114
nue Code of 1986’’ after ‘‘Social Security Act’’;
and
(B) in the first sentence of subparagraph
(B)—
(i) by striking clause (i) and inserting
the following: ‘‘(i) a negligent or knowing
disclosure of information referred to in this
section, section 303(i) of the Social Secu-
rity Act, or section 6103(l)(7)(D)(ix) of
the Internal Revenue Code of 1986 about
such person by an officer or employee of
any public housing agency or owner (or
employee thereof), which disclosure is not
authorized by this section, such section
303(i), such section 6103(l)(7)(D)(ix), or
any regulation implementing this section,
such section 303(i), or such section
6103(l)(7)(D)(ix), or’’; and
(ii) in clause (ii), by inserting ‘‘such
6103(l)(7)(D)(ix),’’ after ‘‘303(i),’’.
(4) CONFORMING AMENDMENT.—The heading
of subsection (c) of section 904 of the Stewart B.
McKinney Homeless Assistance Amendments Act of
1988 is amended by striking ‘‘STATE EMPLOY-
MENT’’.
115
SEC. 3004. GNMA REMIC GUARANTEE FEES.
Section 306(g)(3) of the National Housing Act (12
U.S.C. 1721(g)(3)) is amended by adding at the end the
following new subparagraph:
‘‘(E)(i) Notwithstanding subparagraphs (A) through
(D), fees charged for the guaranty of, or commitment to
guaranty, multiclass securities backed by a trust or pool
of securities or notes guaranteed by the Association under
this subsection and other related fees shall be charged by
the Association in an amount not to exceed the value, as
determined by the Association, of the guarantee or com-
mitment to guarantee. The Association shall take such ac-
tion as may be necessary to reasonably assure that such
portion of the value of the guaranties or commitments to
guaranty as the Association determines is appropriate ac-
crues to the benefit of mortgagors under mortgages exe-
cuted after the date of the enactment of this subparagraph
by or upon which such securities or notes are backed.
‘‘(ii) For each Federal fiscal year, the Association
shall submit a report to the Congress describing any ac-
tivities of the Association with respect to guarantying and
making commitments to guaranty multiclass securities de-
scribed in clause (i). The report shall be submitted not
later than 90 days after the end of the fiscal year for
which the report is made and shall identify the extent of
such activities during the fiscal year, the size of each
116
transaction closed during the fiscal year involving such se-
curities, the number of mortgages involved in each such
transaction, the amount of the fees charged and earned
by the Association for such transactions, and any persons
receiving payments for any services provided with respect
to any such transactions and the amounts of such pay-
ments, and shall include an estimate of the portion of the
value of the guarantee or commitment to guarantee accru-
ing to the benefit of mortgagors and a description of any
action taken by the Association to ensure such accrual.
‘‘(iii) The Association shall provide for the initial im-
plementation of the program for which fees are charged
under the first sentence of clause (i) by notice published
in the Federal Register. The notice shall be effective upon
publication and shall provide an opportunity for public
comment. Not later than 12 months after publication of
the notice, the Association shall issue regulations for such
program based on the notice, comments received, and the
experience of the Association in carrying out the program
during such period.’’.
SEC. 3005. MUTUAL MORTGAGE INSURANCE FUND PRE-
MIUMS.
To improve the actuarial soundness of the Mutual
Mortgage Insurance Fund under the National Housing
Act, the Secretary of Housing and Urban Development
117
shall increase the rate at which the Secretary earns the
single premium payment collected at the time of insurance
of a mortgage that is an obligation of such Fund (with
respect to the rate in effect on the date of the enactment
of this Act). In establishing such increased rate, the Sec-
retary shall consider any current audit findings and re-
serve analyses and information regarding the expected av-
erage duration of mortgages that are obligations of such
Fund and may consider any other information that the
Secretary determines to be appropriate.
TITLE IV—EDUCATION AND
LABOR
SEC. 4000. TABLE OF CONTENTS.
The table of contents of this title is as follows:
TITLE IV—EDUCATION AND LABOR
Sec. 4000. Table of contents.
Subtitle A—Federal Direct Loan Program
CHAPTER 1—AMENDMENTS TO PART D OF TITLE IV OF THE HIGHER
EDUCATION ACT OF 1965
Sec. 4001. Short title; references.
Sec. 4002. Federal Direct Student Loan Program.
CHAPTER 2—CONFORMING AMENDMENTS
Sec. 4021. Preserving loan access.
Sec. 4022. Guaranty agency reserves.
Sec. 4023. Terms of loans.
Sec. 4024. Assignment of loans.
Sec. 4025. Termination of guaranty agency agreements; assumption of guar-
anty agency functions by the Secretary.
Sec. 4026. Administrative cost allowance.
Sec. 4027. Consolidation loans.
Sec. 4028. Student Loan Marketing Association.
Sec. 4029. Authority to use optically imaged documents.
118
Sec. 4030. Amendment to the Balanced Budget and Emergency Deficit Control
Act of 1985.
CHAPTER 3—EFFECTIVE DATES; STUDY
Sec. 4031. Effective dates.
Sec. 4032. Study of Internal Revenue Service collection of student loans.
Sec. 4033. Preference of committee for IRS collection mechanism.
Subtitle B—Cost Sharing by States
Sec. 4101. Cost sharing by States.
Subtitle C—ERISA Amendments Relating to Group Health Plans
Sec. 4201. Coordination of ERISA preemption rules with title XIX provisions
providing for liability of third parties.
Sec. 4202. Continued coverage of costs of a pediatric vaccine under group health
plans.
Sec. 4203. Temporary rules governing preemption of certain State laws.
Subtitle A—Federal Direct Loan
Program
CHAPTER 1—AMENDMENTS TO PART D OF
TITLE IV OF THE HIGHER EDUCATION
ACT OF 1965
SEC. 4001. SHORT TITLE; REFERENCES.
(a) SHORT TITLE.—This subtitle may be cited as the
‘‘Student Loan Reform Act of 1993’’.
(b) REFERENCES.—References in this subtitle to
‘‘the Act’’ are references to the Higher Education Act of
1965 (20 U.S.C. 1001 et seq.).
SEC. 4002. FEDERAL DIRECT STUDENT LOAN PROGRAM.
Part D of title IV of the Act (20 U.S.C. 1087a et
seq.) is amended to read as follows:
119
‘‘PART D—FEDERAL DIRECT STUDENT LOAN
PROGRAM
‘‘SEC. 451. PURPOSE; PROGRAM AUTHORIZATION.
‘‘(a) PURPOSE.—It is the purpose of this part—
‘‘(1) to simplify the delivery of student loans to
borrowers and eliminate borrower confusion;
‘‘(2) to provide a variety of repayment plans,
including income contingent repayment through the
EXCEL Account, to borrowers so that they have
flexibility in managing their student loan repayment
obligations, and so that those obligations do not
foreclose community service-oriented career choices
for those borrowers;
‘‘(3) to replace, through an orderly transition,
the Federal Family Education Loan Program under
part B of this title with the Federal Direct Student
Loan Program under this part;
‘‘(4) to avoid the unnecessary cost, to taxpayers
and borrowers, and administrative complexity associ-
ated with the Federal Family Education Loan Pro-
gram under part B of this title through the use of
a direct student loan program; and
‘‘(5) to create a more streamlined student loan
program that can be managed more effectively at
the Federal level.
121
has an agreement with the Secretary under section
454(b) to originate loans under this part, or
‘‘(2) through an alternative originator des-
ignated by the Secretary to students and parents of
students attending institutions of higher education
that have an agreement with the Secretary under
section 454(a) but that do not have an agreement
with the Secretary under section 454(b).
‘‘(b) FEES FOR ORIGINATION SERVICES.—
‘‘(1) FEES FOR INSTITUTIONS.—The Secretary
shall pay fees to institutions of higher education (or
a consortium of such institutions) with agreements
under section 454(b), in an amount established by
the Secretary, to assist in meeting the costs of loan
origination. Such fees—
‘‘(A) shall be paid by the Secretary based
on all the loans made under this part to a par-
ticular borrower in the same academic year;
‘‘(B) shall be subject to a sliding scale that
decreases the amount of such fees as the num-
ber of borrowers increases; and
‘‘(C)(i) for academic year 1994–1995, shall
not exceed a program-wide average of $10 per
borrower for all the loans made under this part
in the same academic year; and
122
‘‘(ii) for succeeding academic years, shall
not exceed such average fee as the Secretary
shall establish in regulations.
‘‘(2) FEES FOR ALTERNATIVE ORIGINATORS.—
The Secretary shall pay fees for loan origination
services to alternative originators of loans made
under this part in an amount established by the Sec-
retary in accordance with the terms of the contract
between the Secretary and each such alternative
originator.
‘‘(c) NO ENTITLEMENT TO PARTICIPATE OR ORIGI-
NATE.—No institution of higher education shall have a
right to participate in the programs authorized by this
part, to originate loans, or to perform any program func-
tion under this part. Nothing in this subsection shall be
construed so as to limit the entitlement of an eligible stu-
dent attending a participating institution (or the eligible
parent of such student) to borrow under this part.
‘‘SEC. 453. SELECTION OF INSTITUTIONS FOR PARTICIPA-
TION AND ORIGINATION.
‘‘(a) PHASE-IN OF PROGRAM.—
‘‘(1) GENERAL
AUTHORITY.—The Secretary
shall enter into agreements pursuant to section
454(a) with institutions of higher education to par-
ticipate in the direct student loan programs under
123
this part, and agreements pursuant to section
454(b) with institutions of higher education to origi-
nate loans in such programs, for academic years be-
ginning on or after July 1, 1994. Alternative origi-
nation services, through which an entity other than
the participating institution at which the student is
in attendance originates the loan, shall be provided
by the Secretary, through one or more contracts
under section 456 or such other means as the Sec-
retary may provide, for students attending partici-
pating institutions that do not originate direct stu-
dent loans under this part. Such agreements for the
first year of the program shall, to the extent fea-
sible, be entered into not later than January 1,
1994.
‘‘(2) TRANSITION PROVISIONS.—In order to en-
sure an expeditious but orderly transition from the
loan programs under part B of this title to the di-
rect student loan programs under this part, the Sec-
retary shall, in the exercise of his or her discretion,
determine the number of institutions with which he
or she shall enter into agreements under sections
454 (a) and (b) for any academic year, except that
the Secretary shall exercise such discretion so as to
achieve the following goals:
124
‘‘(A) for academic year 1994–1995, loans
made under this part shall represent 4 percent
of the sum of new student loan volume under
this part and part B of this title;
‘‘(B) for academic year 1995–1996, loans
made under this part shall represent 25 percent
of the sum of new student loan volume under
this part and part B of this title;
‘‘(C) for academic year 1996–1997, loans
made under this part shall represent 60 percent
of the sum of new student loan volume under
this part and part B of this title; and
‘‘(D) for academic year 1997–1998, loans
made under this part shall represent 100 per-
cent of the sum of new student loan volume
under this part and part B of this title.
‘‘(3) CASH
MANAGEMENT.—The requirements
of the Cash Management Improvement Act of 1990
(Public Law 101–453) shall apply to the program
under this part only to the extent specified in a
schedule established by the Secretaries of Education
and the Treasury, except that such schedule shall
provide for the application of all such requirements
not later than July 1, 1998.
‘‘(b) SELECTION CRITERIA FOR PARTICIPATION.—
125
‘‘(1) APPLICATION.—Each institution of higher
education desiring to participate in the direct stu-
dent loan program under this part shall submit an
application satisfactory to the Secretary containing
such information and assurances as the Secretary
may require.
‘‘(2) AGREEMENT.—When the program author-
ized under this part is fully implemented, the Sec-
retary shall enter into agreements under section
454(a) with institutions that submit applications in
accordance with paragraph (1).
‘‘(3) TRANSITION SELECTION CRITERIA.—Until
such full implementation, the Secretary shall select
institutions for participation in the direct student
loan program under this part, and shall enter into
agreements with them under section 454(a), from
among those institutions that submit the applica-
tions described in paragraph (1), and meet such
other eligibility requirements as the Secretary may
prescribe, by—
‘‘(A)(i) categorizing such institutions ac-
cording to anticipated loan volume, length of
academic program, and control of the institu-
tion; and
126
‘‘(ii) selecting institutions that are reason-
ably representative of the respective categories;
and
‘‘(B) if needed to carry out the purposes of
this part, selecting additional institutions.
‘‘(c) SELECTION CRITERIA FOR ORIGINATION.—
‘‘(1) IN GENERAL.—The Secretary may enter
into a supplemental agreement with an institution
(or a consortium of such institutions) that—
‘‘(A) has an agreement under subsection
454(a);
‘‘(B) desires to originate loans under this
part; and
‘‘(C) meets the criteria specified in para-
graph (2).
‘‘(2) TRANSITION
SELECTION
CRITERIA.—For
academic year 1994–1995, the Secretary may ap-
prove an institution to originate loans only if such
institution—
‘‘(A) made loans under part E of this title
in academic year 1993–1994 and did not exceed
the applicable maximum default rate under sec-
tion 464(g) for the most recent fiscal year for
which data are available;
127
‘‘(B) is not on the reimbursement system
of payment for any of the programs under sub-
part 1 or 3 of part A, part C, or part E;
‘‘(C) is not overdue on program or finan-
cial reports or audits required under this title;
‘‘(D) is not subject to an emergency ac-
tion, or a limitation, suspension, or termination
under section 428(b)(1)(T), 432(h), or 487(c);
‘‘(E) in the opinion of the Secretary, has
not had significant deficiencies identified by the
State postsecondary review entity under subpart
1 of part H of this title;
‘‘(F) in the opinion of the Secretary, has
not had severe performance deficiencies for any
of the programs under this title, including those
demonstrated by audits or program reviews
submitted or conducted during the 5 calendar
years immediately preceding the date of appli-
cation;
‘‘(G) provides an assurance that it has no
delinquent outstanding debts to the United
States, unless such debts are being repaid
under or in accordance with a repayment ar-
rangement satisfactory to the United States, or
the Secretary in his or her discretion deter-
128
mines that the existence or amount of such
debts has not been finally determined by the
cognizant Federal agency or agencies; and
‘‘(H) meets such other criteria as the Sec-
retary may establish to protect the financial in-
terest of the United States and to promote the
purposes of this part.
‘‘(3) 
REGULATIONS
GOVERNING
APPROVAL
AFTER TRANSITION.—For academic year 1995–1996
and subsequent academic years, the Secretary shall
publish regulations governing the approval of institu-
tions to originate loans.
‘‘(d) CONSORTIA.—Subject to such requirements as
the Secretary may prescribe, eligible institutions of higher
education with agreements under section 454(a) may
apply as consortia to originate loans under this part for
students in attendance at such institutions. Such institu-
tions shall each be required to meet the requirements of
subsection (c) with respect to loan origination.
‘‘SEC. 454. AGREEMENTS WITH INSTITUTIONS.
‘‘(a) PARTICIPATION AGREEMENTS.—An agreement
with any institution of higher education for participation
in the direct student loan program under this part shall—
129
‘‘(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) estimate the need of each such stu-
dent as required by part F of this title for an
academic year, provided that any loan obtained
by a student under this part with the same
terms (except as otherwise provided in this
part) as loans made under section 428A or
428H, or a loan obtained by a parent under
this part with the same terms (except as other-
wise provided in this part) as loans made under
section 428B, or obtained under any State-
sponsored or private loan program, may be used
to offset the expected family contribution of the
student for that year;
‘‘(C) 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 the amount of
such loan, except that the institution may, in
exceptional circumstances specified in regula-
130
tions prescribed by the Secretary, refuse to cer-
tify a statement that permits a student to re-
ceive a loan under this part, or certify a loan
amount that is less than the student’s deter-
mination of need (as determined under part F
of this title), if the reason for such action is
documented and provided in written form to
such student;
‘‘(D) set forth a schedule for disbursement
of the proceeds of the loan in installments, con-
sistent with the requirements of section 428G
(other than subsection (b)(1) of such section);
and
‘‘(E) provide timely and accurate informa-
tion—
‘‘(i) concerning the status of student
borrowers (and students on whose behalf
parents borrow under this part) while such
students are in attendance at the institu-
tion and concerning any new information
of which the institution becomes aware for
such students (or their parents) after they
leave the institution, to the Secretary for
the servicing and collecting of loans made
under this part; and
131
‘‘(ii) if the institution does not have
an agreement with the Secretary under
subsection (b), concerning student eligi-
bility and need, as determined under sub-
paragraphs (A) and (B), to the Secretary
as needed for the alternative origination of
loans to eligible students and parents in
accordance with 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 that students at the institution
and their parents (with respect to such students)
will not be eligible to participate in the programs
under part B of this title for the period during
which such institution participates in the direct stu-
dent loan program under this part;
‘‘(5) provide for the implementation of a quality
assurance system, as established by the Secretary, to
132
ensure that the institution is complying with pro-
gram requirements and meeting program objectives;
‘‘(6) provide that the institution will not charge
any fees of any kind, however described, to student
or parent borrowers for origination activities or the
provision of any information necessary for a student
or parent to receive a loan under this part, or any
benefits associated with such loan; and
‘‘(7) include such other provisions as the Sec-
retary determines are necessary to protect the inter-
ests of the United States and to promote the pur-
poses of this part.
‘‘(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 (1)(E)(ii),
(2), (3), (4), (5), (6), and (7) of subsection (a), as
modified to relate to the origination of loans by the
institution;
133
‘‘(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
AND
TERMINATION
PROCE-
DURES.—The Secretary shall establish procedures by
which institutions may withdraw or be terminated from
the program under this part.
‘‘SEC. 455. TERMS AND CONDITIONS OF LOANS.
‘‘(a) IN GENERAL.—
‘‘(1) PARALLEL
TERMS, CONDITIONS, BENE-
FITS, AND AMOUNTS.—Unless otherwise specified in
this part, loans made to borrowers under this part
shall have the same terms, conditions, and benefits,
and be available in the same amounts, as loans made
to borrowers under sections 428, 428A, 428B, and
428H of this title.
‘‘(2) DESIGNATION OF LOANS.—Loans made to
borrowers under this part that, except as otherwise
specified in this part, have the same terms, condi-
tions, and benefits as loans made to borrowers
under—
134
‘‘(A) section 428 shall be known as ‘Fed-
eral Direct Student Loans’;
‘‘(B) section 428A shall be known as ‘Fed-
eral Direct Supplemental Loans for Students’;
‘‘(C) section 428B shall be known as ‘Fed-
eral Direct PLUS Loans’; and
‘‘(D) section 428H shall be known as ‘Fed-
eral Direct Unsubsidized Student Loans’.
‘‘(b) INTEREST RATES.—
‘‘(1) RATES FOR FDSL AND FDUSL.—(A) For
Federal Direct Student Loans and Federal Direct
Unsubsidized Student Loans made before July 1,
1997, the applicable rate of interest shall, during
any 12-month period beginning on July 1 and end-
ing on June 30, be determined on the preceding
June 1 and be equal to—
‘‘(i) the bond equivalent rate of 91-day
Treasury bills auctioned at the final auction
held prior to such June 1; plus
‘‘(ii) 3.1 percent,
except that such rate shall not exceed 9 percent.
‘‘(B) For Federal Direct Student Loans and
Federal Direct Unsubsidized Student Loans made
on or after July 1, 1997, the applicable rate of inter-
est shall, during any 12-month period beginning on
135
July 1 and ending on June 30, be determined on the
preceding June 1 for all such loans and be equal
to—
‘‘(i) the bond equivalent rate of the secu-
rity with a comparable maturity as established
by the Secretary; plus
‘‘(ii) 1 percent,
except that such rate shall not exceed 9 percent.
‘‘(2) RATES FOR FDSLS.—(A) For Federal Di-
rect Supplemental Loans for Students made before
July 1, 1997, the applicable rate of interest shall,
during any 12-month period beginning on July 1
and ending on June 30, be determined on the pre-
ceding June 1 and be equal to—
‘‘(i) the bond equivalent rate of 52-week
Treasury bills auctioned at the final auction
held prior to such June 1; plus
‘‘(ii) 3.1 percent,
except that such rate shall not exceed 11 percent.
‘‘(B) For Federal Direct Supplemental Loans
for Students made on or after July 1, 1997, the ap-
plicable rate of interest shall, during any 12-month
period beginning on July 1 and ending on June 30,
be determined on the preceding June 1 for all such
loans and be equal to—
136
‘‘(i) the bond equivalent rate of the secu-
rity with a comparable maturity as established
by the Secretary; plus
‘‘(ii) 1.5 percent,
except that such rate shall not exceed 11 percent.
‘‘(3) RATES
FOR
FDPLUS.—(A) For Federal
Direct PLUS loans made before July 1, 1997, the
applicable rate of interest shall, during any 12-
month period beginning on July 1 and ending on
June 30, be determined on the preceding June 1 for
loans and be equal to—
‘‘(i) the bond equivalent rate of 52-week
Treasury bills auctioned at the final auction
held prior to such June 1; plus
‘‘(ii) 3.1 percent,
except that such rate shall not exceed 10 percent.
‘‘(B) For Federal Direct PLUS loans made on
or after July 1, 1997, the applicable rate of interest
shall, during any 12-month period beginning on July
1 and ending on June 30, be determined on the pre-
ceding June 1 for all such loans and be equal to—
‘‘(i) the bond equivalent rate of the secu-
rity with a comparable maturity as established
by the Secretary; plus
‘‘(ii) 2.1 percent,
139
mum length of time determined by the Sec-
retary.
‘‘(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 may provide the borrower with a repay-
ment plan described in subparagraph (A), (B), or
(C) of paragraph (1).
‘‘(3) CHANGES IN SELECTIONS.—The borrower
of a loan made under this part may change his or
her 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.
‘‘(4) ALTERNATIVE
REPAYMENT
PLANS.—The
Secretary may provide, on a case-by-case basis, an
alternative repayment plan to a borrower of a loan
under this part who demonstrates to the satisfaction
of the Secretary that the terms and conditions of the
repayment plans available under paragraph (1) are
not adequate to accommodate the borrower’s excep-
tional circumstances. In designing such alternative
repayment plans, the Secretary shall ensure that
such plans do not exceed the cost to the Federal
140
Government, as determined on the basis of the
present value of future payments by such borrowers,
of loans made using the plans available under para-
graph (1).
‘‘(5) 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 an
EXCEL Account in accordance with subsection
(e).
‘‘(e) REPAYMENT THROUGH EXCEL ACCOUNTS.—
‘‘(1) INFORMATION
AND
PROCEDURES.—The
Secretary may obtain such information as is reason-
ably necessary regarding the income of a borrower
(and the borrower’s spouse, if applicable) of a loan
made under this part that is, or may be, repaid pur-
suant to an EXCEL Account for the purpose of de-
termining the annual repayment obligation of the
borrower. Return and return information (as defined
in section 6103 of the Internal Revenue Code of
1986) may be obtained under the preceding sentence
only to the extent authorized by section 6103(l)(13)
of such Code. The Secretary shall establish proce-
141
dures for determining the borrower’s repayment obli-
gation on that loan for such year, and such other
procedures as are necessary to implement effectively
repayment pursuant to an EXCEL Account.
‘‘(2) REPAYMENT BASED ON ADJUSTED GROSS
INCOME.—A repayment schedule for a loan made
under this part and repaid pursuant to an EXCEL
Account shall be based on adjusted gross income (as
defined in section 62 of the Internal Revenue Code
of 1986, 26 U.S.C. 62) of the borrower or, if the
borrower is married and files a Federal income tax
return jointly with his or her spouse, on adjusted
gross income of the borrower and his or her spouse.
‘‘(3) ADDITIONAL
DOCUMENTS.—A borrower
who chooses, or is required, to repay a loan made
under this part pursuant to an EXCEL Account,
and for whom adjusted gross income is unavailable
or does not reasonably reflect his or her current in-
come, shall provide to the Secretary other docu-
mentation of income satisfactory to the Secretary,
which documentation the Secretary may use to de-
termine an appropriate repayment schedule.
‘‘(4) REPAYMENT
SCHEDULES.—EXCEL Ac-
count repayment schedules shall be established by
the Secretary through regulations and shall require
142
payments measured as a percentage of the appro-
priate portion of the annual income of the borrower
(and the borrower’s spouse, if applicable) as deter-
mined by the Secretary.
‘‘(5) CALCULATION
OF
BALANCE
DUE.—The
balance due on a loan made under this part that is
repaid pursuant to an EXCEL Account shall equal
the unpaid principal amount of the loan, any ac-
crued interest, and any fees, such as late charges,
assessed on such loan. The Secretary may limit by
regulation the amount of interest that may be cap-
italized on such loan, and the timing of any such
capitalization.
‘‘(6) NOTIFICATION TO BORROWERS.—The Sec-
retary shall establish procedures under which a bor-
rower of a loan made under this part who chooses
or is required to repay such loan pursuant to an
EXCEL Account is notified of the terms and condi-
tions of such plan, including notification of such bor-
rower—
‘‘(A) that the Internal Revenue Service will
disclose to the Secretary tax return information
as authorized under section 6103(l)(13) of the
Internal Revenue Code of 1986; and
143
‘‘(B) that if a borrower considers that spe-
cial circumstances, such as a loss of employ-
ment by the borrower or his or her spouse, war-
rant an adjustment in the borrower’s loan re-
payment as determined using the information
described in subparagraph (A), or the alter-
native documentation described in paragraph
(3), the borrower may contact the Secretary,
who shall determine whether such adjustment is
appropriate, in accordance with criteria estab-
lished by the Secretary.
‘‘(f) DEFERMENT.—
‘‘(1) EFFECT ON PRINCIPAL AND INTEREST.—
A borrower of a loan made under this part who
meets the requirements described in paragraph (2)
shall be eligible for a deferment, during which peri-
odic installments of principal need not be paid, and
interest—
‘‘(A) shall not accrue, in the case of a Fed-
eral Direct Student Loan or a Federal Direct
Consolidation Loan that consolidated only Fed-
eral Direct Student Loans, or a combination of
such loans and Federal Student Loans for
which the student borrower received an interest
subsidy under section 428; or
144
‘‘(B) shall accrue and be capitalized or
paid by the borrower, in the case of a Federal
Direct Supplemental Loan for Students loan, a
Federal Direct PLUS Loan, a Federal Direct
Unsubsidized Student Loan, or a Federal Di-
rect Consolidation Loan other than those de-
scribed in subparagraph (A).
‘‘(2) ELIGIBILITY.—A borrower of a loan made
under this part shall be eligible for a deferment dur-
ing any period—
‘‘(A) during which the borrower—
‘‘(i) is pursuing at least a half-time
course of study at an eligible institution, as
determined by such institution; or
‘‘(ii) is pursuing a course of study
pursuant to a graduate fellowship program
approved by the Secretary, or pursuant to
a rehabilitation training program for indi-
viduals with disabilities approved by the
Secretary,
except that no borrower shall be eligible for a
deferment under this subparagraph, or a loan
made under this part (other than a Federal Di-
rect PLUS Loan, or a Federal Direct Consoli-
145
dation Loan), while serving in a medical intern-
ship or residency program;
‘‘(B) not in excess of 3 years during which
the borrower is seeking and unable to find full-
time employment; or
‘‘(C) not in excess of 3 years during which
the Secretary determines, in accordance with
regulations prescribed under section 435(o),
that the borrower has experienced or will expe-
rience an economic hardship, regardless of the
reason for such hardship.
‘‘(g) FEDERAL DIRECT CONSOLIDATION LOANS.—A
borrower of a loan made under this part may consolidate
such loan with the loans described in subsections (a)(4)
and (d)(1)(C) of section 428C only under the terms and
conditions established by the Secretary under this part.
Loans made under this subsection shall be known as ‘Fed-
eral Direct Consolidation Loans’.
‘‘(h) BORROWER DEFENSES.—Notwithstanding any
other provision of State or Federal law, the Secretary shall
specify in regulations (except as authorized under section
458(a)) which acts or omissions of an institution of higher
education a borrower may assert as a defense to repay-
ment of a loan made under this part, except that in no
event may a borrower recover from the Secretary, in any
146
action arising from or relating to a loan made under this
part, an amount in excess of the amount such borrower
has repaid on such loan.
‘‘(i) OPTICALLY
IMAGED
DOCUMENTS.—Records
maintained in accordance with section 484A(c) may be
used in any proceeding, as permitted by section 484A(c),
with respect to a loan made under this part.
‘‘(j) NONDISCHARGEABILITY IN BANKRUPTCY.—Not-
withstanding any other provision of law, a loan made
under this part shall not be dischargeable in bankruptcy.
‘‘SEC. 456. CONTRACTS.
‘‘(a) CONTRACTS FOR SUPPLIES AND SERVICES.—
‘‘(1) IN GENERAL.—The Secretary may award
one or more contracts for services and supplies
under subsection (b). The entities with which the
Secretary may enter into such contracts may in-
clude, but are not limited to, agencies with agree-
ments with the Secretary under sections 428(b) and
(c), if such agencies are otherwise qualified and com-
ply with the procedures applicable to the award of
such contracts.
‘‘(2) EXEMPTION.—(A) The Secretary may,
through June 30, 1998, award contracts under this
section without regard to the requirements in section
303 of the Federal Property and Administrative
147
Services Act of 1949 (41 U.S.C. 253), section 18 of
the Office of Federal Procurement Policy Act (41
U.S.C. 416), and section 8(e) of the Small Business
Act (15 U.S.C. 637(e)) and the corresponding re-
quirements of the Federal Acquisition Regulations if
the Secretary—
‘‘(i) determines in writing, on a case-by-
case basis, that the Government’s need for the
services and supplies to be provided under the
contract is of such an unusual and compelling
urgency that sources from which the Secretary
solicits bids or proposals must be limited; and
‘‘(ii) notifies the Congress in writing of
that determination not more than 30 days after
the award of the contract.
‘‘(B) The Secretary may make the determina-
tion described in subparagraph (A)(i) if the Sec-
retary determines that exemption from the require-
ments described in subparagraph (A) is in the public
interest and necessary for the orderly transition
from the loan programs under part B to the direct
student loan programs under this part.
‘‘(C) On and after July 1, 1998, all statutory
and regulatory requirements described in subpara-
148
graph (A) shall apply to the award of a contract
under this section.
‘‘(b) CONTRACTS FOR ORIGINATION, SERVICING, AND
DATA SYSTEMS.—The Secretary may enter into one or
more contracts for—
‘‘(1) the alternative origination of loans to stu-
dents attending institutions with agreements to par-
ticipate in the program under this part (or their par-
ents), if such institutions do not have agreements
with the Secretary under section 454(b);
‘‘(2) the servicing and collection of loans made
under this part;
‘‘(3) the establishment and operation of one or
more data systems for the maintenance of records
on all loans made under this part;
‘‘(4) services to assist in the orderly transition
from the loan programs under part B to the direct
student loan programs under this part; and
‘‘(5) such other aspects of the direct student
loan programs as the Secretary determines are nec-
essary to ensure the successful operation of the
programs.
‘‘SEC. 457. REPORTS.
‘‘(a) ANNUAL REPORTS.—The Secretary shall submit
to the Congress not later than July 1, 1993, and each
149
July 1 for the 5 succeeding years an annual report de-
scribing the progress and status of the loan program
under this part.
‘‘(b) RESEARCH, DEMONSTRATION, AND EVALUA-
TION.—The Secretary may use a portion of the funds de-
scribed in section 459 for research on, or the demonstra-
tion or evaluation of, any aspects of the program author-
ized by this part, including flexible repayment plans.
‘‘SEC. 458. REGULATORY ACTIVITIES.
‘‘(a) NOTICE IN LIEU OF REGULATIONS FOR FIRST
YEAR OF PROGRAM.—The Secretary shall publish in the
Federal Register whatever standards, criteria, and proce-
dures, consistent with the provisions of this part, the Sec-
retary determines are reasonable and necessary to the suc-
cessful implementation of the first year of the direct stu-
dent loan program authorized by this part. Section 431
of the General Education Provisions Act shall not apply
to the publication of such standards, criteria, and proce-
dures.
‘‘(b) CLOSING DATE FOR APPLICATIONS FROM IN-
STITUTIONS.—The Secretary shall establish a date not
later than October 1, 1993, as the closing date for receiv-
ing applications from institutions of higher education de-
siring to participate in the first year of the direct loan
program under this part.
150
‘‘(c) PUBLICATION OF LIST OF PARTICIPATING IN-
STITUTIONS AND CONTROL GROUP.—Not later than Jan-
uary 1, 1994, the Secretary shall publish in the Federal
Register a list of the institutions of higher education se-
lected to participate in the first year of the direct loan
program under this part.
‘‘SEC. 459. FUNDS FOR ADMINISTRATIVE EXPENSES.
‘‘Each fiscal year, there shall be available to the Sec-
retary of Education from funds not otherwise appro-
priated, funds to be obligated for administrative costs
under this part, including the costs of the transition from
the loan programs under part B to the direct student loan
programs under this part and transition support for the
expenses of guaranty agencies in servicing outstanding
loans in their portfolios and in guaranteeing new loans,
not to exceed $261,000,000 in fiscal year 1994,
$346,000,000 in fiscal year 1995, $552,000,000 in fiscal
year 1996, $596,000,000 in fiscal year 1997, and
$749,000,000 in fiscal year 1998. If in any fiscal year,
the Secretary determines that additional funds for admin-
istrative expenses are needed as a result of such transi-
tion, or the expansion of the direct student loan programs
under this part, the Secretary is authorized to use funds
available under this section for a subsequent fiscal year
for such expenses, except that the total expenditures by
151
the Secretary shall not exceed $2,504,000,000 in fiscal
years 1994 through 1998. The Secretary is also author-
ized to carry over funds available under this section to
a subsequent fiscal year.’’.
CHAPTER 2—CONFORMING AMENDMENTS
SEC. 4021. PRESERVING LOAN ACCESS.
(a) PURPOSE.—It is the purpose of the amendments
made by this section to provide the Secretary with flexible
authority as needed to preserve access to student and par-
ent loans under part B of title IV of the Act during the
transition from the Federal Family Education Loan Pro-
gram under such part to the Federal Direct Student Loan
Program under part D of such title.
(b) ADVANCES TO GUARANTY AGENCIES FOR LEND-
ER-OF-LAST RESORT SERVICES.—
(1) AMENDMENT.—Section 428(j) of the Act is
amended by adding at the end thereof the following
new paragraph:
‘‘(4) ADVANCES TO GUARANTY AGENCIES FOR
LENDER-OF-LAST RESORT SERVICES DURING TRAN-
SITION TO DIRECT LENDING.—(A) In order to en-
sure the availability of loan capital during the tran-
sition from the Federal Family Education Loan pro-
gram under this part to the Federal Direct Student
Loan program under part D of this title, the Sec-
152
retary is authorized to provide a guaranty agency
with additional advance funds in accordance with
section 422(c)(7), with such restrictions on the use
of such funds as are determined appropriate by the
Secretary, in order to ensure that the guaranty
agency will make loans as the lender-of-last-resort.
Such agency shall make such loans in accordance
with this subsection and the requirements of the
Secretary.
‘‘(B) Notwithstanding any other provision of
this part, a guaranty agency serving as a lender-of-
last-resort under this paragraph shall be paid a fee,
established by the Secretary, for making such loans
in lieu of interest and special allowance subsidies,
and shall be required to assign such loans to the
Secretary on demand. Upon such assignment, the
portion of the advance represented by the loans as-
signed shall be considered repaid by such guaranty
agency.’’.
(2) 
CONFORMING
AMENDMENT.—Section
422(c)(7) of the Act is amended by striking ‘‘to a
guaranty agency’’ through the end thereof and in-
serting the following: ‘‘to a guaranty agency—
‘‘(A) in accordance with section 428(j), in
order to ensure that the guaranty agency shall
153
make loans as the lender-of-last-resort during
the transition from the Federal Family Edu-
cation Loan Program under this part to the
Federal Direct Student Loan Program under
part D of this title; or
‘‘(B) if the Secretary is seeking to termi-
nate the guaranty agency’s agreement, or as-
suming the guaranty agency’s functions, in ac-
cordance with section 428(c)(10)(F)(v), in
order to assist the agency in meeting its imme-
diate cash needs, ensure the uninterrupted pay-
ment of claims, or ensure that the guaranty
agency shall make loans as described in sub-
paragraph (A);’’.
(c) LENDER REFERRAL SERVICES.—Section 428(e)
of the Act is amended—
(1) in paragraph (1)—
(A) by amending the paragraph heading to
read as follows: ‘‘IN
GENERAL; AGREEMENTS
WITH GUARANTY AGENCIES.—’’;
(B) by inserting the subparagraph designa-
tion ‘‘(A)’’ immediately after the paragraph
heading;
154
(C) by striking ‘‘in any State’’ and insert-
ing ‘‘with which the Secretary has an agree-
ment under subparagraph (B)’’; and
(D) by adding at the end thereof the fol-
lowing new subparagraph:
‘‘(B)(i) The Secretary may enter into agree-
ments with guaranty agencies that meet standards
established by the Secretary to provide lender refer-
ral services in geographic areas specified by the Sec-
retary. Such guaranty agencies shall be paid in ac-
cordance with paragraph (3) for such services.
‘‘(ii) The Secretary shall publish in the Federal
Register whatever standards, criteria, and proce-
dures consistent with the provisions of this part and
part D of this title, the Secretary determines are
reasonable and necessary to provide lender referral
services under this subsection and ensure loan access
to student and parent borrowers during the transi-
tion from the loan programs under this part to the
direct student loan programs under part D of this
title. Section 431 of the General Education Provi-
sions Act shall not apply to the publication of such
standards, criteria, and procedures.’’;
(2) in paragraph (2)—
155
(A) in the matter preceding subparagraph
(A), by striking ‘‘in a State’’ and inserting
‘‘with which the Secretary has an agreement
under paragraph (1)(B)’’;
(B) by amending subparagraph (A) to read
as follows:
‘‘(A) such student is either a resident of,
or is accepted for enrollment in, or is attending,
an eligible institution located in a geographic
area for which the Secretary (I) determines
that loans are not available to all eligible stu-
dents, and (II) has entered into an agreement
with a guaranty agency under paragraph (1)(B)
to provide lender referral services; and’’;
(4) in paragraph (3), by striking ‘‘The’’ and in-
serting ‘‘From funds available for costs of transition
under section 459 of the Act, the’’; and
(5) by striking paragraph (5).
(d) STUDENT LOAN MARKETING ASSOCIATION.—
Section 439(q) of the Act is amended—
(1) in paragraph (1)(A)—
(A) in the first sentence, by striking ‘‘the
Association or its designated agency may begin
making loans’’ and inserting ‘‘the Association
or its designated agent shall, subject to the lim-
156
itations in section 428(j)(3), begin making
loans to such eligible borrowers’’; and
(B) by striking the second sentence;
(2) in paragraph (2)(A), by striking ‘‘the Asso-
ciation or its designated agent may’’ and inserting
‘‘the Association or its designated agent shall, sub-
ject to the limitations in section 428(j)(3),’’; and
(3) in paragraph (3), by striking ‘‘that—’’
through the end thereof and inserting the following:
‘‘that the conditions that caused the implementation
of this subsection have ceased to exist.’’.
SEC. 4022. GUARANTY AGENCY RESERVES.
Section 422 of the Act is amended by adding at the
end thereof the following new subsection:
‘‘(g) PRESERVATION
OF GUARANTY AGENCY RE-
SERVES.—
‘‘(1) AUTHORITY
TO
RECOVER
FUNDS.—Not-
withstanding any other provision of law, the reserve
funds of the guaranty agencies, and any assets pur-
chased with such reserve funds, regardless of who
holds or controls the reserves or assets, shall be con-
sidered to be the property of the United States to
be used in the operation of the program authorized
by this part or the program authorized by part D of
this title. However, the Secretary may not require
157
the return of all of a guaranty agency reserve funds
to the Secretary unless he or she determines that
such return is essential to the operation of the pro-
gram authorized by this part or the program author-
ized by part D of this title, or to ensure the orderly
termination of the guaranty agency’s operations and
the liquidation of its assets. The reserves shall be
maintained by each guaranty agency to pay program
expenses and contingent liabilities, as authorized by
the Secretary, except that the Secretary may—
‘‘(A) direct a guaranty agency to return to
the Secretary a portion of its reserve fund
which the Secretary determines is unnecessary
to pay the program expenses and contingent li-
abilities of the guaranty agency; and
‘‘(B) direct the guaranty agency to require
the return, to the guaranty agency or to the
Secretary, of any reserve funds or assets held
by, or under the control of, any other entity,
which the Secretary determines are necessary to
pay the program expenses and contingent liabil-
ities of the guaranty agency, or which are re-
quired for the orderly termination of the guar-
anty agency’s operations and the liquidation of
its assets.
158
‘‘(2) 
TERMINATION
PROVISIONS
IN
CON-
TRACTS.—To ensure that the funds and assets of
the guaranty agency are preserved, any contract
with respect to the administration of a guaranty
agency’s reserve funds, or the administration of any
assets purchased or acquired with the reserve funds
of the guaranty agency, that is entered into or ex-
tended by the guaranty agency, or any other party
on behalf of or with the concurrence of the guaranty
agency, after the effective date of this provision shall
provide that the contract is terminable by the Sec-
retary upon 30 days notice to the contracting parties
if the Secretary determines that such contract in-
cludes an impermissible transfer of the reserve funds
or assets, or is otherwise inconsistent with the terms
or purposes of this section.’’.
SEC. 4023. TERMS OF LOANS.
Section 428 of the Act is amended—
(1) in subsection (b)(1)(D), by striking ‘‘be
subject to’’ through the end thereof and inserting
the following: ‘‘be subject to income contingent re-
payment in accordance with subsection (m);’’; and
(2) in subsection (m)—
(A) by amending paragraph (1) to read as
follows:
159
‘‘(1) AUTHORITY
OF
SECRETARY
TO
RE-
QUIRE.—The Secretary may require any borrower
who has defaulted on a loan made under this part
that is assigned to the Secretary under subsection
(c)(8) to repay that loan under an income contingent
repayment plan, the terms and conditions of which
shall be established by the Secretary and the same
as, or similar to, the EXCEL Account established
for purposes of part D of this title.’’; and
(B) by striking paragraphs (2) through (4)
and inserting the following:
‘‘(2) LOANS FOR WHICH INCOME CONTINGENT
REPAYMENT
MAY
BE
REQUIRED.—A loan made
under this part may be required to be repaid under
this subsection if the note or other evidence of the
loan has been assigned to the Secretary pursuant to
subsection (c)(8).’’.
SEC. 4024. ASSIGNMENT OF LOANS.
Section 428(c)(8) of the Act is amended by—
(1) inserting the subparagraph designation
‘‘(A)’’ after the paragraph heading;
(2) striking the second and third sentences; and
(3) adding at the end thereof the following new
subparagraph:
160
‘‘(B) An orderly transition from the Federal
Family Education Loan program under this part to
the Federal Direct Student Loan program under
part D of this title shall be deemed to be in the Fed-
eral fiscal interest, and a guaranty agency shall
promptly assign loans to the Secretary under this
paragraph upon his or her request.’’.
SEC. 4025. TERMINATION OF GUARANTY AGENCY AGREE-
MENTS; ASSUMPTION OF GUARANTY AGENCY
FUNCTIONS BY THE SECRETARY.
Section 428(c)(10) of the Act is amended—
(1) in subparagraph (C), by inserting a comma
and ‘‘as appropriate,’’ immediately after ‘‘the Sec-
retary shall’’;
(2) in subparagraph (D)—
(A) by inserting the clause designation
‘‘(i)’’ after ‘‘(D)’’;
(B) by striking ‘‘Each’’ and inserting ‘‘If
the Secretary is not seeking to terminate the
guaranty agency’s agreement under subpara-
graph (E), or assuming the guaranty agency’s
functions under subparagraph (F), a’’;
(C) by adding at the end thereof the fol-
lowing new clause:
161
‘‘(ii) If the Secretary is seeking to terminate
the guaranty agency’s agreement under subpara-
graph (E), or assuming the guaranty agency’s func-
tions under subparagraph (F), a management plan
described in subparagraph (C) shall include the
means by which the Secretary and the guaranty
agency shall work together to ensure the orderly ter-
mination of the operations, and liquidation of the as-
sets of, the guaranty agency.’’;
(3) in subparagraph (E)—
(A) in clause (ii), by striking ‘‘or’’ at the
end thereof;
(B) in clause (iii), by striking the period at
the end thereof and inserting a semicolon; and
(C) by adding at the end thereof the fol-
lowing new clauses:
‘‘(iv) the Secretary determines that such
action is necessary to protect the Federal fiscal
interest;
‘‘(v) the Secretary determines that such
action is necessary to ensure the continued
availability of loans to student or parent bor-
rowers; or
‘‘(vi) the Secretary determines that such
action is necessary to ensure an orderly transi-
169
loans consolidated, rounded upward to the nearest
whole percent.’’;
(B) in paragraph (2)(A)—
(i) in the matter preceding clause (i),
by striking out ‘‘income sensitive repay-
ment schedules. Such repayment terms’’
and inserting in lieu thereof ‘‘income sen-
sitive repayment schedules, established by
the lender in accordance with the regula-
tions of the Secretary. Except as required
by such income sensitive repayment sched-
ules, or by the terms of repayment pursu-
ant to an EXCEL Account offered by the
Secretary under subsection (b)(5), such re-
payment terms’’;
(ii) by redesignating clauses (i), (ii),
(iii), (iv), and (v) as clauses (ii), (iii), (iv),
(v), and (vi), respectively;
(iii) by inserting immediately preced-
ing clause (ii) (as redesignated by clause
(ii)) the following new clause:
‘‘(i) is less than $7,500, then such consoli-
dation loan shall be repaid in not more than 10
years;’’; and