicable rate of interest provided in section 
465(c)(3) for loans made under this section. 
‘‘(5) AMORTIZATION.—Section 466(b)(2) shall 
apply to each loan made under this section. 
‘‘(e) VERIFICATION OF IMMIGRATION STATUS AND 
SOCIAL SECURITY NUMBER.—A parent who wishes to 
borrow funds under this section shall be subject to 
verification of the parent’s— 
‘‘(1) immigration status in the same manner as 
immigration status is verified for students under 
section 484(g); and 
‘‘(2) Social Security number in the same man-
ner as Social Security numbers are verified for stu-
dents under section 484(p). 
‘‘(f) DESIGNATION.—For purposes of this Act, loans 
described in this section shall be known as ‘Federal ONE 
Parent Loans’. 
‘‘SEC. 468. FEDERAL ONE CONSOLIDATION LOANS. 
‘‘(a) TERMS AND CONDITIONS.—In making consoli-
dation loans under this section, the Secretary shall— 
‘‘(1) not make such a loan to an eligible bor-
rower, unless the Secretary has determined, in ac-
cordance with reasonable and prudent business prac-
tices, for each loan being consolidated, that the 
loan— 
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321 
‘‘(A) is a legal, valid, and binding obliga-
tion of the borrower; and 
‘‘(B) was made and serviced in compliance 
with applicable laws and regulations; 
‘‘(2) ensure that each consolidation loan made 
under this section will bear interest, and be subject 
to repayment, in accordance with subsection (c), ex-
cept as otherwise provided under subsections (f) and 
(g) of section 465; 
‘‘(3) ensure that each consolidation loan will be 
made, notwithstanding any other provision of this 
part limiting the annual or aggregate principal 
amount for all loans made to a borrower, in an 
amount which is equal to the sum of the unpaid 
principal and accrued unpaid interest and late 
charges of all eligible student loans received by the 
eligible borrower which are selected by the borrower 
for consolidation; 
‘‘(4) ensure that the proceeds of each consolida-
tion loan will be paid by the Secretary to the holder 
or holders of the loans so selected to discharge the 
liability on such loans; 
‘‘(5) disclose to a prospective borrower, in sim-
ple and understandable terms, at the time the Sec-
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retary provides an application for a consolidation 
loan— 
‘‘(A) with respect to a loan made, insured, 
or guaranteed under this part, part B, or part 
D, that if a borrower includes such a loan in 
the consolidation loan— 
‘‘(i) that the consolidation would re-
sult in a loss of loan benefits; and 
‘‘(ii) which specific loan benefits the 
borrower would lose, including the loss of 
eligibility for loan forgiveness (including 
loss of eligibility for interest rate forgive-
ness), cancellation, deferment, forbearance, 
interest-free periods, or loan repayment 
programs that would have been available 
for such a loan; and 
‘‘(B) with respect to Federal Perkins 
Loans under this part (as this part was in ef-
fect on the day before the date of enactment of 
the PROSPER Act)— 
‘‘(i) that if a borrower includes such a 
Federal Perkins Loan in the consolidation 
loan, the borrower will lose all interest-free 
periods that would have been available for 
the Federal Perkins Loan, such as— 
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‘‘(I) the periods during which no 
interest accrues on such loan while 
the borrower is enrolled in an institu-
tion of higher education at least half- 
time; 
‘‘(II) the grace period under sec-
tion 464(c)(1)(A) (as such section was 
in effect on the day before the date of 
enactment of the PROSPER Act); 
and 
‘‘(III) the periods during which 
the borrower’s student loan repay-
ments are deferred under section 
464(c)(2) (as such section was in ef-
fect on the day before the date of en-
actment of the PROSPER Act); and 
‘‘(ii) that if a borrower includes such 
a Federal Perkins Loan in the consolida-
tion loan, the borrower will no longer be el-
igible for cancellation of part or all of the 
Federal Perkins Loan under section 465(a) 
(as such section was in effect on the day 
before the date of enactment of the PROS-
PER Act); and 
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‘‘(iii) the occupations listed in section 
465 that qualify for Federal Perkins Loan 
cancellation under section 465(a) (as such 
section was in effect on the day before the 
date of enactment of the PROSPER Act); 
‘‘(C) the repayment plans that are avail-
able to the borrower under section (c); 
‘‘(D) the options of the borrower to prepay 
the consolidation loan, to pay such loan on a 
shorter schedule, and to change repayment 
plans; 
‘‘(E) the consequences of default on the 
consolidation loan; and 
‘‘(F) that by applying for a consolidation 
loan, the borrower is not obligated to agree to 
take the consolidation loan; and 
‘‘(6) not make such a loan to an eligible bor-
rower, unless— 
‘‘(A) the borrower has agreed to notify the 
Secretary promptly concerning any change of 
address; and 
‘‘(B) the loan is evidenced by a note or 
other written agreement which— 
‘‘(i) is made without security and 
without endorsement, except that if— 
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‘‘(I) the borrower is a minor and 
such note or other written agreement 
executed by him or her would not, 
under applicable law, create a binding 
obligation, endorsement may be re-
quired; or 
‘‘(II) the borrower desires to in-
clude in the consolidation loan, a Fed-
eral ONE Parent Loan, or a loan 
under section 428B, or a Federal Di-
rect PLUS loan, made on behalf of a 
dependent student, endorsement shall 
be required; 
‘‘(ii) provides for the payment of in-
terest and the repayment of principal as 
described in paragraph (2); 
‘‘(iii) provides that during any period 
for which the borrower would be eligible 
for a deferral under section 469A, which 
period shall not be included in determining 
the repayment schedule pursuant to sub-
section (c)— 
‘‘(I) periodic installments of prin-
cipal need not be paid, but interest 
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shall accrue and be paid by the bor-
rower or be capitalized; and 
‘‘(II) except as otherwise pro-
vided under subsections (f) and (g) of 
section 465, the Secretary shall not 
pay interest on any portion of the 
consolidation loan, without regard to 
whether the portion repays Federal 
Stafford Loans for which the student 
borrower received an interest subsidy 
under section 428 or Federal Direct 
Stafford Loans for which the bor-
rower received an interest subsidy 
under section 455; 
‘‘(iv) entitles the borrower to accel-
erate without penalty repayment of the 
whole or any part of the loan; and 
‘‘(v) contains a notice of the system of 
disclosure concerning such loan to con-
sumer reporting agencies under section 
430A, and provides that the Secretary on 
request of the borrower will provide infor-
mation on the repayment status of the 
note to such consumer reporting agencies. 
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327 
‘‘(b) NONDISCRIMINATION
IN
LOAN
CONSOLIDA-
TION.—The Secretary shall not discriminate against any 
borrower seeking a loan under this section— 
‘‘(1) based on the number or type of eligible 
student loans the borrower seeks to consolidate; 
‘‘(2) based on the type or category of institu-
tion of higher education that the borrower attended; 
‘‘(3) based on the interest rate to be charged to 
the borrower with respect to the consolidation loan; 
or 
‘‘(4) with respect to the types of repayment 
schedules offered to such borrower. 
‘‘(c) PAYMENT OF PRINCIPAL AND INTEREST.— 
‘‘(1) REPAYMENT SCHEDULES.— 
‘‘(A) ESTABLISHMENT.— 
‘‘(i) IN
GENERAL.—Notwithstanding 
any other provision of this part, the Sec-
retary shall— 
‘‘(I) establish repayment terms 
as will promote the objectives of this 
section; and 
‘‘(II) provide a borrower with the 
option of the standard-repayment plan 
or 
income-based 
repayment 
plan 
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under section 466(d) in lieu of such 
repayment terms. 
‘‘(ii) SCHEDULE TERMS.—The repay-
ment terms established under clause (i)(I) 
shall require that if the sum of the consoli-
dation loan and the amount outstanding on 
other eligible student loans to the indi-
vidual— 
‘‘(I) is less than $7,500, then 
such consolidation loan shall be repaid 
in not more than 10 years; 
‘‘(II) is equal to or greater than 
$7,500 but less than $10,000, then 
such consolidation loan shall be repaid 
in not more than 12 years; 
‘‘(III) is equal to or greater than 
$10,000 but less than $20,000, then 
such consolidation loan shall be repaid 
in not more than 15 years; 
‘‘(IV) is equal to or greater than 
$20,000 but less than $40,000, then 
such consolidation loan shall be repaid 
in not more than 20 years; 
‘‘(V) is equal to or greater than 
$40,000 but less than $60,000, then 
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329 
such consolidation loan shall be repaid 
in not more than 25 years; or 
‘‘(VI) is equal to or greater than 
$60,000, then such consolidation loan 
shall be repaid in not more than 30 
years. 
‘‘(B) 
LIMITATION.—The 
amount 
out-
standing on other eligible student loans which 
may be counted for the purpose of subpara-
graph (A) may not exceed the amount of the 
consolidation loan. 
‘‘(2) 
ADDITIONAL
REPAYMENT
REQUIRE-
MENTS.—Notwithstanding paragraph (1)— 
‘‘(A) except in the case of an income-based 
repayment schedule under section 466(d), a re-
payment schedule established with respect to a 
consolidation loan shall require that the min-
imum installment payment be an amount equal 
to not less than the accrued unpaid interest; 
and 
‘‘(B) an income-based repayment schedule 
under section 466(d) shall not be available to a 
consolidation loan borrower who— 
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‘‘(i) used the proceeds of a Federal 
ONE Consolidation loan to discharge the 
liability— 
‘‘(I) on a loan under section 
428B made on behalf of a dependent 
student; 
‘‘(II) a Federal Direct PLUS 
loan made on behalf of a dependent 
student; 
‘‘(III) a Federal ONE Parent 
loan; or 
‘‘(IV) an excepted consolidation 
loan (defined in section 493C); or 
‘‘(ii) used the proceeds of a subse-
quent Federal ONE Consolidation loan to 
discharge the liability on a Federal ONE 
Consolidation loan described in clause (i). 
‘‘(3) COMMENCEMENT
OF
REPAYMENT.—Re-
payment of a consolidation loan shall commence 
within 60 days after all holders have, pursuant to 
subsection (a)(4), discharged the liability of the bor-
rower on the loans selected for consolidation. 
‘‘(4) INTEREST
RATE.—A consolidation loan 
made under this section shall bear interest at an an-
nual rate described in section 465(c)(4). 
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‘‘(d) INSURANCE RULE.—Any insurance premium 
paid by the borrower under subpart I of part A of title 
VII of the Public Health Service Act with respect to a 
loan made under that subpart and consolidated under this 
section shall be retained by the student loan insurance ac-
count established under section 710 of the Public Health 
Service Act. 
‘‘(e) DEFINITIONS.—For the purpose of this section: 
‘‘(1) ELIGIBLE BORROWER.— 
‘‘(A) IN GENERAL.—The term ‘eligible bor-
rower’ means a borrower who— 
‘‘(i) is not subject to a judgment se-
cured through litigation with respect to a 
loan under this title or to an order for 
wage garnishment under section 488A; and 
‘‘(ii) at the time of application for a 
consolidation loan— 
‘‘(I) is in repayment status as de-
termined under section 466(a)(1); 
‘‘(II) is in a grace period pre-
ceding repayment; or 
‘‘(III) is a defaulted borrower 
who has made arrangements to repay 
the obligation on the defaulted loans 
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332 
satisfactory to the holders of the de-
faulted loans. 
‘‘(B) TERMINATION OF STATUS AS AN ELI-
GIBLE BORROWER.—An individual’s status as 
an eligible borrower under this section termi-
nates upon receipt of a consolidation loan under 
this section, except that— 
‘‘(i) an individual who receives eligible 
student loans after the date of receipt of 
the consolidation loan may receive a subse-
quent consolidation loan; 
‘‘(ii) loans received prior to the date 
of the consolidation loan may be added 
during the 180-day period following the 
making of the consolidation loan; 
‘‘(iii) loans received following the 
making of the consolidation loan may be 
added during the 180-day period following 
the making of the consolidation loan; 
‘‘(iv) loans received prior to the date 
of the first consolidation loan may be 
added to a subsequent consolidation loan; 
and 
‘‘(v) an individual may obtain a subse-
quent consolidation loan for the purpose— 
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‘‘(I) of income-based repayment 
under section 466(d) only if the loan 
has been submitted for default aver-
sion or if the loan is already in de-
fault; 
‘‘(II) of using the no accrual of 
interest for active duty service mem-
bers benefit offered under section 
465(g); or 
‘‘(III) of submitting an applica-
tion under section 469B(d) for a bor-
rower defense to repayment of a loan 
made, insured, or guaranteed under 
this title. 
‘‘(2) ELIGIBLE STUDENT LOANS.—For the pur-
pose of paragraph (1), the term ‘eligible student 
loans’ means loans— 
‘‘(A) made, insured, or guaranteed under 
part B, and first disbursed before July 1, 2010, 
including loans on which the borrower has de-
faulted (but has made arrangements to repay 
the obligation on the defaulted loans satisfac-
tory to the Secretary or guaranty agency, 
whichever insured the loans); 
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334 
‘‘(B) made under part D of this title, and 
first disbursed before July 1, 2019; 
‘‘(C) made under this part before Sep-
tember 30, 2017; 
‘‘(D) made under this part on or after the 
date of enactment of the PROSPER Act; 
‘‘(E) made under subpart II of part A of 
title VII of the Public Health Service Act; or 
‘‘(F) made under part E of title VIII of 
the Public Health Service Act. 
‘‘(f) DESIGNATION.—For purposes of this Act, loans 
described in this section shall be known as ‘Federal ONE 
Consolidation Loans’. 
‘‘SEC. 469. TEMPORARY LOAN CONSOLIDATION AUTHORITY. 
‘‘(a) IN GENERAL.—A borrower who has one or more 
loans in two or more of the categories described in sub-
section (b), and who has not yet entered repayment on 
one or more of those loans in any of the categories, may 
consolidate all of the loans of the borrower that are de-
scribed in subsection (b) into a Federal ONE Consolida-
tion Loan during the period described in subsection (c). 
‘‘(b) CATEGORIES OF LOANS THAT MAY BE CON-
SOLIDATED.—The categories of loans that may be consoli-
dated under this section are— 
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335 
‘‘(1) loans made under this part before October 
1, 2017 and on or after July 1, 2019; 
‘‘(2) loans purchased by the Secretary pursuant 
to section 459A; 
‘‘(3) loans made under part B that are held by 
an eligible lender, as such term is defined in section 
435(d); and 
‘‘(4) loans made under part D. 
‘‘(c) TIME PERIOD IN WHICH LOANS MAY BE CON-
SOLIDATED.—The Secretary may make a Federal ONE 
Consolidation Loan under this section to a borrower whose 
application for such Federal ONE Consolidation Loan is 
received on or after July 1, 2019, and before July 1, 2024. 
‘‘(d) TERMS OF LOANS.—A Federal ONE Consolida-
tion Loan made under this subsection shall have the same 
terms and conditions as a Federal ONE Consolidation 
Loan made under section 468, except that in determining 
the applicable rate of interest on the Federal ONE Con-
solidation Loan made under this section, section 465(c)(4) 
shall be applied without rounding the weighted average of 
the interest rate on the loans consolidated to the nearest 
higher one-eighth of one percent as in such section. 
‘‘SEC. 470. DEFERMENT. 
‘‘(a) EFFECT ON PRINCIPAL AND INTEREST.—A bor-
rower of a loan made under this part who meets the re-
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336 
quirements described in subsection (b) shall be eligible for 
a deferment during which installments of principal need 
not be paid and, unless otherwise provided in this sub-
section, interest shall accrue and be capitalized or paid 
by the borrower. 
‘‘(b) ELIGIBILITY.—A borrower of a loan made under 
this part shall be eligible for a deferment— 
‘‘(1) during any period during which the bor-
rower— 
‘‘(A) is carrying at least one-half the nor-
mal full-time work load for the course of study 
that the borrower is pursuing, as determined by 
the eligible institution the borrower is attend-
ing; 
‘‘(B) is pursuing a course of study pursu-
ant to— 
‘‘(i) an eligible graduate fellowship 
program in accordance with subsection (g); 
or 
‘‘(ii) an eligible rehabilitation training 
program for individuals with disabilities in 
accordance with subsection (i); 
‘‘(C) is serving on active duty during a war 
or other military operation or national emer-
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337 
gency, and for the 180-day period following the 
demobilization date for such service; 
‘‘(D) is performing qualifying National 
Guard duty during a war or other military op-
eration or national emergency, and for the 180- 
day period following the demobilization date for 
such service; 
‘‘(E) is a member of the National Guard 
who is not eligible for a post-active duty 
deferment under section 493D and is engaged 
in active State duty for a period of more than 
30 consecutive days beginning— 
‘‘(i) the day after 6 months after the 
date the student ceases to carry at least 
one-half the normal full-time academic 
workload (as determined by the institu-
tion); or 
‘‘(ii) the day after the borrower ceases 
enrollment on at least a half-time basis, for 
a loan in repayment; 
‘‘(F) is serving in a medical or dental in-
ternship or residency program, the successful 
completion of which is required to begin profes-
sional practice or service, or is serving in a 
medical or dental internship or residency pro-
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338 
gram leading to a degree or certificate awarded 
by an institution of higher education, a hos-
pital, or a health care facility that offers post-
graduate training; or 
‘‘(G) is eligible for interest payments to be 
made on a loan made under this part for serv-
ice in the Armed Forces under section 2174 of 
title 10, United States Code, and pursuant to 
that eligibility, the interest is being paid on 
such loan under section 465(f); 
‘‘(2) during a period sufficient to enable the 
borrower to resume honoring the agreement to repay 
the outstanding balance of principal and interest on 
the loan after default, if— 
‘‘(A) the borrower signs a new agreement 
to repay such outstanding balance; 
‘‘(B) the deferment period is limited to 
120 days; and 
‘‘(C) such deferment is not granted for 
consecutive periods; 
‘‘(3) 
during 
a 
period 
of 
administrative 
deferment described in subsection (j); or 
‘‘(4) in the case of a borrower of a Federal 
ONE Parent Loan or an Excepted Federal ONE 
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339 
Consolidation Loan, during a period described in 
subsection (k). 
‘‘(c) LENGTH OF DEFERMENT.—A deferment grant-
ed by the Secretary— 
‘‘(1) under subparagraph (F) or (G) of sub-
section (b)(1) shall be renewable at 12 month inter-
vals; 
‘‘(2) under subparagraph (F) of subsection 
(b)(1) shall equal the length of time remaining in 
the borrower’s medical or dental internship or resi-
dency program; and 
‘‘(3) under subparagraph (G) of subsection 
(b)(1) shall not exceed 3 years. 
‘‘(d) REQUEST
AND DOCUMENTATION.—The Sec-
retary shall determine the eligibility of a borrower for a 
deferment under paragraphs (1), (2), or (4) of subsection 
(b), or in the case of a loan for which an endorser is re-
quired, an endorser’s eligibility for a deferment under 
paragraph (2) or (4) or eligibility to request a deferment 
under paragraph (1), based on— 
‘‘(1) the receipt of a request for a deferment 
from the borrower or the endorser, and documenta-
tion of the borrower’s or endorser’s eligibility for the 
deferment or eligibility to request the deferment; 
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340 
‘‘(2) receipt of a completed loan application 
that documents the borrower’s eligibility for a 
deferment; 
‘‘(3) receipt of a student status information 
documenting that the borrower is enrolled on at 
least a half-time basis; or 
‘‘(4) the Secretary’s confirmation of the bor-
rower’s half-time enrollment status, if the confirma-
tion is requested by the institution of higher edu-
cation. 
‘‘(e) NOTIFICATION.—The Secretary shall— 
‘‘(1) notify a borrower of a loan made under 
this part— 
‘‘(A) the granting of a deferment under 
this subsection on such loan; and 
‘‘(B) the option of the borrower to con-
tinue making payments on the outstanding bal-
ance of principal and interest on such loan in 
accordance with subsection (f); 
‘‘(2) at the time the Secretary grants a 
deferment to a borrower of a loan made under this 
part, and not less frequently than once every 180 
days during the period of such deferment, provide 
information to the borrower to assist the borrower in 
understanding— 
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341 
‘‘(A) the effect of granting a deferment on 
the total amount to be paid under the income- 
based repayment plan under 466(d); 
‘‘(B) the fact that interest will accrue on 
the loan for the period of deferment, other than 
for a deferment granted under subsection 
(b)(1)(G); 
‘‘(C) the amount of unpaid principal and 
the amount of interest that has accrued since 
the last statement of such amounts provided to 
the borrower; 
‘‘(D) the amount of interest that will be 
capitalized, and the date on which capitalization 
will occur; 
‘‘(E) the effect of the capitalization of in-
terest on the borrower’s loan principal and on 
the total amount of interest to be paid on the 
loan; 
‘‘(F) the option of the borrower to pay the 
interest that has accrued before the interest is 
capitalized; and 
‘‘(G) the borrower’s option to discontinue 
the deferment at any time. 
‘‘(f) FORM
OF
DEFERMENT.—The form of a 
deferment granted under this subsection on a loan made 
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342 
under this part shall be temporary cessation of all pay-
ments on such loan, except that— 
‘‘(1) in the case of a deferment granted under 
subsection (b)(1)(G), payments of interest on the 
loan will be made by the Secretary under section 
465(f) during such period of deferment; and 
‘‘(2) a borrower may make payments on the 
outstanding balance of principal and interest on 
such loan during any period of deferment granted 
under this subsection. 
‘‘(g) GRADUATE FELLOWSHIP DEFERMENT.— 
‘‘(1) IN GENERAL.—A borrower of a loan under 
this part is eligible for a deferment under subsection 
(b)(1)(B)(i) during any period for which an author-
ized official of the borrower’s graduate fellowship 
program certifies that the borrower meets the re-
quirements of paragraph (2) and is pursuing a 
course of study pursuant to an eligible graduate fel-
lowship program. 
‘‘(2) BORROWER REQUIREMENTS.—A borrower 
meets the requirements of this subparagraph if the 
borrower— 
‘‘(A) holds at least a baccalaureate degree 
conferred by an institution of higher education; 
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343 
‘‘(B) has been accepted or recommended 
by an institution of higher education for accept-
ance on a full-time basis into an eligible grad-
uate fellowship program; and 
‘‘(C) is not serving in a medical internship 
or residency program, except for a residency 
program in dentistry. 
‘‘(h) TREATMENT OF STUDY OUTSIDE THE UNITED 
STATES.— 
‘‘(1) IN GENERAL.—The Secretary shall treat, 
in the same manner as required under section 
428(b)(4), any course of study at a foreign univer-
sity that is accepted for the completion of a recog-
nized international fellowship program by the admin-
istrator of such a program as an eligible graduate 
fellowship program. 
‘‘(2) REQUESTS
FOR
DEFERMENT.—Requests 
for deferment of repayment of loans under this sub-
section by students engaged in graduate or post-
graduate fellowship-supported study (such as pursu-
ant to a Fulbright grant) outside the United States 
shall be approved until completion of the period of 
the fellowship, in the same manner as required 
under section 428(b)(4). 
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344 
‘‘(i) 
REHABILITATION
TRAINING
PROGRAM 
DEFERMENT.—A borrower of a loan under this part is 
eligible for a deferment under subsection (b)(1)(B)(ii) dur-
ing any period for which an authorized official of the bor-
rower’s rehabilitation training program certifies that the 
borrower is pursuing an eligible rehabilitation training 
program for individuals with disabilities. 
‘‘(j) ADMINISTRATIVE DEFERMENTS.—The Secretary 
may grant a deferment to a borrower or, in the case of 
a loan for which an endorser is required, an endorser, 
without requiring a request and documentation from the 
borrower or the endorser under subsection (d) for— 
‘‘(1) a period during which the borrower was 
delinquent at the time a deferment is granted, in-
cluding a period for which scheduled payments of 
principal and interest were overdue at the time such 
deferment is granted; 
‘‘(2) a period during which the borrower or the 
endorser was granted a deferment under this sub-
section but for which the Secretary determines the 
borrower or the endorser should not have qualified; 
‘‘(3) a period necessary for the Secretary to de-
termine the borrower’s eligibility for the cancellation 
of the obligation of the borrower to repay the loan 
under section 437; 
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‘‘(4) a period during which the Secretary has 
authorized deferment due to a national military mo-
bilization or other local or national emergency; or 
‘‘(5) a period not to exceed 60 days, during 
which interest shall accrue but not be capitalized, if 
the Secretary reasonably determines that a suspen-
sion of collection activity is warranted to enable the 
Secretary to process supporting documentation relat-
ing to a borrower’s request— 
‘‘(A) for a deferment under this sub-
section; 
‘‘(B) for a change in repayment plan under 
section 466(c); or 
‘‘(C) to consolidate loans under section 
468. 
‘‘(k) DEFERMENTS FOR PARENT OR EXCEPTED CON-
SOLIDATION LOANS.— 
‘‘(1) IN GENERAL.—A qualified borrower shall 
be eligible for deferments under paragraphs (3) 
through (5). 
‘‘(2) QUALIFIED BORROWER DEFINED.—In this 
subsection, the term ‘qualified borrower’ means— 
‘‘(A) a borrower of a Federal ONE Parent 
Loan or an Excepted Federal ONE Consolida-
tion Loan; or 
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‘‘(B) in the case of such a loan for which 
an endorser is required, the endorser of such 
loan. 
‘‘(3) ECONOMIC HARDSHIP DEFERMENT.— 
‘‘(A) IN GENERAL.—A qualified borrower 
shall be eligible for a deferment during periods, 
not to exceed 3 years in total, during which the 
qualified borrower experiences an economic 
hardship described in subparagraph (B). 
‘‘(B) ECONOMIC HARDSHIP.—An economic 
hardship described in this clause is a period 
during which the qualified borrower— 
‘‘(i) is receiving payment under a 
means-tested benefit program; 
‘‘(ii) is employed full-time and the 
monthly gross income of the qualified bor-
rower does not exceed the greater of— 
‘‘(I) the minimum wage rate de-
scribed in section 6 of the Fair Labor 
Standards Act of 1938 (29 U.S.C. 
206); or 
‘‘(II) an amount equal to 150 
percent of the poverty line; or 
‘‘(iii) demonstrates that the sum of 
the qualified borrower’s monthly payments 
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347 
on the qualified borrower’s Federal ONE 
Parent Loan or Excepted Federal ONE 
Consolidation Loan is not less than 20 per-
cent of the qualified borrower’s monthly 
gross income. 
‘‘(C) ELIGIBILITY.—To be eligible to re-
ceive a deferment under this subparagraph, a 
qualified borrower shall submit to the Sec-
retary— 
‘‘(i) for the first period of deferment 
under this subparagraph, evidence showing 
the monthly gross income of the qualified 
borrower; and 
‘‘(ii) for a subsequent period of 
deferment that begins less than one year 
after the end of a period of deferment 
granted under this subparagraph— 
‘‘(I) evidence showing the month-
ly gross income of the qualified bor-
rower; or 
‘‘(II) the qualified borrower’s 
most recently filed Federal income tax 
return, if such a return was filed in 
either of the two tax years preceding 
the year in which the qualified bor-
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348 
rower requests the subsequent period 
of deferment. 
‘‘(4) UNEMPLOYMENT DEFERMENT.— 
‘‘(A) IN GENERAL.—A qualified borrower 
shall be eligible for a deferment for periods dur-
ing which the qualified borrower is seeking, and 
is unable to find, full-time employment. 
‘‘(B) ELIGIBILITY.— 
‘‘(i) IN GENERAL.—To be eligible to 
receive an deferment under this subpara-
graph, a qualified borrower shall submit to 
the Secretary— 
‘‘(I) evidence of the qualified bor-
rower’s eligibility for unemployment 
benefits; or 
‘‘(II) written confirmation, or an 
equivalent as approved by the Sec-
retary, that— 
‘‘(aa) the qualified borrower 
has registered with a public or 
private employment agency, if 
one is available to the borrower 
within 50 miles of the qualified 
borrower’s address; and 
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349 
‘‘(bb) for requests submitted 
after the initial request, the 
qualified borrower has made at 
least six diligent attempts during 
the preceding six-month period to 
secure full-time employment. 
‘‘(ii) 
ACCEPTANCE
OF
EMPLOY-
MENT.—A qualified borrower shall not be 
eligible for a deferment under this sub-
paragraph if the qualified borrower refuses 
to seek or accept employment in types of 
positions or at salary levels or responsi-
bility levels for which the qualified bor-
rower feels overqualified based on the 
qualified borrower’s education or previous 
experience. 
‘‘(C) TERMS
OF
DEFERMENT.—The fol-
lowing terms shall apply to a deferment under 
this subparagraph: 
‘‘(i) 
INITIAL
PERIOD.—The 
first 
deferment granted to a qualified borrower 
under this subparagraph may be for a pe-
riod of unemployment beginning not more 
than 6 months before the date on which 
the Secretary receives the qualified bor-
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350 
rower’s request for deferment and may be 
granted for a period of up to 6 months 
after that date. 
‘‘(ii) RENEWALS.—Deferments under 
this subparagraph shall be renewable at 6- 
month intervals beginning after the expira-
tion of the first period of deferment under 
clause (i). To be eligible to renew a 
deferment under this subparagraph, a 
qualified borrower shall submit to the Sec-
retary the information described in sub-
paragraph (B)(i). 
‘‘(iii) AGGREGATE LIMIT.—The period 
of all deferments granted to a borrower 
under this subparagraph may not exceed 3 
years in aggregate. 
‘‘(5) HEALTH DEFERMENT.— 
‘‘(A) IN GENERAL.—A qualified borrower 
shall be eligible for a deferment during periods 
in which the qualified borrower is unable to 
make scheduled loan payments due to high 
medical expenses, as determined by the Sec-
retary. 
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351 
‘‘(B) ELIGIBILITY.—To be eligible to re-
ceive a deferment under this subparagraph, a 
qualified borrower shall— 
‘‘(i) submit to the Secretary docu-
mentation 
demonstrating 
that 
making 
scheduled loan payments would be an ex-
treme economic hardship to the borrower 
due to high medical expenses, as deter-
mined by the Secretary; and 
‘‘(ii) resubmit such documentation to 
the Secretary not less frequently than once 
every 3 months. 
‘‘(l) PROHIBITIONS.— 
‘‘(1) PROHIBITION ON FEES.—No administra-
tive fee or other fee may be charged to the borrower 
in connection with the granting of a deferment 
under this subsection. 
‘‘(2) PROHIBITION
ON
ADVERSE
CREDIT
RE-
PORTING.—No adverse information relating to a bor-
rower may be reported to a consumer reporting 
agency solely because of the granting of a deferment 
under this subsection. 
‘‘(3) LIMITATION
ON
AUTHORITY.—The Sec-
retary shall not, through regulation or otherwise, au-
thorize additional deferment options or periods of 
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352 
deferment other than the deferment options and pe-
riods of deferment authorized under this subsection. 
‘‘(m) TREATMENT OF ENDORSERS.—With respect to 
any Federal ONE Parent Loan or Federal ONE Consoli-
dation Loan for which an endorser is required— 
‘‘(1) paragraphs (2) through (4) of subsection 
(b) shall be applied— 
‘‘(A) by substituting ‘An endorser’ for ‘A 
borrower’; 
‘‘(B) by substituting ‘the endorser’ for ‘the 
borrower’; and 
‘‘(C) by substituting ‘an endorser’ for ‘a 
borrower’; and 
‘‘(2) in the case in which the borrower of such 
a loan is eligible for a deferment described in sub-
paragraph (C), (D), (E), (F), or (G) of subsection 
(b)(1), but is not making payments on the loan, the 
endorser of the loan may request a deferment under 
such subparagraph for the loan. 
‘‘(n) DEFINITIONS.—In this section: 
‘‘(1) ELIGIBLE
GRADUATE
FELLOWSHIP
PRO-
GRAM.—The term ‘eligible graduate fellowship pro-
gram’, when used with respect to a course of study 
pursued by the borrower of a loan under this part, 
means a fellowship program that— 
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‘‘(A) provides sufficient financial support 
to graduate fellows to allow for full-time study 
for at least six months; 
‘‘(B) requires a written statement from 
each applicant explaining the applicant’s objec-
tives before the award of that financial support; 
‘‘(C) requires a graduate fellow to submit 
periodic reports, projects, or evidence of the fel-
low’s progress; and 
‘‘(D) in the case of a course of study at an 
institution of higher education outside the 
United States described in section 102, accepts 
the course of study for completion of the fellow-
ship program. 
‘‘(2) 
ELIGIBLE
REHABILITATION
TRAINING 
PROGRAM FOR INDIVIDUALS WITH DISABILITIES.— 
The term ‘eligible rehabilitation training program 
for individuals with disabilities’, when used with re-
spect a course of study pursued by the borrower of 
a loan under this part, means a program that— 
‘‘(A) is necessary to assist an individual 
with a disability in preparing for, securing, re-
taining, or regaining employment; 
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354 
‘‘(B) is licensed, approved, certified, or 
otherwise recognized as providing rehabilitation 
training to disabled individuals by— 
‘‘(i) a State agency with responsibility 
for vocational rehabilitation programs, 
drug abuse treatment programs, mental 
health services programs, or alcohol abuse 
treatment programs; or 
‘‘(ii) the Secretary of the Department 
of Veterans Affairs; and 
‘‘(C) provides or will provide the borrower 
with rehabilitation services under a written plan 
that— 
‘‘(i) is individualized to meet the bor-
rower’s needs; 
‘‘(ii) specifies the date on which the 
services to the borrower are expected to 
end; and 
‘‘(iii) requires a commitment of time 
and effort from the borrower that prevents 
the borrower from being employed at least 
30 hours per week, either because of the 
number of hours that must be devoted to 
rehabilitation or because of the nature of 
the rehabilitation. 
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355 
‘‘(3) EXCEPTED FEDERAL ONE CONSOLIDATION 
LOAN.—The ‘Excepted Federal ONE Consolidation 
Loan’ have the meaning given the term in section 
466(d)(5). 
‘‘(4) FAMILY
SIZE.—The term ‘family size’ 
means the number that is determined by counting— 
‘‘(A) the borrower; 
‘‘(B) the borrower’s spouse; 
‘‘(C) the borrower’s children, including un-
born children who are expected to be born dur-
ing the period covered by the deferment, if the 
children receive more than half their support 
from the borrower; and 
‘‘(D) another individual if, at the time the 
borrower requests a deferment under this sec-
tion, the individual— 
‘‘(i) lives with the borrower; 
‘‘(ii) receives more than half of the in-
dividual’s support (which may include 
money, gifts, loans, housing, food, clothes, 
car, medical and dental care, and payment 
of college costs) from the borrower; and 
‘‘(iii) is expected to receive such sup-
port from the borrower during the relevant 
period of deferment. 
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356 
‘‘(5) FULL-TIME.—The term ‘full-time’, when 
used with respect to employment, means employment 
for not less than 30 hours per week that is expected 
to continue for not less than three months. 
‘‘(6) MEANS-TESTED BENEFIT PROGRAM.—The 
term ‘means-tested benefit program’ means— 
‘‘(A) a State public assistance program 
under which eligibility for the program’s bene-
fits, or the amount of such benefits, are deter-
mined on the basis of income or resources of 
the individual or family seeking the benefit; or 
‘‘(B) a mandatory spending program of the 
Federal Government, other than a program 
under this title, under which eligibility for the 
program’s benefits, or the amount of such bene-
fits, are determined on the basis of income or 
resources of the individual or family seeking the 
benefit, and may include such programs as 
‘‘(i) the supplemental security income 
program under title XVI of the Social Se-
curity Act (42 U.S.C. 1381 et seq.); 
‘‘(ii) the supplemental nutrition assist-
ance program under the Food and Nutri-
tion Act of 2008 (7 U.S.C. 2011 et seq.); 
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357 
‘‘(iii) the free and reduced price 
school lunch program established under the 
Richard B. Russell National School Lunch 
Act (42 U.S.C. 1751 et seq.); 
‘‘(iv) the program of block grants for 
States for temporary assistance for needy 
families established under part A of title 
IV of the Social Security Act (42 U.S.C. 
601 et seq.); 
‘‘(v) the special supplemental nutri-
tion program for women, infants, and chil-
dren established by section 17 of the Child 
Nutrition Act of 1966 (42 U.S.C. 1786); 
and 
‘‘(vi) other programs identified by the 
Secretary. 
‘‘(7) MONTHLY
GROSS
INCOME.—The term 
‘monthly gross income’, when used with respect to a 
borrower, means— 
‘‘(A) the gross amount of income received 
by the borrower from employment and other 
sources for the most recent month; or 
‘‘(B) one-twelfth of the borrower’s adjusted 
gross income, as recorded on the borrower’s 
most recently filed Federal income tax return. 
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358 
‘‘SEC. 471. ADDITIONAL TERMS. 
‘‘(a) APPLICABLE PART B PROVISIONS.— 
‘‘(1) DISCLOSURES.—Except as otherwise pro-
vided in this part, each institution of higher edu-
cation with which the Secretary has an agreement 
under section 464(a), and each contractor with 
which the Secretary has a contract under section 
493E, shall, with respect to loans under this part 
comply with each of the requirements under section 
433 that apply to the institutions of higher edu-
cation and contractors described in section 455(p) 
with respect to loans made under part D. 
‘‘(2) OTHER PROVISIONS.—Except as otherwise 
provided in this part, the following provisions shall 
apply with respect to loans made under this part in 
the same manner that such provisions apply with re-
spect to loans made under part D: 
‘‘(A) Section 427(a)(2). 
‘‘(B) Section 428(d). 
‘‘(C) Section 428F 
‘‘(D) Section 430A. 
‘‘(E) Paragraphs (1), (2), (4), and (6) of 
section 432(a). 
‘‘(F) Section 432(i). 
‘‘(G) Section 432(l). 
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359 
‘‘(H) Section 432(m), except that an insti-
tution of higher education shall have a separate 
master promissory note under paragraph (1)(D) 
of such section for loans made under this part. 
‘‘(I) Subsections (a), (c), and (d) of section 
437. 
‘‘(3) APPLICATION OF PROVISIONS.—Any provi-
sion listed under paragraph (1) or (2) that applies 
to— 
‘‘(A) Federal Direct PLUS Loans made on 
behalf of dependent students shall apply to 
Federal ONE Parent Loans; 
‘‘(B) Federal Direct PLUS Loans made to 
students shall apply to Federal ONE Loans for 
graduate or professional students; 
‘‘(C) Federal Direct Unsubsidized Stafford 
loans shall apply to Federal ONE Loans for 
any student borrower; 
‘‘(D) Federal Direct Consolidation Loans 
shall apply to Federal ONE Consolidation 
Loans; and 
‘‘(E) forbearance shall apply to deferment 
under section 469A. 
‘‘(b) ELIGIBLE STUDENT.—A loan under this part 
may only be made to a student who— 
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360 
‘‘(1) is an eligible student under section 484; 
‘‘(2) has agreed to notify promptly the Sec-
retary and the applicable contractors with which the 
Secretary has a contract under section 493E con-
cerning— 
‘‘(A) any change of permanent address, 
telephone number, or email address; 
‘‘(B) when the student ceases to be en-
rolled on at least a half-time basis; and 
‘‘(C) any other change in status, when 
such change in status affects the student’s eligi-
bility for the loan; and 
‘‘(3) is carrying at least one-half the normal 
full-time academic workload for the course of study 
the student is pursuing (as determined by the insti-
tution). 
‘‘(c) LOAN APPLICATION AND PROMISSORY NOTE.— 
The common financial reporting form required in section 
483(a)(1) shall constitute the application for loans made 
under this part. The Secretary shall develop, print, and 
distribute to participating institutions a standard promis-
sory note and loan disclosure form. 
‘‘(d) BORROWER DEFENSES.—A borrower of a loan 
under this part may assert a defense to repayment to such 
loan under the provisions of section 455(h) that apply to 
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361 
a borrower of a loan made under part D asserting, on or 
after the date of enactment of the PROSPER Act, a de-
fense to repayment to such loan made under part D. 
‘‘(e) IDENTITY FRAUD PROTECTION.—The Secretary 
shall ensure that monthly Federal ONE Loan statements 
and other publications of the Department do not contain 
more than four digits of the Social Security number of 
any individual. 
‘‘(f) AUTHORITY TO SELL LOANS.—The Secretary, 
in consultation with the Secretary of the Treasury, is au-
thorized to sell loans made under this part on such terms 
determined to be in the best interest of the United States, 
except that any such sale shall not result in any cost to 
the Federal Government.’’. 
PART F—NEED ANALYSIS 
SEC. 471. COST OF ATTENDANCE. 
Section 472 (20 U.S.C. 1087ll) is amended— 
(1) by striking paragraph (10); and 
(2) by redesignating paragraphs (11), (12), and 
(13) as paragraphs (10), (11), and (12), respec-
tively. 
SEC. 472. SIMPLIFIED NEEDS TEST. 
Section 479(b)(1) (20 U.S.C. 1087ss) is amended by 
striking ‘‘$50,000’’ both places it appears and inserting 
‘‘$100,000’’. 
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362 
SEC. 473. DISCRETION OF STUDENT FINANCIAL AID ADMIN-
ISTRATORS. 
Section 479A (20 U.S.C. 1087tt) is amended— 
(1) in subsection (a), by striking ‘‘financial as-
sistance under section 428H or a Federal Direct 
Unsubsidized Stafford Loan’’ and inserting ‘‘a Fed-
eral Direct Unsubsidized Stafford Loan or a Federal 
ONE Loan’’; 
(2) in subsection (c), by striking ‘‘part B or D’’ 
and inserting ‘‘part D or E’’; and 
(3) by adding at the end the following: 
‘‘(d) ADJUSTMENT BASED
ON DELIVERY
OF IN-
STRUCTION.—A student’s eligibility to receive grants, 
loans, or work assistance under this title shall be reduced 
if a financial aid officer determines, in accordance with 
the discretionary authority provided under this section, 
that the model or method used to deliver instruction to 
the student results in a substantially reduced cost of at-
tendance to the student.’’. 
SEC. 474. DEFINITIONS OF TOTAL INCOME AND ASSETS. 
Section 480 (20 U.S.C. 1087vv) is amended— 
(1) in subsection (a)(1), by striking subpara-
graph (B) and inserting the following: 
‘‘(B) Notwithstanding section 478(a), the 
Secretary shall provide for the use of data from 
the second preceding tax year to carry out the 
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363 
simplification of applications (including sim-
plification for a subset of applications) used for 
the estimation and determination of financial 
aid eligibility. Such simplification shall include 
the sharing of data between the Internal Rev-
enue Service and the Department, pursuant to 
the consent of the taxpayer.’’; and 
(2) in subsection (f)— 
(A) in paragraph (2)— 
(i) in subparagraph (B), by striking 
‘‘or’’ at the end; 
(ii) in subparagraph (C), by striking 
the period at the end and inserting ‘‘; or’’; 
and 
(iii) by adding at the end the fol-
lowing: 
‘‘(D) a qualified tuition program (as de-
fined in section 529(b)(1)(A) of the Internal 
Revenue Code of 1986).’’; and 
(B) in paragraph (5)(A)(i), by striking 
‘‘qualified tuition program (as defined in sec-
tion 529(b)(1)(A) of the Internal Revenue Code 
of 1986) or other’’. 
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364 
PART G—GENERAL PROVISIONS RELATING TO 
STUDENT ASSISTANCE 
SEC. 481. DEFINITIONS OF ACADEMIC YEAR AND ELIGIBLE 
PROGRAM. 
Section 481 (20 U.S.C. 1088) is amended— 
(1) in subsection (a)— 
(A) in paragraph (2)(A)— 
(i) by striking ‘‘For the’’ and insert-
ing the following: ‘‘Except as provided in 
paragraph (3), for the’’; and 
(ii) in clause (i), by striking ‘‘require 
a minimum of 30 weeks’’ and inserting the 
following: ‘‘require— 
‘‘(I) a minimum of 30 weeks’’; 
(iii) in clause (ii), by striking ‘‘re-
quire’’; 
(iv) by redesignating clause (ii) as 
subclause (II); and 
(v) by redesignating clause (iii) as 
clause (ii); and 
(B) by adding at the end the following: 
‘‘(3)(A) For the purpose of a competency-based 
education program the term ‘academic year’ shall be 
the published measured period established by the in-
stitution of higher education that is necessary for a 
student with a normal full-time workload for the 
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course of study the student is pursuing (as meas-
ured using the value of competencies or sets of com-
petencies required by such institution and approved 
by such institution’s accrediting agency or associa-
tion) to earn— 
‘‘(i) one-quarter of a bachelor’s degree; 
‘‘(ii) one-half of an associate’s degree; or 
‘‘(iii) with respect to a non-degree or grad-
uate program, the equivalent of a period de-
scribed in clause (i) or (ii). 
‘‘(B)(i) A competency-based education pro-
gram that is not a term-based program may be 
treated as a term-based program for purposes 
of establishing payment periods for disburse-
ment of loans and grants under this title if— 
‘‘(I) the institution of higher edu-
cation that offers such program charges a 
flat subscription fee for access to instruc-
tion during a period determined by the in-
stitution; and 
‘‘(II) the institution is able to deter-
mine the competencies a student is ex-
pected to demonstrate for such subscrip-
tion period. 
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‘‘(ii) Clause (i) shall apply even in a case 
in which instruction or other work with respect 
to a competency that is expected to be attrib-
utable to a subscription period begins prior to 
such subscription period. 
‘‘(iii) In a case in which a competency- 
based education program offered by an institu-
tion of higher education is treated as a term- 
based program under clause (i), the institution 
shall review the academic progress of each stu-
dent enrolled in such program in accordance 
with section 484(c), except that such review 
shall occur at the end of each payment period.’’; 
(2) by amending subsection (b) to read as fol-
lows: 
‘‘(b) ELIGIBLE PROGRAM.—(1) For purposes of this 
title, the term ‘eligible program’ means— 
‘‘(A) a program of at least 300 clock hours of 
instruction, 8 semester hours, or 12 quarter hours, 
offered during a minimum of 10 weeks; or 
‘‘(B) a competency-based program that— 
‘‘(i) has been evaluated and approved by 
an accrediting agency or association that— 
‘‘(I) is recognized by the Secretary 
under subpart 2 of part H; and 
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‘‘(II) has evaluation of competency- 
based education programs within the scope 
of its recognition in accordance with sec-
tion 496(a)(4)(C); or 
‘‘(ii) as of the day before the date of enact-
ment of the PROSPER Act, met the require-
ments of a direct assessment program under 
section 481(b)(4) (as such section was in effect 
on the day before such date of enactment). 
‘‘(2) An eligible program described in paragraph (1) 
may be offered in whole or in part through telecommuni-
cations. 
‘‘(3) For purposes of this title, the term ‘eligible pro-
gram’ does not include a program that loses its eligibility 
under section 481B(a). 
‘‘(4)(A) If an eligible institution enters into a written 
arrangement with an institution or organization that is 
not an eligible institution under which such ineligible insti-
tution or organization provides the educational program 
(in whole or in part) of students enrolled in the eligible 
institution, the educational program provided by such in-
eligible institution shall be considered to be an eligible pro-
gram if— 
‘‘(i) the ineligible institution or organiza-
tion has not— 
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‘‘(I) had its eligibility to participate in 
the programs under this title terminated 
by the Secretary; 
‘‘(II) voluntarily withdrawn from par-
ticipation in the programs under this title 
under a proceeding initiated by the Sec-
retary, accrediting agency or association, 
guarantor, or the licensing agency for the 
State in which the institution is located, 
including a termination, show-cause, or 
suspension; 
‘‘(III) had its certification under sub-
part 3 of part H to participate in the pro-
grams under this title revoked by the Sec-
retary; 
‘‘(IV) had its application for recertifi-
cation under subpart 3 of part H to par-
ticipate in the programs under this title 
denied by the Secretary; or 
‘‘(V) had its application for certifi-
cation under subpart 3 of part H to par-
ticipate in the programs under this title 
denied by the Secretary; 
‘‘(ii) the educational program offered by 
the institution that grants the degree or certifi-
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