•HR 2669 EH1S 
and before July 1, 2010, 5.44 percent on the 
unpaid principal balance of the loan. 
‘‘(D) For a loan for which the first dis-
bursement is made on or after July 1, 2010, 
and before July 1, 2011, 4.76 percent on the 
unpaid principal balance of the loan. 
‘‘(E) For a loan for which the first dis-
bursement is made on or after July 1, 2011, 
and before July 1, 2012, 4.08 percent on the 
unpaid principal balance of the loan. 
‘‘(F) For a loan for which the first dis-
bursement is made on or after July 1, 2012 
and before July 1, 2013, 3.40 percent on the 
unpaid principal balance of the loan.’’. 
(2) SPECIAL ALLOWANCE CROSS REFERENCE.— 
Section 
438(b)(2)(I)(ii)(II) 
(20 
U.S.C. 
1086(b)(2)(I)(ii)(II)) is amended by striking ‘‘sec-
tion 427A(l)(1)’’ and inserting ‘‘section 427A(l)(1) 
or (l)(4)’’. 
(b) DIRECT
LOAN
INTEREST
RATES.—Section 
455(b)(7) (20 U.S.C. 1087e(b)(7)) is amended by adding 
at the end the following new subparagraph: 
‘‘(D) 
REDUCED
RATES
FOR
UNDER-
GRADUATE
FDSL.—Notwithstanding the pre-
ceding paragraphs of this subsection, for Fed-
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eral Direct Stafford Loans made to under-
graduate students for which the first disburse-
ment is made on or after July 1, 2006, and be-
fore July 1, 2013, the applicable rate of interest 
shall be as follows: 
‘‘(i) For a loan for which the first dis-
bursement is made on or after July 1, 
2006, and before July 1, 2008, 6.80 per-
cent on the unpaid principal balance of the 
loan. 
‘‘(ii) For a loan for which the first 
disbursement is made on or after July 1, 
2008, and before July 1, 2009, 6.12 per-
cent on the unpaid principal balance of the 
loan. 
‘‘(iii) For a loan for which the first 
disbursement is made on or after July 1, 
2009, and before July 1, 2010, 5.44 per-
cent on the unpaid principal balance of the 
loan. 
‘‘(iv) For a loan for which the first 
disbursement is made on or after July 1, 
2010, and before July 1, 2011, 4.76 per-
cent on the unpaid principal balance of the 
loan.
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‘‘(v) For a loan for which the first 
disbursement is made on or after July 1, 
2011, and before July 1, 2012, 4.08 per-
cent on the unpaid principal balance of the 
loan. 
‘‘(vi) For a loan for which the first 
disbursement is made on or after July 1, 
2012, and before July 1, 2013, 3.40 per-
cent on the unpaid principal balance of the 
loan.’’. 
SEC. 112. INCREASES IN LOAN LIMITS. 
(a) INCREASE IN THIRD AND SUBSEQUENT YEAR 
LIMITS.— 
(1) FEDERAL
INSURANCE
LIMITS.—Section 
425(a)(1)(A)(iii) (20 U.S.C. 1075(a)(1)(A)(iii)) is 
amended by striking ‘‘$5,500’’ and inserting 
‘‘$7,500’’. 
(2) 
GUARANTY
LIMITS.—Section 
428(b)(1)(A)(iii)(I) (20 U.S.C. 1078(b)(1)(A)(iii)(I)) 
is amended by striking ‘‘$5,500’’ and inserting 
‘‘$7,500’’. 
(b) INCREASE IN AGGREGATE LIMITS.— 
(1) FEDERAL
INSURANCE
LIMITS.—Section 
425(a)(2)(A) 
(20 
U.S.C. 
1075(a)(2)(A)(i)) 
is 
amended—
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(A) in clause (i), by striking ‘‘$23,000’’ 
and inserting ‘‘$30,500’’; and 
(B) in clause (ii), by striking ‘‘$65,500’’ 
and inserting ‘‘$73,000’’. 
(2) GUARANTY LIMITS.—Section 428(b)(1)(B) 
(20 U.S.C. 1078(b)(1)(A)(iii)(I)) is amended— 
(A) in clause (i), by striking ‘‘$23,000’’ 
and inserting ‘‘$30,500’’; and 
(B) in clause (ii), by striking ‘‘$65,500’’ 
and inserting ‘‘$73,000’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall be effective July 1, 2008. 
SEC. 113. REDUCTION OF LENDER SPECIAL ALLOWANCE 
PAYMENTS. 
Section 438(b)(2)(I) (20 U.S.C. 1087–1(b)(2)(I)) is 
amended— 
(1) in clause (i), by striking ‘‘clauses (ii), (iii), 
and (iv)’’ and inserting ‘‘the following clauses’’; 
(2) in clause (v)(III), by striking ‘‘clauses (ii), 
(iii), and (iv)’’ and inserting ‘‘clauses (ii), (iii), (iv), 
and (vi)’’; and 
(3) by adding at the end the following new 
clause: 
‘‘(vi) REDUCTION FOR LOANS ON OR 
AFTER OCTOBER 1, 2007.—With respect to